Interim Report 2020-01-01 - 2020-06-30
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INTERIM REPORT 2020-01-01 - 2020-06-30 INTERIM REPORT 2020-01-01 - 2020-06-30 *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 2020-01-01 - 2020-06-30 INTERIM REPORT 2020-01-01 - 2020-06-30 SECOND QUARTER 2020 • Paradox Publisher Weekend on Steam took place May 14 - May 18. • Revenues amounted to MSEK 464.9 (MSEK 387.2), an increase by 20 % • The Group’s employees work from home since mid-March to reduce the compared to the same period last year. spread of Covid-19. At present, there is no set date for employees to return to • Operating profit amounted to MSEK 199.0 (MSEK 154.2), an increase by 29 %. work from regular office premises. • Profit after financial items amounted to MSEK 197.7 (MSEK 154.0), and profit after tax amounted to MSEK 154.5 (MSEK 120.3). AFTER THE END OF THE PERIOD • Cash flow from operating activities amounted to MSEK 278.5 (MSEK 232.7), and • Paris-based development studio Playrion Game Studio was acquired cash flow from investing activities amounted to MSEK -148.4 (MSEK -104.9). July 1, 2020. • By the end of the period cash amounted to MSEK 637.2 (MSEK 396.4). • Finland-based development studio Iceflake Studios was acquired July 16, • Earnings per share amounted to SEK 1.46 (1.14) after dilution. 2020. • Revenues in the quarter are mainly attributable to Age of Wonders: Planetfall, • The release of Vampire: The Masquerade – Bloodlines 2 will be postponed Cities: Skylines, Europa Universalis IV, Hearts of Iron IV and Stellaris. until 2021. FIRST HALF-YEAR 2020 • Revenues amounted to MSEK 865.3 (MSEK 625.4), an increase by 38 % compared to the same period last year. • Operating profit amounted to MSEK 364.9 (MSEK 217.0), an increase by 68 %. • Profit after financial items amounted to MSEK 362.4 (MSEK 217.2), and profit after tax amounted to MSEK 282.5 (MSEK 169.6). • Earnings per share amounted to SEK 2.67 (1.61) after dilution. ABOUT PARADOX The Paradox group today consists of both publishing and internal development of IMPORTANT EVENTS IN THE SECOND QUARTER 2020 games and brands. The game portfolio includes more than 100 titles and Paradox owns the most important brands, including Stellaris, Europa Universalis, Hearts of • Four expansions were released during the period; Invasions for Age of Iron, Crusader Kings, Cities: Skylines, Surviving Mars, Prison Architect, Magicka, Age Wonders: Planetfall, Emperor for Europa Universalis IV, Island Bound for of Wonders and the World of Darkness catalogue of brands. Prison Architect and Apocalypse for Stellaris: Console Edition. • The new mobile game Stellaris: Galaxy Command was released worldwide. 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 four million gamers play a Paradox game each month and the number of registered Paradox users exceeds 14 million. Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 2 INTERIM REPORT 2020-01-01 - 2020-06-30 COMMENTS FROM CEO STRENGTHENING OUR FORCES FOR THE FUTURE Closing the books for the first half of the year, I am This acquisition also provides additional develop- pleased to see that we have once again delivered ment competence and capacity within management a strong financial quarter while we have also laid games. several important building blocks for the future. The second quarter came with a major increase in our When we look at potential acquisitions, many capacity and competence to develop and publish aspects are taken into consideration in addition to games - both through organic growth and through the purely financial: we look for a company culture acquisitions. that is consistent with ours and a fit around our central game genres, but we are also searching In June, we presented our plans for a new game stu- for strong teams that have already achieved a lot dio in Barcelona: Paradox Tinto. Paradox Tinto is an together. Sometimes we make acquisitions based important step to further expand our capacity within on a need for increased resources and more talent in our central game genre - grand strategy. Johan An- areas we are already good at ourselves, while other dersson, who has been working as Game Director at times our purpose is to acquire new skill sets and Paradox Development Studio in Stockholm, will lead sometimes it is to broaden our brand portfolio with the studio onsite in Barcelona. new game titles. During the quarter we also worked intensely on two Another important part of our acquisition strategy is acquisitions that were made public in July - Playrion to ensure we integrate