Q3 19/20

Feb 19, 2020

And good morning, everyone. I'm really happy and pleased to see you all here, and it's been a very long night to get things signed. And I think everyone is very interested to find out more about Sabre Interactive, but we will, as usual, start with our interim report and try to run through that as quickly as possible and then move over to Sabre Interactive. And then finally, Oscar will lead a Q and A session if there is any questions. So I'm glad to say we had another stable quarter with a 9% growth in net sales to SEK1.5 billion. The games segment, Deep Silver, THQ Nordic, Kofenstein had a year on year growth of 51 percent to SEK 836,000,000 and our operational EBIT growth 54 percent to SEK 3 2,000,000. And the reason for the increased profitability was driven by a number of releases. Darkseidus Genesis performed well on PC and Stadia. We had also, as usual now, had a strong back catalog sales. Worth mentioning are obviously the Metro franchise, the breakfast and continued performance on satisfactory and the increased share of the digital sales and the share of sales from our own IPs was driving the margins in the quarter. We continue to invest into new games, so that will deliver the organic growth in the future. On a year on year basis, we increased our investments 47 percent to SEK373 1,000,000. Currently or in the end of the quarter, we had 96 games under development. Post quarter end, we had a number of releases. I will talk through them later on, but worth mentioning here is the metrics release on Steam, the Satisfactory Update 3, the Darkseggis Genesis on consoles and others. We also added 6 new studio after the quarter end, taking the total studio count from 20 to 26. In the quarter, we acquired the amazing team in Malmo at Tarsier Studios. We set up C77 in Seattle. After the quarter, we set up River End Games in Gothenburg. We increased our share in missed games in Stavanger to a minority stake. We set up 9 Rock Studios in Bratislava. And this morning, right before the report, we acquired Voxler in France. Furthermore, Tischko Nordic this morning after the quarter announced their setup of a studio in Barcelona that will make a gothic remake. And finally, we had another studio setting up that is not announced yet. With that said, I'm leaving the numbers over to Johan. Thank you, Lars. So let's have a look at our financial performance in the quarter. And we start with our P and L metrics, where as said, we have a net sales of SEK 1 point 5,000,000,000, growing 9% over last year. Growth is mainly driven by strong performance in Business Area Games, 51% growth. In Business Area Partner Publishing, we have a decrease with 19% in the quarter versus last year. The main reason for that being that there were no new large releases in the quarter. Last year, we had 2 large releases in the corresponding quarter. The growth in top line fell through to EBITDA and operational EBIT, growing EBITDA with 59% and our operational EBIT with 54%. I think the main driver of profitability in the period is the improved gross margins, where the favorable mix shift from Partner Publishing to Business Area Games is the main driver, but also within Business Area Games, we see a higher degree of digital sales and owned content. All in all, our EBIT margin for the period was 20% and adjusted EPS SEK0.68. On a trailing 12 months basis, we are turning SEK5.5 billion, which is 34% above last year. EBITDA rose with more than with 100%, reaching SEK1.9 billion. Operational EBIT at SEK1.1 billion percent and then operational EBIT for 21% versus 12% earlier ago. Continuing with depreciations and amortizations. We divide them in operational amortizations and acquisition related amortizations. Starting with our EBITDA of DKK518 1,000,000 for the quarter, we deduct operational amortizations of SEK 216,000,000 reaching our operational EBIT of SEK 302,000,000. The main drivers of our operational amortizations are completed games as well as other intangible assets, mainly film. Acquisition related amortization in the quarter amounted to $211,000,000 and they are mainly related to IP rights and goodwill. During the quarter, we finalized the PPA for Bugbear, which resulted in an increase of surplus values, goodwill and IP rights. This was due to a remeasurement of the variable conditional purchase price of $95,000,000 and resulted in additional acquisition related amortizations of $22,000,000 year to date or in full, of which DKK17 1,000,000 relates to previous quarters. Turning to our cash flow. Cash flow from operations before changes in working capital amounts to SEK552 1,000,000, which is 53% above last year. Working capital increased during the period with DKK312 1,000,000. This is related to a reduction of trade payables in the period. Operating receivables and inventories were slightly lower than they were at the end of September. And the trade payable reduction is heavily influenced by release schedules for larger titles, especially within the physical side of our business. There were no forfeiting in the period. In the corresponding period last year, we had a positive effect of SEK43 1,000,000 from forfeiting. We continue to invest into our business. As mentioned earlier, we invested into Tarsier at the end of December. This had an impact of SEK88 1,000,000 from acquired companies. We also continue to pursue our strategy investing into our games portfolio. Investments into intangible assets were DKK419 1,000,000 in the quarter, and we will have a specification of that on the next slide. Cash flow from financing was positive, dollars 229,000,000 in the period related to increased utilization of credit facilities in Koch. There were no material cash tax payments in the quarter. On a year to date basis, we have paid SEK 122,000,000 in cash tax. I think it's important to I already got some questions on the cash flow to point out that trade payables, meaning if you have a physical Christmas business, you buy in the goods early in the quarter and you pay the suppliers and then you invoice the customers. That is the main reason for the difference here? Looking deeper into the investments into intangible assets of SEK419 1,000,000. The vast majority is related to investments within games, dollars 373,000,000 in the quarter. And then we also invest $46,000,000 into other intangible assets, where the vast majority is related to film. During the quarter, we completed game development projects at a combined value of SEK 146,000,000. Looking at the trends, we see that we are increasing our investments into game development, increasing 37% in the quarter, and the share of the internal investments is also increasing, reaching SEK221,000,000, which is more than half of the investments into games. The balance sheet. One big portion