MTG delivers strong Q2 with 6% pro forma growth and 24% adjusted EBITDA margin

Financial highlights Q2

• Net sales up 2% YoY to SEK 2,965 (2,911) million and up 6% in constant currencies (also pro forma and organic bases¹)
• Group total UA spend of SEK 1,163 (1,054) million, or 39% (36%) of total revenues, up 15% YoY in constant currencies
• Adjusted EBITDA up by 10% YoY to SEK 707 (640) million, with adjusted EBITDA margin of 24% (22%)
• Reported EBITDA of SEK 690 (596) million and EBIT of SEK 317 (222) million
• Net income of SEK 99 (-61) million, and adjusted net income of SEK 470 (324) million 
• Cash flow from operations of SEK 471 (325) million 

Financial highlights H1

• Net sales up 12% YoY to SEK 6,125 (5,468) million and up 21% in constant currencies, 10% pro forma¹ and 9% organic
• Group total UA spend of SEK 2,362 (2,013) million, or 39% (37%) of total revenues
• Adjusted EBITDA up by 20% YoY to SEK 1,509 (1,256) million with an adjusted EBITDA margin of 25% (23%)
• Reported EBITDA of SEK 1,444 (1,190) million and EBIT of SEK 688 (513) million
• Total net income of SEK 237 (4) million and total basic earnings per share of SEK 1.99 (0.03)
• Cash flow from operations of SEK 1,076 (502) million and unlevered cash conversion of 81% for the 12-month period

Key highlights

• PlaySimple's Draft Red Herring Prospectus filed on 23 April as part of potential 2026 IPO preparations
• New share buyback program of SEK 500 million running after AGM approval in May

Financial overview

^[1] Growth is fully organic in Q2, and so constant currency, organic and pro forma growth are the same in the quarter, albeit not on a year to date basis. MTG will continue reporting pro forma growth in 2026 to ensure quarter and year to date numbers are consistent, due to the consolidation of Plarium from February 2025.

Letter from the President and CEO

Positive momentum in top Midcore franchises and growing Casual titles drives strong Q2 growth

I am happy to report a strong Q2 with group pro forma revenues up 6% year over year in Q2 and 10% for the first half of 2026. Total revenues for the Midcore District were up 1% year over year in Q2 and up 5% for the year to date on a pro forma basis. This was mainly driven by another strong quarter for RAID: Shadow Legends, which grew revenues by 9% year over year pro forma in Q2, despite a deliberately more measured pace of new content after an exceptional Q1. Revenues for the Casual District were up an outstanding 29% year over year in constant currencies. This continued high level of growth was driven by PlaySimple's rapid scaling of Crossword Go, Tile Match and Cryptogram along with growth in select other titles.

This Q2 is MTG's seventh sequential quarter of organic growth. Our pace and momentum come from the quality and experience of our people, the longevity of our games and our disciplined investment approach. Together with the rapid integration of AI across the group, our direct-to-consumer initiatives, and our new games pipeline, we remain very well-positioned to continue delivering on our strategy.

Healthy margins of 24% as we continue to balance reinvestment in growth and profitability

We invested a total of SEK 1,163 million in user acquisition in Q2, corresponding to 39% of our total revenues, and representing a 10% increase year over year in reported currency and a 15% increase on a pro forma basis. This increase of three full percentage points reflected higher marketing spend in both Districts. In the Casual District, user acquisition was up 36% year over year in constant currency to scale new titles, while in the Midcore District, a 5% increase in UA in constant currency was driven by higher user acquisition spending in RAID: Shadow Legends, offset by lower marketing spend in select other games.

Our adjusted EBITDA was up 10% year over year to SEK 707 million in Q2 and up by 20% to SEK 1,509 million for H1, with margins of 24% and 25% respectively. The Midcore District reported an adjusted EBITDA margin of 26%, reflecting the strong profitability of some of our major evergreen titles, whilst the Casual District reported a strong adjusted EBITDA margin of 24% in Q2, albeit benefitting from slightly lower-than-expected OPEX in the quarter.

