Welcome to the Stillfront Q1 report 2023. Today I will be presenting Jörgen Larsson, CEO, together with Andreas Uddman, which is the CFO of Stillfront Group. We start with the overview. We think we have a very stable performance with improving profitability in Q1. Our net revenue grew by 5%, our increased focus on efficiency and performance and investing in key franchises have paid off. We will go into details later. Our prime profitability target, EBITDAC Adjusted, improved from 22%-24% year-over-year, which is very satisfactory. Also we start with our buyback program of shares. 10.5 million shares were acquired during the quarter.
You can also see on this slide on the right side that we are a truly global company, which we really see delivers advantages for us, which I will come back to as well. You can both see how our revenues were distributed in the quarter, where we have a good balance between North America, Europe, and Asia, and you can also see our offices represented by red dots. Going into the numbers, as mentioned, net revenue grew by 5% driven by acquired studios. One month was acquired of 6waves into the first quarter. We have positive effects, but we had negative organic growth.
You can see that our revenues were SEK 1,758 million for the quarter, and for LTM it grew by year-over-year by 23% to SEK 7.1 billion, just over SEK 7.1 billion. Our user acquisition was up quarter-over-quarter, typical for the Q1 season, and we continued to deliver with very high ROAS over the whole portfolio, well within the very strict target of 180 days that we have had for a very long time. We continue to do that, which is one of our main effects from that we are diversified, both in geography, but also in the portfolio with many different games, alongside with that we master many different market channels.
We had also in the quarter, which is important, we saw a positive traction during the quarter month by month, which is encouraging, of course. You can also see that we are very steady in the UAC that we have spent looking at LTM. You can see that we are at 25%, and it has been very steady at 26% in relation to net revenues for a very long time. We can be very disciplined. We are very disciplined, and we can see that we have a systematic effect of that turning into growth. You can also see the net revenue bridge on the right-hand side on the different components, organic -5%, even though it was LTM -1% only. We are definitely better than the market without spending more UA, being still disciplined.
We had acquired growth 3% and FX 8% and other, which is the discontinued business in Bangladesh, was -1%. Looking into our earnings, you can see that our Adjusted EBITDAC grew by 15%, which we are very pleased to conclude. As I said, the margin is going up from 22%-24%. We are definitely going with high speed towards our target, which is being in the interval between 26% and 29%. You can also see that we are continuous, very stable on Adjusted EBITDA in this graph. We had in the quarter 36%, and LTM is extremely stable at 37%, only back in Q1 2022 when we still had the positive effects from the pandemic, it was higher.
Otherwise, it's extremely stable in that sense. We also, which is very important for us, we have managed to lower the product and to focus the product development investments, the capitalized product development in relation to net revenue. We are going down from last year we had in this quarter 15.2%, now we are down to 12.8%, and that is also lower than the 13.2% we had in Q4. We are steadily and with cautiously but still steadily lowering that. The important thing is that we're not doing it too drastically because that will be value destructive. We are taking away investment outside our key franchises, but we do invest more into our key franchises because it's just a better return on investment.
Looking into our key franchises, we have managed to expand our key franchises, which is one of the key elements in our strategy that we communicated in our Capital Markets Day in February. To take some highlights from that, BitLife has continued to grow in a very satisfactory way, and we also launched a new product within that franchise for the French audience with very strong performance. It was the number 1 on the charts for downloaded games, and also contributed to strong growth for the BitLife franchise. We also had late in the quarter, late in late March, a very successful launch of Albion East, servers targeting Asia. We are very pleased with that launch and the activity levels, the number of new users, and the contributions.
That has continued into April, and we are very excited about what that could bring and mean for a long time going forward. Shakes & Fidget, very stable, very successful live ops, also contributing to strong growth. Also the Supremacy franchise has continued after so many quarters of great growth to still be growing. It will be more difficult comps as you have seen our Supremacy franchise growing by up to 100% for quite some time. Negatively was Super Free, where we didn't really get the traction that we wanted, partly due to a softer ad market, but also that we focus our efforts and we put the money where it yields the best.
