Good morning, everyone, and welcome to Embracer's Q4 '24-'25 report. My name is Viktor Lindström, being an equity analyst at Nordea Markets and will be today's moderator. As usual, we will start off with the presentation by CEO, Lars Wingefors; and CFO, Muge. And following the presentation, there will be a Q&A session where you will have the possibility to ask questions physically here in stands, online or through the telephone conference. With that said, I leave the floor to you, Lars.
Thank you, Viktor, and hello, everyone, and welcome to this conference call in Stockholm. So let's look at the highlights for the quarter. Our financials came in a bit stronger than expected. Net sales grew on a pro forma basis, 19% to SEK 5.4 billion. Our profitability driven by the solid performance of Kingdom Come: Deliverance II came in at SEK 1.1 billion, which is a 44% pro forma growth. And free cash flow came in close to SEK 1 billion in the quarter. And the performance were very much driven by the solid performance of Kingdom Come: Deliverance II that now is confirmed to have sold more than 3 million copies a bit into this quarter. And we are now looking to launch additional content -- DLC content in the course of this financial year.
We also had a positive organic growth of 30% within Mobile, but also a significant increase of user acquisition spend. Ultimately, this will drive increased free cash flow generation within the Mobile business on the long term. We have a solid slate of new game releases, and I will come back to that later in the presentation. This year, we're looking forward to 2 defined AAA releases, but we do have a very broad portfolio within the group. We expect to release 76 games, new IPs, sequels, remasters. In total, we're expecting SEK 3.8 billion in completion value, meaning invested amount into those games being released in this financial year.
With the strong free cash flow and previous transactions earlier last year, we do have a very strong net cash position, happy to see that we have SEK 5.4 billion net cash and SEK 13 billion in total available funds by end of the quarter. We have continued to adjust the size and structure in the course of last year. And in the fourth quarter, we did some adjustments within Games publishing and distribution. Also really glad to confirm our spin-off of Coffee Stain Group this morning. Coffee Stain Group will be spun off to all shareholders by end of the year. And at the same time, we will also rename Embracer Group to Fellowship Entertainment. I will come back to that later.
We are working very actively on M&A, both looking at potential acquisitions, for example, within the upcoming spin-off as well as looking into opportunities within Mobile. We also look at potential divestments of assets and companies that potentially could fit within better or other structures within the industry. I do believe that, for example, the Easybrain transaction was good for all stakeholders, and they also came to an industry home that will be good for that company as well as we will look into potential further spin-offs -- niche spin-offs of assets that could be stronger using -- utilizing their own balance sheet and having their own equity.
So let's dive into the operating segments. So PC/Console had a really strong performance in the quarter. Net sales came in at just above SEK 3 billion with profitability of 34% or just above SEK 1 billion in the quarter. The absolute bulk of that was driven of Kingdom Come: Deliverance II. So looking at the new releases in the quarter, obviously, Kingdom Come: Deliverance II did very well, but we did have some minor other releases, Tomb Raider Remastered. This one did not perform as well as last year's similar release of the first Remastered. However, we are confident that this game would over time, generating substantial catalog revenues.
We also brought 2 new early access games to the market. The long-awaited Wreckfest 2 developed by our friends at Bugbear in Finland, they released a very early, early access with not so much content. And I think players now in the course of this year on PC would tune into the game, the more content we will bring to the players. And ultimately, this game would in the future -- not in this financial year, but in the coming financial year, be released in a full version and also on consoles. And we did release Hyper Light Breaker also on early access. So far, it has not performed according to our expectations. However, we do -- we continue to develop up until to be able to bring a full version to gamers in the course of the year.
Looking at the catalog titles, happy to see that Kingdom Come: Deliverance I actually was a top performer now 7 years after the release. That's amazing. We also had Payday 3 and Alone in the Dark in the quarter, driven by some subscription or services that those 2 titles was added to. Otherwise, I'm glad to see some favorites on this list. MX -- for example, MX vs. ATV: Legends continues to grow quarter-over-quarter. Looking at our ROI chart. The average total in our combined history, it's somewhat depressing, I have to say, 2x in average is not good enough over time. It's not where it should be, at 3 or more. It used to be 3.5 at peak. However, we are confident that this will grow over time, where we will obviously complete some game investments and release a more focused portfolio of new game releases. This ROI will improve.
In the quarter, glad to see that we had recouped and made a good profit on a cash basis on one very significant release. And then we had some other releases, as you saw on the previous slide on early access where there is a huge investment, and those games are obviously very early. So I don't think this graph on the ROI side gives a full justification to those KPIs here because I think in a way you should measure it when the games are having a full game launch. So looking at the investments and complete the games development, it's the first quarter for quite some time where we actually complete more games in value, close to SEK 1 billion compared to the invested amount.
