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, IV, 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 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 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.

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 6 INTERIM REPORT 2020-01-01 - 2020-03-31

REVENUE AND PROFIT FIRST QUARTER

REVENUE AND PROFIT FIRST QUARTER Selling expenses for the period amounted to SEK By the end of the period property and equipment Revenues amounted to SEK 400.4 (238.3) million, an 46.9 (39.0) million. Selling expenses increased due to amounted to SEK 33.4 (11.3) million. increase by 68 % compared to the same period last increased investments in events, advertising, sales year. Three expansions were released during the pe- and marketing. Right-of-use assets for offices amounted to SEK riod; La Résistance for Hearts of Iron IV, Federations 225.5 (40.1) million. Since last year, Harebrained for Stellaris and Sunset Harbor for Cities: Skylines. Administrative expenses for the period amounted to Schemes, Triumph Studios, Paradox Development Revenues in the quarter are mainly attributable to SEK 36.2 (38.6) million. Studio and Paradox Interactive have taken up new Cities: Skylines, Europa Universalis IV, Hearts of Iron premises. IV, Stellaris and Surviving the Aftermath. Other income amounted to SEK 20.6 (4.1) million, and other expenses to SEK 0.5 (0.0) million. The positive Shares in associates amount to 23.3 MSEK (16.3 Cost of goods sold amounted to SEK 171.4 (101.9) development is primarily driven by a stronger price MSEK) by the end of the period, relating to 33 % of million, primarily attributable to game development, performance of USD against SEK in the Group's liquid shares in Seattle-based development studio Hardsu- development support, operation and maintenance assets, operating receivables and liabilities during the it Labs. The shares are valued at the equity method. of games, as well as royalties to third parties. Costs quarter compared with the same quarter last year. for game development has increased following game Accounts receivable amounted to SEK 162.4 (76.8) investments and releases of new games. During Operating profit amounted to SEK 165.9 (62.7) mil- million by the end of the period, mainly attributable the period, write-downs have been made regarding lion, an increase by 164 % to sales during the last month of the period. unannounced externally developed games, which burden cost of goods sold with SEK 3.8 (2.9) million. Financial items amounted to net SEK -1.2 (0.4) mil- Cash and cash equivalents amounted to SEK 625.1 During the period, a write-down was also made lion. Financial items primarily consists of interest on (378.7) million. regarding an acquired license that impacts costs of lease liabilities. goods sold with SEK 10.6 million (SEK 0.0 million). Shareholders' equity amounts to SEK 1,260.8 (906.1) Work on development support as well as operation Profit before tax amounted to SEK 164.7 (63.2) million, consisting of SEK 128.0 (49.3) million is ac- and maintenance has since the beginning of the million, and profit after tax amounted to SEK 128.0 cumulated profit for the year. year been mainly identified within the cost of goods (49.3) million. sold function, which contributes to an increase of Longterm lease liabilities amounts to SEK 187.6 (27.0) the post. Royalties have also increased compared to FINANCIAL POSITION million consisting of liabilities for office premises. the comparison period due to an increase in sales Capitalised development amounted to SEK 692.4 of externally developed games generating royalty. (479.8) million by the end of the period. Deferred tax liabilities amounts to SEK 125.7 (109.5) Since the end of the year, the item is referred to as million, mainly relating to untaxed reserves. cost of goods sold, since it is considered to be a more Licenses, brands and similar rights amounted to SEK accurate description of the function's content. 195.6 (240.6) million.

