Stillfront

INBJUDAN TILL TECKNING AV AKTIER I Notera att teckningsrätterna förväntas ha ett ekonomiskt värde. För att inte teckningsrätternas värde ska gå förlorat måste innehavaren antingen: • Utnyttja de erhållna teckningsrätterna och teckna nya aktier senast den 16 mars 2022, eller • Senast den 11 mars 2022 sälja de erhållna teckningsrätterna som inte avses utnyttjas för teckning av nya aktier.

Stillfront Group AB₍SF.SE ) Stillfront Group AB₍SF.SE) Corrected Transcript Q3 2022 Earnings Call 26-Oct-2022 Chief Executive Officer, Stillfront Group AB ChiefFinancial Officer, Stillfront Group AB ..........................................................................................................................................................................................

Stillfront Group’s performance throughout 2025 reflects a strategic pivot toward profitability and operational efficiency over aggressive revenue growth. Total net revenue for the year reached SEK 5,710 million, representing a 15.3% year-over-year decline and a 10.2% organic contraction. This downturn was most pronounced in the fourth quarter, where North American revenue plummeted by 31% as the company intentionally reduced marketing spend and divested the Narrative franchise. Despite these top-line pressures, the adjusted EBITDAC margin expanded to 27%, bolstered by a significant shift toward direct-to-consumer bookings, which now represent 45% of the total.

The financial landscape was heavily influenced by non-cash impairments totaling SEK 2,258 million in the final quarter, primarily targeting goodwill and intangible assets. These charges contributed to a full-year net loss of SEK 2,398 million, though this marked a substantial improvement over the previous year’s losses. Total assets decreased to SEK 11,024 million by year-end, reflecting a leaner balance sheet. Geographically, performance remained bifurcated; while North America and Europe struggled with organic declines, the MENA & APAC region demonstrated resilience with 6.6% organic growth driven by core franchises such as Jawaker.

Operational stability remains a priority as the company transitions to a consolidated reporting structure for 2026. With a monthly active user base of approximately 35 million, the focus has shifted toward sustaining "Key Franchises" that generate over SEK 200 million in annual bookings. Financial health is supported by a free cash flow of SEK 290 million in the fourth quarter, which facilitated debt reduction. The year concluded with a net debt of SEK 3,747 million and an adjusted leverage ratio of 2.02x, positioning the group just above its long-term financial target of 2.0x.

Stillfront Group’s 2024 fiscal year marks a pivotal transition into a synergy-driven operational phase, characterized by a major geographic reorganization into Europe, North America, and MENA & APAC business areas. This strategic shift aims to drive efficiency and mitigate a 2% organic revenue decline, which resulted in total net revenues of 6,737 MSEK. The financial year was defined by a significant net loss of 7,378 MSEK, primarily driven by a 6.9 billion SEK goodwill impairment in the North American segment due to lower-than-expected growth. Despite these non-cash charges, the group maintained a resilient financial foundation, generating over 1 billion SEK in free cash flow and improving gross margins to 80% through successful direct-to-consumer initiatives.

The group’s portfolio remains focused on free-to-play franchises, with North America and Europe accounting for 71% of player bookings. To reduce dependency on third-party platforms, which still facilitate 54% of revenue, management is prioritizing its internal payment systems and the "Stillops" platform for cost optimization. A comprehensive cost-savings program is underway, targeting up to 250 MSEK in annual savings by late 2025. Leadership has also stabilized under a new CEO and a board that remains fully compliant with the Swedish Code of Corporate Governance, focusing on organic growth and franchise scaling over dividend distributions.

Sustainability and governance have been deeply integrated into the corporate strategy in preparation for the EU’s Corporate Sustainability Reporting Directive. The group achieved Science Based Targets initiative validation, reducing market-based greenhouse gas emissions by 7% and more than doubling its renewable energy share to 37%. While social metrics show a stable workforce with improved turnover rates and high data security standards, challenges remain in gender diversity at the executive level. Executive remuneration is now tied to long-term sustainability targets, including employee satisfaction and data privacy, ensuring that environmental and social governance remains central to the group’s long-term value creation.

Stillfront Group AB demonstrated significant financial resilience during the third quarter of 2022, reporting a 36 percent year-over-year revenue increase and achieving an adjusted EBIT margin of 29 percent. This performance was underpinned by a strategic combination of acquisitions, favorable foreign exchange effects, and 1.4 percent organic growth, which notably outperformed a broader global mobile gaming market currently facing post-pandemic contraction. The company’s operational cash flow reached a milestone of over SEK 2 billion on a last-twelve-months basis, supported by a diversified portfolio that has expanded to 77 active games.