When some product or some franchise loses momentum, it goes into where it yields the best, which is the ones that I mentioned here. All in all, the strategy of focusing on our key franchises has already started to pay off. Going into our active portfolio, you can see that quarter-over-quarter we have a very stable development in both daily actives, monthly actives, and monthly paying users. We have a year-over-year clear decline, which is mainly related to the Bangladesh that we have post operations basically in Bangladesh, but also that we have lowered the UA spending strategy and also, as mentioned, a lower intake in the Super Free Games . Still sequentially, it's very stable.
You can see that we have compensated with a higher average revenue per daily active user, which is also driven by positive FX, but also that we have a larger portion of high-spending games in the mix for the quarter. That is very important and also part of our strategy because many of our largest franchises are in these areas. Which is something new that we start to present now because we think it's important in our efforts to increase the gross margin, is to look at how much we have through third-party stores, which is 63% in the quarter, how much we have directly to the consumers, which is hence our own payment solutions and shops.
Since we have many cross-platform products, and we have increased that in several ways, we are pleased to see the increase from 19% to now 24%. Advertising is down, which is not fully satisfactory, but it's also two parts of that. One is that we saw a softer, slightly softer market, especially year-over-year, not so much Q4 to Q1, but then it's mainly the mix that we have, that we are growing the franchises that are not containing that much advertising revenue. It's not only for bad reasons, it's also for good reasons, namely that other products have been growing at a higher rate. The five largest franchises that we have in our portfolio represents 49% of our total revenue.
They are significant and continue again to deliver good growth and solid performance with a really loyal user bases. As you might recall, we presented at our Capital Markets Day that the Empire franchise passed the impressive number of EUR 1 billion in lifetime revenues already in Q4. Looking at this quite massive slide, I shouldn't go through all the numbers, if you don't want a very long presentation today, but I think it contains a lot of information that could be commented on. You can see the stable growth in bookings year-over-year for Strategy, 11%. Strategy that did strike back, I think I said in Q2 last year, has continued to be very solid.
Sim, RPG, and Action are also have returned to growth very much driven by the Albion East successful launch, even though it was only in the very last few weeks of the quarter. That is, of course, promising, as I said, for looking forward. We have lowered our ROAS within our Casual & Mash-up , and we have also removed games from the active portfolio because as we set higher requirements on returns, it's natural for us to take out some legacy games that are not really meeting what the requirements that we have in our active portfolio. We have also added one product during the quarter, but taken away eight of them makes 71 games in our portfolio.
Importantly, very importantly, that we continue that the group ROAS is again well within the 180-day target, that is, of course, most satisfactory. We also improved the monetization year-over-year across all product areas. Our dedicated teams, the game teams out there are doing a great job in terms of live ops and the results from that. You can also see on the lower right part of that of this slide how the distribution between the three product areas looked in the first quarter. 40% still being largest, then Strategy 35%, and 24% Sim, Action and RPG. With that, I will hand over to Andreas.
Thank you, Jörgen. First, focusing a bit on around the cash flow and focusing around the quarter. In Q1, we had a Cash Flow from operations before net working capital adjustments of SEK 517 million. That's a slight decline of 2% versus last year. That decline was mainly driven that we actually have higher interest costs, so cash interest paid, which is driven by higher reference rate interest. That amount was SEK 67 million, that was SEK 30 million more than the same period last year. Slightly offset by a lower tax payment in the quarter of SEK 43 million versus SEK 60 million. I think one of the key things in this quarter was that we had a negative effect versus a positive effect of net working capital.
The primary driver for that we only got two payments versus three payments in the same period last year for one of our major platform providers. That drives that, and of course, there's a timing effect on that. Cash Flow from operations, that was SEK 381 million in the quarter isolated. That cash was deployed to continue our investments. We had investments of SEK 248 million. That is primarily driven by product development, which was SEK 224 million. That SEK 224 million, what also Jörgen mentioned, is 12.8% of net revenues. That's a 2.5 % points less spend than we had in the same period last year.
