Remedy Entmt Oyj

CEO, Jean-Charles Gaudechon, and Remedy CFO, Santtu Kallionpaa.

The agenda for today, JC will guide us through the quarter's numbers, and then we'll take a deeper look at the control resonant. We'll cover our marketing ramp-up during Q2, the sentiment, commercial indicators, and the launch window positioning. Then, as usual, we'll take a look at our games in the market, as well as our development pipeline. Santtu will then do a deeper dive on the financials and we'll end with a Q&A. Any questions you have already, feel free to leave those in the text box below the webcast. But without further ado, please JC, the stage is yours.

Thank you Apo. Hello everyone. The headline numbers first. Revenue was 10.2 million euros this quarter, down 40% from the comparison period. EBITDA was minus 2.4 and EBITDA minus 3.9. Operating cash flow slightly negative at negative 0.7 million euros. Two main factors explain this quarter's performance. First, the comparison quarter included the launch of FBC Firebreak with its initial subscription accruals. Second, marketing for Control Resonant ramped up during the quarter, reducing profitability as anticipated. So let's talk about this quarter was all about. Control Resonant launches worldwide on September 24th. We can now finally speak about the date. So this is Remedy developing and self-publishing the sequel to Control, our own IP, our own voice, and our most ambitious release to date. We revealed the launch date with a trailer shown at State of Play in June. Let's look at it again now.

Something is coming. We have to go. It felt like an earthquake. But it was just a paperclip falling off a desk. The tiniest tremor before the main event. Jesse, I know what they put you through.

You never had a chance.

Two days before the lockdown fell, an uncategorized resonance appeared in Manhattan. I sing stand right now, Dylan. You're our only shot at survival.

You are not FBC. You're not even fucking human.

The FBC locked me in that cell for years and forgot about me. We're going to have a lot of fun together.

All right, cool. So we had two trailers that same week, the one we just saw and the second trailer at Summer Game Fest. That lifted our embargo. Then media and content creators went hands-on with a three-hour build of the game. One thing I want to highlight here, the move to faster melee action, different type of gameplay was the most debated aspect at the announcement for good reason. Thank you very much. We have an ambitious global campaign for this game. After the trailers were revealed, we ramped up the activity and got members of the team on the road to meet fans and support our hands-on demo. We got 20 billion impressions from that tour so far. Over a thousand articles were written and 71 content creators engaged worldwide, which at this stage is really good and only the beginning. Just over a week ago, we were at China Joy in Shanghai with a very promising reception from the local audience. We are also listening to live feedback when people play the game and localization quality, which, as I mentioned before, is extremely important for us. Next up, we're in Gamescom in Cologne where we're gearing up for a great show, including a community event where you're all invited. Our marketing accelerates further in the third quarter. I can't reveal too much for now, but there's a lot to expect leading up to the launch. We got some great