Thank you. Good morning. Also by my side, I have Andreas, our CFO, to present today. Starting on slide two, a few initial words. We had a high ambition in building Stillfront to be the free-to-play powerhouse. We started our scale-up phase this year, which has led to that we're now 16 studios that operate with high focus on live ops and user acquisition, also that we are creating operational synergies between the different studios. We have built a diverse game portfolio with two common themes, loyal users and long lifecycle games. We have also reached approximately 20 million monthly unique playing our games. The main markets we have is U.S., Germany, the MENA region, U.K., and Canada. In total, we are approximately now 1,000 professionals around the world, basically.
If we turn to slide three, you can see where these approximately 1,000 professionals are located with the red dots on the left side, which represents our offices. Also you can see that we are a true global company, both from the offices and the studios that we have, but also how the revenues are distributed, which you also can see on the left side. North America is now 51% of our revenues. Europe is 31%, Asia 12%, Australia 3%, South America 2%, and Africa 1%. North America is significantly increasing in share of revenues. In absolute numbers, we are increasing across the board, but in relative terms, North America is gaining territory, primarily on the cost, so to speak, on Europe. Turning to slide four.
We have had a very strong momentum in the third quarter, both by a significant revenue growth amounting to 99% year-on-year, both through a solid organic growth, but also, of course, thanks to the acquired growth from Storm8 and Candywriter. We have, during the quarter, spent 16%, equal to SEK 164 million on user acquisition. As typical in the third quarter, percentage-wise, it's a bit lower than it were in Q1, where it usually is the highest. Also you can see in Q2 it was higher. Last Q3 2019, we also were at 16%, obviously lower absolute numbers as we were a significantly smaller company. You can also see on the last 12 months, we're now up to SEK 3.5 billion in revenues and with SEK 635 million in the last 12 months in UA spend.
That is an important trend which is a fruit of a lot of hard work that we have been able to achieve organic growth in the range of 20%, actually from 2018 and onwards. At the same time that our UA in relation to net revenues are going at, and now the two last quarters below 20%. I think that's a very strong combination, which is basically only possible through a large focus on operational excellence out in our studio, working very hard and successfully with live ops. We can just conclude that the accelerated demand and the large influx of users we had in Q2 has started to normalize as we have communicated in June, and that normalized level has continued in Q3.
Basically what we're saying is that we don't see any effect during the quarter, or actually since June in our operational numbers or in our marketing and activity levels. Of course, we are happy to see that users that we did take in on a much higher level from mid-March to end of May, they are showing the same pattern as Q2-2019, Q2-2018, and so on, namely that they are loyal and will enjoy our products for many years to come. This quarter, besides the, as always in Q3, present seasonality, which is lower, typically 7%-10%, we also had a significant FX headwind, which we will come back to later during this presentation. Turning to next slide, slide number five, looking at our EBIT development.
We can see that our EBIT for the quarter was SEK 419 million, equal to a 140% EBIT growth year-on-year, which of course we are very pleased with. Also we are pleased with having the record high profitability of 41% for the quarter and not the least 37% last 12 months in EBIT margin. Again, the focus on well-executed live operations across the board, across all studios is one of the key elements to achieving this high profitability. I also think it shows the power in our business model with increasing margins as we grow. We have also been able to acquire very healthy companies, but also made them even more healthy being in the group by achieving the synergies that I touched upon initially.
I think it may be one of the most important things is the systematic margin expansion that we have been able to achieve looking back to Q3 2019, where we thought at that point that was a very strong number, 34%, but we have been stable 33%, but now up to 35% and 37% LTM. Of course, that will vary from one quarter to another, but that's also why the LTM numbers are a very important metric for us.
Turning to slide six, you can see that we have, looking at our total portfolio, what is important here is that we work very systematically at Stillfront with looking at the total composition of our portfolio, that it's balanced in many different dimensions, balanced in terms of genres, balanced in terms of addressable audience, not the least the gender balance in our revenues, which I think we have taken significant steps during this first scale-up year of Stillfront. I think you can clearly see that three of our four acquisitions, Everguild being the small exception, have an audience which is primarily female. That is one dimension, but also when we look at the risk/reward balance and the balance between growing product and more mature product, smaller, medium, and large franchises, how that balances out, I think we have taken significant steps during the year.
We will continue our efforts to constantly improve the balance so that we get a very strong predictability and profitable growth across the board in our portfolio. Looking further into some of the numbers here, you can see that the Casual and Match-Up area has continued to develop very well, and we're happy with that, being the latest vertical that we have added to the portfolio. It's now during Q3 accounted for 14% of the total bookings in the active portfolio. In total, we have 38 games in the portfolio during the quarter, so basically unchanged from Q2. Notable could be that the product that we added in Strategy, the mobile extension of Conflict of Nations, is not considered to be a standalone product for the fact that it's a true cross-platform product, but it's a new launch nevertheless. We had also 77% mobile in this quarter.
