Good morning, everybody. My name is Lars-Johan Jarnheimer. I happen to be the Chair of Stillfront's Board. Before I hand over to Alexis and Emily to take you through the quarter, I would like to say a few words about the announcement we made last night. First, on behalf of the board, I want to thank Alexis. He took on the role at a challenging time and has led Stillfront through a decisive period of strategic and organizational change, including the focus on our key franchises that you will hear more about today. He will lead Stillfront until November 1 and will be available to the incoming CEO after that date to facilitate a solid handover. Secondly, I am very pleased to announce that Marcus Jacobs will assume the position President and Group CEO on November 1.
Marcus has an extensive experience in the industry, including many years in King's executive management and Candy Crush, which became one of the world's biggest mobile games. He knows Stillfront well from his time on our board. He was on the board for almost four years. After a tough recruitment process, the board is, of course, convinced that he is the right person to lead Stillfront and deliver on our strategy. With that, thank you for listening to me, and I will then hand over to Alexis. Please go ahead.
Thank you, Lars-Johan, and good morning, everyone. I am joined today by our CFO, Emily Villatte, and we will go over the quarter with you, and then we will open up for a few questions. The third quarter continued to show that our strategy is working. Net revenue was about 1.3 billion SEK, corresponding to an organic decline of 1%. That is in line with the second quarter, and it means our organic revenue has now been broadly stable for three quarters in a row, after declines of 8% and 9% in the second half of last year. Behind that our key franchises grew organically by 8%, driven by BIG, Empire, and Board. It was their fifth consecutive quarter of growth, and our key franchises now make up around three quarters of our revenue while our other games continued their planned decline. Our franchise model is consistently profitable.
Adjusted EBITDAC was 366 million SEK with a margin of 28%, and free cash flow rose to 250 million SEK, which was used to reduce our debt. The profitability is backed by long-lasting players who expected a steady flow of new content. Delivering that effectively is where AI comes in, and it is already part of how we build, market, and operate our games. For our teams, it is a force multiplier. They produce more, test ideas faster, and spend more time on the player experience. Our engineers use AI agents to write, review, and test code, which also makes it affordable to modernize some of our older games. AI also lets us explore new formats. Our team in Croatia has launched ReelSaga, a short-form drama app that combines AI-assisted production with the audience building and monetization know-how from our games.
It's an early-stage experiment, and any further investments will be tied to results. Finally, we remain well-positioned for long-term profitable growth. Before going into the franchises, I'd like to take a moment to introduce our business for those of you who are new to Stillfront. We're a global games company focused on free-to-play games with long life cycles and highly engaged player communities. Around 32 million people play our games every month. Our strategy is centered on seven key franchises where we focus our resources to drive scalable growth and long-term value. Our portfolio is highly cash generative with a proven track record. With that, let me take you through the key franchises, starting with Jawaker. Jawaker reported net revenues of 228 million SEK, corresponding to an organic growth of 3%.
That was against a strong comparison of 16% last year, so Jawaker held on to the higher level it reached then. The player base continued to widen beyond Jawaker's core markets. We had more daily players than a year ago and more paying players in markets across the wider region where we are expanding through reseller partnerships. Around four-fifths of Jawaker's revenues come from players who have been with us for more than two years. That loyal, long-standing community drives network effects and reduces reliance on paid marketing. This is what makes Jawaker such a steady contributor to our profitability. As a reminder, Jawaker had an exceptionally strong fourth quarter last year with a lot of sales activity, which makes for a tough comparison. Supremacy now reported net revenues of 290 million SEK, corresponding to an organic decline of 10%.
This was against an exceptional third quarter last year when Supremacy grew 31%. Last year's quarter benefited from favorable marketing conditions linked to world events. Fewer new players joined this quarter as we kept marketing tied to returns in a more challenging user acquisition environment for that franchise. At the same time, revenue from our long-standing players grew. Supremacy: Warhammer 40K remains in soft launch. The focus is on refining both engagement and monetization before we scale it to a global launch, and we are taking the time to get that right. On BIG, BIG continued to perform very well in the third quarter. Net revenue amounted to 171 million SEK, corresponding to organic growth of 78%. Big Farm: Homestead, which launched globally in the first quarter, has almost doubled the franchise in a year, and Sunshine Island continued to grow year-on-year, supported by new features.
