Hello, good morning. I am Alexis Bonte, the CEO of Stillfront. I am joined here today by Tim Holland, who is our Interim CFO. Thank you for joining our call today. Without further ado, I will jump into our key franchise activities in Q2 of 2025. We announced during the quarter a very exciting new game, which is the Supremacy: Warhammer 40,000 game. This is part of our Supremacy franchise, and we're doing this game with a major, major IP that is really beloved. We think it's a great fit for our grand strategy type of game that we have within Supremacy. We're very excited about this game. We have also made good progress with Big Farm: Upstead, within the Big Farm franchise, which has entered its technical launch phase.
We are also having successful expansion of key franchises with Supremacy, World War 3, and Ludo Club, scaling and growing well in the quarter. We've also significantly strengthened the setup at our Candywriter Studio. That's the studio that works on our BitLife franchise. We really want that to... That's really a franchise that we believe we can expand and grow. We've completed a new account system to unlock major features there, such as the web shop and also to allow us for deeper monetization. That's a really cornerstone franchise for us in North America. We've also initiated the move of the Word franchise from Super Free in North America to Moonfrog in MENA and APAC. This is part of our strategic review. I'd like to have a little spotlight on our direct-to-consumer efforts, which have really kind of been driving a lot of our gross profit improvements.
We have been really able to grow the DTC share that we have in many, many of our key franchises, and that really puts us in the situation where we are an industry leader in terms of DTC efforts. This comes really from a lot of historical know-how and efforts. Those of you who follow us for a long time know that a lot of the roots of Stillfront and Stillfront Studios come from the browser game days. As a result, we have a very, very strong and performant payments hub that allows us to power these direct-to-consumer efforts. It's really a key advantage for us that allows us to really maximize why we're able to do that and allows us also to rapidly adapt to new opportunities on this front. For example, we were able to leverage the U.S.
legislative changes for iOS and have an immediate positive impact across several of our key franchises by growing the DTC share there as well. You can actually see that from 2023 where we had a 26% share of direct-to-consumer, we've grown that to 33% in Q2 2024, and that's now at 39% in Q2 2025. As you see, the share of third-party stores is declining where it was at 61% in Q2 2023 and is now at 49% in 2025. Obviously, this is the part of our revenues where we have to pay a 30% revenue share to the third-party stores, whereas in terms of direct-to-consumer, our margins are much, much bigger. We've also done some trials for expanding our direct-to-consumer service to the more casual games. These trials have been successful, and we will expand this to BitLife in Q3 of 2025.
Looking at our business areas, focusing first on Europe, we had net revenues of SEK 653 million. That's an organic decline of 14.5% year- on- year. If we look at the key franchises, the decline was slightly less. Really, the drivers there were, first of all, the year-on-year comparables for Albion Online. We had a server launch last year during the same period, which obviously made a big difference. Also, the underperformance in our kind of narrative segment, which we are addressing and working on. USC was at SEK 243 million, representing about 37% of our net revenue. There, we saw some opportunities bigger towards the later part of the quarter, which allowed us to invest a bit more USC than we would have expected in the quarter, and we expect that to pay back in the remaining quarter.
We thought that's a good sign and a good opportunity for us. In particular, we found some good possibilities around our Supremacy franchise. Adjusted EBITDA came in at SEK 132 million, so a 20% EBITDA margin. Moving on to North America, we continue with our turnaround and restructuring efforts. Tim will later talk about the cost savings, and the bulk part of our cost savings came from North America restructuring. We achieved SEK 309 million of revenues there. That's down 18% year- on- year on an organic basis. USC was at SEK 174 million.
There, we were kind of very conservative in terms of USC around the Word franchise and some other parts of the portfolio, but we were actually more aggressive in terms of the USC in our investments with BitLife and Candywriter as we're kind of investing in that franchise and seeing possibilities of good returns in the future. Adjusted EBITDA continued to be positive at SEK 13 million. That's 4%. This is down versus Q1, but that's really mostly due to the change of the Storm8 legacy games that we've moved from Storm8 to Imperia, and those were being legacy games and games in which we have available USC investments. These were games that were high on cash flow. Actually, if we didn't account for that move, we would have had a roughly similar EBITDA margin in North America versus Q2.
If we go into MENA and APAC, this is a region that continues to grow for us. The growth was really driven by the performance of our key franchises that grew by more than 15% year- on- year, there with revenues overall of SEK 473 million. We had lower USC than year- on- year of SEK 20 million and also versus the previous quarter. That's really due to less investments in our publishing divisions on UA with 6waves and Babil. We continue to be looking at potentially new publishing titles there, but for the moment, we are kind of going conservative with these studios. Adjusted EBITDA continued to be very, very solid at SEK 261 million, which is a 55% EBITDA margin. With this, to go look at the overall picture, I will pass on to Tim. Tim, please go ahead.
