Stillfront Interim Report: Third Quarter 2020

Key insights

6 takeaways

01
Stillfront reported Q3 2020 net revenue of 1,027 MSEK, a 99% year-over-year increase driven by organic growth and the acquisitions of Storm8 and Candywriter.See it on page 4
02
Adjusted EBIT grew 140% year-over-year to reach a 41% margin, reflecting record profitability for the quarter.See it on page 5
03
The company set a 2023 financial target of 10,000 MSEK in net revenue while maintaining an adjusted EBIT margin of approximately 35%.See it on page 15
04
With a leverage ratio of 0.67x—well below the 1.5x target—and 1,052 MSEK in cash, the company remains positioned for further strategic M&A.See it on page 10
05
Revenue is diversified across segments, with casual and mash-up titles accounting for 40% of bookings, strategy for 33%, and simulation/RPG/action for 27%.See it on page 8
06
The company continues to prioritize the acquisition of studios with long-lifecycle assets, recently adding Everguild to its portfolio of 16 studios.See it on page 14

Summary

Stillfront Group’s third-quarter 2020 interim report details a period of significant expansion and strong financial performance for the free-to-play gaming powerhouse. Headquartered in Stockholm, the company operates 16 studios across 12 countries, maintaining a portfolio characterized by long-lifecycle games and high user loyalty. The primary objective remains the consolidation of the gaming market through strategic acquisitions and the leveraging of operational synergies across its diverse, global studio network.

Financial results for the quarter reflect robust growth, with net revenue increasing by 99% year-over-year to 1,027 MSEK. This performance was driven by a combination of solid organic growth and the successful integration of recent acquisitions, specifically Storm8 and Candywriter. Profitability reached record levels, with an adjusted EBIT margin of 41% and an adjusted EBIT growth of 140% year-over-year. The company maintained a strong cash position of 1,052 MSEK and a leverage ratio of 0.67x, well below its 1.5x target, providing significant financial flexibility for future M&A activity.

The company’s portfolio is segmented into strategy, simulation, RPG, action, and casual/mash-up titles. While the casual and mash-up segment accounted for 40% of total bookings, the strategy segment contributed 33%, and the simulation, RPG, and action segment provided 27%. Despite experiencing some normalization in user demand following the peak inflow observed earlier in the year and facing increased volatility in online marketing costs toward the end of the quarter, the company successfully executed its user acquisition campaigns.

Looking ahead, Stillfront has established updated growth targets for 2021–2023, aiming for 10,000 MSEK in net revenue by 2023 while maintaining an adjusted EBIT margin of approximately 35%. The company continues to prioritize the acquisition of well-run studios with long-lifecycle assets, as evidenced by the recent addition of Everguild to its portfolio, while focusing on diversifying its revenue streams and expanding its reach within the female gaming demographic.