G5 is an asset-light, net-cash F2P mobile developer earning ~99% of revenue from in-app purchases, with ~30% of gross billings paid to Apple/Google. Its edge is a live-ops engine that monetises a long-lived catalogue, but the portfolio is hit-concentrated (top-3 games 61% of carrying value) and the franchise is contracting: FY2025 revenue −17%, EBIT −80%, Q1'26 MAU −13%, paying users −19%.
The bright spot is margin mix: the direct-to-consumer G5 Store lifted gross margin to a record 70.6% FY / 72.7% Q1 and monetisation quality (MAGRPPU +16%) is improving. Accounting is unusually clean for the sector (no goodwill, no PPA, capitalised dev ≈ amortisation so near-zero adjustment). But with EP only +SEK 5M and the top line rolling over, the stock is roughly fair, not cheap.
On adjusted NOPAT of SEK 14.5M capitalised at WACC−g plus net cash over 7.75M shares, fair value is ~SEK 57–59 versus SEK 68 — a modest premium (PEBV 1.10). The ~11% FCF yield is the support; the reverse-DCF offers no discount while users and revenue decline.
Base SEK 60 (−12%) on continued gradual decline offset by D2C margin; bull SEK 75 if the D2C mix and monetisation stabilise revenue and re-rate the FCF yield; bear SEK 45 if user erosion accelerates.
The market pays today’s enterprise value for roughly 0.1% NOPAT growth over 5 years. The business earns 12% on capital against a 8% cost of capital (spread +3.7 pp); the no-growth value is SEK 59/share (100% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | SEK 75 | ≥11% | +27% | 30% | D2C mix + monetisation stabilise revenue; FCF yield re-rates |
| Base | SEK 60 | +2% | +2% | 40% | Gradual decline offset by D2C margin |
| Bear | SEK 45 | -36% | -24% | 30% | User erosion (MAU/DAU) accelerates |
| Prob-weighted | SEK 60 | — | +2% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 68 | 71 | 73 | 77 | 79 | 85 |
| 7.25% | 63 | 65 | 66 | 69 | 70 | 75 |
| 8.00% (base) | 59 | 60 | 62 | 63 | 64 | 67 |
| 8.75% | 56 | 57 | 58 | 59 | 60 | 62 |
| 9.50% | 54 | 54 | 55 | 56 | 56 | 57 |
Green = fair value above the current price of SEK 59.00. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
G5 Store drove gross margin 70.6% FY → 72.7% Q1 — a structural, mix-driven profitability gain.
Debt-free, ~SEK 245M net cash, ~11% FCF yield — downside support and buyback capacity.
No goodwill, no PPA, capitalised dev ≈ amortisation — no accounting games inflating earnings.
MAGRPPU +16% — squeezing more from a smaller but higher-value paying base.
G5 is a clean, cash-rich, marginally value-creative developer whose D2C-margin story is real but fighting a shrinking user base. Fairly valued on reverse-DCF, cheap only on FCF yield. HOLD, low conviction; base SEK 60 (−12%).
An upgrade needs top-line stabilisation — D2C mix and monetisation actually arresting the MAU/DAU decline — before the FCF yield re-rates.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
NOPAT adjustments: THE CORE ADJUSTMENT (software.md): capitalized game development. G5 capitalizes directly attributable development cost and amortizes it over 24 months (Note C1/C11, AR p.79-81). NC/mttssn methodology REVERSES the capitalization: rd_capitalization_reversal = -(the year's capitalization) + (the year's amortization of capitalized dev). LTM (USD, Q1 report Note 2): capitalization 9,982, amortization 9,570, write-off 0 -> -9,982 + 9,570 = -412 KUSD @9.8251 = -4.0 MSEK. THE NET IS NEAR ZERO because G5 is a MATURE developer in steady state (cap ~= amort), just like BETS-B (gaming, -0.5). No double counting: the amortization already sits in reported R&D cost (p.79), so we add it back and subtract the capitalization. IFRS 16: the lease interest (LTM -89 KUSD, immaterial) already sits below EBIT — no NOPAT add-back. FX revaluation losses in operations (FY -32.9 MSEK, Note C8; Q1'26 +1.1 MUSD) are treated consistently as OPERATING (recurring FX on customer/supplier receivables), NOT one-offs — no normalization. SBC kept in opex (see company_addbacks_we_reject). after_tax @ normalized 15%.
Post-tax add-backs: NO impairment in the LTM window. Note C11 (AR p.88): write-downs of capitalized dev = 0 KSEK 2025 (accumulated write-downs -121,457 unchanged YoY). Q1 report Note 2: write-offs 0 KUSD both Q1 2026 and LTM. G5 tests the portfolio quarterly per CGU (each game); 'No games have showed any sign of impairment ... in 2025 or 2024'. No goodwill on the balance sheet (asset-light, internally developed) -> no goodwill-impairment risk. Genuinely one-off-free this year in that sense.
Company add-backs we reject: PPA amortization = 0 (no goodwill/acquired intangibles; all intangible is internally developed game portfolio, Note C11). SBC/IFRS 2: total group cost FY2025 = 6,184 KSEK (equity table AR p.76, line 'IFRS2 - Employee share schemes'; down from 9,055 in 2024). Three LTI programs (AGM 2022/2023/2024, max 160,000 shares each, vest 3 years, Note C13 p.89). SBC/revenue only 0.66% — low for software. mttssn KEEPS SBC in opex (real compensation cost). G5's ONLY own APM is 'EBIT excluding UA' (adds back a REAL operating cost) — which we reject; G5 publishes NO flattering adjusted EBIT with SBC/PPA/dev add-back, an unusually clean governance signal for a software company.
Invested capital: BS snapshot Mar-31-2026 (Q1 report p.10, KUSD -> SEK @9.2098). total_equity 49,501 KUSD = 455.9 MSEK (matches AR Dec-25 457.0 MSEK well). accumulated_oci = 'Other reserves' 11,265 KUSD = 103.7 MSEK (FVOCI equity instruments + FX translation reserve; equity table p.11). NOTE: the USD presentation's translation reserve differs from the SEK annual report's 'Other reserves' 30,713 KSEK because the entire group has been re-translated from a SEK to a USD base — I use the USD-consistent figure (11,265) to match the USD BS on which I build IC. equity_ex_oci = 49,501 - 11,265 = 38,236 KUSD = 352.1 MSEK. NO interest-bearing debt (non-current liabilities = only deferred tax 864 KUSD; current = trade payables/accruals). cash 26,644 KUSD = 245.4 MSEK; operational_cash = min(cash, 0.02 x revenue 93,175 = 1,864) = 1,864 KUSD = 17.2 MSEK; excess_cash = 24,780 KUSD = 228.2 MSEK. IC = equity_ex_oci 352.1 + 0 - excess_cash 228.2 = 123.9 MSEK. capitalized_rd_removal = capitalized dev carrying value 19,156 KUSD = 176.4 MSEK — NC KEEPS this as a productive asset in IC (it already sits in equity via the intangible); the field DOCUMENTS the size, does NOT adjust IC downward (same convention as APR.OL/BETS-B). Short- and long-term financial investments (369+3,626 KUSD) are left in equity/IC (financial, not separately stripped — conservative, lowers ROIC). Lease immaterial (office; no ROU/lease line on the BS, lease financing LTM -89 KUSD) -> lease_liabilities_in_ic=false. NCI=0 (all subsidiaries 100%).
Pages read — FY: [2, 4, 21, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 122] · Q: [2, 7, 9, 10, 11, 12, 13] 📄 p.2
How the mttssn view has evolved — each prior dated note is preserved.