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1. Company Snapshot

1.a. Company Description

Stillfront Group AB (publ), through its subsidiaries, designs, develops, markets, publishes, and distributes digital games in Europe, North America, the United Kingdom, and the Middle East and North Africa region.The company's games portfolio include Albion Online, Battle pirates, Big Farm: Mobile Harvest, BitLife, eRepublik.com, Call of War, Conflict of Nations: World War 3, Goodgame Empire, Hollywood Story, Home Design Makeover!, Imperia Online, My Story, Nida Harb 3, OFM, Property Brothers Home Design, Shakes & Fidget, Siege: World War II, The Horus Heresy: Legions, and Trivia Star.Its games portfolio also include Unravel Two, War and Peace: American Civil War, War Commander: Rogue Assault, Word Collect, Word nut, What's the Pic, Ludo Club, and Teen Patti Gold.


The company was founded in 2010 and is headquartered in Stockholm, Sweden.

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1.b. Last Insights on SF

Stillfront Group AB's recent performance was driven by robust free cash flow growth and improved gross profit margins, despite a decline in net revenue. The company's ability to navigate increased user acquisition costs and maintain profitability is a positive sign. Additionally, the high-growth tech sector's resilience in a complex market landscape, as mentioned in a recent article, suggests that Stillfront Group AB's innovative approach and adaptability could be key drivers of its success. The company's focus on strong fundamentals and agility in adapting to market changes is also a positive indicator.

1.c. Company Highlights

2. Stillfront's Q3: Revenue Decline, Margin Expansion, and Strategic Progress

Stillfront's Q3 net revenue declined 7.8% organically to SEK 1,373 million, driven by a 32.9% year-on-year decline in North America. Despite this, the company reported a significant expansion in adjusted EBITDAC margin to 32%, driven by cost savings and a more disciplined approach to user acquisition. The EPS came in at 0.1062, significantly beating estimates of 0.02704. The revenue decline was partially offset by solid growth in Europe and MENA/APAC, with Europe returning to growth with a 0.6% year-on-year increase.

Publication Date: Nov -17

📋 Highlights
  • Net Revenue Decline:: Q3 net revenue fell 7.8% organically to SEK 1,373 million, driven by a 32.9% North America drop, partially offset by 0.6% growth in Europe and 3% in MENA/APAC.
  • Adjusted EBITDAC Growth:: Adjusted EBITDAC rose to SEK 436 million (32% margin), up 13 percentage points YoY, reflecting cost optimization and disciplined user acquisition in North America.
  • Regional Performance:: Europe rebounded with 0.6% growth to SEK 643 million, driven by Big, Albion Online, and Supremacy; MENA/APAC grew 3% via Jawaker and Board franchises.
  • Financial Strength:: Net debt decreased by SEK 800 million YoY to SEK 5.1 billion, with a leverage ratio of 2.06x, and a new share buyback program announced.
  • Future Strategic Focus:: Warhammer Supremacy’s soft launch in October and scaling in Q4, alongside key franchise investments and potential divestments, aim to drive long-term growth and margin stability.

Regional Performance

Europe's growth was driven by strong performance from Big, Albion Online, and Supremacy, while MENA/APAC saw healthy double-digit growth from Jawaker and Board. North America showed improved profitability, with an adjusted EBITDAC margin of 15%, despite a significant revenue decline. The company's cost optimization program has delivered significant fixed cost savings in North America and direct cost savings from the web shop rollout.

Financial Position and Capital Allocation

The group's financial position remains strong, with a total net debt decrease of almost SEK 800 million year-over-year to SEK 5.1 billion, and a leverage ratio of 2.06x. The company has announced a new share buyback program and has a strong debt structure with a maturity profile that sees most debt due in 2027 onwards. This provides flexibility for potential actions such as amortizing the RCF, dividends, or acquisitions.

Outlook and Valuation

The company is confident in its new rhythm for Europe, which is expected to show long-term improvement, driven by new games such as Warhammer Supremacy. Analysts estimate next year's revenue growth at -3.9%. The current valuation metrics suggest a P/S Ratio of 0.53 and an EV/EBITDA of -1.33, indicating a potentially undervalued stock. The significant beat on EPS estimates and the ongoing strategic review, including potential divestments and game closures, are positive catalysts for the stock.

