Modern Times Group (MTG) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were SEK 1,437 million, down 1% year-over-year in constant currencies, with Snowprint showing growth while other studios declined.

• Adjusted EBITDA rose 7% year-over-year to SEK 426 million, with a 30% margin, setting an all-time high for 12-month rolling adjusted EBITDA.

• Operating margin increased to 30% in Q2 and 28% for H1, driven by lower user acquisition spend and strong cost control.

• Cash flow from operations reached SEK 374 million in Q2, with a rolling 12-month cash conversion of 66%.

• The company remains confident in achieving its full-year outlook of 1–5% reported growth (excluding currency effects) and an adjusted EBITDA margin of 26–29%.

Financial highlights

• Adjusted EBITDA margin improved to 30% in Q2 2024 from 27% in Q2 2023; H1 2024 margin at 28%.

• Free cash flow for Q2 was SEK 295 million, with a rolling 12-month cash conversion of 66%.

• User acquisition spend was SEK 470 million in Q2, representing 33% of revenues, down from 39% last year.

• CapEx was significantly lower at 1.5% of revenues, reflecting the end of a development cycle and the divestment of Kongregate.

• Cash and cash equivalents at period end: SEK 3,144 million.

Outlook and guidance

• Full-year 2024 guidance reiterated: 1–5% reported sales growth at constant currencies and adjusted EBITDA margin of 26–29%.

• Sequential revenue growth expected in Q3 and Q4, with Q4 being seasonally strongest.

• New game launches in H2 expected to have marginal impact in 2024, with greater value anticipated in 2025 and beyond.

• Ambition to scale user acquisition when market opportunities arise in H2 and beyond.

• Confidence in reaching the upper end of the adjusted EBITDA margin range.