Company Presentation Pareto Gaming Seminar Stockholm March 3, 2020 Presenter: CEO & Co-Founder Lars Wingefors 1. Introduction STORY OF EMBRACER

Net sales, SEKm

IPO on Nasdaq Strong IPs First North acquired Stockholm from THQ e.g. 5,413 Founding: All assets incl. Darksiders and MX vs. ATV IPs in JoWooD 4,124 acquired and key people recruited

302 508 8 102

2011 2013 2016 2017 2018 2019

Raised equity capital 240 598 1,448 2,090 before transaction costs:

Track record of strong growth and value creation through major acquisitions, well-positioned for further growth

3 2. Business GROUP OVERVIEW

SEK 5.5bn Net sales, LTM*

Group strategy and M&A SEK 1.1bn Operational EBIT, LTM*

HQ, Karlstad 2,970 Headcount* * As per Dec 2019

Two complementary business areas

Games Partner Publishing Development, publishing and marketing of games Publishing and distribution of (mainly) games and film

Four autonomous sub-groups:

Munich

13 offices across the world:

Selected partners: Vienna Munich Skövde Stockholm

Details on next slides

5 Games business area GAMES – OVERVIEW (1 of 2) Four autonomous sub-groups with different core focus

% of net sales 30% 62% 8% (LTM Sep 2019)

Development size Small to mid-sized Mid-sized to large Small to mid-sized

Fewer, larger own IPs and Creative, focused on games Acquire established IPs and build publishing of external products Core focus making and development, new on them that needs powerful marketing and IPs, teams up to ~20 people. distribution power

22 41 52 141 134 24 15

STUDIOS NORTH Skövde Stockholm

20 internal studios 69 64 21 (December 2019) ## = Approx. headcount 173 70 +3 minority-owned 5 22 29 31 Lavapotion studios

200 7

Note: All studios are 100% owned except Coffee Stain North (60%), Lavapotion (60%) and Bugbear (90% but with an option for the remaining 10%) Note: LTM = Last Twelve Months ending 30 Dec 2019. Other figures refer to as per 30 Sep 2019. 6 Games business area GAMES – OVERVIEW (2 of 2) New forth leg: Amplifier Game Invest

Rebranding to clarify core mission within Embracer Group (Jan 2020)

Strategy

Setting up new studios together with splinter industry veterans, e.g. C77

Acquiring creative, well-renowned studios, e.g. Tarsier Wholly or majority owned studios: C77 Entertainment, River End Games, Tarsier Studios, and Misc Games Majority equity investments in strong game studios, developing new IPs for long term growth

7 Games business area GAMES – NET SALES BREAKDOWNS AND DEVELOPMENT

Net sales Owned titles Developers (rest is publishing of 3rd-party IP) (both internal and external) Trailing twelve months (TTM), SEKm % of TTM net sales # 3,328 79% 80% 2,272 2,258 3,045 75% 2,447 2,605 67% 1,828 1,803 1,667 1,484 of which 55% 50% internal developers

Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2018 2019 2018 2019 2018 2019

Digital New releases Ongoing development projects (rest is physical) (rest is back catalog) % of TTM net sales % of TTM net sales # 68% 75% 96 63% 86 58% 80 81 58% 77 53% 32% 35% of which 44 18% 45% announced

Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2018 2019 2018 2019 2018 2019 8 Games business area GAMES – KEY IP:S

100+ IPs 15+ IPs 5 IPs

Exclusive license

150+ IPs SEK 10BN+ 100M+ COPIES in total lifetime sales by 10 key IPs lifetime sales by 10 key IPs

9 Games business area INVESTING FOR ORGANIC GROWTH…

Most operational cash flow is invested in game development… …o/w large share is growth investment TTM, SEKm TTM, investments-to-amortization ratio

EBITDA Investments in game development EBITDA/investments 2,500 160% 3.5x 1,945 140% 2,000 120% 2.6x 2.5x 2.4x 2.2x 2.2x 1,500 1,377 100% 2.2x 2.2x 80% 71% 1,000 60% 40% 500 20% 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 2019 2018 2019

• 80% of EBITDA was invested in game development Jan 2017-Dec 2019 • Investments in game development ~2.2x higher than amortization of released games • 71% of EBITDA was invested in game development LTM Dec 2019

Note: Investments = investments in game development Amortization = amortization of capitalized game development for released games EBITDA = Group EBITDA 10 Games business area …INTO STRONGEST PIPELINE TO DATE

