M&A Announcement

Aug 5, 2021

Press Release

Good morning, everyone, and thank you for joining the EMBRESA Analyst and Investor Call this morning. My name is Ben May and I'm an Equities Analyst at Berenberg Bank and I've been covering embracer for a number of years now. I've been pleased to have been invited going to open up the call this morning on what is an exciting day for an Embracer, with the company announcing 8 acquisitions this morning, expanding a number of areas in the gaming market from mobile businesses to development studios to publishing businesses also. We've kindly got the management teams from the acquired companies with us today. But before we hear from the different management teams. I will hand over to Lars, who's going to run you through the strategic rationale for the acquisitions completed this morning, echo and will be back at the end of the call, at which point I will host a Q and A. So over to you, Lars. Thank you. Thank you so much, Ben, for being able to join this call with short notice this morning. And hello, everyone, and very welcome to an We've been able to present 8 new acquisitions this morning, new companies and welcome more than 560 new colleagues to the group. Today, we will present Crazy Labs from Israel, one of the leading hyper casual mobile publishers. We will present Ghost Ship Games, a well known name from Denmark, the makers behind Deep Rock Galactic. Also from Denmark, we will have slipgate, ironmercs ex and 3 d Realms. Further, we will have 1 of the leading VR developers, Forcefield from the Netherlands. And Digixart from France, one of the leading indie games developer story driven and Easy Trigger, which is close by here in Sweden from Trollhattan. And finally, the leading merchandise company within Viking themes, Grimfrost. So with that said, I would like to take you through the summary of the Financial terms of the acquisitions disclosed this morning before we're entering the company presentations. So the aggregated day 1 purchase prices for all the acquisitions announced this morning were SEK2.7 billion on a cash and debt free basis. Approximately, euros 2,100,000,000 being paid in cash The fairly high ratio of cash paid is driven partly by there is some VC and financial owners That's 2,000,000,000, 1,000,000,000 are to be paid up to 1,000,000,000 are paid in cash and furthermore 1,000,000,000 in shares. So the aggregated maximum consideration amounts to 4,700,000,000. Looking at to give you some So to achieve the maximum additional consideration of the acquired companies, the combined Aggregated operation EBIT would be exceeding 6,000,000,000 And to illustrate this further, to achieve the maximum consideration milestone on year 5, The acquired companies are estimated to generate SEK1 1,000,000,000 Estimated or preliminary surplus value for all acquired companies, it's SEK 4,500,000,000 And this will be amortized as usual over a straight period of 5 years according to embracer's accounting standards principles. Looking at the financial impact of all acquisitions. So the net Sales contribution we are estimating to be between €2,000,000,000 to €3,000,000,000 during the next financial year, expert. We have made an operational EBIT contribution to be NOK 300,000,000 to NOK 550,000,000 during the same financial year ending March 2023. During the remaining half year, Q3 and Q4, the run rate is expected to be in the lower end An extra general meeting will be held at 23rd August And you got or it was published in invite for this morning. And the reason for that is that The Board doesn't have a mandate to give out shares enough. We've got a new mandate in February and now we need a new mandate to close all these transactions. To repeat that we still have a strong balance sheet with a sizable net cash position to support further M and A going forward. And we continue to have many ongoing discussions with entrepreneurs, creators, companies to join the family, including large or even transformative acquisitions that potentially could create new operating Equinox. So with that said, I would like to welcome Hi. Hi. Hi, guys. How are you? Very hot, very excited. We just like half an hour ago, we announced to the employees. We asked them to be a little bit more quiet so you can hear us, but they are very, very excited about this. Fantastic. You are very welcome to the group, but please send them my best regards here from the headquarter in Sweden. So I would like to leave over the stage to you. I will try to manage the slides here. So I will leave over to you, Sagi, and then please feel free to introduce yourself, your team and then the company. Sure. So my name is Sagish Lisser. I'm one of the founders of Crazy Labs and the CEO since the position, then a start up in the B2B area and then I've done 14 years of InsurTech. Last position before creating Crazy Labs was in Sapiens, another traded company. And I love moving from B2B to B2C. For me it was a big great chance that you are You go direct to consumer which is amazing. So this is a little bit about me. I believe In the beginning, I used to call the Chief Day Officer of the company. I believe in DNA. I believe in the teams an and that aligns then usually everything else aligns as well and we have an amazing team, 2 of them Hi, I'm Guy. I joined Saghi and the team here in 2012 as a COO. I also come from a tech actually. Sagi and I worked in our first startup together in 99 and in the B2B and then I also had my own start up that I founded and was very happy to join SAGI again in ex-twenty 20, very excited to be here today. And I'm Noriko Njemini, also from Tel Aviv. I joined CrazyLabs about 8 years ago. I have financial background and half of my career I was the CEO of public companies in NASDAQ. And then I moved to the private market and My kids were born and I'm very happy and excited about this transaction. A little bit about Crazy Labs. We can talk all day about it, but just the highlight. So for since 2013, we've been a top downloaded company. We excel in the marketing side, but also in game creation. And we evolved into 2 main lines of business that will enhance a little bit about them in the next slide. But we have both casual with Strong lifestyle and female oriented game boots with Super Stylist being our frontrunner game which is consistently growing and showing really a great outcome and we have Also really a good pipeline. And hyper casual, which was the genre that evolved out of The fact that there are billions of people with gaming device in their pocket, but not all of them are hardcore gamers. So they can just play for a few minutes each time and download a lot of games and we are one of the top hyper casual publishers. Last year in 2020 alone, we had almost 1,000,000,000 downloads In the app stores and we accumulated so far in our history over 4,500,000,000 downloads, which is really a nice amount and We have around 110 unique monthly active users. So Kind of our highlight KPIs. If we look at Super Stylist Then it was released in 2019 and you will see the trajectory, the upward trajectory. It started There's a game which was doing in 100 of 1000 and now it's doing 1,000,000 on a monthly basis. The revenue is growing, contribution is growing And also the in app components, so around that we've built a lot of knowledge and gained a lot of Strong teams that were working on launching Superstylist and are now also involved in launching other projects. If we look at CrazyLab, so our vision was to have this really strong two pillars. On one side, casual, creating casual gaming, deep casual gaming experiences. And as we already told you that we are started as tech people. We have some tech background. We are we also love the content part, But everything we create, we create with the mindset that if it's going to be successful, then let's create it in a way which will Enable us to do it again and again in a better way. So we create a new game genre or type. We created actually as a small platform that is repeatable. We believe in that way that is the best way for us to create things and we've done that in the casual, in the lifestyle side, but also in the puzzle RPG, in the games that We'll tell you that we're going to launch. And it's a mix there with the in app component an and users that some of them are becoming