Good morning, everyone. Thank you for joining our call to present MTG's results for Q3 and the first nine months of 2026. My name is Anton Gourman, and I am the VP Investor Relations of MTG. This call is hosted by our CEO, Maria Redin, and CFO, Nick Hopkins. There will be an opportunity to ask questions after the presentation, as always. Please use the online form if you want to add questions to the live stream or follow the instructions from the operator if you are dialing in by phone. I now hand over the call to Maria Redin. Maria, please go ahead.
Thank you, Anton, and hello, everyone. For Q3, we delivered a solid quarter against high year-over-year comps and also a more challenging backdrop for marketing and user acquisition. Nick and I will cover the financial results in a moment, but before doing so, I wanted to touch on some of the key news from the quarter. It is great to follow our progress as we continue to evolve. in August, we unveiled Playamp as a new brand for our mid-core district, and from this report onwards, we report to our mid-core district simply as Playamp and our casual district as PlaySimple. Also in August, we acquired WARP36. It is a small U.S.-based studio developing a CCG game in the Star Trek universe, which has just entered soft launch if you have an Android phone.
The studio is now fully onboard into Playamp, and it is great to see that it started to benefit the district services when it comes to the infrastructure and the expertise. I think it is also fair then to say that our biggest news came just after the quarter end, when we announced our decision to postpone the potential IPO of PlaySimple, and this was due to the prevailing conditions on the Indian capital market. We have stated before that we had two very specific goals with the listing, both of them which remain unchanged, and the first was to crystallize the value for our shareholders, while the second was to better empower PlaySimple to execute on all aspects of its growth strategy.
As we had said during the announcement, we do not believe that a listing with a challenging market backdrop would enable us to deliver on these two objectives efficiently, and that is why we took the proactive decision, and it was a decision that we did not take lightly, to actually postpone the IPO. It does not change our long-term strategy for either PlaySimple or MTG, and our confidence and commitment to the studio and the team remains intact. And it is also good to know that thanks to the extensive preparatory work done this year, we are well-positioned to proceed with a potential listing when the conditions are right, and we will revisit the timing during 2027. Now let us zoom into the result for the third quarter. In total, we reported SEK 3 billion in revenues in Q3, corresponding to approximately $310 million.
Our revenues were stable both year-over-year and quarter-over-quarter, although down slightly by 2% on a constant currency or pro forma basis. This was largely driven by challenging year-over-year comps for several of our studios and games, which I will speak to the next slide. Looking then on the year-to-date, due to our strong first half of the year, our year-to-date net revenues were up 6% on a pro forma basis at just over SEK 9.1 billion, or close to $950 million. We invested nearly SEK 1.2 billion in user acquisition in Q3, or approximately $120 million. This was a 4% year-over-year increase in constant currencies and represented 39% of our net sales, the same as in Q2 and up from 37% in Q3 last year.
We reported SEK 693 million in adjusted EBITDA in Q3, equivalent to just over $70 million and up 3% year-over-year. Our margins were stable year-over-year at a healthy 23%, as the benefits of lower platform fees on our successful DTC initiatives, as well as our 20 million cost savings program, were offset by higher marketing spend and operating expenses that came primarily due to the onboarding of WARP36 in August, some studio mix impacts, and also certain one-off items in the quarter. We generated SEK 452 million in unlevered free cash flow in Q3, equivalent to almost $50 million. This corresponds to an unlevered cash flow conversion of 82% on a rolling 12-month basis. Our balance sheet remains very healthy, which enables us to continue to execute on our strategic initiatives to drive value creation for our shareholders.
We remain well on track to deliver on our full year outlook, with our group pro forma revenue growth of 5%-8% and our adjusted EBITDA margin of 22%-24%. Based on our performance for the year-to-date, we now expect the full year pro forma revenue growth to be in the lower end of the range and the full year adjusted EBITDA margin to be towards the upper end of the range. This is something that Nick will cover in more details later in the presentation. Moving then onto the next slide, let's take a closer look on some of the revenue dynamics in the quarter. Playamp generated 77% of the revenues in the quarter and PlaySimple 23%. Our three largest games remains intact and were RAID, Forge of Empires, and Warhammer 40,000: Tacticus.