Last year, we had intentionally increased the amount of cash we deployed into new products. Also in absolute terms, it's actually a reduction of SEK 31 million in what we actually spend in terms of products. That goes a bit into what we discussed in the capital markets, more efficient use on our capital, putting into the franchise where we know that where it yields the most. In addition to that, we had SEK 16 million, which related to a deferred withheld payment from the 6waves acquisition from the upfront consideration over a year ago. In terms of the financing cash flows, we had some significant activities. The first one, we bought shares for SEK 204 million.
In terms of the share buyback, that was executed, we stated that we would go up to SEK 270 million in total. We executed on SEK 204 of that in the quarter. We also used some of the cash to reduce our revolving credit facility in the quarter. Looking at LTM numbers. First of all, if we look at the Cash Flow from operations before net working capital, that was almost SEK 2.1 billion, an 18% increase versus the same period year-over-year. We had some significant impact on net working capital, and I think that's important that it's also, you know, which quarters or LTM numbers you have to compare.
In Q1 2022, we had a very strong positive impact on net working capital of SEK 156, and now we have a negative of SEK 203. The difference between those periods are mainly driven by receivables. In the Q1 2022 LTM versus this, the same period this year, we had 13 settlements from a big platform provider versus we only had 11 now, which also impacted this quarter. Then, of course, liabilities is also a difference between the two periods, and that impacts almost SEK 200 million. That's driven about timing effects when you settle invoices for user acquisition costs, et cetera.
There is an impact that will of course correct itself over time, but it impacts the Cash Flow from operations in this quarter, which was SEK 1.8 billion, a 3% decline versus the last period last year. I think in terms of our investments in product development, we spent SEK 965 million, that is a 32% increase versus the same period last year. It's important to remember that we only start increasing the investment pace sort of Q3 in 2021. It actually is a decrease in terms of absolute. If you look at the full year 2022, where we spent SEK 996 million, we have actually decreased the LTM number.
That's in our intention to be more efficient, to deploy capital where it yield the most. It's good to see that that also comes through the numbers. As Jörgen mentioned as well, we're not gonna just stop investing. It's important to continue to focus investments just on the right things, on our franchises going forward as well. Then looking at the free cash flow, based on the working capital, it was SEK 846 million. It is a decline. Of course, if you would just adjust for the net working capital effect, it's actually an increase. We would then have generated over SEK 1 billion in free cash flow if you just adjust for that.
That will be a 7% increase. Looking at our, in terms of our debt portfolio, it's been fairly stable. There's quite a lot of activities going on in Q4 where we did 2 refinancing activities. The total debt is, which now when we define as our financial targets also include the short-term earn-outs was at SEK 4.7 billion versus SEK 4.6 billion in Q4, despite the fact that we actually bought shares for SEK 204 million. We used some of our cash to buy our own shares to be able to use that in the future to settle some of the earn-outs. Our leverage ratio was 1.78. That's based on the new financial target which includes the earn-outs.
If we would have used the old one, we would have been at 1.5. It is in line with what we had expected and we are pleased that we are trending in terms of where we want to be in terms of leverage. Not too much and not too little. And we used some of the cash. We have less cash on hand. Some of that cash was used to buy the shares, but also to reduce the revolving credit facility. The revolving credit facility, as you can see, has decreased actually with 160 million SEK versus the last quarter.
We are more efficient in how we repatriate cash from our studios and working very heavily on cash management because the more efficient we can be, the more we can drive down our interest costs as well. The RCF gives us that flexibility to be able to pay back in a much more frequent way than, for example, the bonds. Summarizing Q1, we can already see now there's been an increased discipline in our product development, and that improves the Adjusted EBITDA. That's encouraging. Doesn't mean we should stop investing, but it is more disciplined. We have several margin-enhancing initiatives. We talked a bit about this on the Capital Markets through collaborations, clear identified synergies. It's not gonna happen overnight, but the pace of that is really rapidly increasing.