We managed to increase our ad bookings, which is an ambition we've had for some time. I think we can do much better, but it's nevertheless a sequential good increase from 5%- 7%. We're happy to see it's going in the right direction, and we hope and think that that could continue. We had also worth mentioning that 4% of the total bookings equal to SEK 36 million is gains from the non-active portfolio. With active portfolio, we mean products that have a revenue volume exceeding the threshold where it's rational for us to have a dedicated live ops team. The long tail, which consists of a significant amount of products, they are profitable, but on a lower level that is not paying off to have a dedicated team. Nevertheless, they deliver 4% of our bookings in the quarter.
On our UA side, we can say that as we saw in the earlier slide, it's 16% in the quarter in relation to revenues and 17% in relation to bookings. The campaigns have been very efficient and performed well and continue to meet our highly set ROI, return on ad spend expectation and demand. We are well within the 180 days, which we are pleased to see that we can continue with that efficiency. However, we can also conclude that in September and also into Q4, the volatility has been significant. It has been a slightly or clearly a different pattern to what we're used to, making it a bit more operationally tricky to scale up. Usually, it's a good period from somewhere during September up until the beginning of December to market. That has been a bit more volatile this year.
We think that one of the reasons is the American presidential election that has impacted traffic prices. It's not only in one direction, it's basically more volatile. We can come back to that later as well. Turning to slide seven, going into each of the three different verticals. We are very pleased with how Strategy continues to deliver on a very stable and predictable way, growing by 11% in terms of both bookings and MAUs, equal to now 33% of the active portfolio bookings during the quarter. We also have now 61% coming from mobile. Several of the products are true cross-platform or multi-platform, 24% comes from Asia, and it's in total 12 games making up the strategy portfolio of ours. We're also very happy to see how our mid-size products continue to deliver very strong growth.
Call of War," "Supremacy 1914," and "Conflict of Nations" are all built on the same engine, continue to perform well. Actually, these products combined are similar to the size of "Nida Harb ." It's really organic growth success that we have. You should remember that "Conflict of Nations Mobile" was launched in September, so it hasn't contributed so much during the quarter, but we are very optimistic what that could bring, not the least full year 2021. "Imperia Online" and "War and Peace" have been very strong in the quarter. It's fine to see how mature products, well into several years being operational, could come into and gain a new momentum of growth again. "War and Peace" have had a decline for a couple of quarters, but now are back on a good growth trajectory again.
That's very good to see how our portfolio theory, not the least with the strategy, is really working the way that we think it should do and that we are pleased with. As always in Q3, "Nida Harb " has made it the most significant seasonality pattern since they had their strongest quarter in the year during Q2, not the least from Ramadan and other high activity that are usually paying off, and also this year in Q2 there is a slight bounce back, of course, in Q3. Looking at the MAU and the traffic numbers, you can see that as I said, that we have clearly a sequential drop, which is not very surprising in strategy games following the usual pattern, but 11% year-on-year growth.
You can see that we have a year-on-year DAU that is 3% down, but we have a strong ARPDAU growth of 15%, and the monthly paying users are + 7% on a year-on-year basis, and as mentioned, 11% year-on-year bookings increase with a UA that is increasing 26%. The nature of UA in strategy is that it's delivering returns for the longest time of all the verticals, which is of course then promising as we can increase the UA with good returns and keeping our 180-days target. Also you can see that the ARPDAU in absolute numbers are very high and on a very competitive level, almost at the same level as it was in the record-breaking Q2. Good monetization, solid performance across the portfolio in strategy games.
Well, first of all, it constitutes 27% of the total bookings and of active portfolio. It is 18 games in Simulation RPG Action, 58% mobile, 47% coming from Europe. Ad bookings represent 3% of the total bookings. You can also see how we have managed to grow the user base in this area by 32%. However, clearly a sequential drops in MAUs. You can also see that in DAU, which shows again that it is moving quite fast and the intake hasn't been that much. You can also see that the monthly paying users are increasing by 45%, so more than the MAU and DAUs year-on-year, which I think is a strength that we have a higher conversion.
Also, you can see that we have a very stable ARPDAU number, even though it's lower year-on-year, it is very stable the last couple of quarters. It's basically the mix of products that explains the year-on-year decline, whereas you can see very stable from we got in Storm8 and Candywriter. The bookings 14% year-on-year with the UA increase in 22%. The UA is 19% in relation to the bookings, which is I think showing that we have elevated this business and have continued to grow it with quite a representative UA spend. It's also good to see that Big Farm: Mobile Harvest continues to be one of our growth engines through the whole portfolio, the whole group. We're pleased to see that Shakes & Fidget have continued very strong performance from Q2.
It's also pleasing to see that mature products and smaller products like GemStone IV, actually on its 33rd year, had all-time high during this summer. It's tremendous what stability and in that case also tremendous profitability, since we don't market the product and despite that it's taking all-time high. Also smaller games like OFM is a strong growth quarter. We have, however, a weaker performance from several of the KIXEYE products. It's partly given that we haven't been able to market it so strongly during summer or during Q3. The FX effect being very North America and dollar-centric is significant for the KIXEYE titles. Also we can see that ad bookings in this area, not the least from Big Farm: Mobile Harvest always have doubled year-on-year.
