[Foreign language] Noterat bolag. Vi listade det här bolaget på Pareto 22 november förra året på 20 kronor. Aktien har handlats i dag i 68-68,50, så det är 240% upp. Imponerande utveckling som är drivet av en stark fundamental utveckling. Även om det är ett litet kvartal under 2017 så var det i alla fall starka siffror. Lars, du kan väl förklarar vad som har skett under kvartalet?
Thank you very much, Lars-Ola. I do this in English because we have some international viewers in the webcast. It has been so far a pleasant ride being a stock-listed company and I'm very happy and proud presenting, as stated, the third quarterly report, the second quarter of 2017. It has been, as you stated, Lars-Ola, a quarter without any major releases. The business has been growing compared to last year, the same quarter. Net sales increased from SEK 52.7 million to SEK 85.6 million, an increase with 62%. The EBITDA increased from SEK 23.2 million to almost SEK 40 million. EBIT-level increased in percentage even more from 14.2% to 30.3%. The reason for the higher percentage in EBIT level is because the amortization in the quarter are lower because we have not really completed any new development.
The net sales in Q2 has been driven by a good amount of promotions, especially around the Darksiders series because of the Darksiders III announcement in May. The Darksiders series was promoted with new bundles on PlayStation Network, Xbox Live, and on promotions on Steam. Other promotions we were running in Q2 were a Steam publisher weekend and the classic Steam summer sale that the majority of the income came in Q2. We also had very proudly Humble Bundle together with Hand in Hand International, and that was the second ever PlayStation Humble Bundle ever. The first one was done by Capcom last year, and we did the second one grossing over $1 million. Our gross net was about $500,000. Even more important or as important, the consumer contributed to charity for about $240,000, generating over 3,000 jobs in developing countries.
During the quarter, we also had some minor releases. We had 5 what we call asset care releases. It was de Blob. de Blob is IP we acquired from THQ, and it has now so far been launched at PC platforms on Steam, number 1 and 2. We also released Darksiders on Wii U, probably one of the last releases ever made on that platform. We released another THQ IP we acquired, Lock's Quest. Finally, we released a asset care product called Neighbours from Hell, which is original IP created by JoWooD in the early 2000. That was released on mobile platforms. We also had 2 publishing titles together with our long-term business partner, Wired Productions in U.K. It was Victor Vran and Torchlight. Those releases was only done on physical distribution on our side.
The cash flow from operations, as you can see, increased considerably from SEK 2 million to SEK 21.6 million. The percentage margin increased on both EBITDA level and EBIT level. If you have read the report this morning, you could see on page 12 that we have implemented a new quarterly information. That has been not a demand, but a request from major shareholders and analysts to follow the company over longer time periods. Here you see some quarterly information that are relating to the sales. If you read these numbers, you can understand our business a bit more on a long-term basis. Obviously, I would like to compare it to the Q2, as you can see here at the right-hand side. The gross margin are at peaking or a record level of 72% and in millions, SEK 61.3 million.
That is because of the very high percentage of digital sales. The margin, as you know, are higher on digital sales. If that sales has been driven on our own IPs and back catalog IPs, that is then becoming even higher margin. Looking at the net sales split between own titles and publishing titles, 77% of our business in the quarter was generated by our own titles and 23% on the publishing titles. Looking on the specific quarter, the new releases I talked about, the seven of them, they collectively generated, I would say in this case, only SEK 13.7 million. The back catalog, including obviously the Darksiders and everything else we've got, were SEK 71.9 million. 84% of the business or net sales in the quarter was generated from the back catalog.
If you look at the information about the relation physical and digital sales, a record high, 69% came from digital sales. Again, that is because of the high percentage of back catalog promotions. You can find quarters here, and you are very welcome to ask questions after my presentations about because if we are having a new release, a larger new release, and especially on console, you would see a higher percentage of physical sales. This KPI or information will vary over the quarters, obviously. If you look at the balance sheet, it still looks healthy. We have a cash position at almost SEK 125 million. Together with the unused credit facilities of SEK 38 million, our total available cash position at the end of June were SEK 163.5 million.
Another very interesting note you can make in the balance sheet is the intangible assets that are driven by our continued investments into the future releases. That position were at the end of June, SEK 338 million. The comparable number last year was SEK 144 million, and end of the year 2016 was SEK 228 million. We are still investing more than the cash flow generated into new releases. This SEK 339 million, you can compare this to another KPI or information we've given that the total completed development in the first half this year was only SEK 2.7 million. Equity stands at SEK 394 million, giving a solidity of 75%. Looking at the depreciations levels, the IP depreciations are stable at about SEK 3.4 million.