of the balance sheet are the intangible assets. At the end of December, the value of our intangible assets totaled SEK 5,600,000,000. They are split in acquisition related intangible assets and operational intangible assets. Acquisition related intangibles assets consisted of SEK3.2 billion and are mainly split between goodwill and IP rights. The operational and intangible assets was SEK2.4 billion, where ongoing game development is the biggest one, reaching SEK 1,700,000,000. Finnish completed games that generate cash flow now is valued at SEK410,000,000. We also have cash on bank at the end of the year, total SEK 2,800,000,000 and another unutilized credit facilities of roughly SEK600 1,000,000, adding up to a total of SEK 3,400,000,000 in available funds. Net cash at the end of the year was SEK838 million. Business areas. Thank you very much, Johan. I will talk you through the business areas. First of all, I would like to just look at some KPIs here on the net sales. Trailing 12 months basis, we are up to SEK 3,300,000,000 in net sales in the business areas, DSQ Nordic, Dipsilver and Coffee Stain. Looking at the digital share of the business on a trailing 12 months basis, it's up to 68%. And looking a year back, it was 45%. So the shift is ongoing. Own titles are also increasing, partly because of acquisitions, partly because of organic investments, and that is increasing to 80% on a trailing basis from 50% a year ago. And well, the new lease share is currently at 35%, meaning we have a strong catalog business. So looking at the business area, Deep Silver, they had a significant increase in business with 150%, mainly driven by the strong catalog. And the strong catalog exceeded our expectations, both digitally and physically. During the quarter, they didn't have a lot of releases. They had Shenmue 3, and I was happy to see that the core fans of Shenmue was happy. But it's also clear that Genmoo is not a AAA mass market product. It's a product for defense, and I'm happy that we pleased them. In total, they had 4 releases in the quarter. Looking ahead, they have obviously a strong pipeline of releases. Worth pointing out here in the current quarter is, I'm glad they succeeded porting the 1st Metro games, Metro Redux to Switch coming out in a week or 2. They just released what I have seen a fantastic last DLC for Metro Exodus, Sam's story. And furthermore, they released Metro Exodus on Steam this last week and on Saturday morning. And I was happy to see it's been performing well, selling about 200,000 copies already. And also surprising to see that one big country in Asia was the biggest country buying the product, very close to America. Furthermore, just commenting on other things. Milestone just recently 2 weeks ago released Monster Energy Supercross 3. And they're looking forward to have very soon or soon a multi GP20 and a bit later down the line, Ride 4. Moving over to Tissue Nordic. They in the comparable period, it was a tough quarter to compare with because they had the Darksiders 3 in the same quarter last year. So they had a negative 5% growth to SEK 343,000,000 in revenues. Well, I was really glad to see that they put a lot of new energy into Dark Sider's IP with releasing Genesis. That's been very well received by fans and is performing well and continues to perform well on Steam and Stadia. And we had a good continued performance on Wreckfest. The engagement in that game is very good. Also, the remnants developed by Gunfare Games that we acquired in August continue to perform well. That is published by Perfect World, but it did contribute to the numbers. And Handy Games, they released a great title called Little Big Workshop developed in Vemland, 1st product ever released from Vemland. I'm very proud. And as stated earlier, they set up a new studio, 9 Rock Games in Bratislava that will be working on a survival shootershooter. And this morning, they announced setup of a new studio in Barcelona doing a Gothic remake, and they also published the rationale for doing the Gothic remake. So if you are Gothic fans, and there's a lot of them out there, they kind of voted to make it or not. So I think 94% voted for. So looking in the current quarter, We have Dark Shadows Genesis just releasing last week on console, on PS4, Xbox 1 and Switch. And so far so good. I think it's well received by fans. And so I think it just continues the performance on PC. I also pointed out in the report this morning about Biomutant that they still continue polishing and finishing that product. And I've been very clear in my reporting that quality comes first and we need to give all teams an IP the time to make the game as good as it could be. And it obviously goes as well for Biomutant and this is a new IP and it's a small team here in Stockholm. So I will they have the time they need to complete this. So that will be announced the release date will be announced by the publisher when they are ready. And Coffee Stain, they had a quarter without really any new releases. They were planning the update on satisfactory Update 3, but they delayed it until last week. But the performance was stable on Satisfactory as well as the publishing title, Deep Rock Galactic and their own old Goat Simulator game, still performing well, taking revenues of 36,000,000 But I was really encouraged to see the update free on satisfactory last week. It obviously was very well received by the fans. And I'm pleased and I'm excited to see what that product will become in the future. And I will let the team speak for it, so I will be quiet. But I know they announced the release of Satisfactory on Steam, but they will, in due course, announce that date. Overall, I'm excited for the lineup at Koffiefstein. They have a really good lineup that they are to announce when they are ready to announce it for the coming year years. And this morning, we announced a new business area, Amplifier GameInvest. We acquired Goodbye Concert Game Invest in August, and it's now rebranded to Amplifier Game Invest, headed up by Perane here. And they have been active. I was already pointing out the acquisition of Thalesir, the setup of new studio in Seattle with C77 Entertainment and River End Games in Gothenburg and Miss Games. And overall, Amplifier will be part of driving the organic growth of our own products in the future and creating new IPs. They set up studios around very senior game developers. This will be an operating group, but they will not be reported in the business area segment because they are obviously developing games and not they are not ready yet. So there is no significant revenue to report about yet. Finally, Partner Publishing and Film. They had a solid quarter, but without any significant releases, and that's why the revenues decreased 19%. However, I