All in all, a solid and good performance, good growth organically and good increase in profitability as well. Turning to our largest area or vertical, Casual and Match-Up, as I mentioned initially, 40% of the bookings. It is eight games currently, 100% mobile, ad bookings up to 16%. It is getting there. 74% of the revenues are from North America, which is good in many ways, potentially not for in FX perspectives. Nevertheless, a good growth. Also, we can just conclude that Candywriters title, Candywriter was consolidated for the full quarter. It was only two months in Q2. We have had a healthy growth for BitLife by UA ramping up during the quarter. Also, Storm8 continues to deliver solidly during the quarter, somewhat softer during the latter part of the quarter due to marketing conditions as previously touched upon.
You can see on the traffic numbers how we have a decline in terms of MAU and DAU sequentially, and year-on-year is not meaningful since this is a newly opened vertical. You can also see how we have a solid, actually even an increase in monthly paying users. That is also something showing that these users are sticky and they pay, and this is the pattern that we expected to see in Match-Up. It's not that we churn paying users when we churn MAU and DAU. That is encouraging, I think, and very stable ARPDAU. Due to the lower number of users, you can see that we have a lowering the bookings to SEK 383 million for the quarter. You can also see that the UA in relation to net bookings was 17%. Basically quite flat.
That was the walkthrough of the portfolio and the general trends during the quarter. I will hand over to Andreas to go into financials, and then I will wrap it up after that. Please, Andreas.
Thank you, Jörgen. Turning to page 10 in the deck, just the highlights for the quarter. We continue to see the same kind of underlying platform financially in Q3 of a 99% revenue growth, but very strong EBIT margins. We also had a very strong cash flow generation in the business, generating SEK 207 million of free cash flow prior to acquisition and financing. We have created, in the last one to two years, a strong platform in terms of financing. We have a strong financial position with a cash position over SEK 1 billion when we exit the quarter, and we still have unutilized credit facilities. As well, we have room in our ability to take up new leverage, and we have an 0.67 leverage ratio, which is well below our targets.
This allowed us to continue with a strong underlying financial performance and our platform to actually execute on two acquisitions in the last month and a half, both Nanobit and Everguild . This is a very strong fundamental for looking at the future pipeline, as Jörgen was mentioning. I am turning into the slide 11, the income statement. Our net revenues grow by SEK 510 million, versus year-over-year in 99%, driven by both acquired growth, but also good underlying organic growth in our business. We continue to have a good, well-diversified income stream, both from different types of games, from more ad revenues, which increased both in percentage-wise but also in absolute terms in the quarter. We did see normal seasonality effects.
We have seen that each year in the history of this company in Q3, usually that tends to be between 7% and 10%, and then we have also impact of FX, which is in a similar level as the seasonality effect. We had a positive deferral effect in the quarter of SEK 41 million. This is also partially driven by seasonality. We had a -1 in Q2. It follows a similar pattern as we have seen before. Looking at platform fees and our gross margin improved slightly, at least versus Q2 this year.
That is driven by, even if we increase our share of mobile to 77% from 75% in Q2 this year, we have a positive effect, both ad revenues, which is a strengthening of the gross margin, as well as a deferral effect in the quarter, UA, Jörgen has touched upon, so I won't go into depth on that. Our other externals expenses are increasing year-over-year, slightly up versus Q2 as well. We still have a positive effect that people are working from home, even if it's becoming marginal when people have started returning to the offices. The big impact here is also FX. Same as we have impact on FX on our top line, it also impacts our cost base. That also goes into staff costs, which increases 50% year-over-year.
We also have a natural hedge in that perspective, both from when our top line is impacted, our cost base is impacted positively. Amortization and appreciation increased as we have seen similar trends. This is mainly driven by amortization of PPA items, which increased SEK 69 million year-over-year. We had items affecting comparability of a total SEK 18 million, and this is mainly driven by the Nanobit transaction. Underlying down for an adjusted EBIT of 41% margin, and SEK 419 million for the quarter. In terms of financial items, SEK 48 million. The underlying interest cost is SEK 26 million for the quarter, slightly down from Q2 this year because we had less utilized facility over the whole period. We have the SEK 19 million non-cash interest that we book based on the earn-out considerations.
In terms of tax, we had an unusually high tax charge to RP now in the quarter of SEK 104 million. This impacts the quarter stand-alone and it's something we are reviewing. We will need to get back to that, but we don't think that the quarter stand-alone is representative of what our future outlook will look like. Stand-alone for the quarter, we had a net result of SEK 154 million. I will turn into the balance sheet. Page 12 or slide 12. In terms of our big positions or intangible assets, actually decreases in the quarter with almost SEK 300 million. This is both goodwill decreased with SEK 200 million and the other intangibles, i.e. product development, also decreased. This is the other side of the FX. Majority of our assets actually sits in non-SEK currencies.
This actually reduces our balance sheet based on that, when they are revalued at the closing date of the period. We have a high receivable booking, which increased quite significantly. That is a pure accounting treatment since we acquired Nanobit in the last hours for the cash portion of that. That is booked as an accounts receivable on the 30th of September, and then it's converted on the 1st of October. It's showing an accounting temporary effect on cash flow that is recorded as an investment in subsidiary. Cash position, over SEK 1 billion and we utilize more credit facilities in the quarter to both manage our FX, but also to have a strong war chest for the future as well. We have total earn-outs of almost SEK 1.8 billion . This is a reduction from last quarter.