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 7 INTERIM REPORT 2020-01-01 - 2020-03-31

Other long term liabilities amounted to SEK 25.6 Profit before tax amounted to SEK 166.2 (72.4) million. DIVIDEND PROPOSAL (61.2) million by the end of the period. Other long Profit after tax amounted to SEK 128.6 (56.7) million. The Board proposes a dividend of SEK 1.00 per term liabilities consist of a contingent consideration share. The Board proposes Tuesday, May 19, 2020 as relating to the acquisition of the rights to Prison ACCOUNTING PRINCIPLES record date. If the meeting approves the proposal, Architect which will be settled within a three-year This interim report has been prepared in accordance the dividend will be distributed by Euroclear Sweden period from the transaction date. with IAS 34, Interim Financial Reporting. The parent AB on Friday May 25, 2020. company applies the Swedish Financial Reporting Short term lease liabilities amounts to SEK 39.1 Board's recommendation RFR 2, accounting for legal (13.1) million consisting of short term liabilities for entities. The same accounting principles have been office premises. applied as in the latest annual report. It is judged that the fair values of all financial assets and liabi- Accrued expenses and prepaid income amounts to lities are approximately equal to their book values. SEK 278.2 (121.1) million. The change is mainly rela- Financial instruments valued at fair value is compri- ted to an increase in prepaid revenue from games sed of contingent considerations. These are repor- sold where revenue is accounted for at a later date. ted at fair value through profit or loss. The valuation is based on other observable data for the asset or CASH FLOW FIRST QUARTER liability, that is, level 3 according to IFRS. No reclas- Cash flow from operating activities amounted to sifications have been made between the different SEK 247.7 (156.3) million, primarily attributable to levels during the period. the operating profit and adjustments not included in the cash flow. Cash flow from investing activities RISKS AND UNCERTAINTIES amounted to SEK -166.4 (-101.6) million, mainly refer- Paradox is, like most companies, exposed to certain ring to investments in game development. Cashflow risks in its operations. The risks and uncertainties from financing activities amounted to SEK -9.1 (-3.8) are described as a whole in the Annual Report for million and consists of amortisation of lease liabili- 2019, page 23. Risks to be specifically mentioned ties. includes a dependency on key employees, depen- dency on a few sales partners, delays of game pro- PARENT COMPANY FIRST QUARTER jects, low revenues from game releases, and foreign The parent company consists of the publishing currency. These risks and uncertainties may have a direct or indirect impact on the group's financial branch, and the parent company provides adminis- position and results. trational services to its subsidiaries. The subsidiaries mainly have intercompany revenue from the parent company, which is why the financial development of the parent company to a great extent follows the group's development. Parent company revenues for the quarter amounted to SEK 400.2 (236.1) million. Operating profit amounted to SEK 166.2 (72.4) million.

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 8 INTERIM REPORT 2020-01-01 - 2020-03-31

CONTACT Additional information about the company can be found on the corporate website www.paradoxinteractive.com. The company can be contacted by e-mail, [email protected], or by post Paradox Interactive AB, Magnus Ladulåsgatan 4, 118 66, Stockholm, Sweden.

CALENDAR Paradox intends to distribute financial reports on the below dates.

Annual General Meeting 2020-05-15 Interim report January - June 2020 2020-08-11 Interim report January - September 2020 2020-11-17 Year-end report January - December 2020 2021-02-23

ASSURANCE BY THE BOARD OF DIRECTORS The board of directors hereby provide an assurance that the interim report provides a true and fair view of the parent company's and the group's business, positions and earnings, and also describe the signif- icant risks and uncertainties faced by the companies making up the group.

Stockholm May 12, 2020

Fredrik Wester Ebba Ljungerud Chairman of the Board Chief Executive Officer

Håkan Sjunnesson Josephine Salenstedt

Peter Ingman Mathias Hermansson

This report has not been subject to special review by the company's auditors.

This information is information that Paradox Interactive AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication on May 12, 2020.