The franchise's revenue held at the second quarter's level, even as user acquisition investments continued to normalize after the launch. This demonstrates our ability to expand an established franchise with new games, and to take what we learn into one game from into the next one. BitLife now. BitLife reported net revenue of 100 million SEK. That corresponds to an organic decline of 2%. Unlike the last three quarters, the franchise is now compared against a like-for-like UA strategy as we refine our targets and profitability in the region last year in Q3. The core BitLife app returned to growth, supported by higher advertising revenue and new content, including the movie director expansion in August, while smaller titles in the franchise declined. Empire. Empire delivered on another strong quarter, with net revenue of 105 million SEK, an organic growth of 22%. It was the franchise's third consecutive quarter of growth.
Empire celebrated its 15th anniversary in August, which resulted in the franchise's highest monthly revenue since March of 2024. For a game that has just turned 15, that says a lot about the strength and loyalty of its community. At the same time, the team continues to invest in the new game for the franchise, Empire: Titans & Dragons. Albion reported net revenue of SEK 91 million , corresponding to an organic decline of 9%. The comparison quarter was lifted by The Crucible, a creator event which was held in Q3 last year. At the end of August, we released the Dragonfire update with a new area and a 20-player raid. It lifted player activity in its launch week, but engagement softened afterwards, so it did not give us the lasting lift that we had hoped for. Board continued strong development in the third quarter.
Net revenue amounted to 71 million SEK, corresponding to organic growth of 16%, against a strong comparison of 27% last year. More Ludo Club players chose to pay, particularly in Brazil. Growth in app purchases was led by new weekly subscriptions, which together with passes, accounted for more than half of the increase. Both give players regulars ways to take part in the game, the kind of recurring engagement our franchises are built on. In Other Games, Other Games reported net revenue of 316 million SEK, corresponding to an organic decline of 23%. That is in line with our plan to focus investments on the key franchises. Other Games now make up 24% of group net revenue.
That is down from 35% a year ago. Several titles are stable or growing with little or no marketing, including Simutronics and the older Storm8 games. Other Games remain profitable and continue to generate cash for the group. This was also the first quarter without OFM Studios and the Gameberry royalties. With that, I hand over to Emily to take you through the financials in more detail.
Thank you, Alexis, and good morning, everyone. What a big day. Let's go through the financials for our third quarter. We reported net revenue of 1.3 billion SEK for the quarter, which represents an organic decline of 1%, compared with a decline of some 8% in the same quarter last year. As Alexis noted, this was driven by our key franchises, which grew organically by 8% year-on-year, offset by a decline of 23% in our Other Games portfolio. On an absolute basis, net revenue was down 6% year-on-year. Here we have the impact from our divestments of Narrative and OFM Studios, and also the end of our Gameberry royalties. These together had a negative impact of around 4.5 percentage points. Notably, unlike in recent quarters, currency had almost no effect.
Our gross margin was stable at 83% as a higher share of direct-to-consumer bookings offset the end of our Gameberry royalty payments, which carried no direct costs. DTC actually accounted for 47% of bookings, which is up from 44% in Q3 of last year. The increase came mainly from web shops launched in more of our games, for example, BitLife. It strengthens both our margins and our direct relationships with our very loyal player communities. Moving on to UA, which amounted to SEK 307 million in the quarter, down from SEK 336 million in Q3 of last year. This corresponds to 24% of net revenue, compared with 25% last year. The decrease was mainly driven in our Other Games portfolio, where UA came down to 14% of net revenue from 20%, and by lower investment in UA in Supremacy, as Alexis noted earlier.
This was partly offset by higher investment in Big Farm: Homestead, which continued to scale. In the key franchises, UA was flat year-on-year, representing 27% of net revenue. Sequentially, UA decreased from SEK 340 million following the launch of Big Farm: Homestead and Albion's launch on Xbox in the first half of the year. Our approach to user acquisition is unchanged and remains dynamic and tied to returns, and we apply strict return criteria. We invest where we see returns, and we of course hold back where we do not, as we did in Supremacy, which saw a more challenging environment this quarter. Adjusted EBITDAC amounted to SEK 366 million , which is a decrease of 16% from SEK 436 million last year. Our EBITDAC margin was 28%, compared with 32% last year and 29% in the second quarter.