3. NewsRoom

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Stillfront Group (OM:SF) Seen Profitable Within 3 Years as Earnings Growth Signals Turnaround

Oct -24

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Stillfront Group AB (STLFF) Q1 2025 Earnings Call Highlights: Strategic Shifts and ...

May -07

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Stillfront Group AB (STLFF) Full Year 2024 Earnings Call Highlights: Strategic Growth Amidst ...

Feb -06

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High Growth Tech Stocks To Watch In November 2024

Nov -04

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Stillfront Group AB (STLFF) Q3 2024 Earnings Call Highlights: Navigating Revenue Challenges ...

Oct -24

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Stillfront Group AB (STLFF) Q2 2024 Earnings Call Highlights: Strong Margins Amid Revenue Challenges

Oct -09

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.76%)

6. Segments

Subscriptions and Virtual Goods

Expected Growth: 11.95%

Stillfront Group AB's 11.95% growth in Subscriptions and Virtual Goods is driven by increasing demand for online gaming, successful game portfolio expansion, and strategic acquisitions. Additionally, the company's focus on live operations, user engagement, and retention strategies have contributed to the growth. Furthermore, the shift towards digital entertainment and the growing popularity of free-to-play models have also fueled this growth.

Advertising

Expected Growth: 10.5%

Stillfront Group AB's 10.5% advertising growth is driven by increasing demand for mobile gaming, strategic acquisitions, and expansion into new markets. The company's focus on user acquisition and retention, coupled with its data-driven approach to advertising, has also contributed to this growth. Additionally, the rise of e-sports and social media influencers has increased brand awareness and advertising revenue.

7. Detailed Products

eRepublik

A massively multiplayer online game where players can participate in a virtual world, build their own empires, and engage in strategic battles.

Victoria

A historical massively multiplayer online game set in the Victorian era, where players can build their own empires and engage in diplomacy and warfare.

Nordcurrent

A portfolio of casual games, including Cooking Fever, Hotel Dash, and other popular titles.

Toon Blast

A popular mobile puzzle game where players can match colorful toons to progress through levels and challenges.

Solitaire Rush

A mobile solitaire game with a twist, where players can compete with friends and other players to achieve the highest scores.

Big Farm

A farming simulation game where players can build and manage their own farms, plant and harvest crops, and raise livestock.

8. Stillfront Group AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Stillfront Group AB (publ) is medium due to the presence of alternative gaming platforms and entertainment options.

Bargaining Power Of Customers

The bargaining power of customers for Stillfront Group AB (publ) is low due to the company's strong brand recognition and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Stillfront Group AB (publ) is medium due to the company's dependence on a few key suppliers for game development and publishing.

Threat Of New Entrants

The threat of new entrants for Stillfront Group AB (publ) is high due to the low barriers to entry in the gaming industry and the potential for new competitors to emerge.

Intensity Of Rivalry

The intensity of rivalry for Stillfront Group AB (publ) is high due to the highly competitive nature of the gaming industry and the presence of established competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.05%
Debt Cost 4.89%
Equity Weight 73.95%
Equity Cost 4.89%
WACC 4.89%
Leverage 35.22%

11. Quality Control: Stillfront Group AB (publ) passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
PlayWay

A-Score: 7.1/10

Value: 4.7

Growth: 8.0

Quality: 9.8

Yield: 9.4

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
GDEV

A-Score: 5.6/10

Value: 6.8

Growth: 6.4

Quality: 7.4

Yield: 8.8

Momentum: 4.0

Volatility: 0.0

1-Year Total Return ->

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Paradox Interactive

A-Score: 4.6/10

Value: 1.9

Growth: 8.2

Quality: 8.4

Yield: 3.1

Momentum: 1.5

Volatility: 4.7

1-Year Total Return ->

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11 bit studios

A-Score: 4.1/10

Value: 5.4

Growth: 4.4

Quality: 6.9

Yield: 0.0

Momentum: 5.5

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
Team17

A-Score: 3.9/10

Value: 4.9

Growth: 6.1

Quality: 3.4

Yield: 0.0

Momentum: 6.5

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
Stillfront

A-Score: 3.6/10

Value: 9.8

Growth: 4.4

Quality: 3.1

Yield: 0.0

Momentum: 3.5

Volatility: 1.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.45$

Current Price

6.45$

Potential

-0.00%

Expected Cash-Flows