The organizational strategy centers on a disciplined capital allocation model that prioritizes high-performing studios and dynamic user acquisition spending. While certain subsidiaries like Storm8 and KIXEYE have faced efficiency challenges or market softening, these are offset by the success of strategy titles and the integration of high-growth assets like Jawaker. The "Stillops" platform serves as a critical driver for synergy, facilitating the transition of acquired entities toward higher-margin, first-party game development. This portfolio-wide approach ensures that overall profitability remains stable even as individual studios experience natural fluctuations in performance.

Looking ahead, the pipeline remains robust with 50 new products in development and a high conversion rate for recent launches. Management anticipates continued acceleration in organic growth through the remainder of 2022 and into 2023, bolstered by a strong liquidity position and SEK 2.2 billion in unutilized credit. By focusing on live operations and regional expansion for long-term assets, the group aims to maintain a consistent EBITDA margin between 35 and 40 percent, reinforcing its position as a consolidated leader in the global gaming industry.

Stillfront Group AB (publ) initiated a preferential rights issue in March 2022 to raise approximately 1,952 MSEK in net proceeds. The primary objective of this capital raise is to repay debt incurred from the $201 million acquisition of 6waves and to strengthen the balance sheet for future strategic initiatives. The offering allowed existing shareholders to subscribe to three new shares for every ten held at a price of 17 SEK per share, representing a potential 23.1% dilution for non-participating investors. The scope of the offering focused on Sweden, Denmark, and Finland, supported by subscription commitments from major shareholders such as Laureus Capital and Swedbank Robur.

The group’s financial trajectory reflects an aggressive acquisition-led growth strategy, with net sales increasing from 1,967 MSEK in 2019 to 5,455 MSEK in 2021. Despite this rapid expansion across 22 global studios, organic growth turned negative (-8%) in 2021, and the company faces significant contingent consideration obligations (earn-outs) totaling 3,328 MSEK through 2027. Operationally, the business is highly concentrated, relying on a small number of "free-to-play" titles and "whale" users, with 77% of revenue generated through the Google Play and Apple App stores.

Significant risks include the retention of approximately 55 key personnel and studio founders, whose departure following earn-out periods could impact productivity. Furthermore, the group faces evolving regulatory challenges regarding data protection (GDPR/CCPA), "loot box" monetization, and the potential reclassification of virtual currencies as gambling. Exposure to currency fluctuations, particularly the USD, and rising interest rates also pose material threats to profitability. Moving forward, the group aims for 10 billion SEK in net sales by 2023, maintaining a policy of reinvesting all profits into growth rather than issuing dividends.

Stillfront Group AB established this company description in December 2015 to facilitate its listing on Nasdaq First North, signaling its transition from a private conglomerate to a public entity. The group utilizes a "PLEX" strategy, managing a portfolio of near-autonomous subsidiaries that focus on long-lifecycle, cross-platform games. By leveraging shared game engines and intellectual property, the company aims to mitigate the high risks inherent in game development while capturing synergies across its diverse titles. The scope of operations is global, with primary markets in the United States, Germany, and Sweden, and a workforce distributed across nine subsidiaries.

Financial performance in 2015 was characterized by significant growth, including a 63% increase in organic sales and an underlying EBITDA margin of 23.1%. This momentum was largely driven by the success of the war strategy title Call of War from Bytro Labs—which contributed 62% of group revenue—and the anticipation surrounding Unravel, a partnership project between Coldwood Interactive and Electronic Arts. To sustain this trajectory, the company raised SEK 75 million through a private placement to fund new game development and the acquisition of remaining stakes in its subsidiaries, targeting a net revenue of SEK 300 million by 2020.

Despite strong growth, the business faces operational risks including a heavy reliance on a limited number of key titles and the challenge of navigating rapid technological shifts in mobile and social platforms. The global games market, projected to exceed $100 billion by 2017, presents opportunities in the "free-to-play" and "mid-core" segments but also introduces barriers such as rising user acquisition costs and complex multi-jurisdictional regulations. The group’s governance is centralized under a management team with significant equity stakes, though the concentrated ownership structure and the lower regulatory requirements of the First North market remain notable considerations for new investors.