and constructive early coverage, quoting Eurogamer, how video games should be done, and Polygon, a bolder sequel than we ever could have expected. So we're very grateful for this reception, but we also keep it in perspective. There are previews. These are only previews of an early build, not reviews of the finished game, obviously. But even from that demo, the game has come a long way, so we're very bullish. Interest has matched the sentiment. As of today, we have over 1.5 million wishlists across platforms. Wishlist growth, as you know, typically tracks campaign activity, which will keep intensifying further in Q3, so only bigger numbers to come. During the campaign window in June, our analytics showed that Control Resonant was among the top three most pre-ordered games on PlayStation in the US, Germany and Brazil. And Chinese-speaking markets are our second largest market in Steam unit pre-orders. So we are seeing strength in both our traditional and growth markets. So there's been a lot of talks around a very busy launch window and for good reasons. There are a lot of great games coming in September. But the first priority for us has always been to ship an outstanding game and a very unique experience that we believe has a real chance to stand out. The following factors also give us confidence. We're day one on all major platforms, which is a first for Remedy. And this is our most localized product ever, which I believe I mentioned before, which matters tremendously in order to reach new markets and grow our audience. Also the price point, $59.99 for the standard edition. This is basically AAA quality at an attractive price against comparable titles in autumn. We made the conscious decision to keep this product priced attractively. Overall, I just don't think there's such things as a perfect window these days. There are amazing games coming out all through the year. I think the real differentiators today is quality and uniqueness, where we're pushing really strongly on Control Resonance. So that's it for Control Resonant. Let's look at our games in the market. Alan Wake 2 passed 3 million lifetime copies sold during the second quarter. Consumer sales continue at an expected pace and royalties in Q2 were generated entirely from consumer sales. No platform deal accruals this quarter. Control is a good example of the power of franchises, which is extremely important for me. In its seventh year on the market, Control grew year on year in Q2. Over 6 million copies sold, more than 20 million lifetime players. The Control resident campaign is renewing interest in the original game, and Control remains the entry point into the franchise for new fans. On FBC Firebreak, unfortunately, this is the main driver of the year-on-year decline in game sales and royalties because, as mentioned previously, the comparison quarter contained its launch and the initial accruals that came with it. This quarter, most of Firebreak's sales were revenue accruals from our subscription service agreements, and the game continues to be available on Xbox Game Pass and PlayStation Plus. Naturally, all eyes are on Control Resonant, but it's important to remember that we are a multi-project studio. Max Payne 1 and 2 Remake remains in full production with Rockstar Games, and our new project moved to production readiness, the next stage gate on our development framework. And with that, over to Santtu for the financials.