Selected pipeline projects Balanced pipeline, SEKm Released games Ongoing game development 2,500 1,749 2,000 1,582 1,280 PC PS4 XB1 PC PS4 XB1 PC PS4 XB1 Switch PC PS4 XB1 1,500 1,115 IP: Own IP: 3rd party IP: 3rd party IP: Own 1,000 394 427 393 410 THQ Nordic Deep Silver THQ Nordic Deep Silver 500 0 Mar Jun Sep Dec 2019 Ongoing game development (not yet released or generating sales) is 4.3x released games, on the balance sheet PC PS4 XB1 PC PS4 XB1 PC PC PS4 XB1 IP: Own IP: Own IP: Own IP: Own # of pipeline projects THQ Nordic Deep Silver Coffee Stain THQ Nordic

96 86 77 80 81

54 51 55 36 of which 44 announced

Deep Silver Deep Silver Coffee Stain Deep Silver Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2019

11 3. Acquisition of Saber Interactive SABER INTERACTIVE AT A GLANCE

GLOBAL BUSINESS TRACK RECORD OF OWN/LICENSED IPs

• US-based game developer • Founded by Matthew Karch (CEO) and Andrey Iones (COO) in 2001 • Entrepreneur-driven company which has grown organically from 3 to c. 600 internal developers over a 20 year period

20YRS 5 c. 600 30M+ EXPERIENCE STUDIOS DEVELOPERS1 GAMES SOLD

FINANCIAL PERFORMANCE PROPRIETARY TECHNOLOGY

USD, preliminary figures2 3D ENGINE GAME OPS

Enables high-quality game development m 105m 62 rd REVENUE 2019 EBIT 2019 Reduces 3 party dependency

Note: 1) Developers including technology R&D personnel. 2) Financials based on management account actual figures for the period 1 January – 30 November 2019 and preliminary management accounts for the period 1-31 December 2019 13 THE NEW COMBINED GROUP

Internal development studios 26 5 31

External development studios 58 3 61

Number of IPs 154 91 163

Announced 44 4 48 Development projects Unannounced 52 8 60

Internal 1,237 590 1,827 Developers External 1,021 150 1,171

Revenue 2019 Jan-Dec SEK 5,541m SEK 981m3,4 SEK 6,522m4

3,4 4 Adj. EBIT2 2019 Jan-Dec SEK 1,143m SEK 591m SEK 1,734m

Note: Number of studios and Saber Interactive KPIs as per 19 February 2020. Other numbers as per 31 December 2019. 1) Excluding 5 licensed IPs of which 2 through partner. 2) Operational EBIT for Embracer Group and reported EBIT for Saber Interactive. 3) Unconsolidated, non-GAAP numbers. 4) FX rate USD/SEK of 9.4582 14 ACQUISITION HIGHLIGHTS

 Senior management with highly experienced and efficient development teams

 Strong profitability with high cash conversion

 Additional stable and recurring revenue stream from Work-for-hire / royalty based projects

 Portfolio of recurring titles and a solid and growing pipeline from 2020 and onwards

 Long term synergy opportunities within publishing, development and IP utilisation

 Platform for further organic growth and acquisitions

15 TRANSACTION TERMS

TRANSACTION TERMS POST DEAL CORPORATE STRUCTURE

• Asset deal • Sellers receive a combination of A and B shares, priced at SEK 78.4510 per share1 (40 day volume weighted average price up to and including 18 February 2020) • Founders become two of the largest Embracer shareholders with a combined 11% and 15% of the capital and votes, respectively1 • Lars Wingefors and Erik Stenberg have committed to vote in favour of appointing Matthew Karch to the board of directors • As employees of Embracer, the Sellers receive a fixed salary and a 20 year incentive package based on future performance of Saber Interactive (10% profit share of Saber Interactive’s EBIT above USD 76m per year (accumulated)) • The Transaction expected to close during the second calendar

quarter 2020 Saber Interactive USA HQ and Business operations PURCHASE PRICE Development studios • USD 150 million upfront payment • USD 100 million in cash

• USD 50 million in equity St Petersburg Sundsvall Minsk Madrid Porto Russia Sweden Belarus Spain Portugal • USD 375 million earn-out payment over six years, of which USD 100 million in cash and USD 275 million in equity

Note: 1) Assuming full Earn-out and fully vested shares. 16 EXPERIENCED FOUNDERS AND MANAGEMENT