would like to point out, especially now the release of Parasite, the film that got a number of Oscars that really have taken that film to the next level. And it was already good. They got the Golden Palm in Cannes last year, and it performed well in the quarter Q3 quarter, but it continues to perform well now on cinemas in Germany, Switzerland, Austria, where Koch Media has the distribution rights. But it's not only about Parasite in Films. They had the best quarter ever. The integration and the business performance from KSM acquisition in August is doing very well as well as the overall Koch Film catalog in especially in Germany. Looking at the current quarter, worth pointing out in a few territories, they are releasing distributing Doom Eternal and Persona 5 Royal from Atlas. Today, we are distributing in part of Europe Final Fantasy VII, and the release date is 10th April, meaning not this quarter. M and A. Well, first of all, Thierry Seager, again. I gave you a few slides here, and I'm happy to have them on board. We paid DKK88 1,000,000 plus 10 years earn out for the five sellers that remain in the business. They have a strong track record of creating successful original IPs and critical claim millions selling fan favorite Little Nightmares. That game and IP is owned by Bandai Namco, and they are very important business partners to Tarsier and to us, and they will continue that relationship regarding Little Nightmares 2 under development. But on a very long term basis, the ambition is obviously to create new own IPs within the studio. And this morning, we well, wrote in a report about the acquisition of Voxler, a French music game studio behind the million selling Let's Sing game series. Let's Sing is a game series that Koch Media has been distributing for a number of years. Studios founded in 2005. They currently have 14 people in Paris and Marseille. And I would say, overall, the business is stable year on year. They put out these new products. And now we are able to invest for the next generation of consoles. Purchase price was €1,900,000 or 100 percent. And the founder, Nicolas, and his team remain committed to stay on board. I'm really happy to have them on board. Furthermore, we decided to commit to an investment of up to $6,000,000 in London Venture Partners Foundry over 10 years. London Venture Partners is founded and led by 3 veterans in the business, one being David Gardner that will join the Board that we decided just a few minutes before this quarterly report. I'm really glad to have David Gardner on board, embrasure Group. I know David for many years, and he already contributed well with his network to the business. M and A outlook. Well, we continue working from all angles, from the headquarter in Carlstadt to Vienna, Munchen, Amplifier and Koffe Steyn. Obviously, the acquisition we will talk about in a few minutes has been taking most of my time and the team's time, especially the past month, I would say, and a lot of other processes has been put on hold. But M and A is part of our strategy, both by adding new pillars or operating units to the mother parent company or acquiring businesses under each operating unit operating group. So we had a number of discussions during the past quarter. And but right now, I would like to say that, obviously, we will make sure that this acquisition gets closed and well integrated into the group. So I would like Johan, before finishing this report, just have a few words about the most important or the important topic about sustainability? Yes. So one of the key strategic initiatives that we have in our group running is the work we do within sustainability and ESG that we call smarter business. We are making progress on a daily basis in the area. And as you know, we launched an ambassador program during the fall, where we work cross functionally and cross border, involving everyone throughout the organization to participate in this. Currently, we have 20 people in the ambassador program, and it's an important link to spread awareness and also continue to work with sustainability throughout our organization. We have we are working with KPIs according to the GRI standards that will be an integral part of our annual report later this year. We have also launched a compliance call, which was rolled out during the fall. One key remaining initiative there is to make a more a popular version of it, a more accessible version, which will facilitate to spread the knowledge and awareness of the compliance code throughout the organization. Also, we have conducted site visits. And on the picture here, you see Karin visiting our friends in Italy, in Milan at Milestone, describing the work we do within ESG and sustainability. And also sustainability or ESG is also about governance and the importance of data security, which is also a topic that we are addressing and working with continuously throughout the group. I would like then to start the presentation about the acquisition of Sabre Interactive. And before welcoming Matt on stage, I will start off presenting the transaction, and then I you will soon hear the gentleman that founded the business and the Creative Officer. So Sabre Interactive is a company that we've been doing business with for known, I would say, for many years, especially I know Koch Media and you had a long standing relationship, even though you haven't actually produced any games together, what I'm aware of. We got to know each other like a year ago, and it's been a process now to get to know each other and to get you into the group. And I'm really glad today. It's been a very long night. I had advisers at 2:30 discussing the number of things in the agreement. So and we signed 6:30 this morning. So and I'm sorry the press release was a bit late, but it was long and a bit complex to distribute. So Sabre Interactive at a glance. Sabre is a U. S.