Paradox Interactive

Correction:
Cash flow from operating activities, in the headline Second Quarter, bullet number four, has been corrected.

The interim report has been corrected.

SECOND QUARTER

• Revenues amounted to MSEK 575.8 (MSEK 737.3), a decrease by 22 % compared to the same period last year.
• Operating profit amounted to MSEK 28.9 (MSEK 292.9), a decrease by 90 %. Write-downs of MSEK 208.0 (MSEK 0.0) are included in the operating profit.
• Profit after financial items amounted to MSEK 36.8 (MSEK 310.9), and profit after tax amounted to MSEK 27.3 (MSEK 239.4).
• Cash flow from operating activities amounted to MSEK 391.1 (MSEK 421.6), and cash flow from investing activities amounted to MSEK -81.2 (MSEK -172.5). Cash flow from investing activities includes a positive effect of MSEK 70.0 (MSEK 0.0) from sales of short-term investments in bonds. Cash flow from operating activities has been corrected.
• By the end of the period cash amounted to MSEK 1,164.2 (MSEK 844.2).
• Earnings per share before dilution amounted to SEK 0.26 (SEK 2.27) and after dilution SEK 0.26 (SEK 2.24).
• Revenues in the quarter are mainly attributable to Age of Wonders 4, Crusader Kings III, Hearts of Iron IV, Stellaris and Victoria 3.

IMPORTANT EVENTS IN THE SECOND QUARTER

• Foundry, developed by Channel 3 Entertainment, was released to PC in Early Access.
• New downloadable content was released to games during the period; The Machine Age to Stellaris, Eldritch Realms to Age of Wonders 4, Sphere of Influence to Victoria 3, Winds of Change to Europa Universalis IV, The Obsidian Uprising and Nenukil, The Engineer to Across the Obelisk.
• The release of Life by You, developed by Paradox Tectonic, was cancelled, which led to a write-down of all capitalised development costs of MSEK 208.0.

FIRST SIX MONTHS

• Revenues amounted to MSEK 1,057.9 (MSEK 1,220.1), a decrease by 13 % compared to the same period last year.
• Operating profit amounted to MSEK 183.3 (MSEK 448.6), a decrease by 59 %.
• Profit after financial items amounted to MSEK 201.8 (MSEK 468.0), and profit after tax amounted to MSEK 154.1 (MSEK 363.1).
• Earnings per share before dilution amounted to SEK 1.46 (SEK 3.44) and after dilution SEK 1.46 (SEK 3.41).

COMMENTS BY THE CEO

We end the second quarter of the year with mixed feelings. On the one hand, our core business has performed very well, but on the other hand, we made the difficult decision to cancel the release of Life by You, as the game would not be able to meet our expectations.

Looking at the quarter's results, we’ve released several strong expansions with good quality to our core games, which has a positive impact on the top line and provides a good cash flow from operating activities. The bottom line is sadly weighed down by the write-down of Life by You. It is painful but gives us a strong motivation to further improve our operations.

Fredrik Wester, CEO of Paradox Interactive