The decrease was mainly driven by lower net revenues, which came largely from our divestments and the end of our Gameberry royalty payments, together with higher personnel costs. This was partly offset by lower UA and a higher share of DTC bookings. It should be noted that personnel costs amounted to SEK 256 million , compared with SEK 231 million in last year, and this increase mainly reflects targeted investments in our key franchises and higher accruals for performance-based incentives. This was partly offset by lower personnel costs in Other Games. Profitability remains strong, supported by steady delivery from our community-led franchises such as Jawaker and by disciplined marketing investment. Moving on to our cash flow.
Cash flow from operations actually increased this quarter to SEK 383 million from SEK 310 million in the same quarter of last year, and this was even after tax payments of SEK 100 million made in the quarter. Working capital contributed SEK 70 million , mainly from timing effects in receivables. Cash flow from investing activities was a negative SEK 122 million related to product development of SEK 190 million . Cash flow from our financing activities was a negative SEK 421 million, and the strong cash generation in the quarter allowed us to amortize SEK 377 million on our credit facilities, which is in line with our focus on reducing debt.
Free cash flow for the quarter increased to SEK 256 million from SEK 183 million last year, and on an LTM basis, free cash flow was around SEK 1.1 billion , or SEK 913 million if we exclude the Gameberry settlement. Over the same period, SEK 469 million went towards earn-out payments, net of the proceeds from divesting Narrative and OFM Studios. SEK 446 million went towards deleveraging, and we also completed SEK 220 million in share repurchases, which went towards the settlement of earn-outs. To summarize, our underlying cash-generating capacity remains very healthy. Turning to our financial position, where we ended the third quarter with total net debt of SEK 4.4 billion , including all earn-outs. This is down from SEK 4.6 billion last quarter and a reduction of more than SEK 650 million from SEK 5.1 billion a year ago.
Net debt including next 12 months cash earn-outs was SEK 4.2 billion , and our leverage ratio was stable sequentially at 2.2 times as lower net debt was offset by lower EBITDA. Our liquidity remains sound with SEK 458 million i n cash and SEK 1.3 billion in unutilized credit facilities. If we look at our maturity profile, the remaining earn-outs of SEK 671 million are to be settled in June 2027. All our external debt matures no earlier than 2028.
You will also recall that in July of this year, we extended our EUR 60 million EUR term loan facility with the Swedish Export Credit Corporation to September 2028, for which we are very grateful. With all of this in mind, looking at our maturity profile and our earn-outs coming up, it is really clear that 2027 is an important inflection point for us. When the remaining earn-out obligations are settled, significant annual cash flows will be released, which strengthens our ability to deleverage, and this remains our near-term capital allocation priority. All right, I will hand back to Alexis to wrap up.
Thank you, Emily. Before we open up for Q&A, I would like to summarize our priorities going forward. First, our focus on key franchises is delivering. The third quarter again showed that our key franchises are the main driver of Stillfront's organic development. We grew for the fifth consecutive quarter. We will continue to invest with discipline where we see clear potential to generate value. Second, as Lars-Johan said, the board has appointed Markus as my successor, and he will assume the position on the 1st of November. After the 1st of November, I will remain available to Marcus to facilitate a solid handover. We build games that players return to year after year. Across our key franchises, player lifetime value is around three times acquisition cost. Some franchises barely need that investment.
Jawaker grows mainly through its community with very little marketing, and its players have already returned many times what we spent to acquire them. Combined with one of the industry's highest direct-to-consumer shares, this supports durable high-margin revenue. I also want to thank everyone for taking their time to tune into the call and listen. With that, we are ready to take your questions.
If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Rasmus Engberg from Kepler Cheuvreux. Please go ahead.
Yes. Hi, thanks for taking my question. Let me just first thank you, Alexis, for this time, and I wish you the best of luck going forward. Secondly, just wanted to know if you could share some light on your strategy for UA in the fourth quarter. It's such a big quarter, but it's also a fairly expensive quarter. How does it look right now in terms of deploying UA? Is it still a bit of a difficulty, or are you running full throttle, or how should we think about that for Q4?
Yeah. Thank you, Rasmus, for your kind words. I will let Emily complete, but basically, the strategy for Q4 in terms of UA is always the same as we've had before, where we see opportunity and the strong return on our marketing investment, we invest. If we see that we need to throttle back, we do that. Emily, maybe you would like to build on that.
