Interim report January - September 2021
Third quarter 2021
Revenues amounted to MSEK 289.4 (MSEK 494.8), a decrease by 42 % compared to the same period last year.
Operating profit amounted to MSEK -44.6 (MSEK 187.7), a decrease by 124 %. Write-downs of MSEK 133.7 (MSEK 28.4) are included in the operating profit.
Profit after financial items amounted to MSEK -45.4 (MSEK 187.0), and profit after tax amounted to MSEK -33.2 (MSEK 148.5).
Cash flow from operating activities amounted to MSEK 59.4 (MSEK 213.0), and cash flow from investing activities amounted to MSEK -151.4 (MSEK -236.3).
By the end of the period cash amounted to MSEK 552.3 (MSEK 600.0).
Earnings per share before dilution amounted to SEK -0.31 (SEK 1.41) and after dilution to SEK -0.31 (SEK 1.40).
Revenues in the quarter are mainly attributable to Cities: Skylines, Crusader Kings III, Europa Universalis IV, Hearts of Iron IV and Stellaris.
First nine months 2021
Revenues amounted to MSEK 1,056.9 (MSEK 1,360.1), a decrease by 22 % compared to the same period last year.
Operating profit amounted to MSEK 159.3 (MSEK 552.6), a decrease by 71 %. Write-downs of MSEK 210.1 (MSEK 32.3) are included in the operating profit.
Profit after financial items amounted to MSEK 156.4 (MSEK 594.4), and profit after tax amounted to MSEK 131.9 (MSEK 431.0).
Earnings per share before dilution amounted to SEK 1.25 (SEK 4.08) and after dilution SEK 1.25 (SEK 4.07).
Important events in the third quarter 2021
New downloadable content for games was released during the period; Below and Beyond for Surviving Mars and Ancient Relics for Stellaris: Console Edition.
The group’s employees continue to work from home to reduce the spread of Covid-19.
Fredrik Wester took over as CEO and Håkan Sjunnesson was appointed Chairman of the Board.
The development has been canceled for several unannounced games, which has led to write-downs of MSEK 133.7.
After the end of the period
No significant events have occurred after the end of the period.
Comments by the CEO
Tough quarter where we pave the road ahead
This report is a disappointment, we underperform on several important key figures as well as the quality standard we've set for our products, which is something we have identified and are working hard to improve. Profit before tax of SEK -45 million is largely driven by non-recurring costs linked to write-downs of cancelled projects. However, we have also had delays in our game development which have led to too few releases of new content for our core games. In a longer perspective, the quarter's results are an effect of investments in externally developed projects where we must improve at controlling game vision, quality and progress. We have also seen too low velocity in our internally developed projects. In these respects we have been too passive, something we are now rectifying.
My initial time back as the CEO of Paradox Interactive has therefore been characterized by high activity and a great expectation on the time ahead of us. We continue to build forward momentum from the company's strong core business, enthusiastic player base and solid fundamentals. We have chiseled a straight line forward for leveraging and developing Paradox's strengths and have ground down many irregularities.
We can and will perform far better. In the short term we have taken steps forward to become a smarter and sharper game developer and publisher. Our pipeline is stronger after the quarter, we have freed up resources and begun to phase them into more promising projects and the work to refocus our energy to activities with greater revenue potential is in full swing. We put a lot of effort into ensuring that we henceforth have the right level of quality on all content we release. Going forward, we have a stronger framework for how we work with and set targets for the quality of games and expansions and have created a clearer ownership of game quality where decisions are made closer to game development.
With the changes above behind us we can continue the implementation of our strategic direction for how we will invest in, develop and publish games in the future. My and the management team's focus is on maximizing and developing a few strong segments and franchises, rather than placing several new big flags in unexplored territories. So that our strengths in the strategy and management segments come to the fore.
One effect of this is that our internal development will take precedence in future investments. At the same time, we will take a more conservative stance on external development, unless we have a strong and proven relationship with the studio in question. To explore more and new revenue streams is still important and we will continue to make forays into new areas where we believe there is potential for success. However, they will be monetarily smaller, faster in process, and more focused in scope.
In the end, Paradox exists to create games that our fans love to play and explore. All the work we do is with this in mind; to create games and experiences that our players want and can continue to come back to. Then we create the revenues that make it possible to continue to grow and develop.
Our clear focus, a strong pipeline with 15 new games and even more content for our core games makes me convinced that Paradox has the best to come. I look forward to leading the work ahead.
Fredrik Wester, CEO
Presentation of report
Fredrik Wester and Alexander Bricca will host a livestream to present the quarter’s results, and answer questions related to the report and the company’s financial performance on our YouTube channel November 16 12:00 PM CET, https://youtube.com/paradoxinteractive.
Please note that our report livestream has changed platforms to YouTube and will not be hosted where it appeared in previous quarters. As part of this change, there will not be a live chat function during the stream; please ensure your questions are submitted via our forum or by e-mailing them to firstname.lastname@example.org. Please note that it will be possible to e-mail questions to email@example.com during the presentation.
If you missed the presentation, you can find it here.
This disclosure contains information that Paradox Interactive AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 16-11-2021 08:00 CET.