We did pay out the remaining part of 2019 earn-outs, both in shares and cash in Q3. We have no outstanding earn-out payments this year to be made. We have the long-term provision for the earn-out is SEK 912 million, and the short term is SEK 872. Short term is within 12 months, the short term reflects the payment for 2020 that is due within 12 months. We had adjusted leverage ratio for four months, 0.65, and adjusted interest cover ratio pro forma of over 14. We're well-positioned from a balance sheet position after this quarter. Turning to slide 13, the cash flow. First looking at the reported numbers of Q3 and some flavors on that. We had a cash flow from operations of SEK 332 million. This includes a positive working capital effect, which has to do with the seasonality of revenues. We had a negative in Q2.
It's offset by high tax payments that was executed in the actual quarter of SEK 120 million. Still underlying SEK 332 million of cash flow from operations. We did invest SEK 858 million. That is mainly driven by Nanobit, which was SEK 695 million. Then we had SEK 815 million of investment in product development, which is 11% in relation to net revenues. We had cash flow for financing activities of SEK 648 million, which is mainly driven by utilization of the credit facility. As I think I mentioned a few times before, it's always important to look at the free cash flow and looking at it on an LTM basis, so the lower part of this slide. Here, we have generated in the last 12 months SEK 939 million of cash flow from operation. That is an improvement of 105% versus LTM Q3 2019.
We have increased our investments in product development, which was SEK 406 LTM. It's important here that that's an increase with 103%. The intrinsic here is that we are actually increasing our free cash flow from operations higher than we are increasing our spend on product development. This metric is something that will be volatile over time, where we have especially in individual quarters, it is very critical for our underlying performance in this business in terms of our financial model. Very good cash flow generation and a general very good financial quarter. With that, I will hand back to Jörgen.
Thank you, Andreas. I will wrap this up with slide 14. We are very happy with the Everguild acquisition, because it's a very focused, agile team, and they bring another genre into our portfolio where we're not present or don't have any products, collectible card games, which is a very exciting area. We think they have been focused on that, and they have an exciting pipeline and knowledge about that, and also existing products are exciting. We can jointly scale up and see growth from this area, we think it will be some interesting years to come, and not the least for 2021 and onwards. They have a product called The Horus Heresy: Legions, which is based upon the Warhammer universe.
Also they have shown that these kind of games, if you operate them as professional as the Everguild small agile team have done so far, we can really attract the users for a very long time and have a very high stickiness, that of course fits perfectly into our strategy. This is yet another example of a smaller acquisition that we have spoken about that we should increase hopefully going forward. That is our ambition, that we can find small products that we can scale, filling out white spots and blanks in our current portfolio, that will be an increasingly important source for acquisitions for us. In parallel, we're doing larger studio acquisitions like Nanobit, Storm8, and Candywriter. We also hope and think that we will do more Everguild-like transactions the next coming years. Turning to slide 15.
We updated our financial targets in the capital markets update in September. Since we have had the fortune to be reaching our communicated targets from November last year in a very short time. Now we have updated and increased our ambition looking to 2023, reaching SEK 10 billion total revenues or net revenues, both through organic growth as well as, of course, acquired growth. Important to note that always important for us is that we see that we can turn acquired growth into organic growth through the business platform of Stillfront. We have an ambition to reach this revenue with a continued profitability at around 35% in adjusted EBIT margin. We have an ambition to be conservative but still work with leverage. With that, it shouldn't steadily be above 1.5. It could be for a shorter time if there's a good reason for that.
Otherwise, we have an ambition that we should be conservative, but still work with the leverage. That is basically also unchanged. Finally, on slide 16, a few comments on the nine months as well as the third quarter. We have had a strong momentum as I started off with, and not only that, we are with all the operational things going on in our group with the new product coming out, expanding, balancing our portfolio, and reaching the high financial performance that we think we have achieved with a 99% growth and 40% or 37% LTM EBIT margin.
Also we are working a lot with things that are not visible to the outside, hopefully explaining some of the performance, but nevertheless, we put a lot of energy into establishing Stillfront as a business platform to attract the best studios, the best talent, and the best products so that we can elevate that to further new levels. We have taken many steps during 2020 to continue to refine center of excellences, expert nodes, sharing data, making data accessible, making collective knowledge available for new studios coming in. We have increased the number of collaboration projects from being somewhere 30 ongoing projects in Q1. At the end of Q2, it was 55 collaboration projects. Now we're up to 60 collaboration projects that are taking place between the different studios.
This is scaling not linear, this is scaling progressively with the number of studios that we are in our group. That is very important. We also now, as mentioned, we're up to 16 studios for acquisition completed this year. Our M&A agenda during this scale-up phase is accelerating, our ambition is accelerating, and we have a strong and exciting pipeline for the future as well when it comes to growing the number of studios. Also the diversification of our portfolio we are happy with, but not satisfied. We will constantly try to improve the balance and that we increase the user base as well, which has an importance in many dimensions.