Thank you, Alexis, and good morning, everybody. My name's Tim Holland. I am the Interim Group CFO. Net revenue declined by 11.3% organically to SEK 1,436 million. I should note we did face currency headwinds in the quarter year- over- year of about 6.3% affecting the absolute net revenue figure. User acquisition expense came in at SEK 436 million, down from SEK 462 million in Q2 2024. As Alexis mentioned, one of the bigger drivers of our UAC decline on an absolute basis was BA North America, and specifically, it was related to Super Free titles. As we reported, we plan to move those titles or the Word franchise from BA North America to BA MENA APAC. Looking at adjusted EBITDA, that came in at SEK 374 million, down from SEK 505 million in Q2 2024.
Part of that decline, of course, is decreased net revenue top line, but a portion of it is due to foreign exchange headwinds, which amounts for about SEK 30 million of the SEK 130 million absolute decline. Happy to report, free cash flow came in at SEK 1,089 million. That's the third consecutive quarter in a row that we've reported LTM free cash flow of over SEK 1 billion. We reported it in Q4 2024, we reported it again in Q1 2025, and now we're reporting again in Q2 2025 over SEK 1 billion free cash flow on an LTM basis. Next slide, please. Looking at cash flow a bit closer, cash flow from operations came in at SEK 362 million. Of that, cash flow from operations before net working capital was paid financial expenses of SEK 81 million, down year- over- year from about SEK 98 million.
The driver for that decrease is reduced interest rate expense based on our reduced debt, but also due to reduced reference rates. We also had taxes paid of SEK 45 million, and that's flat year-over-year. Moving to net working capital, changes in net working capital had a positive impact of SEK 21 million. That was driven by receivables, SEK +25 million, offset by payables of SEK -4 million. I should note that in Q1 2025, we had a negative net working capital adjustment of SEK 51 million. You're seeing that natural progression back and forth with regards to our net working capital. Cash flow from investment activities was SEK 713 million, driven by the settlement of our cash earnouts, SEK 590 million. I should note all of our earnouts related to 2024 performance that are paid in 2025 have been settled in Q2 2025.
We also had investment of product development that came in at SEK 119 million. When you look at the comparable period and compare that against net revenue in fiscal 2024, it was 8.7% of net revenue what we capitalized. In Q2 2025, it's down to 8.3% of net revenue. Cash flow from financing activities came in at SEK 332 million+ , and that's because we had changes in our net borrowing where we took on draws from our RCF to fund earnout liabilities. This is natural this time of year. If you look at the comparative period from last year, we did take on additional debt to fund those earnouts. Lease payments of SEK 9 million are comparable year-over-year. To end on the top left box, we did share buybacks in the quarter of SEK 60 million.
Looking at our free cash flow on an LTM basis, like I said, we are above SEK 1 billion on an LTM basis for free cash flow at SEK 1,089 million. That's compared to LTM Q2 2024 of SEK 737 million. One of the drivers for that is networking capital, but it also is being driven by reduced product development. The right table is really what we did with the free cash flow. Acquisition and divestment of businesses is primarily related to our earnout payments. SEK 576 million of our earnout payments came from that acquisition and divestment of businesses. We also had our minority payouts for Dorado. That's the balance between the SEK 576 million and the SEK 618 million. We had change in borrowings of SEK 157 million. We paid down borrowing of SEK 157 million over the LTM period.
Compared to the comparative period, LTM Q2 2024, you can see that we actually took on debt during that time period. That's our commitment to deleveraging the business. Finally, on this slide, we did share buybacks of SEK 222 million. We view this share buyback program as quite successful, as it achieves two things where we buy shares for earnout recipients. We believe the share is undervalued, so we're buying and getting a benefit that way. Additionally, we're buying shares and then giving them to the earnout recipients instead of issuing new shares and not diluting our current shareholders. Next slide, please. Looking at our financial position, our total debt profile in Q2 2024 came in at SEK 6.2 billion. That includes all net debt plus all earnout debt.
You can see from Q2 2024 to Q2 2025, we've deleveraged down by almost SEK 900 million to SEK 5.3 billion on the far right there in the left table. The maturity profile remains strong. That's the middle table there. The first maturity or larger maturity that we do have is in 2027, and that's the RCF. That's followed by one of the bonds that's due in 2027, followed by the SEK term loan. The point is we don't have any significant refinancing to do until 2027. Finally, on this slide, our net debt to EBITDA, our leverage ratio, including cash earnouts for the next 12 months, came in at 2.18. That's rounded here to 2.2. Compared to Q2 of 2024, it was 2.15. We do naturally see an increase in our leverage ratio in Q2.
