Interim Report 2021-01-01 - 2021-03-31
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INTERIM REPORT 2021-01-01 - 2021-03-31 Interim Report 2021-01-01 - 2021-03-31 *Please note that this is a translation for information purposes only - in case of any discrepancies between this version and the Swedish, the Swedish version shall prevail. Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 1 INTERIM REPORT 2021-01-01 - 2021-03-31 INTERIM REPORT 2021-01-01 - 2021-03-31 FIRST QUARTER 2021 • Revenues amounted to MSEK 364.5 (MSEK 400.4), a decrease by 9 % compared to the same period last year. • Operating profit amounted to MSEK 92.5 (MSEK 165.9), a decrease by 44 %. • Profit after financial items amounted to MSEK 91.6 (MSEK 164.7), and profit after tax amounted to MSEK 76.7 (MSEK 128.0). • Cash flow from operating activities amounted to MSEK 145.7 (MSEK 247.7), and cash flow from investing activities amounted to MSEK -189.2 (MSEK -166.4). • By the end of the period cash amounted to MSEK 717.6 (MSEK 625.1). • Earnings per share amounted to SEK 0.72 (1.21) after dilution. • Revenues in the quarter are mainly attributable to Cities: Skylines, Crusader Kings III, Europa Universalis IV, Hearts of Iron IV and Stellaris. IMPORTANT EVENTS IN THE FIRST QUARTER 2021 • New downloadable content for games was released during the period; Going Green for Prison Architect, Lithoids species pack and Megacorp for Stellaris: Console Edition, Heirs of Alexander for Imperator: Rome and Northern Lords for Crusader Kings III. • The group’s employees continue to work from home to reduce the spread of Covid-19. ABOUT PARADOX The Paradox group today consists of both publishing and internal development of AFTER THE END OF THE PERIOD games and brands. The game portfolio includes more than 100 titles and Paradox owns the most important brands, including Stellaris, Europa Universalis, Hearts of • No significant events have occurred after the end of the period. Iron, Crusader Kings, Cities: Skylines, Surviving Mars, Prison Architect, Magicka, Age of Wonders and the World of Darkness catalogue of brands. From the start in 2004, the company has published its games all over the world, initially through physical distribution but since 2006 primarily in digital channels. Paradox games are developed primarily for PC and console platforms, but the company also releases games on mobile. The largest markets today include the US, UK, China, Germany, France, Russia and Scandinavia. Today, over five million gamers play a Paradox game each month and the number of registered Paradox users exceeds 18 million. Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 2 DELÅRSRAPPORTINTERIM REPORT 2021-01-01 - 2021-03-31 COMMENTS FROM CEO With increased focus on our core games At Paradox, we have gradually created a portfo- long-lived games form the basis of our business and Age of Wonders, and Prison Architect. At the other lio of core games which, through many years and generate, quarter after quarter, the vast majority of end of our portfolio, we have not-yet-released games iterations, have grown popular, created loyal player Paradox’s player activity, revenue and profits. based on new brands that are partly outside our bases and built strong brands. We have also built up current core areas. The development of these games significant internal expertise around these games In recent years, the core games have consisted of Eu- is often associated with higher risk, but when they in terms of game development, marketing and ropa Universalis, Crusader Kings, Stellaris, Hearts of become successful, they attract new players and other publishing activities. This means that we can Iron and Cities: Skylines. We also have several fran- expand our core areas. For us, it is therefore impor- develop and release both expansions to the existing chises in our portfolio of management and strategy tant to have a good balance between building on our games and new sequels to the games with relatively games that have great opportunities to establish existing core games with new content and sequels, low risk and often high returns. These popular and themselves as core games, such as Surviving Mars, and at the same time growing the portfolio with new Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 3 INTERIM REPORT 2021-01-01 - 2021-03-31 games. We have recently adjusted the weighting with the result that we invest a larger part of our invest- ments and resources in the core areas of strategy and management games. This means, for example, that we continue to develop Surviving Mars and could during the first quarter of the year announce that new content is being built by our partner studio Abstrac- tion Games, with