Stillfront has set the current financial targets for the period 2021-2023:
Growth – Stillfront’s target is to reach a net revenue of 10,000 MSEK by 2023. Growth will be achieved organically as well as through acquisitions.
Profitability – Stillfront’s target is to reach an Adjusted EBIT margin in the region of 35 percent. The Adjusted EBIT margin may vary quarter to quarter depending on mainly the level of user acquisition and product development.
Leverage – The net debt/Adjusted EBITDA ratio should not exceed 1.5x. Stillfront may however, under certain circumstances, choose to exceed this level during short time periods.
To support value creation, Stillfront aims to invest its profits and cash flows in organic growth initiatives and acquisitions and therefore, does not expect to pay dividends or buy back shares during 2020-2022.
Stillfont’s games are essentially free-to-play games, which means that players can access the base platform for free. Players then have the choice to buy in-game currency (IGC), which can be used in the game to enhance the gaming experience. Such a transaction is referred to as a Deposit. Revenue is recognized by Stillfront when the player uses the IGC to acquire a virtual good in the game.
The share of the Deposit which has not been used in-game during the period is classified as Deferred revenue (i.e. advance payments from players). If a player does not use the IGC for an in-game transaction during a specific period of time, the player becomes classified as inactive and the value of the player’s remaining IGC is recognized as revenue. The length of the period is determined on a game-by-game basis.
The gaming industry is today the largest entertainment industry in the world with 2.7 billion gamers globally. In 2020, the gaming industry is expected to generate revenues of around USD 159.3 billion, growing year-on-year by +9.3%, and the total market is expected to exceed USD 200 billion at the end of 2023, according to Newzoo.
Mobile gaming is the most popular form of gaming. Mobile games are expected to reach 2.6 billion players and generate revenues of USD 77.2 billion in 2020, representing almost half of the global games market in term of revenues. The mobile games market is expected to grow by 13.3% year-on-year in 2020 and will continue to grow faster than the total games market up to 2023, according to Newzoo.
The active portfolio, generating revenues every day, consists of some 40 games divided into three categories: Strategy; Simulation, RPG & Action; and Casual & Mash-up. Most of our titles are long lifecycle games with a loyal player base and stable revenues.