Good morning and very warm welcome to this presentation of Embracer Group's acquisition of Eidos, Crystal Dynamics, and Square Enix Montréal. My name is Oscar Erixon. I'm an equity analyst covering Embracer Group. I'm personally very excited about these deals, all these very well-known studios and legendary IPs. We'll be joined today by the key people at the different studios presenting their companies. Lars will also go through the rationale and deal structure of these deals. I will be back for a Q&A in about 40 minutes, I believe. Without further ado, I will leave it over to Lars Wingefors, the CEO and founder of Embracer Group.
Thank you so much, Oscar. I'm excited to be here this morning and to welcome Eidos, Crystal Dynamics, and the team of Square Enix Montréal to the Embracer family at closing. I would like to personally say that, you know, already since I were teenager running my mail order business in the mid-nineties, remember the first samples of Tomb Raider on Sega Saturn shipping. I've been super excited about that IP and obviously being part of this industry the past three decades. We have all been following the successes of many of these IPs and studios we will talk about today. Without further ado, I would like to welcome the team members to this call, and to start with Phil Rogers.
Hi, everyone. Good morning. My name is Phil Rogers, and today I am the CEO of Square Enix America and Europe. Happy to be here.
Hi, everyone, I'm Scot Amos, the Head of Studio at Crystal Dynamics, and I am delighted to be here as well. I'm just thrilled that this is my 30th year making games, and I've loved every minute of it, and I can't wait to see what our future's gonna look like. It seems so bright. David?
Bonjour. Hey, all. Hi, everyone. I'm David, Head of the Eidos-Montréal studios. Very happy to be with you today. Patrick?
It's great to meet everyone. I'm Patrick Naud, Head of Studio for Square Enix Montréal. I'm one of those that had a chance to start a studio 10 years ago, and today I'll be talking about mobile. Lars?
Thank you, everyone, and very welcome to this this call, and soon very welcome to the family of Embracer. Before we jump into the studio presentations, I would like to take you through the high level transaction summary. I will come back to that in the end of this call. The acquisition rationale for this transaction is obviously, Crystal Dynamics and Eidos-Montréal is two of the most well-reputable AAA studios in this industry that has been around for decades in the case of the Crystal Dynamics. The transaction goes with iconic IP such as Tomb Raider, Deus Ex, Thief, and Legacy of Kain, and others. With the studios, we're getting very talented and highly skilled, employees that has decades of AAA experience.
The studios come with a very exciting pipeline of new installments and original IPs, including a new Tomb Raider game. We see a significant growth, organic growth opportunity to grow the studios and also to create synergies within the wider Embracer ecosystem. Looking at the details of the transaction, we are paying a total purchase price of $300 million that all will be paid at closing. The transaction is that we are acquiring the legal entities of Crystal Dynamics, Eidos-Montréal, and Square Enix Montréal, along with another company holding the IPs. In total, there is more than 1,100 full-time employees across three studios and eight locations.
Again, there is a portfolio of AAA IPs and IPs along with more than 50 back catalog games that we will take on upon closing. Looking at the financial outlook for the acquired companies, first of all, I would like to say that we have done extensive due diligence during the past period, both with internal and external advisors, to fully understand the acquired businesses. We're expecting the acquired businesses to be break-even or to have a smaller operational EBIT contribution for the current financial year and the following financial year with some upside potential if there's a number of or a few things that will occur. This is a long-term transaction, you know. Again, I'm looking, you know, a decade ahead.
I wanna create some amazing new big games with high quality or very high ambitions together with the teams. What I've seen, I'm thrilled about and when that pipeline will start to mature over the coming years after the two years I'm talking about, I see at least half a billion SEK in operational EBIT contribution with a notable upside from that. Looking at the financing and the current trading. We have secured long-term debt funding commitment of SEK 4 billion and we have extending another loan of SEK 6 billion to become a long-term. With the inclusion of the new facility, we have more than SEK 10 billion as of this morning in available cash and credit facilities.
We have under the new terms, we have no short-term debt due, so no expiry of any debt before 30th of June 2023. As of this morning, we reiterate the group operational EBIT forecast previously given at our quarterly on February 17. For the financial year ending March 31, 2022, the current financial year ending 31st of March 2023, and the following year. That's the high level. Let's jump into the presentation. I would like to welcome Phil back.