several content releases planned for the coming year. Surviving Mars recently reached five million unique players and we see great opportuni- ties for the game to establish itself as part of our core portfolio. To further increase our focus, we also chose during the quarter to cancel further development of two not-yet-announced games, developed by external studios. Part of the increased focus on our core games is about securing the velocity with which we release new con- tent for the games. The balance between publishing content as fast as our players want and keeping high quality in what we produce is difficult and important, and we continue to put a lot of time and effort into constantly getting better. One part of this focus is to in- crease the number of people and studios that build our grand strategy games. The work began in 2020 when our studios in both Malmö and Umeå switched to start developing content for our grand strategy games at the same time as we established a new studio in Barcelona - Paradox Tinto - with the same purpose. Over the years, we will be able to release more and at the same time ensure high quality of our expansions. Revenue during the quarter decreased by 9% and profit before tax decreased by 44%, compared to the first quarter of 2020. For the last twelve months, revenue increased by 21% while profit before tax decreased by 2%, compared with a year earlier. Since a large part of Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholmtockholm • www.paradoxinteractive.com 4 INTERIM REPORT 2021-01-01 - 2021-03-31 our revenue is in USD and other foreign currencies, our games, not least in China. The Chinese market has tain areas due to working from home and I therefore revenue and result are affected by changes in exchange gradually increased in importance for us and during look forward to meeting all colleagues in the offices rates. The USD / SEK exchange rate has decreased by the first quarter of the year it was our second largest again soon. 13% from the first quarter of 2020 to the first quarter of market after the USA in terms of sales. this year, which has had a significant negative impact Next week, May 21-23, our annual PDXCON will take on the quarter's revenue. We are not satisfied with the For many reasons, I am glad that the vaccination aga- place, this time as a completely digital event, PDXCON quarter. Sometimes there are periods with fewer and inst Covid-19 is in full swing. For us at Paradox, this Remixed. I hope to see as many of you as possible smaller game and expansion releases - but we can do means that we will be able to start going back to the there! better than this and our ambitions are higher. offices in all countries in the not too distant future. Although player activity and growth have been strong Ebba Ljungerud, CEO In February, we participated in the Steam Lunar New during the pandemic, we have, despite great efforts Year Sale which contributed to increased sales of our from all our staff and partners, lost efficiency in cer- Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 5 INTERIM REPORT 2021-01-01 - 2021-03-31 RELEASES DURING THE QUARTER DLC DLC DLC PRISON ARCHITECT: GOING GREEN STELLARIS: CE - LITHOIDS STELLARIS: CE - MEGACORP PC, XBOX ONE, PLAYSTATION 4, NINTENDO SWITCH XBOX ONE, PLAYSTATION 4 XBOX ONE, PLAYSTATION 4 Prepare to get your hands dirty Wardens! The Lithoids Species Pack features a selection of new MegaCorp is an expansion pack for Stellaris: Console Prison Architect: Going Green brings agriculture to your rock-based species portraits and ship models for play- Edition, which has players ushering in an era of prospe- compound, introducing farming, produce exports, and a ers who take nothing for granite and are looking to une- rity and profit on a galactic scale. In this economy-fo- whole bunch of contraband. arth a more grounded civilization. Lithoids are a bigger cused expansion, players can become the CEO of a Fruits of Labor: Farming introduces a new type of Prison and boulder species type made entirely of sapient rock powerful corporate empire to expand operations across Labor, allowing prisons to grow potatoes, wheat, apples, who eat minerals for sustenance, are long-lived, and the stars. and more. Produce can be exported or used as ingredi- can colonize in almost any environment. ents for inmate meals. Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 6 INTERIM REPORT 2021-01-01 - 2021-03-31 DLC DLC IMPERATOR: ROME - HEIRS OF ALEXANDER CRUSADER KINGS III - NORTHERN LORDS PC PC The Hellenistic kingdoms of the Eastern Mediterranean and Asia take Best known as fierce raiders from a land of snow and legend, the Norse center stage in this Content Pack for Imperator: Rome.