That's primarily due to the fact that part of the calculation is the earnouts that are due on a cash basis in the next 12 months. Now we've added the cash earnouts that are due in 2026 to the 2025 Q2 calculation. You do see that natural increase that occurs this time of year. Also affecting that calculation is reduced EBITDA on an LTM basis. Next slide. This is the last slide I'll go through before I hand it back to Alexis. As you know, we reported SEK 225 million in annualized cost savings. Part of those cost savings are fixed cost savings, and part of them are, of course, direct cost savings. You can see these coming through in our financials, specifically with regards to BA North America and our staff cost. If you look at staff cost for BA North America, it's down by over 50%.
The majority of the cost savings are coming from BA North America. Additionally, when we're looking at direct costs, you can also see that in our business and specifically gross margin. You can see that it's increased year-over-year from 80% to 82%. That's driving this cost saving program. Specifically, you can see our DTC share increasing, as Alexis mentioned. Going forward for Q3 and Q4, we, of course, believe we will be within the announced range of SEK 200 million- SEK 250 million savings by the end of Q4. We do expect this value to fluctuate over time if we choose to take on further costs related to investing in our key franchises. However, we will make cuts in terms of cost if we believe it makes sense. With that, I want to thank you, and I'll hand it back to Alexis.
Thank you very much, Tim. As you can see, we've continued the quarter with our disciplined execution of our strategy in terms of, first of all, focusing on our cost structure and making sure that we reach the targets that we set ourselves on that front. More importantly, the key focus going forward is to really focus our investments on our key franchises. We really are now in the position, we think, to go on the offensive there. We see that all the efforts that we've done in Europe, we expect them to start paying off in H2. We're already seeing the first results, in particular with the Supremacy franchise, and we expect that to continue going forward and be boosted forward by the Supremacy: Warhammer 40,000 game launch. We see that the bulk of the savings now in North America have been done.
We still have the Super Free move in Q3 that will be an additional part there, but we are in a situation now where we also can start being on the offensive in North America from a profitable base since Q1 and Q2 and going forward. We are feeling very, very confident about the future there and our ability of really driving the results that we want by focusing on these key franchises. Obviously, part of H2 is going to be also dependent on the successful launch of new games that always carries some question marks in terms of how big of an impact it will be.
The latest game that was launched successfully was Sunshine Island that fairly quickly went on to provide revenues of SEK 40 million-SEK 50 million a quarter, but every game is created differently, so we'll have to see how quickly the new games will basically scale. We definitely will be very disciplined and very cautious about how we make those launches and make sure that we don't burn any bridges. If we have to delay something by a week, if we want to change some pushes, but if we see an opportunity and we see an opportunity to deploy a lot more UA than we expected because the game is really performing very well, we will also do that. At all times, we will continue to focus on making sure that we're delivering strong margins and strong cash flows, as you've seen we've continued to do in Q2.
We continue to execute on the strategic review that we announced just a few months ago. As we've explained, we've done the first small steps of that strategic review with the closure of our Dream Garden game that was basically closed, and also with the future move of the Super Free games and the effective closure of that studio to basically have the Word franchise work within Moonfrog, where we think we have the depth of talent to really execute well on that franchise. That's really the main things that we're focusing on going forward. We are not happy with the Q2 kind of organic development. Yes, there was a slight improvement versus Q1, but we would have ideally wanted to see a better outcome in terms of top line.
We think we've been able to, through our discipline, really deliver or even over-deliver in our cost savings program, and we've been able to also deliver on our cash flows. Going forward towards H2, as I said before, it's back. We're going back on the offensive with the kind of major improvements in terms of some of our key franchises, lots of really interesting live operations, new features, and obviously the launch of new games. With that, I will ask Tim to rejoin me, and we will open for questions. Thank you very much.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. Next question comes from Nick Dempsey from Barclays . Please go ahead.
Good morning, guys. In terms of organic revenue growth in the second half, can you just maybe lay out the kind of range of possibilities, not necessarily in numbers terms, but are we talking about the main flex versus what the sort of top and bottom of the possible ranges being related to the new games? What about in terms of how quickly the Super Free franchises roll away? What are the other factors that determine the kind of top and bottom of the potential organic revenue growth range for the second half? Second question, we're now talking about sunsetting some of the Super Free games, Word going over to Moonfrog. Could there potentially be a bunch of other things like that?
In other words, could there be a kind of drip feed of news of revenues that we need to start taking out, or is this going to be the main one?