Yeah. Thanks, Lars. Thank you. This is the slide today, I think with the least words, and just wanted to use it to share a few opening remarks. Firstly, it's just to reiterate how excited we are across Crystal Dynamics, Eidos-Montréal, and of course, Square Enix Montréal to be here today with the signing of this deal. Personally, I'm thrilled to be joining the Embracer family at closing. Of course, everything remains today very much business as usual, but still the news today is a key milestone for us. Secondly, it's to say we have a really simple objective this morning, and that's to introduce you to our teams, our games, the studios, and to give you a little bit more background on our missions, our people, and our achievements so far.
To Embracer, well, from the meetings we've had with Lars and his global team through the process to date, what I can tell you we're most excited about is the entrepreneurial drive and spirit that comes through and this unique decentralized structure. I think they're really important in businesses like ours. As I said in the press quote, "This feels like the perfect fit for our ambitions, making great games with great people sustainably and to grow our franchises to their best versions ever." Scot, David, and Patrick will talk to some of those franchises shortly. My final remark is this, and that's behind the studio names, behind the studio heads are great teams with great and talented people.
Many more than we can name in a short presentation like this, but I just wanted to take this chance to thank them for helping us do what we do and for getting us to this point of announcement today. I'm really confident that this marks the start of a really exciting new chapter. With that, I'd now like to hand over to Scot, who will first introduce Crystal Dynamics. Over to you, Scot.
Thank you, Phil. This is a nice quick high-level overview of who and what Crystal Dynamics is. We have core pillars that drive everything we do, how we do it, why we do it, and that culminates into a phrase that we live by of "Achieve the extraordinary and live the dream in doing so." We were founded in 1992, and then we were acquired by Square Enix as part of Eidos in 2009. Best way I have found to describe what we are as Crystal Dynamics is a family of like-minded craftspeople who've come together to make the games of their careers, have an amazing time doing that, and to fulfilling with our San Mateo studio, which is our HQ here in the Bay Area in California.
Then 2018, we'd opened Crystal Northwest up in Bellevue, Washington, starting with 25 like-minded folks who then have now grown to 75 at CNW. Then last year, we opened our Crystal Southwest studio in Austin, Texas, with one employee that has now grown to 31 employees and continues to grow as we are. On the right-hand side, this is just a couple reminders and glimpses of the IPs that we're known for and been part of, starting at the top with Legacy of Kain. One of those beloved action franchises that combine great mechanics and great storytelling in a unique way that our fans consistently and constantly of Tomb Raider, and then the Rise of the Tomb Raider, and of course, Eidos-Montréal, who did the end of the trilogy in Shadow of the Tomb Raider.
These are the two games most recently that have really highlighted what great looks like, what Crystal is capable of, the types of stories and cinematic experiences and the award-winning campaigns and stories that we put together, and you can see a smattering of some of that in the middle of the slide on the left. What makes Crystal special is the people. Looking at the bottom left, I wish I had time to go through all of them because the amount of talent here, the years of experience, the pantheon of products they've all worked on here for 26 years of that. Looking at some of these other folks who've only been here a few years, but look at those histories. 20+ year veterans across the industry. We have seen it all, we've been through it all, we know the platforms and the games.
We have this amazing, staggering amount of talent to be able to focus in the direction for what's next. We also have new folks who joined just a week ago, and they came here because they want to be part of this diverse and inclusive culture, this Crystal of coming here to make these games of your dreams. For us, it is exactly why we do what we do. If we go onto the next slide, we can talk briefly about the Tomb Raider franchise. This is a storied global franchise. We've had 88 million units sold of the AAA franchise to date, and really importantly, looking at 2013, 2015, and 2018, the reboot trilogy. Looking at the bottom row, these are some of our digital offerings, areas where we experiment with our technology and opportunities for new ways for folks to play our games.
Lara Croft and the Guardian of Light and Lara Croft and the Temple of Osiris being couch co-op, arcade action games. Looking at the two mobile games on the right where we had our first free-to-play Lara Croft: Relic Run, which garnered 50 million downloads on its own. That just shows the power of the brand inside of the right space. Looking at Lara Croft GO, it's award-winning mobile game that still stands at one of the highest rated games in the App Store because of the quality and the features of that product. This is just looking at the games. We still have an entire transmedia world out there, known for films, new series coming, comics. Looking across what the possibilities are for this franchise, I tell you, the best is yet to come. With that, I'll hand it over to David.
