So let's put on our VR glasses and dive into the Q1 presentation of Beyond Frames. Thank you so much for watching, and warm welcome to the CEO of Beyond Frames, Ace St. Germain. Welcome, Ace.
Thank you, Linda. Appreciate it. Hello. As Linda mentioned, my name is Ace St. Germain, and I am the CEO for Beyond Frames Entertainment. If you're not familiar with the XR industry, which is what we say to cover virtual reality, mixed reality, and augmented reality, it is a multi-billion dollar segment that is growing year-over-year quite substantially, and is driven by some of the biggest tech companies in the world. Adoption has grown to be so healthy, that in 2023, it was estimated that Meta Quest 2 headset rivaled the total ownership of current generation Xboxes in the market. That said, strong demand by players is currently met with fairly weak supply of games, and distributor operations are inadequate to meet this demand. So solving for this weakness in our ecosystem is exactly why Beyond Frames exists.
As an XR game publisher, we aim to accelerate the development of player-demanded titles and be one of the leading providers of immersive entertainment in the world. Our business is broken up into two main categories: We have our studios, and we have our publishing. Our studios business relates to all games that we build internally by our in-house development teams. Our publishing relates to the funding, distribution, marketing of games for external studios, as well as our own games. All in all, we currently have 11 games in market, with at least five slated for release through the first half of 2026. Both our studios and publishing businesses monetize through consumer sales of game copies. Our studios also monetize through the acquisition of game development funding. This diversity of product offerings and B2C plus B2B monetization is the cornerstone of our portfolio-driven strategy.
Our game investment strategy is focused on reducing risk through data and partnerships. Through publishing, using internal and external market data, we look for market-fit games and provide last-mile funding, distribution, and marketing support at low cost to us in return for publishing rights. While we take a lower margin on these deals, this approach puts more games in market faster, which gives us an ROI-positive average return across our portfolio and data to understand near-term and long-term trends. Using that data and other player research, we develop products which we have high confidence that players want. More importantly, this commercially-minded approach aligns with the needs of our distributors and other publishers, who are happy to share the risk through providing project funding for a share of our upside. On average, this means we lose very little on non-performers, while still seeing strong returns for our winners.
Which leads me to our Q1 performance, where I'm happy to say that the aforementioned de-risk portfolio strategy delivered another record-breaking quarter for Beyond Frames. It is the highest sales we've seen in a single quarter in the history of the company, with sales reaching SEK 59.6 million, which is a 245% increase over Q1 2023. Furthermore, we were EBITDA profitable with SEK 8.1 million, compared to SEK -249 thousand last year, and profitable after financial items with over SEK 660 thousand, compared to negative 3.4 million SEK last year. Cash flow from operating activities before changes in working capital amounted to SEK 8.7 million, and EPS amounted to SEK 4.82.
This quarter continues the positive trend in our quarter-over-quarter growth since establishing a new management team in 2022, and beginning to invest in the current portfolio strategy in the same year. The first games in this new strategy launched in Q1 of 2023, and we continue to experience positive returns from the strategy now in 2024. Income was primarily driven by the consumer sales of our award-winning title, Ghosts of Tabor, and the collection of paid milestones for Cortopia's projects. Our costs are all inclusive of platform fees and partner royalties. This means our OPEX scales with increased sales, which is a big driver for the year-over-year increase in OPEX. EBIT amounted to a small operating loss, and exchange gains captured under our financial items led to a positive net profit for the period.
Cash flow, after changes in working capital, amounted to SEK 7.4 million. Investment activities, which are the capitalized costs for our internal and external game development, amounted to SEK 9 million. We had a net burn of SEK 1.7 million for the quarter, with 5 titles impacting our group's consolidated OPEX. This is a relatively slow burn for future rewards. We ended the quarter with SEK 21.1 million cash, and current internal projections guarantee a 12-month survival. Focusing in on a few of the major highlights. As mentioned earlier, when we talked a little bit about the high sales we had, a significant portion of that was the relaunch of our 2023 Game of the Year bestseller publishing title, Ghosts of Tabor, which is an extraction shooter by our partner studio, Combat Waffle Studios.
They were in store on the early access part of the Meta Quest store called App Lab, but then relaunched on the main store to tons of fanfare and obviously a lot of sales. Immediately after the quarter, I just want to mention that we also launched a small title called Toy Monsters, which is a mixed reality tower defense game by a single developer studio called Habaduda Games. It was a very small investment for us, but we're happy to say that it's currently forecasting to return a positive ROI over the term. The highlight for our studio side of the business in the quarter was the securing of $2.5 million for the widely-...
