Earnings call transcript: Hacksaw AB sees strong Q3 2025 growth

Hacksaw AB reported a robust third quarter for 2025, showcasing significant financial growth and product expansion. Despite a minor dip in stock price, the company demonstrated a solid performance across various metrics, reflecting its strategic focus on innovation and market expansion.

Key Takeaways

• Q3 2025 revenue of EUR 52 million, marking a 39% year-on-year increase.
• Net income rose by 27% year-on-year to EUR 39 million.
• Free cash flow surged by 139% compared to the previous year.
• Stock price fell by 1.24% following the earnings announcement.
• Continued focus on game development with 12 new in-house titles released.

Company Performance

Hacksaw AB experienced a notable increase in revenue and net income during Q3 2025, driven by strong organic growth across all markets. The company’s strategic emphasis on expanding its game portfolio and enhancing its geographical footprint has yielded positive results. Hacksaw’s diversified game offerings and robust development pipeline continue to position it favorably in the competitive iGaming industry.

Financial Highlights

• Revenue: EUR 52 million (39% YoY growth)
• Net income: EUR 39 million (27% YoY increase)
• Free cash flow: EUR 35 million (139% YoY increase)
• Adjusted EBIT margin: 81%
• Cash balance: EUR 88 million (doubled from previous year)

Market Reaction

Following the earnings release, Hacksaw AB’s stock price decreased by 1.24%, closing at EUR 76. This movement comes amid a broader market environment where investors are cautious, possibly reflecting the company’s stock trading near its 52-week high. Despite the slight decline, Hacksaw’s financial performance remains strong, indicating potential investor reassessment in the near term.

Outlook & Guidance

Hacksaw AB reiterated its long-term revenue growth target of over 30% and plans to maintain its game development pace with four new games per month. The company is committed to returning 75% of its net income to shareholders, signaling confidence in its ongoing financial health and strategic direction.

Executive Commentary

CEO Christoffer Källberg emphasized the quarter’s growth, stating, "Our third quarter 2025 was a quarter of growth." CFO Per Alnefelt highlighted the company’s financial efficiency, noting, "We have a very strong free cash flow conversion rate of 89%." These comments underscore Hacksaw’s focus on maintaining robust financial metrics and expanding its market presence.

Risks and Challenges

• Market Saturation: Potential challenges in sustaining growth within a competitive iGaming landscape.
• Regulatory Environment: Changes in gaming regulations could impact operations.
• Currency Fluctuations: As a European company, Hacksaw faces risks associated with foreign exchange volatility.
• Talent Acquisition: Continued growth requires successful recruitment and retention of skilled professionals.

Hacksaw AB’s Q3 2025 results highlight its strategic focus on innovation and market expansion, setting a promising trajectory for future growth despite minor market fluctuations.

Full transcript - Hacksaw AB (HACK) Q3 2025:

Conference Operator: Welcome to Hacksaw’s Q3 earnings call for 2025. During the Q&A session, participants are able to ask questions by dialing #5 on their telephone keypad. Now, I will hand the conference over to Group CEO Christoffer Källberg and CFO Per Alnefelt. Please go ahead.

Christoffer Källberg, Group CEO, Hacksaw: Good morning, everyone. Thank you for dialing in to our Q3 earnings call.

Attention, please.

Per Alnefelt, CFO, Hacksaw: Hello?

The fire alarm test is now complete. Please respond to all future fire alarms.

Christoffer Källberg, Group CEO, Hacksaw: Apologies for that. Good morning, everyone. Thank you for dialing in to our Q3 earnings call. I will start with going through our performance during the quarter before handing over to Pat for a closer look at our financials. After that, I will conclude with key takeaways before we open the floor for questions. Next slide, please. Next again. Thank you. Our third quarter 2025 was a quarter of growth, both compared to the previous year and to the previous quarter. It is also our first quarter that has fully taken place in a public environment. During the quarter, we once again exceeded our own expectations in terms of the number of new deals that we closed. In addition, the long-awaited go-live in Pennsylvania that we’ve previously referred to took place.