Thank you, Scot. Fast. I am an introvert and French speaker, so be patient with me. I cannot speak as fast as Scot. Let's start with Eidos. Let's start with the beginning. The Eidos adventure in Montréal began in 2007. At this time, we are two crazy people who decided to revive the Deus Ex IP as our first game. A new team, a very complex production, a new tech, and a new studio. An easy challenge. There is several reasons for this choice. First, establish a very high quality brand studio image and attract the right experts with an iconic IP, and that's how the production of Deus Ex: Human Revolution began.
Since the critical acclaim and commercial success of this game in 2011, the Eidos-Montréal team have developed games based on different IPs, like Thief in 2014, Deus Ex: Mankind Divided in 2016, and Shadow of the Tomb Raider in 2018, establishing Eidos-Montréal as a major player in the industry, an ecosystem capable of creating and producing high quality games in full autonomy and on a regular basis. We also went through several co-developments with our friends at Crystal Dynamics, Tomb Raider in 2013 and Rise of the Tomb Raider in 2015. Through the production of all of these quality games, we have developed a great expertise in creating deep stories, strong characters. Our mission is now crafting emotions, and our studio values are people, courage, business savvy, and continuous improvement, a guideline, and content.
We currently have several developments, and they all collaborate on the Unreal Engine 5 technology. Recognize organizational culture. Efforts rewarded by the Best Place to Work in Canada to strengthen our external development capacity in Asia, and last year, we opened a tech R&D branch in Sherbrooke, two hours from Montreal, with 32 experts in AI machine learning, rendering, online infrastructure, and cloud computing at work. How can we achieve all of this? Because I'm surrounded by a complementary, diversified, and talented group of experts who work with me to make Eidos an ecosystem where people are linked around the same values, feel valued as human beings, and have a say in the decisions that affect them.
Eidos-Montréal is at its best in 15 years, and I am convinced that to be part of the Embracer Group will take Eidos-Montréal to the next level and make its talents, the gamers, and you very happy. Next slide, please. Eidos-Montréal is the home of Thief and Deus Ex franchises, but let's talk about Deus Ex today. With the first two games, Deus Ex in 2000 and Invisible War in 2003, Ion Storm created and shaped the reputation of this franchise. The creative development of a Deus Ex experience is very complex to master, and Eidos-Montréal successfully developed this expertise with two titles. With a 90% Metacritic, Deus Ex: Human Revolution, released in 2011, has been a critical and commercial success, and by doing so, established our studio notoriety.
With an 83 Metacritic, Deus Ex: Mankind Divided, released in 2016, confirmed our capacity to deliver complex productions and high quality games. With these two titles, we have been able to revive, modernize this franchise, and create a strong community. The Deus Ex DNA is all about choices and consequences integrated in every aspect of the experience as you choose your gameplay style, offering an exceptional replayability for a single player experience. A Deus Ex experience is also synonymous with immersion. With a near future world rooted in today's life and challenge, a future that seems close and relevant, the Deus Ex games can generate a strong emotional connection beyond what action RPGs usually accomplish, and it is for all these reasons that this IP is considered as genre-defining. Thank you very much. Pack. Patrick.
Merci, David. Square Enix Montréal just celebrated its tenth anniversary. We started in mobile space with the objective of leveraging our amazing triple-A IPs that had limited presence in the mobile space and expanding them to new audiences in global markets. The strategy was to craft new triple-A experience that were tailored to mobile player and devices, but they would respect the pillars of these IPs. We were not going to take the usual route taken by many publishers that were porting their console experience or cloning successful games, and this is how we came up with Hitman: Sniper and the GO trilogy, Hitman GO, Lara Croft GO, and Deus Ex GO.
For those not familiar with these games, the concept behind the Go series was to adapt the AAA gameplay of the console game into visually stunning, turn-based puzzle experiences that you can play in short sessions for an easier mobile consumption. All four games are critically acclaimed experiences that were positively received by journalists, mobile gamers, and console gamers alike. These games are all Apple's Editor's Choice, have won numerous awards, and Lara Croft GO, for example, has won the App Store Game of the Year and The Game Awards Best Mobile and Handheld Game in 2015. It also received the prestigious Apple Design Awards.
