Stillfront Interim Report: First Quarter 2021

Key insights

7 takeaways

01
Stillfront Group achieved a 91% year-over-year increase in net revenue to 1,319 million SEK, supported by a 33% adjusted EBIT margin and 9.5% organic growth.See it on page 5
02
The company’s portfolio reached 60 million monthly active users and 12 million daily active users, with the Casual/Mash-up segment contributing 39% of total bookings.See it on page 6
03
Growth was bolstered by the integration of acquisitions including Sandbox, Super Free, and Moonfrog, alongside the launch of 10 new titles during the quarter.See it on page 3
04
Foreign exchange fluctuations, specifically a weaker USD, negatively impacted revenue by 8.9% during the first quarter of 2021.See it on page 4
05
The company maintains a strong financial position with 1,225 million SEK in cash and a 1.3x leverage ratio, which remains below its 1.5x target.See it on page 11
06
Management anticipates a negative organic growth rate for the second quarter due to difficult year-over-year comparisons.See it on page 16
07
To mitigate Apple’s IDFA changes, the company has implemented extensive A/B testing and provider diversification for its mobile advertising and user acquisition strategies.See it on page 15

Summary

Stillfront Group’s first-quarter 2021 interim report highlights a period of significant expansion and robust financial performance for the Stockholm-based free-to-play gaming powerhouse. Operating a portfolio of 19 studios, the company achieved a 91% year-over-year increase in net revenue, reaching 1,319 million SEK. This growth was driven by a combination of organic expansion and the integration of newly acquired studios, including Sandbox, Super Free, and Moonfrog. Despite a 9.5% organic growth rate and a 33% adjusted EBIT margin, the company noted that foreign exchange fluctuations, particularly the weaker USD, negatively impacted revenue by 8.9%.

The company’s active portfolio reached 60 million monthly active users and 12 million daily active users by March 2021. The portfolio is categorized into three segments: Strategy, Simulation/RPG/Action, and Casual/Mash-up. The Casual/Mash-up segment emerged as a significant contributor, accounting for 39% of total bookings, while the Strategy segment remained a core pillar at 28%. The company successfully launched 10 new titles during the quarter, including the UK release of BitLife, and maintained high profitability even as user acquisition costs rose to 28% of net revenue.

Financially, the group maintains a strong position with 1,225 million SEK in cash and a conservative leverage ratio of 1.3x, remaining below its 1.5x target. Looking ahead, the company anticipates a negative organic growth rate in the second quarter due to challenging year-over-year comparisons. Furthermore, the organization has proactively prepared for Apple’s IDFA (Identifier for Advertisers) changes through extensive A/B testing and provider diversification, positioning itself to navigate potential shifts in mobile advertising and user acquisition dynamics. The company is also actively pursuing a transition from the First North market to the Nasdaq Stockholm main market.