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 9 INTERIM REPORT 2020-01-01 - 2020-03-31

KEY FIGURES FOR THE GROUP

2020-01-01 2019-01-01 2019-01-01 2020-03-31 2019-03-31 2019-12-31

Revenues, KSEK 400,404 238,271 1,289,332

Operating profit, KSEK 165,885 62,744 473,530 Profit before tax, KSEK 164,697 63,162 466,849 Profit after tax, KSEK 128,007 49,329 374,080

Operating margin 41% 26% 37% Profit margin 32% 21% 29% Equity/assets ratio 62% 70% 58%

Equity per share before and after dilution, SEK 11.94 8.58 10.66 Earnings per share before and after dilution, SEK 1.21 0.47 3.54 Number of shares by the end of the period before and after dilution 105,600,000 105,600,000 105,600,000 Average number of shares before and after dilution 105,600,000 105,600,000 105,600,000

Average number of employees 496 417 453 Number of employees by the end of the period 503 423 479

OPERATING MARGIN EQUITY PER SHARE Operating profit after depreciation and amortisation in relation to revenues Shareholders' equity divided by the number of shares outstanding at the end of the period

PROFIT MARGIN EARNINGS PER SHARE Profit after tax in relation to revenues Profit for the period divided by the average number of shares outstanding during the period

EQUITY/ASSETS RATIO EQUITY Equity at the end of the period in relation to total assets at the end of the period Shareholders' equity

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 10 INTERIM REPORT 2020-01-01 - 2020-03-31

GROUP INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME (KSEK) 2020-01-01 2019-01-01 2019-01-01 2020-03-31 2019-03-31 2019-12-31

Revenues 400,404 238,271 1,289,332 Cost of goods sold -171,401 -101,936 -500,286

Gross profit 229,003 136,335 789,046

Selling expenses -46,948 -39,035 -193,582 Administrative expenses -36,222 -38,622 -173,665 Other income 20,572 4,078 63,553 Other expenses -521 -11 -11,821

Operating profit 165,885 62,744 473,530

Profit from shares in subsidiaries - - 34 Financial income 0 581 583 Financial expense -1,188 -163 -7,298

Profit after financial items 164,697 63,162 466,849

Income tax expense -36,689 -13,833 -92,769

Profit for the period and total income for the period 128,007 49,329 374,080

Attributable to: Shareholders of the parent company 128,007 49,329 374,080 Non-controlling interests - - -

Earnings per share attributable to the shareholders of the parent company, SEK 1.21 0.47 3.54

OTHER COMPREHENSIVE INCOME Items that may be reclassified to profit or loss

Translation differences 7,603 3,031 2,919

Total comprehensive income for the period 135,611 52,360 376,999

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 11 INTERIM REPORT 2020-01-01 - 2020-03-31

GROUP BALANCE SHEET (KSEK)

2020-03-31 2019-03-31 2019-12-31

ASSETS Non-current assets Capitalised development 692,356 479,784 580,736 Licenses, brands and similar rights 195,622 240,616 200,561 Property and equipment 33,409 11,327 32,583 Right-of-use assets 225,471 40,089 235,521 Investments in associates 23,345 16,334 18,835 Other long term assets 3,462 3,462 3,462

Total non-current assets 1,173,665 791,612 1,071,698

Current assets Accounts receivable 162,446 76,775 249,716 Other receivables 16,997 13,475 18,646 Prepaid expenses and accrued revenue 47,172 41,798 48,019 Cash and cash equivalents 625,051 378,749 554,227

Total current assets 851,665 510,797 870,609

TOTAL ASSETS 2,025,330 1,302,409 1,942,307

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 12 INTERIM REPORT 2020-01-01 - 2020-03-31

GROUP BALANCE SHEET (KSEK)

2020-03-31 2019-03-31 2019-12-31 EQUITY AND LIABILITIES Equity Share capital 528 528 528 Other capital contributed 27,994 27,994 27,994 Reserves 16,711 9,219 9,107 Retained earnings 1,087,547 819,067 713,467 Profit for the period 128,007 49,329 374,080

Total equity 1,260,787 906,137 1,125,176

Long term liabilities Lease liabilities 187,599 27,028 194,034 Deferred tax liabilities 125,723 109,462 126,078 Other liabilities 25,615 61,227 23,293

