Welcome everyone. My name is Anton, I am the CEO of the Coffee Stain Group. We're going to go through the Q4 of financial year 2025/2026 and the year-end report here, and I'm accompanied by Erik, our CFO. There we go. We have the presentation. Let's just see. The slides doesn't work now. Can you take the next slide? Okay. There we go.
There we go.
Now it works. Perfect. All right, today's agenda, gonna go through the quarter and the year in brief. We're going to give you a little bit of a dive into the portfolio and an update on that. Followed by that, Erik will guide you through the financial performance, and we will go to the Q&A. Without further ado, we're getting into it.
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Do we have problems? We have some technical challenges here. Just give us a moment.
Yeah, maybe you can just Okay.
All right. I don't see the slides now. All right, let's head into it. Last quarter of the financial year, very happy to report a very solid top line. SEK 260 million. If you compare it with last year, it's a very healthy growth, especially considering the currency headwinds. We also had no major releases this quarter. It's driven by the portfolio, our steady IPs. Just also boosted by certain events during the quarter. We had, like, a publisher sale end of the quarter. We also had the release of Teardown multiplayer. Now we have the slides here. All right. Let's do. SEK 260 million on net sales. Slides goes back and forth.
Let's do it. Cash EBIT ended at SEK 81 million.
Yeah.
We're quite affected by higher costs during the quarter. I think it's worth to just, net sales, we're very happy with that. It's a very solid performance. It's driven Satisfactory keeps performing very well. Teardown, also has been a strong contributor.
Yeah, as a reminder.
Yeah
The Cash EBIT is also including growth CapEx. It's a cash metric where you have, both expense then capitalized cost included where we see, like, a 90% Free Cash Flow generation of that Cash EBIT.
Mm-hmm. On, on the cost side, higher costs from mostly third-party costs. We have some kind of, like, specific costs that were, like, related to, we do usually when we have our projects in, a phase where we need to go to more platforms or do specific things, we can use consultants. We've had a little bit more intense of that lately with, like, a lot of Goat Simulator, Satisfactory going to console. Also Fellowship has been a big cost as that has not performed as well as we had hoped. In addition to that also by the end of the quarter, we had one, like, less fun thing where we decided to close down the studio in Malmö.
It was a strategic decision, following our strategy, which is, going back to our teams are supposed to, we want our IPs to be controlled by each specific team and work in this decentralized way. The way that the studio in Malmö was working was going a little bit against our core kind of philosophy. It's been a studio that we had running for quite some time. We felt that for the future we're gonna kind of move the IPs back to each respective team, and we think that's the right way forward. In relation with that, we also closed down a project that had been in development for some time in that studio.
That's things that happens and things we need to do.
as a, in our business. If you look at the full year, sales came in at SEK 961 million, which is stable. Like, the year-over-year growth was -12%, this is also taking into account the currency headwinds, if we hadn't had those, it would've been pretty much in line. Cash EBIT at SEK 333 million. Also finally can say that we have a very strong cash position, SEK 620 million by the end of the year. Yeah, solid foundation for the future. Let's dive into some of the operational highlights. We started the year in January. We had the Season 6 releasing for Deep Rock Galactic. It was a long-awaited season after quite a break.
As you might know, we have Ghost Ship has been focusing quite a lot lately on the coming release of Deep Rock Galactic, Rogue Core. That caused a little bit of an interruption in their kind of season cadence. Since some time ago, we now work with Invisible Walls, one of our other studios in Copenhagen, and they have been working together with Ghost Ship on this Season 6. It was very nice to see another season. Sales performance on this specific season has been a little bit lower compared to the previous ones, but it's also worth mentioning that it's a slightly smaller in scale. It was a longer gap between the last one.
I guess the competition also generally on Steam is very tough these days. I think it's very good to see, like we are overall very happy with the collaboration works well and like it's still a good reactivation of the franchise and I think looks well ahead of the coming release of Rogue Core and for the future of Deep Rock generally. We had obviously Fellowship, a game that Coffee Stain brought in just before the spinoff in December. This is a game that we have not kind of built in Coffee Stain. It was developed by another part of the Embracer Group and it launched in Early Access in October. Had a very strong launch.