I think we have around 126 collaborations projects now ongoing in the group, which is of course over time would yield best practices and that comes down in the financials. Here as well, you need to be patient, and we are trending towards our financial targets in terms of our 26%-29% in terms of margin. In terms of our maturity profile, and our cash generation, but also the available funds and the facilities we have, we can continue to work tactically, both in terms of how do we deploy and grow our business. We can work tactically towards our debt portfolio. We now have 14 months roughly to the next bond maturity, and we can also execute on the buyback.
With that said, we had a continuous strong quarter, but we had a quarter that was also negatively impacted by net working capital, but that will correct itself over time. With that, I will hand over to you, again.
Thank you, Andreas. To summarize, and look a bit forward, basically this quarter has been what we hope and expected and what we communicated during our Capital Markets Day. As you have heard from also Andreas, it shows in the financials in different way, but also the way that we develop our key franchises. I'm very pleased with the expansions that we have seen already. This is obviously a long-term work, so it's not an overnight thing, but the pace that we have started this work with has already start to pay off. Focusing new product investments enable us to be more efficient in capital allocation, not only for UA, which we have been good at for many, many years, but we can improve, and we are improving the capital allocation for product investments.
Also, I'm very pleased to see the 126 different ongoing synergy initiatives in the group. That's a massive movement, so it's really something that is happening in practice, not only us stating that on Capital Markets Day or in reporting the numbers. That is really that's the key thing. That is the key theme for this phase in the development and building of the group to the next level. As we have elaborated on, the cash flow is continuously very strong, and we have a good balance sheet. Then of course, we have the networking capital effect that will mend itself over time, as Andreas elaborated on. The cash flow, the basic cash flow, we are pleased with the development and again enabling us to buy back shares and also pay off some of our debt.
We are basically, to summarize, well-positioned to continue to take step towards our financial goals. We are growing already faster than the market, and we have done so for quite some time. but we are also taking significant steps towards our profitability target, the 26%-29% EBITDAC margin. We are taking already from 22%-24%. All in all, we are pleased with the quarter. It was what we hoped and expected, and the underlying activities to take us further is very good. We will return to organic growth, we expect during the second half of the year. and we also expect, by the way, the market will do the same. With that, with these closing comments, I would like to open up for questions. Thank you.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Simon Jönsson from ABG. Please go ahead.
Hi, Jörgen and Andreas. A couple of questions from from me. I'll take them one by one. First, we know that the overall online ad market has been or is very weak right now. You wrote that you saw softness in ad bookings in Q1. Could you specify us a bit more how much the CPMs are down currently?
Well, we haven't communicated an exact number on that, but we see that it's on par or slightly weaker than Q4, but year-over-year it is a larger difference. It's more complex. That's why we're not going out with this individual number because it's so very much momentum driven, and since we are not growing our ad intense products or franchises, then you also get less paid per inventory. It's not only that there are one fixed market price, but our view is that it's softer, and that is elevated through the fact that we're not putting so much UA into these products because we yield better on other products.
Relatively on par with Q4 then. A follow-up on that is if you have seen, again, a positive impact on the user acquisition side, you know, from the softness?
I think we have been consistently delivering, higher and higher spend through IDFA, pre-IDFA and post-IDFA, and also through the weaker market. We haven't seen and felt that, the softer, on the CPI side or the challenges on buying traffic as we have clearly stated, we invest significant and steady amounts, and we still continue to deliver the ROAS within 180 days. On that side, leveraging our strength that we have the diversification, which is a key competitive advantage, we don't have seen any challenges on the portfolio level for our user acquisition.
All right. Overall, how do you view the current competitive landscape, you would say? Have you seen any new trends in the recent quarters? I mean, in terms of competitors releasing new games, investing in new development, investing in UA, appears more aggressive or passive. Have you any view on that?
