Welcome to our Stillfront Group Q2 earnings call. I will be presenting, along with our CFO, Andreas, today's presentation, and there will be a Q&A session afterwards in the ordinary way. Please, the first slide. Next slide. Since the last month of last year, we have gained great momentum into Q1, and that has continued into Q2. Our revenues grew in Q2 by 31% in total, with 1% organic growth. This performance has been primarily driven by the new games that we have launched to the market and the new games that we launched earlier that we have been able to scale up alongside with that we have created synergies when it comes to several areas, and collaborations between the different studios that has gained momentum.
Last but not least, we have had successful live ops, which is a very efficient way of growing our revenues in a cost-efficient way. We also have performed a strong cash flow as we have done for several quarters now, and the cash flow grew, the LTM cash flow grew by 18% in the quarter. On the right-hand side, you can see also the distribution of our revenues where we have North America still being the largest part, but you can see also that Asia is increasing, and Asia is almost on par with Europe.
You can also see through the red dots there that we are a truly global company which is not only looking beautiful on this map, it's very important because that is the way that we can have the proximity to different markets and that we really can leverage our market reach capabilities to support all our studios worldwide. Next slide, please. Just some highlights from the portfolio during the second quarter. We had three new games coming into our portfolio, our active portfolio during the quarter, and in total, we have had 14 games coming in organically the last year. We have a good outcome of the increased soft launch that we had increased investments that we started some 12, 18 months ago.
Also, we have enjoyed a continuous good momentum with Bytro across grand strategy-based engine-based games. Now we have five games out there from three different studios built upon the same very successful engine. This is providing us with a strong component in our total organic growth, and has been so for some time, and we expect it will be going forward as well. Nanobit also had an exciting quarter, both with we announced a collaboration with Netflix, taking a game to the market in 2023, which is yet another example of how we can get leverage on our existing assets, our existing game engines, in this case, in collaboration with Netflix.
It's yet another dimension of the Stillops platform and how we gain access to new distribution forms through, in this case, a good collaboration with Netflix. Also, Nanobit has a very successful scaling up of their new game, Winged during the quarter, so that has really contributed to a good development for Nanobit and for the group. Also, we've seen that BitLife has had a very good trajectory in the quarter with a lot of live ops and several feature updates that has been very well received among the users. Candywriter has been growing 40% year-over-year organically, which of course is a very strong performance.
Further, we have a good collaboration between Candywriter, that is the publisher and the developer behind BitLife, together with Goodgame, we have made culturalized and adapted versions of BitLife in Portuguese and in Spanish. We have had some good traction in Latin America during the second quarter, and we are enthusiastic about what that could bring going forward, basically. Next slide, please. Looking into our financials, we had, as mentioned, 31% growth in total revenues, where we're at 1% in organic revenue. The SEK 18.11 Million revenues are built up and developed from last year according to the revenue bridge you can see on the upper right corner of the slide here. 1% organic growth, just shy of 21% acquired growth and 10% FX, positive FX effect during the quarter.
We have been able to deploy continuously high UA levels without compromising on our profitability targets of a ROAS of less than 180 days. I'm very pleased to see that we have been able to do this and very much, again, the reason why we can achieve this during a quarter when the market has been a bit mixed is that we again leverage the Stillops capabilities and our marketing capabilities and the way that we have this data-driven way of marketing our products and rapidly reallocate UA to where it yields the best regarding geography, regarding product, and so on, and channel. I think that is one of the explanations why we have been able to improve our top line that much in the quarter.
We have slightly lower margins compared to Q1 in Q2, and that is due to that we have several growth initiatives ongoing, both of course that we invest more in new products that increases the D&A, but also that we have slightly increase the investments and cost taken for improving the Stillops platform further, improving our data capabilities further, as well as the different other parts of the Stillops platform that is yielding returns we think already and will do so even more in the future. We also have a different product mix in the quarter with higher degree of mobile revenues, less ad revenues, and also that 6waves is consolidated for the first time the full quarter, which has a lower gross margin. That is also something that impacts.
