Earnings Call: Q2 2021

Aug 26, 2021

All right. Hello and thank you for tuning into this live Q2 presentation with AG7. With us today, we have CEO and Co Founder, Robin So with no further ado, I'm going to hand it over to you, Robin. Thank you very much. And I also want to say a big thank you. Further ado, I'm going to hand it over to you, Robin. Thank you very much. And I also want to say a big thank you to everyone who has chosen to listen in or will listen later to this video of EG7's Q2 presentation. Something I always mention in the beginning of this presentation is for all of you gamers out there or maybe other people watching this, This presentation is specifically targeting investors, shareholders or anyone interested in the performance of EG7 as a business. But you're very welcome to join us along. But be reminded that if you're very interested in news about the latest games and the things that we do, you should always Q2 has both been in some ways for the world a challenging time and for us both good and some things that have been hard. But we still have come up with a really good quarter, beating our last quarter and by far beating the quarter of last year, The Q2 of last year by 160% in net revenue and 3 60% in EBITDA. So I want to start this presentation by just giving a big thank you to all of those that worked really hard over at EG7 And all of the companies that we own in the group, because you have really been the part of delivering this during the challenging times. And some of the challenging times has been 8 games, for example, for a company like SoldOut that has been pushed to release data into Q3 and Q4. And Even with that, they still performed quite well. But now we're also seeing that still kind of come, which is very exciting for the coming part of the year and the second half of the year. EG7 is an ecosystem for video games companies. We are the little thing that helps all of these different pieces become a bigger and greater whole. We find different companies in the video game space that we think can help each other become better at what they do, enhance each other's abilities or be in some way Additive. In the portfolio today, we have a big part of live games, world class titles and IPs that are currently generating revenue. We have games that are on their way out in our game segment. We also have our own proprietary platforms where we sell directly consumers and we have our world class services where we both do marketing for some of the biggest games in the world and also published some of the greatest games in the world around the globe. EG7's history is one of amazing growth, and it's gone quite fast. And that's why the Q2 has also been a big focus on putting together and consolidating all of these big acquisitions that we have done lately. And now we're really ready to set up for the future and further growth. And it's definitely a very exciting time in the company's history. Especially if you look at the reported numbers, you can see the massive growth that has happened and is still to be happening in the company. And this is once again something I just want to say thank you to all of those working in the team because this is your delivery. Something that a lot of people have asked us about and investors is, how are the games performing and so on. And I think that this slide can very easily show you that We have very stable performance of the games and good growth in the business as well. So we're very excited that that part is also something we can now show in numbers and going to be able to continue showing in numbers as the year continues and we report further quarters. When we set out very early, we told investors when we went public as a company that we wanted to control the value chain. The reason for this, we think, is that long term it creates very strong values when you are able to create a concept and bring it all the way to the consumers. And this is, of course, something that we have achieved throughout our M and A. And over the coming time in the future, you will see that these things play out that's very positive for the company. The fact that we can directly distribute games to consumers instead of just having to go through Steam and other platforms to always have that packs come on to the game launches. Those are still great platforms and we still use them, but our own distribution really helps and the fact that we can directly interact with our gamers. We think it's very important to the future of the company and our ability to really deliver the best types of services. Something that we are extremely proud of is also the many great brands that we both own and are attached to and get to work with every day as a business. And these brands are known all around the world. From EverQuest is, of course, a legendary MMO to Lord of the Rings, one of the most read books and a great movie for those of you who have watched it. And of course, DC Universe and Dungeons and Dragons. But not to forget things like Misinger Monsters and H1C1. All of these games together create a very diversified portfolio of strong currently revenue generating games. And this, we think, also creates diversification in the business, security for investors that stability of revenue can persist Even though it goes a bit up and down sometimes, it's very stable and very reliable for the business and creates a great platform for us to be able to keep investing in new product For game is a proprietary distribution platform and this we're still to see any of the big potential that Is to come, but it is something that we're working on underneath and the teams are working very hard on to be able to link the games together better within the 4 game software and work on it on a global scale. And we think that this is definitely going to do some great things in the future and be very important for our future prospects in terms of other game launches and so on to be able to have that uplift of the different marketing we do into the games and the way that consumers can come into the games. One question that many have asked, does this mean that you're not going to be on other platform or going to force me to stop being able? And that's not our view at the moment that we would stop you being able to consume games in the way you want. This would just be an alternative and we'll hopefully really make it worth it for the gamers So that they choose to go through this platform. And if they don't, we will still, of course, support any other way that you want to consume the games. World class services was something that many in the industry when we acquired Petro, which was one of our first big acquisitions, really looked at us and said, what is going on there? Something is different with this company. And our