Also, as I touched upon earlier, to have a balance between male and female audience, we also think is very important and exciting, increasing the addressable market and grasp the opportunities from the fact that it's not a balance between supply and demand relating to that part of the gaming audience. Some comments on the third quarter. As mentioned, good momentum, the very strong profitability, solid organic growth paired with strong acquisitive growth. However, as mentioned, a bit more challenging online marketing environment in the end of the quarter and in the beginning of Q4, which is more an operational issue. We are convinced that high volatility driven, we think primarily from the U.S. election, is something that will go away. Nevertheless, it also has been an ingredient in what we have to report.
All in all, we are pleased with the quarter and we are as convinced as ever about that we are on an exciting track towards 2023 and onwards. That was the last we had to say. We open up for questions, please. Welcome.
Thank you. If you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. Our first question comes from the line of Oscar Erixon from Carnegie. Please go ahead.
Thank you. Good morning, Jörgen. Good morning, Andreas. Few questions from myself. First of all, just the organic growth in Q3 year-on-year. Any input on that? Also if you could elaborate a bit on the FX effect, which seems to have been quite substantial here, especially sequentially versus Q2. Thank you.
On organic growth, we have been able to achieve approximately or in the range between 10% and 15%. It's as always depending on how you define it, but we continue to grow faster than the market. If you look at LTM numbers, we continue to be in the range of 20%. We are happy with that organic growth, even though it was lower compared to Q2, but that was also, we think, expected. On FX, maybe you can elaborate on that, Andreas.
Yeah. As mentioned, we had a similar effect from FX that we had on normal quarter-on-quarter Q3 from seasonality. That is impacted by especially the strengthening of the SEK and lowering on the dollars. We are more focused on and have been in the last two quarters on income from the U.S. or North America, which is up to 51%. That impacts us both from historical reporting where you always take the year-to-date average rates, plus the underlying FX in the actual quarter.
Maybe one can add that we have an inbuilt hedge then on our P&L. That's why you can see that it impacts our top line for sure, significantly as Andreas said, on par with the seasonality, but in local currency, obviously not. The inbuilt hedge is that obviously our costs are also lower as Andreas touched upon walking through the P&L. That's the EBITDA hedge. Also on the balance sheet, we also have some hedge. Maybe you can just touch upon that as well, Andreas.
Yeah, in terms of the balance sheet then, what is actually happening is that we are actually lowering our debts or expected earn-outs goes down in a similar fashion that they are positively impacted because they are usually the underlying functional currency of the targets that we have.
It is a, as Jörgen pointed out, we have a EBITDA hedge on most of our costs. We also have then a lower debt level on the balance sheet due to this.
The final comment could be also that looking on future M&As, it could be also, if not a hedge, at least working in favor for us if the tech is stronger reporting-wise. I hope that answers your question, Oscar.
Absolutely. Thank you. Regarding the more volatile marketing prices in the U.S., my assumption would be that this should mainly, or at least more affect the recent acquisition of Storm8 and Candywriter, i.e. the Casual and Match-Up segment, which are more U.S.-oriented. Is that correct? Also, have you seen any improvement in marketing prices post the U.S. election now in early November?
Yes, it definitely impacts Match-Up and casual since they are North America heavy, so to speak. Also, it depends very much on the product. For instance, KIXEYE has a significant portion of their revenues coming from North America, and so do some other products. It's not super clear per vertical or product area. It's rather product-based, so to speak. That is how I would like to describe it. Obviously, having 61% of the revenues from North America and primarily U.S., it's a significant portion. Looking on the current situation, we can see that it's improving, but now it's a very short time since the election, obviously. I don't know whether the election is completely done or not. Well, the election is, but the aftermath, maybe not.
It's very hard to say how it varies, but one of the elements that we have and one of the reasons basically why we are so much working with broadening the number of products so we have the diversification region-wise, product-wise, and sector-wise and addressable market-wise, is that we can cope with changes in one territory better having a wider portfolio. Of course, with such a drastic change in the FX currency, of course, in our reported number, that has an impact. When changes are more particular for a certain region, we have traction in many regions that we can work with hedging that. All the same, of course, we would prefer not having that volatility and the pricing going according to pattern, which is usually not the case.
The final question from me for now. Just on the synergy side, seems to be good momentum with synergies across the group. Are there any interesting projects that you would like to highlight perhaps localizing certain games to the MENA region, for example, Storm8 games? What's the progress on the synergy projects? Thank you.
Since we have 60 of them, this call will be very long to go into details. In general, we can see that it's many different kinds of both cost side synergies, but also, and most clearly you can see it on product and/or marketing and distribution. One very recent example is the "Conflict of Nations Mobile", and I think the whole collaboration based upon the engine, the grand strategy engine of Bytro's which now there are three products there, and they are equal to "Need a Hug," which was our record-breaking growth history for us. I think that shows a good example when even on a complete product and engine level, one studio can develop products that are growing very strongly based upon another studio's engine. We will definitely see more of that.