I would say that it's rather, some companies had explicitly said that they are I think 1 company said that we are not launching any new games. That is what we have seen already from Q4, that launching new games when you need a consistent momentum in your UA to get up to a certain level, that has been more difficult since Q3, Q4 last year. It's not only us experiencing that, but we have met that challenge, I think, in two different ways. We have been very disciplined not trying to spend more to get that momentum. Instead, we have been disciplined and to a higher degree spent our UA on our existing franchises, which really have paid off. Your question is good and very relevant.
The difference that we see is that it's less competitive because in our view, some of our peers or competitors are in the market are lowering their spend and lowering the number of new products that they are launching, and that means a slightly better competitive landscape. I think also when the market is improving in general terms, that will be even more visible in our numbers.
Got it. On the D2C revenues, how much of that would you say is the traditional browser sales versus how much is sales that you've been able to reroute from mobile?
There is no simple answer to that because many of our products are true cross-platform. Many players prefer to play the same, very same game experience seamlessly. Sometimes they prefer the mobile. Then when you should lay out different strategies and you need a larger screen, then obviously the mobile is not the perfect platform to do that. Our players are quite agile in many of our games, moving between the different platforms. Many of them that is not necessarily one-to-one how they choose to pay. We can see that as I, as I mentioned, that more and more of them from 19% - 24% has chosen to pay directly through our shops instead of in the mobile or through third-party stores, basically.
It's to the level that I can describe that, but it's very much driven from cross-platform games.
All right. I was just wondering if you have, for example, been able to reroute players that typically only pay through iOS, for example. Yep.
Yeah.
The last one from me.
To some extent, we do that, of course, that's part of this, but we don't have a specific number of how much that is. We open up opportunities in different way. Also since we have strong growth from Albion that came in this at the last couple of weeks this quarter, they have a very high degree of their payments outside the mobile. It differs with the different franchises.
Yeah, makes sense. The last one from me. You removed some active games from Casual and Mash-up. Would you say that the lower ROAS that you saw in the segment was related to those games or is the ROAS still lower on the remaining portfolio as well?
It is lower in the whole area, so it's not only. I mean, we spent quite low numbers on the games that we removed, hence we took them away because it's not. It wasn't the most marketable in the same way that other products are. Still, the flip side of being very disciplined on spending on how we spend and how we leverage our diversification is to move in real time. We have an extremely rapid reallocation of UA, and these games were not qualifying for that anytime. It's not like we're saying that we're moving away in any way from Casual and Mash-up.
When the CPMs are coming up again and we gain momentum through new products or the existing products, finding pockets of traffic, all of a sudden you get that momentum going, then I will expect that later this year, I hope and think that we can increase with good ROAS also the spending in Casual and Mash-up. That's a super important area for us. They are acting differently, and the stability from Strategy games and from RPG games are supporting us indeed, and has been supporting us indeed. I'm pleased with having an increase there the last year in both these areas.
I think.
All right.
I mean, it's also Q1. We always look over our portfolio in Q1, and then these games still generate revenues. It's sort of how do we deem them as active. I think that should also. It wasn't just that they just disappeared, but we always done this in Q1 each year. What is in our active portfolio? How do we track this? How do we report to the market, et cetera? That's just an addition to that.
All right. Thank you. That's all from me. I'll get back to the queue.
The next question comes from Erik Larsson from SEB. Please go ahead.
Good morning. Two questions. The first one is on deferred revenues. They've been a quite positive contributor the last three quarters. Once you go back into organic growth, is it reasonable to assume that deferred revenue will come down or perhaps go into negative territory?
Yeah, I mean, that is partly driven of the positive deferred revenues. It's also partially driven that you look over your methodology of applying deferred revenues. Yeah, when we grow, that would obviously potentially have that negative effect. It's also when do we get the revenues? Is it the first month of the quarter or is it the last month of the quarter? That also drives that. I think when we steer the business, deferred revenues is not really one of the key drivers. It's sort of an accounting policy that we need to follow. I think it's also The dynamics is not just it depends when in the quarter, but in general, when you have higher growth, the deferrals will go up on the negative side as well.
It is seasonalities in that as well.
Makes sense. second one and final, if you could give any color on CapEx, i.e., how much is of last year, for instance, is attributable to new game releases and how much is related to existing games and maintenance and so forth? If you can give any color on that.