repetitive, highly repetitive users and paying users and high monetization. That we test going to launch and we'll discuss the process a little bit. But it really made us powerhouse of marketing, understanding teams and what can be successful on the App Store and how and building a very, very strong marketing team. And we that it really helps the casual side on the hyper casual side bringing from the game expertise an expert. And from the hyper casual side, the marketing capabilities being innovative and being really agile in marketing our games. And in the middle, we managed to find opportunities where we are entrepreneurs. And when we find things that are not defocusing for us And can leverage from that, so we also go after them and it's very interesting and dynamic atmosphere. So you heard a little bit about the 3 of us, expert. But we have by the way a very strong leadership team on casual, on hyper casual with the game owners with a lot of experience in the industry from different companies and a lot of people that was Focusing in few main geographies. So here in Israel, where we started is also our headquarters in Tel Aviv, but we also have a very strong team in China, an amazing team in Macedonia. And recently we also added offices in Germany and we also have a very strong team in the Ukraine. Part of the way we feel we are innovative in hyper casual and in finding developers, we are a developer that At some point started also helping other developers in doing publishing. So we have both in hyper casual and Guy might talk about it a bit more. But we said let's try and meet developers before they even know that they are developer in hyper casual. So we've built this HUBS program where we find really talented individuals. We sort them, they submit tests And we help them become hyper casual developers and launch their games to millions of people around the world and it's a very exciting program in many geographies. We started in India and in Israel and now it's expanded to Other territory Serbia, Turkey, Poland and South Africa and more is planned in the pipeline. So We bring a lot of value to our external developers because unlike maybe a lot of other publishers, which are pure publishers, We are also developers, so they kind of appreciate the fact that we can give them tips both on their game and also on the marketing. So it gives us in hyper casual a big competitive advantage. Covering a little bit casual and lifestyle RPG. So this is kind of our evolution line. We started with kind of smaller casual titles in lifestyle an And evolved into bigger games, bigger meta game, role playing games and creating ex. We also have had good relationship with media partners And we've launched games with Sony, with Mattel. But I think our most significant partner to date is ZAGG Animation, French company that has Ladybug, which we launched the runner game with them, which Very, very successful and we signed with them to launch next year together with the movie launch, a puzzle RPG game. So one of the things that we have done, we identified the puzzle RPG market It's a very interesting market for us to evolve into and we are now in soft launch of 1 of our first titles there Once Upon A Match. But as I revealed earlier, we build things in a way we believe That can be repeated. So we've built it actually as an puzzle RPG platform. And when we had the opportunity and ZAGG asked us To think about what we can launch next, so we propose to them to do a bubble shooter based on that platform, which is going to launch with a movie in Q2 end of Q1, Q2 next year and soft launch towards the end of this year. So really exciting evolution The business is growing in casual. We expect the Stronger growth as we go forward and the new launches which take more time on the puzzle RPG platform We'll start materializing, but we are constantly increasing. And among that, Superstylus is taking Bigger and bigger position out of the total pie and getting really high valued users If we go to hyper casual, I'll dive. Yes. So in 2020, we had 11 launches and this year we plan at least twice as many launches in hyper casual. Some examples that appear here, for example, tie dye that was one of the biggest one had 70,000,000 downloads in the 1st 9 months. We are very focused on expanding our presence into countries that are very suitable to the hyper casual business model today. Turkey is considered probably the most successful country in hyper casual. There is kind of a gold rush to the hyper casual today in Turkey that Everybody want to develop games now and we opened a hub in Istanbul. We hired Small team there and we opened the hub together with 1 of the universities and we teach them how to make hyper casual games and then they continue to work with us At least for 1 year further and launch game with us. And we also are very focused on India, where we just acquired a small studio that is called Fiosco and they already launched with us 3 games successfully. 2 of them appear here, the acrylic nails and the soap cutting. And those are 3 games that they launched with us already generate nice revenues and reached 200,000,000 downloads and we acquired them just recently. We actually just closed this deal and Now we have a very strong presence in Mumbai and we have another studio that we work locally in Hyderabad and And as Agui mentioned, we are also doing it in other places such as South Africa and others. In terms of the hyper casual process, so it's first about the developer relationships building them. We have it split between external developers, which we are launching about 70 of the new games and we have internal studios with whom we are launching about more or less 30% of the new games with the internal studios. So it starts with this local presence and with building the relationship and we work with hundreds of developers around the world. And eventually we launched the games and we focus on the contribution margin. And by the end of the year, we aim to launch about 3 games 3 new hyper casual games every month. And just to focus what hyper casual is, for those who don't know, it's like the snake and the Tetris that all of us used to play. Today they just got their own genre and they are called hyper casual. So they used to be just games that everybody plays And today they have a name, it's called the Hyper Casual Games. Very important part of our competitive advantage in hyper casual is our cutting edge technology. We have a self serve dashboard that those 100 of developers, they can test the games independently. They don't need us to run the UA campaign and everything for them. We just closed the deal with them. We give them the access and we approve the test in terms of the quality of the test, but then they can run it by themselves, the test, they can see the results. It's very transparent and they get attached to work with us through this dashboard because they really like it that they can iterate and learn how the game works. Other tools that we have are deep machine learning that we use for the ad monetization side for echo how aggressive we are with the ad monetization. We run AB test, continuous AB test to optimize The game in the background and the few other technologies that we use to make our UA user acquisition and ad monetization In the past 2 years, we had in 2019, we ended with $72,000,000 revenues. We reached the $100,000,000 mark in 2020 and we continue to grow. Here you can see the last 12 month numbers equity of $153,000,000 and we continue to work hard to increase these numbers. And you can see also the breakdown an Thank you. And we are expecting, as Very long term commitment earn out model as well to incentivize you and the management team. Yes, we are very excited to continue and do this together for a really long, long time and Great. Yeah. So, Saghi, just coming into the rationale, I can just say a bit here, but I would like to just hear you out as well. Obviously, I just expert. Very, very strong entrepreneurship from you and the team. It's amazing you've been through, you know, lots of ups and downs, You have a strong pipeline. And hypercash in a way how you work is somehow a bit similar to what I What you're doing in premium games, even though the games is very different, but you work with external developers and you publish them