Hello everyone, and welcome to this Q1 presentation of financial year 2026-2027 for Coffee Stain Group. I'm Anton, the CEO, and I'm here with Erik, our CFO.

Without further ado, let's head into the presentation.

Yeah. This is the agenda for today.

We will have the quarter in brief, a short summary, and go in some more depth in the game portfolio update. I will talk more about the financial performance, and we will end up with a Q&A.

Sounds good. Let's do it.

You can send in the questions throughout the presentation to our IR mail. Let's start.

Quarter in brief, headline is quite clear. We have a very strong financial quarter, but with some mixed operation outcomes beneath it.

Our net sales was 253 million SEK, which is a growth of 37%. Cash EBIT was 95 million with cash EBIT margin of 38%, and we had some very good free cash flow conversion on that to 100 million SEK.

Anton, what shaped Q1?

Yes. This quarter was the two big things that shaped the quarter was the Rogue Core release, which a lot of people obviously was waiting for and that has had, we'll talk a bit more about that, of course, but then obviously Satisfactory 1.2 as well that released in June, which has had a big, yeah, is an important game that keeps keeps contributing.

I think, I mean let's let's move into it and we will we'll continue.

Yeah.

All right. Some of the operational highlights.

I think it's worth just getting straight into Rogue Core, which we understand is on everyone's mind. Most of you guys who have probably also been following the release, we can also be clear that it's not gone according to expectations and it's clear that the game has not fully aligned with the audience expectations of the Deep Rock franchise.

When it released, it had initial very strong sales, but then it declined rather quickly when you also saw the reception has been problematic. It's obviously full focus on that.

Ghost Ship is working hard on the situation and now they need to kind of assess what to do basically with it. It's a game that they worked on for quite some time, but it's also a reminder it's always very hard ahead of releases to know exactly how it's going to turn out.

This is an Early Access game just as a lot of our other titles, it's a lot going to depend on what steps they take from now and forward basically. It's been a tough launch, something to come back to in the future and talk more about.

Then we have Satisfactory that released the 1.2 update that had been previously on the experimental branch, but it went into public in early June, which was very well received by the Satisfactory audience and the engagement is continuously very high in the game. We happy to see the strong support from the players and the activity.

It's not a material impact maybe on the quarterly. It's a game that we have done a lot of updates on and just as with this one, it's been free updates.

What they do is that they continuously kind of revive the activity and for the players, something to come back to and a lot of refinements, but very well received. Then in addition to that, the console releases that happened end of last year, they keep contributing well for Satisfactory as well, so that's nice.

Then we have Fellowship, it's been a lot of talk last quarter. We talked a lot about Fellowship that has had a rocky start since we took it over.

Last quarter, we had a lot of focus on the coming Season 3 release, which this was the biggest update that the game had had so far, was a big season that launched in June. We can conclude that sadly, that release has not had the impact that we needed basically to kind of keep supporting the game on that level of investment that has been running.

We have taken actions on that, now from Q3 and forward on, we will see a lower cost for the development of the game. And...

We're going from a headcount from 35 to approximately 15, more focused team

with... That's also it's obviously going to have some impacts on development, but we think that also in some cases smaller teams can actually have positive effects as well where you can be a smaller team, more focused, so.

Yes. Then the fourth thing we want to highlight here is that we finally have a release date for Valheim, which was announced during the quarter.

It's coming out now on 9th of September and we also going to put it on PlayStation 5 and Switch 2, which is going to be very exciting. Switch 2 obviously a new platform for us.

It's going to be interesting, but this release also is a game that has been out for quite some time and I think we need to be kind of a little bit cautious about expectations, I think. It's very hard, as we need to keep that in mind.

It's a game that's been out for 5 years now in Early Access and roughly 5 years, and it's a very important and successful game. We very excited, something to keep an eye out for when it happens in September.

Definitely.

Yeah. All right.

Yeah. A bit on the roadmap ahead.

Yes. Already touched a bit on Valheim, 1.0 coming.

In addition to that, we also have multiplayer for Teardown consoles that is also coming. No date as of yet, but we saw that when it released on PC earlier this year, it had a very nice impact on Teardown.

It's also I think a very natural thing for that game that a lot of players have been waiting for. We are very excited to see when it also hits consoles.