The game development depreciations are actually becoming lower because we haven't, as stated, released any major completed game development projects. IP investments have been almost zero. We made one acquisition in Q1 for a nominal amount, and that's why it doesn't show anything here. The game development and royalty advances were a bit lower than Q1. It was SEK 58.6 million compared to SEK 67.2 million. The reason for the differentiation was different milestone payments to external development projects. This number goes not only with the month but also milestones according to projects. Capitalized internal development are increasing because we are increasing the headcounts in our internal studios. That number in the quarter was SEK 14.4 million. The total headcounts, and that includes all contractors and internals and external people working on full-time for THQ Nordic are, at the end of the quarter, 423.
That could be compared to 372 end of last year. Here we have a slide showing perhaps the most important stuff, what will happen in the future. We have changed the model of how to do this in reporting. Rather than stating only the next quarter, we are stating now all the announced products. If you want to find out the exact release dates on every product, that is from my side, ongoing business in Vienna, and you can find that information on thqnordic.com. Looking at this list, this is the 13 projects announced. Some publishing titles will be in addition to that number. For example, "theHunter." "theHunter," we would not have any development in the balance sheet, and that's why it's not counted in the KPI.
One major news today is that "Aquanox Deep Descent" has been moved to 2018 in order to polish and maximize the potential of that product. We have replaced that with another title called "Black Mirror." "Black Mirror" is the IP we acquired a few years ago. It has been a successful IP. It has been already "Black Mirror" 1, 2 and 3, and as many of our other IPs, it has been quite successful in that genre in certain territories such as Germany, Eastern Europe, and partly also Canada and the U.S. That we'll release at the end of the year. According to management expectations, both titles have a similar potential. Also, I would like to point out today that a lot of titles have now moved to Q4.
I would say our absolute majority of the incomes for the remaining part of the year will be in Q4 rather than Q3. Q3 will be a very operational, hectic period with, for example, Gamescom next week, but also a lot of marketing, PR, and sales, and obviously finishing all these products in order to get them out. Talking about operational things, I would like to point out that development is not only the bottleneck of the company. We have a lot of projects, and perhaps someone could be surprised that we could pull up "Black Mirror," we have as a principle tried to complete quite a lot of our products and choose the right time to release them, when we have a capacity in the organization to do the marketing, PR, and sales, because that's one of our major bottlenecks in Vienna.
Each title deserves and requires a substantial amount of time to do the PR, marketing, and sales. We have still these two mobile titles in soft launch, The Muscle Hustle and Snipers vs Thieves. We are expecting that Snipers vs Thieves will be the first one out, and that would be fairly soon. It will be very interesting to follow that. That will be through a third-party publishing partner. As stated, next week we have the major trade show called Gamescom, where we would have a major event both on the consumer side and business side. I know a lot of people from Sweden and investors and a lot of other people are traveling down there. We are really excited to really show off our lineup. A lot of our Q4 releases, if not all, would be playable in almost final stages.
That was the presentation for the second quarter 2017. Thank you. I think we start off with some questions. I have some minor questions on my own, but let's take some questions from the audience. Okay. Nothing? It's Chris. Okay. Kristoffer.
Hi. Kristoffer from Redeye. Congratulations to your report, Lars.
Thank you.
The promotional bundles for all the Darksiders titles, is that something that has continued in Q3 also? If you look at the catalog sales, or was it a burst in conjunction with the-?
Well, I think that specific Darksiders promotions, they were running in May.
Yeah.
That is not running into Q3.
Okay. Yeah.
We are always trying to promote our back catalog as much as possible. I would say that Q2, it was a lot of promotions on the digital side.
Yeah. Okay. Thank you. Yeah. Okay. I can take a question also on Darksiders. When you made this promotion in May, do you feel that you have expanded the fan base of the Darksiders franchise?
Yes. Well, when we made the announcement, the trailer we made had 2.3 million views only on IGN and YouTube. Obviously, there has been a great interest, and we are not tracking everything. I would say, I'm sure a good amount of the buyers were old fans that want to replay the products. Obviously, I'm sure, and I'm convinced that it was also a good amount of new players that would like to play the games in order to be played up for the release 2018 of Darksiders 3.
Mm-hmm. How is the franchise performing on Switch?
It's not released on Switch.
Oh, okay.
Wii U.
Wii U.