In order to grow our mobile business, we have made a transition from premium games to free-to-play in the past few years in order to bring our next slate of games to the hundreds of millions of players around the world that we just can't reach with premium games. We've built our tech stack, or we have our own backend solution, our live ops engines, our BI suite. We've refined segmentation tools. We retooled all of our processes, all of our pipelines. We hired free-to-play experts, but we still have the same goal, and it is to stand out in this very crowded mobile market by finding better ways to play our triple-A IPs on mobile.
We have a very strong core of developers that have been with us in the first years of the studio, and we've added a few key people to the studio, notably Nathalie and Ivan, that have brought some of the free-to-play expertise, and we'll be launching our first slate of free-to-play games this year. Back to Lars.
Thank you so much, Patrick, and thank you so much for this presentation. Let's go back to the transaction a little bit. Perhaps less interesting for gamers, but as a public company, we need to take you through all the details or to give a good disclosure of the transaction this morning. Again, to repeat, the total purchase price is $300 million on cash and debt-free basis paid at closing. The acquisition includes the legal entities of Crystal Dynamics, Eidos-Montréal, and Square Enix Montréal, as well as a company in England with IP rights. In total, there is more than 1,100 highly skilled employees joining at closing across eight global locations.
The acquisition includes a number of IPs, and obviously iconic IPs such as Tomb Raider, Deus Ex, Thief, Legacy of Kain, and others. There is a quite substantial catalog of those games and IPs being created over the past decades, and it's more than 50 back catalog products that joins the catalog at closing. There is various regulatory and other external approvals in this transaction, and we're expecting everything to be closed in the period of July to September this year. Going back to the strategic rationale, I would like to say that I firmly believe that Embracer is the perfect home for these studios and these talents and these IPs.
Our decentralized operating model allows very well to give the autonomy and freedom for the studios and the management to maximize the potential, and with the ambition to always put quality first to make it little bit more polished and shiny and to give enough time to really ship high-quality products. I think that speaks well to the ambitions I've been hearing from the studios. There is enormous potential across the ecosystem of Embracer to find collaboration in all sorts and forms, and this process will start at closing to identify how we further potentially could strengthen each other. Embracer is all about entrepreneurship and creativity. I think this transaction this morning are perfectly into that strategy.
Looking at the IPs again, I think there is a pipeline that is very interesting. It's a little bit hard to talk around that pipeline without disclosing too much. I was pleased to see during our transaction period or process that actually, Crystal Dynamics did announce they are working on a new Tomb Raider game. At least I could say that.
Scot, you know, came and ended his presentation with saying, you know, a little bit of the transmedia opportunities, and the shareholders and other stakeholders have been following Embracer for the past period know about the opportunity we see in transmedia, meaning putting IPs, and IPs could travel between different media and obviously with iconic IPs as we have been talking around this morning, there is even more potential to do things, and I can't wait to see what these IPs could bring on other media. Post this transaction, Embracer Group will have more than 14,000 employees, whereof 10,000 engaged game developers on a daily basis. We will have 124 internal game development studios, and I think Eidos-Montréal will be the largest by headcount.
Pleased to see that our U.S. will be number one in terms of headcounts and games developers post this transaction, and Canada will be number two. All in all, we will have a pipeline of more than 230 games under development, whereof 30 games are defined as AAA. Looking into the future, we believe that these IP studios and people will bring value to all stakeholders. We have done again extensive commercial due diligence and legal, financial and everything that you normally do, and we are thrilled what we have seen. It's a well-managed business, and it's also been very important for us to understand the commercials behind recent releases from the studios.
Looking ahead, again, we believe that we will make a break-even or a small profit based on the back catalog over the coming two years. Looking further out, when the pipeline really start to release or the new games start to release, we at least see the potential to have half a billion SEK in operational EBIT on average going forward. There is various opportunities existing, you know, within the studios. One thing being potentially if we could or if they want to form a deeper strategic relationship with one or more platforms, for example, that could change the P&L dynamics and cash flows as well. I'm expecting to communicate further around the financial post-closing regarding this transaction.