Hopefully that will be a very positive once it gets there. In addition to that, there's more things going on in Coffee Stain and we have a bunch of them here on the right side.

Lightyear Frontier working on the 1.0 release, Wielders of the Essence from Lavapotion, a game that came out of a little bit I guess of a surprise that can happen, a smaller game that is slated for a late-year release. Then we obviously have Into the Unwell, which is a really cool title that we have in the publishing portfolio that is announced.

These are things we highlight. Also want to be clear that this is not the full kind of pipeline for Coffee Stain Group.

We don't...

Also the studios...

The studios do their announcements and it's important to keep that in mind. You need to keep track of the studios are responsible of announcing things.

You can kind of think of it like that that we keep working on the big IPs like Valheim, Satisfactory, and stuff and there's always kind of work ongoing and, yeah, but it's announced when it is announced.

That's a good summary. Okay.

Let's talk more about the financial performance in depth.

Yeah. We,

as said, we saw a very strong year-over-year growth of 37% on net sales that is mainly supported by the launch activities talked about on Rogue Core, which contributed 48 million in this quarter on the launch uplift. Besides of that, our baseline is growing year-over-year.

It's amounted to 190 million. As you can see in the picture here, you have a decrease versus Q4 and that is mainly driven by in Q4 we have a very strong publisher sale that is a yearly event.

That's more of a seasonal effect, you could say.

Yeah.

If we then see that cost base is under control, that's translate this quarter cash EBIT into 95 million. If we look more in the cost base, we can see that the total cost is down 21 million versus Q4 and that is partly driven by a lower third-party support, which we also talked about previous quarter.

Yeah.

We aim to reduce that further. Fellowship, the new agreement there, is a good example where that will be executed going forward this year.

Then many of the other titles like Goat Simulator, for example, and Satisfactory, we have had a lot of help from outsourced studios on work on the console versions. Many of these games have a lot of different SKUs, and at times we take help from outsourcing.

Then at some point either we kind of take stuff in-house, or in some cases it just doesn't need as much work and effort, it's a natural. It can take some time to kind of bridge those.

It's not something we can do exactly, yeah.

Okay. Let's zoom out a bit and look at the last 12-month performance.

We can see that on net sales, we are above 1 billion SEK with a organic growth of 10% year-over-year. Very solid cash EBIT margin with cash EBIT on 391 million SEK for the last 12 months.

Our finance position strong, 722 million in the cash at end of Q1. We can still see that roughly 75% of the total cost base goes into our core IPs and that is also intentionally and still 90% of the net sales are generated from there.

That figure is a little bit lower now, mainly because of I guess Fellowship that is not an internal or it's an IP that we own, but it's developed by an external.

It's not a core IP.

It's not a core IP, exactly, yeah.

Also we can repeat that the board's ambition is to return approximately 300 million SEK to the shareholders with a proposed dividend of 152 million that would be on this year annual general meeting in September. Then in addition to that, we have a repurchase program for up to 150 million SEK that will be from the new regulation in December 2026.

There you need a new decision from an extra general meeting. We can repeat that message that we talked about in Q4.

Mm. I think that was it.

Yeah. Should we head to the Q&A then?

Let's head to the Q&A.

All right. Do we have any questions?

We do. Let's start, first question here is from Lucas.

We have a question about paid content in Valheim and Satisfactory. "Are you looking into being able to release paid content for Valheim post 1.0, and also about Satisfactory?"

Question for you maybe?

I can say first on Valheim there, I think that Coffee Stain, we would really like to do that. I think it would be very well suited for it, but ultimately when it comes to Valheim, it's not our own IP and it's Iron Gate, the studio that is in control of what content we make on that game basically.

We talk with them and we will see and there's nothing planned at this point, so. If there would be plans for that, that would be announced through Iron Gate's channels.

You would probably see it on Steam or platforms where it's available if it would to happen in the future. Then on Satisfactory, there's nothing announced on that, but what we can say obviously is that we have a large team and we continuously work on Satisfactory.

It's one of our most important internal IPs, and when and if there would be some news on that, you would see it from the official channels. Our strategy is obviously to over time it's always this balance where we usually want to support the games, we want to grow them, and then over time we obviously want to monetize them in a nice way where we care a lot about the player perception.