The anticipated intellectual property that we've teased a few times, but have not openly said exactly what it is, by a partner that is currently under NDA. But we're happy to say that we've secured that funding, which brings the total funding for all of our titles up to SEK 58.4 million from external funding parties. Additionally, our internal studios, specifically Cortopia, received milestones related to the development of all the games they currently have in development, for major deliveries, which we're happy were all accepted. So 2023 was obviously a very big year for us at Beyond Frames, and 2024 is shaping up to be incredibly strong, as you could see from the start of our opening numbers. The future, in general, we feel is incredibly promising.
We already have six games slated for future release, four within our studio group and then two additional games in publishing. Those two games in publishing, just for the record, are by our partner studio, Combat Waffle, who made Ghosts of Tabor, and they have an incredibly strong built-in audience who are already promoting those two games even stronger than they were Ghosts of Tabor. So we're very excited to see how that's gonna pan out. And, at least five of these games we're anticipating to be released by the first half of 2026. It's important to highlight that all these projects are already fully funded by external partners and ourselves. We're not necessarily looking for any capital or any cash to be able to continue and finance these games.
They're already fully funded with our existing resources and partnerships. Ideally, we'd like to put more games into our studio and publishing development pipeline, but with this many games already in flight, our resources are nearly 100% allocated across the group. Furthermore, due to our growing reputation in our category, we've become a preferred partner for studios who are now coming to us exclusively for publishing support, with distributors who are now considering us for additional funding, and for promotional partners who are interested in working with us to expand our reach and marketing capabilities. We believe these deals present a tremendous opportunity for growth, and we're looking for ways to take advantage of them to supercharge our future profitability. Last but not least, the first quarter of 2024 marked our passing of over 1 million game units sold.
Our ability to spread joy through immersive entertainment is our reason for being, and we're incredibly thankful for the players who've gone out of their way to share their time and attention with us. We look forward to continuing to serve players and our partners as we march toward our goal of being one of the greatest providers of immersive entertainment in the world.
Thank you so much, Ace. So you more than doubled the sales, so... and in all, it was a great, strong quarter.
Right.
Can you give us summarize the highlights, please?
Yeah, exactly. So as mentioned, you know, sales were extremely strong for us this year in the first quarter this year. Obviously, the relaunch of Ghosts of Tabor was considerable, and the major milestone payments from Cortopia's projects also added a significant portion to the bottom line. You know, overall, I would say that was really the bright, shining star of it, was the relaunch of this really monster game-
Yeah
... in addition to those milestone payments. That was big for us this quarter.
Yeah. And Beyond Frames, you are in the video games sector or in the industry. Could you give us, walk us through how is it to be in this specific area, the niche that you are working in? What-
Yeah.
Tell us a bit.
And luckily, it's very similar to the traditional games market, wherein we are very focused on... We try to take a lot of a pretty similar structure to the same thing. So there are publishers who help to fund and distribute games, there are studios who create games, there are the platforms, like Meta and Apple. I guess in non-VR, that would be something like... Well, I guess PlayStation's also in VR, but like Xbox, and who help then sell the games to consumers. We make money off of consumers purchasing games. We also make money off of distributors and external publishers providing us funding to create games.
Mm-hmm.
And then where we live in the ecosystem are those first two bunches, which we are a studio group that makes games, and we're also a publisher, helps distribute games, so we're-
Okay. So how strong is the VR market today? Could you elaborate a bit on the growth of this VR, XR market and how we are positioned?
Yeah, sure. So it's been growing steadily year-over-year, and it's been incredibly promising to see how much growth has happened. Meta just announced recently that they've actually had the highest amount of game sales on their platform than they've ever seen. So everything is pointing up right now, which is really fantastic. You know, again, some of the biggest players in the space are participating. You have folks like Meta and Pico and PlayStation and Apple now, like, taking the charge there. And you know, as mentioned during the presentation, you know, we've even seen blips of the market where VR is starting to overtake some segments of the non of the traditional gaming space, and so-
Okay
... that is all looking very good to us.
Yeah, but still, it hasn't really boomed yet. When do you expect it to be a, like, like a mass market?
Yeah, no, it's a great question. It's probably the question I get most often, and I think it's fair.
What do you answer?
Yeah, exactly. I think, I think people, I think people are waiting for this moment, similar to the iPhone, where suddenly, like, the smartphones kind of take over everything.
Okay.
But what I think they're missing sometimes is the incremental growth towards its sort of dominance over specific areas. And, you know, if you were to ask me about 3-5 years ago, whether or not a standalone virtual reality games company could ever find any level of sustainability, the answer would be wildly no. The math would never work out. What's nice about today is that-
Mm
... that's actually quite true, you can. Like, on consumer sales alone, you have games out there making hundreds of millions.
Mm.
That was absolutely not true a decade ago.