I hope and think that we will have several marketing and product-related synergies going forward. Besides the very recently then released CoN Mobile, we have no new product to announce as we speak now. We definitely have a strong pipeline of new collaborations in the pipeline, not the least from Nanobit entering into the group just recently. Everguild, of course, also the whole idea with Everguild is that it's based upon that we should leverage the power of the group to make their products scale much more. That's why we emphasize this. We see that it's really paying off with a business platform of Stillfront creating this leverage and the synergies.
Great. Thank you. I might come back with a few questions later. Thank you.
The next question comes from the line of Jesper Birch-Jensen from ABG Sundal Collier. Please go ahead.
Morning, Jörgen and Andreas. A couple of questions from me. First off for Jörgen. Obviously, you mentioned that the marketing showed some volatility here in Q3 due to the U.S. election. I was wondering, do you think that the release of the next generation of consoles could cause similar conditions into Q4, or is that not big enough of an event?
To be bluntly honest, I don't know because I think that it has been an interesting launch period where they use election also for the console marketing or the new generation marketing. This is worth mentioning, hence we do it. On the other side, this is nothing new. We have had special events, and there are changes in the market rapidly. That is a standard thing that happens from time- to- time. It's not like we are very concerned, but it's just that we might see from time- to- time lowering our intake of new users compared to what is the usual pattern. We also know that the absolute strongest period in the year, and has been every single year, is Q1 for marketing, not for revenues necessarily, but for marketing.
Whereas it's usually from somewhere first week of December until the 26th of December, we are very low on marketing because then definitely traditional gaming companies are pushing extremely hard for the holidays in the Western world. It's just for us to rest our case, and then everybody's ready for increase in marketing significantly from the 26th of December, and then usually we have a very strong period from that into January, but often it continues into March, April. That is the typical seasonality, and I expect that will be the same. Maybe stronger this year due to consoles, but I'm not sure, to be honest, so we'll see. The strength we have in products with the longevity and the loyal user base we have, it doesn't put the pressure on us.
If we would have had products within hyper-casual, for instance, that you have to fill with new users all the time, it will be, I imagine, a bit more stressful. We can just say that it impacts the intake, but nevertheless, we grow from live ops. We can continue to do that, and yeah. We're not stressed. It's more an operational question rather than strategic tactical.
Got you. Another question for you, Jörgen. I was wondering if you could speak to the performance of Nanobit's portfolio since you announced the acquisition, perhaps in terms of growth in the games compared to UA spending there.
That is Q4. They are not in our company for Q3. We don't give forecasts, as I think you know. We need to come back to that. Just on a general level, they could also see the volatility, but it's not differs from other studio in general, so it's nothing exceptional to that. I think they have a very strong portfolio and not the least exciting products targeted to get out in the market next year. Fashion Nation, which we think it's a very exciting release for us. That is, of course, not impacted on this volatility. There's nothing that has changed our view on Nanobit, and we will come back to how it performs when we are reporting Q4.
Right. Thank you, Jörgen. My last question is mainly for Andreas, I think, and it's in regards to the tax charge of SEK 104 million. I know you mentioned that it's not representative of the normal tax rates for Stillfront, but I didn't quite catch what caused the tax charge in the quarter. If you could please elaborate on that a little bit?
The tax charge in the quarter was SEK 104 million. That was the tax charge, and that is equivalent to approximately 40% as a standalone. On a year-to-date basis, we have SEK 193 million, which equals approximately 32%. As we stated, we will need to come back on the tax charge going forward on this, but that's the numbers in the quarter.
Okay. Thank you. That's all for me.
Good.
The next question comes from the line of Hjalmar Ahlberg from Kepler Cheuvreux. Please go ahead.
Thank you. Maybe just a question on KIXEYE. You mentioned that was one of the segment where you saw some both impacts on FX, it also sounded like there was some general weakness. Is that overall the games in the KIXEYE studios, or any specific games that is impacting there?
No, it's not a systematic drop. From Q1 and into Q2, KIXEYE was growing, but then it has been a bit more tougher. We're just adding some flavor to that. As we have seen with the kind of products that KIXEYE and the portfolio in general, it does differ from one quarter to another. It's not a systematic issue. It's just that we would like to highlight that their product have had both because we haven't found the right UA and the right channels for that, so we're optimizing our campaigns, but also that the FX is making it a bit more tricky. They also have a pipeline of products that we think could be exciting next year. We hope and think that we will get KIXEYE into a growth track again.
In terms of revenue mix, you mentioned that ad revenue is increasing a bit from 5%- 7%, and you also showed this on your different genres or different segments, 16% in casual, but 0% in strategy. Is there any target here? Can you go as high as 20% in casual, or is it more like you can increase it in other segments?
I definitely think we can do much more. We have no external targets per segment to communicate in that way because it's more, how should I put it? It's more sophisticated than just saying, "Whatever it takes, we should reach a certain number." Of course, you can do that, but it's all about the blend so that we get the right way of introducing ad space into the games, not disturbing in-app purchases. It needs to be done in a diligent way and to optimize the total revenues and the total profitability for products, not only focusing on one number. Having said that, I definitely think it could potentially be much higher, 10%, 15% higher potentially in Match-Up, and it could be definitely higher in Simulation RPG. We've seen that from Big Farm: Mobile Harvest, not the least. It shouldn't be 0 in strategy.