Ahead of the spinoff of Coffee Stain, there was this decision that Coffee Stain would take this project over. It looked very good and Embracer wanted to keep it as part of when Arc was divested. We brought it into Coffee Stain, and it had a very high velocity at that time. It looked very promising. This team is developed by a quite large senior team in Stockholm. We are like, we really like the game. Sadly the performance after we took it over in like December and January was slowing down significantly. Last quarter we said that this season, that Season 2 that went live in February was a big point to kind of figure out where we are heading with this.
Sadly, Season 2 has not really performed as well as it needs to. There we are actively in like discussions now with the development team and trying to figure out a mutually beneficial way forward. We need to kind of take into account this is quite, it's a big project, and we still think there's potential, we need to kind of figure out a more sustainable way to run it forward. We'll come back to that in the future as well. We are very aware of how it's doing at this point. Teardown multiplayer, big update for Teardown that has been in the works for quite some time. Very happy to finally have that out.
It's been a very well-received, this is only for PC at this point. Teardown, for those who don't know, is an amazing game. It's like it's an engine where like, you know, 10,000+ mods. Creators create their own games in Teardown, it's been very successful historically, even in single player. Now we have with the multiplayer out, it kind of opens up the potential more for the game to build and to grow over time. We saw with this update, we saw the all-time high concurrent users of 15,000, which was almost double of the previous record.
Even after this has stabilized, we see a kind of now, a more solid bottom lines. It's gonna be super interesting. Now we have a lot of cool mods that they have to be adapted now for multiplayer because multiplayer was not available before. We already see a lot of cool mods coming up, it's gonna be very interesting to follow it, yeah, it's a, it's an amazing game. We already mentioned the Fellowship and the Malmö closure. Another shout-out, obviously Satisfactory, a very strong contributor, it's amazing to see how this game just keeps performing.
We had the coming update 1.2, it's been put into the experimental branch so players can test it out and the reception seems good, so that looks promising for the future of Satisfactory. Also we see continued good performance from the console versions of Satisfactory. Really cool to see.
Yeah.
Yeah. I think that's it. Did we go two slides there?
No.
That's, yes. Saying a few words about the road ahead. As you know, we focus a lot on our core IPs. That's the Coffee Stain strategy is we're very like focused on making these quality games and then sustaining them for a long time. Almost all of our core IPs have been there for years, and they are continuously kind of developed upon through all our studios. Something to keep an eye out now for in the near future is the Deep Rock Galactic: Rogue Core that comes out May 20th by Ghost Ship Games, which is an important release that we look forward to seeing going out to the public.
We obviously have Teardown multiplayer update as well that is coming out soon, later.
On console
on console as well. It's only on PC at this point. We have Satisfactory 1.2 update, and then we have Valheim coming to PlayStation 5 and Switch 2 later this year as well. Want to also send out a big shout-out to our studio Easy Trigger Games in Trollhättan, which last week released Huntdown: Overtime game, smaller game that has been in development for some time now on their IP Huntdown. It's a really cool arcade shooter going down the roguelike path. It's received good reception so far, good reviews. It's a little bit early to comment. We will comment on it in the future, but very happy to see it out. This is, you know, the Coffee Stain strategies.
We have both these six core IPs, but we also have these other smaller games as well, which we hope that in the future could also kind of qualify into becoming core IPs. We have the coming Lightyear Frontier 1.0 release. We have Wielders of the Essence by Lavapotion, another title that popped up, that is, we're looking to go into Early Access later. Finally Into The Unwell as well, that is looking very, very interesting. So those are some games to keep an eye out for.
Yeah.
Yeah. Oops.
A bit more on the financials then. On the quarterly trend, as Anton said, we have had some very solid net sales with the increase on 20% year-over-year. Where our Cash EBIT is affected by higher cost this quarter, that's mainly caused by third-party development cost where we are at the point where we have a higher degree of support in our core projects, also the full development cost of Fellowship in this quarter with some transition cost also of taking over the publishing.