view was very clear from the beginning. To be able to have some great video games company want to join the group, you also have to have platform or services and these benefits that it is to come into the group. And this has really shown out and started to work together in the group. And we really see that These businesses really like to work together, and we see this as a great potential. Not only is it diversification of revenue that comes into the business, But it's also a great uplift for potential and creates a lot of energy within the staff and the people who get to work together with the different businesses. EG7 was always meant to be a global business, even though our headquarters are here in Stockholm and we were founded here in Stockholm. We've expanded globally and That's our intention to keep doing. As the business is a global business, video games are consumed globally and becoming more and more so that games are transcending the territories. And we believe that it's very important to be able to understand the nuances in those areas and being able to have offices not only creates the ability for us to have lower costs on some developers being able to shift development around much more easy, higher when it's hard in areas where it's more easy to hire talent, Which this gives us the ability to do, but also really understand the gamers on the local level, which can sometimes be very hard. And this will add value over time as we learn from this and establish it in our framework. We always said that aligned incentives are very important. And I think It's quite clear by looking at this picture that you can see that a big part of those who are the board, who are founders, who are working in the business day to day have a huge incentive and ownership in the business and are very much looking forward to the future of the business prospects. We really see 4 things as the main things that we are looking at for future growth. What are the things that's going to not only have the stable revenue, profit generation that we see today from the business, but really how do we grow. And we see that there are these four things. 4 game we see as a big potential. We're hoping this can really help us be able to launch into territories that we don't exist in today, do a better job in but also have the direct link with the consumer. And we think that it's also very important into a big part of our portfolio exists within the free Play Gamespace and Fit to Play Games generally have their own launchers. This is something that I think is very common to most people who play video games. And the reason for this is just that it It's more efficient to be able to do your marketing and the way you operate towards your own launch system. You're not marketing someone else's way to sell to the consumer or have the consumer come into your game. You're marketing directly to the consumer to get into your game. And I mean, many gamers might ask, okay, this is quite a horrible system. Why is it like this? But I would say it's good because, of course, this also generates more money directly to the developers that can be reinvested in the game instead of stopping that at the platform. So it's good for investors and gamers alike. EG7 really also see that geographical expansion with the men of the games is something both being able to understand these territories, but also the fact that we see in the data that many of our games are not transcending the territories as well as they should. They're delivering really well in some territories and not at all as well in other territories. And we think that this is low hanging fruit for the company and something that we are looking forward to Export in the future. Of course, it's not something you do overnight, but over time, we will be able to get really closer to the communities in different territories and therefore expand the games both in terms of players and our ability to serve those gamers. Something else that, of course, is very exciting to me as a developer myself originally and someone who loves playing video games and still do a lot. This is the future with the new games, which we also see has a big uplift. So we have the stable revenues, we have diversified revenue, we have growth Part of the business that are very exciting. But then we also have games that we have been investing in for quite a while and new games that we're investing in That are coming out and not in such a far future. We are seeing, of course, some of these games will be launched very soon, games like Evil versus Evil and blocking load 2, for example, and then not so far after, of course, in the future as well, AT3 and IGI and minimal effect. So this is very exciting. And also, Of course, one of the things that we haven't talked about is one of our big MMOs that we haven't announced yet, but we are very much Looking forward to talk more about what is there. And in this, I don't want to also forget we are going to do more with the games, EverQuest and Order of the Rings and so on, and we have many plans for what that could look like both in terms of what's coming day to day in the games already from the teams, but what could there'll be more to expand on these games and that which is underneath for those gamers to play them today. And then last but not least, of course, is our M and A strategy. And many of you might say, oh, you have not done an M and A very recently. We have been consolidating. We've been working really hard on making sure that all of these businesses fit into the business. And we think that we've also focused very much on the core operations of the company, but we have been actively talking. We have had many conversations with M and A targets, and we still See that there's a lot of opportunities out there to do deals in the M and A market. And this is something that we are looking more to do in the future and we are seeing that there will be more M and A coming up. There are, in my opinion, personally, of course, many reasons why you should invest in EG7. But in front of you, there are 7 strong reasons, In our opinion, that you could want to invest in the company. I just want to say a big thank you to all of you who have listened through the presentation, to all those gamers that play our games the reason for we can be here today and investors who have supported us through the journey and of course, all the employees We do all the hard work every day at the company. Thank you very much. All right. Thank you, Robin. That was great. But I'm afraid that's all the time we have today. If you're watching this, if you have any questions, you can always e mail them in to the Investor Relations inbox on the website, right? Thank you, everyone, who tuned in, and we'll see you next time. Thank you much.