So we completed games, obviously, driven by Kingdom Come: Deliverance II of close to SEK 1 billion, and we invested into our pipeline SEK 700 million in the quarter. Looking into this financial year, '25-'26, ending March '26, we are looking to have in the current release slate with the 76 games, SEK 3.8 billion of completed games, whereof about 10% of that would fall in the first financial quarter now ending in June. Looking at the pipeline for the year, we obviously have the 2 AAA titles. Define AAA titles? The definition is it should have at least 100 game developers at peak in development. That's our definition. Nothing else.
And the first one out is Killing Floor 3, now confirmed for July release that was delayed from the first quarter -- calendar quarter this year. We are having increased growing expectations that this actually could turn out very well. We have made some improvements from the early build that was showed to players earlier this year. And then by end of the year, we will ship as a publisher, Marvel 1943: Rise of Hydra. Personally, I believe this is a fantastic product. The financials are somewhat more limited because we have shared economics with more other stakeholders, but also more limited CapEx. But outside those 2 titles, we have a range of midsized game releases. For example, from our friends in Skövde, we have -- we're expecting to ship the console version of Satisfactory. From our friends at Tarsier in Malmo, the makers behind Little Nightmares, Tarsier, REANIMAL that I have really good hopes for, could be fantastic.
We will ship an early access version of Titan Quest in this year to PC gamers. We had one title by Reikon Games in Poland, a publishing title that we fully financed, Metal Eden that we now delayed a bit to give extra Polish that now will ship in the second quarter of the year, opposed to this quarter, followed by our own IP and our own development, Gothic 1 Remake. If you haven't played Gothic, it might not be a thing. But if you have played Gothic, you are probably a fan of Gothic, and there's a lot of fans of Gothic, especially here in Europe. And yesterday, I noticed that they had more than 1 million wish list actually on steam for this game.
So it could be an underdog for the year, followed by Wreckreation made in the U.K. by an external team, Deep Rock Galactic: Rogue Core made in Denmark by Ghost Ship Games, followed by a publishing title, NORSE developed here in the Nordics by an external team, published by Tripwire, followed by Fellowship, developed here in Stockholm by Chief Rebel, but published by Arc Games, our internal publisher. And finally, the full version of Deep Rock Galactic: Survivor, alongside many, many other game releases in the year. So it's not only about AAA releases.
Even though AAA releases do -- they are important if you look at the year. And if you look at this financial year, we did expect one significant AAA release to be shipped by end of the year that has similar economics to Kingdom Come: Deliverance II. I believe it's an amazing -- will be a fantastic game. However, now we are announcing even though the title is not officially announced, and we are still working on the title for -- to be prudent and with some cautiousness and not having a delay later in the year. We're saying it's likely shipping in the next financial year.
It's not easy to be a game publisher communicating as a public company and telling you, the game is done when it's done. Yes. So looking at Mobile. Again, in the quarter, we had revenues of SEK 900 million with an adjusted EBIT of SEK 91 million. Of that number, SEK 200 million came from the Easybrain contribution in January with SEK 200 million on sales and about SEK 40 million on EBIT. So CrazyLabs and DECA, but particularly CrazyLabs, which is part of the DECA Group, are scaling up a number of titles, Bus Frenzy, Glow Fashion Idol, Coffee Mania, in particular, investing more into marketing that will generate more cash flow later.
And we see that this will continue the scale up in the course of the year. But Mobile market is very dynamic and it's very competitive, and you need to make new decisions every minute, every day, scaling and not scaling. I'm just glad to have really strong management teams in my Mobile business that could make these decisions because this is not something you do from Karlstad. Going to Entertainment & Services. They had a fairly stable quarter with revenues close to SEK 1.4 billion with only 2% margin, SEK 32 million. The margin was muted by, I wouldn't call it, extraordinary inventory write-offs, but I look at that as extraordinary even though accounting is hitting the adjusted EBIT within the Freemode operating group.
And we are now looking ahead of the year. The distribution business are going from strength to strength. They recently have signed a number of extension of partnerships with -- in the recent actually week with Ubisoft, Warner Games and also PlaySation Distribution that would keeping their business stable or potentially growing. Within other parts of this business segment, we have Middle-earth Enterprises. And I would say they have a more active business development pipeline than ever, covering many different areas.