We are convinced that this will be improved in the short to mid-term, the different components here supporting our margin expansion going forward. We reiterate our organic growth to be in the mid-single digit area, for the full year this year. Finally, we can also mention that our LTM curve for net revenues is increasing steadily, as you can see on the slide here. It amounts to SEK 6,243 million the last twelve months now in Q2. We can go to next slide, please. Looking into our total portfolio, we have continued to strengthen and balance further, and not the least diversify further our portfolio. This is a pillar in our strategy to have a very strong and a leading risk reward looking into our portfolio.
I think that we have taken a lot of important steps during this quarter as well, just as we have done for this year. I think that is maybe one of the most important things. Now we have, with the three new games added to our portfolio, we have six to seven products in our active portfolio. And you can also see how the daily actives and the monthly active users year-on-year has been very, very stable. Whereas our monthly paying users have increased by 8%, showing that our live ops and the traffic that we have acquired contains a higher degree of conversion into paying users, which is of course satisfactory. That is also mirroring that Strategy have had a strong development during the quarter.
The share of mobile, as mentioned, increased to 79% of the total revenues, ad bookings down in percentage-wise of the total revenues to 16%. It's fairly flat in absolute numbers, but it's lower in relative numbers. You can also see the distribution between our different areas, and it's pleasing to see that Strategy is again increasing to 35%, and we can look into some more details on the next slide for the different product areas. Next slide, please. We can see that it's a very strong development for Strategy. I said it last quarter, I say it again, Strategy strikes back growing some 83% year-over-year, with a high degree of that coming from organic growth. And it's a core strength.
You can also see that in our average revenue per daily active users, it's really increasing for Strategy, showing that our content and the updates and what we do with our live ops in general are very appreciated in our audience. Of course, also supported by the fact that 6waves are part of our group now for the first full quarter. Also, Casual and Mashup are growing, which is satisfactory to see by 24% year-over-year. The only product area that is not growing is slightly declining by 3% year-over-year: Simulation, RPG, and Action.
That is basically due to the fact that we're not allocating as much UA to that area as we do to the other ones because it's not yielding as much as the other areas in this quarter. I'm sure that we will see further traction, later in this year also in that area. It's good to see that all three product areas is improving their monetization despite the fact that we have a higher degree of new products, which is usually not monetizing as good as a mature product when it's a new product. Still we are able to across the board increase our average revenue per daily active users, not only in strategy. As mentioned, the number of paying users are significantly improving, not the least in strategy that is contributing in that respect as well.
With that, I would like to hand over to Andreas to go in deeper into some of the financial aspects. Please, Andreas.
Thank you, Jörgen, and turn to the next slide, please. Start with the cash flow for Q2. We have a continued strong cash flow development for operations of SEK 477 million prior to working capital movements. This includes taxes paid of SEK 58 million. In the quarter, we had a negative effect from working capital movements, mainly due to accounts payable being paid, which is a reversal from Q1 with of SEK 27 million. Our cash flow from operations after net working capital is SEK 450 million. We continue to invest in our products. We spend in total from our investments SEK 829 million in the quarter.
SEK 249 million of that is for product development from new products, and which is the equivalent of 13.8% of net revenues. We also settled some of the cash components for the earn-outs relating to 2021, and that had a negative effect on investment activities of SEK 523 million. In terms of financing, fairly flat, - SEK 4 million, mainly driven by lease payments of SEK 15 million, offset by some slight increase in borrowing for the quarter. We exit Q2 with a cash position of SEK 1.47 billion. A strong cash flow once again for the quarter. Looking, however, at LTM numbers, it's always important to look at how that grows.