A very solid net sales generation, as you can see, despite quite a rough FX headwind also. We are on the cost side. As you can see, other operating expenses is almost 50% of our operational cost at the moment, and we are actively working to reduce this level with taking more of our projects in-house.
It's also natural when we have this console porting projects ending, and also, as you said, working with Chief Rebel, to find a more sustainable long-term level of investment on that game.
A very solid quarter. If you go next slide. We zoom out a bit and look at the year-over-year comparison. You can see that we have, it's a lower net sales, and it's almost the majority is on the U.S. dollar movement against SEK. We would say we are pretty much in line with the previous year, and that is also a direct effect on Cash EBIT, where it's driven by net sales. It's a net sales story, basically, and where cost base is increased only modestly year-over-year. The contribution from new releases is also a bit lower. We had some significant releases during the year which was very successful.
Yeah, we are, overall, we are happy with the year.
You take the slide.
Okay. Thanks. Yeah. Okay. This is more of a summary of our financial model in one slide, where we have the net sales coming still 90% from these core IPs generating SEK 961 million. We have a solid Cash EBIT generation with 30% margin, of which SEK 300 million turns into Free Cash Flow.
And that's put us in a position where we have a very strong cash position, SEK 620 million, where the board ambition is now to return SEK 300 million of those from the AGM in September until the next AGM next year, of which SEK 150 million would be a cash dividend paid in four installments, quarterly installments. That SEK 300 million is basically the Cash Flow we generated 2025, 2026. On the cost side, we already talked about a bit. A bit we had 80% of going to core portfolio. Now it's roughly the same figure, a bit lower since, I think, more because of Fellowship now in our portfolio.
Yeah, overall a very solid financial position.
All right. Some final remarks. Some of you might be joining for the first time. I think it's worth just reminding everyone we've not been out on the market for that long. This is our second quarterly report. Coffee Stain Group is a group consisting of a lot of very strong development studios. We're like 13 development studios. We have this strong belief in decentralized empowerment, and we really want to build a group that can scale without becoming slow and ineffective. The decentralization for us is very important, and we empower developers.
We really want to build this model where they feel empowered, and they are in control of their own kind of IPs and their P&Ls and the whole business. We think this is, this is not only driven, like, by some kind of business thinking. It's actually, like, it's very important for the creative aspect as well that they feel, like, because when you build games, it's like it's a whole, like you have to be kind of thinking about all these different pieces of the puzzle to do it in a good way and, I think. It also sets us in a good position when we grow, when we kind of start new studios or we, if we potentially look at acquisitions in the future.
It's super important that those pieces would fit in this system where, like, ultimately it's a ecosystem of strong developers that can kind of help each other, empower each other, and make great games, which is the ultimate goal of this group. The industry as a whole is like a creative industry. It's making games is interesting in that way. We tap into kind of this, it's not like only like, it's not like a factory. You have to kind of, it's so complex.
We tap into all this creative, like, kind of, different areas, the success of a game usually boils down to very specific fine details, the quality of the games, and I think in the past we've been very good at kind of identifying those and making that, those decisions that ultimately lead to the successful games. I know we have so many good developers in the Coffee Stain Group that I feel very confident for the future as well that, like, with this model, I think we are very well, you know, positioned to kind of keep delivering good games.
Looking back at the year, it's been a very eventful year for Coffee Stain Group and like obviously the spin-off from Embracer was a big thing for us, nothing that we maybe envisioned if you go back a couple of years. I think it's very nice now. We feel kind of we are now on our own, we stand our own legs. We have a very solid foundation for the future with, like, all these great development studios, these great IPs, and kind of we can control our own destiny, so to say. Yeah, it feels I think we're off to a good start and very excited to see where we are taking Coffee Stain next.
That said, I would go to the next slide. We're going to the Q&A now I think.
Yeah.
Yeah.
Time for Q&A.
See if you have any questions.
Thank you, Anton. Yeah, so Q&A, you can send in question to IR, our IR email. We will try to answer as many as possible.