But it takes a very long time to make business development in licensing. So the fruits of this, we will see in the coming years and decade, I have to say. Within Dark Horse, they have been hit by a number of different things, everything from tariffs to a bit of turbulence in the comic book market in North America. But they have a very strong core of the business. They have a fantastic team at Dark Horse, and they have a leading position. So I'm confident that they would be on track to be a winner in that market, continuing creating new successful IPs and bring comic books to TV and film.
Moving to some comments from my side on the financial performance. So looking at the first quarter in this financial year and now ending in June, again, it would be -- the first half year would be fairly slow in terms of PC/Console. In the first quarter, we expect to have SEK 300 million to SEK 400 million in completed new game releases, as a range of smaller PC/Console titles releasing. On the Mobile side, we see limited top line growth year-over-year on a pro forma basis with somewhat higher pro forma -- currently somewhat higher pro forma adjusted EBIT contribution compared to fourth quarter or the last quarter.
On Entertainment & Services, we basically see very limited or no profitability in this quarter due to very limited product releases. In the overall year, we -- on a pro forma basis, we expect net sales to grow slightly above last financial year and with both EBITDAC and adjusted EBIT broadly in line with last year numbers. And again, the title that we now likely -- believe likely will ship in the following financial year '26-'27, again, had a similar financial dynamics as Kingdom Come: Deliverance II, which obviously delaying this with one or a few quarters, has in this -- technically in this financial year an impact.
I believe for long-term shareholders to polish and optimize the release window of titles is always a better way to do business rather than stressing out titles. Looking in the 2 following financial years, '26-'27 and '27-'28, we currently have 9 additional AAA games currently slated, many of them based on owned IPs or licenses that we control, made by our most recognized game developers within the group. In addition to this, we potentially have a few AAA titles financed by partners that also could have a contribution to profitability.
To give some color on this, if you look at the past 5 years, we, in average, have released, if you include Remnant II as a AAA, but technically was not a AAA to our definitions, but had a notable contribution, just about 1 title per year. I will come back to that a bit later, but the year we had -- it was 1 year '23-'24, we actually had 3 titles. And that year on a pro forma basis had a notably higher EBIT contribution. So with that said, I would like to hand over to our CFO, Muge.
Good morning, everyone. I'm very happy to be here today and present our financials. Overall, I'm also very happy to report a solid financial performance for the quarter. So without further ado, maybe we can go into the details. This is another quarter where the perimeter changes, primarily Easybrain, does result in a significant difference depending on the table between reported and pro forma numbers. So I will not hesitate precising the weight.
If we were to look at the net sales of SEK 5.4 billion in Q4 this year, it includes SEK 200 million of Easybrain. Whereas looking at the same period last year, the weight of divested perimeter represented SEK 1.4 billion, half of which itself is Easybrain, which explains the reported growth of minus 6%, but delivering an organic growth of 19% for the quarter that we are very happy with. As Lars described, the main driver of the organic growth is the successful performance of Kingdom Come: Deliverance II, our PC performance, PC/Console business. And Mobile, excluding Easybrain, also saw a solid growth of 30%. Of course, the satisfactory performance of PC/Console gets captured also on the gross margin. So we do also benefit a margin improvement coming primarily from PC/Console.
The margin improvement is 1 point, but looking at pro forma, actually, it grew by 8 points, just PC/Console business itself is 10 points to the overall contribution that we are very happy. As far as the marketing expenses are concerned, as a percentage of net sales, you'll see compared to the same period last year. It increased by 5 points. The non-user acquisition cost marketing expenditures are primarily related to the investments on Kingdom Come: Deliverance II release, going from SEK 90 million the same period last year to SEK 243 million.
As far as the user acquisition costs are concerned, as Lars mentioned, it is still consistent with the investment in our Mobile business that is expected to start paying in the first half and the upcoming quarters of the year. Our operating expenses decreased significantly by more than SEK 400 million this quarter compared to the same quarter going from SEK 1.7 billion to SEK 1.3 billion. Again, the impact of divestments do play. If we were to look at Q4 this year, Easybrain represents SEK 30 million.
However, the same period compared to last year included more than SEK 600 million. If we were to restate, however, Q4 this year would still be close to 24% of net sales. And last year same period would be 25%. So on a pro forma basis also, we do see an improvement in our operating expenses, and it is thanks to the effects of restructuring program we had done, but also it's a good testament to see that cost control and in line with expectations, the cost structure continues to be delivered. So we're happy to see the like-for-like perimeter also our OpEx spend improving.
Looking at the adjusted EBIT, we enjoy seeing SEK 1 billion for the quarter, which represents 3% growth reported and 44% on a pro forma basis once we take out again the impacts of Easybrain and overall divestment parameters. It is primarily driven by the PC/Console performance, as we said, Kingdom Come: Deliverance. So the successful release and top line gets captured not only in gross margin, but obviously, we do enjoy seeing the adjusted EBIT as well. So the adjusted EBIT margin, you will see here also improves 2 points on reported and 3 points actually on pro forma basis. So let's now move on to cash flow, where we can share some happy numbers as well.
