The following is a summary of the Stillfront Group AB (STLFF) Q1 2024 Earnings Call Transcript:

Financial Performance:

• Stillfront Group displayed organic growth in Q1 2024, with revenues reaching €739 million and gross margins up to 80%.

• User acquisition rates stood at 34%.

• A 5% year over year increase in gross margin was attributed to a focus on direct-to-consumer efforts.

• The company recorded a free cash flow of SEK 828 million over the last 12 months; operating cash flow declines were offset by reduced investments.

• Bookings from ad revenue increased to 14%, reflecting adaptability amidst changing ad-bidding systems.

• Despite changes in Google's ad bidding system, Stillfront Group increased absolute User Acquisition (UA) spend.

• The company experienced a 2% decrease in Absolute due to higher interest costs, partially mitigated by over SEK 200 million decrease in CapEx.

• Underlying growth of cash flow was observed, with an increase of approximately NOK 147 million in two periods.

• A top-line increase of SEK 80 million was seen in Q2, attributed to a successful launch.

Business Progress:

• Disciplined investments in marketing products with strong Key Performance Indicators are poised to fuel growth and margins.

• The success of the game 'Jawaker' contributed to increasing ad revenues.

• New game 'Sunshine Island' continued successful development, while preparations for another game launch, 'Ellen Garda Restoration', are underway.

• A plan to reduce user acquisition spend relative to revenues in Q2 and Q3 is set to boost margins.

• A new Europe server for Albion Online launched in April, and ongoing growth is expected from Sunshine Island.

• The ad team successfully maintained revenue amidst industry-wide challenges posed by Google's ad bidding changes, demonstrating resilience and adaptability.

• Operational traction was noted in several franchises, including Nanobit, Supremacy, and Jawaker.

• The company initiated a second buyback program, offering the Board greater capital deployment flexibility.

• Overall, Stillfront is confident in its positive Q1 development trend and its ability to continue towards achieving their financial targets.

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