• We expect positive organic growth from H2'25
• EBIT estimates cut 2%, mainly on FX
• Share is trading at 6-5x and 10-11% FCF yields on '25e-'27e

Improved organic growth from Q2, positive in H2

Q4 saw sales in line with our expectations, for an organic growth (measured in USD) of -12% (vs. ABGSCe -12%). This corresponded to an organic q-o-q increase of 1% (4% in SEK), the first sequential increase since Q1'21, making it an important milestone. Own games continued to gain share compared to licensed games, which coupled with continued strong growth for G5 Store (+37% y-o-y, now comprising 19% of sales) drove an increased gross margin of 69% (68%). Sherlock and the Jewels of franchise drove the sequential increase in sales while we estimate that Hidden City saw a slight decline. We expect that Hidden City will continue to decline by low single digits in 2025 while Sherlock and Jewels of should remain more stable. For H1, we expect that organic growth will remain negative (similar in Q1, better in Q2), but turn slightly positive in H2 supported by contributions from new releases.

Estimate changes

The adj. EBIT was 4% better than our expectations, mainly driven by lower user acquisition cost. We make minor negative revisions to sales and EBIT of 2-3% and 2% respectively for 2025e-2026e, mainly related to FX. We now expect EBIT of SEK 111-114m and lease adj. FCF of SEK 111-119m in 2025e-2026e, compared to SEK 117m and SEK 177m in 2024.

Likely to resume buying back shares

G5 took one-off costs of SEK 4.9m in Q4 related to an M&A situation that was discontinued in Q1'25, which explains why the company has paused its buybacks in recent quarters. The cash position has increased to SEK 276m, which together with the strong cash flows should support resumed buybacks. The annual dividend was set at SEK 8 per share (SEK 8), for ~6% yield, and corresponds to around half of the expected FCF. The share is trading at 6-5x EBIT and 10-11% FCF yields on '25e-'27e.