It's really a pleasure to see our free cash flow and overall numbers resulting in expected favorable positive numbers. Free cash flow after net working capital was close to SEK 1 billion. Looking at the same period last year, you would see that the free cash flow was negative, close to SEK 0.3 billion. So we are happy to see a big improvement compared to the same period. I would say there are 2 main drivers contributing to this improvement. The Q4 investment in intangible assets of SEK 830 million is more than SEK 600 million lower than prior year, benefiting from the effects of our restructuring program that we had carried out.
Out of that difference, SEK 500 million-ish is actually Saber and Gearbox driven. The second part of the improvement relates to working capital improvements, where we enjoyed more than SEK 200 million this year. Same period last year was a working capital consumption of minus SEK 269 million. And this improvement comes from across a variety of operator groups. So actually, we're happy to see that multiple operator groups are contributing to the improvement of working capital, which as a result, also looking at full year, delivers a free cash flow of SEK 1.4 billion. Again, representing a major improvement over SEK 2.2 billion, looking at the same period, full year last year, where we had minus SEK 819 million. So very happy.
The cash flow from financing activities relate to, you might recall, the repayment of external debt of about SEK 5 billion as well as the equity contribution to Asmodee around SEK 4.7 billion. As far as the net cash flow from acquired divestment companies, it is primarily the net proceeds of Easybrain divestment. And looking at the right side of the table, very happy to see that we are reporting a net cash, as Lars also mentioned, at the end of March '25, we were in a net cash position of SEK 5.4 billion. As Lars also mentioned, it's worth highlighting that at the end of the period, the amount of available funds we had exceeded SEK 13 billion.
Well, up to now, we have primarily spoken about our adjusted EBIT. We have also announced today a reported EBIT of SEK 4.3 billion. So it's worth going through those details together. The difference of adjusted EBIT and EBIT amounts to SEK 3.2 billion. If we were to look at the main drivers, it's composed of 2 items. One is the items affecting comparability that I'll go in detail. And the second one is the specific items related to historical acquisitions. So as you can see in this table, as far as items affecting comparability is concerned, it's composed of different items. I'll begin with the first one, the biggest one, the net gains from divestments. So it's primarily the net gains related to Easybrain, as we have covered throughout other slides and of which SEK 12.6 billion was net cash proceeds.
And then if we were to look at the noncash impairments, it's a total of SEK 4.1 billion, of which SEK 3.7 billion relates to the impairment of goodwill. The main ones, I would say, coming from PC/Console. Just Saber, Gearbox represents more than SEK 2 billion, just to give you a sense, but there are also some others within Mobile around SEK 400 million as well as Dark Horse and Freemode. As far as the impairment of acquired IP rights, it is primarily related to also Saber, Gearbox, and we've got also a bit of a few other within the operative groups.
The write-down of intangible assets, SEK 404 million. So these write-downs are related to, I would say, a range of development projects across Amplifier and THQ businesses. And last but not least, SEK 371 million, mainly related to the actions dedicated to improved profitability or cost efficiencies resulting in either the discontinuation of studios or teams. The second item, as I said, refers to the specific items related to historical acquisitions. And I would say they are related to primarily the noncash on the planned IP amortizations and adjusted earn-out calculations. So with that said, I would like to hand over back to you, Lars.
Thank you, Muge. Very interesting, like this. Sometimes I ask you about the balance sheet, it's sometimes very complex. Right. So this morning, we communicated the spin-off of Coffee Stain Group, and I would like to go back a few years to start with. I was so pleased to be and honored to be able to add Coffee Stain in November 2018 to the group. Back then, we were much smaller, and it was fantastic to bring one, what I believe of, the leading game developers in Sweden of the new generation from Skövde into the group. I believe the revenues back then was like very small, SEK 50 million or something.
And since then, they have been growing and growing and have been really successful, adding not only and a number of new studios outside Skövde, in Stockholm, now in Gothenburg, in Malmö as well as a strong publishing team here in Stockholm. We also added Ghost Ship Games that has a very similar mindset to Coffee Stain and position as Coffee Stain in Denmark. And Ghost Ship has also taken the journey of been growing with more people and studios and products and that's now actually becoming an important part of the Danish ecosystem, publishing a number of games made in Denmark. As well as finally to bring also Tuxedo Labs that used to be part of Saber into a similar minded group of companies.
