Storytel AB (publ)

Welcome to Storytel Q3 Report 2026. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the CEO, Bottle Erickson-Torque. Please go ahead.

Good morning and welcome to StarTel Group's earnings call for the third quarter 2026. I'm Bård Eriksson Torp, CEO, and with me today is our CFO, Stefan Bård. I will start with the highlights for the quarter. Stefan will take you through the financials and we will then open up for your questions. We're pleased to report a strong quarter. Net sales grew 16.5% in constant currency, of which 11.7% was organic. And we added 80,000 paying subscribers. This is actually our highest net additions in a quarter since the third quarter of 2023. Adjusted EBITDA increased 16% to 268 million. Excluding LTIP costs, which are driven by our share price, adjusted EBITDA increased 25%. With nine strong months behind us, we confirm our full year 2026 guidance of adjusted EBITDA of 900 million. So let's take a look on the highlights. Net sales grew 16.4% to 1 billion, 179 million as reported, and 16.5% in constant currency. Adjusted EBITDA increased 16% to 268 million with a margin of 22.7%. Excluding LTIP cost, adjusted EBITDA was up 25% to 279 million, which equals a margin of 23.7% compared to 22.1% year on year. Net profit 151 million up from 138 million and earnings per share after dilution were 1.83. In the quarter we added 80,000 paying subscribers up from 64,000 a year ago. and reached 2.83 million paying subscribers. This is up 7.6% year on year. In Europe, we added 39,000 subscribers and in the Nordics, 33,000. Publishing continued a strong development, with external net sales up almost 54% in constant currency, of which close to 27% was organic, and the adjusted EBITDA margin expanded to 36.2%. Over Amstel was a part of the group for the first full quarter. And we confirm our full year 2026 guidance of adjusted EBITDA of 900 million. The board decided in August on a share buyback program up to 300 million to secure the delivery of shares under our long-term incentive programs. So we reacquired shares for 91 million during the quarter. After the quarter, we launched Storytelbooks.com, our new online bookstore for physical books in Sweden. This makes it seamless for our readers to move between formats, offering subscribers an exclusive discount on physical books while helping authors to reach their audience across all formats. Net sales grew 16.5% in constant currency, of which 11.7% was organic growth. Streaming up 7.8% and publishing external sales up 53.8%, both in constant currency. The gross margin was broadly unchanged at 45.3%. Adjusted EBITDA increased 15.7% to 268 million with a margin of 22.7%. The increase was driven by publishing, partly offset by higher marketing investments in streaming and higher share-based compensation following the share price development. So excluding LTIP impact, the adjusted EBITDA grew almost 25% to 279 million. This is a margin of 23.7% compared to 22.1% last year. Our pre-tax profit grew by 19% to 172 million, driven by the higher operating profit and also improved net financial result. Cash flow from operations before working capital increased 21% to 246 million. So let's take a look at rolling 12. Our rolling 12-month development shows continued margin expansion over the past 10 quarters. On our rolling 12-month basis, net sales reached 4.3 billion and adjusted EBTA 860 million. This is up 20% year on year. The rolling 12 adjusted EBTA margin was 19.9% up from 18.2% a year ago and from 11% in the second quarter of 2024. We remain well on track to live on 2028 targets. Average annual net sales grow above 10% in constant currency, the growth, and adjusted EBITDA margin above 20%. So let's take a look on each segment. Over to you, Stefan.