Together, the top three games generated 51% of our quarter net sales, same as last year, and was up from 48% in Q2 this year. RAID: Shadow Legends reported revenues just over SEK 1.1 billion in Q3. That was up 1% year-over-year in constant currencies. The highlights in the quarter included Echoes of Oz, based on The Wizard of Oz IP in August, supported by two dedicated hero events, as well as a double mythic events in July and August. It is worth noting that RAID has some very strong comps versus Q3 last year, when it had a well-received IP partnership. Looking forward to the rest of the year, the team is now stepping up the pace of the new content heading into the seasonally important fourth quarter, with a busy schedule of content planned for the rest of the year.
Forge of Empires continues to stabilize, with revenues holding steady now across Q3, Q2, and Q1 this year in absolute terms. As we discussed last quarter, the team has been focused on new content that is aimed for our veteran players, and therefore launched a Stellar Age discovery area in August. That is the first new era that the game has launched since 2024. As a result, whilst revenues were down 13% year-over-year in constant currencies to SEK 188 million, that is a big improvement compared to the 22% decline reported in Q2 and similar Q1. Revenues in Warhammer 40,000: Tacticus were down 10% year-over-year in constant currencies to SEK 200 million. This was again measured against very tough comps, with the game actually having its all-time high revenue quarter in Q3 last year.
Still, if you put it into context, Tacticus actually delivered its second-highest quarter ever in regards to revenues, so we remain excited about the game. Similar here, it had a very busy content lineup, when they had the fourth anniversary event and a new Crusade mode. PlaySimple reported another quarter of double-digit growth, and we had strong growth in Heroes of History as well as Bloons TD 6. This was offset by lower revenues in some of Playamp's other established games, such as F1 Clash and Merge Gardens. As a result, revenues from our other games were down slightly year-over-year by 1% in constant currencies. Let's look at our D2C initiatives and revenue dynamics. In Q3, 76% of our revenues came from in-app purchase and 21% from in-app advertising.
We continue to have a strong focus on direct-to-consumer revenues, as this is one of our key strategic priorities. It's about finding ways to further drive our players to engage with us directly through our channels across our Playamp portfolio. These initiatives includes direct user billings, web stores, and the Plarium Play launcher. The proportion of total revenues coming from D2C within Playamp increased to 55% in Q3, up from 51% in Q2, and significantly up from 33% in Q3 last year. At a group level, this translates to D2C revenues accounting to 42% of our total revenues, up from 38% in Q2 and 26% in Q3 last year. As a result of this, our platform fees were just over 11% of revenues in Q3, down from 12% in Q2 and 16% in Q3 last year.
This is an evolution, and so is our relationship with the platforms, and it's continued to be shaped in part by the ongoing legal and regulatory developments around the App Store billing, and that is something we continue to expect to evolve. We will keep adapting on our end and change our approach as the regulation does. One of the recent example that we are experiencing is Google introduced a new alternative billing from 1st of October, and that is something that Nick will cover in his part shortly. Moving on to our user acquisition investments, and let's look at that into some more details. As I mentioned, we invested nearly SEK 1.2 billion in user acquisitions in Q3. That is up 4% year-over-year in constant currencies and up 6% on a reported basis.
This represents 39% of net revenues in the quarter, up from 37% a year ago. The increase of 2 percentage points was mainly driven by higher UA spend in PlaySimple, where UA spend increased by 90% in constant currencies year-over-year, supported by the continuous scaling of its newer games, including Crossword Go, Word Connect Association, and Cryptogram in the word game genre, and Tile Match in the non-word genre. However, PlaySimple's UA spend was down slightly versus Q2, and this reflected reduced UA spend in specifically the first part of Q3 due to lower UA returns, which was in turn driven by a combination of a more competitive user acquisition market, as well as weaker long-term retentions in some of the PlaySimple established games. In Playamp, user acquisition spend was down 4% year-over-year in constant currencies in Q3.
UA spend was higher in some of our flagship games, such as RAID and Warhammer 40K: Tacticus and Heroes of History, but this was more than offset by lower marketing spend in Forge of Empires and certain of our other games. With that, I will then hand over to Nick.
Thank you very much, Maria, and hello, everyone. Turning to profitability, adjusted EBITDA was SEK 693 million in Q3, equivalent to just over $70 million. This was a 3% increase year-over-year, with an adjusted EBITDA margin of 23%. Margins were broadly stable year-over-year, reflecting the several factors that Maria touched on earlier. Two items drove profitability gains, lower platform fees thanks to the success of our D2C initiatives and our cost savings program, which has now reached a run rate of $20 million. But given the timing of the program and the phasing of the savings, approximately a third of that has been realized in our reported numbers so far this year.