They are based in Malmö and obviously have been making this very successful Teardown and now they are looking to bring that on multiplayer. That's a lot of fans are waiting for. So as well as a number of other studios that has -- that are promising or had success under the wings of Amplifier. In total, there is about 250 people. So really glad to have seen this growth over the past years. And we did announce on April 22 last year, the transformation of Embracer Group. So Embracer Group was this quite huge group supporting entrepreneurs, creators, building different verticals, working together. And we announced in April to change that to 3 operational groups, focusing on their business as one operating group.
And glad that we spun off Asmodee. I think they've done fantastic. They reported yesterday, very pleased to see their progress. Now I'm really glad this morning to confirm the spin-off, a bit different parameter than we thought from the beginning of Coffee Stain. And then finally, the last step is the name change of Embracer. I will come back to that in a minute. But Coffee Stain Group will be spun off on Nasdaq Premier -- First North Premier here in Stockholm. And it would be a bit smaller as a public company, the overhead. And it will be led by Anton Westbergh, the CEO and Founder -- Co-Founder of Coffee Stain. And he is excited. Unfortunately, he's not here today, but I know he's at a very important conference for the industry in Malmo today.
But I obviously have been talking a lot to him, and I will let him build Coffee Stain, being Coffee Stain as a public company also in terms of communication, how they do things, so do things the same way as a public company as Lars is doing it. So -- and I'm excited to sit on the bench here to watch that or somewhere. So we will get this done by the end of this calendar year. So quite straightforward. It's [indiscernible] to all shareholders. And at the time we are doing that debt spin-off, we will be renaming Embracer Group to Fellowship Entertainment.
As you remember, we talked about a working name of Middle-earth & Friends last year, now this is becoming Fellowship Entertainment. And we will come back to this a lot more in the future. But obviously, this will be the rest of Embracer. But the strategy is to create a single operating powerhouse within PC -- or PC, Retro, Mobile games and publishing as well as transmedia capabilities, IP licensing, comics, merchandise, film and distribution. And this group would then hold many of the most iconic IPs in the industry, not only the commercial rights to Tolkien's work, the Hobbit and the Lord of the Rings, but obviously titles such as Kingdom Come: Deliverance, Metro, Dead Island, Remnant, Tom Rider and many, many others.
In total, there is more than 60 companies part of this future group. And as I wrote in the end of the press release, at the time of the spin-off, I also declared this morning my ambition to stay as a long-term shareholder of all 3 entities and by formula we do that to a new holding company that I name Embracer. So looking at the pro forma financials of these different groups. If you look at Coffee Stain Groups, they have a very strong margins and cash flow generation. The turnover is just about SEK 1 billion with just about adjusted EBIT north of SEK 500 million with the same in EBITDAC. The past 2 years has been very stable. They have not released any new -- big new IP such as Valheim that they had, I believe, in the year prior to this '23-'24.
And now looking ahead -- and I don't want to take out something from the Anton's future communication and are promising things. But I'm excited about what they do to the future, and I'm confident they will please shareholders whatever those numbers will be. Fellowship on a pro forma basis, if you look at this Fellowship here, it's excluding the corporate overhead costs. If you look at the Embracer here, it's including it. So Fellowship, last financial year, now ending March, had a pro forma profitability of SEK 2.1 billion in adjusted EBIT and SEK 1.8 billion in EBITDAC. That year, we had one big title, Kingdom Come: Deliverance II contributing a lot. The prior year, we had actually quite strong year. Now that year was very turbulent of restructuring, divestments and things. So you didn't think around it too much as shareholders.
But if you look at pro forma, we actually had 3 titles that year that somewhat you could define as AAA. We had Dead Island 2, we had Remnant II and we had Payday 3. And all those contributed nicely into the adjusted EBIT, especially Dead Island 2 and Remnant, not so much Payday. And on top of that, we had a very successful trading card launch with the Hasbro on the Lord of the Rings that brought a lot of profitability that year. So that year, we had SEK 3.5 billion in adjusted EBIT. Now without promising anything as shareholders, I'm a bit excited about the future, perhaps not so much this year financially, but the years ahead of that.
We have 9 titles again releasing. Yes, there could be most likely 1 or a few out from that 9 slate that we're moving from those 2 years, but still, it will be a lot more than last year and this year. Again, in average, we had 1 title in the past 5 years. Together with cost efficiency program that will improve margins and cost control as well as interesting pipeline on the Middle-earth Enterprises, to name one thing that also would, I believe, contribute to profitability in the years ahead. But I have to say Fellowship Entertainment will be more volatile as a company. And it's the beauty of that compared to Asmodee and Coffee Stain that will have a very stable cash flow, nicely growing, hopefully, without promising too much. Fellowship, it's a bit more up and down. It also has a beauty as a public company, I have to say. And I think there is an enormous potential to build value within Fellowship. So I'm excited about Fellowship as well. So with that said, I hopefully mentioned everything you need to know. But if you don't know everything, we have Viktor here that will ask some questions.
