MindArk’s Q4 figures were softer than we expected due to lower activity in Entropia Universe, with sales coming in at SEK23.7m compared to our estimate of SEK29m. This represents a y/y decline of 49% (c35% excluding accounting changes in Q4 last year). In terms of profitability, MindArk reported an EBITDA of SEK8m and EBIT of SEK3m, below our estimates of SEK12.6m and SEK7.8m, respectively. The lower profitability is due to the lower sales, while Opex was in line with expectations.

We were somewhat surprised by the weak sales figures in the quarter, as we expected to see a larger rebound from Q3, which had limited content releases, compared to Q4 with the Halloween and Christmas events. The company states in the report that its new update, Howling Universe, has been well received by users, and we think it is increasingly important that MindArk can show that the update translates into higher activity to demonstrate that Q3 and Q4 results have just been bumps in the road.

On the back of the report, we reduce our sales estimates by 5% for 2025e and 3% for 2026e, while adjusting our opex estimates upwards by 4% for 2025e-2026e. We remain relatively conservative in terms of growth in the coming years until we see any clear signs of improvement from the new game engine and other growth initiatives. Our new base case stands at SEK2 (3), with a fair value range of SEK0.8-4.5 (1.2-7).