Those collective savings have been partially reinvested in growth, notably through the higher UA spend in PlaySimple and in certain other Playamp titles such as RAID, and they have also been offset by higher continuing operating expenses, mainly in Playamp. These higher continuing operating expenses include the onboarding of WARP36, the adverse year-on-year impact of a stronger U.S. dollar, studio mix effects due to the varying growth versus profitability within our studios, and some one-off items, which were positive in Q3 last year, but negative in Q3 of this year. On a year-to-date basis, we reported adjusted EBITDA of SEK 2.2 billion, or approximately $230 million, with an adjusted EBITDA margin for the nine months of 24%.
Our adjustments to reported EBITDA came to SEK -5 million in the quarter, and these related to M&A transaction costs and compared with SEK -86 million in Q3 last year. Now let's turn to the performance of each of our two districts, first of all starting with Playamp. Playamp reported total revenues of just over SEK 2.3 billion in the quarter. This was a decline of 6% year-over-year in constant currencies and against an exceptionally strong backdrop of growth in Q3 last year. District revenues were up 2% for the first nine months on a pro forma basis.
As Maria's already mentioned, 1% growth in RAID, together with strong growth in Heroes of History and Bloons TD 6, to call out in particular, was more than offset by lower revenues in Forge of Empires, Warhammer 40K: Tacticus, which had a particularly strong Q3 last year, F1 Clash, and Merge Gardens. Playamp delivered adjusted EBITDA of SEK 591 million in Q3, up 4% from SEK 568 million last year, with a margin of 26% comparing to 24% last year. As mentioned, the increase was mainly driven by lower platform fees, as Q3 D2C revenues grew to 55% of the district's revenues, up from 33% last year, together with the cost savings program and slightly lower UA spend. This was partially offset by higher underlying continuing operating expenses, as we've just discussed.
Playamp had 3.8 million daily active users in Q3, down slightly from 4 million in both Q3 last year and in Q2 this year. Whilst DAU levels were lower, ARPDAU was up slightly year-over-year in Q3, and this reflects higher monetization levels in RAID and Heroes of History in particular. Now, let's turn to PlaySimple. PlaySimple reported revenues of SEK 687 million in Q3, up 11% year-over-year in constant currencies and up 23% for the first nine months of the year. This double-digit growth was delivered against very strong comps in Q3 last year, when PlaySimple grew by 21% in constant currencies at the point in time when several of our new games began scaling. Growth this quarter was, however, lower than in the first half of the year, given the retention and UA dynamics that Maria described.
Year-on-year growth in Q3 was primarily driven by new games such as Crossword Go, Word Connect Association, and Cryptogram, which more than offset lower revenues in some of our established word games. PlaySimple's adjusted EBITDA was broadly stable year-over-year at SEK 141 million compared with SEK 143 million last year, and with a margin of 21%, down from 23% year-on-year. This reflects the higher UA spend year-on-year, which increased by 19% in constant currencies to SEK 452 million, and therefore amounted to 66% of district revenues, up from 61% last year. UA spend was slightly down quarter-on-quarter. Other operating costs were up slightly, both year-on-year and sequentially, driven by the ongoing scaling of PlaySimple's team and the tech platform.
It's also worth recapping that Q1 and Q2 margins this year were slightly elevated due to positive one-off impacts to operating expenses, and that was an effect that did not repeat itself in Q3. PlaySimple had 4 million DAUs in Q3, down from 4.6 million last year and down from 4.5 million in Q2, and this primarily reflects the UA and retention dynamics that Maria described, particularly in some of our established titles. ARPDAU, however, was up 27% year-over-year due to the higher monetization of our faster-growing new titles, which are also predominantly focused on tier 1 markets. Now, let's take a look at both our cash flow and our balance sheet. Our cash flow from operations was up 13% year-on-year to SEK 431 million in Q3, up from SEK 382 million last year, and this demonstrates the strength of our underlying cash flow generation.