We have secured additional long-term debt funding of SEK 4 billion, and we extended one existing loan of SEK 6 billion, meaning that we will have no short-term debt on our balance sheet and no debt that matures earlier than 30th of June next year. The new additional bank funding also covers a number of other small and mid-sized expected M&A transactions in pipeline. As of this morning, we expect that we have more than SEK 10 billion across the group available in cash or credit facilities. On average, we estimate the net interest cost to be around 1%, including the new facility. Again, I'd like to repeat our financial targets. Debt goal.
Embracer expects strong growth in free cash flow during 2020, 2022 and 2023 financial year and the years beyond. We remain committed to deliver on our financial leverage target. If net debt temporarily exceeds one times net debt to operational EBIT on a forward 12-month basis, our intent is to return to below one times net debt to operational EBIT over the medium term. The current trading we put out this morning in this press release is that we reiterate it's our current forecast for operational EBIT for financial year 2021, 2022, 2023 and 2024. That was a little bit color on the transaction, and I'm pleased to welcome Oscar.
Thank you very much, Lars, and thank you, everybody else presenting. I have a number of questions. Please remember that you can ask questions also in the chat box for those watching online, and I also believe you have an email address to send additional questions too. The chat box is preferred. I'll start with a few questions from me and starting with some questions for Lars just to get them done. I have to ask first of all just wanna ask about the two recently released Marvel licensed games, Marvel's Avengers and Marvel's Guardians of the Galaxy. Are they included in the transaction? I assume not.
Well, yes, all games that has been developed by the studios are included in the transaction. However, a number of external approvals are needed from external parties in order to close this transaction. Potentially, licensors, as you mentioned here, could be one of those approvals needed.
Okay. Just to understand that correctly, if that would be approved, I mean, is that the base case that it's approved, and that they are part of the deal and that you can develop games based on these IPs ahead?
I don't expect any notable commercial agreement relating to the studios or this transaction to be declined by either regulatory parties or business partners. However, that remains to be seen, obviously. I think your question was relating to the two existing games and whether they will still be operated and built upon and change from the existing plans today going forward. I think that is the color I can give you on this, Oscar.
Okay. Thank you.
If I'm not clear enough, you need to ask me in the end of it.
Yeah. Absolutely. The next question, I mean, the process here, what can you tell me about the background here of the deal? How long has it been in the making? What is your relationship with Square, like? Would be interesting to hear.
Well, first of all, I think there is a very long-standing business relationship with Square Enix to Embracer Group, especially or for example, through the business commercial relationship with Koch Media that has been going, I think, more than 15 years. There is a relationship between, you know, management and also the studios partly, and they are well aware of this, you know, products and, so and personally, I've been obviously in this industry the past three decades, and I'm super excited to have this opportunity as of this morning.
There's been a process with a lot of respect, and I think we are well suited to be a very good owner of these assets and studios going forward. I can't talk around the sellers, but I think that has been the strong belief during this process that there is a good home for this within Embracer.
Understood. I think I'm gonna ask the team here about the pipeline a little bit.
Oscar-
Do you have any more color, Lars, first?
I think, Oscar, I need to be a little bit boring here and Lilja, but we have announced signing here of this transaction, or we have done signing today. We need to wait until closing, unfortunately, to get more color around you know IPs and the studios. Both Square and we are public companies, so there's a little bit sensitive legal things we need to be mindful about. The questions you need to direct to me, let's see if I can answer them, Oscar.
Understood. I was just wondering if.
Sorry, guys.
Just wondering if there's any more color to give on the pipeline at all. We heard about the new Tomb Raider game already announced, of course.
Yeah, obviously, there is. We are super excited about that. Obviously during the due diligence, we get opportunity to get even more excited. It's not only Tomb Raider, it's also a number of very sizable what I define as AAA experiences in the pipeline, both based on beloved franchises that we will own as well as original IPs. It's a very interesting pipeline. I would say the pipeline in general are further beyond these two years. There will be a few years now where there will not be as many new big games coming out and then there will be some amazing things coming through the studios looking further ahead.
Just looking at the capacity of the studios, I mean, I think I saw and heard there's 1,100 employees. Is there any color sort of to give on the number of AAA projects that the studios are capable of sort of simultaneously or any color on that front?