At some point, I think we've done DLC in the past, and I would be very surprised if we wouldn't do a DLC in the future for other games as well, so.

Yeah. Great.

Next question is from Tomas Nilsson at Nordea. First question is about Rogue Core again.

We talked about it. Say that, "You mentioned that further investments in Rogue Core will depend on improved player engagement.

What KPIs are you monitoring: concurrent players, Steam reviews, or monetization? What timeframe will you decide?"

Yep. It's not like me and Erik here sit with a framework for this.

It's Ghost Ship that is responsible for the title. Want to just be very clear that obviously the launch has not gone maybe according fully to plan and the reception has been tough.

It's still an important game and what we do is basically we measure a lot of these different KPIs. The activity and the ongoing revenue generation is obviously very important, we want games to sustain their continued development.

All our decisions are always based on the belief in that we can see a return on them basically. It's very hard to say now.

It's very early, the game released, it was not long ago, Ghost Ship is assessing the situation and then they will come up with a plan basically. We will see what they come up with and, yeah, they will take the good actions based on that.

We have very high trust in them, yeah.

Next question about Valheim 1.0 and console launch opportunity. "How should we think about the commercial opportunity for Valheim 1.0 and PS5 and Switch 2 launches?

I think you touched upon it on the presentation."

It's a very hard one, I would say, and I think with any release, it's always very hard. Thinking back at when we released Valheim, our internal expectations were very low compared to how that turned out.

Or then it can also be examples like Rogue Core where the expectations were higher than it turned out. Now we know that Valheim is a very good game, from that point of view, I'm rather sure that it should be well received on the PlayStation 5 and Switch 2 since it already well received on Xbox.

That said, Coffee Stain historically, we are usually stronger on PC. It's also a game that has been out for a very long time, without kind of giving guidance, because that's not what we do here, I think it's worth looking into generally how games perform.

In general terms, I would assume that a game that releases day and date on all platforms usually do better on consoles than if you release consoles later, so that might play against us. At the same time, it's a big game.

I think the range that we could see is very high. It's hard to

predict

it, and that's the honest answer. I think it's hard to maybe be more detailed than that.

Okay.

Next question is about Satisfactory, the console impact versus organic growth. "Satisfactory continue to exceed expectations.

How much of the recent strength was driven by the console launch versus underlying engagement, and how should we think about its growth from here?"

I think it's fair to say that console is making up a large, if not the big addition for this period. It looks rather stable I think on PC as well, and the activity is slightly higher, but again, these updates like the 1.2 now that we released, for example, is a free update, it doesn't have that material impact on kind of the sales performance.

Yeah. Great.

Okay. Next questions, Jesper Stugemo, Handelsbanken.

I think a couple of questions also about Valheim, Rogue Core, and also maybe a question about live service monetization strategy. "Could you elaborate on the monetization strategy across Satisfactory, Teardown, Valheim, Deep Rock, particularly with the balance between paid DLC and free updates?

For example, to what extent did Satisfactory update drive incremental sales or player engagement?" I think that we already answered.

I think you can just say that all of the games have different strategies. They are run by their own typically the studio runs the game, all of these titles, all our core IPs have their own strategies.

We think that's the best because if we will have to have just one strategy, it would not be the best. We let our teams that are close with the communities together with the people like me and Erik or the people work on publishing, we have a lot of expertise within the group, we try to just make the best possible strategy for each different title.

Generally, I would say that we try to grow the games, and to grow the games, you need to deliver content, you need to make the players happy, and then over time you want to find a nice way to monetize it that doesn't feel kind of predatory. The strategy that we employ is we kind of recognize that our titles is not we're not like AAA titles, we're not like a total games-as-a-service focused business.

We do have some really big in our soup of titles that we keep, just look at the results of these games, they keep performing year after year. We take a lot of inspiration as well from other similar games I think in the industry and we really try to make the best possible decisions at all times around these strategies.

You could somewhat say that I think that the more mature a game becomes and the bigger it becomes, the more it might go towards something that resembles live games-as-a-service. It's also kind of a word that I want to be a little bit careful with using it because I think it also comes with a lot of that word means so much, yeah.

I think that was a...

Yeah.

...answered the question. Also a question about depreciation and amortization here.