Yeah, I can give color to it, but not absolute numbers. In general, we are focusing our investments, as we said, on our 12, 13 largest franchises. We haven't completely taken away new products. You will see some soft launches during the year and into Q1 next year. We have lowered the share of completely new products. There are new products also in the franchises, which is very important. That is. You have to separate them. Completely new products outside our largest franchises, it will not be many, but we do some things still there because we think it's interesting opportunities. The absolute majority of our CapEx will be on the extensions, new features and also new products, but within the franchises.
Okay, great. Thank you.
Please state your name and company. Please go ahead.
Yeah. Hi, good morning, Jörgen, Andreas. Can you hear me?
Yes.
Yeah. Perfect. Marlon here, Nordea Markets. Just a question on the free cash flow negative impact here in the quarter from the payment cycle from a main platform provider. Can you give some more color here? Do you expect it to return fully in Q2? Can you also quantify the effect here in Q1?
I mean, basically we got two payments versus the normal three from one of our biggest payment providers. I mean, we haven't said specifically how much that drove, but that drove the absolute majority, if not more of the actual negative accounts receivable. That's just the isolated quarter. Then how we expect it, we expect that it will turn to normal, based on the information we got from the payment provider, and we expect, but it's not a certainty that we will get three in Q2, three in Q3, et cetera. That's where we stand on that one.
Thank you. Clear. Also, on ARPDAU, it's up 18% year-over-year, whereas daily active users is down 13% year-over-year here in Q1. Can you give some comments here of the drivers besides FX, as well as if you can dig into some work you have been doing here during the year? Thanks.
Yeah. That's an important point that you bring up. There is an FX effect, but also it's two other forces that are very important. One is that we have improved our capabilities on live ops, especially again, focusing on our largest franchises. Many extensions and new features has been launched, which drives up the monetization, and the monetization is across all product areas, as I mentioned. That is very important, but also that we do invest more. A larger portion of our revenues are within products that have higher monetization. Since it's moving from Casual and Mash-up into Strategy and RPG.
It's both that we are on all across the board are more active and have been more successful in live ops, but also that we have a different product mix that is supporting this, which is obviously something that we strive for.
Okay. Thank you again. That was all for me.
The next question comes from Rasmus Engberg from Handelsbanken. Please go ahead.
Yes. Hi, guys. Just wondered first, you know, how do you see revenues pan out for this year? Do you think we'll have a more kind of, if you could call it normal, seasonality with a kind of better Q2, slight decline in Q3, and then a kind of bigger Q4 again? Or what are your thoughts around how the market seems to be behaving?
Yes, we expect a normal seasonality, just the way that you described here. We should remember that we had a very strong Q2 last year. That's why we are emphasizing that LTM, we had a negative organic growth by only 1%, whereas the market were maybe 6%-8%. That is a huge difference. We actually improved LTM from Q4 to Q1, but it's not only just extrapolating that and expecting that we will be positive already in Q2 because we have tough comps, not the least within Strategy that was extremely strong last year. That larger, more difficult comps. If you take away the comp effect, in absolute terms, we expect the ordinary classical seasonality that you just described.
Thank you. That's very clear. With regards to your portfolio, I didn't quite understand if we take like two, three years out, do you think you'll have more or fewer games in your active portfolio?
I think it's very important for us to have many products in our portfolio so that we will continue to develop and strive for, and the reason again is that that's a foundation in our core strategy, namely that that is making it possible for us if we have many products that are marketable in many different markets with domain-specific knowledge about how it is to market in the MENA region, in Japan, North America, and Europe, and India. That is a key competitive advantage, and also that we master through all the very professional, craftsmen or marketing that we have in our organization, and not the least the data analysts. That is a key thing. We will have more products, but we have just raised the bar.