You know, I think we should let the studios talk when they are ready around it, but I think the color I can give is that they have the capacity to build a number of projects at the same time. I think that's for sure.
Great. Then perhaps one general and harmless question for Phil, if you don't mind, Lars. Just wanted to ask you, Phil, about, I mean, what makes you excited about joining Embracer Group? Do you know the other studios in the group as well and have any contact with them, possibly?
Yeah. To take that last point first, I mean, I think you've seen today the tenure we've got in the industry, is long. I've been in the industry since 1999, so we've worked alongside Saber, for example, on other projects. As Lars mentioned, we have a very long-standing relationship with Koch. I think there's great familiarity actually. I'd say from our side, as I said in the quote, it's about the entrepreneurial can-do, the spirit, coupled with this structure. It really feels like it is that perfect fit for us right now. We've thought long and hard about this opportunity. We care passionately about our IPs.
I think we all feel privileged to work with these IPs and the people that we get to lead and manage every day, about where we can take them and what we can do next. You know, I think those two factors combining sort of what we can do with these IPs and this unique operating environment and you know, I think it's really super exciting.
Thank you, Phil.
Thank you. I thought I'd ask some questions from the web that has come in as well. First of all, question from, let's see here.
I need to answer all the questions, Oscar, so have that in mind if there is very detailed questions regarding games or IPs.
Absolutely. That is well understood. First of all, Lars, question from Rasmus Engberg at Handelsbanken. What are the main games expected to raise the earnings in 2024, 2025? Are they mobile games or console PC games?
You know, I think it's almost entirely premium games in the base case. I'm talking about mobile. I'm impressed and the team and what they've been trying to achieve. It's doing this on mobile is a challenge in today's market. I think we are realistic, and we're looking forward what you know how we could develop this mobile team and business further. In my base case, I would say it's more or less all down to premium games and big premium games, and the catalog of that. There is an enormous potential in mobile, and I love to see that coming through.
Understood. A question from several participants here asking about how this acquisition will be structured in the group. Does it become a separate operating unit, or is it included in one of the current units?
First of all, I'd like to highlight again the Embracer operating model and with a lot of freedom to entrepreneurs and management teams to operate their business. I think that's the most efficient way of creating long-term value, and that's the ambition here. Looking at the operating group structure, we need to come back to that at closing. I have a lot of trust in Phil Rogers that is now joining us, the CEO of Square Enix of America and Europe, and I will work with him and the studio heads and my CEOs to find optimal structure.
In the end of the day, it's about the studios primarily at this point and, you know, letting them, you know, create their games and letting them operate the way they believe is the right way to operate.
Understood. A question on the financials and starting with the guidance, which I received a number of questions on. First of all, a question from Nick Dempsey here. In reiterating the guidance for the next two years, are you factoring in any new risks of disruption at Saber Interactive related to Russia?
We are always factoring all information we have at hand when reiterating a forecast, and we have done that as well this morning.
Great. A question from me also just to be clear on the guidance here, the reiterated guidance for this year. This implies, I guess, that the operating EBIT for Q4 will be between SEK 950 million and SEK 1,350 million in operating EBIT. Is that the correct way to read it?
Well, I'm reiterating that we will have operational EBIT in the financial year ended now in March between SEK 4.3 billion and SEK 4.7 billion as we forecasted on February 17th. As you know, Oscar, we have our quarterly report coming up on May 19th, so I will be very, very limited in my coloring except this coloring that we are reiterating our forecast on operational EBIT. That again is not including any new acquisitions.
Great. Wanted to ask also on the purchase price here. $300 million, I believe, EV at present value. I believe there are some questions also from the web, I should say, about Square Enix issuing a release with some financials. Obviously it's quite clear that in your press release you see a very bright future and earnings potential in the many years ahead. Could you give some color sort of on how you think about the purchase price, and any additional color?
Well, obviously a process like this, there is always a number of parties involved, and I would say there's a handful of key players in the industry that are a good home for some studios like this, and that are able to execute on such transactions. I'm pleased to be standing here today. I think looking at the purchase price, obviously it's still a lot of money, but I think it creates a lot of shareholder value, that purchase price, for all shareholders of Embracer. I think in a different timing and circumstances, that could have been a different number. Now we are where we are, and I'm standing here, so I'm super pleased with that.