Thank you, JC, and good afternoon. So before jumping into financials, let's start with discussing the reporting logic. As this is now first time when we are receiving pre-orders as a self-publisher, it's good to walk through how these are shown in our P&L and balance sheet. So before the game launch, pre-orders are not recognized as revenue. As based on IFRS, sales can't be accrued before the performance obligation has been fulfilled. In our case, this means delivering the game to the players. Based on this, on the launch date, all pre-order revenue is recognized. And at the same time, also related platform fees and royalties are accrued as costs. After that, accruing sales and related partner expenses will happen on a continuous basis. On balance sheet, pre-orders are shown in advances received only if we have received payments from the platforms before the game launch. As there is usually at least one month delay in receiving the payments, there are no cash flow impacts from pre-orders in our Q2 reported figures. After the game launch, reported sales will be shown in trade receivables or in cash depending on if the actual payment from platform to us has taken place. And as said, there is usually at least one month delay with the actual payment related to sales and this also varies depending on the platform. In outgoing cash side, it's good to note we are paying contract-based royalties to our partner with delay after first receiving the cash ourselves. Then let's move on to actual figures of our second quarter report and start with the revenue. So our second quarter 2026 revenue was 10.2 million. Decrease from the previous year was 40%. The decline in revenue was mainly from the game sales and royalties side. The main factor for the decrease was the initial revenue accruals from FPC firebreaks, subscription service agreements that were linked to the release of the game in the comparison period last year. In Q2 2026, Control, FPC Firebreak and Alan Wake 2 were the main drivers of game sales and royalties revenue. Looking at the development fees, those also decreased from the comparison period. The development fees were from Max Payne 1 and 2 remake and Control Resonant. In this quarter, the exchange rates didn't have a big impact on the revenue level. Then looking a longer period, we can see revenue variations from quarter to quarter. The amount of development fees is based on accurate development milestones. In Q2 2026, those were on a lower level than during the last couple of quarters. In a longer perspective, we can see the effects of the self-publishing strategy. The game sales and royalties have been on a higher level since the beginning of 2025 as our own published games generate meaningful game sales. FBC Firebreak continues to be available in the gaming services. However, the game is already one year old and we have not had new game launches since then, which explains the decline in game sales. And as said, Control Resonant pre-orders are not included in the Q2 figures as we can't accrue these sales before the game is available to the gamers. Then moving on to profitability. So the operating profit was minus 3.9 million in Q2 2026, which was 3.5 million less than in the comparison period. EBITDA was at minus 2.4 million and on a lower level than in the comparison period. Our other operating expenses increased from a year ago as we ramped up our marketing efforts for ControlResonant. As we head to the third quarter and the game launch approaches, the marketing expenses are expected to grow even more. Overall the profitability was largely affected by the revenue decrease in Q2 2026 driven by lower level in game session royalties and also partly in development fees. Then let's dive in our costs in more detail. So gross external development and personal expenses in total decreased by 8.5% from 12.6 million in Q2 2025 to 11.6 million in Q2 2026. Following the year-on-year trend and the external development needs in the game projects, the external work expenses were at 2.6 million, being clearly lower than a year ago. We have been able to complete more required external development in-house than before. The personal expenses increased by 7.3% and were 9 million in Q2 26. The increase was mainly due to general increase in salary levels and additional efforts put towards the game launch. Capitalized development expenses were 3.7 million in Q2 26. The amount of capitalization is higher than in the previous quarters, mainly due to the increased development efforts put into Control Resonant. Then depreciation in total, it was 1.6 million and were on a level in Q2 2026, sorry, it was on a lower level in Q2 2026 than during the previous quarters. 0.9 million of the total depreciation was related to the game projects. This included Alan Wake 2 and FPC Firebreak depreciations. Depreciation closely followed the level of game sales of the games which we are depreciating. Depreciation of Control Resonant will start when the game has launched. At other depreciations they have stayed on a similar level from quarter to quarter. At the end of June 2026, our total cash level was 29.6 million, including 9.6 million in cash and 20 million euros in short-term cash management investments. Cash flow from operations was 0.7 million negative. The main driver for the negative operating cash flow was the period's low revenue level. Cash flow from investments at minus 3.8 million had the biggest impact on the period ends cash position as the investments in our capitalized development projects mainly in control resonant increased. Cash flow from financing included the IFRS lease liability payments and it was on a similar level as in previous quarters. Net cash flow in the first half of 2026 has been minus 0.1 million, including 7 million investments offset by positive operating cash flow. So looking at the year-to-date revenue from the first half of the year, it was 23.3 million. This is 7 million less than the first half of 2025, as we had a firebreak launching in the second quarter of 2025. In the first half of 2026, we started investing more in marketing. At the same time, we have kept on working on our cost structure and we have managed to decrease our outsourcing expenses. Ahead of the new game launch, our profitability declined from a year ago, with EBITDA being in the first half of the year 2.3% positive and EBITDA 12.5% negative. This year's profitability in overall will be defined by the sales of control resonant. And now JC will continue with outlook.