In combination to have your own in house development. Ken, are you online here as well? Yes, I'm here. So Ken, being the leader of the Dece Equi Games and now having Crazy Labs being part of the vertical and assist the company to the existing I see a lot. I'm really excited to have the team join. There's a lot of similarities between our companies, even though we're doing very different types of businesses. We thought that the culture, the people, the drive, there's so much similarities, and they're going to fit in really well with the rest of the group. Industry and I think that's really important, going forward as the mobile industry is adapting, is changing very quickly. Publishing capabilities and the technology that they've had to support the products that we have, not only within DeCA's live operations business, but also within The studios in Canada that already are with us. And vice versa, I think that DeCA has an immense exclamation in live operations, which can only help create the labs in their casual titles. Thank you. And sorry, last thing is that, together, we plan to tackle a lot more M and A I think both Tecka and Creative Labs will be very active on the M and A side. Yes. And it's quite As we saw this morning, the press release of the Crazy Labs acquisition in India, that guy mentioning, That's I think it's fantastic. So it's already happening within a few minutes. Just a word on our side, I think for us when it's all about people and this is what we liked about Embracer meeting Lars and Jacob and Ken and for us we connect with people. Echo and it's the most important thing and we felt entrepreneurs to entrepreneurs and people to people that we share values, the way we look at teams, The way we look at gaming and the way we look at what we want to do next, which is continue to grow Amazing business in gaming and doing it together. And for us, it was critical. So and we found place where we feel that is our next home, which is really an emotional work for us. So it's not Home is not anywhere and we feel that Embracer can really be our home. And as I said, Embracer also has this amazing name because it Already makes you feel embraced. So thank you for the time, Sagi. And likewise, I can't wait expert. To be integrated and now to work together with the rest of the company, it will be Very exciting. So with that said, I'd like to thank the team from Feel free to stay online. We move over from Tel Aviv to Copenhagen. So welcome, Soren, Mikael and Anton for Kopstein. So welcome to the group. Thank you. Thank you. We are super excited about joining Enbaser Group, Larry. And if our voices are a little rusty, it's because we celebrated this yesterday with with the rest of the team. So, very, very excited. So, yeah, so my name is and I'm the CEO and co founder of Kosypt. And my name is Mikael, and I am Creative Director and also Co Founder of Go Ship Games. And we are 6 founders expert of GoShip, and we'll get back to that. Maybe you can change the slide, Lars. Sure. We can see the team here. But actually, as you can see, we started in 2016. And we'll let Miguel start that because I was not part of No, so besides Soren, we were 5 people coming from another company that was closed. And we are just as when the company was closed, we got together and said, hey, shouldn't we start our own company? We had an idea for a game that was to be Gibraltar. And the 5 of us had the skills expert to actually create this game ourselves. We are a team that I have more than 20 years of experience in the game industry. Each of us, yeah, not together. And we are a group of 3 highly skilled programmers and art director and me as, an Yeah, game director, game designer. And we got together and we started working on Deep Rock Galactic and we very quickly realized that We were needing a dedicated CEO, both to help us fund the company, but also Build the company. Yeah, and then things will have it that you moved your office into the same office building where I was working in a different equity company just on the 2nd floor. So I was invited down by Miguel. Me and Miguel, we worked together for 10 years back in the days. And We kind of had like an onset thing that we wanted to work together someday, but again then do our own company. So I was down there and I was very ambitious. This was just the start up smell, right? Like, this was so exciting. So I went back and, good luck. And then we talked about it, and then we are basically just offered Saum to become CEO for the company. And I suggest, which is a acquisition I do not regret, because it's been an amazing journey since then. Then, of course, we got some money. We got some investment. We got on collaboration with Kopistein, which has been throughout all these years almost. And we've been building up a team. You can see the Beautiful picture of this pirate developer team. And we have been skillfully selecting these people, Some of them from our existing networks, some new people, some young blood as well. And we're trying to still Equinor. Keeping a lean, efficient machine with everybody having hands on the product being as effective as possible. But maybe we should talk about the game that made us, the T Prok Galactic game made us, the T Prok Galactic. So, yeah. So, Deepak Galactic is a first person co op shooter. And in the game, you play as a team of Ecuador who work for this mining corporation, Deepwater Galactik. And they send you on missions into alien planets in order to mine them for precious minerals. So it's All about getting out alive with the you can say, and it's all about going on an adventure with your friends and having a fun time. Yeah, there's a lot of camaraderie in this game. It's about this thing about working together. And we set out a mission to create the best co op game ever, And we also put that as a statement for the company, the company motto was co op first, which also relates to the way we work with our fans, where we have a collaboration with the fans, you can say. When we started working on the game, we made a decision that we wanted to develop the game in what we call open development, Yeah, which means that we do it. We have very few secrets. We put out what we're working on and tell our fans about it. So we have not much secrecy about what we do in the company. And there's 2 huge benefits to producing a game in open development. The first is that we don't waste much excellent time on working on features that are not going into the game, because we make our decision based on what our audience and fans already want and are demanding. And then we shape those features together with them, Which means that we basically deliver 100% of the work we put into producing the game is actually ending up in the game. That's very effective. And obviously, producing a game in open developments is for the whole developing team is just immensely satisfying, Because we get instant feedback from our community. And, yeah, that's just satisfying. Yeah. And there's also a way to kind of make this kind of big game compared to how small a team we are because we have all the contributions from the fans in terms of like finding bugs and expert in helping us translate the game and promote the game to their friends and so on. Yes. And to some degree, I think you could say that it's also part of our marketing strategy. And now we're part of Embracer Group and we are extremely proud to be now a sister company to Coffee ex-ten. We've been working together very closely with Anton and Albert and the other great guys from Covistein. And now being in this position in the Embracer Group just feels like the natural next step for GoShip and a way for us to expert on the Deep Rock Galactic IP to create new IPs and to also move on our Interest in investing into game startups. Yeah, because you have a very, expert in the world as well, obviously, but you already have made a few investments into other companies in Denmark, haven't you? Yeah. So we've made one and we have one Ongoing, which will likely close quite soon. Yes. And we will we are looking at Several more. When we started announcing that we were interested in doing this and had the ability to do it, we got quite a lot of attention, Especially also the not because people want money, but they also want the knowledge that we and Coffee