In the last 12 months, we generated from operations, after deducting the IFRS 16 lease costs, SEK 1.85 billion of free cash flow. This is an increase by SEK 452 million versus last year. We have continued and tactically decided to continue to invest in our products, and we spent SEK 832 million, which is an increase from last year of SEK 302 million. In relation to net revenues of the same period, that's 13.3%. It is, however, important to note that we do continue to grow our operating cash flow more in absolute terms than our investments cash flow.
We are over the period increasing our cash flow after investments of SEK 151 million to just over SEK 1 billion. Cash conversion is 0.45 in the quarter. With that, please for the next slide. Net debt has been fairly stable versus last year, SEK 3.6 billion. It increased to SEK 450 million from Q1, which is mainly due to the settlements of earn-outs where we used our free cash that we had at Q1. We had a leverage ratio of 1.4, which is below our targets of 1.5.
We have a strong cash position of SEK 1.47 billion of cash at hand, plus we also have SEK 2.3 billion of unutilized credit facility when we exit the quarter. Looking to the right side of this slide, we have a balanced maturity profile on our debt, which ensures that we can tackle market uncertainty and be well-prepared to refinance our existing facilities when we need to. To summarize, we continue to have our diversification in revenues. We now have 76 games versus 56 games in Q2 last year. We have continued to invest in our product portfolio and in our Stillops platform.
This is supported by strong underlying cash flow and also continued healthy margins. This together with our diversified financing platform allows us to continue to invest in the business, and if we elect to look at M&A opportunities going forward. Strong balance sheet position and good cash flow generation from the business in line with the previous quarters as well. With that, I will hand back to you again.
Thank you, Andreas. We can go into next slide. And some summary, short summary and an outlook. We have returned to organic growth, something that has been our priority, and I'm pleased to see that we can go from -7% to +1% organic growth in just one quarter. And we can do that with a good profitability and a very strong cash generation, as Andreas pointed out. We are entering into the seasonality, the weaker season the seasonality that we have had, I think, for if not all, almost all of the 12 years of this company's history, and we expect that to be following the quite usual pattern. As for the ones that have followed us for time, you know that the strategy games are more impacted on seasonality usually than casual games.
All in all, we think it would be a quite usual seasonality in Q3. To finalize, we do reiterate our we are following our plan to be back on or reach the mid-single-digit organic growth for the full year. I'm pleased to see that we are on track towards that guidance and that target. With that, I would like to open up for questions. Please take it away.
Thank you. If you wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question come from Nick Dempsey, Barclays. Please go ahead. Your line is now open.
Yes. Good morning, guys. I've got three questions. First of all, with Strategy organic up 29% in the quarter, simulation RPG in action, there's no M&A in there, so we can have a decent idea of what organic is. I still get Casual & Mash-up to be seeing negative organic growth. Then when I dig into that division, Candywriter going really well. Does that mean we're still seeing notable organic year-on-year declines from Super Free Games and Storm8 combined? And should that start to ease in the second half if I'm right on that?
Question, a year on from IDFA change, do you think that with all of the adjustments that you've made internally and the adjustments made by external players you use for marketing, that you can now achieve close to the same level of targeting for the same unit of spend as you did before the change or not? The third question, with the U.S. dollar moving in your favor, should that help margins a bit in the second half, as I guess your revenues are a bit more weighted to dollar than your costs are?
Thank you, Nick. I can start on the FX. I think Andreas could take the last question. When it comes to organic growth from the different areas, you're correct in that we are still not where we are heading and where we would like to be when it comes to organic Casual and Match Up. But we are definitely in the situation where we have closed the gap and this issue we had with the very uneven performance from Super Free Games last year, which we have elaborated on. Remember, however, that Super Free Games did grow top line-wise full year 2021 versus full year 2020.
It's not like they were in a crisis situation in any way, but it was a very uneven top-line development for Super Free Games, which make the comp thing very uneven as well, of course. I think that we will see continuous improvements. We have seen continuous improvement from Super Free Games since October, and they have for the third consecutive quarter launched successfully a new game that comes into the active portfolio. They are definitely in a good spot and not for the full quarter close the gap, but they have closed the gap at the end of the quarter. I hope and think that we will see them contributing to our reported organic growth for the rest of the year. Also, Storm8 has been developing nicely.