So-
And so I think, I think while we're not maybe what we call mainstream, like, I think they say having roughly 10 million headsets in the space would qualify it as being mainstream. But the reality is, we're. While, while there are more units out there, they have, they have a bit of a. I would argue they have a, a bit of a retention issue, which is what we're trying to solve as well with our software.
Okay, so what was it that you didn't really foresee there back in... 4, 5 years ago?
Yeah, it's just the consumer sales and adoption weren't high, right?
Ah, okay.
There weren't enough headsets at home. There weren't enough willingness for people to pay. You know, I would say that there was far less software in the space at the quality bar-
Wow
... and level that it currently is today, so.
Did the pandemic affect in any way, or?
Yeah, positively.
Mm.
So I think like a lot of at-home consumer entertainment, it experienced quite a sharp jump over the period. However, what I'd like to remind people is that if you cut that sharp period out, it's still on a growth. So if you take a look at the numbers from early 2019 to now in 2024, it's still been a-
Mm
... it's still been an upturn.
You mentioned Meta.
Mm-hmm.
Obviously, and you seem to have a nice relationship or position-
Right
... with Meta. How did you achieve that, and how does it affect your... How can you capitalize on that, working with Meta?
Sure. Yeah, I mean, I think like every good partnership, it's about listening. We just-
Yeah
... we decided to start actually listening to our partner and try to understand what their needs were. I mean, if you imagine, they have access to a wealth of information and data about the people who use their headsets. You know, us working with them to understand what kind of games we felt were gonna work for the market, trying to be a little bit more conscious about that, we actually went in and did last-mile funding on projects that they had already funded, so we were inextricably tied in business relationships with games they wanted to get to market. We had an opportunity to talk and listen, and I think made us better partners for it, and that's opened up a lot of opportunity for new development.
Okay, and looking into your portfolio, it seems to be divided in two areas.
Mm-hmm.
You have studio, and you have the publishing of games.
Right.
Could you tell us a little bit, what is the difference between those two areas?
Yeah
... to begin with?
Sure. I like, I think, like, studio is really focused, at least for us, on the development side. Like, what is the game and what game are we making? And then on the publishing side, it's all about the business of the games industry and how we get those games to market. So the studio side, they create the games, and then they earn money on game sales. Additionally, they also earn money from external publishers and distributors for the development of games, so they're able to get B2B and B2C money into that portion of our business. On the publishing side, we're entirely focused on the sales of games.
Where that content comes from is either from our internal studios, as mentioned, or by us looking externally at external studios, providing a little bit of funding in exchange for publishing rights and a revenue share, and then helping those games go to market as well.
Mm.
But we pay a lot less money for the publishing rights than we do building our own internal games.
Okay. Could you explain a little bit how come you are operating in both those areas?
Mm
... and not just focusing on just one?
Right, so we think diversity is a big strength of our overall strategy. You know, when you think about it, there's sort of a feast and famine in every industry, I would say, especially in entertainment, and then especially in games lately. Our ability to diversify not only the kind of games we make by being able to do more of them... If you think about it, we have a limited amount of studios, so we can't make that many games. We could put some really expensive, interesting intellectual properties in the market, but we can only maybe do one of those a year. When it comes to publishing, we could do upwards of five a year, right?
Mm.
5, maybe even 10. It just depends on how much, how many resources we have. And so that allows us to put more, more games in market, diversify the kind of money that's coming in for different audiences. Also, again, as mentioned before, we're able to find different types of money to monetize our business.
Okay.
So that diversity overall kind of keeps us fairly, fairly-
Yeah
... diverse.
And so they work a little bit hand in hand or-
Exactly.
Yeah, okay. You have your studio, Cortopia.
Mm-hmm.
You have three upcoming titles coming-
Correct
... the games, and, can you tell us a little bit more, when do you expect to launch them? What do you expect from them-
Right
... and how do you think they will be received by the players?
Sure. So we have not mentioned any specific names of games.
Okay.
Well, what we have been a little bit more open about is that we plan on all these games launching before, at least by the first half of 2026. And you can imagine a slow drop. We're not gonna drop all of our games in the first half of 2026.
Mm.
But, you know, in terms of our anticipation, we kind of talked a little bit about it earlier, about, you know, being a good partner and listening. So much of what we've done over the last two years is really refocus our energy on understanding what players want and understanding total addressable market. So again, of those three games, one of them is attached to a giant Hollywood intellectual property.
Okay
... that we're extremely excited about. That was the one that received the recent SEK 2.5 million in funding.
When can you give us names?
you know, I am dying to tell you what it is-
Okay
... because I'm the biggest fan of this thing. I could tell you. But we're gonna keep that a little bit more quiet until our partners, you know, given that they're the IP holders-
I'm so curious now.
... when that's
Okay.
You'll be the first to know.
Wow.