The core of this success lies in the strength of our platform, as well as our ability to continuously develop and release entertaining content. It summarizes our two-pillar strategy very well. We focus on product innovation, including maintaining the best platform in the industry and releasing the best content in the industry, and increasing monetization with both existing and new clients. I want to once again emphasize that our strong team’s ability to close a large number of new deals in both existing and new markets, with both existing and new customers, illustrates our large market opportunity and our ability to capitalize on it. The success of our commercial operations has led to revenues of EUR 52 million for the quarter, which is equivalent to 15% sequential growth versus Q2 and 39% year-on-year growth versus Q3 last year. All of this is organic growth.

All of our growth since inception is organic. The primary determinant of our operating margin is the relative success of our open RGS games versus our in-house games. We pay the open RGS to reduce the license fee, which we account for as cost of services sold. Hence, a strong acceleration in open RGS leads to higher revenue, higher EBIT at a lower margin, higher cash flows, and higher earnings per share. Open RGS remains below 10% of revenue, and I’ve previously stated that we expect to scale up open RGS faster than we scale up our in-house game development. I maintain that view. Our adjusted EBIT margin came in at 81% in Q3 versus 82% in Q2. Given the strong performance of open RGS year-to-date and the associated mix effect, comparisons to previous years do not make much sense.

We’ve not issued guidance for the full year, but we’ve adopted long-term financial targets, including a revenue growth target of more than 30%. Our strong Q3 results support our view on the short, mid, and long-term direction of the company. We’ve seen an increased focus from various stakeholders on understanding how companies work with compliance-related matters. First and foremost, we are a supplier, a platform provider, and a content provider, and we supply to the iGaming industry. We’re exactly that: a supplier. We do not actively target specific jurisdictions or player demographics. As a supplier, we ensure that we have all necessary licenses and that our games are certified as required. We do this in order to allow each of our customers to launch our content in the jurisdictions they prioritize.

As a result of that, our geographic footprint is an output of the aggregated strategies and relative success of our customers. As part of the IPO process, we stated that in Q1 2025, approximately 12% of our bets were considered locally licensed bets. Put differently, bets placed with operators who hold a local license in a locally licensed market. For the avoidance of doubt, this does not include bets generated via global licenses, such as the multi-license. Hence, it is different from comparing regulated to unregulated revenues. We consider our approach the most conservative one and thus the most relevant one for public disclosure. I would also say that in jurisdictions where we are required to obtain some form of local license, for instance, the U.K., we ensure that we obtain that license and that we only provide content to operators who also have the appropriate license in that jurisdiction.

Under the leadership of our Chief Compliance Officer, we work actively with regulators around the world, and we prioritize our good relationships with each one of them. This work has always been and continues to be a central part of our company. Going to California, during the quarter, there was immediate coverage on a lawsuit filed by the City Attorney of Los Angeles against a large sweepstakes operator and its suppliers. No Hacksaw entity has been served with any complaint from a California court. Therefore, I do not think it would be appropriate to comment on a legal action when we do not have the particulars from a court. Let me take a moment to repeat our view on sweepstakes operations, as outlined in the IPO prospectus.

Hacksaw does not provide games to sweepstakes customers in states where Hacksaw holds local licenses, nor does Hacksaw provide its games to sweepstakes customers in any other states not backed by an independent legal opinion provided by each respective sweepstakes customer. In the Q2 earnings call, I announced that we recently had closed down Louisiana, and during Q3, we have closed down Montana, as a result of each of these states moving to prohibit sweepstakes operations. California has now passed a bill stating that sweepstakes casino operations will no longer be permitted in California per 1 January 2026. In line with our principles, by the end of the year, we will no longer provide our games to sweepstakes operators in California. Revenues generated via sweepstakes operators remain a small part of our total revenue.

