Stillfront Group (SF) Q3 2024 earnings summary

Executive summary

• Net revenue for Q3 2024 was 1,595 MSEK, down 4.6% year-over-year and 0.8% organically, impacted by seasonality and lower bookings from the Netflix collaboration.

• Gross profit margin improved to 80%, up two percentage points year-over-year, driven by increased DTC bookings.

• Adjusted EBITDAC margin was 24%, down 0.4 percentage points year-over-year due to higher user acquisition costs.

• Free cash flow reached 298 MSEK, up 49% year-over-year, enabling 80 MSEK in share buybacks and 223 MSEK in debt amortization.

• CEO transition: Alexis Bonte appointed interim CEO after Jörgen Larsson's departure in October 2024.

Financial highlights

• UAC rose to 29% of net revenues in Q3, up from 26% in Q3 2023, mainly due to investments in Super Free's Word Collect and Trivia Star.

• Staff costs as a percentage of net revenue decreased by 1.4 percentage points year-over-year.

• ARPDAU increased by 14% year-over-year, while monthly and daily active users declined due to seasonality and a focus on high-value users.

• DTC share of bookings increased by five percentage points year-over-year.

• Net result for Q3 was 18 MSEK, up from -5 MSEK last year; EPS was SEK 0.03.

Outlook and guidance

• User acquisition investments are expected to increase sequentially in Q4 due to higher play activity, with a cautious approach due to potential impacts from the US elections and higher CPIs.

• SEK 200–250 million cost optimization and reorganization program underway, with SEK 39 million in annualized savings already actioned, full effect in Q1 2025.

• New organizational model with three business areas effective January 2025, aiming for faster decision-making and improved profitability.

• No change to previously stated financial targets; Q4 performance is key to achieving margin goals.