They had, as you might recall, a tremendous uplift from the pandemic. They were the ones that grew the most, the first quarter being on board with almost 70% organic growth in one quarter or just actually in a few weeks. They have been struggling with that comps, but the business is developing positively, and they have been successful in several updates in their games, as mentioned in the report. I'm also optimistic about that when we come out now of the comparison issues from the pandemic, especially for Storm8. They will also contribute later in the year with reported organic growth. For us internally, that is not a special topic anymore with Super Free, and it hasn't been a special topic in that way for Storm8 as well.
You're right in the fact that we still need some time for it to be contributing organically for a full quarter. Coming to your second question on IDFA, I think that we are definitely post-IDFA. We have been so operationalized for several months now. I think that what we can see and strengthened by the fact that our best-performing area is Strategy, which was supposed to be most hit by the IDFA change. I think that what this has made is that we are on average, you have a lower LTV on the traffic that we buy since it's not as refined as it was pre-IDFA, but we also pay less, so we can have the same relationship between LTV and CPI for a cohort nowadays.
On our side, when we have bought the traffic, we refine the traffic. Basically, we are strengthened from this fact even though it was quite an effort to get to that point. Now we are refining the traffic, and that is one of the reason why we can be successful in growing Strategy that well. For us, it's not targeting in the same way it was pre-IDFA, but this is part of our industry. The very reason why we have been focusing so much on being data-driven and building prediction models because it will always be different changes in different channels. That's the reason why we have focused so much on this market reach to master many different channels for many different products in many different territories.
We can always optimize which marketing campaigns that yields the best and allocate very dynamically and with a high discipline to where it yields the best. I think that we have benefited from that, and we will benefit from that. IDFA is not a topic for us or issue for us any longer, and hasn't been since the beginning of this year, actually. I'm pleased with that. On your third question, I leave to Andreas to talk about the
Yeah.
the impact from FX.
No, I mean, you're right. It's been a very volatile FX market in the last few months, but even in the last week. In terms of how it impacts, Stillfront is
We have a very strong hedge in our portfolio in terms of our P&L that revenues are very linked to the direct cost, and also, which includes, of course, platform fees and our direct costs and also our marketing spend, but also the fact that our cost structure looks very similar to our revenue structure. It will of course impact the absolute numbers that you report, but it won't impact the margins as such because we have a nice natural hedge in terms of that in our portfolio. The cost structure is very similar to our revenue structure.
Great. That's helpful. Thank you. Thank you. Our next question come from Oscar Erixon, Carnegie. Please go ahead. Your line is now open.
Thank you and good morning, guys. Couple questions from me. First of all, very glad to see you being back to organic growth. You have some quite confident comment here on the return on ad spend and also on the sort of market health, the mobile gaming market health, in Q2, as opposed to some peers perhaps. Would you say that you have seen any data anomalies on any platforms for Q2? May, for example, looks quite strange from some providers. Would be useful to hear. Thank you.
Yes, we have seen some mixed signals and some strange things in third-party data. Having said that, I'm sure that the conclusion when this is sorted out or summarized, the second quarter will show a weaker development against at least what we expected. I wouldn't be surprised if the sum of the second quarter would be - 5% in mobile gaming markets or something like that. It has been a much higher numbers that have been out there, and it's a bit uncertain about how the market has been developing in second quarter due to some data errors, but also that it is mixed signals in the market. We have seen that different subgenres and different types of products in different market have developed very differently.
I think that some companies that has a low diversification has been suffering more and either compromising on margins or lowering their spend basically. I think that again, the fact that we have a very diversified portfolio has supported us then grow much faster than the market we think has been growing in Q2.
Understood. Just to follow up on that, just curious to hear more about what subgenres have done well and not so well. I mean, casual mashup was quite strong, for example, for you compared to at least my expectations in Q2.