Finally, the majority of our 228 employees are based in our offices in Bucharest, Malta, and Stockholm. We have continued to scale up the team in order to capitalize on the opportunities presented to us, and we aim to continue doing so. The recruitment and retention of the very best talent is essential for our continued success and remains a key priority for me and others in the senior management team. The fact that we’ve continued to attract this talent reflects the quality of our culture, working environment, and overall opportunities that talented people see with Hacksaw. Next slide, please. During Q3, we released 12 in-house developed games. I foresee the cadence of four in-house developed games per month to remain for the next few quarters. Our third-party studios released 15 games on our platform in Q3, which is up from 11 in Q2.

We have six studios live on the platform, and we continue to see growing interest from third-party studios in using our platform. At the end of Q3, our total games portfolio included 268 titles, compared to 184 titles at the end of Q3 last year. We maintain a strong focus on product innovation in our in-house game development, and we continue to expand our studio partnerships, both of which are at the core of our growth strategy. Next slide, please. In-house developed game releases. We’ve continued to receive positive feedback on games released at the end of Q2, most notably The King from 26 June, and additional positive feedback on strong releases during Q3, for instance, Chaos Crew 3. I remain very impressed by the creativity of our game development team, both in terms of visuals and audio, but also in terms of exciting game mechanics.

I know that our players and our customers are impressed as well. Next slide, please. Our open RGS studios have released a total of 64 games, 43 of which during the last year. As a reminder, open RGS studios develop the front end while we develop the back end. Since we own the open RGS games, we take full responsibility for them in terms of compliance, and we distribute them using our existing commercial agreements with our customers. As I mentioned in my introductory comments, strong acceleration in open RGS leads to higher revenue, higher EBIT at a lower margin, higher cash flows, and higher earnings per share. The onboarding of new third-party studios is positive for the business, and we look forward to our already onboarded studios releasing even more exciting new games moving forward, and we look forward to onboarding new studios. Next slide, please.

One of the primary operating KPIs that we monitor on a day-to-day basis is the number of rounds played in our games. The average bet size for these rounds will naturally vary both across markets and over time, and the outcome of those bets placed, i.e., players winning versus losing, will by definition vary and short-term sometimes be above and sometimes below the mathematical mean. With rounds, we average the daily number of rounds played, given the varying number of days across months and quarters. Average daily rounds played in the quarter were up 50% compared to Q3 last year, which is a very positive development. Our portfolio of 268 games is well-diversified, with the largest game accounting for no more than 14% of gross gaming revenue in Q3.

Our top 10 games accounted for 45% of GGR in Q3, compared to 60% a year ago, and slightly better than Q2. We are becoming more diversified every quarter. This concludes my initial remarks on our performance, and I would like to hand it over to Pat to go through our financial performance for the quarter.

Per Alnefelt, CFO, Hacksaw: Okay. Next slide, please. Thank you very much, Chris, and hi, everyone. Let’s look at the numbers for the quarter. As Chris mentioned earlier, our 39% year-on-year and 15% quarter-on-quarter revenue growth in Q3 shows a high revenue pace for the start of the second half year compared to the first half year. Q3 revenue amounted to EUR 52 million, which was up EUR 15 million versus last year and up EUR 6.6 million compared to Q2 this year. The growth is totally organic and driven by additional game releases and growth in our customer base. Operating costs amounted to EUR 11 million in Q3, which was up EUR 6 million compared to last year and reflected the following drivers. Firstly, our cost of services sold was up due to the increase of open RGS revenue.

As explained earlier, the growth in this part of our business raises our revenue and profits but slightly lowers the margins. The increase in cost of services sold also included higher costs for licenses and certifications. Secondly, personnel costs increased as we ramped up investments in new talent in order to secure continued revenue growth. Thirdly, other external costs, when adjusted for non-comparable items and calculated as a percentage of revenue, were up 1 percentage point compared to Q3 last year, largely reflecting cost increases related to being a listed company. Finally, depreciations and amortizations increased in line with the higher CapEx levels, most of which relate to the investments in capitalized development costs. Our EBIT in Q3, when adjusted for EUR 1.1 million of items affecting comparability, amounted to EUR 42 million, which was up 29% year-on-year and up 13% quarter-on-quarter. The adjusted EBIT margin was 81%.