Stain have on how to develop and publish Indie games. And early access games. And early access games specifically and the Steam platform expertise. Yeah. I think it's very interesting and I highly believe in the vision and the strategy you put forward and Super excited that we also have agreed on a very long term alignment, 8 years incentive And I think you will contribute a lot to both the coffee stain ecosystem, but obviously the wider Embraerci We expect to, yes. So thank you very much. And with that ex head. I would like to say again thank you to Copenhagen and then move over to Anton and Yes, Anton and Troll have done in a way. Hi, everyone. Very exciting day, obviously, and super happy about Ghost Ship. It's been a long, long discussions with you guys to get you an into the group and I was happy that we finally could make it work out. But today we also have another Announcement and that is like the Isitrigger acquisition. And Isitrigger is a quite small equity company down in Trollhattan, which we have been working with for a couple of years now as well. And it was actually one of the first Games that we signed in our publishing after publishing was started as a separate company. And, The Trigger is mainly known for Hunt Down, which is an old school arcade platformer shooter, which when it was pitched to us, it was supposed to take 1 year to develop. But in the end, it took an 4 years to get it to the market. But, takes a lot of time to make great games. And It turned out well. And, yes, it just felt like a small nice team that I think it's going to be a very natural addition to the Coffee Stain Group. And the trigger is becoming a part Ecopfiestain, not a scholarship, which is going to live as a sister company. And Yes. Just super happy pretty much to have Itsa Trigger as part of Coffee Stain now. And the plan with Itsa Trigger is to establish this little company in Trollhattan that will grow just as Coffee Stain does slowly, but with And, yeah, I can't wait to see what we will make with is the trigger in the coming years. Thank you, Anton. I think we all love retro and arcade are absolutely amazed of the product of Hamtau. It's really well received, great reviews. And I know there's a lot of love from a lot of Super excited to have them on board. So thank you, Anton. With that said, we are leaving Trollhattan and Moving over to Amsterdam, Arthur, Martin, John. Thank you, Loris. Obviously, we're very, very excited to be welcoming Forcefield to the Vertigo and Embracer family. But I'm going to let them speak and introduce their company. I think that's a better way to approach this. But Arthur Hoffman, as you can see, is the CEO of Forcefield and Martin Deronda is the Creative Director. And so I thought, Arthur, if you would Introduce the company to our audience and give a little bit of description of your journey and how you've moved into VR. Why don't you why we hello, Arthur. Sorry for jumping in here. Why don't you because we spoke yesterday and I'm very highly impressed about your background. Why don't you Tell us about your background before starting with Forcefield and then jumping over to Forcefield. Sure, Lars. I can do that. Thanks, John, for the introduction. Good morning, everyone. Yes, myself in the industry since the early 90s, So I've worked at companies like Infogrames, Atari, Disney in the U. S. I've been hopping around from country to country a lot Always been very interested in new emerging technologies. That's how I got into the industry as well when I saw digital distribution being possible on CDs and that's been more or less through our history We worked for Amazon on new platforms. We worked for Microsoft porting Halo to mobile devices. Equinor's new devices. So when we saw VR starting to emerge and the affordability of the new devices that ex started working on some R and D next to our other work. And very quickly, we got in contact with Docuys, If we wanted to make a game for the Atlas Rift when that was in still gestation at So, yeah, and that was 2015 and we haven't looked back. Over the time, we did a very wide variation of all expert in the audience and always trying to explore and demonstrate what the possibilities of VR are. Through that time also we're also quite technically oriented company. So we've been able to know much about technology Specific to VR and we've worked with great franchises. We've worked on the Star Trek franchise. We work with National Geographic, we travel expert for the company. I was very excited, of course, to go into less business to business, more consumer related business. And, yes, that's when we started talking with Vertigo. And here we are today. Thanks, Arthur. Diving in a little bit further into that process as You've started talking with us and what led you to joining the Vertigo and Embracer Families. Could you sort of walk us through The rationale for the deal from your perspective and what opportunities, do you see this creating for Forcefield? Yes. As I said, the business to business, of course, was a great way to get on board with VR as there was not a big market in 2015, in 2016. So that definitely gave us the opportunity to explore the possibilities and to work on our pipeline, our technologies and grow the team. And we saw, of course, with the growth and the rapid growth that the market expert. We definitely saw, okay, now is the moment that we can do the next step and go over to More of the passion of the studio is making games that we want to make and not being asked to make the specific kind of game by a client. We knew Richard and Vertigo, of course, as fellow countrymen, an extremely successful VR company. So we've had continuous talks with Verdigo over the time. And when we wanted to make that step, we had a discussion with Richard and it was clear that this was a really, really good match to join the 2 companies and come together and being actually the biggest dedicated VR studio in the world today with I think over 140 employees. And Martin, from your perspective, in terms of, the creative view of the type of games you're looking at, what does this combination do for from that perspective. Yes. I think As Arthur mentioned, I think it's fair to say that we've more or less grown along with the growth of the VR market over the past 6 years. And Arthur just pointed out, we really, really enjoyed a very close partnership with Oculus working on creative work for hire launch titles almost every single one of their VR devices that they launched. And because of that, we've been able to more or less build and grow this amazingly talented and wonderful group that are now capable of delivering best in class VR experiences in games. And an And obviously now that the VR market is growing and you've got next gen devices that are going to be hitting the market soon, I believe that we're starting to see the moment where We're more or less perfectly positioned to deliver on those kinds of occasions. And the only question that remained for us was will we be doing that Independently or as part of a larger group and the answer was more or less quite simple. When you have the opportunity to partner with You're also arguably one of the most successful developer publishers in PR over the past 5 years. And you're also located in the same this opportunity to create the world's biggest VR studio, a true VR powerhouse, which will allow us to focus on truly creative, should be our development instead of exciting, but still a different higher stuff that we've been doing It was simply an opportunity that we couldn't pass on. And that's obviously even the fact that Vertigo is part of the Embracer Group and a subsidiary of Caution and Deep Silver because as far as I'm concerned, that was the icing on the cake. Part of such large and diverse group with all these amazingly talented and different developments, some of which we have been listening to today. I think it's tantalizing for a creative and a commercial point of view in terms of VR. The fact that we're able now to engage in discussions with our fellow new colleagues and studios about bringing some of these beloved franchises into the world of Europe, extremely exciting. Equity. Yeah, certainly from our perspective, bringing together these 2 studios allows us to much more rapidly grow in terms of our internal