-based game developer. It's founded by 2 entrepreneurs, Matthew and Andre, that has been organically growing this business for most from 3 people up to the 600 people today. They have 500 studios. Their games have sold more than 30,000,000 copies 5 studios, sorry. Long night. Long night. And they've been turning this business from foremost a work for hire business to a self publishing business, and that's why the financial performance has been impressive. Last year, they made $105,000,000 in revenues and $62,000,000 in EBIT. And we see stability in the business for the coming years. Pointing out here, they made last year the release of World War Z. It's been a great success. They previously released MudRunner and the year before last year, they released NBA 2 ks Playgrounds 2. That's also been a great success. And over the years, they have developed technology that we have been very impressed with, and Andre will talk more about it very soon. Looking at the combined group to give you overall picture, we've got 26 studios. They have 5, we're getting 31 studios across the group. And we're working at currently at Embrace with 58 studios, and they have 3 external studios. So we've got 61 in our network of studios. We are adding through a number of IPs, taking our total number to 163 and taking the number of projects under development from 96, adding 12 from Sabre, taking it to 108. And the number of developers that we are engaging on daily basis are now more or less 3,000 people. And revenue wise, the combined group, this is based on the management numbers, their numbers for 2019, taking the total revenues for the group on a very high level performance basis of SEK 6,500,000,000 and adjusted EBIT to SEK 1,700,000,000. And I would like to give you a few highlights why I believe in this acquisition. Now talking out of my heart, I really have a deep respect for the management, Matthew, Tim, Andre, but also the rest of the management I met across this process. And they are and their teams, they are very highly regarded developers and very efficient, and they have been creating some, I would say, very, very well, fantastic games. I'm very impressed of it. It's not that easy. Business wise, they have a very strong profitability with a high cash conversion. So basically, the profit they've been making is being converted to cash. For the group, they are adding stable and recurring revenue stream from work for hire. They will continue working with their business partners, and they will continue working having these royalty based projects. And they have a portfolio of titles with recurring revenues. And looking ahead for the current year and the years ahead, we see a solid and growing pipeline. Obviously, within the group, I see a lot of opportunities and synergies within Publishing, Development, IPs. In general, I think it's just a great platform to generate further organic growth as well as potential acquisitions. So looking at the actual deal, it's asset deal. So we are setting up new entities for most across the countries, and we are then transferring the assets to those entities and will operate from these new entities. They will receive a lot of shares that are priced at the 40 days weighted average price coming to $78.45 per share. And the founders are becoming the 2nd biggest shareholder in the group, combined 11% of capital and 15% of the votes. And I committed to welcome Matt myself and Erik are committed to welcome Matt to the supervisory or to the Board of the group. And as to employees, and they will continue operating group, they will receive the fixed salary, but they will have incentives that is part of the package that they will have 10% profit above SEK76 1,000,000 per year in EBIT. That's accumulated year on year. Expect the transaction to close in the second quarter calendar quarter, so we expect to close during our 1st financial quarter in the next financial year. So the purchase price is €150,000,000 upfront, it's €100,000,000 cash and €50,000,000 in shares. And then there is €375,000,000 in earn out payment over 6 years, where of SEK 100,000,000 is in cash under 2 years and the rest in equity or in shares linked to various operational goals. All right. So, gentlemen, welcome on stage. I'll stop pacing. All right. Well, I'm on already. I have to watch what I say now, right? No. This is new for me. So never sold the company before. So I just want to introduce myself. I guess I'm standing under my picture. So Andre, you should move. So you're standing on your picture. He's in the middle of it. Tim is the presentation guy. So I just want to introduce myself really quickly. My name is Matthew Karsh. If I speak quickly, I apologize. I live in New York City, originally from South Florida and we don't know how to speak slowly. So I apologize in advance for that. This is super, super exciting for us. I mean, honestly, I would have done this deal just so I can work with Laura's for the rest of my life, which is what's going to happen. So I'm a 20 year veteran of the video game space. Andre and I started Sabre when Andre still didn't have hair, but we've been doing this a long time. We've been building up the business organically. And we figured in our case, it was about time that we found a partner who could help us take it to the next level. And so I know this is technically an acquisition, but we feel this is more of a merger. I know you're my boss. I get it, I get it, I get it. I agree. But we are super excited about this because we think this is the most exciting video game. I would say it's group more than a publisher and a group in the industry that's reinventing the way things are done in our space, very new school in its approach and we really wanted to be part of this. So I'll let my partner Andre and our newest partner and game celeb, Tim, introduce themselves as well. So I'm Andre. In 1, started Sabre with Matt same 20 years ago when he started on this adventure with me. We started with a very small team, just a few guys in New York and we grew this team to over 600 people. And we're happy to be part of larger organization. And hello, my name is Tim Willett. I am the new Chief Creative Officer with Sabre. I started my career 24 years ago as a designer at id Software. I worked on designing all the great id Software IPs like Doom and Quake and Wolfenstein and Rage. I was the Studio Director at id Software from 2013 until recently when I joined these guys. I really loved what they were doing. I love the energy that the teams had across all their studios. And I love the fact that at Sabre, we can work on so many cool games. So for me, it's been a big part to be with the team. Okay. So I think some of this has already been addressed. I have to look at it to see what it says. Not like I don't know about my own company, it's not my company anymore. I'm sorry. So if we haven't closed, it's our focus. Well, a lot of this has already been mentioned and some of the games have been mentioned as well. So I'll just basically go over real quickly who we are and what we do. We started in Russia, like Andre mentioned, just a few of us and we've grown over the years. Some of our most esteemed Russian developers are here right now along with the head of our Portuguese studio and our Sunswell studio. We have a studio in Sunswell and our studio in Madrid. I don't see. He's just pretty sure somewhere. Oh, there he is. Hi. So we Minsk. Or Minsk. Where is Minsk? Oh, there he is. Okay. Leave it to the Russians who remember the Russian studios, a Belarussian studio. So this is basically the timeline. We for many years were a work for hire studio, working on some prestigious titles that we'll talk about a little bit later. We've done