As pointed out in the previous quarter’s presentation, it’s worth noting that we continue to have a gross margin that is well above 90% for our in-house developed games, and our primary costs are personnel-related, which correlate well with top line and give us a high operational leverage. We continue to scale up the team in order to capitalize on the opportunities presented to us. The group’s effective tax rate was 5.9% in Q3 compared to 6.1% a year ago. Our profit for the period, or net income for Q3, amounted to EUR 39 million, which was up 27% year-on-year, and our fully diluted earnings per share was up 26%. Next slide, please. Our cash flow from operating activities before changes in working capital amounted to EUR 42 million in Q3, which was up 29% year-on-year.

Changes in working capital amounted to minus EUR 5.5 million in Q3 this year and were impacted by withholding taxes paid on dividends, whereas the corresponding figure for Q3 last year was minus EUR 16.9 million and reflected changes in the VAT scheme in Malta. Our total cash flow from operating activities therefore amounted to EUR 37 million and was up 133% year-on-year. Our free cash flow was up 139% year-on-year to EUR 35 million. Free cash flow is defined as cash flow from operating activities less cash flow from investing activities. We had a very strong free cash flow conversion rate of 89%. The free cash flow conversion rate metric shows the company’s ability to convert profits into free cash flow and is calculated as rolling 12-month free cash flow adjusted by reducing the cash flow of EUR 13 million one-off VAT receipt in Q4 last year.

That figure is divided by rolling 12-month EBITDA. Our Q3 CapEx of EUR 1.9 million increased in absolute terms given the pace of our games development, but as a percentage of sales, it was slightly down at 3.6% compared to 3.7% in Q2 this year and up from 3.1% in Q3 last year. It mostly comprises capitalized expenses related to the development of new games, functional improvements to our technical platform, and investments in patents and trademarks. We made no major investments in tangible assets during the quarter. Next slide, please. Our financial position continues to be very strong, and we further improved our cash balance during the quarter. Our total cash and cash equivalent amounted to EUR 88 million at the end of September compared to EUR 53 million at the end of last quarter and EUR 44 million at the end of September last year.

The cash balance has increased despite the fact that we paid out EUR 106 million of dividends in the first half year of this year compared to EUR 46 million in the first half last year. We more than doubled our dividends this year but still increased our cash balance by 100%. We still have no financial debt apart from IFRS leases. That is it for my comments on our financial performance and position. Back to you, Chris.

Christoffer Källberg, Group CEO, Hacksaw: Thank you, Pat. We can go to the next page, please. Our aim is to generate as much shareholder value as possible, both in terms of building a valuable business long-term by continuously reinvesting into the business and by returning excess capital to shareholders. We have adopted a capital allocation policy by which we intend to return at least 75% of net income to shareholders, either through cash dividends or share buybacks, or through a combination of the two after each year’s annual general meeting. Summarizing the quarter, and with this in mind, we should be very proud of what we have achieved. We delivered revenue growth of 39% year-on-year and 15% quarter-on-quarter. Year to date, we have grown by 52%. We have closed a high number of deals and delivered on a continuous flow of strong releases. I look forward to our remaining Q4 releases with great anticipation.

We maintain a very high operating margin and a very strong cash flow conversion, and we face a very attractive market opportunity, and we continue to scale up our organization to capitalize on that opportunity. In addition to our own games, I am thrilled to see the good success we have had with third-party studios under open RGS and view positively the relative increase of that business as we move forward. Finally, I would like to thank the entire team for the great work being done and our shareholders for your continued support. With that, I hand it back to you, operators, for questions.

Conference Operator: If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Martin Arnold from DNB Carnegie. Please go ahead.

Good morning, Christoffer and Per. I hope you can hear me.

Christoffer Källberg, Group CEO, Hacksaw: Yes, good morning.

Perfect. My first question is on the Q3 performance where you returned to quarter-on-quarter growth. How much would you say is sort of tailwind from the season compared to how much is your own efforts with games pipeline?