development capability and what we can bring in terms of AAVR. We've talked about this a lot as a group, but for those who may not know, certainly The VR market continues to grow rapidly. We're seeing, continued growing investments from first party platforms stay in and continue to be a leader in this segment. From your perspective, Arthur and Martin, What do you see this acquisitions, what does this mean for the VR landscape and Maybe a little bit more of what you see the group's ability to do. Well, I think we're definitely showing an upgrading the whole company to a new level. A lot of the bigger publishers and colleagues' studios have always growth that everybody is noticing in the market. And I think we're going to be taking a lot of people along in our slipstream into this new and exciting entertainment platform. Yes, I echo that. This It feels like a perfect combination. We've got Vertigo and Forest View as veteran VR developers. Then you've got the very successful publishing power an Echo Publishing. And then we have the, if I can call it that, the IP candy shop of embracer, which I think is a recipe for creative and commercial success because the market is growing, the stakes are getting bigger, Yes. And you've got consumers craving for console style AAA VR experiences. So I think there's never been a more exciting moment for VR, both commercially and creatively. And I think the coming 5 years are going to be amazing. If you're a hardcore VR gamer And you like some of Embrace's most popular IP, then I think you have every right to be excited by this announcement and partnership. Thank you so much. Thank you, John, Arthur and Martin. I'm super excited about what we'll what the future will bring with you and we are. So with that said, I would like to thank you, the team in Amsterdam and LA and move over to Sommer in France, where are you? You are to camping. Yes, we are. I don't know if Clemens is there today. Yes, I absolutely I am following the presentation of Friends in VR, it's for Koch Media, this is a big day. And we are This industry is about creativity and other companies believe in building VR is very close to our heart because it's growing at a faster pace than the general And this is narrative games. This takes me to Digix Art, which we are presenting now. 2 years ago, this was the first touch point with DigiXR, with them, Road, the Road, as it was called at the time. We are looking for something we have not seen before and the road really ticked all these boxes. So we We're really following closely the development of the game itself and then Johann and Laura, please tell me tell us all about your story and your vision. It's an amazing unique setup that you have there. Yes. So first of all, we are really happy and excited to join the So we founded Digixat, so you and I, 6 years ago. And our goal is to create meaningful narrative stories. And so I will let So, yes, we are working on the an on the switch and PC. So it's a very exciting moment. It's a big year for us expert and we are really happy to join the group that will allow us to expand and to double the studio very soon Because we have a lot of ideas, we have a lot of things we want to make and now we can do it. So it's a really nice thing. Developer and talents here, a lot of nice schools also in the area. So it allows us going to expand quickly in the next months because we have so many ideas we want to try in the narrative adventure expert, more than just narrative in fact. So we want to explore new fields like how can multiplayer interact with narrative for example. This is kind of thing we want to try. So we are really innovative based. The OD96 is a procedural narrative game That can sound a bit strange, but we managed to make this, so we believe we can do other new things in the future, very exciting for players. And when we see the whole hype around the game, we are pretty sure it's a good way to go to try very different things. As a publisher, we are always looking for the next thing. We are always looking for innovative Equitable Officer. Strategically, I believe that this is a great launch for us as a global partner wait until 8, Road 96 launches, but then the future will really show a good potential for many of similar games. And this is a new area in a new type of games in our roster. We as you know, Deep Silver and Primeta and Ravenscourt, we have an a wide portfolio of games, but narrative games are underrepresented and this is now the starting point of We are opening a door into a new era. And then when we look at all the IPs that I think we lost you there, Johan. Sorry. Yeah, don't worry. But I think we need to thank you very much. And again, very welcome to the group. And Thank you, Clemens, for joining this presentation as well. So leaving France, we are Heading over to Denmark again and Jundland. So I think we have Frederic and Andre here. Andre from Sabre on the call. Yes. And me. And Tim. Yes. Sorry. Great. Yes. Great to see you all. We're all here. We're all here. I know he's in the middle of the night in the States, but thank you for staying awake. No problem. It's very exciting for us. The slipgate and 3 d Realms, we've always been a big fan Of what they've done, the legacy of 3 realms and the exciting new projects that slipgate has currently worked on and is currently working on are very exciting to us and we feel that, that we'll have many opportunities to do something exciting. And Frederik, are you online? Yes, I'm here. Hi, Lars. Hi, Tim. Hey. So finally, we got together in the same family. We got to know each other a few years now through THQ Nordic, I think. Yes, absolutely. I think we've been working together for, yes, it's almost 5, 6 years now in different capacities. And so, why embrace Frederic and Sabre? So we started working with X Sabre. I think it's almost a few years ago now. We had a very aligned strategy of all. Also with Tim and Todd joining Sabre. There's a lot of both creative and business alignments with Sabre Interactive. And we've had The honor and pleasure of working together with Sabre now for some time on various projects. And When this opportunity came to us, it was very clear that Sabre was the perfect home for us. We also knew you, Lars, and we knew from previous collaborations, previous IP that we have worked together on a few years ago. So This was pretty much a match made in heaven for us. Thank you. And can you tell us a bit about how slipgate is looking today. Absolutely. So, Slipgate was founded in 2017. The core team was established way back in 2011 under the name Interceptor. We did the first, you can call it the first boomer shooter, that kind of created this whole subgenre of old school retro first person shooters with a very obscure game called Rise of the Triad. It became kind of a viral hit. It was a very janky game, but a very fun game. This was way back when when Steam was still in its infancy almost. But the game did incredibly well for us and we built up Interceptor and our team. We did a few more games. The last game we did, we we sold to to THQ under a bracer. And then we, in 2017, rebranded as a slipgate. We almost exclusively do hardcore action games in 1st person shooters. As some of you might know, slipgate actually stems from a series that Tim was very involved with, the quake series where the slipgate portals were essentially ways that you go through the different universes in the in the quake universe. And, And we named our studio Slipgate because that resonates really well with what we do. We primarily focus on hardcore old school shooters. Over the past 4 years, we started expanding what we do to to other sub genres of the games industry. We We started helping out some of our good friends with some of their games. We built up an expertise for almost a decade in specifically Unreal Engine, Going back to the early days of Unreal Engine 3 and then, of course, following all the different revisions. And we started helping out other studios within also the THQ and Embracer family with their games using the Unreal Engine, Helping them port the different games to other platforms. And this was a way for us to both learn more, but also help out studios that We really like working with on other projects. So as part of that, we established a porting department where we don't