Good morning, everyone, and welcome to EG7's second quarter earnings call. My name is Robin Lundell, and I will be your moderator during this call.

With us today, we have Ji Ham, CEO, and Fredrik Rüdén, Deputy CEO and CFO, who will guide you through our Q2 earnings release. We will round off this presentation with a Q&A session, and if you have any questions, you can email them to the investor relations email.

With this, I hand it over to Ji.

Thanks, Robin. Good morning, and thank you all for joining us this morning.

We will start with the highlights for the quarter and some updates on releases coming up for Q3 as well. Then Fredrik will go through detailed discussion relating to financial performance for the quarter.

Then as Robin mentioned, we'll go through the Q&A session. Let's start with the numbers.

Next slide, please. For the second quarter, net revenue came in at 475 million SEK, which is 25% higher from last year, 30% growth in constant currency.

Adjusted EBITDA at 99 million SEK compared to 37.5 million SEK last year. The margin improved by up to 21% by 1,100 basis points from 10% last year.

Net profit came in at 42 million SEK and EPS at 52 cents SEK. Operating cash flow was 120 million SEK.

This number does include working capital benefit at Fireshine for developer royalties that have to be paid in the third quarter. If we exclude working capital movement, we're looking at operating cash flow of 94 million SEK.

Next slide, please. Every business unit for this quarter grew adjusted EBITDA from last year.

Fireshine with net revenues coming in at 160 million SEK, that's up 127% local currency. Adjusted EBITDA came in at 53 million SEK, compared to 3 million SEK last year.

Far Far West was the key driver for Fireshine, sold over 1 million units in the first couple weeks of release, early access PC title on Steam. Players are really enjoying and loving the game.

It's currently sitting at 96% overwhelmingly positive rating on Steam, which is amazing. We expect Far Far West to be a nice contributor beyond 2026 as well, as the current plan is 1.0 release on PC and all the consoles planned for 2027.

Back-catalog sales also contributed nicely for Fireshine, led by Core Keeper. For Big Blue Bubble, net revenue came in at 71 million SEK, that's 21% higher compared to last year in local currency.

That represents growth for Big Blue Bubble for the first time in five quarters, which is nice to see Big Blue Bubble trending back up, growing from year-over-year. Adjusted EBITDA came in at 35 million SEK at 50% margin.

The combination of Clubbox feature that Big Blue Bubble released earlier this year in collaboration with number of influencers have been a nice combination, working really well. T-Pain concert that happened in Q2 was a nice success, and there's more coming with "Weird Al" Yankovic content coming next and additional content with influencers, and additional engagement plans coming up for the rest of this year.

Piranha net revenue for the quarter came in 33.5 million SEK. That's up 53% in local currency.

Adjusted EBITDA of 13.1 million SEK compared to 12.5 million last year. DLC number 8 for MechWarrior 5: Mercs, Chaos Reign, shipped in May, and that was a nice driver for them for the period with the loyal player base for MechWarrior 5: Mercenaries.

DLCs continue to prove that they deliver consistent performance and with each release, it's been quite steady and profitable. Content model that's currently working really well for Piranha, we intend to continue with this.

We expect stable revenues and profitability with this plan going forward. For Daybreak, net revenue came in at 185 million SEK, essentially flat compared to last year in local currency.

Adjusted EBITDA of 8 million SEK compared to 2 million last year. Second quarter is a seasonal low for Daybreak annually due to the timing of its content releases as well as revenue recognition timing.

Highlight for the quarter did include Palia reaching a major milestone of 10 million lifetime players, also released the Royal Highlands expansion in May, achieving its highest peak monthly revenue since our acquisition. The rest of the live service portfolio for Daybreak is steady, performing nicely, and Q3 should be showing a nice rebound as is typical from Q2 seasonal low.

Petrol, not highlighted here, but nonetheless back to profitability and contributing positively to the group. The main takeaway from this particular slide is five businesses, all of which are performing nicely and improving their performance.

Next slide, please. Hey Robin, I think it says no slide is being presented currently.

