G5 Entertainment AB (publ)

Revenue was USD 20.1 million, down 16% year over year and 7% sequentially. Reported operating profit was minus USD 0.2 million versus positive USD 0.6 million last year, with reported margin of minus 1.1% versus 2.5% a year ago. Adjusted EBIT was USD 0.1 million versus USD 1.6 million last year, implying a 0.4% EBIT margin versus 6.8% a year ago. Gross margin reached 73.1% versus 70% last year. Monthly average gross revenue per paying user was a record USD 79, up 15% year over year. Cash ended at USD 24.4 million, and the company remained debt-free. For the year, management said the two workforce-reduction waves should generate about USD 11 million in annual savings, with the full effect only partially visible in Q3. No formal next-quarter or full-year revenue guidance was given.

Vladislav Suglobov emphasized that the legacy portfolio is under pressure, with Sherlock, Hidden City and Jewels all declining and Jewels now moved to harvest mode after limited success from roadmap changes. He framed the main strategic shift as leaning harder into G5 Store, third-party distribution, direct-to-consumer monetization and advertising, while remaining cautious about the outlook for older games. His tone was realistic and somewhat guarded, but he highlighted optimism around the store, the new game in soft launch, and the potential to build a fourth revenue pillar.

Stefan Wikstrand highlighted the balance sheet and cost actions, noting cash of USD 24.4 million at quarter-end, no debt, and the completion of the first workforce reduction wave in Q2 with the second wave completed in early August. Management said the two rounds of redundancies should save about USD 11 million annually, though the full P&L benefit will not be seen until later, with some severance still flowing through Q3. He also pointed to capital returns, including a USD 1.6 million dividend and USD 1 million of repurchases in the quarter.

Analysts focused on whether Sherlock and Hidden City can stabilize, with management saying Hidden City improved after the problematic functionality was removed, but Sherlock lacks one obvious fix and faces structural pressure from rising user acquisition costs and aging audience cohorts. On Jewels, management said harvest mode should not accelerate the decline and may slow over time, since they are no longer spending on UA for those titles, though cross-promotion and content support may help somewhat. Questions on UA led management to say the market got more expensive than expected, so they are back to trying to keep the portfolio roughly margin-neutral rather than increasing spending aggressively. On third-party games, management said the 100% sequential increase confirmed the strategy is working and that more titles are in the pipeline.