Q2 2026 G5 Entertainment AB (publ) Earnings Call Transcript
Key Points
- G5 Entertainment AB (FRA:U3I) achieved a record-high gross margin of 73.1%, up from 70% year-over-year, driven by the growing G5 Store and direct mobile monetization.
- Third-party distribution revenue on the G5 Store surged 100% sequentially, with a strong pipeline of signed and in-negotiation games, positioning it as a promising fourth revenue pillar.
- Monthly average gross revenue per paying user hit a new record of $79, a 15% year-over-year increase, reflecting a high-quality loyal audience.
- The company maintains a strong balance sheet with $24.4 million in cash and remains debt-free, providing strategic flexibility for future investments and shareholder returns.
- Workforce optimizations totaling approximately $11 million in annual savings have been completed, with the full cost benefits expected to materialize in the coming quarters.
- Total revenue declined 16% year-over-year and 7% sequentially, with all three main pillars (Sherlock, Hidden City, and Jewels) underperforming.
- The Jewels family of games saw a nearly 30% year-over-year decline and has been put into harvest mode, with expectations of continued gradual decline.
- Hidden City suffered a 10.5% year-over-year revenue drop due to negative effects from new functionality, though it is gradually recovering after restoration.
- User acquisition costs rose to 19.5% of gross revenue, up from 18% a year ago, and market-wide cost increases have made it harder to replenish users.
- Reported operating profit turned negative at -$0.2 million, with an EBIT margin of -1.1%, impacted by severance payments and increased UA spend.
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Morning everyone for the Q2 2026 earnings call. (Event Instructions) With that said, I will hand over to our CEO, Vlad Suglobov.
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Welcome everyone to the earnings call for the second quarter. We obviously have Stefan Wikstrand, our CFO, with us today. We will go through the presentation in about 15 minutes, and then we will open the line for the questions. I will start by giving you a brief overview of this morning's report. First, I will tell you about the current optimization of the workforce. As we disclosed in the first quarter report, the plan was to reduce our staff by approximately 180 employees with the aim to have a total of around 635 employees. This first wave of redundancies was completed during the second quarter, and since then, we have continued to review the workforce and the
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