The cash flow comprised income before tax adjusted for non-cash items of SEK 623 million, less taxes paid of SEK 175 million, and a working capital outflow of SEK 17 million in the quarter. Our CapEx remained very low at SEK 62 million, mainly comprising capitalized development costs, in line with our very prudent accounting policies and the asset-light nature of our business. After we add back realized currency effects and interest paid, we generated unlevered free cash flow of SEK 452 million in Q3, which is equivalent to almost $50 million. Therefore, on a rolling 12-month basis, unlevered free cash flow was just under SEK 2.4 billion, which corresponds to an unlevered cash conversion of 82% of our adjusted EBITDA.
I'd also like to take a moment to call out our adjusted net income, which is our net income excluding PPA-related amortizations and other non-cash items in the financial net. Adjusted net income was SEK 431 million in Q3, up 19% from SEK 361 million last year. This demonstrates both the strength of our financial performance and of our balance sheet. On a rolling 12-month basis, adjusted net income was just over SEK 1.8 billion, or almost $190 million. This translates into adjusted EPS of SEK 15.35 and unlevered free cash flow per share of SEK 20.02, which is up from 14.72 and 19.56 respectively at the end of Q2. Finally, turning to the balance sheet, we paid the final SEK 272 million for the Snowprint put call options in July, and we now own 100% of the studio.
We therefore also no longer have any significant earnouts on our balance sheet following the payments made to the sellers of Plarium in Q2. Our financial net debt amounted to SEK 3.5 billion at the end of the quarter, and this corresponds to a financial leverage ratio of 1.29 x based on our reported LTM EBITDA. Our total net debt, which includes the earnout liabilities that we currently have on our balance sheet, amounted to SEK 3.7 billion and corresponds to a leverage ratio of 1.37x , down from 1.45 x at the end of Q2. Before I hand back over to Maria for her summary, I want to take you through the outlook for the year, which we are reiterating. We expect pro forma revenue growth in the range of 5%-8%, with growth now anticipated to be towards the lower end of this range.
This reflects our performance to date, our comps in the seasonally important fourth quarter, and the more challenging marketing environment we are seeing across the industry. On EBITDA, we expect group adjusted EBITDA margin to be in the range of 22%-24%, now anticipated to be towards the upper end of the range. This reflects our year-to-date margin, the factors mentioned above, as well as the consolidation of WARP36 and the expected impact of the platform fee changes from Google that took effect on 1st of October . Just to elaborate on that last point, as you may have seen, Google introduced new rules on alternative billing and began charging platform fees on external links for Android players in the U.S., which does reduce some of the cost advantages of D2C for these players.
It is worth noting that there are several ongoing court cases around billing currently in the U.S., the outcomes of which could have an impact on our platform fees, and we are, of course, monitoring the situation very closely. Our teams are also implementing a range of mitigation tactics to optimize our D2C revenues and platform fees going forward. Our adjusted EBITDA margin outlook reflects all of these factors. To give a sense of the magnitude, if we look at the combined impact of the WARP36 consolidation and the Google platform fee impact, together, those are expected to be just over 200 basis points impact on our Q4 margins, with the Google platform fee being the larger share of that. So excluding those two items, our full year margin would actually be slightly above the top end of our original guidance range.
With that, I will hand back over to Maria for her closing remarks.
Thank you, Nick. So before we move to Q&A, let us just summarize where we stand. Q3, as I said in the beginning, was a solid quarter of disciplined execution against strong comparisons. Our team are firmly focused on the final months of the year now, which are, as always, the seasonally most important. We continue to build the next generation of games across our gaming village. Bloons Blitz, if you have not tried it, is in soft launch right now, with positive indications around both engagement and retention. Star Trek: Warp, which Nick just mentioned, entered soft launch just yesterday. We also have several exciting projects from both our Plarium Studios and PlaySimple, and we expect to announce our next major title from Plarium team behind RAID early 2027.
We are also making good progress on our many AI initiatives and on embedding AI across our whole value chain, which basically reinforce our competitive moat and compounds the advantages we get from our creativity in our teams, our data, and our scale. As Nick just mentioned, our balance sheet and cash generation remain strong, and together with moderate leverage, this provides us with optionality when it comes to capital allocation and deployment. We continue to execute our strategy, which is focused on driving organic growth, pursuing further selective value-creative M&A opportunities, and delivering ongoing shareholder value creation, which includes our SEK 500 million share buyback program, which runs until May 2027. That was all from me and Nick, and now we are ready for your questions. Thank you.