High cash generation with further strengthening of the balance sheet

Our unlevered cash conversion amounted to 81% of adjusted EBITDA for the rolling 12-month period ended 30 June 2026. The strong performance continued to reflect robust underlying cash generation across the group, as well as the timing of certain working capital items. While we expect some quarter-to-quarter variation during the remainder of 2026, due to both the natural seasonality of the business and the timing of certain working capital items, we continue to expect unlevered cash conversion to remain materially above our medium-term guidance.

During the quarter, we paid USD 52 million to the sellers of Plarium, comprising the deferred consideration from the 2025 acquisition and the first earn-out, which has now been fulfilled. We will also exercise the final put/call options for Snowprint and own 100% of the studio by end of July. As a result, nearly all the acquisition-related commitments on our balance sheet will have been resolved, which strengthens our financial flexibility and increases our optionality.

DTC remains a strategic priority

DTC accounted for 38% of group revenues in Q2, broadly stable from 39% in Q1 this year, as further DTC gains in the Midcore District, now at over 50% in Q2, were offset by the increased contribution of IAA revenue due to the growth in the Casual District. Increasing our share of DTC revenues remains a key strategic priority, and we follow the ongoing legal developments concerning app store distribution and payments in the US closely, both as it relates to potential implications and opportunities for our business.

AI adoption continues at a rapid pace across the group

AI continues to significantly enhance our productivity and execution across both Districts. We are increasingly embedding AI across game development workflows as well as integrating AI directly into our internal tech and tools which leverage our vast amounts of data, notably in our marketing (GoGame) and data platforms in the Midcore District and in our Little Engine platform in the Casual District. Select highlights from the quarter include that one of our best-performing marketing creatives for RAID in Q2 was produced entirely with AI tools, which was a first for the game; and that AI agents now provide insights on the code base of every game at PlaySimple, making it faster for teams to build on each other's work and onboard new team members.

New games and content set the stage for an exciting H2 and beyond

I am very happy with our performance during the first half of 2026 and proud of our team's ability to deliver strong organic growth while continuing to transform the business for the future. The second half of the year will also be a busy one across the group. We have a healthy pipeline of new content coming to our established titles, including a pick-up in the pace of releases in RAID and new content aimed at veteran players in Forge of Empires. Bloons Blitz, the exciting new game from Ninja Kiwi, is next up for soft launch and we will continue to invest in user acquisition behind our new titles and content where we see attractive returns. I am also excited about the progress the Plarium team is making on their next major game, which we look forward to unveiling in 2027.

The preparatory work ahead of a potential listing of PlaySimple continues, after the filing of its Draft Red Herring Prospectus in April. We continue to work towards a potential listing during the second half of this year and will provide further information when the time is right.

We reiterate our full year outlook for 2026, with pro forma revenue growth expected in the range of 5-8% and a group adjusted EBITDA margin in the range of 22-24%. While our strategy and growth are always firmly in focus, we also continue to drive direct shareholder value by executing on our new and increased SEK 500 million share repurchase program that was approved by our AGM in May.

Thank you for following our progress and I wish you a good summer.

Maria Redin, 
Group President & CEO, MTG

2026 full year outlook

• MTG expects full year 2026 pro forma revenue growth to be in the range of 5-8%.
• MTG expects full year 2026 group adjusted EBITDA margin to be the range of 22-24%.  

Shareholder information

Financial calendar

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MTG (Modern Times Group MTG AB (publ)) (www.mtg.com) is an international mobile gaming group that owns and operates gaming studios with popular global IPs across a wide range of casual and mid-core genres. The group is focused on accelerating portfolio company growth and supporting founders and entrepreneurs. MTG is an active driver of gaming industry consolidation and a strategic acquirer of gaming companies around the world. We are born in Sweden but have an international culture and global footprint. Our shares are listed on Nasdaq Stockholm ("MTGA" and "MTGB").

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