Total long term liabilities 338,937 197,718 343,404

Current liabilities Accounts payable 43,461 30,093 45,030 Current tax liabilities 39,119 24,921 40,467 Lease liabilities 39,137 13,132 42,247 Other liabilities 25,716 9,353 12,144 Accrued expenses and prepaid revenues 278,173 121,055 333,837

Total current liabilities 425,606 198,554 473,726

TOTAL EQUITY AND LIABILITIES 2,025,330 1,302,409 1,942,307

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 13 INTERIM REPORT 2020-01-01 - 2020-03-31

CHANGE IN GROUP EQUITY (KSEK) Other capital Share capital contributed Reserves Retained earnings Total equity

At the beginning of the period 2019-01-01 528 27,994 6,188 819,067 853,777 Dividend -105,600 -105,600 Profit for the period and total income for the period - - 2,919 374,080 376,999

At the end of the period 2019-12-31 528 27,994 9,107 1,087,547 1,125,176

At the beginning of the period 2020-01-01 528 27,994 9,107 1,087,547 1,125,176 Profit for the period and total income for the period - - 7,603 128,007 135,611

At the end of the period 2020-03-31 528 27,994 16,711 1,215,554 1,260,787

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 14 INTERIM REPORT 2020-01-01 - 2020-03-31

GROUP CASH FLOW STATEMENT (KSEK) 2020-01-01 2019-01-01 2019-01-01 2020-03-31 2019-03-31 2019-12-31

Operating profit 165,885 62,744 473,530 Adjustment of depreciations, amortisations and write-downs 79,296 53,849 262,205 Other adjustments -2,428 -1,982 -41,684 Interest received 0 0 2 Interest paid -1,188 -163 -7,298 Tax paid -39,990 -16,105 -63,104 Cash flow from current operations before changes in working capital 201,575 98,342 623,652 Changes in working capital

Change in current receivables 88,919 59,378 -118,733 Change in current liabilities -42,814 -1,437 222,852

Cash flow from current operations 247,681 156,284 727,770

Investing activities Investments in capitalised development -153,422 -97,897 -421,986 Proceeds from capitalised development - - 80,000 Investments in licenses, brands and similar rights -10,578 - - Proceeds from licenses, brands and similar rights - - 350 Investments in equipment -2,394 -3,695 -32,806 Proceeds from sale of subsidiaries - - 26

Cash flow from investing activities -166,394 -101,592 -374,416

Financing activities Received deposits 422 - - Amortisation of lease liability -9,544 -3,829 -23,464 Paid dividend - - -105,600

Cash flow from financing activities -9,122 -3,829 -129,064

Cash flow for the period 72,165 50,862 224,291 Cash and cash equivalents at the beginning of the period 554,227 327,044 327,044 Exchange rate effect -1,341 843 2,892

Cash and cash equivalents at the end of the period 625,051 378,749 554,227

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 15 INTERIM REPORT 2020-01-01 - 2020-03-31

PARENT COMPANY INCOME STATEMENT (KSEK) 2020-01-01 2019-01-01 2019-01-01 2020-03-31 2019-03-31 2019-12-31

Revenues 400,213 236,122 1,289,081 Cost of goods sold -166,320 -89,785 -463,661

Gross profit 233,893 146,337 825,421

Sales expenses -47,043 -38,650 -193,582 Administrative expenses -36,370 -37,481 -174,596 Other income 16,245 2,147 13,713 Other expenses -515 0 -10,548

Operating profit 166,210 72,353 460,407

Profit from shares in subsidiaries - - 34 Financial income - - 2 Financial expense -17 -2 -7

Profit after financial items 166,193 72,350 460,436

Year-end appropriations - - -111,500 Income tax expense -37,566 -15,650 -77,745

Profit for the period and total income for the period 128,628 56,701 271,190

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 16 INTERIM REPORT 2020-01-01 - 2020-03-31