many of our own titles. We did a game called TimeShift, which was great and sold a couple of 1,000,000 units back in the day, which is now owned by Activision. I'd love to get it back, but try getting something back from Activision. I shouldn't say that, should I? So and then we eventually grew the studio to a multiple team shop because it's very difficult when you're a one team studio to make money, because you're constantly depending on the whim of the publisher and we don't want to be in a position where we were depending on the whim of publisher for all of our income. And so we split off into multiple teams and when we did that, we started to develop some of our own IP. And then we started to work on larger properties such as the Halo franchise. We had a great relationship, which we still do and it's still ongoing with Microsoft working on multiple Halo properties. And we released what I believe are the 2 most successful Halo games of the last decade in Combat Evolved Anniversary and the Master Chief Collection. Matter of fact, I would say that we were responsible for kind of reinventing the HD remake genre with our Halo products, which have collectively sold, I don't know, dollars 7,000,000, dollars 8,000,000, dollars 10,000,000 copies and Master Chief Collection was just released on Steam and it's been the number one game since basically it released and we've been involved in that as well. So if I'm saying anything wrong, you're supposed to hit me or I was supposed to have a shock collar on. He told me that I needed to have something on to stop me if I said something wrong. So one of the things that's interesting about Sabre is you are laughing, comedy routines, better than reading numbers, isn't it? So one of the things that's interesting about Sabre is that we combine both original IP that we've created over the years with strong IP with partners and we have great relationships with our partners. Obviously, we work with Microsoft on Halo. We worked with ZeniMax on Quake and then we stole their best employee. We worked with CD Projekt on The Witcher and if you look online and people will tell you that the most impressive switch port in the history of switch ports to date because we still have more to do, thanks to the guys sitting right there, is The Witcher 3. And then we've created original IP like MudRunner. We have an exciting sequel to MudRunner coming out called SnowRunner, which is getting rave, rave early reviews and we're super excited to get that to the market. And then we negotiated a deal with NBA and that eventually with 2 ks to create NBA playgrounds. So and then obviously, World Wars Z and Ghostbusters. World Wars Z has done extremely well for us between 3,000,000 or 4,000,000 copies so far. And then Ghostbusters is also doing really, really well for a 10 year old remake. It's been really successful for us. So basically, we are on the next slide. And we are already on technology. Is that a hint that I should be moving on? You are hinting me then. So look, I just wanted to give a little summary. I know it's a big transaction and it's a big huge probably the biggest step of my life. Don't tell my wife because marriage is now second to this. So one of the things that's interesting about Sabre is, yes, we're one company, but we're making arcade sports games, we're making shooters, we're doing switch ports, we're doing what did I miss, we're doing mobile product as well. Vehicle based. We're doing vehicle based games. We're doing free to play games. We're doing social games. So we really are not your typical developer, right? A lot of developers focus on one product and have a small independent team that works on one product. We try to look at whatever market opportunities are available and do the best job we can with them. I mean, I'm going to let Andre talk a little bit about our tech, but I just one of our strong points has always been, we're really good at maintaining our costs. So we feel we can make a AAA product or a product which is AAA in feel, maybe a little bit smaller in content on occasion like a World War Z for maybe Efficiently. Thank you. Maybe efficiently. Yes, efficiently. And this is when you know you're no longer the boss. I'm going to let Andre talk about technology. So making games efficiently is important, but many games we wouldn't be able to make if we didn't have our own technology. And when we started the company almost 20 years ago, we started to invest in our own tech. At the time, there were no solutions in the market which were, I guess, readily available, which would be capable of allowing us to build great games. So we started to invest in our own tech. Over the years, we invested I think maybe 1,000 man years into our own technology. So it's a massive, massive investment. We have multiple components of our technology. We have a suite of tools which allow us to create content to run those content in real time in various platforms such as PC, consoles, old Xbox, new Xbox, old PlayStation and new PlayStation. Like I said, many games we wouldn't be able to make without our own technology. For example, there was a game our second game which we built was TimeShift, and that's a game where players could slow time, stop time and reverse time. And that's not something which you can do with an off the shelf solution. In our recent games such as World War Z, we had thousands of zombies on screen, not only on screen, but they were also working online. So if I'm playing on one machine and my friend is playing on another machine, all the zombies are somehow synchronized across the network and that's not something which you can do in the technical solution. We have a suite of back end tools. We have our lead back end guy here in the audience. Our back end allows us to many of our games, most of our games have an online component. On a game such as Quake, we had 100,000 players playing concurrently at the same time in the same game all over the world and the game never collapsed, which is pretty impressive. We have a significant live ops team. It's a team which allows us to operate these games in live environments. So they monitor how the game works. If something happens, nothing ever happens. But just in case if something does happen, we can identify these issues in real time and fix them and the game will continue. One thing I could just add to this is obviously our technology has been built to support a relatively large group of developers. And as part of a larger group, it will be our intention to make sure that a lot of that technology could be used across the various studios in the group. We think that there will be some great efficiencies from that as well as some cost savings. And we have a large technical team, so we certainly have the ability to customize tech as