All time high revenues and adjusted EBITDA underscore strong finish to the year with 8% organic growth for Q4 and 9% for 2025

Modern Times Group reported record revenues and adjusted EBITDA for 2025, with Q4 net sales SEK 3,123m (+84% YoY; +108% at constant FX) and full-year net sales SEK 11,579m (+92% YoY; +107% at constant FX). Organic sales grew 8% in Q4 and 9% for the year, adjusted EBITDA was SEK 717m in Q4 (+58% YoY) and SEK 2,648m for the year (23% margin), while UA spend totaled SEK 1,192m in Q4 (38% of revenues) and SEK 4,316m for the year (37%). The group generated SEK 1,723m cash from operations for the year, ended Q4 with SEK 1,230m cash and net financial debt of SEK 2,522m, closed the Plarium acquisition in Feb 2025, is preparing a potential PlaySimple IPO and intends to seek a renewed buyback mandate — all factors likely to influence investor positioning in the stock.

Analysis

Market structure: MTG (MTGA/MTGB) is a clear winner — record revenues SEK 11.6bn and 9% organic growth amid heavy UA (37–38% of revenues) show it can scale user acquisition profitably; ad-tech platforms (Unity U, META) and UA vendors also gain as demand/CPIs rise. Casual/midcore peers with weak UA efficiency will be pressured on margins and user LTV economics, increasing consolidation tailwinds.

Risk assessment: Key tail risks are a sustained deterioration in UA ROI (CPI up >15% QoQ), regulatory setbacks in India (affecting PlaySimple IPO pathway), or a rapid FX swing (USD declines vs SEK reducing revenue translation). Immediate (days) readouts: market reaction to report; short-term (weeks/months): Q1 results (29 Apr) and AGM buyback vote (21 May); long-term: delivery of USD 20m Midcore savings by end-2026 and PlaySimple IPO timing.

Trade implications: Favor a modest long in MTG ahead of Q1 and IPO updates while hedging operational/earnings risk — MTG’s net debt SEK 2.52bn vs SEK 1.23bn cash implies leverage sensitivity to rate moves. Cross-asset: buy ad-tech exposure (Unity, Meta) to capture higher UA spends; trim small-cap mobile peers vulnerable to CPI inflation. Use options to cap downside on event risk.

Contrarian angles: Market may over-penalize reported negative net income (−SEK62m FY) driven by acquisition-related amortization — operating cash (SEK1.72bn) and adjusted EBITDA (SEK2.65bn) are healthy. If PlaySimple IPO proceeds in 2026, MTG could de-lever and accelerate M&A — current skepticism underprices optionality. Conversely, if UA returns slip, downside is non-linear given 37%+ marketing intensity.

Key Decisions for Investors

• Establish a 2–3% long position in MTG (MTGA/MTGB) ahead of Q1 results (target +40% in 12 months, stop-loss −20%); trim to half size if adjusted EBITDA margin falls below 20% or UA/% revenue rises above 42%.
• Initiate a 1–2% overweight in Unity (U) and 1% in Meta (META) to capture sustained UA spending; rebalance if CPI for mobile UA rises >15% QoQ or if ad monetization guidance weakens.
• Execute a pair trade: long MTG (1.5%) and short Zynga (ZNGA) (1.5%) as a relative-value play on superior cash conversion (MTG 66%) and midcore consolidation optionality; unwind after PlaySimple IPO or 6–12 months.
• Buy a 12-month MTG call spread (long ATM, short +25% strike) sized to 1% portfolio risk to capture upside while limiting premium; simultaneously buy 3–6 month OTM puts (cost <1% portfolio) as event risk protection around AGM/IPO milestones.
• Monitor three concrete catalysts in next 90 days: Q1 report (29 Apr) for UA efficiency trends, AGM buyback mandate vote (21 May), and PlaySimple IPO advisor updates — add to positions if Q1 organic growth ≥7% and UA ROAS stable or improving.