Thank you, Bodil. In publishing, we delivered another strong quarter. Our net sales grew by 31% in constant currencies to 423 million. Our external net sales grew 54% to 280 million, of which 27% is organic. Growth IS DRIVEN BY THE ACQUISITION OF OVER AMSTEL WHICH IS CONSOLIDATED FOR THE FULL QUARTER FOR THE FIRST TIME REQUIRED OVER AMSTEL LATE IN MAY LAST QUARTER IT IS ALSO DRIVEN BY HIGHER DIGITAL EXTERNAL SALES AND GROWTH IN OUR EXISTING PUBLISHERS THE GROWTH MARGIN IMPROVED TO 36.6% VERSUS 35.5 A YEAR AGO SUPPORTED BY THE HIGHER DIGITAL EXTERNAL SALES and improve the profitability. Adjusted EBITDA increased by 42% to 153 million with a margin expansion to 36.2% up from 33.4% a year ago. Overarmstel is included for the first time this quarter and contributed around 49 million to net sales in constant currencies. In the streaming segment, we added 80,000 net new subscribers during the quarter compared to 64,000 in the same quarter last year. This is our highest net level since Q3 2023. In percentage terms, the subscriber growth year on year was 7.6% and the total base at the end of the period was 2.83 million. Year-to-date we have added 163,000 customers and on a rolling 12-month basis the level is 200,000. Europe continues to lead this strong growth, adding 39,000 subs during the quarter for a growth of 12.7% and net sales growing by 18.6% in constant currencies. In the Nordics, we added 33,000 subs in the quarter. versus 29,000 in Q3 last year for a net sales growth of 5.6%. Subs growth is the primary driver, but we also had some help from ARPU in the quarter, which rose by 3.4% year on year. Churn remains stable across our base at the low level. It is lower in the Nordics than in other areas, but the profile is similar with very low churn in the cohorts that have been with us for more than 12 months, while the churn is higher in the most recent intake. Price increases primarily in Nordics and Europe, partially offset by regional mix in some other areas. In America, the ARPU is coming down. It was 131 in the quarter, down 5.7% year-on-year due to primarily geographical mix and a higher share of partnership subs. We continue to target full year net addition in line with 2025, which will require a solid performance in the fourth quarter. Streaming P&L, net sales growth of 8.4%. reported 7.8% in constant currencies to 1 billion flat, driven by the subsintake but also helped by a rising ARPU. Europe reported sales growth of 18.6% and the Nordics of 5.6%, while APEC growth 3.7% and we had a slight decline in the Americas. Gross margin improved to 40.5%. up from 39.9% with higher margins in Nordics and Americas partially offset by Europe and APEC. The adjusted EBITDA was 153 for a margin of 15.3%. The decrease reflects the increased marketing investment but it is also together with higher personnel and IT related costs. Operating profit was 119 million. Moving over to our cash flow statement. We delivered a strong cash flow from operations before working capital of 246 million up 21% year-on-year. We had a positive impact from working capital of 40 million in the quarter compared to a headwind in the same quarter last year of 45 million. This enabled really strong growth in the cash flow from operating activities after working capital of 81% to 285 million. The cash flow year to date is 570 million, an increase of 228 million compared to the same period last year. Cash flow from investment activities was 44 million, minus 44 million, mainly explained by investments in intangible assets of 48 million. Cash flow from financing activities negative with 102 million of which buybacks accounts for 91 million. Cash flow for the period was 140. We have added a new slide to the deck showing our free cash flow development over several quarters starting in Q1 2023. On a rolling 12-month basis, our free cash flow, that is cash flow from operations after CapEx, both tangibles and intangibles, is at the level of 587 million. This is an increase of 57% year on year from 373 million annualized free cash flow in Q3 2025. and it's up 245% from Q3 2024, so it's been a very strong improvement in the cash flow generation. Looking over the past eight quarters, the average annualized free cash flow is around 419 million and over the past four quarters it's 474 million. This equals a free cash flow per share of 5.4 and 6 kronas per share respectively over these periods. The dramatic improvement in free cash flow generation provides us with a lot of flexibility to further drive value creation for our shareholders, primarily from investing in growth opportunities, but also in the form of distributions. Moving over to the balance sheet, we see that we have total assets of 3.9 billion, equity increased to 2.1 with an equity to assets ratio of 53.5, up from 49.7% a year ago. We ended Q3 with a net cash position of 132 million versus a net debt of 23 million in the same quarter last year. During Q3, as we have mentioned, we did buybacks of 91 million. In Q2, we distributed 140 million to shareholders in the form of dividends, and we acquired over Amstel for 175 million. Together with our unused credit facility, we have a total liquidity on our books of 1.2 billion. Our gearing is negative 0.15 versus our max target of 1.5 which provides even more room for growth initiatives so we are well prepared to continue develop our solid offering and our business model and with that i'll hand it back to you Bodil