Operator, we are ready to take the questions. For those queuing on the call, just to give everyone a chance, we ask you to do three questions at a time, and then you are more than welcome to queue up again, just so that everyone gets a chance to ask their questions. Operator, please, let's take the first question.
If you wish to ask a question, please dial # five on your telephone keypad to enter the queue. The next question comes from Jacob Edler from Danske Bank. Please go ahead.
Hi, Nick, Maria, and Anton, and thanks for taking my questions. I have a first question on DTC, and you did provide some flavor there on the 200 basis points. I mean, the DTC execution up until this point has been very solid, with 55% of revenues in Playamp in this quarter. I presume, the majority of DTC doesn't actually relate to alternative billing on App Stores overall. Just on Google, so that I understand it, should we think of it as, and specifically for Google in the U.S., that this means that the fee that you are paying on Google in the U.S., going, let's say, I don't know, mid-single digits, as it may have been for a couple of quarters now, back to a, let's say, a 20% level? Is that how we should think about it, so to speak?
Yeah, happy to. Taking each of those questions in turn, you are correct that this is related to one platform, being Android, and one market, being the U.S., and it does not impact all of our DTC platforms. For example, Plarium Play, our browser revenues are obviously isolated from this, as is organic traffic to our web stores. On the latter point, yes, whilst the rules did come into effect from the 1st of October, there are different various initiatives actually within it, whereby the exact outcome of the fees will be determined over the course of the coming few months. But it is fair to assume that it does go from mid-single digits to in the 20s range for those isolated revenues which are in the U.S. on the Android, which is related to alternative billing.
Very clear. Thank you for that. I just had a question on PlaySimple. ARPDAU continues to be very solid, up 27% year-on-year and also up quarter-on-quarter. But DAU kind of takes another step down, and would you say that this partially also is outside of what is happening in the quality catalog or the older games, as you explained? Is it also partially explained by a timing? Yes, you do have a couple of, call it, new games that you launched in H2 of 2025 that are contributing positively, but we haven't had that many new early scaling games here recently. Is that one effect? How does the release pipeline for PlaySimple look here near term, and could that pipeline offset some DAU deterioration short term or, yeah, some flavor there?
Yeah. Thank you. I'll take that one. You're absolutely correct that we see a decline both year-over-year and quarter versus the previous quarter. I think you call out some of the effects. I mean, it is a shift between the games. As I called out as well, there are two factors that has been impacting. Even though we're underlying or investing in Crossword Go and some of the scaling games, we are seeing both a more challenging marketing environments, which means that we actually scale back on marketing to some degree, and CPIs are higher. So that is one driver. The second part is that we're also seeing slightly lower retentions in some of our select titles, so that's a second driver.
Then the third driver, to your point as well, we do have some exciting new games in the pipeline, but I would say they are not ready to fully scale up, and absolutely not to the degree we saw with the success of Crossword Go. So, I think as we look forward, we are probably more looking to 2027 to actually properly scale up the new games. So, I would say those are the key drivers impacting DAU that we are seeing in the quarter.
Yeah, very clear. Just a last question, and we'll see how much you can give me answers here. Just on your phrasing when it comes to the prevailing conditions in India regarding the PlaySimple IPO. I mean, I do agree Nifty, the main index over there, has been to date. I guess on the other hand, Nazara, for example, is on all-time high levels, and we've also seen some quite big deals with the Jio Platforms and also some other IPOs in September. Can you just give us some more flavor here on what you define as the prevailing conditions and, yeah, just some more flavor in general?
Of course. Happy to do so, and I'll start on that one. On the equity market conditions, yes, you're right to call out, for example, the Nifty is down close to 10% year to date, and that compares to, for example, the S&P and the OMX both up north of 10% year to date. There's also various other data points that you can look within that as well. For example, FIIs have so far extracted over $30 billion worth of cash year to date out of the market, and that compares to less than $20 billion in the whole of last year in totality. There are other various data points that you can look at with that. I think the second thing that I'd call out is obviously, as you're aware, there is a differentiation between the existing market and the fresh issuance market.
Yes, whilst there have been some IPOs, there is the one kind of very large IPO of Jio Platforms, which is the largest ever Indian IPO, and so I don't believe has much of a corollary against what we're seeing in the broader IPO market in India. Then whilst there have been a few small and mid-cap IPOs, a large number have been postponed, and those which have come to market have had significant pressures either on pricing or on sizing or actually in the aftermarket performance of those IPOs as well. So those few which have come out have not been without their own challenges.