Can we go back to slide 4? There we go.

Thank you. All right.

Q3 is off to a great start. Fireshine published Denshotak on July 15th, released across PC and consoles, and it's over 100,000 units sold and 250,000-ish Game Pass players currently enjoying the game.

It's sitting at 98% overwhelmingly positive rating on Steam. Fireshine is really establishing itself with the solid track record of consistently delivering high-quality indie titles.

Core Keeper is rated 94%, Far Far West is at 96%, now Denshotak at 98%. With these types of consistent track record of bringing high-quality, highly rated games to market, Fireshine is successfully establishing itself as one of the leading indie publishers in the marketplace.

Another title that came out during the quarter so far in third quarter, EverQuest Legends, developed by GameOn, and published by Daybreak, released on July 28. It's a more casual and approachable version of EverQuest.

It's also single-player friendly. Target audience for this particular title is the former EverQuest players who want to re-experience the EverQuest, but at their own pace without relying on other players.

That's the reason why this is more solo-friendly, single-player-friendly type of game. Game's been very well received, and EverQuest Legends has enjoyed strong start to its life, with former players coming back significantly in volume and highly engaged.

The team is working hard to continue to provide compelling content, and the idea is to be able to establish this title as another long-term live service next to EverQuest and EverQuest II for the overall EverQuest franchise for the long haul. Next one is Aliens: Fireteam Elite 2.

It's our biggest premium title for the year, it's releasing on August 25th, 6 days from now. Some additional details relating to this: it's a sequel to Aliens: Fireteam Elite that released back in August 2021.

It's a third-person action shooter based on the iconic alien movie franchise from 20th Century Studios, co-op gameplay, you have single-player up to four players that can enjoy the game, and it's going to be crossplay across all the platforms at release. It's built to be playing with friends and having a lot of fun, being able to live out the Colonial Marine fantasy, fighting against the iconic Xenomorphs and other type of creature from this particular universe.

High action, high octane, lots of team play that is highly dynamic that we're really looking forward to having the players enjoy. That's coming out in the next 6 days.

It's a double-A title, it's not a triple-A title. It's a solid co-op shooter.

It's meant to be competing against more of that double-A title versus the big triple-A titles, but in terms of the gameplay, in terms of the overall combat and everything else that the team has been able to design and create, we're very proud of what they've been able to do, really looking forward to getting this game out finally for the player base to be able to enjoy. Platform and pricing-wise, it's releasing on Steam, Epic, PlayStation, and Xbox first on August 25th.

Then the plan is to be able to bring this title to Nintendo Switch, too, over the next number of periods later this fall. Base game pricing is at $50 US and premium SKUs priced at $70.

The studio that developed this is Cold Iron Studios. Daybreak is the publisher.

The transaction as proposed and approved by the shareholders at the annual general meeting a few months back to acquire Cold Iron successfully closed yesterday on August 18th. Now Cold Iron development team, all its tech, IP contracts, everything would be moving over to Daybreak under the same umbrella.

This addresses the conflict issue that's been out there, and now Daybreak will have full control over development and publishing of Cold Iron's titles going forward. That's the summary discussion for Q2 and what's coming up next, and now Fredrik will take us through the financials in more detail.

Fredrik, over to you.

Thank you, Ji. Next slide, please.

It shows no picture, if you can go back. There you are.

In the second quarter, net revenue reached 475 million, representing an FX-neutral organic growth of 30%. Both Daybreak, Big Blue Bubble, Fireshine, and Piranha all delivered organic growth in local currencies.

The headwind currency was 19.1 million in the quarter, and LTM net revenue was 1.6 billion, and adjusted EBITDA margin was 18%. Both these KPIs improved from previous quarter, and specifically with the release of Aliens in Q3, net revenue is expected to continue to improve for the reminder of the year.

Next slide, please. More predictable revenue comes from the live service and back-catalog titles.