necessarily market ourselves as a supporting studio, but we like helping out studios that make games that resonate really well with what we like to do. We then as part of that also started co developing the biggest game, one of the biggest games of this year Ghostrunner. We co developed almost from day 1. We were presented with an early vertical slice of the game a few years ago and I've been working on that game together with All In, 1 More Level and 505 for a few years. The game was released recently to fantastic reviews. We have also done all of the ports for the game, including, all the way from switch to, to the next gen ray traced ports for PS5 and Series X. And then last but not least, we have our internal development where we're currently making 4 games internally at slipgate. Almost all original IP. The, the games range from classic, hardcore first person shooters. We We also have an unannounced real time strategy game that we're working on, with, with, with some great partners. One of them also being, THQ, from, from, from, from, from, from Ambracer. So we have our hands in a lot of different things these days. But, but I think what's common for all of it is that It's all within the genre that we feel really comfortable with hardcore action games. Yes, that's a hardcore action game studio. They fit so well with Sabre and what we do and how we are Improving our portfolio. And as Frederic said, you know, his his old retro shooters are are some of the games that that that I worked on. I feel like I'm getting old. But the, but their future is more than just updating retro shooters. Like he said, The portfolio is increasing and and we, you know, really see exciting things, Frederick, for you and your teams in the future as well. Thank you so much, Tim. Yes. I moved Slide over to 3 d Realms. Could you explain the connection here and what's the ambition is with 3 d Realms? I know it's a well known brand for a lot of people. Absolutely. We have been working with 3 d Realms from From day 1, the first game we did under slipgate under the Interceptor name was actually a 3 d Realms IP. Way back in the early days of the first person shooters, they made a game under the Apogee name called Rise of the Triad, which was originally called Wolfenstein 2: Rise of the Triad. And the first game we did was a remake, reboot of that game. So we had a long relationship with 3 d Realms. And in 2014, we were lucky enough to acquire parts of 3 d Realms and help build up a new version of 3 d Realms, which homes back to the, You can call the good old days of what treated worlds were known for in the mid nineties. Games like Duke Mucum, Max Payne, Shadow Warrior, Echo and so on. A lot of classic games that many of us grew up playing. These days, we have built up 3 d Realms ex as a new publisher and call it a team builder. What we primarily do is build smaller development teams and Create new IP, just as 3 drones did back in the day. Among those, are games like Iron Fury, which came out, last year, which was a big success for us, a spiritual successor to the classic first person shooter made popular with games like quake and Duke Nukem. We also have brand new IP and new teams that we're working together with Core Decay and RATH being some of them. And then we're working together with with other great partners such as Interplay and Nightdive on bringing back some of the old school shooters, which were part of the legacy of the nineties games like Sin, which was a game originally done by a ritual entertainment, which was a studio formed by previous 3 d Realms employees. Kingpin as well, kind of a forgotten classic also from the mid nineties, first person shooter. So as you can see, the theme under 3 d realms is Mostly what it was back in the nineties. We focus on what we what we're good at and what we know best, which is hardcore first person shooters. We also have Some new titles that are unannounced. We have a big event coming up here in a few weeks where we're going to announce a range of new titles under the TV realms label. So we're incredibly excited to, to have the honor to, you know, follow and and and built this company that was founded The year I was born. Yes. That is fantastic. Yes. Yes. For for us having 3 d Realms has a name that we are all familiar with. And to now have these titles These legacy brands in our portfolio and to now be able to do an exciting page with them expert at Sabre. Working with Frederic and his team is again very, very exciting for us. So we're looking forward to it. Andre, I know you have been working hard to get this done as well. Do you have any last comments here from the Sabre side on this? Well, I certainly want to welcome Slipgate an expert. And Frederic, personally into the family of Sabre and the Brezhda family. Like Frederic said, we met Sabre in its younger days, meaning these guys are doing Some work for hire there working on additional IPs, they're publishing some of their games through some other publishers and they're bringing some other titles to market themselves, which is very similar to what we do. We certainly respect their creative abilities, we certainly respect their technical jobs. I would say that Frederic is a little bit fearless kind of guy, which I certainly appreciate. When we started working together, we tried to encourage him to take on one of super challenging projects, which he was a A little bit hesitant of engaging, but I managed to convince him and did a very good he and his team did a very good job. Now we can Degree of confidence in Flipgrid will 3 realms pull up. We'll do very well as a member of Sabre family and we'll be able to Thank you so much. And I would like to say as well, I'm happy to see that one of the Founder is also staying on board as advisor, Mike Nilsen, one of the most brilliant guys I know in the industry and I know since the '90s and the founder or And very welcome to the family. With that said, we would like to leave Denmark and move over to Sweden again. And I'm having the honor to present the last acquisition of this morning, And Greenfrost is the leading e commerce merchandise specialist with high quality Viking merchandise under their own brand. And the idea is To bring them on board, and obviously, I see a number of potential synergies e commerce business under one brand, but also the Viking themed merchandise are very well suited We are acquiring 70% of the business and the founders remain with 10% each and have a very long term commitment. By this investment, the company will be able to grow even faster and more, offering a wider range of products and a better supplier of products to consumers. They've already grown Substantially the past years, but we're looking forward to grow even further in the coming decade. So I know they are one of the most respected companies within the Viking merchandise products and I know they've been supplying leading TV series and films So with that said, I know they are online listening here. So very welcome a lot of hard work during the summer for all of us in this call. And I can't wait to see what the future will bring. I think all companies have a strategic rationale why they're joining and it's all making us the combined of us stronger. And as you've been hearing today, it's all about creativity and entrepreneurship. And that's it's Embracer is all about. Expert and you might be able to answer them during the Q and A session. So Ben Jamin from Berenberg. Yes. Thank you very much, Lars, and to each of the management teams who presented today. Expert. Just as a reminder, you can submit your questions onto the message board and I'll be able to pick up some of those. Expert, perhaps jumping straight into a question from myself, Lars. And before we go into some of the nitty gritty on some of the businesses you are acquiring or merging with today. We've seen a lot of news in the industry that acquisitions are becoming increasingly difficult to complete in the video gaming space, given it's very hot right now. Tencent EA, Microsoft paying big sums for businesses. You've clearly not had that issue. You've managed to do 8 acquisitions this morning in very different areas of the market too. Can you maybe just give us an update on practically how you've been able to achieve completing all of these deals in such a