our acquisitions into our eco- Game Studio and Iceflake Studios. Playrion Game system in a diligent way. We always strive to combine Studio is a mobile-first studio in Paris. Through this the help a studio receives from Paradox Interactive's acquisition we are enhancing our ability to develop structure and resources as a parent company with and publish mobile games, and we also welcome the creative freedom needed to create and build real- Airlines Manager to our game portfolio. Airlines ly good games. Integrating companies requires time Manager is a management game with a long lifespan and resources, and we are convinced that this tactic like many of our other games, but for mobile. generates greater value than the individual units on their own. Iceflake Studios, on the other hand, is a Finnish game studio with whom we already have a successful col- In addition to the new colleagues we have gained laboration regarding Surviving the Aftermath, which through acquisitions, we also prepared for the future is sold in early access through the Epic Games Store. in our existing operations through recruitments Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 666 Stockholm • www.paradoxinteractive.com 3 INTERIM REPORT 2020-01-01 - 2020-06-30 during the period. At the end of the second quarter, Covid-19 has continued to be a significant element our employee count amounted to 534 employees in during the period where our employees are working the entire group. Following the acquisitions of Playri- from home since March. During the latter part of on and Iceflake, which were completed after the end summer we have seen that the positive trend we have of the second quarter, and the start-up of Paradox noticed in regards to increased gaming has somewhat Tinto, our operations stretch to nine locations in six decreased. We have also noticed an impact on our countries around the world. productivity with the risk that primarily game titles which have not yet been communicated may be Our revenue and profit deliver on new records in the delayed. second quarter of the year. Our revenue increased by 20% compared with the same quarter last year and the In summary, we leave an operational as well as finan- revenue for the past twelve months increased by 29% cially successful quarter behind us with strengthened compared with the previous year. Our profit before tax relationships with our fantastic fans. Through the increased by 29% compared with the same quarter acquisitions and recruitments we have made in recent last year and, compared to the previous year's twel- months, we have many new colleagues to welcome ve-month period, profit before tax increased by 42%. when our summer holidays come to an end, which is While we are incredibly proud of the quarter I would something I am really looking forward to! like to mention, as so often before, that our quarters rarely can be compared to each other; instead it is the Ebba Ljungerud, CEO overall picture over time that gives the fairest indicator of our economic development. One of our main growth factors is the game expan- sions we launch on an ongoing basis. During the quarter, we launched the expansions Emperor for Europa Universalis IV, Island Bound for Prison Archi- tect, and Invasions for Age of Wonders: Planetfall - all in line with our strategy to provide games with strong brands and longevity. PC continues to be our largest platform by a good margin, but during the quarter we also continued to expand on other platforms: on console through the ex- pansion Apocalypse for Stellaris and on mobile through the launch of Stellaris: Galaxy Command globally. This way, we reach more players with our brands and can further diversify our sources of revenue. Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 4 INTERIM REPORT 2020-01-01 - 2020-06-30 RELEASES DURING THE QUARTER DLC STELLARIS - GALAXY COMMAND STELLARIS - APOCALYPSE ANDROID & IOS XBOX ONE, PLAYSTATION 4 Get ready to explore and discover a spectacular and Apocalypse is a full expansion that redefines stellar real-time universe, where thousands of players meet warfare for all players with a host of new offensive and in a single galaxy with nearly a thousand star systems defensive options. Destroy entire worlds with terrifying to explore.Construct your space station, form and join planet-killer weapons, fight against (or alongside) ruth- alliances to occupy regions of space together, trade with less space pirates, and maybe discover a few non-violent other players, build-up your own powerful fleet, and features as well.