Paradox Interactive AB (publ)

Hello everyone and welcome to the Paradox Interactive Quarter 3 2023 livestream. I'm Fred and with me I have Alex. Welcome. Thank you, Fred. How are you? I'm good. Good to be here. I just wanted to start by saying that we've gotten a couple of game related questions sent in to us and this stream is not for answering game related questions in general. I'm going to comment a bit on Cities Skylines 2, even if it's outside of the Quarter, but Apart from that, I would like to ask everyone to go to our respective pages for the games where the teams have their dev diaries and they answer questions about the games, etc. So we'll keep this to the reports and to the finances in general. So let's kickstart this. That's me. And as we know, our quarters vary quite a lot. It has to do with what releases we have in said quarter. So Q3 this year was... Probably the quarter since we listed the company with the least action, if you want to call it that. So it was very slow on releases. It has to do partly with that we had a heavy Q2. We're going to have a heavy Q4 with releases for most of our main titles. But it varies naturally. But we aim to perform more equal over time as well with our releases. So another thing that is worth mentioning is that the first game from Paradox Arc was actually lifted into our portfolio. And that is across the obelisk that has performed fairly well for us. It's not going to be a record-breaking seller yet, but we'll see in the future. It shows some good promise there. So, going through releases and announcements is fairly quickly done, as I already mentioned. We had Wards and Wardens for Crusader Kings 3, Dawn of Wonder for Victoria 3, and the first bigger DLC for Across the Obelisk, Sands of Ulimin. We also announced the game Millenia, which is due for release in 2024, in the beginning of 2024. Commenting a bit on Cities Skylines 2, which is obviously the biggest release for us this year. We always have to remind people that it's a marathon and not a sprint. So our core games are always planned for the long term. And the most important metric that we have is player retention and engagement. And now it's only been 36 hours after release. We can see that the initial player numbers are good and sales are off to a good start. Mostly in line with how we planned, actually. So we're fairly happy. But speaking of being 100% happy, we know that performance hasn't lived up to player expectations to some degree. And we work every day with Colossal Order and the team at Paradox to optimize and to continuously update the games so you can follow the game in all our social channels or through the games page as well if you want to get more updates there's going to be a lot in the coming weeks so i want to recap a bit about our growth strategy that we went through in the deep dive of paradox that were held in may for everyone all shareholders and everyone interested in investing in the company so we have as you know a portfolio of core games which we work with over time and our first growth strategy is to if we click that is what we call dig in namely releasing content for our live games where we have a lion's share of the player base and people who want updates and the people DLCs that we charge money for. And you see in the coming quarter here, you have releases for Stellaris, Europa 4, Age of Wonder 4, Victoria 3, