Stillfront Group Q3 2024 Earnings Report

In Q3 2024, Stillfront Group (SF.ST) reported a net revenue of SEK 1.595 million, reflecting a year-on-year decline of 4.6%. Conversely, the gross profit margin improved by 2 percentage points to 80% compared to last year, as stated by interim CEO Alexis Bonte. This uptick was attributed to a greater share of direct-to-consumer bookings, despite the overall revenue dip.

Key Takeaways

• Net Revenue: Declined by 4.6% to SEK 1.595 million.
• Gross Profit Margin: Increased to 80% (up 2 percentage points).
• Free Cash Flow: Rose by 49% year-on-year to SEK 298 million.
• User Acquisition Costs: Grew to 29% of net revenues, largely due to investments in Super Free turnaround.
• Share Buyback Program: Announced for up to SEK 40 million.

Company Outlook

• Seasonal slowdown in game activity commenced earlier than usual; improvements anticipated as the quarter progresses.
• User acquisition investments expected to rise in Q4, though caution is advised due to the U.S. election.
• Targeting SEK 200-250 million in savings by Q4 2025, with SEK 39 million in annualized cost savings already realized.
• Next Capital Markets Day set for February 6, 2025, in Stockholm.

Bearish Highlights

• Bookings fell by 5%, with slight declines in Strategy segment games.
• User acquisition for Sunshine Island dropped by 41% quarter-on-quarter.
• Storm8 faced ongoing struggles in the Casual segment.

Bullish Highlights

• Average revenue per daily active user (ARPDAU) in the active portfolio increased by 14% year-on-year.
• Direct-to-Consumer channels improved by 5 percentage points.
• Total gross debt reduced by SEK 1.6 billion over two years.

Challenges and Opportunities

• Shakes & Fidgets faced setbacks due to a poorly received update.
• Despite declines in bookings and revenues, growth opportunities are seen in direct-to-consumer initiatives.

Q&A Highlights

• Stillfront is considering the sale of underperforming franchises.
• An ongoing search for a new CEO is underway, with Alexis Bonte as interim CEO.
• Regular updates planned for Albion Online, with optimism about its long-term potential.

Stillfront's earnings reveal mixed performance for Q3 2024. While revenues declined slightly, strategic focuses on direct-to-consumer channels have contributed to a stronger gross profit margin and increased free cash flow. The company is progressing in reducing debt and managing capital effectively through share buybacks and focused portfolio management. Plans for further cost savings and an emphasis on organic growth demonstrate Stillfront's efforts to navigate market volatility with a clear strategy.

Full Transcript – Stillfront Group (SFRG) Q3 2024

Alexis Bonte: Good morning, and welcome to the Stillfront Q3 2024 interim report… (transcript continues)

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