Thunderful Group’s Q1 figures was aligned with preliminary numbers, and net sales came in at SEK392m, a decline of 28% y/y and 22% below our expectations of SEK505m. Games performed somewhat softer in terms of sales, while margins came in significantly lower than expected. The distribution came in 24% below our estimates, and Bergsala was the biggest disappointment, with a y/y decline of 33%. On a positive note, Amo Toys was better than expected and grew 14% y/y with strong margins. In total, adjusted EBITDA for the group amounted to SEK-29m, negatively affected by Games.

Recent quarters have come in much lower than our expectations, with NGS, Bergsala, and Games reporting significantly lower sales and margins compared to our estimates. However, we believe that management is taking the right steps by divesting NGS, reducing the workforce, and streamlining the Games pipeline, actions that should become visible in the coming quarters, especially in H2 and 2025. With that said, given the company’s financial position, upcoming game launches are becoming increasingly important, and we do not rule out a capital injection in the current year.

Following the Q1 report, we have revised our estimates downwards, anticipating lower sales from Bergsala and lower margins for Games. We have also included a capital injection of SEK100m in our bear case, resulting in a dilution of 46%. Our new valuation range is SEK1-7 (3-18), with a base case of SEK4(7). Our base case of SEK4 corresponds to an EV/Adj EBITA multiple of 5.7x (25e).