In this case, a few products, we took them out from the active portfolio because we don't see that they are we can develop them that much. As Andreas Uddman pointed out, it's not like we have shut them down. They still generate money outside for the company, being outside our active portfolio. I hope and think that we will have more products in the future. Important is that these products, to a larger extent, as I explained earlier, are within our franchises. For instance, BitLife DE, and that's a separate product because it's so complex game, a very sophisticated game. It's like building it's not like only translating, it's like building a completely new game. That was a new game that we added.
That strengthened the BitLife franchise, and it is a new product. It's not a contradiction between investing in franchises and getting new products out. As I said, we still have a few completely outside of franchises products in the pipeline. You should not expect that we will lower the number of products with seven or eight per quarter. The opposite. We expect that we will increase the number of products.
I think just to add on the BitLife, that's also 'cause actually BitLife DE and the international version was developed by Goodgame Studios, not actually around from Candywriter. That also shows that it's a clear synergy that drives top line growth and it is an expansion on the franchise, so that the franchise expansion doesn't necessarily need to happen in the studio that developed the original franchise, basically.
Then a question on the earn-outs. This buying back shares and handing them to as earn-out payments, is that a strategy that you think you will continue to use going forward to kind of reduce the potential dilution or whatever?
Yeah.
No, I mean, we made a decision for this year. I mean, we are buying back as many shares or the amount that we can buy back. Naturally, we have a strong balance sheet. We have a cash generative business, and especially when you are perceived as having lower valuations, it makes sense to buy your own shares, to pay for those earn-outs. It was the first time we did it. It doesn't of course rule out that we won't do it again. I think it's money well invested, to be honest.
We also to the AGM that is very soon taking place, we are asking for a new mandate for buying back shares. Again, we must look at what the valuation and share price is, but it's something that we will consider at least next year as well.
Very good. Thank you.
The next question comes from Nick Dempsey from Barclays. Please go ahead.
Yeah, good morning, guys. I've got two questions left. Just the first one. It's been a number of quarters now that Super Free has performed, I think, worse than your hopes. Could it make sense now to just sell that unit to remove the drag on organic growth in the group numbers rather than just deprioritizing it regarding your investment, given that organic growth is such an important thing for the way we think about the group? Second question. We've seen another acquisition in the mobile market with Rovio recently. Can you just talk about the potential benefits of scale in your market? If theoretically you were to ever combine with another mobile player, what the benefits would be there?
Yes. Two relevant questions. We have no plans to divest Super Free, and it's important to understand how we think here. All movements with the strategy that we have will be elevated. When any product get momentum, it gets more UA, and it gets more momentum, it gets more UA because the ROAS is improving. When it loses momentum, and this moves very rapidly, and it's also depending on where we are in the market cycle, then we move that. That means that I remember one year, Q1, I think it was, or Q4, just over one year ago, we had many questions about Strategy. Why can't you get Strategy going more?
For quite some time, Casual and Mash-up were growing very much, or even more clear during the pandemic when it was growing the Storm8 products, were growing 70% in weeks, being the largest studio. The strength of our portfolio Strategy is that we have products of different categories. And having rapid moving products like Super Free products is very important for us because when the market starts to grow again, they will grow much faster than Strategy can do in 9 out of 10 cases because it's a faster-moving type of product. To have these different dynamics is key for us. Otherwise, we will limit, and all of a sudden, we don't have that key competitive advantage. Of course, we're not happy with the development, so I understand your question.
I respect it. The other way would have been to put UA and invest in products that are not yielding nearby, where Strategy products has been yielding the last quarters, and that will flip back and forth. Now, as we have seen, Sim and RPG has been regained growth. What if we would have divested that because it was not growing for a couple of quarters, then we wouldn't have had the great success with Albion East. On the other question, there are benefits of scale. In November 2019, we said that we are entering into the scale-up phase for exactly that reason. We stated then in November 2019 that we think at a size of SEK 4 billion in yearly revenues and that is important, also paired with having the diversification that we have been talking about.