Net revenue from this portfolio increased 9.5% to 325 million, corresponding to strong organic growth of 17% in stable currency. Over the past five consecutive quarters, this portfolio has, on an LTM basis, had an accelerated organic growth in stable currencies, increasing from 3% in Q2 '25 up to 12% in Q2 this year.

This is a good indication how we perform in a longer perspective. Over the last 12 months, net revenue amounted to 1.6 billion, of which 1.3 derives from the more predictable revenue base.

Next slide, please. Daybreak is the largest contributor to net revenue, generating 185 million.

This correspond to a small organic growth, 0.3%, in local currencies. The underlying operational growth in Q2 comes from Palia, EverQuest 1 and 2, and DC Universe.

The adjusted EBITDA was 8 million, corresponding to 5% EBITDA margin. Big Blue Bubble's net revenue increased 17% to 71 million, corresponding to 21% organic growth in local currency.

Since the introduction of the cooperation-driven influencer strategy, Big Blue Bubble has continued to deliver sequential increase in net revenue between quarters. The latest cooperation with "Weird Al" Yankovic was recently announced, and this strategy and other initiatives give us comfort that Big Blue Bubble will continue to perform well.

This gave an adjusted EBITDA at 35 million, which means that Big Blue Bubble is contributing higher EBITDA than Daybreak from being at the same level in Q1. Next slide, please.

As already mentioned, Fireshine had a great quarter driven by one strong early access digital release of the game Far Far West. Net revenue was 160 million, where Far Far West contributed with 118 million.

The EBITDA margin was 33%, delivering an EBITDA at 53 million Swedish kronor, which further highlight the scalability in Fireshine's digital business model. Fireshine contributed above any other business unit's EBITDA this quarter.

Petrol generated its lowest net revenue over the past 12 months, but managed to stay profitable given its commercial focus and the business optimization efforts carried out. Net revenue was 26 million, and EBITDA was positive.

Petrol continued to secure some important contracts in the quarter and continues its effort to diversify the portfolio outside the traditional gaming market. Next slide, please.

Piranha delivered a net revenue of 33 million, corresponding to 46% growth. Adjusted EBITDA was 13 million, corresponding to 39% margin.

A strong quarter for Piranha following the successful launch of the eighth DLC for MechWarrior 5: Mercenaries. The cost reductions effective from the second quarter also impacted the level of capitalization.

This is the reason why the EBITDA margin remains the same as in the first quarter. Meanwhile, the annual cash flow is improved by approximately 15 million Swedish kronor.

Next slide, please. Now it says no picture again.

There you are. Our financial situation remains solid.

Operational cash flow increased 121 million, which is a 143 million improvement from Q2 last year, of which 65 million derives from working capital fluctuations, timing effects if you may say so, and 78 million from operational improvements already mentioned. We invested 64 million, which is down from 73 million in Q1, and the 73 million is excluding the 101 million settlement for the remaining earnout to the seller of Daybreak, which we did in Q1.

Net debt was 3.6 million. The cash box increased to 344 million, but is following the strong quarter by Fireshine a bit boosted by 78 million in accrued royalties to be paid in Q3.

Together with an unutilized rolling credit facility of 100 million and the bond frame of 1 billion, EG7 has plenty of financial strength going forward. By that, I hand it over back to you, Ji.

Thanks, Fredrik. Now for our closing remarks, let's go to the next slide, please.

Once again, it's a blank slide. Yep.

There we go. Thank you.

Key takeaways, we got five points here to summarize with. The first one is that Q2 was a strong quarter on all headline measures.

Net revenue was up 30% constant currencies on a consolidated basis. Adjusted EBITDA was up 165%.

Net profit came in at 46 million SEK. Secondly, we have strong growth from multiple business units.

Fireshine led the way with 127% net revenue growth, but wasn't the only one. We have Piranha growing at 53% and Big Blue Bubble delivering 21% growth as well.

Third one, every business unit was profitable in the quarter. Everyone showed increased EBITDA year-over-year, some more than others, but the overall portfolio performing very nicely, resulting in adjusted EBITDA margin expanding by 1,100 basis points to 21% for the quarter.