Yeah. It's a multidimensional answer there, Oscar, so I think we should not go into all aspects. There are some suggestions that certain type of larger product have had challenges to grow larger products, and with smaller mid-size products and fairly large products have had it relatively easier. Strategy has been strong, and that has been a bit stronger than I expected, not only in Q2 but for the first half of this year. Casual mashup has been stable, market-wise, I think. We are improving steadily, but still some more mileage to walk and some of the simulation RPG games has been a bit weaker, RPG maybe.
It's quite a not very unified picture you can get from third-party data besides the fact that the market has been developing slower than most of us expected, I would say.
Understood. Very helpful. Two more questions, if I may. One for you Jörgen and one for Andreas. First of all, just wanna understand the comments on return on ad spend here a bit better. Is the returns better in Q2 versus Q1? Any further comments on that? I mean, the spending levels in absolute terms should reasonably logically bode well for Q3 growth, but you mentioned expecting usual seasonality despite this high spending. Would be useful to just hear your reasoning here, please.
Yeah. We are pleased to see that we are well within our 180 days ROAS requirement, which is a very strict one. The reason we have that is that we force ourselves to utilize the full of our market reach and the different channels that we master in the different regions, and the fact that we now have 76 products in our portfolio. I would say that it's on par with Q1 and also Q4. We have consistently been well within our 180 days. What differs is that we put more into Strategy where it's tougher to get the money back within the break even within 180 days.
I'm pleased to see that even despite that we are increasing in relative terms in Strategy, we can still return well within our 180 days. I think we have seen quite similar levels for the last three quarters. That is what builds our momentum basically. Within the second quarter, there are some you referred to the third-party data. We had an unusual fluctuations within the quarter. April and June were stronger than May. That was a bit unusual. Nothing big in that. The important thing is that we have been able to deploy 26% in relation to net revenue, so on a high level with very good returns.
When it comes to the seasonality, usually we are deploying a bit less in relation to top line in Q3. That is of course, if we can deploy the same level as we do in Q2, that is of course supporting our growth so that we would like to do that, but we will not compromise on profitability and usually you cannot deploy that much. I would expect it will tick up again in September as it usually does, then we go into the six-seven months of strong marketing opportunities following the ordinary pattern basically. That is what we expect at this point in time.
Fantastic. Thank you, Jörgen. Just one final question. Sorry for asking so many questions. For Andreas, you talked a little bit about your debt structure. What's your view on refinancing versus not refinancing the debt maturing here, first of all in 2022, but also in 2023 more importantly? You have roughly, I think, SEK 1.5 billion cash, but also earnouts to be paid, and quite nice free cash flows. Would be great to hear your elaborating a bit on that. Thank you.
I mean, we have a bond of SEK 600 million maturing in Q4 this year. Of course, we're following closely the development of the bond markets. We do have, as noted, almost SEK 1.5 billion of cash and SEK 2.3 billion of unutilized facilities. We have a cash flow generative business. We are very comfortable that we will be able to deal with that. What and when, of course, we have to talk about when we get there. We have the next maturity, which is the end of 2023. That's with our banks, and we have a good bank relationship with our banks.
As we always do with financing, we need to consider, you know, the market conditions. We need to consider how we work with this, both from a strategic perspective, but also from a tactical perspective. That's why we've been being historically and now also conservative in what type of leverage we have and how high it is, and also looking as much, not just on the absolute value, but also on the maturity profile. We always, when we look at it, should be able to repay that with existing cash from existing facilities.
As you probably note, you have noticed as well that there are obviously various debt markets that are more difficult now, but we are in no rush and have a strong balance sheet to sort of go through that period.
Excellent. Thank you very much. That's very helpful.
Thank you. Our next question come from Chirag Wadia, Bank of America. Your line is now open. Please go ahead.