"So our operational depreciation and amortization was 76 million versus only 30 million of the current investment in capitalization. How long do you expect this gap to persist, and does this lower capitalization indicate a smaller development pipeline or simply fewer projects meeting the accounting criteria?"

I think I can answer that question. As said that it's rather that we have a fewer projects meeting the accounting criteria now.

We are a bit more careful and doesn't want to capitalize, the total investment in games are as a cost base. We have a very low overhead cost and we try to put as much as possible into our games.

That hasn't changed. Regarding the question about the gap between that we have a higher operational depreciation is that basically a big part of it is that when we transferred Fellowship in a non-cash transfer from Embracer, you inherent a value of 173 million, which we depreciated over 2 years in our depreciation model.

That's impact. Now we release Rogue Core, and also Huntdown over time also helped, like a long

development time.

That is also, of course, impacting, especially since our model is you have a higher depreciation in the beginning and then it gets lower and lower. It depends, of course, on the games we release, but we try to have a very strong balance sheet and not get into impairment question going further, so.

All right. Okay.

Next question, Viktor Lindström, SB1 Markets, a question about additional marketing cost. "Will there be any additional marketing cost that we should be aware of in Q2 given your attendance on Gamescom and with the 1.0 release of Valheim?"

Erik, I don't know if we give any kind of usually, what we can say is typically we are very cautious on marketing. We usually don't do a lot of, but in this case, maybe we can say that there might be a little bit higher, but it's not going to be something extreme.

We're obviously, yeah, we're going to go to Gamescom and that's not cheap, it's something that we will evaluate very closely and see how that turns out. It's also...

I would also say that Valheim, they've been out for a couple of years as a massive player base. Of course, we want to re-engage it and remind all the people of the fantastic game, so.

Exactly. It's like a celebration, and it makes a lot of sense on that title, I think, yeah.

You can say that there could be an effect compared to how we marketing our other games normally.

It's not like a new strategy for how we do things, don't think of it like that. No.

Okay. Let's see.

We have questions about capital allocation plan for excess cash. "You will have an excessive amount of net cash including your stake in Iron Gate.

Cash position going forward, will you consider letting the repurchase program be renewed upon completion, extra dividends, or smaller acquisition, or a buyout of Iron Gate, of Valheim IP, et cetera?"

I think the simple answer to that is when we evaluate new business opportunities, it's always very important for us that it has to be something that really fits our portfolio and our culture if we were to look into acquisitions or stuff like that, and the price has to be right. It's going to depend a lot on whether we find something and, but if we keep generating cash flow and if we don't find something, the policy right now is that then we would return share capital to the shareholders.

Yeah.

More on that in future. Mm.

Yeah. Next question from Gustav here is, "The future of the company behind this fiscal year is very clouded at the moment.

It would be reassuring to hear more in-depth discussion about the company's capital allocation management going forward, although the cost-cutting in Fellowship and the possible discontinuation of Rogue Core are welcome. More comments?"

Just to be clear that we said that...

75% of...

...Rogue Core, that further commitment will depend on the evidence. We haven't said that Rogue Core is a possible discontinuation.

Nope.

Just to be clear there. Could you elaborate a bit on the long-term view of...

I think since our strategy, it revolves a lot around the core IPs, that's the main pillar, and we keep investing, as you said, Erik, 75% into our core IPs. There's a lot of investment going into them and we announce things as the teams themselves are ready to announce it, we are not going to sit here and announce that.

Rest assured that there's continued work on this franchise and we also believe strongly that that makes sense. Like if you look at most of the really successful games in the games industry, they've been around for some time if we look at the really big ones, and our hopes is obviously that our games is going to stay there for the future as well.

In 10 years, hopefully you're going to still play Satisfactory, and Goat Simulator, and Valheim, and so on. Then we take our bets on the side.

Right now, we invest 25% obviously in other things, and that could be new small things or internal smaller projects that are not core IPs yet. Hopefully some of those will also be successful in the future, and then we will add to that kind of that group of core IPs.

We think it's a pretty nice allocation strategy.

Great. I think that's a wrap.

Yeah.

Thank you for the questions.

Yeah.

Thank you for this presentation, Anton. Yeah.

Thank you everyone and, yeah, stay tuned for more.