PARENT COMPANY BALANCE SHEET (KSEK)

2020-03-31 2019-03-31 2019-12-31

ASSETS Non-current assets Capitalised development 681,132 449,444 566,006 Licenses, brands and similar rights 105,692 95,171 111,464 Property and equipment 23,539 6,450 24,287 Shares in subsidiaries 106,454 145,109 106,454 Receivables from group companies - 50,301 - Investments in associates 16,766 16,766 16,766 Other long term assets 3,462 3,462 3,462

Total non-current assets 937,045 766,704 828,440

Current assets Accounts receivable 161,913 76,048 249,522 Receivables from group companies 19,856 26,334 20,426 Other receivables 15,890 12,385 16,437 Prepaid expenses and accrued revenues 47,923 42,793 48,602 Cash and cash equivalents 589,231 346,538 519,333

Total current assets 834,813 504,099 854,320

TOTAL ASSETS 1,771,858 1,270,802 1,682,760

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 17 INTERIM REPORT 2020-01-01 - 2020-03-31

PARENT COMPANY BALANCE SHEET (KSEK)

2020-03-31 2019-03-31 2019-12-31 EQUITY AND LIABILITIES Equity Restricted equity

Share capital 528 528 528 Capitalised development reserve 681,132 449,444 566,006 Non-restricted equity

Share premium reserve 27,994 27,994 27,994 Retained earnings 48,215 114,067 -107,850 Profit for the period 128,628 56,701 271,190

Total equity 886,497 648,733 757,869

Untaxed reserves 472,875 361,375 472,875

Long term liabilities Other liabilities 25,615 61,227 23,293

Total long term liabilities 25,615 61,227 23,293

Current liabilities Accounts payable 42,205 24,863 38,539 Liabilities to group companies 40,257 24,651 27,859 Current tax liabilities 37,945 24,069 39,030 Other liabilities 7,507 2,525 2,353 Accrued expenses and prepaid revenues 258,958 123,359 320,942

Total current liabilities 386,871 199,467 428,723

TOTAL EQUITY AND LIABILITIES 1,771,858 1,270,802 1,682,760

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 18 INTERIM REPORT 2020-01-01 - 2020-03-31

NOTES (KSEK) NOTE 1 SEGMENT REPORTING Group Management has determined the operating segments based on the information processed by the President and which is the basis for making strategic decisions. The operations consist of one segment.

Group revenue from clients based on where the distributor is located is divided into the following geographical areas;

2020-01-01 2019-01-01 2019-01-01 KSEK 2020-03-31 2019-03-31 2019-12-31

USA 338,341 193,712 1,090,842 Sweden 10,130 6,286 24,366 Rest of Europe 45,966 34,081 156,957 Rest of the World 5,966 4,192 17,168

Total 400,404 238,271 1,289,332

Group revenue divided into major product categories;

2020-01-01 2019-01-01 2019-01-01 KSEK 2020-03-31 2019-03-31 2019-12-31

PC 336,780 193,025 1,071,588 Console 55,816 40,945 199,256 Mobile 2,963 1,807 6,597 Other 4,845 2,494 11,891

Total 400,404 238,271 1,289,332

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 19 INTERIM REPORT 2020-01-01 - 2020-03-31

NOTE 2 DEPRECIATIONS, AMORTISATIONS AND WRITE-DOWNS DIVIDED PER FUNCTION

2020-01-01 2019-01-01 2019-01-01 2020-03-31 2019-03-31 2019-12-31

Cost of goods sold 71,260 48,821 233,246 Selling expenses 1,313 - - Administrative expenses 6,724 5,028 28,959

Total 79,296 53,849 262,205

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 20 INTERIM REPORT 2020-01-01 - 2020-03-31

Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Magnus Ladulåsgatan 4, 118 66 Stockholm • www.paradoxinteractive.com 21