Hi. Thanks for taking my questions. First one was just on EBIT margins, which were down this quarter. You mentioned it was due to investments in growth initiatives, and a short to midterm effect in gross margins from the current product mix. Could you call out anything in particular that drove this, and if you expect this to continue? The second question was how do you view the ad exposure of the group, with revenues being cyclical in nature in a recessionary environment, in particular the casual and mashup segment which has more revenues from ads? Final question is what do you think of Apple's new version of SKAdNetwork, announced at WWDC, and do you think this will affect your user acquisition positively or negatively on iOS, in a post-IDFA world? Thanks.
Thank you, Chirag. I will try to answer these questions. When it comes to our margin that we see, if you look at EBITDA margin, you can see that we are at 35%. Compared to the consensus out there, we're two percentage points more in D&A, which is a direct effect of that we have increased our investments in product development since 18 months. That has also paid off. That is one discrepancy towards the consensus going into this earnings, the Q2 report, basically.
I think it's as important, but looking into other parts where we see that we short- to mid-term will improve our margins besides the obvious that UA, when that goes down to a more normal level, or to a lower level, that directly correlates with our margin. Taking that away, we also have invested some approximately equal to 1% in margin in our Stillops platform, our data capabilities, where we're doing quite heavy.
Investments or taking costs for that and some other parts. Marketing capabilities, as I described, we see that pays off very well, but some of that approximately one percentage point in margin comes on our P&L. On the gross margin, 6waves has as they entered into the group for the first full quarter, this second quarter, they have third-party publishing today doing absolutely dominating, which then provides us with a direct cost in terms of royalties. We have a very clear path that they already started prior to the acquisition to get in more first-party publishing and second-party publishing. Further, we see a lot of synergy opportunities where they will publish in the Japanese market several of our other Stillfront portfolio games and obviously then that will immediately have a very good positive impact on gross margin.
I think that we have an opportunity to improve over some time, 12 months maybe, we can improve the gross margin just by that, but maybe by a 1.5% or so, that's the potential there. Then the fact that we have increased mobile part of our business also has an impact. In-game advertising down to 16%, I think we should be, we're not doing good enough, I would say. I think we should be at the high 10s, even up to 20%. If it would have been 20%, it's more like 1.5 percentage points improving gross margin as well.
As I mentioned earlier, yet another point that supports margin expansion, looking what 12 months ahead is that we then will have a less degree in relative terms being young products and young products being under scale, monetized slightly less than mature products. That will also support our margins going forward. We have done our decisions to prioritize getting back to organic growth, increasing our investments, both in the Stillfront platform as well as in our product pipeline, and that is paying off. I'm pleased with that. The other parts we have a clear plan on how to get back to the margins where we were. Looking at ad revenues, how that will be impacted if eCPM and the prices in general go down.
I mean, this is again something where we, if we have an almost perfect inbuilt hedge in our business, where we have ad revenues, yes, that will obviously go down if the eCPM goes down or the eCPMs goes down. On the other hand, that will support our marketing further. That this is the dynamic that is so important, the strategically important for us to have established. We should be higher than 16 in ad revenues, so that will balance. We haven't seen any massive movements or large movements in eCPMs so far. They are more volatile, but not the structural significant change so far. It's hard to say what happens the second half of this year.
Your third question about the SKAdNetwork changes, I think it's early to say how that will exactly play out. We haven't received the full understanding. We haven't got the full understanding yet of what that is. The first view and analysis from our data analysis and marketing people is that it will be unchanged to slight positive when that comes in. Again, it's early to say anything more than that, but it will hardly be on the negative side is our view.
Thanks so much. Really helpful.
Thank you.
Thank you. Our next question come from Edward James, Berenberg Bank. Please go ahead. Your line is now open.