Yeah. All right.
Okay. The first question is regarding our back catalog and performance and recurring revenue.
We have a strong Q4. The question is, how resilient were recurring revenues in Q4 without major launches, how did the key titles like Valheim, Deep Rock, and Satisfactory perform during promotion?
such as Steam Spring Sale?
I think this is, I think just looking at the numbers this quarter is a good kind of example of showing how resilient they are. The fact that we didn't have any major new releases for a game, like Satisfactory for example, it just keeps performing very well.
Yeah
Year after year. , we believe strongly that as long as we keep, like, developing these titles, as long as it, as it makes sense and they have these strong communities, they're gonna stay resilient. Generally we think that they are very, we like also another example. Like we had the Publisher Sale end of March, compared to last year it was performing better.
Um, so, uh, it's a good-
Yeah. That's a good sign.
That's a good sign. Yeah. For sure.
The next question is about Nintendo Switch 2 financial impact. Do you see any big impact from Nintendo Switch 2 on net sales and player growth?
I would say that so far, not really. Like we have historically we've not had that many games on Switch. Like the Switch 1 was a little bit of a tough platform for us to develop to because it was, in terms of hardware, it was quite low end. We usually focus on PC primarily, and we build from there. Now with Switch 2, we do have some games there. So far we kind of look at it as like it's always good when there's new platforms and we have, for the future it's gonna, it does, it will contribute. It's not gonna have a like a significant impact that we are-
No
kind of commenting on.
We have announced Valheim is planning on making a Nintendo-
Yeah
version, for example.
Yeah
Still, it's quite early to say something about it.
Yeah. We will have to come back on that.
Okay, next question is from Rasmus Engberg on Kepler Cheuvreux. Is it possible to shed some light on the full impact from Fellowship in terms of net sales and Cash EBIT?
I can start there on like the, I think we obviously realized the situation and we took over this project in, it came in with quite high pace and it, everything looked very promising. You have to kind of, you have to also, you have to do some commitments. In that case, we've committed to, you know, we have a agreement with the developer and like we have to work out the situation there to find a better way, as we talked about before. In terms of sales, it's, it is always tough to kind of predict how a release will turn out. Our hopes is obviously that we will see higher sales, with the Season 3 that is coming in June.
If we can reduce the cost, it's gonna help.
Yeah. Also just to add, we talked about it in the report that we had increased cost of SEK 30 million this quarter.
The majority is mainly related to Fellowship full development because now we have a full quarter.
Also as a reminder on cash, we have this, the current development going in and we have, but we inherit the total development cost was SEK 163 million on the non-cash transfer, which is depreciated quite aggressively now. That's affecting EBIT, not cash EBIT.
Just also that, important to state out.
Yeah.
Yeah. Next question. Martin Arnell, DNB Carnegie. It's three questions. What can you say about your own expectations ahead of the launch of Deep Rock Galactic: Rogue Core? I think let's start there.
I mean, we don't speculate. It's obviously it's like one of our Deep Rock Galactic is one of our core IPs. That said, we obviously we hope that it's gonna turn out well. It has, you know, seems to have good traction ahead of the launch. Yeah, we will have to, we will wait and see. It's coming out soon, May 20th.
I see.
Yeah
It's a big project.
Big project, yeah.
the work, the core team worked for quite a long time now.
Obviously the whole hope is that this will be good.
Yep.
Okay, second question. Can you give some more flavor on the strong performance on Satisfactory in Q4, how important do you expect the 1.2 update will be later this year?
I mean, I think the, generally the performance is a result of all the good work that the Satisfactory team is putting into the game, understanding their community very well, providing good new content. I think the console launch probably also helped even on PC because, when we did that, it obviously creates a lot of buzz around the game. Every big update is important for Satisfactory, and we obviously hope that even the 1.2 update, once that goes kind of public, for real, is gonna have an impact. It's hard to go do any kind of more predictions on it.
Yeah.
We believe in the game. It's gonna keep delivering.