Thank you, Santtu. So our outlook is for the year. Thank you. Our full year outlook is unchanged. We expect revenue in EBITDA to increase from the previous year.

All right, so let's head to the Q&A session next. Any questions you have, leave those in the text box below the webcast. We already have a couple good questions in the pipeline, so let's begin with those. A bulk of the questions are in relation to Control Resonant first, and let's start with the commercial indicators. After disclosing more than 1.5 million wish lists, what can you tell us about the conversions in the pre-orders?

Yeah, okay. So first, you know, 1.5 million wish list is an achievement. We're very happy about where we stand and we're pretty much on track with what we were planning. So that's actually great news. When it comes to conversion, of course, you know, it really depends. We've seen games actually with a lot of wish lists not converting as well. We've also seen some games which weren't as focused on wish listing that did really well. You know, this is not science. The one thing we control today is to push that number as high as we can. And of course, one thing that is really positive for a game like Control Resonant, it's the sequel of a well-established franchise, which obviously has a nucleus of players, of fans that are here and we hope will be here day one. and that is conversion but also all the work that the team is doing today to you know expand our global audience and make that a day one purchase obviously we can expect through healthy level of conversions.

Very good and then looking at the conversions are the pre-orders running ahead or in line or behind your internal plans?

Pre-orders are positive also. As I mentioned in the slides, we're very happy about being in top pre-orders in the window that we did that announcement. So far, very happy, very bullish on pre-orders. Of course, we don't have internal as easy numbers to compare, but what I can say is that it's tracking ahead of some of our previous games, which is very healthy again on the pre-order front.

Very good. And then on the wish list number, is the figure cumulative or net of cancellations?

Yes, so it is net of consolation. So it's actually a true number. We've actually removed people that decided to pull out. So that's basically, I could say here that is an absolute true number. And yes, it is cumulative, but of course, removing these people. One thing I wanted to mention also, both for pre-orders and wishlist, it's still early, you know, and most of these numbers accelerate much further as we get closer to launch. So we're, again, tracking well.

Very good. Is there something you want to communicate for the split between platforms and the pre-orders?

So I can't give precise numbers on the split. What I can say is it's strong on all platforms.

Very good. Excellent. Then heading to China next, how has control resonance been received in the Chinese market or the Chinese speaking market and what are your expectations for that market?

So indeed, you know, and I've said it before, China is a priority for us along, you know, all our core market. And the reason for that, by the way, is our data has shown that, you know, control has done really well in China. This is a franchise that resonates well in China, which is also why, you know, this is grounded in reality. This is not kind of, you know, a shot in the dark reality. and also why we were at ChinaJoy just a bit more than a week ago and we had actually a great show allowing people, actually fans, press, content creators to play the game and the game has been really well received so far. And as I said, extremely important for us to really feel how the game... resonate locally and also the quality of localization since as you know for Chinese we also have VO so we're being very close to feedback from local audience.

Very good. Then next maybe to Santtu, how does your share of net sales with Annapurna change once the production and marketing investment is recouped?

Yeah. First of all, when the recouping the investments is happening, it's happening in relation of the investments made. And after the investment has been recouped, then Remedy will receive a greater share of the net sales of Control Resonant.

Very good. Then on the marketing spend, we said that the marketing will accelerate further in the third quarter. But will Q3 marketing spend for Control Resonant exceed Q1 and Q2 combined, Santtu?

I think it's a good assumption that the kind of peak of the marketing cost and the investments made, it will happen around the launch window. I will not give an exact guidance for Q3, but I can say that the second half of the year, it's greater in marketing costs than the first half of the year. Gotcha.

Then the next one is, what is the total budget for Control Resonant? I mean, it's in line with our AAA budget. Is there something you want to add on that?

Well, I can say that, as you said, it's a AAA game, which anyway, I think Remedy can make much more affordable way compared to many companies around the world. Right.

Excellent. I think those were the questions for Control Resonant as of moment, but let's continue with the Control franchise. Santtu, also Control grew in comparison to the comparison period. Was this in copies revenue or both? I would say it's in both.

As currently, of course, the discounts are quite deep, so we get a lot of copies sold, but also in sales we are getting a good traction with Control. Excellent.

Then heading to a bit more general questions next, JC, the third new project is moving with a solid pace in the development pipeline and a bit faster than the previous games. What are the key drivers behind us accelerating the pace with the new project?

That's a good question. I'm happy there's actually focus on other projects and how we develop games because obviously Remedy, we always thrive to improve on how we make games. And it was a priority for me when I joined Remedy. Thank you very much. Thank you very much. I am and we're not interested in just getting through the gates just for the sake of it. It has to be a great game that we're building every step of the way. So I just want to put it out there that yes, it is, and it's actually progressing well, both on time and on quality.

Very good. Then, Santtu, extending on the marketing budget, is the budget fixed or is there a potential to increase it if the reception is good enough?

We have a certain base marketing plan which we follow but of course when marketing this kind of game there needs to be room to take also reaction depending on how we see things are working out. So yes it's a flexible budget also.

Then heading to more general questions with JC. Will you port your older titles to mobile phones?

