Interim Report 2020-01-01 - 2020-03-31
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INTERIM REPORT 2020-01-01 - 2020-03-31 INTERIM REPORT 2020-01-01 - 2020-03-31 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 2020-01-01 - 2020-03-31 INTERIM REPORT 2020-01-01 - 2020-03-31 FIRST QUARTER 2020 • Revenues amounted to SEK 400.4 (238.3) million, an increase by 68 % compared to the same period last year. • Operating profit amounted to SEK 165.9 (62.7) million, an increase by 164 %. • Profit before tax amounted to SEK 164.7 (63.2) million, and profit after tax amounted to SEK 128.0 (49.3) million. • Cash flow from operating activities amounted to SEK 247.7 (156.3) million, and cash flow from investing activities amounted to SEK -166.4 (-101.6) million. • By the end of the period cash amounted to SEK 625.1 (378.7) million. • Earnings per share amounted to SEK 1.21 (0.47) per share. • Revenues in the quarter are mainly attributable to Cities: Skylines, Europa Universalis IV, Hearts of Iron IV, Stellaris and Surviving the Aftermath. IMPORTANT EVENTS IN THE FIRST QUARTER 2020 • Three expansions were released during the period; La Résistance for Hearts of Iron IV, Federations for Stellaris and Sunset Harbor for Cities: Skylines. • The Group's employees work from home since mid-March to reduce the spread of Covid-19. At present, there is no set date for employees to return to work from regular office premises. ABOUT PARADOX AFTER THE END OF THE PERIOD The Paradox group today consists of both publishing and internal development of • No significant events have taken place 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 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 four million gamers play a Paradox game each month and the number of registered Paradox users exceeds twelve million. Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 2 INTERIM REPORT 2020-01-01 - 2020-03-31 COMMENTS FROM THE CEO Record quarter under sad circumstances It is with mixed feelings that I present the first exclusively digital. Most of the work can therefore During the quarter, we have tried to help those quarterly report of the year. The Covid-19 pande- be done efficiently from home, although there are, who have greater challenges than we do. Our mic has impacted our society in a disturbing way, of course, tasks that are more difficult under cur- efforts, among other things, have included finan- causing tragedies for individuals and families as rent physical constraints. We see some impact on cially supporting charities in Sweden, the Nether- it has for business. Covid-19 has also affected Pa- the speed of the creative process, a key compo- lands, and the US where we have a presence. We radox, albeit not as harshly as many other compa- nent of developing a game. As for consumption, are extremely happy and proud, with the help of nies. Since mid-March, all of our employees in all we, like large parts of the digital entertainment our dear players, to have conducted a very suc- offices worldwide have been working from home, industry, have not seen demand for our products cessful fundraiser on Steam and thereby donated and will continue to do so for the time being. The decrease, but on the contrary it has increased. 5 MSEK to the UN COVID-19 Solidarity Response situation is challenging, but I am extremely proud However, it is still too early to say what long-term Fund. of how well our employees have handled the situ- effects, if any, Covid-19 will have on our business ation. We are fortunate to have a business where and on the gaming industry in general. Revenue for the quarter increased by 68% compa- production, distribution and marketing are almost red to the same quarter last year, and revenue for Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 3 INTERIM REPORT 2020-01-01 - 2020-03-31 the last 12 months increased by 32% compared to a year ago. Profit before tax for the quarter increased by 161% compared to the first quarter of 2019 and profit before tax for the last 12 months was 50% higher than a year ago. I want to take this oppor- tunity to remind you that our revenues and results often vary substantially between quarters and we rarely have a seasonal pattern. This means that a comparison between individual quarters risks gi- ving a misleading picture of our long-term financial development, especially when including a quarter of extraordinary events such as Covid-19. A strong contributing reason for the high revenue has been that during the quarter we released expansions to three of our biggest games. First out was La Résistance for Hearts of Iron IV, followed by Federations for Stellaris and then Sunset Harbor for Cities: Skylines. When we release expansions to our larger games, it usually generates significant revenue. This quarter, the sale of the expansions was exceptionally good. All three expansions broke sales records by selling more in the first month than any previous expansion ever made for each respective game. These high sales are reached when the games are now, on average, more than four years old. It is a pattern we see that many of our games sell more and more expansions, the older the games become. On the last day of the qu- arter, we also released a content pack for Impera- tor: Rome. This is the first content we have charged Imperator players for since the release of the game one year ago. The reception from players has been very positive and, as I have written in previous reports, it is really great that we have been able to turn around fans' perception of Imperator: Rome. Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholmtockholm • www.paradoxinteractive.com 4 INTERIM REPORT 2020-01-01 - 2020-03-31 When we break revenue records during the quarter without launching any new games, it is yet another confirmation of how valuable it is to have a portfo- lio of games with a long life, strong brands, and a dedicated and growing player base. This has been, and will continue to be, central to our strategy. We continue to build on our existing brands through new content, constantly expanded distribution, and steady marketing efforts. At the same time, we continue to invest in creating new brands, all with the aim of expanding our portfolio of games that will attract players and generate revenue for a long time. As our revenues and profits rise, we also increase our investments. During the first quarter of the year, we invested more in game development than ever before; investments increased by 57% compared to the first quarter of 2019. The second quarter of the year has so far been characterized by a focus on completing the development and preparing the launch of the games that we will release later this year. Ahead of us, we have two of the biggest game releases we have ever launched -- Crusader Kings III and Vampire: the Masquerade - Bloodlines 2 -- but also Empire of Sin and continued updates to Surviving the Aftermath. I am very much looking forward to sharing these fantastic games with the outside world -- and sincerely hoping that we can all return to our everyday lives as soon as possible. Ebba Ljungerud, CEO Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 5 INTERIM REPORT 2020-01-01 - 2020-03-31 RELEASES DURING THE QUARTER DLC DLC DLC HEARTS OF IRON IV - LA RÉSISTANCE STELLARIS: FEDERATIONS CITIES: SKYLINES - SUNSET HARBOR PC, MAC, LINUX PC, MAC, LINUX PC, XBOX ONE, PLAYSTATION 4 Uncover Enemy Secrets in Hearts of Iron IV. The supreme art of war is to subdue the enemy without Ahoy! Cities: Skylines - Sunset Harbor introduces the La Résistance adds secret agents, espionage missions fighting. With the Stellaris: Federations expansion, fishing industry, new mass transit options, and important and new options for resistance movements to Hearts players can extend their diplomatic dominion over the city services. Increase your city's entertainment with of Iron IV, the popular grand strategy wargame from galaxy like never before. Use every trick in the book to the Aviation Club and fly with passenger helicopters and Paradox Development Studio. Send agents into dang- gain an edge on friend and foe alike, with a host of new private planes. Create cities across five new maps and erous territory to decipher enemy secrets or prepare the options to influence, manipulate, and dominate without build fishing infrastructure to develop your agricultural ground for your invasion by propping up collaborators firing a shot. industry. who will be happy for any taste of power.