Group management team

MATTHEW KARCH ANDREY IONES TIM WILLITS Co-founder and CEO Co-founder and COO Chief Creative Officer

+20 years +23 years +24 years industry experience industry experience industry experience Joined in Q3-2019

9 Managed Saber Interactive from a 3- The pulsing heart of Saber person start-up to a large Creative mind behind success stories Interactive, leads operations and international gaming group. Quake, Doom and Rage leads and contributes to creative ideas and instrumental in crafting Saber supervises creative vision concept development Interactive’s vision

17 4. Embracer strategy GROWTH STRATEGY

Invest for long-term organic growth Financial model Investments in development should outpace finalised game development . Diversified portfolio/pipeline – reduces operational risk . Develop and expand IP portfolio – including currently dormant IPs . Strong balance sheet – reduces financial risk . Develop and expand internal studios . Reinvests as much as possible of operating cash flow and willingness to issue equity – to capture . Establish new studios with top talent developers attractive organic and acquisitive growth Organic growth . Development projects with external studios opportunities (ROI > WACC) . Continue to consolidate partner publishing market Buy to build Empowering people Continue acquiring great companies that share our . Philosophy of decentralization to empower our vision at fair valuations great people across the group . Acquire and develop IPs, and studios and . Commercial autonomy to business area CEOs, publishers founders, and studio heads to run their operations . Increase investments in acquired companies to M&A . Fosters creativity, speed and relevance as unleash unlocked potential and capacity decisions are taken closer to local markets and . Synergies with distribution, marketing, knowledge- niche markets sharing, IPs, tech, development etc. . In general to complement, not compete, with business partners in the game industry.

19 GROWTH TRACK RECORD SINCE IPO Organic and acquisitive (31% dilution*) growth since IPO until 31 Dec 2019 has yielded:

# of game developers # of internal studios Key IPs acquired since IPO +5x +7x Long-term exclusive license

2,258 STUDIOS 20

339 4 Lavapotion

Sep 2016 Dec 2019 Sep 2016 Dec 2019 (IPO) (IPO)

Net sales, SEKm Op. EBIT, SEKm Cash, SEKm Top talent

+20x +13x +17x Highly talented 5,541 2,785 key people 1,143 with complementary skillsets 272 90 167 joined THQ Nordic

TTM Sep TTM Dec TTM Sep TTM Dec Dec 2016 Dec 2019 2016 (IPO) 2019 2016 (IPO) 2019 (IPO)

* Based on 180m shares immediately post IPO (adjusted for split) and 312m shares as of 31 Dec 2019 20 M&A OUTLOOK

• M&A prospects continue to look favorable

• Ongoing scouting and research activity at HQ in Sweden, THQ Nordic Vienna, Koch Media Deep Silver, Coffee Stain and Amplifier

• Substantial watchlist of IPs, development studios and publishers

• Currently a number of ongoing discussions with companies to join our Group, including a few sizable businesses that could form a new operating group, however, we do not depend on acquisitions to grow our business

• Strategy of giving autonomy to our local management teams is empowering them to continue succeeding and is attracting more studios and publishers to join our family

21 M&A PROCESS

Typical M&A process Success factors 1. Scouting – Ongoing, patient scouting and  Fast and lean research activity at HQ in Sweden, THQ Nordic process – focus on Vienna, Koch Media Deep Silver and Coffee key issues Stain Typically  Give autonomy to performed 2. Proceeding with specific lead management – “entrepreneur to attractive to creative entrepreneur” with 3. In-house DD – Commercial and financial due and entrepreneurial in-house capacity diligence on key games, people and business people and light on third- plan party advisors on  Accessing a either side 4. Handshake on Heads of Terms – Negotiating plethora of heads of terms, business plan and post- knowledge and acquisition structure (subject to legal, financial, experience within tax and further commercial due diligence) the Embracer family

5. Execution: Due diligences, finalizing terms, legal Engaging leading  Cash on balance docs, etc. legal (Baker McKenzie), 6. Signing and closing – Normally same day financial and tax advisors (EY)

22 5. Financials FQ3: OPERATIONAL AND FINANCIAL HIGHLIGHTS

Increased profitability mainly driven by strong Continue to strengthening our pipeline digital back catalog of own-IP games

Q3 FY19/20 Investments in game development in the quarter: Net sales YoY growth SEK 373m (+37%) SEK 1,509m 9% (37% higher than same quarter last year)