Early to say, we're very happy about the quality of control on mobile, which was released not long ago. That's actually a great proof of concept, I would say. But too early to say for other games. But if there's an opportunity, we're always looking at all new platforms. I see questions around mobile, but there's questions around Switch too. and these are platforms we always keep an eye on we'll always keep you know in the future looking into and if there's the ability both to do it and to you know Get in the hands of more players. That's going to be a very, very important focus for Remedy. We talked about growing our global audience, and you do it through marketing, a publishing strategy. On a specific game, you also do it by being on more platforms. So we'll absolutely be looking at moving to more platforms, be it mobile, console, or others. Excellent.

Then looking more to the development pipeline again, are you exploring live service games in the future?

Not a focus today. Of course, there's experience now in the studio with the different projects that were done in the past. Today, and I think I said it in my first earnings call, and I said it again, we need to be extremely strong at the core, and we need to defend the core of what makes Remedy great. And today, what makes Remedy great is incredible, super creative, high-quality single-player experiences, I'm not going to move away from this until this is in an excellent place. If there is a good reason to look at a life service model, then we'll start looking at it. But I'll repeat, today this is not a priority.

Very good. And then on the new project that is now in production readiness, can you comment on whether you're in the process of looking for financing and publishing partners, or is it self-published?

It's too early to say. Today, our priority, of course, is to self-publish our own games.

Very good. And then, I suppose, going to the transmedia opportunities, have you considered expanding Remedy's connected universe beyond games, for example, transmedia or films?

Absolutely. And if you actually dig a little bit, you see that we've already made some moves in this space. And yes, Transmedia, for such a story-rich studio that we are and story-rich franchises, it would be an enormous waste not to invest into the Remedy Connected universe. and actually that's something to me I'm very bullish on. So yes, absolutely. One, the transmedia strategy is central to Remedy and two, the RCU is central to Remedy's future.

Very good. Then on the long tail of ControlResonant, are you exploring DLC options for ControlResonant?

So let's see how the game lands. I am not the type of going to have a manifest destiny approach. But if the way we plan, it's going to be a great product and it's going to land well, we will absolutely be looking into content updates. If we can give more to happy players, we will do so.

Excellent, excellent. Then I suppose the last question on the commercial topics of Control Resonant. Are you considering adding additional language supports like Arabic or additional localizations? How do you view localization in general?

So we have heard, you know, wonderful people in MENA and the fact that and some of the disappointment that came from not supporting Arabic. Unfortunately, you know, on the deaf side, it was a tricky one for us. But we are not forgetting you. I can't give any promises. But, you know, as I said to me, as I said earlier, like, you know, localization is really important and high quality organization to reach. More and New Markets. So we will be looking into it for sure. Now, I can't say that we will add that to Control Resonant, but remedy as a whole is something that we need to solve.

Understood. Then a question for Santtu on the cost side. Will outsourced development costs once again increase when the third new project moves closer to production?

Outsourced development costs, first of all, they of course depend on the needs of the game projects. I would say that there are certain things that it's wise to do outsourced as it adds certain flexibility to our kind of internal capacity. But at the same time, we have been able to develop our ways of working so that we can do more in-house. So I would say that we are not expecting any significant increases in the external development costs. Very good.

And then a bit more general question on the shareholder side. Is there something you want to comment on Heikki Herlén's company Marjatorp acquiring a large share of Remedy shares?

Well, this is a question for shareholders. But what I can say is that I'm actually, you know, very happy to welcome a long-term investor like, you know, HeyKirlin Fund. And, you know, I think it's only good news for the strength of our, you know, cap table overall, shareholder. And, you know, it's someone that can bring a lot, I think, to Remedy.

Excellent. There's a lot of questions concerning Max Payne on that game. Rockstar Games is handling the publishing side, so we can comment on those questions.

Otherwise, we run out of questions, so thank you gentlemen for the great answers.

Thank you for the questions. If there's any questions you did not have the chance to ask, feel free to send those over at the email address visible now on the screen. We'll be back with the next earnings webcast with our business review for the third quarter of 2026 or normally the third 2026. Until then, bye-bye from us.