I think that it's not likely that it will be more than maybe 3%- 5% over time. All in all, it's a huge potential for us, and I think we can do much better than we've done. It's taking a bit longer time than I hoped for. Nevertheless, we're getting there slowly. It's, of course, yet another dimension of diversification, and there is no platform fees on these revenues, so it's good for margin expansion as well.
Another question on acquisitions. You mentioned small acquisitions you did recently. How should we view these acquisitions? You buy a very small company, then you can maybe increase revenue fivefold, tenfold. Is it more like that you should see these acquisitions compared to maybe if you buy a larger one where it's maybe difficult to increase significantly that in terms of revenue?
That is one angle. Of course, we've seen opportunity to grow these products with significantly higher percentage-wise than if we acquire a larger studio, more mature products. Obviously, that is the case. Also, I think that we have an ambition that we should do at a higher pace, not in short time, but over a longer time within the next coming three years. I hope and think that we can have a higher pace of acquiring assets with team, as in this case, or potentially without the team attached to it, so that it makes up also being a relevant stream of non-organic growth as it is a number of products coming in that way. We're not there yet, but I think we will get there in a couple of years.
Okay. Maybe just the last question on Q4 seasonality. You mentioned the volatility in terms of marketing efficiency, but with your current portfolio and the Q4 seasonality, are there any different versus historical levels there?
No, activity-wise, we have no reason to believe that existing users will be less active, not at all. Maybe they will be more active if COVID-19 pushes in. It's how much that translates into transactions very much depending on how successful we are in LiveOps, not the least over the weekends and the holidays coming up in December, and also Black Friday and stuff like that. That LiveOps will tell us how much we gain in revenues from the active base, but I don't see any reason why it shouldn't follow the ordinary pattern with significantly increased activity. What we talk about is the other part of how we achieve organic growth, and that is how many new users we can take in on what profitability level.
Since we are a very EBITDA-oriented company and have tough requirements on profitability, of course, we are loyal to our strategy, and that means that we can cope with not taking in the same amount of new users, and in short term, that then, of course, would have an impact on revenues. That is the way that we built this company, and we think it's a good way to go. We will continue with that, even though if it would short term show a volatility in top line, we think it's the way to build the company.
Okay. Thank you.
The next question comes from the line of Erik Lindholm-Röjestål from Nordea. Please go ahead.
Yes. Hi, Jörgen. Hi, Andreas. Looking at the Casual and Match-Up segment, have you seen any increased competition in the home design segment? I've noticed there are some new entrants in the segment.
Yeah, we also have noticed that, but we think we have a very strong product and a strong audience, so it's no material difference in that respect that we see.
You continue to see strong user acquisition return in the segment, or has competition for user acquisition also increased?
As we said, we are comfortable with acquiring users with the efficient machinery that we have proven for quite some many years now. As I said, we see volatility, and that impacts every product in some sense. Of course, if you have significant revenues in certain regions where the volatility is not that much, for instance, in the Middle East, volatility is lower than in the U.S. If our thinking that the U.S. election is very much behind this, it's of course less in the Middle East than it is in the U.S. That is still applicable, but your question was about whether increased competition hits Storm8 higher more than anyone else due to new launches. We don't see that, but volatility is applicable in both directions for all U.S.-exposed products.
Okay. Yeah, got it. Looking at M&A, have you seen any increased competition on M&A? Would you say that you are sort of a preferred buyer for these small studios and games that you could add on?
We think that, first of all, we have never had a strong pipeline as we currently have. Pipeline is one thing. What counts is obviously deals, and to make good deals, and to get really strong talent, product, and studios to join our group and enjoy the synergies. We think that we have a strong offering. We think that shows in our pipeline. Also, you can see during this year with increased competition, you can say we have still managed to do more acquisitions than ever previously. We think we have a strong offering. We have a financial capacity. Of course, I think it would be naive if you say that increased activity on the market doesn't impact prices. Yes, we are expecting that prices in terms of multiples will increase.
How much and in what steps is harder to say. We expect that will happen during 2021. We are prepared for that. We also trade on higher multiples now than we were one year ago, so I think we can cope with it also from that perspective. Of course, it will be over time, if more are consolidating and stepwise the number of non-consolidated companies or targets are decreasing, of course it is an increased competition. We are ready to take it on.
Great. A final question for Andreas here. Is it fair to sort of assume that the uptick in deferred revenues you saw now in Q3 will swing back in Q4?
Yeah, we tend to have a seasonality effect in the deferred as well. It's a bit about the timing when how the player behavior is happening. Yes, you would tend to see a normalized pattern or maybe a flat pattern in Q4. It's difficult to make any future statements on that one.
Okay, perfect. Thank you.
The next question comes from the line of Lars-Ola Hellström from Pareto Securities. Please go ahead.