Great. A question here from the web, regarding Square Enix and the financials. Square Enix has communicated in its press release the financials of Crystal Dynamics and Eidos. Can you explain the low profitability and I guess sort of the year that has passed just to put into context the performance and financials?
I can't comment on Square's disclosures on this. Without commenting on them, I think it's important to separate numbers being, you know, intra-group P&Ls and consolidated P&Ls, including publishing revenues and cost. I think it's two different things. I'm not commenting on Square in the press release, but I'm just saying that numbers are numbers and could be very different. I think overall I'm looking forward to have further financial disclosures upon closing. Obviously we are in the IFRS process as well. You will see this more in detail upon closing in the future quarterly report.
Understood. Then a question from Jesper Birch-Jensen with SEB. What type of back catalog revenues are the combined studios generating currently? Yeah, that's possible.
We have not disclosed that number, but I would say it's, you know, there is a number of notable titles in this back catalog. There will be some revenues coming through. However, there is also cost relating to operating these studios obviously and overhead. That's why I've been, I think, quite conservative saying there is a breakeven or a small operational profit coming through from this catalog. For me, it's important to say that, you know, we are not acquiring this for the short-term profits. We are acquiring this for the long-term potential and what value and what amazing games they can bring on the long term.
Embracer is all about organic growth and to create, you know, something on the very long term with a totally different view than just having a multiple expansion on a catalog on the short term.
Great. Then a question here from the web as well. Does the transaction also include an acquisition of Square Enix Western IPs, such as Life is Strange, Just Cause, or Sleeping Dogs?
I think Square had done some disclosure this morning about the transaction, and we have done our disclosures. I don't have any further color than we have been mentioning four IPs as of this morning, but there is also a number of other IPs. There is a number of things that will happen during this process between signing and closing, and I'm looking forward to have further disclosures in the future.
Understood. Looking forward to that. A question on transmedia. Obviously, you invested significantly in transmedia with the acquisition of Asmodee and Dark Horse, not the least. What do you see ahead here with these additional studios and these additional IPs? What's the plan and how does it fit in?
Obviously there has been a number of films produced the past two decades on Tomb Raider and you know, I think there is plenty of opportunities, you know, doing films, TV series, you know, books, plus, comics, board games. But depends on what IP, what does it make sense, you know? Is it aligned with the core of the IP, does it strengthen the IP, and so on. There's many factors, and that's why it's such amazing to have the teams of Crystal Dynamics and Eidos-Montréal and Naud's team. They will work this out, I'm sure. I will not decide on this this morning, but I'm super excited about on this opportunity actually, especially relating to Tomb Raider.
Great. I mean, a similar question on mobile, I guess, related to Patrick's presentation. How do you see? You obviously invested as well in mobile. Maybe sort of the bulk of the studios have a slightly different focus, but you do have HandyGames and some studios working with well-known IPs as well. How do you see this fitting in and sort of building and developing that? Any sort of synergies or potential there that you see?
I'm sure there is, you know, potential for collaboration on mobile across the group. There is a lot of competence across the Embracer Group on this. But I think Patrick has built an enormous team already, and they are one of the most senior mobile games developer there is in this field. I'm excited about opportunity, but also I think we need to be, you know, realistic. Mobile is not easy. I think we are looking into this deeply, how we could build on our strength and work with the team to create success. Again, we need to wait until closing until we could share, you know, more details on this.
Okay, great. I think that's it for the sort of most relevant questions, actually. I wish I could ask Phil, Patrick, Scot, and David a number of more questions, but it seems tough at this point. Looking forward to some more color on this in the months and years ahead. With that, I think I'll leave it over to you, Lars, for some closing remarks.
No, thank you, Oscar. I'm, again, you know, I can't wait to bring them back on stage at a later point. I'm sure they will be excited to share, you know, things around IPs, the studios, and the pipeline and so on. We need to wait until closing, and then we can start do that. No, but thank you everyone, and thank you, Oscar, and thank you all team members, shareholders, advisors, you know, getting these transactions done. It's been a real pleasure working with you, and I can't wait what the future brings us. Thank you, everyone.