competitive market. Well, I think that question is somehow better answered obviously by the sellers and entrepreneurs. But I think To answer it from my side, obviously, embracer is offering a different proposition. And it's all about the long term alignment with creating something greater and bigger in the future. And that's why you can see this long term alignment and earn outs over up to 8 years. And I think, an entrepreneurs and creators out there. And I think our operating model really Is the strength here in terms of M and A, obviously having 8 management teams all across Embracer, most of them working on M and A on a daily basis. It's not all about acquisitions and driving all these financials. It's all about connecting with people. And I think in most cases, when you connect with people, you start doing business, publishing business, you are creating a relationship That might end up just in a relationship or in a publishing relationship or in an M and A. So and I'm super long term and I think we all are very long term aligned here at Embraer. I having decades in my horizon building this. So for Why can't you make an announcement, but I'm please asking all shareholders and patiently and that we are bringing the right companies on board with quality. So With that said, as I stated this morning, Ben, that we have I stated that last report, but we have a lot echo of ongoing conversations all the time, I think more now than ever and including large or even transformative acquisition. Whether they will end up in acquisition or not remains to be seen, but I'm confident about the future of embracer on the M and A side, but also obviously on the organic side for most. Okay. That's very helpful. And one of the areas that clearly with the acquisition of Crazy Labs this morning expert you've ventured deeper into is the mobile space. And I have to say, looking at some of the KPIs from Crazy Labs, I was particularly impressed, expert, which is interesting because there's been nervousness amongst the investor community in the mobile gaming space in the last few months as a result of IDFA and the challenges it could have potentially on customer acquisition. But growth at Crazy Labs doesn't seem to be affected at all seemingly by this. I'm just interested to hear how they've been able to achieve this when seemingly some of the peers have been struggling. Do we still have a team from Israel on board here, Saghi? I think Ben, either Saghi is on board here and answering that questions Otherwise, we need to wait until our public reporting on August 18. As you know, we are in a silent period and I don't want to comment on things that are outside these acquisitions. And I think that question is partly is a bit outside Crazy Labs. But Just to say, I'm confident about the team, the Crazy Labs business, their growth and their success. And I'm highly impressed about what they are able to achieve. Yes. Well, you know how analysts are. We're always trying to get as much information as I know, Ben. I know. But it does seem like a great acquisition and one that's bucking the trend and doing very well. Maybe on to the indie space. I think I'm right in thinking that Go Ship and EZ Trigger are coffee stains first or at least amongst their First Acquisitions. I know Goshit will operate separately. But with 3 d Realms also joining Sabre, which will have a strategic focus on publishing of independent developer titles. Also, it seems like you're doing more equity in this space. Is that a strategic push? Was it sort of opportunistic as these good businesses came about and you had started to have discussions with them? Maybe talk to us a little bit about that. I think talking about Coffee Stain, obviously, It's been a great success and amazing team. And you're right, they haven't been doing a lot of acquisition. Obviously, Go Ship has been one of their key products under the publishing label over the past years and highly successful. Ambitions in the future, what we're able to create within that, let's call it, operating group I think stay tuned on that part what will happen in the future. But, you know, Ghost Ship is a way in a coffee stain, but either in Denmark, they are very well connected to the Danish for the global industry and well respected. So I think it's a strategic value for us to actually being able to fully Having Ghost Ship within the group, not only financially, obviously, it helps. And To be clear, financially, on Ghost Ship, it doesn't actually add any revenues because the revenues is already coming on a deep drop right now Under the publishing, but it obviously helps the operation a bit because we're getting the full margin. Obviously, in the future, they will be able to hopefully have more product lines and investments going under the closure. Anton, are you still online here? Perhaps you can just share a bit, you know, why What you saw with GoShip and is trigger and Yeah, sure. I think, like I mentioned here, we haven't done a lot of acquisitions, which has been, I guess, kind of natural of how we built Eckeoffice Dane. It's always been about 100% focus on the products and just not focusing on just growing the company in any way pretty much. And So, acquisitions has maybe not been a natural part of how we wanted to build Kofistain. But I think like when it comes to Gold Ship for example it It became very clear for us early that there were so many similarities. And I mean, the first time I met Zara now, I think I was super impressed with their thinking being, I mean, they were a new company at that time, but I mean, they are super experienced. They've been in the gaming industry for a long time. And I was so impressed expert by seeing all their thoughts on how they wanted to run Gold's Ship. And it was I think it was very clear already from the beginning that They were very independent and when we joined as a publisher on the title, it was Also, I guess, a special publishing relationship where they do a lot themselves. So, when we started discussing, You know, we wanted to get them into the group for quite some time, but it was not maybe super clear to them what the benefit would be. And I think in the end when we figured out this way where we would set up this structure where they will reside as a sister company to us and operate kind of independently that opened up that door. And I think it's a very interesting way forward. So, yeah, super happy about that. And like when it comes to Easi Trigger, I think it's more of a natural acquisition for us. We've been working with them, I guess a little bit even more closely as a publisher and they are a small company in Sweden. It makes total sense for us to get them into the coffee stain group. So, Yes. Thank you, Anton. Maybe just one very quick follow-up on that. When you're having those conversations, Anton and looking to publish a title within Coffee Stain. How important is it to see a pathway to potentially sort of acquiring the developer going forward. Is that important to you to be able to think that that's a possibility? It hasn't been that important, to be honest. But I think that, I mean, our strategy has already from the beginning been a little bit different where we've always been very flexible with how we do our publishing and investments. So in the Ghost Ship case, we had the, you know, The 30% that we own in Gold Ship from the start and the idea with that at that point was maybe not necessarily to acquire them at some point, but we just Wanted to align ourselves more tightly with them. And obviously, if you just go in with only publishing, It's a little bit more short term than what we wanted. So, having that minority share from the get go Made it more clear that it was a long term commitment, but we didn't really know like whether it would end up in an acquisition or not. But I mean, So, all in all, everything worked out and then now we're here and that's great obviously. Okay, great. Well, one of the other areas that clearly you've bought into today, Lars, is the VR space and we know that, you know, Oculus is a big area of focus from Facebook. They've been making big hiring into that business unit for them and they're providing big incentives to developers who create content onto that platform. Expert. You completed the acquisition of Vertigo last year and now Forcefield