Then to your final point about the Nazara comparator, yes, Nazara's share price is up on a year-to-date basis quite materially, but I think I'd, A, again refer to kind of the fresh issuance market versus the already established secondary market, but also, B, a huge amount of that share price appreciation you can link to the actual underlying financial performance of Nazara following their M&A acquisitions, where their EBITDA has almost doubled through M&A. So a large part of that share price performance is due to inorganic initiatives that they've undertaken rather than the underlying.
Okay, perfect. Thank you so much for the answers, guys.
Thank you.
Thank you.
The next question comes from Simon Jönsson from ABG Sundal Collier. Please go ahead.
Good morning, all. Thanks for taking my questions. First of all, I wonder if you can elaborate a little bit more on what you said about the effects on PlaySimple here, lower ad returns, retention on some of the older titles. I think you said, Maria, that this happened early in the quarter, if I am correct. Does that mean that it was isolated to early in the quarter, or has those effects continued through Q3 and also into Q4?
Yeah. No, thank you. Sorry if I was slightly unclear on my answer before. It was early in the quarter we actually scaled back on marketing as we are starting to see a more challenging marketing environment around us, and then since, we have been gradually scaling up and also trying new initiatives and new creatives. That point was specifically to the ad markets, or the advertising markets, and our response. When it comes to the retention, that is something that actually prevailed throughout the quarter, and that is something the team is actively working on, and I think there is quite a lot of initiatives, both on the live op side, but equally actually on how we optimize the inventory in the games to make sure that we drive improvement, both amongst our more older titles, but equally on the new titles coming out.
Those are two different mix, and unfortunately, retention has been throughout the quarter.
All right. I see. Thanks for the clarification. Then the final one from me here on the capital allocation side, and now when you have put the IPO of PlaySimple on hold, for now at least, I mean, it is quite central to your capital allocation and growth strategy, I think. I just wonder if you will change your capital allocation framework here in any way, or if the base case is still that you will do the transaction and continue as planned, or if you could change a bit in your framework?
Yeah, happy to say that. Our capital allocation framework, which we spoke about back at the Capital Markets Day in October last year, that remains unchanged with or without the potential listing of PlaySimple, whereby we will prioritize capital deployment against value-accretive organic and inorganic initiatives. Then excess liquidity, we will return to our shareholders. As we've spoken about, our leverage is now at 1.4 x, which I'd characterize as moderate leverage, and we do have incredibly strong cash generation, which should bring that leverage down further over time. The IPO, I think we could have characterized, could have been a potential accelerator of capital deployment, but it is what we still have the flexibility and the optionality to look at how we want to allocate our capital, but it will still be within the framework of the prioritization towards organic and inorganic with excess liquidity.
Therefore, any changes to potential shareholder return would only be done in the context as to where we stand upon both organic and inorganic strategic initiatives at that point in time.
All right. May I just ask why you're not prioritizing buybacks here? Just hear your view.
This is, again, just because we do believe that if we look at both the organic initiatives that we have to our hand, but also some of the inorganic opportunities that we are continuing to evaluate, there are potential opportunities to deploy that on a more value-accretive and return-accretive optionality. If those do not come through, then of course, we will assess returning the excess liquidity to shareholders. But at this point in time, there are interesting organic and inorganic opportunities for us to continue to evaluate.
If I'm not mistaken, I think a lot of the opportunities you have seen is on the casual side, where you have said that multiples are higher and that currency in the case of PlaySimple listed would help you do that kind of M&A. That is not a possibility right now, at least, but has that changed in any way, or what other kind of M&A opportunities are you primarily?
Well, we do continue to evaluate M&A opportunities within Playamp, within PlaySimple, and also other broader M&A opportunities for the group. You're completely right to characterize that M&A opportunities and the ability to expand our casual district and not just be a studio of one was kind of high up on the priority list. But as we've always said, part of the reason behind a potential IPO was an accelerator of that M&A ambition, but it was not a requirement to do that M&A ambition. So, we do continue to evaluate casual M&A opportunities. You're also right that there are typically slightly higher multiples within the casual ecosystem, but there are also opportunities that we can evaluate where we do believe that there is a return-accretive optionality for us.
All right. Thank you so much for the answers.
Thank you.
Thank you.