Net sales – Games YoY growth 96 pipeline projects SEK 836m 51% Releases after Q3 FY19/20:

Operational EBIT YoY growth SEK 302m 54% Continued organic and acquisitive expansion Increased profitability driven by: – Release of Darksiders Genesis on PC/Stadia In the quarter After the quarter – Strong back catalog including Metro franchise, Wreckfest and Satisfactory – Increased share of digital sales – Increased share of sales from own-IP titles

+ setting up two unannounced studios FINANCIAL OVERVIEW

Net sales EBITDA Operational EBIT

CAGR: 164% CAGR: 145% CAGR: 120%

5,541 1,945 1,143 4,124 974 484 133 273 108 202 302 508 2016 2017 2018 2019 2016 2017 2018 2019 2016 2017 2018 2019 Margin: 44% 54% 24% 35% Margin: 36% 40% 12% 21%

Balance sheet key items Intangible assets As at 31 Dec 2019 As at 31 Dec 2019 Item SEKm Share Item SEKm Share Total assets 10,745 100% Finished completed games 410 7% Intangible assets 5,633 52% Ongoing game dev. projects 1,749 31% Equity 6,177 57% Other intangible assets (film etc.) 250 4% Cash 2,785 26% Operational intangible assets 2,409 43% Debt 1,947 18% IP-rights 1,920 34% Net cash 838 8% Surplus value Partner Publ./Film 192 3% Cash + available credit facilities 3,444 Goodwill 1,112 20% Acquisition related intangible assets 3,224 57% Total intangible assets 5,633 100% 25 NET SALES PER BUSINESS UNIT Trailing twelve months net sales, SEK million

1009 991 2076 756 764 804 1796 1571 1606 620 660 560 508 1148 1119 988 1074 765

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 2019 2017 2018 2019

• 40% average growth (CAGR) CQ4 2017 – CQ4 2019 • 65% average growth (CAGR) Q4 2017 – Q4 2019 • Q1 2017 – Q1 2018 figures are proforma • We acquired Deep Silver on 14 Feb 2018

2821 261 2542 2674 2335 2348 2445 2368 2086 2213

100 77

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 2019 2017 2018 2019

• 84% average growth (CAGR) Q4 2017 – Q4 2019 • –3% average growth (CAGR) Q4 2017 – Q4 2019 • We acquired Coffee Stain on 14 Nov 2018 • Q1 2017 – Q1 2018 figures are proforma • We acquired Koch Media on 14 Feb 2018 26 6. Appendix MARKET TRENDS Market trends favorable to creators and owners of quality content

Robust market growth Competition to Steam Cloud Gaming: Subscription based services: for PC and console continues boosts publisher margins Billions of dollars up for grabs “Netflix for games” Current services already generates Market Growth notable revenues: Msoft GamePass, size 18e–21e Publisher/developer share: +26% Sony PSNow, EA Origin 2021e (CAGR) 70% Established and upcoming services PC $32bn 4% 88% needs our content excl. browser Console $39bn 4% Monetizing catalogue, increase revenues on DLCs 30% Mobile $88bn 16% 12% Brings new players to sequels for established IPs Total $180bn 9% Even stronger with cloud gaming

Shift to digital distribution Games as a Service (GaaS) boosts publisher margins Console or gaming PC not needed the new normal Steam (Valve) dominates digital if games are stored, computed and distribution to PC – but its 30% rendered in the cloud Games as a Service (GaaS) Digital (vs. physical): revenue take is at risk if new strong continues to grow in importance competitors enter Billions of dollars up for grabs: + Interact with community and Epic Games Store will take 12%, 1. Console hardware spend headed analyse their gaming behaviour to Digital gross margin: ~95% leaving 88% to publisher/developer toward content/subscriptions Physical gross margin: ~70% when it launches in 2019 drive community engagement and 2. Market expansion (more gamers) post-launch monetization through = Steam lowered its take Oct 2018: as no console required to play: DLC and other in-game purchases, 25% on sales beyond $10m, and lapsed gamers, mobile gamers, Publisher gross margin: 20% on sales beyond $50m females, families Gives games longer life and engagement

Sources: Newzoo, steamcommunity.com, unrealengine.com, Embracer 28 30 September 2019 30 September OWNERSHIP

Management jointly owns: 46% of capital, and 66% of votes

Equity research coverage: Berenberg, Carnegie, Handelsbanken, Nordea, Pareto Securities, SEB, ABGSC (paid), Redeye (paid)

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