needed for I see Clemens looking there wondering what I'm going to do for him. I'm going to do a lot for you, I promise. So we look at this as technology as more just something which enables our internal development. It's going to be something which is capable of being used across studios. So let's talk about the games. So Sabre has created a portfolio of these hit titles. And looking at these titles as pillars of the company and expanding on not only what we have, but what we're creating. And the thing about great teams is when they make great products, they continue to make great products. So a few of our greatest hits, of course, World War Z, insanely successful, but it really taught the team to create intense multiplayer co op fun. And we'll take that knowledge and we'll continue with this brand. And of course, MudRunner, at first when I talked to Matt, he said, we have a game, it's a truck simulator. I was like, really? Is that fun? But it is, it's insanely fun. And we're working with different truck manufacturers, we're working with different types of gameplay mechanics to really build on this experience and push it further out. And of course, sports games, people always ask me, you're a first person shooter guy, why do you own work in sports games? Well, I feel that we can take some of the intensity and the action of great first person shooters and integrate those lessons into creating really cool sports games. So, look for some exciting things in the future, I won't mention, but we have some exciting things coming in the future. And then like I said, we're going to build on the MudRunner franchise, the lessons learned, how we develop games and we're going to continue to build on that. So we are really excited on the creative side with our games. The teams are passionate about what we're making, and we are very excited to continue with a much larger group. Thank you very much and very welcome to the group. Matthew, do you have any final verse you want to send to the public and the shareholders and the market, your employees, your new colleagues? No, we're just super excited to be part of the group. We see huge potential. I think sometimes Laura thinks I'm overly ambitious and what I think we're going to be in the next 5 years, but I firmly believe that the synergies are we're the tip of the iceberg here. And I'm super excited and I love coming to Sweden. So I'm looking forward to seeing you more frequently. Thank you, Matt. Thank you very much. Okay. So I'm just finishing this off with just take you through this slide with some numbers, and I want to explain the uplift they have in the business. So taking the business from being more a work for hire business to capture the value of creating your own products and then leveraging various distributors and publishers. So looking at the 2018 numbers, they made CHF38 1,000,000 in revenues and CHF14 1,000,000 in EBIT profit. And then they had the uplift last year, driven by World War Z and the success of that game. It was exclusively launched at Epic and then on consoles. But the actual EPYC revenues is also very strong in the actual sell through. And then looking ahead, we see they have established a new platform. We see that the current year, they have a stability in their business. They have a number of good releases. I would say that are more to come in the second half of the year. And then we see obviously, we are excited for the pipeline for the years thereafter. They have previously not capitalized any development. And applying Embraer's accounting policies will like to have some impact on reported revenues. However, they have been getting payments from their business partners. We will come back to this accounting when we start reporting the numbers of Sabre within the group. So here's the organizational structure. Dave will become the 5th division and operating unit headed up by Matt and Andre and the rest of the management aside the 4 other groups, Amplifier, Coffee Stain, Cortmelia and Tischlud Nordic, they will be an independent division. I want to send a message. It's business as usual. There is no reorganization planned. We keep our business relationships. We want to invest into the business as usual. That's always our strategy. And as Mads stated, I see this personally more as a merger in a way than an acquisition. They're becoming a really important part of the group, owning a lot of shares and are committed long term. And here you have a slide you can look through on your own on the website. This presentation will be after this presentation available for download. So that was the presentations of the day. Oskar, I don't know if you have any questions or is it all clear? I think I might have a few questions and perhaps the floor as well. I'll start off with a few questions and let's start with the report and then definitely we'll get back to Sabre again. First of all, I mean, quite a reasonable contribution from new releases in Q2 sorry, Q3. Are you happy with the release of Dark Stars Genesis and the Shenmue? Or were you expecting more from Shenmue perhaps? I think Darkstar Genesys had a solid performance, and it was well received and it's continued to perform also after the release window. So I would say it's exceeded my own expectations. Chemu 3, it's an IP and a product I love. And I think financially, it's fine, and I'm glad that the core fans are pleased. However, I think it's a challenge to see this as a mass market product. This is a core niche product, and I think that is the comment I would like to do on that game. Yes. And clearly, I mean, you've released Dark Search Engine is now on PC. The console release was a few days ago. How has the sort of good reception from PC translated into console sales so far? I have seen a few sales numbers and it looked solid on the physical side. I don't have any data to share on the digital side for you, but I expect it to perform have a solid performance. Yes. And anything that stands out in the back at Lager? You mentioned the metrics, it is and ReckFest in the report. What is the volume mean? Yes, I think it's just I wouldn't say I'm surprised. It's just if you make great games, they just continue to perform. Breakfast, Remnant, Metro Exodus, there's a number of titles continue to perform, and you see high engagement in those titles from the players. I love watching myself Wreckfest online. It's just great and people just love playing it. And I think now we have a number of titles that I could see we could see people spending more than 1,000 hours plus in over a year. So and that is a good base of building a business that you have gamers committed to your products on a long term basis. Great. And Metro Exodus, I think we have to mention as well. I mean, you mentioned strong sales on Steam for the re