today. Is this like a strategic push into VR? How do you see this market developing over the coming years? And I guess, how much does VR excite an over the next few years. Well, obviously, as stated, with the acquisition of Vertigo, VR really excites ex CEO. First of all, it's really it's a commercial viable platform now for developers to build VR products. And Vertigo Pro, they could be highly profitable as a business. And I see further Growth in that market. And as Klem has stated, I think that market will grow with a higher pace than the rest of the more traditional gaming market. So And I think the plan with Vertigo from the beginning was to also using We're having them as how could we expand our business by allocating further capital and resources to Vertigo. So Vertigo becomes kind of even stronger. We are a company and I'm really pleased to see this morning acquisitions. And John, are you still on the call here? I am. Do you believe in LDR market, John? Yes, I do. Obviously. I think the big picture of what we're seeing, As I hinted at in the comments earlier, it is a rapidly growing ecosystem and Certainly something that Vertigo sees and I believe, as Lars has said, Embracer and Koch Media do as well that this is an area that's going to grow faster, than the overall gaming market because what you're seeing, is 1, the creation of a new medium and different creative expressions of what gaming can be. And Martin's talked about that a little bit from Forcefield. And then also there's this amazing opportunity to bring classic and well known IP from other gaming mediums into VR and allow people to experience these worlds in a way they've never had before. And so we think that also I know what you said about VR. I know there's a number of other VR games under development across the group and there's And I know we are working closely with the platforms to support them with content in the coming years. So I'm super excited. And is Vertigo in time if you make more acquisitions in that space, could it its own operating segment or will it still remain within Project Media Deep Silver? No, it's not a discussion. I think it will remain within Cogmeda. I don't think it makes sense. I think an has a very strong ecosystem and it makes sense to have the synergies with that ecosystem with Vertigo. So what I'm hearing, the synergies and corporation works out very well. Acquisitions or capital allocation and I'm bringing more fantastic creators and entrepreneurs onboard Vertigo in the future. It's really up to John and Arthur, Martin and Richard and Kamara and the team to do that. It's their business and they are driving it. Okay. Maybe last question for me before I take a couple from the web. There there's been a lot of companies of late who have been delaying titles because of challenges with development. Clearly a lot of the businesses you have today have got big plans for their pipelines over the next ex few years. When constructing your earn out payments, some of which is financial, some of which I know is operational, those agreements with regard to milestone payments. Yeah. Well, there There's a few milestones. It depends on agreements that there is a definition of number of titles to be released over a number of years. Obviously, again, it's important for us not to construct these milestones that we push or The companies are pushing releases too early. So I think we have taken enough space here expert. Yes. And it's something that's put you in good stead in many years in the past. So, not changing that is probably the right thing to do. So, a couple of questions from on the web here, one of which is on China. So, there's been a lot of news surrounding stricter rules around younger players in China in the past week. I know Embracer hasn't historically had a huge amount of exposure to the Chinese market. But of the acquisitions this morning, do you anticipate these new regulations being an issue for any of the businesses being acquired? Expert. We have seen the likes of we had an announcement from Team 17 a few weeks ago when they acquired Storytoys expert. And albeit in a completely different market, one of the reasons why they bought that business was to expand their knowledge of sort of regulatory hurdles in selling to younger audiences. Is that something that Embracer is concerned about at all, like across the broader business? Or is it something that you feel is in check and it is more noise in the market than anything else? Well, it's a delicate question you can spend hours answering. Obviously, we do have products for children, not that much in China, I would say, but Obviously for the Western market, even though our core, I would say, is still older audience. But I'm confident about my management teams, how they develop and manage These products against these audiences. So it's not a concern for me. Obviously, we've done a lot of due diligence. And so I'm sorry, Ben, I can't really give you any more color on that. No, that's absolutely fine. And one of the other questions from the web is with regard to sort of 1st person shooters with Slipgate and 3 d Realms acquisitions this morning. There's an expansion deeper into this market and you already have a lot of presence in that area already. The question is how much shared learning do you get from bringing more experience and expertise into a specific genre into the group given how sort of decentralized the model works. Well, I think, you know, just From my own point of view, you learn things new every day and you can never get enough learning and context. And I think So I'm confident that there is a lot of synergies in that regard And let alone the commercial reasons that IPs is king and having more IPs ex available and resource to develop them because, again, remember, the bottleneck for growth is the talent. It's always to find the talents and the creators, the developers and the business people to bring more products to the market. That's bottleneck and that's why we are making all these mergers or acquisitions this morning. Okay. Well, that's very helpful. And I think we've run through most of my questions and those on the web as well. So perhaps the last question I'll ask you is, over the next maybe perhaps longer term, a few years. Clearly, Embrace has got a significant opportunity, very well respected for being a group that sort of harnesses the Opportunities of the businesses that join you. What is it that you're, I guess, most excited about from an acquisition perspective over both with these acquisitions and over the coming years. That will be my last question and then I'll let you wrap up, Lars. I'm excited about just seeing all my colleagues and the teams Really buy into the model and continue to grow the model. We continue to find and hire more talents, but we also continue Bringing more fantastic creators and entrepreneurs on to this platform. And I think the greater and the bigger we get in a way, The greater we become. And I think the ecosystems we are building, it's unique in many way. And completely sense for people to join because they could see the benefit of becoming part of the group. Obviously, capital, we can bring them, but XO. All the senior deals, IPs, distribution, marketing, technologies, and we have seen nothing yet of this coming out or we I've seen a bit, but over the coming decade or decades, I think you will see some amazing things coming out from this ecosystem. So I think that's why it makes sense. That's why that excites me that the greater and bigger becomes, the more rationale there is for people And remember, it's not all about owning everything everywhere. It just makes sense and we are an independent platform. RA. We work with our industry partners. We work with the leading platforms and we would like to continue doing that. They are business partners and friends to us. And we are just 1% roughly of the global gaming market. So I could see plenty of growth the coming years decades come. Great. Well, thank you so much for having me, Lars, and thank you to all of the management teams who presented and appreciate that some of my questions were a little bit tricky to answer this morning, but I appreciate you taking the time. No problem. And thank you, everyone. And remember, we have our quarterly report coming up the 18 August 2018.