EG7 reported revenue of SEK473m and EBITDA of SEK98m for Q4 2023 which was lower than our forecasts of SEK504m and SEK119m respectively. The main deviation on topline stems from Big Blue Bubble where revenue from My Singing Monsters declined faster than we had expected during the quarter. The company comments that it expects My Singing Monsters to stabilize at a new normal level during H1 2024. The lower-than-expected revenue in Big Blue Bubble also resulted in a softer EBITDA-margin than expected and the segment was the main contributor to the weaker-than-expected EBITDA. The company saw strong cash flow during the quarter where operating cash flow of SEK100m and net investments of SEK63m resulted in a net cash position of SEK481m by the end of 2023.

Coming to the outlook, the company reiterates its expectation that 2024 will be a transition year until new growth investments start generating revenue. The company expects revenue of SEK1.8bn with an EBITDA-margin of 22-25% (implying an EBITDA range of SEK396-450m). Redeye currently forecasts topline of SEK1.9bn and EBITDA of SEK467m (margin of 24%).

We expect to lower our 2024E EBITDA by around 10% on the back of the report while 2025-26E should see limited changes. The tables below summarize Q4-results outcome vs our expectations.