Nitro Games reported net sales of EUR2.9m in the quarter, corresponding to a growth of 78% y/y, 13% above our estimates of EUR2.6m. As in Q1, the growth was driven by the B2B segment. Regarding profitability, EBITDA and EBIT landed at EUR0.5m and EUR0.1m, respectively, above our expectations of EUR0.3m and EUR-0.1m. The deviation is attributed to higher sales while costs were slightly higher than expected. Operating cash flow was positive, and the company ended the quarter with a cash position of EUR3.1m.

We believe Nitro Games has intensified its communication to position itself as a cross-platform player in the action and shooter genres. By opening up for expanding its existing IPs to new platforms, the company appears to pivot from its previous focus on free-to-play mobile games to becoming a niche player in cross-platform action and shooter games. Considering the current landscape of the mobile gaming market, we view this as a strategic shift that is likely to enhance investors’ perception of the company.

Following the Q2 report, we have made downward sales revisions as we expect a somewhat slower scale-up of Autogun Heroes from Supersonic. We view the report as stable and undramatic and expect no major changes for the upcoming Q3. Our valuation remains unchanged, and we continue to see a healthy upside to our base case. Our base case stands at SEK9, with the fair value range being SEK4-22.