Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stillfront Group AB (STLFF, Financial) reported strong margin development in Q2, with an EBITDAC margin of 29%, marking the highest margins in three years.
- The company achieved a significant increase in free cash flow, amounting to SEK272 million, nearly doubling from the previous quarter.
- Gross profit improved by 2 percentage points to 80%, driven by a focus on direct-to-consumer channels, which increased to 33% from 29% last year.
- The company successfully reduced staff costs by 12%, contributing to improved margins and operational efficiency.
- Stillfront Group AB (STLFF) announced a share buyback program, intending to purchase up to SEK80 million of shares, reflecting confidence in its financial position.
Negative Points
- Net revenues were down by 4% compared to the previous year, indicating challenges in maintaining top-line growth.
- The strategy segment experienced a clear slowdown in June, with bookings dropping by approximately SEK99 million.
- User acquisition costs remain high, with a significant portion of cash flow allocated to UA, impacting overall profitability.
- Monthly active users (MAU) and daily active users (DAU) saw a decline, reflecting challenges in user engagement and retention.
- The company faced a negative net working capital effect due to a reduction in liabilities, impacting cash flow from operations.
Q & A Highlights
Q: Can you elaborate on the decline in the strategy segment, especially given the record levels of user acquisition (UA) in previous quarters?
A: Andreas Uddman, CFO, explained that the decline was primarily due to lower activity levels in Supremacy during June, influenced by seasonal factors. Despite low UA levels, Empire performed steadily, contributing positively to margins.
Q: Is the lower activity in Q3 expected to affect the entire portfolio or just the strategy segment?
A: Andreas Uddman, CFO, noted that the slowdown is more pronounced in strategy games due to their time commitment, while Casual and Mash-up games are less affected by seasonality.
Q: What are the potential new initiatives for cost optimization in the second half of the year?
A: Andreas Uddman, CFO, mentioned that while specific details are not yet available, the company is exploring initiatives to lower costs and increase transparency, with more information to be shared later in the year.
Q: Can you discuss the performance and margin profile of Jawaker?
A: Jorgen Larsson, CEO, highlighted Jawaker's strong growth and high margins, attributing success to its social gaming model and low UA costs, driven by organic and viral marketing.
Q: How do you view the user acquisition levels for the second half of the year compared to last year?
A: Jorgen Larsson, CEO, indicated that while UA levels might be slightly higher than the 25% previously expected, the company aims to offset this with improved gross margins and cost efficiencies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
