And Quarterly Report October - December 2018-01-01 - 2018-12-31
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INTERIM REPORT, 2018-01-01 - 2018-09-30 omslag YEAR-END REPORT AND QUARTERLY REPORT OCTOBER - DECEMBER 2018-01-01 - 2018-12-31 *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 • Västgötagatan 5, 6th floor • S-118 27 Stockholm • www.paradoxplaza.com 1 YEAR-END REPORT, 2018-01-01 - 2018-12-31 Year-end report, 2018 FOURTH QUARTER 2018 Race for Surviving Mars, Holy Fury for Crusader Kings II and Golden Cen- E Revenues amounted to SEK 336.9 (222.4) million, an increase by 51 % tury for Europa Universalis IV. compared to the same period last year. E Rights and assets for the Prison Architect IP were purchased from Intro- E Operating profit amounted to SEK 146.8 (86.7) million, an increase by 69 %. version Software Ltd. E Profit before tax amounted to SEK 146.8 (86.7) million, and profit after tax E Steam Winter Sale took place December 20 to January 3. amounted to SEK 114.3 (68.8) million. E Cash flow from operating activities amounted to SEK 151.3 (139.7) million, AFTER THE END OF THE PERIOD and cash flow from investing activities amounted to SEK -167.9 (-63.4) E No significant events have taken place after the end of the period. million. E By the end of the period cash and short-term placements amounted to SEK 327.0 (320.1) million. E Earnings per share amounted to SEK 1.08 (0.65) per share. E Revenue from the fourth quarter of 2018 are mainly attributable to Cities: Skylines, Stellaris, Crusader Kings II, Europa Universalis IV and Hearts of Iron IV. FULL YEAR 2018 E Revenues for the period amounted to SEK 1,127.7 (813.8) million, an in- crease by 39 % compared to the same period last year. ABOUT PARADOX INTERACTIVE E Operating profit amounted to SEK 455.1 (339.8) million, an increase by The Paradox Interactive group includes publishing, internal development of games and licensing of brands. 34 %. The publishing operation publishes both internally developed titles and titles developed by independent E Profit before tax amounted to SEK 455.2 (339.6) million, and profit after studios as well as music and books. The game portfolio includes more than 100 titles and Paradox Interactive owns the most important brands, including Stellaris, Europa Universalis, Hearts of Iron, Crusader Kings, tax amounted to SEK 353.9 (264.9) million. Cities: Skylines, Magicka and Age of Wonders. E Earnings per share amounted to SEK 3.35 (2.51). E The Board of Directors propose a dividend SEK of 1.00 (1.00) per share From the start over ten years ago, the company has published its games all over the world, initially through for the year 2018. physical distribution using partners, but beginning in 2006 has primarily distributed digitally using its own publishing arm. The development platform is primarily PC, but the company has released games on console and mobile platforms as well. The largest markets today include the US, UK, Germany, France, Russia and IMPORTANT EVENTS IN THE FOURTH QUARTER 2018 Scandinavia. Today, over three million gamers play a Paradox game each month and the number of Paradox E Six new expansions were released during the period; Industries for Cities: registered users exceeds nine million. Skylines, MegaCorp for Stellaris, Flashpoint for BATTLETECH, Space Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Västgötagatan 5, 6th floor • S-118 27 Stockholm • www.paradoxinteractive.com 2 YEAR-END REPORT, 2018-01-01 - 2018-12-31 Words from CEO OUR BEST YEAR TO DATE 2018 was an eventful year for Paradox Interactive. I am proud and happy to announce that we are now putting our best income quarter on the books. We do this without having released any new games during the quarter, which again demonstrates the strength of our core strategy to develop and support games and brands in the long term. Continuous updates and expansions give our games a long life, both in terms of number of players and recurring revenue. During the year, we released 16 expansions to existing games, of which six were released during the fourth quarter of 2018; Industries for Cities: Skylines, MegaCorp for Stellaris, Holy Fury for Crusader Kings II, Flashpoint for BATTLETECH, Space Race for Surviving Mars, and Golden Century for Europa Universalis IV. Many of our games continue to be popular many years after release: Europa Universalis IV and Crusader Kings II were released more than 5 and 7 years ago, respectively, but continue to attract both new and existing players. For example, when we released Holy Fury - the most recent expansion for Crusader Kings II - in November 2018, it sold more during its first month than any previous expansion for the game in the same time. At the beginning of the year, we released the new games Surviving Mars and BATTLETECH. In September, Paradox Interactive premie- red on the Nintendo Switch with Cities: Skylines. Although only a few of our most successful games are available on console, our console revenues during the year accounted for 12% of total revenue. We en- ded the year by acquiring the rights to the Prison Architect game and brand, an award-winning management game created by the English studio Introversion Software Ltd. The game is currently available on PC, Mac, Linux, Xbox, Playstation, Switch and on mobile for iOS and Android, and has sold over two million copies so far. Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Västgötagatan 5, 6th floor • S-118 27 Stockholm • www.paradoxinteractive.com Photo: Academy of Interactive Arts & Sciences or AIAS 3 YEAR-END REPORT, 2018-01-01 - 2018-12-31 Through the acquisition of Prison Architect, we In 2019, we will add two completely new games are laying an important building block for future to our portfolio - Age of Wonders: Planetfall and growth within the management genre, where Imperator: Rome - and, for the first time, welcome Cities: Skylines and Surviving Mars are currently the console audience to the grand strategy genre our most successful games. Constantly adding through Stellaris: Console Edition, launching in early new games and brands to our portfolio remains a 2019. We will also reveal more information about core part of our strategy. It helps ensure longevity games that are being developed but have not yet and lessens our dependency on all releases being been announced. hugely successful from day one. For the gaming industry as a whole, 2019 looks to During 2018, we also grew through a number of be a year characterized by growing competition in acquisitions. We acquired the studio Harebrained the distribution market. Several strong players have Schemes LLC, creators of BATTLETECH, as well as a recently announced their plans to challenge Ste- minority stake in Hardsuit Labs Inc, who are working am's dominance in the PC market, while the console on an as-yet undisclosed game on our behalf. The platforms are starting to prepare for the shift to the purpose of these investments was to secure our ex- next hardware generation. pertise and capacity to develop games within both strategy and other genres. We have also expanded For us, these are positive developments. We own a our existing organization considerably - during the strong portfolio of popular games and well-known fourth quarter we passed 400 employees in the brands, content that is very attractive to anyone Group. attempting to enter the distribution market. Our strategy continues to focus on broad cooperation During the full year 2018, we invested 304 MSEK in with all leading distributors, both in the PC and the game development and 155 MSEK in the acquisition console space. At the same time, we remain dedica- of development studios and brands. We also inve- ted to building our own ecosystem of players around sted more money into development of our own tech- Paradox Interactive as the world’s leading publisher nical platform and in the marketing of our games. of deep, complex gaming experiences of the highest All of these investments are made possible by cash quality. flow from our ongoing operations. It is important to point out that our growth journey is just beginning. Also, on a personal note, I have now completed six In 2019 we will invest more than ever in building for months as CEO, and I'm as pleased to be in this posi- the future. As always, our revenue and results vary tion now as I was at the start. We have an exciting greatly between quarters, depending on the timing journey ahead in 2019. of releases of new games and expansions. So it has been in 2018, and so it will continue to be in coming Ebba Ljungerud, Chief Executive Officer years. Paradox Interactive AB (publ) • Org.nr: 556667-4759 • Västgötagatan 5, 6th floor • S-118 27 Stockholm • www.paradoxinteractive.com 4 YEAR-END REPORT, 2018-01-01 - 2018-12-31 Releases during the Quarter PC CRUSADER KINGS II - HOLY FURY The medieval battle for the soul of Europe takes center stage in Crusader Kings II: Holy Fury. This expansion adds special new challenges for experienced players as well as random worlds that include ahistoric king- DLC doms, empires and religions – a world that resembles our own, but is entirely fictional. STELLARIS - MEGACORP Usher in an era of prosperity and profit on a galactic scale. In this economy-focused expansion, you can become the CEO of a powerful corporate empire to DLC expand operations across the stars.