Stillfront's Margin Surge Masks a Changing Business: Disciplined Spending, Key Franchise Growth, and a CEO Succession

Q2 2026 shows profitability up 6pp despite 1.3% organic decline, as the company pivots to franchise-led growth and deleveraging ahead of a 2027 inflection.

SF.ST · Earnings Call · 2026-07-24

Profitability Engine Overrides Top-Line Stagnation

Stillfront's Q2 2026 results tell a story of operational discipline overcoming a flat top line. Net revenue slipped 1.3% organically to SEK 1.323 billion, but adjusted EBITDAC surged to SEK 387 million, a 29% margin — up from 23% in Q1 and 3pp year-over-year. CFO Emily Villatte captured the tension: “Adjusted EBITDAC amounted to SEK 387 million, which is an increase of 3% compared to last year. And it is great to see that we're achieving this while our reported revenues and organic growth decline year-on-year.” — Emily Villatte, CFO · 2026-07-24 The drivers: a sharp reduction in user acquisition (UAC) spend, down to 26% of revenue from 30%, and a growing direct-to-consumer channel now at 46% of bookings — a step-up from 39% a year ago. The Big Farm franchise, after its global launch, saw UAC normalize, and the Gameberry settlement (a one-off upfront payment) boosted cash flows and aided deleveraging. Beyond the headline, the quarter underscores a deliberate trade-off: sacrificing some topline for margin and cash generation. This is a company that, just a few quarters ago, was still fighting a double-digit organic decline. Now, even with the reported revenue down 8% (including negative FX and divestment impacts), the business is generating SEK 519 million in free cash flow. The CFO noted that on an LTM basis, free cash flow reached SEK 1.307 billion (or SEK 841 million adjusting for the Gameberry upfront). This cash engine is being channeled toward earn-out settlements and debt reduction, with net debt falling to SEK 4.6 billion from SEK 5.2 billion in one quarter.

I think we've now had 2 successive quarters that demonstrate that the strategy is working. So I feel that when discussing with the Board, I feel that the group is now kind of well set with a strong strategy, strong execution, strong new team and it will be the right moment, I think, to pass on the baton to a new CEO when we find that person.
Alexis Bonte, CEO · 2026-07-24

Key Franchises Carry the Load — But UA Weather Is Turning

The company's strategy of focusing on a handful of key franchises is delivering: they grew 10% organically, the second consecutive quarter of double-digit growth, offsetting a 24% decline in the "Other games" bucket, which includes recently divested assets and deliberately reduced UA. CEO Alexis Bonte touted the breadth: Jawaker rebounded to double-digit growth, Empire posted its best quarter since 2024, Albion launched on Xbox, and Board continued its momentum. Yet the quarter also revealed a cautionary sign in the user acquisition market. Management admitted they would have liked to deploy more UA for Supremacy (whose Warhammer title sits in soft launch), but the environment turned unfavorable. As Bonte put it, “we would have liked actually to allocate a bit more UA for Supremacy towards the end of the quarter. But the environment wasn't favorable for that in the quarter.” — Alexis Bonte, CEO · 2026-07-24 This is a recurring theme — but this time the company is carrying less optionality, given its strict ROAS criteria and reduced cash levels. Still, the resilience of Jawaker in a volatile region and the success of Supremacy's predecessor suggest the franchise model can weather short-term UA headwinds. The company's own keyword trajectory for Q2 2026 is dominated by the same themes: "Gameberry settlement," "Big Farm," "Live ops," and "global launch." These are company-specific, not market-wide, which reinforces that this turnaround is being driven by internal execution rather than a rising tide. In the global context, the quarter's top keywords (e.g., "Batch Zero," "Earnings growth") are unrelated, making Stillfront's story genuinely idiosyncratic.

Strategic Review and a Leadership Transition

The quarter also marked a significant milestone in the company's evolution: the strategic review, initiated in 2024, is delivering divestments and settlements — OFM Studios was sold and the Gameberry dispute resolved. The company is now targeting an inflection point in Q2 2027 when all earn-outs settle, releasing cash for further deleveraging. As the CEO summarized in his prepared remarks, “We will continue to focus on execution, profitability, cash generation, and long-term value creation through our key franchises.” — Alexis Bonte, CEO · 2026-07-24 The leadership succession is orderly, but it introduces an element of uncertainty that investors will monitor. Bonte, who stepped into the role nearly two years ago to lead a turnaround, now feels the strategy is proven. In a prior call, he had already signaled the changing approach: “there's a time to be doing cost savings and there's a time to go on the offensive.” — Alexis Bonte, CEO · 2025-10-23 That offensive may be delayed while the UA market remains volatile, but the margin and cash-flow strength buy the company time. Stillfront's story is one of improving financial efficiency amid a stagnant topline, with a clear strategic narrative and an upcoming leadership handover. The market will be watching whether the franchise-led growth can accelerate once UA conditions improve. For now, the company is delivering on its promise of profitability and cash generation, even if the topline is not yet back to growth.