Thank you for the presentation, Lars. [Operator Instructions] but before we do that, I think I will start off with a few on my side. So obviously, very strong margins in the PC/Console this quarter, driven by Kingdom Come: Deliverance II, but apart from that game, how would you say the underlying margins in the PC/Console evolved in this quarter?
Yes, if you take out Kingdom Come: Deliverance, there is a bit of profitability left, not a lot. So I think on average quarter, we would have a bit of profitability, but not too much.
Right. So still...
I think Kingdom Come was absolute elephant in that quarter. The other releases did not really contribute. I would say they have a negative profit contribution on adjusted EBIT. So it was the catalog that actually contributed. Hopefully, in the course of the year, perhaps not the first quarter, but later in this financial year, the midsized game releases would contribute more nicely into like REANIMAL and Gothic and others.
Right. And in terms of -- if you look at the amortization level compared to the back catalog, I mean, would you say that they are soon to reach a better balance? Or are there still a few quarters left here?
What do you mean by a few quarters left off?
I mean if you compare to the past releases with amortization levels, compare with, I mean, perhaps a slower sales from the catalog, when do you expect that to balance out the mix and then improve underlying margins in PC/Console?
Yes. It's hard to give you a firm color here. I think in general, we do have some amortizations that are still going through our P&L. It's quite painful to have a title like Hyper Light Breaker that cost a lot of money generating almost nothing and a number of others. And we have a release slate, SEK 3.8 billion that we have moderate expectations on. Okay, there could be some upsides, but there is titles that we will recoup cash-wise, that has limited or no EBIT contribution. That's the reality.
Over time, when adjusting studios, investments and so on, we will improve our margins and ROI. The way how accounting works. You can argue that you -- why don't you write everything off and do some other things, but we're sticking to our formula. So that's the way how we communicate.
And yes, you touched upon it a bit in the presentation here, but previously with Coffee Stain & Friends and now with Coffee Stain Group, I mean, you have done some changes within that organization. So what would you say is the, I mean, rationale behind the new units and the strategy ahead for those 2?
No, again, this today is not like a Capital Market Day or day where I try to sell Coffee Stain Group. I would like to leave that to Anton and the management teams to communicate. I could -- look I can share a bit of color. Obviously, last year, we announced Coffee Stain & Friends, which were Coffee Stain, THQ, Mobile and a number of other businesses. And since then, we divested Easybrain. And we had a lot of conversations across the key stakeholders, including Board, how to do this.
I think a lot of feedback and believe what we have is that Coffee Stain Core that now will be spun off as Coffee Stain Group is a fantastic business on its own with high margins, a leading position or one of the leaders in the world in that field. And for them to be really successful on their own, attracting new talents and companies into their group, keeping their culture, I think it's the most wise decisions for them as a business and for people as to shareholders to spin them off as a bit smaller public entity. Now let's see if they will grow over time or if they will add more businesses and they might build more experience, but you need to learn to walk before you run. And Anton will start walking as a public company here soon.
Yes. It would be interesting to follow. Yes, question?
Simon Jönsson from ABG. A few questions to you, Lars. First, on the cash position. Maybe you can elaborate more on what the optionalities from that, from your perspective? And also how you intend to split that position between Coffee Stain and Fellowship?
Thank you, Simon. You probably know the answer that I can't tell you exactly, but I can elaborate a bit around it. First of all, it's very nice to have SEK 5.4 billion cash on account. So that gives you a lot of options to create value or to return capital to shareholders, if I -- we can't find value. So in the communication this morning, we gave a number of options, acquisitions, divestments, mergers, potential spin-offs. So looking at acquisitions, there is opportunities to perhaps add more into either Coffee Stain or into Mobile, strengthen their position with accretive acquisitions. It doesn't have to be very sizable.
Okay. But maybe to elaborate a bit on the question. Should we assume that you're not intending to keep all the cash within Fellowship. There's optionality to spin off Coffee Stain with some cash to do things as well?
I think we should spin off Coffee Stain being really positioned to do what they like to do. So whether there is a bit of cash or not at their balance sheet, obviously, they are generating cash every quarter. So that's a discussion we are currently having. I don't think they need many billions of cash on their balance sheet. So I think there's a lot of cash left also for shareholders potentially.