Hi, guys. I'm having a cold, so I sound very bad. I want to go back to speak about the seasonality effect. In the strategy and Simulation, DAUs is down 20% quarter-on-quarter. Can you give us some flavor what you view is a corona effect and what is, so to say, the clean seasonal effect? How to view it in Q4, given that you will not be able to support with UA as strongly as you maybe hoped for?
I think it's very hard to dissect to say that it's X% exactly due to that and so on. Of course, if users have started to pay, the loyalty increases significantly. That is the case. It has been the case for 10 years, the full history of this company. That is very significant if you have games like we have that are built for supporting a paying user and active user for a very long time. It's natural, especially as we have a very high intake during Q2, that the absolute numbers goes down more than it maybe usually do. The more loyal users, the more they will stay for a longer time, and they show the same pattern as we have seen in Q2 2019.
Of course, the non-so-active users, the portion of users that we acquired in Q2 that are not in for the long run, so to speak, they try the game and then they drop out, which is always a portion, higher portion than normal in strategy than it is in Match-Up. That will explain some of that pattern. We are not surprised of these movements at all. It's very much the expected pattern. What is important, maybe going into too much detail, is that Match-Up as a category have a different spending pattern than in strategy. It increases more rapidly. A larger portion of the lifetime revenue for a cohort comes in the early months, but it continues. It's not like Casual, that it's basically where you empty the revenue potential from a cohort within 90- 120 days.
A larger portion than compared to in Strategy, spend their lifetime revenue the first coming, say four, three, four, or five months compared to Strategy. In Strategy, it's very slowly building the LTV curve, but it continues to grow for a very long time. That is exactly the difference in diversification we searched for adding this third vertical, because if we wouldn't have had that, we wouldn't have increased as much as we did in such a short time in March, April, and May. That was very much thanks to that it's faster-moving in Match-Up and to some extent Simulation RPG compared to Strategy. The flip side of that is that it lowers in a more quick way than it does in Strategy.
I think for us, when we analyze the data, it's following the expected pattern, so we don't see any significant difference or deviations or so.
Yeah. Now in Q4, do you see in the strategy and simulation that this strong DAU growth you had in Q2, the click-back in Q3, do you see that some of the DAUs that you expected to be corona players are coming in again in Q4?
As we have said several times, the cohorts from Q2 2020 are looking similar to Q2 2019. We didn't have mashup though, the total portfolio looks different in its behavior. Looking at like for like, the cohorts from Q1 2020 to Q2 2020 for mashup, where we can compare, of course, we have the historical data, even though it wasn't consolidated in Stillfront, are showing a similar pattern as always. The nature of that, the cohorts in mashup differs from the ones in Simulation RPG and in Strategy. It means that it's the same portion of the users that we took in this year that we expect that we can see are spending time and being active as it was the previous, across the line, Strategy, Simulation RPG, and mashup.
It's looking the same, but the blend makes it harder to compare. Also the fact that it was a giant intake in Q2 also makes the absolute numbers larger, if that adds some light to the question.
Given that I expect that you will run more Live Operations during Q4, will it be possible to keep the ARPDAU at Q3 levels in Q4, even with a higher player base?
I think that we have proven that we are strong on LiveOps. We think definitely it's possible to do that. We're not reporting Q4 now. I think there is no reason to expect that we shouldn't be able to keep it. As I said, it's usually a higher activity in Q4 than it is in Q3, which usually supports the ARPDAU. Now you have to put in sorry, perspective from where we come and so on. We have been able to increase it for quite some time. Even though the blend, again, it makes it look a bit funny because all three areas have increased their ARPDAU, the blend over the whole portfolio lowers significantly. That's a mix component rather than the individual games are not performing. Yes, I expect we should continue to do that.
Yes. Finally, going to the success of the Bytro portfolio. In terms of UA, is it that it's mainly towards U.S. players it has been hard to run marketing campaigns while it has been easier or possible to do it for Europe and other regions, and marketing price has not been as high as in the U.S.? Has the Bytro portfolio been growing strongly organically, and would have been growing even stronger if this marketing prices effect hadn't been present?
Long question. I think that it's organic growth we're talking about on the Bytro Supremacy Engine to start with, and I think that we see very strong growth opportunities. In general, the pattern has been unusual. That's why we're highlighting this. It again, doesn't change our view on the growth opportunity for both on the Bytro Supremacy Engine games that has been growing tremendously the last 12, 18 months soon. We hope and think it will continue to grow because it's a very strong product. We also launched the Conflict of Nations: [WW3], which will hopefully support that. Of course, if the volatility is lower and the prices are lower, of course you can grow at a higher pace, still returning marketing spend within 180 days.
That's completely normal, just as it has been in December from the first week of December until the 26th of December, the prices are always higher. Then we lower the marketing, so with that, we still reach the return on ad spend 180 days. On the opposite, the CPIs usually drop significantly going into January where we can increase marketing. We think that trend and the pattern and the attractiveness of our product in the market are unchanged. It's just that the market changes from time to time, and so we have seen now. I think it's an isolated topic, and it will happen again sometime for whatever reason that you see a certain volatility in the market. Yeah, it's how this market works.
Okay. Thank you.
As there are no further questions, I'll hand it back to the speakers for closing remarks.
Thank you. Thank you all for good questions.