Great. Thank you for taking my questions. Just a couple from me. Just firstly on the Nanobit and Netflix games, could you just discuss how the sort of revenue model for those games, are those licenses or upfront payments or are they kind of monetized, like the rest of your portfolio? Because you've seen sort of a variety of revenue models for sort of platform partnerships like that. Second question, just on wages and cost inflation, is that impacting the margin profile at all? Are you sort of, you know, seeing, you know, sort of in line or higher or lower cost inflation versus some of your peers and sort of how is that, yeah, how is that impacting your sort of margin outlook? Thanks.
Okay. When it comes to the Netflix collaboration, we cannot disclose the commercial terms, but we think it's a very good way for us to leverage our Stillfront platform, more precisely our game engines. The game engines that Nanobit has developed fits very well with the narrative type of games, fits very well to other IP owners, not only Netflix, potentially, it could also be other ones. How do these look like is different from one case to another. We are just as I think I'm convinced that Netflix are pleased with the deal that we did strike. It has a positive impact for us, but I cannot, unfortunately, go into any details of that commercial agreement. I think there is a strategic value.
We value that collaboration highly, so we think there are more opportunities potentially in the future as well. When it comes to the wage and cost inflation impact, first of all, a very important thing is to note that we have much lower staff cost in relation to net revenues than traditional game developers. We are at a bit over 16%, correct me if I'm wrong, Andreas. That means that if the inflation rate would be 10% across the board, which we don't expect to be nearby, then we will have, since half of that increase is capitalized, the immediate P&L effect would only be 0.8% approximately. We are not that exposed to wage inflation.
Having said that, in some areas, in some offices, in some regions, we see some wage inflation. In some other areas, since we are largely distributed globally, there is no or very little impact. Basically in large economies and large hubs, like in California, in San Francisco, to some extent in Germany, it's higher, whereas in Eastern Germany it's lower. Also it will be interesting to see what kind of effect it will have that several tech companies are actually lowering their staff in total. The demand side and the supply side is changing slightly, we expect, during the second half of this year. Would you like to add something, Andreas, on that?
Yes, we have been exposed to what I call the tech inflation for years, and that's what Jörgen was alluding to. Now we have normal inflation, which we are not blind to, but it might be an offsetting effect between those two waves as such, which is important to keep in mind.
All right, any more questions?
Yes. Our next question come from Rasmus Engberg, Kepler Cheuvreux. Please go ahead. Your line is now open.
Yes. Hi, guys. Hi, Jörgen and Andreas. Just wanted to ask you a bit more longer term. I mean, you've been in a sort of an investment phase now for about a year or more to get back to organic growth and so on. Is this kind of the new Stillfront or are we, or is it kind of like as we go forward that the rate of expansion of new games is unchanged, meaning that the costs and maybe the potential investments are coming down sometime the beginning of next year when we meet the comps? Or is it kind of a new Stillfront that we're seeing?
Thank you, Rasmus. That's correct that we took a decision 18 months ago to increase our organic development of products, and I think that has really paid off. We have 14 new games organically that has come out to the market and generated revenues on the levels to qualify for our active portfolio. It has been a very fruitful and good returns on these investments. As communicated earlier, we have kept a pace of 15 products per six months coming into soft launch. Some of them will fail, some of them will be very successful, and some of the rest will be in between somewhere. I think the outcome has been good. Of course, as we now have 76 games in our portfolio, 15 games in relation to that is a lower number.
What you can expect is that we, as we see it now, we will keep approximately this pace in absolute numbers, but in relative numbers, that will go down. That is what I expect now. Of course, that is something that is evaluated constantly. If we find good investments and get good traction and could do clever investments with a good risk reward, such as publishing more games on the Bytro strategy and engine has been exceptionally successful for us with a very good risk reward and short time to market and good return, that we will like to do more of. But to summarize, I would expect us to have lower investments also when it comes to what we're doing with the Stillops platform.
As I mentioned, that is maybe one percentage point that go all-in margins that go into increased cost for expanding our Stillops platform. We have several very clearly identified areas where we think that as our investment pace in relative terms goes down, it will support margin expansion in the next year. Would you like to add something, Andreas?