Well, Wii U is a very old format. It's the end of the stage of the life cycle of Wii U. I would say it has been according to our expectations. It was a promise we made last year to release it on Wii U, and I would say the fans was really happy that we actually fulfilled that promise. We made our money back. Obviously, it's not the key products or key formats anymore.
Mm-hmm. Okay. Is it some other titles except for Darksiders that you want to highlight? I noticed that, for example, This Is the Police had almost 370,000 copies owned on Steam Spy. I think it was below 180 last time we were here.
Yeah, I think, looking at on our Steam promotions, obviously Darksiders is one of the best sold, but also This Is the Police is one of our best seller products, and I'm very happy that we acquired that title from the owners end of last year. That will be a long-term seller.
Is that a title performing on a console as well?
This is a PC title. I would say we made our money back with a good return of investment because it was quite low on PlayStation 4 and Xbox, but this is a PC product. It fits our catalog well, and we're making promotions on PlayStation, Xbox. We can do some heavy discounting and get some good revenues. Another title performing well, I would say, is Titan Quest Anniversary Edition on Steam. That is constantly one of our top sellers. I'm really excited about that IP.
In the future?
Yeah. It's a quite old IP, but has a huge fan base, and it continues having new fans joining.
Okay, concerning the beta test of SpellForce, I don't know what to expect. I'm pretty new to this industry, but I noticed that it was 65,000 owners on Steam.
Yeah.
Is it really good numbers?
Actually, I didn't know that you can track the beta on Steam. Steam Spy is an unofficial product, so you can't really trust those numbers 100%. I would say we are very pleased with the beta testing. It has been a multiplayer testing with a lot of feedback, good and bad, in order to improve the multiplayer experience. Obviously, we can't please all old fans, but we are certain that SpellForce 3 will be, I would say, a pleasant experience.
Really good to hear. Also last time we were in this first quarter report, we spoke about broadening the fan base of ELEX and the Piranha Bytes fans to the U.S. market.
Yeah.
Can you say something on that, how that has turned out?
I think reading the feedback and hearing the feedback when we were at E3 and from written sources, there is people really going for that IP also from America. We can now track the pre-ordering on Steam, for example, and see from which countries they are.
Obviously, we can see the fan base in Germany, Russia, Poland, but also in America.
Your expectation on ELEX, is it the same as it were six months ago?
No, I would say it's the same.
It's the same.
I'm confident it will be a decent return on investment.
It's a new IP. It's a Piranha Bytes game. It's super nerdy, heavy, open world, 100 hours. It's not a game you play for five minutes for fun.
Battle Chasers is communicated, and The Guild, you haven't communicated the release date yet?
No, we haven't. We are finally showing something good at Gamescom, and it has been a challenge developing that. It has been a quite small team. It has been for a long period. It was done in the old engine, the old Darksiders engine , which now is becoming the only game made in that engine. It has been various discussions how to please the fan base, user interface and so on. We are now confident that it will be, for the fan base, a good product.
Still released in Q4? It's achievable?
Yeah. It was one of the five titles, I would say if I had any information it was 2018, I would have said that today. Obviously, until the game is actually released. Today I don't have any other information that the game will be to the consumers this year.
Okay. Any questions? Should I just go on? From the teleconference.
Ladies and gentlemen, if you wish to ask a question from the phone lines, please press 01 on your telephone keypad now.
Okay, I just can go on the IP acquisition side. Basically nothing. It's just a small nominal amount. Is it few objects out there or is their price tag simply too high?
I just think it's a mixture of reasons that we haven't made any major acquisition. Obviously, the price tag has been in a few cases just outrageous, and I won't pay that price. Sometimes just takes time to complete deals. You sometimes have to dealing with parties that doesn't have a very keen interest to make the transaction. It could be either a big corporation or someone that are not used to that kind of transaction. I'm not stressed. I'm sure we will make some good acquisitions over time. Unfortunately, we haven't made any really this year so far, I'm sure it will happen sometime in the future.
The number of leads is increasing or the same, or?
I wouldn't say there is no other competitor showing up. I think the situation is the same. There is a lot of IPs out there that we could do a much better job of actually owning than the current owner. In theory, there is a lot of deals we've made. On the other hand, we have a lot of assets already. As you can see, we're popping up new titles and products just from the war chest. We can continue just using that pool of assets and IPs for a considerable amount of time.
I guess it will be exciting times next week when you will speak about the new IP. I guess you won't say anything today, so I will not even ask. Questions from the audience? I think otherwise I'm pretty done.
Thank you, Lars-Ola. Thank you very much. Thank you for coming here today.