Yeah, thank you, Nick. I'll start with the first question in terms of H2 organic growth. As I said, we're now going into numbers. We do expect during H2 a significant improvement in terms of our organic growth profile. As you've seen, we're not stating that we think that we'll return to positive organic growth in Q4 yet. The reason for that is, yes, there's a bit of uncertainty always when you're launching a new game. You might have to delay a game by a week or two to make sure that you get the best performance, and we just want to be cautious. We do have a lot of things that also give us the confidence that we're going back on the attack in H2.
We're seeing really good traction even without the launch of the new game yet within our Supremacy franchise where we have some large updates coming up. We think that will carry. We're seeing some really good signs in terms of Europe and RBA Europe, where, as you know, we've really been focusing on the last quarter of our investments, and we really think that's going to start paying off in Q3 and Q4. That's really the bulk there.
One of the things that's contrasting that a little bit is North America, where we want to continue being very disciplined in terms of the UA investments, where we really think that BitLife can be a cornerstone for future growth, but we need to see the results and the impact of the features improvements that we're making to the game before we can really commit to what kind of effect that will have. We prefer to be a little cautious with North America. In terms of MENA and APAC, as you've seen, the key franchises continue to be solid. We are seeing a little bit of weakness in one of our Moonfrog games called TPG, which is not a key franchise. That's dragging down our performance a little bit there.
Also, the Babil and the 6waves games that, as you know, are our publishers where we're looking actively for ways to grow that. That's overall the picture of how we see H2. There's the reason we're being slightly more cautious than we've been before in terms of where we think we will be. We are very confident that the improvements will be significant in H2 versus H1 in terms of organic growth. I don't know if Tim, you want to add anything to that question?
No, nothing further to add. That was complete.
Yeah, and in terms of Super Free, you know, moving to Moonfrog, so basically the Word franchise moving to Moonfrog, as you see, we also prior to that at the 24, I think it's 24 or 28, Storm8 legacy games that moved to Imperia. Obviously, as part of our strategic review, we're looking at various things. We're also looking at buy investments, not just studio closures. We basically are looking at that as a whole, and we will kind of report back depending on the results of that strategic review. We're not excluding potentially doing other moves if we see that that brings a cost savings and also the ability to operate the games in a better way and potentially either slowing their decline so that we can extract more cash flow from them or even potentially pausing that decline or returning them to growth. Thank you.
Thank you, guys.
Yeah, good.
Next question comes from Rasmus Engberg from Kepler Cheuvreux. Please go ahead.
Hi, good morning. Can you hear me?
Yes, we can hear you.
Great. Can you elaborate a little bit on what kind of questions that you discuss in your strategic review? Specifically, if there are assets that would seem to be worth more or where you can have bids that are clearly above your own valuation, would that sort of be something that you jump to, or how's your thinking around that?
Yeah, I mean, without going into too much detail, for obvious reasons, Rasmus, as we announced in the strategic review, we have a very wide scope for the strategic review. We are basically really discussing every part of the company where we think we can create shareholder value in the best conditions possible. We are under no pressure to do anything radical. We feel that, as you've seen, we were able to deliver very solid cash flows. We are confident that the organic growth trajectory is going to start moving in the right direction in a more pronounced way in Q3 and Q4. Yes, we're looking at everything, but at the same time, we want to make sure that we do the right kind of deals, both for our shareholders and for the company going forward.
With this move of the Word games, does that mean that they're going to be kind of immediately profitable, or what's the timeframe for that?
Tim, why don't you take that question?
Yeah, I mean, in terms of the Word franchise, as noted in the report, in 2024, it was SEK 300 million in terms of net revenue, but it was a - 9% in terms of EBITDA margin. The question is, you know, will we run them profitably? Of course, we'll run them profitably. That's one of the reasons for us moving those titles to BA MENA APAC. The revenue is coming down year-over-year in terms of the Word franchise, but we believe it has its best shot in Moonfrog and BA MENA APAC for success. We will be moving those titles closer to the end of Q3. For your forecasts, you can sort of pencil that in.
All right, cool. I forgot the question. Sorry about that. I'll jump back in the queue.
That's fine.
I think I'll come up.
That's fine. If I can just put a bit more color as well, one of the reasons we selected to move this to Moonfrog was not just for cost reasons. It's also a lot of the team at Moonfrog are former Zynga team members who have a wide experience in working with Word games. We actually think that we can level up the quality of the team that's working on those games as well.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Thank you very much for joining the Stillfront Q2 call. As Tim and I have stated before, we continue with the disciplined execution of our strategy. At the same time, we think that a lot of the efforts and a lot of the difficulties are behind us. We feel very confident in improving significantly our organic growth profile during the second period of the year. We are also very excited about the new game launches that will come during the year and also some of the updates in our key franchises. That being said, thank you and I wish you a good day.
Thank you.