Okay. Got it. Another question on Coffee Stain. Maybe it's for Anton later, but in terms of monetization, you have a very good flagship portfolio, I think, in terms of active players and all that. But in terms of monetization, maybe there's more to do. Maybe what's your sort of view right now of what Coffee Stain is doing to increase monetization? And what the potential is on that side? Or should we think more that the growth potential is more on new titles? Or what's your view on that?
I don't like the word monetization when talking around Coffee Stain, but I think there is a potential to grow those IPs they have, their core IPs. But how they do that, I would let Anton talk to you and the market, but especially to the gamers first, how they intend to do that. But they have a really good base. They have a huge fan base. When they bring more content, whatever they do, there is a lot of activity. So they have all the potential to grow those IPs over time. And there is many different plans. But again, I would like Anton to share that in the future.
[Operator Instructions] and the first question is from Erik Larsson from SEB.
I have 2 questions. First off, I appreciate the color here on the outlook comment. It's very helpful. And just seeing that steep increase in value of released games that you expect for this year, while at the same time, you expect similar EBIT year-on-year. I understand, obviously, Kingdom Come stands out in the comparison, but it looks like you're going into the year quite cautiously. So my question is, have you taken down general expectations a notch? Or is it rather a few specific games?
Great question. We're trying to learn from our mistakes and history. So there might be a bit of cautiousness into our expectations on titles. There's also a number of titles that we try to be cautious like Killing Floor 3, for example. We need to focus on making outstanding product to the fans, but we have been a bit cautious considering the feedback and our expectations. So there is a bit of upside, if they deliver more than a cautious view.
But if you are cautious, it's a very limited EBIT contribution, very limited, if any, for example. That's one example. I think there is a cautious view on many of these midsized titles on the EBIT contribution level. But you can argue there is some upside on those. And then -- and then on Marvel, there is not a significant CapEx, especially if you're comparing it to a normal AAA because we are sharing economics with more parties.
All right. And my second question, looking at Coffee Stain Group here. I'm curious on the Bloxburg, just generally, how has that performed lately? And if you could say roughly how large is this as a share of the Coffee Stain Group?
No. Obviously, Bloxburg had its peak during pandemic. The title is still obviously profitable. We built a team around it, and we try to turn the tide on the performance. It's a competitive environment on Roblox. And I think now we have a really good team and they have a good plan. I don't want to share a percentage. It's -- I wouldn't say it's minor, but it's minor if you compare to the big titles within Coffee Stain. So...
The next question is from Amar Galijasevic from DNB Carnegie.
A couple of questions from me, starting off on the PC/Console side. You mentioned you have 9 internally financed AAA games beyond '25-'26. As always, things could be delayed in the industry. But would you say that the release date set now are on the conservative side?
It's hard to talk 2 years ahead being conservative. I'm just very -- it's the management information and the plans they currently have, and they obviously believe in it themselves. Now being cautious and prudent, I would argue that there is -- out from the 9, could 1 or a few slip into the following years. Yes, that is definitely not unlikely. But still, we would have more AAA releases those years than we had this year and the past years. And especially a few of them are quite sizable. So...
Would you dare to give any comment on cadence of per year? Do we expect it to be front-end heavy or back-end heavy?
Fairly stable, let's say, between the years. So that's a good news.
Got it. And then just a couple of follow-ups on the Mobile side as well. You had quite high user acquisition costs in Q4, but you're also expecting limited top line growth in Q1 year-over-year. Is there no spillover from the UA push in Q4 into Q1?
Yes. It's a very complex material, Mobile. Yes, there is a spill-off. Obviously, we have been investing, and we will see the rewards of that. And the communication was a bit muted top line growth year-over-year and a bit growth on profitability above Q4. So when you stop spending on one title, you obviously have an improved profitability. So it could be that one of those 3 titles that we heavily invested into stop spending because of competition. And then we will -- it will follow with profitability. That's kind of the dynamic. The problem this could change like next month or week. So it's -- yes.
Understood. And maybe lastly, a follow-up to, I think, one of Viktor's earlier questions. So if I understand it correctly, both DECA and CrazyLabs now appear under Fellowship instead of Coffee Stain, as it was communicated before. Could you just elaborate on those 2, how they end up on that side of the split?
Yes. First of all, I think -- Mobile, I think the synergies are obviously financially to the group, and they are great entrepreneurs integrated and culture-wise, they fit into the holding company. But operationally, they don't make games on our IPs. We don't bring players between the groups. So there is limited synergies in between. That goes both for Fellowship as well as Coffee Stain. So you could argue that the Mobile is actually 2 very strong mobile companies, perhaps a bit subscale in the greater world of mobile, but they still have enough scale to actually be with synergies. They could add more titles and business to them.
