Stillfront Group

Research note


Stillfront: KPIs strengthening

Today Stillfront released statistics over their most important KPIs during Q4’16. As we had expected, we saw a high growth in player volume, compared to Q3, and continuously high player loyalty. The numbers exclude Siege: Titan Wars and the game portfolio of the newly acquired Babil Games.

Stillfront has been experiencing a downward trend in the number of users for the last two quarters, and it is therefore very pleasing to see a significant increase during Q4. During the period, the average number of MAUs (Monthly Active Users) amounted to 289 729 and DAUs (Daily Active Users) 72 148. Corresponding to an MAU growth (compared to Q3’16) of 30% and DAU uptake of 15%. In comparison to our estimate, the MAUs was stronger and DAUs almost spot-on.

We had anticipated a somewhat higher DAU/MAU ratio, but given the significant rise in MAUs we see this deviance of less concern. The user trend has been down sloping during Q2 and Q3, mainly due to temporally high user acquisition prices in H1 2016, so we find the substantial user rise during the quarter as extra important. The user statistics are based on Stillfront’s largest games, ranked by revenue generation, but do not include the soft launched Siege: Titan Wars and the game portfolio of the newly acquired Babil Games.

We will not make any forecast adjustments for Q4 as our forecast of DAUs was well in-line with the reported numbers. We still find Stillfront as a highly compelling case with an attractive valuation given their strong prospects. In our next update, we will most likely have to adjust our assumptions for Siege: Titan Wars upwards and add Babil Games to our projections. Before any forecast adjustments our estimated fair value, in Base-case, amounts to 105 SEK per share. We firmly believe that the market has missed the plethora of value enhancing triggers that will materialize during the coming years for Stillfront.

The biggest drivers will be:

  • Siege: Titan Wars release
  • Bytromobile porting
  • Coldwood in-house title
  • More value adding acquisitions (in the fashion of Babil Games).

We continue to find that the risk-reward situation at current levels is compelling.

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