One of them is a sequel-
Mm
... to one of the best-selling VR games of all time. We're very fortunate that the studio decided to work with us on that. And then the other title is actually an own intellectual property that we also received funding for. Like, all of the three of these have some built-in audience, the first two I talked about probably more than the last. We're excited about all of them-
Mm
... and we know that fans have been excited to get more of this content, so we're pretty excited about that.
Mm, really nice. But it does seem like... It sounds like quite a big investment-
Mm-hmm
... all those three games and-
Right
... Hollywood and everything.
Sure.
Are they financed or?
Yeah, they're 100% financed between our partners and us, and right, and as mentioned, we've been able to secure over SEK 58 million on the production of these three titles, and between that and our cash in hand, we have no issues getting these games to market without any further support.
Mm.
Anything, anything that we would do would be new-
Mm
... at this point, so yeah.
Okay, and the Hollywood-based title, I need to know a little bit more. How did you work, and how did you manage to make them choose to work with Beyond Frames-
Right
... a Swedish company?
Yeah. Oh, but very, very fortunately, so I've over the last 20 years jumped in a few industries, one of them happened to be entertainment, so luckily we had some contacts there.
Okay.
What was really helpful is we had a lot of passion in-house for the intellectual property, in addition to the superb production quality and design quality inside of Cortopia. We blended those two things together through a really compelling prototype together and sent it to them, and that was probably the fastest yes I've ever heard in my 20 years.
Oh, oh, my God!
So I think we're pretty excited about people finally knowing what this is-
Ah.
and getting their hands on it.
That's nice. But Ace, who are you? I mean, I read about you, that you had been focusing on working in the game industry since you were three years old.
Correct. Yeah, that's true.
I don't know how that happened. But apart from that, can you tell the investors something more about you? Why are you, you the right person to lead Beyond Frames, for example?
Yeah, sure. So as mentioned, you know, as if everyone watching this can't tell, I'm not ... don't necessarily have a Swedish accent.
Uh-huh.
I'm originally from the United States, specifically San Francisco, California.
Okay.
Spent the last 20 years of my career, both in and out of games, entertainment, and technology. Some notable places being Amazon's own Twitch, Twitter, PlayStation, and I've also worked for Warner’s ex-Warner’s company, Crunchyroll. And obviously I've been around the startup scene for quite a while. So, you know, my love and passion and understanding of the business of games is quite, I would argue, quite substantial.
Mm-hmm.
You know, I think that the connection between what VR is and its ability to deliver on fantasy fulfillment for those who are who want that kind of experience allow you know with the amount of contacts that I have, and again, places like Hollywood and other places where we could bring people to be their favorite heroes in their favorite worlds, I think is a match made in heaven. And so I think all the learnings from all those really great, wonderful places and what I'm passionate about, I think brings a lot to the table.
Yeah, it helps. But you have been the CEO for two years now?
Mm-hmm.
How has that affected Beyond Frames? How have you developed the company ... and what is your strategy going forward?
Sure. You probably have to ask them whether or not they like them.
Well-
But
In your words.
In my words, I would say probably the three main things we brought to the table. One was product thinking. We talked about that a little earlier, which is really focused more on trying to find out what the players want, and then how do we build that to put that in their hands? Again, trying to meet demand where it is. I think that wasn't something we were super focused on. I think we're more focused on how do we meet bleeding-edge tech, where it's going, versus focusing on what player fantasies are and how do we arrive there. And I think we've changed fully how we got there. The second thing is our framework for decision on how we make content and what content we invest in.
That was a really big part of my career, and especially dipping into the content, Hollywood side of things for quite a while. You know, being able to spend money on content is a tricky, it's a tricky business. But having a way forward to understand how to de-risk some of these initiatives and how to find your, again, a little bit like where your market's going to be and how much money you should be spending on it, has been a big player. And finally, I would argue, just developing our partnerships arm, like being able to get very good at relationship management, selling, you know, business development, trying to open up opportunities, searching for opportunities, and then figuring out how we can solve for those.
Mm.
That's been a big piece of it.
Mm-hmm. Looking forward to the rest of this year, what milestones are you anticipating for 2024?
Right. Well, I sincerely hope to be able to announce all three games. I don't know if, I don't know if my marketing team will let me, but ... at minimally, I think we're gonna announce two of the games we have coming out from Cortopia.
Okay. Mm.
You know, I think what we hope to do is continue on this ride of great sales and top line and profitability for the rest of the year if we can. You know, subject to the fluctuations in the market, I think those are probably gonna be the biggest things. But, and as a reminder, like, we were able to put our new strategy in play at the very beginning of 2023, so we're just getting started. I hope we can continue to accelerate that this year.
Okay. Thank you so much. Ace St. Germain, CEO of Beyond Frames.
Thanks.
Looking forward to follow your company. Thank you so much for watching.