The next question comes from Martin Arnell from DNB Carnegie. Please go ahead.
Good morning, guys. My first question is on the narrowed sales growth guidance for the full year towards the low end of 5%-8%. Could you just help us understand a little bit more? You mentioned the challenging market conditions, but how busy do you expect Q4 to be here, and how good visibility do you have?
Yeah. I can talk a little bit about the engagement activities, and then Nick can fill in more on the guidance. I mean, we always have a busy and exciting calendar events for our games in Q4. This year is nothing different to that, which means that we are really excited when we go into it. I think the one thing we call out is that, yes, we do have tough comps year-over-year, and I think that's just there. Again, we will do our best this quarter as well, as we always do. I think there is one new element that we are highlighting, and I'm highlighting in my part, that we are seeing tougher marketing environments in user acquisition, particularly for PlaySimple in that environment, which is impacting our return levels on that side.
That is one factor that we are seeing. I think the second thing that I just want to call out, I mentioned in Q2, as we discussed the growth levels in general for PlaySimple for the second half, was also the timing of new game launches. As I just said, we are probably looking at these new game launches in 2027 now. I think that is, of course, impacting as well for PlaySimple year-over-year. Because last year, if you remember, we started to scale up Crossword Go very rapidly already in Q3.
I do not think there is a huge amount that I can actually add to that, because we do not give guidance on a segmental basis. As Maria alluded to, whilst not to the same extent as Q3, Q4 does have those strong comps, both within the Playamp and within the PlaySimple side of the business, in particular across a lot of our key franchises. So, whilst we do have good aspirations for how Q4 will land, it is in the context of a strong Q4 last year.
Okay. Thanks. So there is not really much messaging on this looking beyond the Q4. Is that the way we should read it?
I mean, we always come out with our sort of full year guidance as a part of Q1 report, and that is what you should expect this year round. But again, we also do give, and I think Nick also shared the sort of mid-term guidance, and nothing is changing when it comes to our mid-term guidance.
Okay, perfect. Nothing changed to the 3%-7% medium-term guidance.
No.
Okay, perfect. Then I have a question on this. You mentioned PlaySimple in this context with tougher environment. Did this also add to the decision to postpone the potential PlaySimple IPO?
The primary driver was the market. Over the course of the weeks and the months leading up to the announcement, we did see the increasingly challenging equity market conditions that we've spoken about on this call, and that did make us come to the decision that we would not be able to achieve the two objectives that we've spoken about in an effective manner. Now, I'm also not going to pretend that financial performance is not a kind of relevant factor as you do evaluate an IPO together with market conditions, valuation expectations, but we would have come to the same decision based upon the market conditions on their own. I think it's also just worth recapping as well that whilst we have seen the slowdown in Q3 relative to the prior two quarters, that was 11% organic growth compounding on 21% organic growth last year for PlaySimple.
On a nine-month basis, they have delivered 23% growth for the nine months with a 23% margin. It's important to retain that full visibility of it. But to reiterate, the markets were the primary factor.
Okay, perfect. Thank you, guys. That's all for me.
Thank you.
The next question comes from Jesper Stugemo from Handelsbanken. Please go ahead.
Yes, good morning, and thank you for taking my questions. So, two from me here. We saw some sequential improvements in Forge, or not as steep decline at least, as in Q2 and the second-highest revenue quarter for Warhammer 40,000: Tacticus. So, what is your confidence level to return to positive growth territories once again in Q4 here? Could you give any color on this?
I mean, I can give a little bit more high level because we do not guide nor on the quarters nor the isolated games. But when it comes to Forge, I think it was an extremely important update that we did, and it was overdue in all fairness. I said the same thing in Q2. But what was great to see is that our players responded to it. Yes, it will still continue the decline, but I think that we sort of stabilized the decline, and our ambition is to stabilize it further as we go forward. I think the team has a much improved pipeline for the game going forward, both for not just the early gameplay, but especially important for the veteran players. Hopefully they should be excited about that, and we should therefore see that sales going forward stabilize even further.
But Forge is not a growth game, and that is not how we see it, but it is about stabilizing it as much as we can because it is still an amazing game that is going to last for hopefully another 15 years. That is on Forge. On Tacticus, yes, that is a growth game. But then again, when you are up to your sort of record quarter ever, and also in general, the Warhammer IP had a very strong sort of second half last year when it comes to the overall awareness of the IP, which always drives that incremental boost. I mean, it is hard to beat that, in all fairness. Yes, we have a high degree of confidence that that game will return to growth and will continue to grow for many years.