Difficult to separate the two. I mean, we’ve continuously communicated that we expect the second half of the year to be stronger than the first half of the year. I think it’s difficult to split that into. We feel good about our releases, and we make sure that we have releases during the period we think we’re going to get the most bang for the buck.

Okay. When you look in Q4 so far, are there any change in trends, or is there anything new that has happened, or can you comment anything on the progress so far?

I don’t think there’s a change in trend. I mean, naturally, if you were to look at any short-term period, things can go a little bit up or down, which we talked quite a lot about when it came to the Q2, right? The overarching trends that we see in terms of preferences for games, in terms of geographical movements, etc., are very consistent.

Okay, thanks. Finally, how do you view the games pipeline where you are today in Q4? Can you say anything about sort of any games that you have high expectations on that are going to be widely released now? Secondly, can you comment anything on the plan for 2026 in terms of the number of new games or any specific initiatives?

Yeah, sure. If we start with where we are right now. You and I have already talked about the Cowboy, which had a good start in exclusivity. I think that’s the next one that we look forward to seeing how that’s going to fare. I feel that we do have a couple of other ones coming later in the quarter as well, which we look forward to. I think we have a generally quite strong pipeline of games for the remainder of the quarter. When it comes to 2026 cadence, as you know, we’re currently at four games per month, which is, generally speaking, one game a week. As you know, we have a production process which is almost half a year or 25 weeks, meaning that it’s fair to assume that over the coming half year, we will have the same cadence.

Okay. Thanks. That’s all from me.

Thanks, Martin.

Conference Operator: The next question comes from Jamie Base from City. Please go ahead.

Good morning, guys.

Christoffer Källberg, Group CEO, Hacksaw: Morning, Jamie.

Three questions from me, please. Morning. First of all, on personnel expenses. You did touch on it, but I’m seeing that that’s grown over 100% year-on-year in Q3. As I said, you touched on why, but could we sort of talk about, do you expect the personnel expenses line to continue to grow above revenue for the next few quarters, or is that something you expect to reverse moving forward? On cost of services sold, you mentioned again the higher cost from licensing costs. Is that coming from launching? As you roll out more in the U.S., is that something that we should take into account in our models? Final question.

Sorry, Jamie, I lost you for one second. Could you just repeat the second question? I lost you for one second there, towards the end.

Sorry. On the cost of services sold, you touched on that being partly licensing costs. I was wondering if that’s due to more U.S. states, and if so, is that something we should take into account in our modeling as you roll out more across the U.S.? Finally, on geographic split, is it out on any regional strength or weakness? Thank you.

Okay, sure. Personnel expenses. I think the way to view it is that if you look at the game development, we have a certain number of people required to produce a game over a period of time, meaning that with a consistent game cadence, you should assume the personnel expenses for the game development to be relatively flat. Having said that, as we grow, we obviously try to scale that up. We will continue to hire in order to increase the cadence further out, but it’s not for the coming months, right? That’s how to think about that. If you look at the part of the personnel, of the staff which is not relating to game development, you would assume that you would have some operating leverage.

We do hire across the board to scale up, but we do expect those recruitments to generate more revenue directly or indirectly than the cost of them. There are two different dynamics to bear in mind. When it comes to the second question on cost of services sold and higher licensing fee, this is not relating to the U.S. states. This is relating to overall open RGS being more successful, and as a result of that, we pay more money back to the studios as they do better. The third question on geographical split, we do not see any massive geographical developments during the quarter in either direction. It’s reasonably consistent.

Having touched upon in the Q2, if you look at a longer period of time, then naturally the developments in the Americas that we’ve talked about before, they remain, but it’s nothing that’s deviating in Q3 from what we’ve said before.

That’s very clear. Thank you.

Conference Operator: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Christoffer Källberg, Group CEO, Hacksaw: Very good. Thank you all for dialing in. We appreciate your support, and we look forward to continuing delivering on our strategy. Thank you all.

Thank you. Bye.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.