If you have one single product on one single market only being marketed through one channel, that is not a strength because then you're very vulnerable. If you have the diversification and different, including different segments like Casual and Mash-up and Strategy, then scale is good. We said that SEK 4 billion with diversification, then we can start to draw synergies. We are up at approximate, just a bit over SEK 7.1 billion, and we see clearly, as we have described, that we are making more and more synergies, 126 ongoing synergies, activities in our group. Is it indefinite that if we would have $70 billion in revenues that we will be 10 times better?
I don't think so, because then again, it's so much other bits and pieces that need to be in place in order to really make it happen, to make these synergies happen. We have built our Stillops platform the last five, six, seven years, which is aiming exactly towards maximizing the opportunities for synergies. If you don't have that or have another operating model or strategy, I don't think that size will be much, much better.
Thank you for your answers. It's great.
The next question comes from Martin Arnell from DNB Markets. Please go ahead.
Hi, good morning, guys. My first question is on the comments you made on the month-on-month improvements in the quarter. Was that mainly the market or your own initiatives that caused it?
Both, actually. We saw that the market was improving, but we were able to leverage that more than the market because we both had the successes with as mentioned and in March with Albion East, but also other products and other updates that contributed to a very strong March. It's a mixed factor. But we see and believe that the market will improve, but we again, to be very clear and repeat that we don't expect the market to be turning to positive organically in Q2, don't ourselves either since we have this, the tougher comps for strategy, so it will be during the second half of the year.
I think we're back on the structural growth that this market have had and actually the paradox in all this is that if you look at the CAGR between 2018 and full year 2022, it is still some 8%-9% CAGR. It's just like it was booming during the pandemic, and then we see that it's going back. It's normalizing, and we hope and expect that sometime during second half we will be back on that track. If it's 3%-5% or 4%-6%, there are different views on what that structural growth will be for the next coming 5 years. I think 3%-5% is a good starting point.
Thank you. That's very helpful. I understand this commentary on that you might not be at positive organic growth as early as Q2, are you aiming for less negative than the minus 5 that you had in Q1?
We.
We're not happy with -5 , so of course, we're always aiming for more. I think, you know, this is not something new in the communication. It's playing out a bit how we expected it when we communicated how this year would play out. It goes in line what we said in the last quarter report and we're sticking to that basically. It's not a new way than exactly how it pans out.
We don't give a specific forecast either. It again, it's a I mean, we cannot operate and build a games company looking only a few months ahead. We are taking the initiatives that we described in detail during the Capital Markets Day, and we see that they pays off. Of course, since we were much stronger than the market Q2 last year, I think it was potentially the largest difference between our performance that was positive organically, the market was very weak that. Of course, we have different more difficult comps, but we cannot just do everything just to save one quarter.
We are building our company to get into the 26%-29% EBITDA margin. We will do that paired with taking market shares and have better growth over time. It will vary from one quarter to another, and that's a necessity, I would say.
As well as we will continue.
Perfect
Very disciplined on our UA capital allocation. I mean, we are continuing to deliver ROAS on 180 days. I think those two combined, I mean, that's sits in our DNA, and I think that's-- is one of the strengths of the group. Of course, you can always increase that if you, if you want, but we are disciplined in that.
Perfect. Thanks, guys. Just a final question, maybe to you, Andreas, on the working capital effect. You mentioned that it should be a reversal over time. Is that in the near term from this effect of the platform provider that changed the payment cycle?
Yeah. I mean, as I mentioned, earlier, I mean, we expect to get three and three and three this year. I think in the comp numbers, as I mentioned on my presentation, there's actually 13 payments in the Q1 2022 versus we now have 11. Over time, that will of course rectify. It is a large payment provider who sets their own calendar. We can't really influence that. It's. They change apparently every few years and that happened this year. We knew that the only the two payments were coming. It wasn't like a surprise. Over time, yes, of course, working capital does neutralize. I would say that will go into the next couple of quarters, not necessarily as the first.
Perfect. Thanks, guys.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Yes. Thank you for listening and putting forward some good questions. We are pleased with our Q1, and we are looking forward to meet with several of you. If not earlier, then we will meet in our Q2 presentation. Thank you for dialing in and asking questions.