Thank you. The last question is, could you elaborate on the cost actions that you're initiating? When should we expect to see a result from this, and what about the potential magnitude? I think we talked about it during the presentation. I think roughly SEK 75 million now is from external cost, where a very large chunk is third-party development cost.
There is some natural project swings where we have extra support in the porting projects.
Also on our core IPs, which is now going to be reduced. Then of course, we have The Fellowship, and development. This is also quite a big impact w here we need to find a sustainable way going forward. In terms of timing, it's hard to say something exactly, but we are definitely working on it, and it's in our own hands, so it's not personal cost. It's rather consultants that we can over time decrease. That's our game and our aim also.
Yes, also worth like, on this additional costs, like, to give a little bit more context there is that, like when we, one of the for us it's very important to keep our teams as lean as possible. When we approach, for example, porting, a natural thing for us is that at some times we use external consultants to kind of get Satisfactory out on console, for example. Then when that initial work is done, then it becomes like the, it is a quite big task to kind of get it up and running, do all the optimization and then we hope to kind of over time to be able to kind of bring the ongoing work home, and that's gonna cause like this Erik mentioned here, like reductions in cost over time.
Yeah.
At the same time, it's also worth mentioning, like if we have other games that become very successful in the future, and then we might have to increase those costs again.
Yeah.
It's not gonna be like permanent reduction of cost.
No
We're very aware that like it is a quite high, a big amount of our.
Total cost.
full cost, total cost picture. Yeah.
It's also worth mentioning again that this is also growth cost included.
We have cost for games that are going to be released in the long term also included there.
Okay. Erik Larsson from SEB had also, I think, four questions. One is, can you quantify how large the year-end bonus accruals amounted to, and what is attributable to any specific game or studio? There we can see that we had some year-end bonus studio accruals. That is certain targets being met during the year. I think we have for the core studios, there is, some of this is M&A-related, and some of this is like a yearly target bonus. We don't have any specific on that one.
No, every, I guess everyone, every studio is a little bit different.
Yeah.
It's hard to give kind of a Yeah.
Okay. Setting the items affecting comparability aside, did underlying cost in Q4 include the Malmö studio? Yes, it did, because this decision was made very late in the quarter. Up until that decision, I think end of March, basically was the cost included. There was a question about Deep Rock season six. How was the reception? I think you talked about it.
Yeah
During the presentation.
The reception was overall, quite good. But as I said before, like the, it was not performing as good as previous seasons, but there's many, I think just the fact that there was such a long gap between them is the one explanation to that. But also the, it was a slightly smaller season in terms of scope. But also we're bringing in a new development team with Invisible Walls working together with Deep Rock or Ghost Ship on this one. So, we'll see. But it was, it was good to get the reactivation in the Deep Rock product.
The last one is all about gross margin. That was a bit lower in Q4 versus previous quarter. Was this driven by revenue mix, such as Fellowship, or what is the driver basically? That is, like the, it's a product mix where certain projects have a share, revenue share during a shorter period and some are longer. I think the answer is that this quarter, the revenue mix was built like that. Yeah, we don't have any specifics on per project, but it can be that we have a third-party support where on during a period they get a rev share after we have recouped our investment, for example.
Okay. Next questions is from Thomas Nilsson at Nordea. The release calendar for the remainder of 2026, can you walk us through the pipeline and outline our expectations for both new titles and new content for core IPs?
Already did that.
already did that.
Yeah.
As much as we-
We can.
we can.
Yeah.
Next question is regarding M&A agenda. Why return capital to shareholders so soon after the listing, and how does that current M&A pipeline look?
Yeah. I think, like, it's worth, again, just highlighting that Coffee Stain, we're not, like, we always kind of investigate potential. We can look at M&A, it's not, like, a core part of our strategy to buy ourselves to. We think it's very hard to buy studios generally because of the way we work. We do investigate things and if all parameters are correct and we find the right things, we will of course act. On the return on capital, I just think it's a result of we feel comfortable that with the cash flow that we have and kind of the, what we would be looking at, we feel it's just a reasonable thing to do. I don't know, Erik, if you have any context.