No, I mean, it's just we have a very strong cash flow generating business, so we can afford to make those tactical decisions. We are generating cash flow and we have decided and taken a decision to use some of that, and not all of it, to continue to build Stillfront a better company. That's where we can take that luxury because we can afford it, just to add.
Yes. Thank you. Thank you very much.
Thank you. Our next question come from Simon Jönsson, ABG. Please go ahead. Your line is now open.
Yeah. Hi, all. Two questions from me. The first one, a question on 6waves. You said it was stable here in the quarter. Could you explain what that means? Does it mean that it maintains the Q3 LTM sales numbers you gave us of SEK 750 million, or should we expect slightly declining sales until we see the new releases coming later this year?
Of course, we don't give explicit guidance on each of our studios like that way. What we mean with stable is it's revenue-wise stable because it's strategy games. Strategy games, you know, we have had strategy games as core in our business for 12 years now, so they are very stable for the very straightforward reason that the loyalty amongst users when you're progressing a strategy game is very, very high. Having said that, it's also the area which is hot and most impacted by seasonality because you don't play the more time-consuming strategy games on average as much. When you're on holidays with your family or whatever it might be, and the audience is also a bit older on average than in casual games.
Considering that we not even have a full year with 6waves on board, It's not the perfect symmetry, the LTM before we entered, and the February to June that they have been consolidated. These five months are a bit softer than a full year average, I would say. KPIs are looking very stable and we are looking forward to grasp the growth opportunities from their existing pipeline and not the least from publishing existing Stillfront games into the world's second-largest market for mobile games, which is the Japanese one, where 6waves has a very, very strong knowledge and position.
Okay. Thank you. My second one. You commented on the LTV development earlier and how it has been impacted by the IDFA. You don't target the same way as before, basically. Could you help us maybe understand how you are as confident in your estimation of LTV and ROIs as before, even after privacy changes? What are the factors behind that, as the visibility should be lower?
The visibility is lower when it comes to looking at the traffic and buying the traffic, so it's less refined. We cannot be buying as precise targeting traffic as we could do pre-IDFA. That is a natural part of our industry that you will have changes all the time in the marketing conditions. Now, IDFA was a bigger change because it came from a platform owner, but changes in the platform or the channel for marketing will be something that we will see in the future as well. What this leads to is that we are doing the refinement of the traffic, so our prediction models to analyze the traffic, which is not as refined when we buy it, we do ourselves.
The prediction model and the prediction rate and the precision in our predictions are on par with pre-IDFA. It's different because we do more. We have refined our models, we have built new models on our side because we cannot get as precise traffic from our partners, the intermediaries where we buy our traffic from. Result is at least as good, which on an otherwise strategy would never be possible to grow as much as we have done. The outcome is at least as good as pre-IDFA, but it's different. That's why we are geared the way that we are. Yeah, that's my answer to that question, basically.
Okay. That makes sense. Could that also mean that you as a larger scale player in the market has an advantage?
Absolutely. I mean, if you're dependent on few channels, I mean, the highway previously were if you were a U.S. player in particular, you work with primarily a large portion iOS, and you work to a large extent with the channel Facebook. That was the main road two years ago. Of course, you're much more vulnerable to that, whereas Facebook entered into the issues with their algorithm as a consequence of IDFA. I mean, we have very much accelerated the leverage from the fact that we master many channels, we market many products in many different territories. You're absolutely right in that statement, and that has accelerated, and it will continue to accelerate. You benefit from having this diversity indeed.
All right. Thank you so much, Jörgen and Andreas. That was all from me.
Thank you. If there are any additional questions, please press zero one on your telephone keypad. There are no further questions at this time. I hand over to you speakers for any closing remarks.
Thank you very much, and thank you everyone for dialing in this morning, and also for raising good questions so we have a good discussion and interaction. We are pleased to see you next quarter again, if not earlier. Thank you everyone, and have a great day.