Enad Global 7 AB Earnings Call: Mixed Results Amidst Challenges

Enad Global 7 AB ((SE:EG7)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Enad Global 7 AB painted a mixed picture for investors and stakeholders. While there were notable achievements in specific segments such as Palia and Piranha, these successes were overshadowed by an overall decline in revenue, significant underperformance in Big Blue Bubble, and delays in key projects. Despite these challenges, the company’s financial stability and promising growth areas provide some optimism for the future.

Palia’s Strong Performance

Palia emerged as a standout performer this quarter, showcasing impressive growth metrics. The game saw a 77% increase in monthly active users (MAU), a 141% rise in monthly average revenue per user, and a 99% boost in payer conversion rate following its console release. These figures highlight Palia’s potential as a key growth driver for Enad Global 7 AB.

Piranha’s Revenue Growth

Piranha delivered a robust performance with net revenue growth of 112% in local currency and 93% in SEK. The success was largely attributed to the better-than-expected performance of MechWarrior 5: Mercenaries’ DLC 7, which is on track to become the best-performing DLC for the game.

Stable Financial Situation

Despite the challenges, Enad Global 7 AB maintained a solid financial position. The company reported a net cash position with SEK 396 million in cash and secured a new revolving credit facility of SEK 100 million, which remained unutilized by the end of the quarter. This financial stability provides a buffer against the current market challenges.

Overall Revenue Decline

The company faced a significant setback with a 24% year-over-year decline in net revenue for Q3, amounting to SEK 355 million. This decline was primarily due to adverse foreign exchange effects and weaker performance in certain segments, underscoring the need for strategic adjustments.

Big Blue Bubble Underperformance

Big Blue Bubble experienced a notable decline, with net revenue dropping by 27% in local currency and 34% in SEK. The underperformance was driven by lackluster anniversary content and lower user acquisition, highlighting areas that require immediate attention.

Cold Iron Title Delay

The anticipated release of a Cold Iron title has been postponed to Q3 2026, necessitating an additional investment of approximately $7.7 million. This delay represents a significant challenge for the company, impacting its short-term growth prospects.

EverQuest Challenges

EverQuest and EverQuest II faced softer performance than expected, due to challenging comparisons from the previous year and negative impacts from The Hero’s Journey, an unauthorized title. This segment’s struggles indicate the competitive pressures within the gaming industry.

Forward-Looking Guidance

Enad Global 7 AB provided cautious forward-looking guidance amidst a challenging market environment. The company reported a net revenue of SEK 355 million and an adjusted EBITDA of SEK 63 million, representing an 18% margin. Despite a 24% decline in net revenue year-over-year, or 16% when excluding adverse FX effects, the company remains focused on maintaining a solid balance sheet and being selective in capital deployment. Key business units showed varied performance, with Piranha and Daybreak demonstrating growth, while Big Blue Bubble faced declines.

In conclusion, the earnings call for Enad Global 7 AB highlighted a complex landscape of achievements and challenges. While segments like Palia and Piranha showed promising growth, the overall revenue decline and project delays present significant hurdles. The company’s stable financial position offers a degree of resilience, but strategic focus will be crucial in navigating the current market dynamics.