Four, Fireshine is building a leading indie publishing business: Core Keeper, Shadows of Doubt, Far Far West, Denshotak, and just recently released, Duskfade. Fireshine's track record of delivering high-quality indie titles is up there with the best of them.

Along with that, Fireshine's back-catalog sales continues to build, which should be providing nice long-term baseline cash flows for Fireshine. Really exciting to see the continuing success and growth with Fireshine here.

Five, Q3 is off to a busy and exciting start. Denshotak and EverQuest Legends already released.

Next up is Aliens: Fireteam Elite in 6 days, our biggest premium title for the year. After that, My Singing Monsters 14-year anniversary content coming up with exciting new content line up for continuing to drive the strong performance here today through third quarter and fourth quarter as well.

All in all, Q2 was a solid quarter, and Q3 is off to a nice start. That concludes our presentation.

With that, we could move on to Q&A.

All right. Thank you, Ji and Fredrik.

I will start off with a question here from Hjalmar at Redeye. Profitability was up in Daybreak year-over-year, but down quarter-on-quarter.

Is this seasonality related or anything else impacting?

Daybreak has a seasonal impact where second quarter tends to be the low quarter for the year. There's couple factors that go into it.

Q4 typically is our highest quarter, where some amount of revenue from Q4 does get deferred for revenue recognition purposes into Q1. Q1 ends up being a bigger quarter because of revenue benefit that's rolling over from Q4 the prior year.

Sequential comparison from Q1 to Q2 usually shows a decline. That's one.

Secondly, content updates that are coming out in Q2 typically is a little bit lighter compared to some of the other quarters. Combined with this revenue recognition timing issue, you see Q2 being a little bit lower.

Additionally, we did have marketing spend, etc., that did go out for Palia and number of other content updates, some of which the revenue would be recognized in Q3. There's a little bit of that deferral mismatch there as well.

Those are what's contributing to what seemingly is a lower EBITDA number in Q2, but some of that benefit will be coming into play as that gets recognized in Q3.

Right. Thank you, Ji.

Another question from Hjalmar. Can you share anything about total wishlist for Aliens on all platforms?

We're not disclosing that, but it is on a nice trajectory and has performed better than the first title. There's data that we have made available for how the first game has done.

The first game sold 3.7 million units life-to-date, and then additional close to 5 million sort of engagement from Game Pass as well. In terms of how the wishlist built for that first game compared to how we're building now, we feel we are ahead of it with the nice momentum going into the release next week.

All right. Thank you, Ji.

Another question from Hjalmar. You mentioned marketing costs in Daybreak for Aliens.

Can you comment if this had a notable impact on EBITDA?

For Q2, not significantly. Q3 is where most of our marketing spend will be spent along with the prepping for release leading into it and then as we're releasing.

Some amount, but not a significant amount for Q2.

All right. Thank you, Ji.

Another question. What platform mix do you expect for the game?

More consoles than PC?

Based on the data points we have from the first game, Steam PC tends to be the biggest platform amongst all the other console platforms. We expect the same for the second title.

All right. Thank you, Ji.

Another question from Hjalmar. You mentioned positive early reception of EverQuest Legends.

Can you comment anything on the financial effects? Will it have a meaningful impact on Daybreak in Q3, or any cannibalization from EQ1 and 2?

We expect it to contribute nicely to our Q3 figures. In terms of its performance, we're happy with how it's performing.

There's definitely some level of players that are playing EverQuest as well as EverQuest II that are trying out EverQuest Legends. Our expectation as always been when you combine EverQuest and EverQuest Legends, 1 plus 1 may not equal 2.

It may be slightly less than 2, but 1 plus 1 will be higher than EverQuest just being 1 on its own. On a combined basis, we look at the overall franchise performance, EverQuest, EverQuest II, and EverQuest Legends.

On a combined basis, it's performing significantly higher prior to EverQuest Legends release.

All right. Thank you, Ji.

We have another question regarding Far Far West. What's next for Far Far West?