release now this week or last week. And Metro performed well on Epic, and I was happy with the performance of Epic Game Stores, but that doesn't say I'm not happy with the Steam performance either. So it's been great the 1st days. So I think it's just it's a great game. People just love playing great games. So and I hope it will continue to perform well over the coming years on all platforms. And could you sort of shed some detail on the sort of move from EPYC to steam or the addition of steam Because obviously, you had some sort of revenue stream on EPYC. How will that sort of difference develop over the coming quarters, you think? I have no idea. I love my business partners, and I wish them all the best. And I make great games that we sell. So that's my take on it. Yes. And Partner Publishing quickly, I mean Parasite, great movie in my opinion. What is the impact of that? Is it so impactful fantastic movie, and I'm proud that we have it. In overall business, it's not notable significant revenue. We are a games company. But in Germany, there's been a substantial revenue contribution to the Partner Publishing business. It helps. I love these small channels of revenues coming in. And I think we also have to mention here that you write in the report regarding the at least 2 AAA leases in the next fiscal year. It doesn't seem completely certain that it will actually come out. Could it be Well, I'm not a games developer. I have we have a plan, the only plan. As you noticed yourself, Oscar, there's been a number of delays in the industry. I don't want to comment why they delayed things, but making huge games is a complex process. And there's next generation of consoles coming up. So I have some I'm always worried in a way. Are they coming in time or I don't know. So that's why I want to just say that we just need to finish all our products with high quality in order to make the best possible return of investment. Is that a delay? No. It's just perhaps a worrying risk that things could get delayed. You have seen Biomutant and they deem it is okay, it's not polished enough and that they continue to work on it and that it will be released the day it's polished. And as you said, I mean, a lot of publishers have delayed games recently, Sony, Square Enix, CD Projekt, Ubisoft, Paradox. What is the reason in general? Do you think there's an impact from the new consoles coming and potential platform deals to be made? Or how should we interpret it? No. Well, obviously, a new platform is always a new platform, and it adds a layer of complexity to, I guess, the development. I'm not the game developer, so I don't want to comment in specific on this. But I don't think it's I don't want to comment on the others. Obviously, now we have a next generation of consoles coming up. So if you are to release games on the current generation, you need preferably to bring them out sooner rather than later. Otherwise, you would preferably have them on the next generation of consoles. So there's a lot of hard decisions to be made. I just think everyone in the industry just say we need to make fantastic games. That's the thing that counts. And I think we could clearly see that on the games we had released the past year, Metro Exodus, Wreckfeston and many others that it's just worth the time to make the game finished. But obviously, if you start making a game, you have a plan. You have a budget. You have a team. You add some layer of extra time to polish things. So, well, that's the rationale I could have managing the business. I have these plans. Great. And I mean, in Q3, you had a strong gross margin of 50 plus percent. You had a strong operating margin. Can you comment quickly on the cash flow as well? I mean, working capital was quite negative in the quarter. Perhaps if Johan could share some light on that? Yes. So the working capital was negative SEK 3 12,000,000, as we said. The main reason for that is that the trade payables were a lot lower. So that explains the difference. Looking at operating receivables and inventory, they are at the same level as they were in September. And then looking into trade payables and why they differ, of course, it's heavily influenced on when you make purchases when you make payments to suppliers, which in terms is heavily influenced by release schedules of launch releases, especially in the fiscal side of our business. All right. Basically, we had Christmas purchases coming in early in the Q3. Please correct me wrong. You are wrong. And then we paid them off, yes, early. Yes. And on a also on a general level, I mean, looking at the net working capital, it's around slightly above SEK 600,000,000. So it's the same level as it was a year ago. And looking at it in relation to our trailing 12 months revenue, it's about 10%. So we still think that it's on a fairly low level. But of course, you will have quarterly swings in cash flow. That's the nature of it. Perfect. Do we have any questions from the floor? I have a few from the web after that. So let's do some questions from the web. And we have some questions on amplifier game invest that we can start off with perhaps. I think you already answered this question, how will amplifier be accounted for going forward? You have commented on that. But can you comment on the rationale behind amplifier and what you foresee there over the coming years? How big will it get? Well, how big it will get is I think the team have a great ambition to continue building on their strategy and on their strategy of setting up new studios around very senior games developers and to intercentify them and then to add the synergies as a group. Will the gain to self publish? Will they be published through the group? There is various things that we they will be communicating over time. And they will operate as independent units. There is a rationale having them as independent units for various of reasons. Obviously, they were very closely with the rest of the group in various sorts of publishing deals and or exchange of knowledge and so on. Great. And I think we'll have to move over to the Sabre Interactive acquisition given time constraints. So I mean, first of all, we don't have Matt and his colleagues up here now, but We bring Matt and Tim and Andre back here, I think I wouldn't say I will start answering, but I thought listen to Oscar and then I will You can judge me. Right. So first off, I'll give it to you, Matt. So can you delve a little bit deeper into the rationale behind joining Embraerci Group? You talked about synergies. What is the most concrete thing that you see? Well, I mean, on its face, obviously, it's just the library of IP. There's a ton of incredible IP that's yet to be utilized and we see quite a few of the potential games from the IP within the library. Don't mention