Yeah, sure. As you know, Rasmus, we do not guide on specific line items. We have been clear on our strategy. We will deploy UA where we see the required return on ad spend that we require for our different franchises, and we will pull back if we do not see that return. You will know historically that UA has been between 25%-30% in a usual quarter.
This quarter, we were actually a little bit lower at 24%. If we are able to deploy a little bit more than that in Q4, that would be because the marketing environment allows us to do so. We know, of course, that in what we call Q5 around Christmas time, it is an interesting time to build our player base and attract new players, but the amount that we spend will be entirely dependent on the marketing environment and adherence to our strict UAC criteria.
Sure. I was just wondering because I think we have seen contract costs go up throughout the year, more or less at least. Is there any update for what it looked like in Q3 and maybe going into Q4? Is it still on high levels, or is the weak consumer having an impact the other way, or what does it look like right now, if you could give us any hint on that?
Excuse me, Rasmus, which cost were you referring to?
The CPMs or whatever you want to use. The cost for acquiring. Is it high or is it-
Understood. First of all, it really depends per franchise. That's why I say we're very dynamic in terms of our allocation of UA. In Q4, it is true that for certain franchises, most of them, the cost tend to go up because of the entry into the Christmas season, and all that sort of stuff. But then also we have the opportunity right after Christmas in the Q5 period that Emily referred, where actually the prices usually tend to go down quite a lot and you have an ability to push. So we believe that kind of seasonality will be the same this year as in previous years. Again, it will depend on which franchises. There will be different types of impacts on certain franchises. But I know, Emily, if you want to build on that.
I think that's comprehensive. I will note that some of our key franchises, like Jawaker, deploys very little paid marketing, so they have less exposure to that environment.
Just as a huge fan of Warhammer, I happen to notice that there are similar games coming out on maybe on other platforms, but you have both Dawn of War coming out probably quite soon in February, and then you have Total War: Warhammer 40,000 coming out. Is that crowding the market, or does it add appeal to a product like yours?
Yeah, you and me both are fans of Warhammer. That's also one of the reasons we want to get it right. I actually think that everything that is happening, again, around the Warhammer universe just makes that universe more dynamic and more vibrant. We believe that the type of game and experience that we're offering with Warhammer, and you can see it in the Google Play reviews and the App Store reviews, resonates with a fan audience and really gives them a different experience. We actually think that the increase of engagement around the whole Warhammer experience will help us specifically because we are delivering a very specific fan experience.
Okay. Thank you so much.
The next question comes from Nick Dempsey from Barclays. Please go ahead.
Yeah. Good morning, guys. Sorry, I've got a dodgy voice. I hope you can hear me okay. Just to focus on the Other Games portfolio, it's only 4% of the business and pretty consistently going down pretty heavily. You mentioned in the release that some titles like Simutronics and the older Storm8 games are stable or growing with little or no marketing, which kind of implies to me that some other ones are declining very heavily with quite a lot of marketing. Is there a series in here which are loss-making now or close enough to loss-making that you can just shut them down? What's your plan for the games that are performing really badly inside Other Games?
Yeah. Thank you, Nick, and we can hear you very well, so no worries about that. In terms of Other Games, there's a different mix of things. I think the one important thing to say about Other Games is, first of all we operate all Other Games in a profitable manner. We're really making sure that they're delivering positive cash flows to the bottom line. The exception being the new game launches that we do within that. So they're really behaving in the way that we want them to behave at the moment. Some of them are actually performing even better than we expected. Simutronics, as we say, is growing. We're seeing some interesting return of form of some of the older Storm8 title as well. So it is really performing as we expect.
Their importance will continue to reduce and will continue to reduce over time as our focus is on key franchises. Also interestingly within Other Games, we are exploring pockets of innovation with new entertainment formats through ReelSaga, which I mentioned, which is a short-form drama app combining our storytelling and audience development expertise with AI-assisted production. It remains validation with further investments tied to results, but you can check it out already in the App Store. So cash flow and innovation, but the games there are very profitable. I don't know, Emily, if you want to add anything to this.
No, I think that's comprehensive, but just add one note. Nick, on your question, are there Other Games that are in heavy decline where we're deploying a lot of marketing? The answer to that is no.
Bye.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Well, with that, thank you very much for joining our call. This is my final results call as CEO, so I also want to thank our teams across the studios and our headquarters and all of you for your interest and support. I wish Markus and everyone at Stillfront every success. Thank you