No, we have like SEK 630 million-
Yeah
in cash balance. We generated SEK 300 million in Free Cash Flow.
Yeah.
We are confident that we can generate Free Cash Flow going forward also.
Yeah.
There is, if we find something, there is always other options to use should find a suitable M&A.
Yeah.
Okay. Last question from Thomas is, how are you balancing investment in new IPs versus continued support and expansion of existing franchise?
I think we can go back a little bit to the, what we've said in the past as well.
Yeah
Where we usually invest, like, 80% into our core IPs. We tend to lean more towards the core IPs.
Then we take, you know, a smaller portion into kind of new IPs or new stuff. That's the way we're doing it, and we think that there's a lot of value to unlock in the core IPs still. As I said before here, like, if you look at, you know, if you look at the games industry as a whole, I think most of the really successful companies, they usually have one or a handful of very strong games that they rely on, and you have to kind of keep investing into them and build them over time. I think as long as we do that, they will probably grow, and it will be more resilient, more recurring, more stable.
We want to avoid kind of relying on new releases as much as possible, actually.
Yeah. Lot of focus on our, on our existing stuff.
Yeah. Okay. Next questions is from Viktor Lindström at SB1 Markets. Could you elaborate around the increase of cost of third-party support? Which projects and will this remain going forward, or will it decrease as recent projects have been finalized? I think we talked about it quite a lot now, and as you say, Viktor, some of this will decrease naturally since the projects have been finalized, and we also have a task to have a more sustainable cost on, for example, on Fellowship.
Yeah, I think it's, like, a natural, kind of development for some of our, like, mature, projects where, like, studios are going to kind of look to bring a little bit more in-house.
Yeah
Yeah.
Yeah. I think he also had a question regarding Fellowship and how will you optimize a more balanced cost and sales structure for Chief Rebel and Fellowship going forward?
I think we will have to come back to that.
Yeah.
Yeah.
Actively working
Yeah, we are actively working on it, so.
Okay. Let's see. Okay. We have another question from Christopher, which is: With the closing of Coffee Stain Malmö, how should we think about the future impact on revenue from other platforms? Will it be affected, like the mobile?
Yeah. I think it's worth mentioning that it's not like we're stopping working on with mobile as a platform. It's more about how we work with it. For example, Goat Simulator obviously does pretty well on mobile, and we will keep kind of supporting it. It's just that now the development will be done by Coffee Stain North, in that case, for example. We think of our games as the, it's one product, so we have to, that's also we want to centralize the thinking around each individual title. In terms of the impact for the other platform segment, I obviously hope that we will see that growing in the future as well.
As long as we find projects that are very, you know, suited for mobile platforms, and then obviously we have Welcome to Bloxburg, which we have not talked so much about in that segment. That's no big change really on it. We've seen a little bit of a stabilization in terms of the activity, which is positive. Yeah, it's no big change, I would say, in the platforms.
No. The studio in Gothenburg is working-
Yeah
actively with the, like, the pipeline, the roadmap they.
Yeah
They presented on the capital market event in November.
Exactly. Exactly. Yeah.
Okay. Next question is from John Westborg at Redeye. It is a question about how we calculate our game launch uplift and baseline net sales. We previously said we have a game launch uplift effect, which is basically when you release a new content on an already existing game. It's 60 days. We measure the uplift effect from previous quarters, like the steady baseline, and that we will have presented as a game launch uplift in our reports. The next question is about Coffee Stain Malmö. If the cost related to the closure of Coffee Stain Malmö now is fully behind us, or should we expect additional related cost in the upcoming quarters?
To answer that, we had accrual for this restructuring, which we have presented in the interim report. The cost that will then be fully behind us. The cash effect of course will occur later on. We have made this reservation for closing this studio.
Okay. I think that was everything from the Q&A.
Maybe we should look. Is there still any-
Oh, I think-
Should take [inaudible]
I think it was-
That was that. Okay.
It's a wrap.
It's a wrap. All right. Well, thank you very much, everyone. See you next quarter.
Thank you.