Any content updates planned for H2 2026, or is it fair to assume v1.0 during 2027?

The primary focus for the team is v1. So 1.0 is where a lot of focus is going because that's when the game would be coming out of Early Access, along with that it would be being released across all the other consoles as well.

Major milestone that they're aiming for. Of course, they do want to continue to service the existing player base, there could be additional content update.

Primary focus, significant majority of the effort is going into prepping for that 1.0 release.

Right. Thank you, Ji.

Another question. What do you expect for investments in Q3 excluding the Cold Iron acquisition?

Is Q2 a normal run rate?

The investment size for Q3 excluding Cold Iron so Fireshine is the one that's investing into additional publishing titles, and we have some small amount of investment that's going out from Piranha for continuing DLC development for future title, and a few other investments that are being made for R&D relating to potential new titles that are being made at Big Blue Bubble as well as Daybreak. Comparing Q2 to Q3, if we strip out investment that's going into Aliens: Fireteam Elite, we expect that number to be generally similar because of the ongoing investment that Fireshine is making into additional titles that they're securing.

Right. Thank you, Ji.

Another question. With Cold Iron now being a part of the group, how do you see Cold Iron contributing to EG7?

I think there's number of ways that we expect to benefit from Cold Iron being part of the group. The games that they've developed the last two, right?

Aliens: Fireteam Elite as well as new game coming out, there's been significant investment that went into building out all the gameplay, all the systems, all the combat, etc., that we want to be able to harness for anything new that we do going forward, where a lot of those types of gameplay systems and features could be utilized for other types of games that we have in mind, including to the extent we're able to deliver nice success with the second title, there could be additional opportunity with the franchise going forward as well. We look at Cold Iron's contribution going forward as the expertise, tech, and the foundation that's been built relating to a very specific type of gameplay that Cold Iron specializes in that we want to be able to leverage that for continuing content development along a similar type of game.

As we talked about in the past, we're big fans of being able to continue to refine what works, 80-10-10 model. We want to be able to continue to build on that with Cold Iron's tech and gameplay specialization.

We expect to utilize those skills that tech and assets to be able to whether it's applying to a game like an H1Z1 or additional Alien title, that's what we're looking forward to being able to do.

Right. Thank you, Ji.

We have another question from Stephen. How does Big Blue Bubble view the balance between continuing to build on the successful My Singing Monsters franchise and developing additional sources of revenue?

They're always exploring new opportunities, but it's a bit like a portfolio management in terms of managing or personal investment portfolio, right? The lowest risk for them is to continue to invest in My Singing Monsters, servicing the sticky audience that they have, which has proven to be quite good in terms of revenues as well as profitability and ongoing retention and engagement of that user base.

They'll continue to be doing that, but additionally utilizing the same know-how, expertise that they've been able to build with My Singing Monsters, they are exploring other types of game that leverages that type of mechanics. Those types of efforts are going on.

Of course, some of those are prototypes, has to be a lot of testing before they decide whether some of those could come to market or not. If you're looking at it as a portfolio as to how much sort of time and effort is going into new versus My Singing Monsters, significant majority is still going into My Singing Monsters.

As we've seen, Clubbox feature that they just released earlier part of this year, brand-new feature that wasn't there last year, now it's there. What we see is that even though game is turning 14 years old, investment into existing title with a captive audience that they've been able to continue to satisfy new ways of engaging with the game has significant upside.

It's always balancing that, there's not a perfect answer. Nonetheless, team, of course, always wants to be trying something new, and they are doing that.

Then to the extent we're able to take some of those prototype to a stage where we feel like, hey, these could be commercially successful, then we would be disclosing those and bringing those to market. For now, I would say significant majority of their time and effort is going into continuing to build and improve on My Singing Monsters because we believe that there's more upside there.

All right. Thank you, Ji, and thank you, Fredrik.

I think this concludes our Q&A session. If anyone has any further questions, you can reach out to our investor relations email.

Thank you, everyone, for listening in, and have a good day.

Great. Thanks, everyone.