Stillfront Group (SF) Q4 2023 earnings summary

Executive summary

• Q4 net revenue fell 2% YoY; organic bookings declined 2% and organic net revenue fell 3%, but organic bookings returned to growth in November and December, with 7% sequential organic growth.

• Scaling new and existing games, led by Sunshine Island, supported the recovery; record marketing investment reduced Q4 adjusted EBITDAC margin.

• FY2023 adjusted EBITDAC margin rose 1.8 percentage points to 24.4%, from 22.7% in 2022.

Financial highlights

• Q4 net revenue was SEK 1,742m, down 2% YoY; gross profit grew 1% to SEK 5,445m and gross margin increased to 78% from 76%.

• Q4 adjusted EBITDA was SEK 569m, down 15% YoY, with a 33% margin versus 38%; adjusted EBITDAC was SEK 365m versus SEK 437m, with a 21% margin versus 25%.

• Q4 EBIT was SEK 130m versus SEK 70m; net result was SEK 10m versus SEK 203m.

• FY2023 net revenue was SEK 6,982m versus SEK 7,058m; adjusted EBITDA was SEK 2,510m versus SEK 2,595m, and adjusted EBITDAC was SEK 1,705m versus SEK 1,599m.

• FY2023 net result was SEK 12m versus SEK 547m; EBIT was SEK 754m versus SEK 850m.

Outlook and guidance

• High marketing investment was expected to continue into Q1 2024, supporting further improvement in YoY organic growth; Sunshine Island and other active-portfolio games were expected to sustain spend.

• The winter season was identified as the strongest period for user acquisition; the addressed market was expected to expand in 2024.

• The adjusted EBITDAC margin target is 26–29%; FY2023 margin was 24.4%.

• Sunshine Island's roadmap included new languages, webshop functionality, additional content and live-ops events.