Yeah, thank you for that. Could you give some color on your expectation on the WARP36 studio here in the coming quarters?
Yeah. No, again, it is always hard with the games that are just soft launching, so we do not even have We did the first day yesterday, but we would not have bought it if we were not excited by the game, about the potential of the team, and also the relevance of the IP. It is coming out fresh with a full sort of Star Trek content and inventory. Yes, it is an experienced team. It is a good product and an interesting category. I think most importantly also, we can put to play the whole sort of Playamp service platform and the tool set, so that is equally important. We are still too early to say where it can go. As always, new game launches, yes, you have high ambition, but we need to start to get the data.
After the soft launch for such a game, you need to then iterate the game, refine it, and then you can hopefully go to full commercial launch. Still early days.
Okay. Is this a mobile-first game, or will it be available on the web store or Steam or.
It will be Steam available and mobile, so it is a cross-platform.
Okay. Thank you for that.
Thank you.
The next question comes from Rasmus Engberg from Kepler Cheuvreux. Please go ahead.
Yes. Hi. Thanks for taking my questions. Firstly, on this change with Google, just so I understand it, are they based on the amount spent by the customer, or is it something to do with per-link basis, or how does that actually work? Just for our understanding.
No. The platform fee that is being charged on external links is then only related to any purchases which are subsequently made because of that external linking. As with all other platform fees, it is directly correlated to the sales.
Yeah. Thank you. That's clear. The second question I had, broader, when we look at the market right now for any type of game, there is an elephant in the room, which is a very big game launch for consoles. To what extent are we seeing CPI in this sector go up because of that huge launch of GTA? Is that an impact at all, or are there other things happening there?
I would probably say that the CPI increases we've seen in this previous quarter has probably been from other drivers, the increase in general demand on the market rather than a specific sort of AAA game launch.
Okay. Thanks. That's all for me.
Thank you.
The next question comes from Jacob Edler from Danske Bank. Please go ahead.
Hi, guys. I just had two follow-ups that I wanted to address. The thing is, you talked about the increased cost base in Playamp due to the WARP36 acquisition. I think other OpEx within that segment was up some, let's call it SEK 26 million quarter-on-quarter. Can you just give some flavor on how much the cost increase was due to WARP36 in the quarter?
Yeah. We are unfortunately not able to give specific cost impact related to an individual studio. I think the two things that I would clarify is, one, as we spoke about, for the Q4 impact of Google billing change plus WARP36 combined, that is just over 200 basis points that we expect to impact our Q4, of which the largest share of that is related to Google, and the smaller share of that is in relation to the WARP36 consolidation. We owned WARP36 essentially for half of Q3, so that full quarter impact in Q4 is approximately half of that impact in Q3.
The other thing that I would call out as well is, if you do look across at the increase in the Playamp OpEx, either on a quarter-on-quarter basis, there was the significant offsetting impact of the decrease in the platform fees. On an underlying basis, there was a decrease in the PEX, the personnel expenses, given the cost savings programs that we have put through, and that was offset by the onboarding of WARP36 and an increase in other OpEx, a lot of that driven actually by FX.
Very clear. Last question on my side. Group operation costs were a bit lower this quarter, like SEK 39 million compared to SEK 50 million and SEK 60 million in Q1 and Q2. Is this a new level, or was it temporarily a bit low here in Q3?
Yeah, I think that I'd characterize is, there's a couple of factors into that. If we look at the year-on-year comparison, there are, A, some of the cost-saving initiatives that we've driven as a group have also been related to at the MTG central layer and not all within the Playamp, so we have extracted some cost synergies at the HQ level. Plus also, there has been, as we have invested further within the Playamp leadership team, also some migration of personnel actually between HQ and that leadership team. But those were one-off shifts between Q3 last year and Q3 this year, and therefore, I'd say that the Q3 levels that we have in 2026 are more reflective of an ongoing basis.
Very good. Thank you so much.
Thank you.
There are no more phone questions at this time. I hand the conference back to the speakers for any written questions and closing comments.
Thank you very much, everyone. Thank you for a good Q&A. Thank you, everyone, joining us today, and we will come back as and when appropriate with further news as we go along. Thank you.