specifically I'm not mentioning anything. I'm trying to remember that I am no longer a private citizen. So, yes, there's amazing IP. That's 1st and foremost. The second is, I really love the strategy of acquiring new studios and the access that Lars and his team bring to the ability that they bring to grow. We see tremendous opportunity for growth primarily. Our primary area of growth has been in Eastern Europe and in Russia where it's very cost efficient to develop. And we also have growth in Spain and in Portugal where it's also there's a lot of talent and there's a lot of opportunity for growth. And we felt that if we wanted to continue to expand, the best way to do it was to have the backing of a larger entity with the ability to help us to really take it to the next level. Great. And I mean, so far, some of your largest IPs that you worked on a self publisher has been obviously World War Z and NBA 2 ks. I guess those are licensed IPs. Can Can you talk a little bit about how you sort of mix between your own IPs and licensed IP? And what's the rationale there? Sure. Look, the rationale behind World War Z was pretty simple. We wanted to do a game that was what we do at Sabre is we identify market opportunities, right? We look and we say, hey, what types of games are people looking for? What types of experiences do people want to play that aren't being provided by the market right now. So our philosophy has always been kind of a market driven approach. So we wanted to create, we looked there was a game called Left 4 Dead that sold something like 28,000,000 copies and there was nothing in the market like it for a very long time and we wanted to scratch that itch. So we wanted to create a 4 person co op zombie shooter and we had 2 ways to go about it. We can either create our own IP and spend considerable money on marketing it and still we'll have to overcome significant barriers or we can license an IP. And we thought, especially as an independent developer that's trying to keep its development costs relatively contained, it made more sense to go with a license and share on the back end. And so in the case of World War Z, it just made sense for us because there was the largest grossing highest grossing zombie movie of all time, highest grossing zombie book of all time, highest grossing Brad Pitt movie of all time, people don't realize that. And so, I guess, he's got a lot of indie films too. So from our perspective, it just made sense to leverage that. And so but in addition to that, we also have IP that we want to develop individually. So MudRunner, for example, and now SnowRunner, those are IP that we felt that we wouldn't have been served well by using a licensed IP for something like that. Personally, I think licensed IP sometimes gets a bad rap. You can make just as much money with a licensed IP as you can with your own IP. It's just a question of how long you have that IP for. In the case of World War Z, we have some pretty good protections and we can continue to develop that franchise and plan to. And as long as we have that, then it's almost the equivalent of owning it with just the obligation to share on the back end a little bit. Great. And a question for you, Andre, perhaps. I mean, you grew by roughly 150% in 2019. How much was that how much of that was down to World War SAID? And how resilient would you consider the revenue? Sorry, I forgot about you, Lars. Obviously, we can't provide a financial forecast. No, they have a stability they built up. And I was pointing out, we see stability in their business on a new level and that will generate growth driven by their pipeline of releases. And looking again on this current year, you see a more shift to the second half of the year than the first half, the first two quarters. That's the answer. I think if we don't go into actual numbers, what's important is that we work on a portfolio of games. So we don't have one game. So we're very diversified. We do larger games. We do smaller games. We have mobile games. We have premium games. We work in multiple locations and we have multiple releases per year. So we kind of hedge our risks and we have multiple revenue streams and that makes it for sustainable business. And a follow-up there, will you continue with your work for hire business as well? Love our partners. We feel like we developed very good relationships with companies like Microsoft, for example. We did a number of Halo games. Yes. We have a great working relationship with CD Projekt, great Polish studio. We have a number of other relationships, a whole host of other relationships actually. We're working on a number of titles, which haven't been announced yet, but they will be in a very short amount of time. So we'll have opportunities. And we feel like to start working with somebody, open doors. So sometimes you work you start working on something small, which leads to bigger, better things. And that's why Workflow Hire, it's a great way to open those doors. Great. And I mean perhaps some more discussion on your pipeline? What are you in what ways are you thinking? You mentioned sports and MudRunner as important categories perhaps? I think they announced one title. It's published by Focus Home, it's Snowrunner. The rest of the titles is not announced in the pipeline, but they have 11 We have a very large number of titles. Some are bigger, some are smaller. They're all developed across various studios. I guess So I think that is kind of the coloring we can do on that currently. Obviously, we would like the publishers to talk about the products, whether that is being Sabre, us or the actual other publishers we're working with. Great. And the final question for me. Can you say something about how many people are still working on World War VII, the personnel has come out for DLCs and live ops, etcetera? We have a large team that's continuing to support the title, the exact number. Yes. We meet people around. Yes. But we have look, it's a great franchise for us. We see a lot of potential in the future. I wouldn't be surprised if we continue to work on it. And we certainly don't want to abandon our fan base because the way games are made these days is it's constantly feeding your fan base even if the content is free. That's how you keep your community alive. And if you want to ever get to the sequel, you got to keep them there. And so we understand that games even games that are for sale are games as a service. And so that's the way we approach all of our development with all the games that we're working on. I think if was a good answer and that's a great answer in general. Thank you, Matt. Okay. I think that's it from me. So think I'll leave it up to you to round it off. No, I think thank you very much for listening in today, and see you in 3 months.