So we have been open-minded about is there potential to create a niche public company around that or not. I think they obviously have a home. They are integrated into Fellowship. It's not like they are very welcome and that's the plan. But I'm just keen to maximize the potential of each company for the company itself, but also to shareholders. I don't know if I'm very clear here, but I'm trying to be as clear as I can, step by step.
The next question is from Nick Dempsey from Barclays.
So first of all, it's definitely a CFO question. But in terms of personnel costs related to acquisitions, that's a cash cost, which I think has been relatively substantial inside FY '25. I don't think it's included in your free cash flow calculation. So is that going to be significantly reduced that line in the cash flow in FY '26, just to help us model year-on-year cash progress, not just free cash flow?
Second question. Yes, when you're guiding to both adjusted EBIT and adjusted EBITDAC to be broadly stable year-on-year in '26, I guess I'm tempted to think that means CapEx will be fairly stable as well. But I guess D&A could be changing in there. So can you give a directional indication of what you're implying in terms of CapEx progress year-on-year?
And then the third one, you've answered a few questions about Coffee Stain already. I guess it really will be a very small listed business in its new form. Alongside that process, have you had any discussions with potential acquirers of Coffee Stain?
I can ask last -- I can answer the last one, obviously. I think, obviously, there is a huge interest from many parties having a fantastic company like Coffee Stain within their businesses. I think currently, we believe it's best for shareholders that we do the spin-off and it's best for the company. So it's hard really to comment any further on that. But without commenting on that alone, I could just reassure you that we are active in the M&A -- global M&A space within gaming, and we are talking to everyone needed. So trying not to miss out on things. So Muge, should you start with the first and second one, and if needed, I should give some color.
Actually, I'll try to address both questions via the same answer about the outlook, whether personnel costs or the CapEx, amortizations and so on. As you know, we are refraining from providing an outlook. So as far as '25-'26 is concerned, all I can say is that we haven't communicated. We don't foresee any change of method in the way we report our numbers. So it is going to follow the pattern based on release, based on like-for-like business and the associated costs are going to follow that pattern. So there isn't a decision taken that is to change, but I would be cautious to provide an increase or decrease as far as '25-'26 is concerned.
Yes. Just to give some more color to color here. Historically, if we are talking about amortization hitting the reported EBIT in terms of earn-outs that has a component that the entrepreneurs need to stay on board as employment costs, it's really earn-out that we are -- with the condition that they need to stay on board. Those are noncash. They are reported every quarter. And it's very clear in our reporting how we're doing that. And it's actually a forecast of that when you look in the report. Then we might pay earn-outs cash-wise. It's not entirely linking to that line. That's a different thing. That is also very clearly reported. So I think we need to separate things here.
Sorry, maybe I could just have another go on the personnel costs related to acquisitions. What exactly is in that line? And why would it not be reducing over time?
It is reducing over time. It's basically -- it's earn-outs with the condition that the companies we acquired, they need to stay on board. Easybrain had a huge component of that, which is now taken off, but there is many companies. We buy the companies, we make an earn-out, one condition is the team stay on board. That is accounted under IFRS as this line.
I think it would be fair to say it is to reduce over time as a result of 2 effects, either related to the presence of people and simply just conditions being met and/or actualization of the performance, the criteria itself. So regardless, as you reach closer to those dates and conditions, it is supposed to reduce over time.
But there is a forecast in the report around this.
[Operator Instructions] the next one is from Jacob Edler from Danske Bank.
I just have one then. On completed development, you said 10% out of that value in Q1. Are you able to add any more flavor on how we should look at it for Q2, Q3 and Q4? I suppose Q2 and Q4 could be a bit more heavier, but please correct me if I'm wrong.
No, I think the bulk is in the second half of the year. So Q1 and Q2 is a bit more muted in terms of new releases, but also completion value.
And the next question is from Rasmus Engberg from Kepler Cheuvreux.
Yes, a little bit of the same question. When I look at what you've already announced in the second quarter, Killing Floor, Metal Eden and Deep Rock Galactic: Rogue Core, wouldn't you say that, that is already a significant step-up from Q1? Or am I missing something?
No. But obviously, I was thinking outside the AAA, Killing Floor 3 has a significant complete value. So that is actually obviously hitting the second quarter.
No more questions from the telco. So I hand the word back to you on the stage.
Right. Thank you very much. I think we're running out of time. So Lars, do you have any final remarks or otherwise?
No, thank you. Pleasure to have you on stage here, Viktor, first time.
Thank you for being here. Thank you, everyone.
Thank you.
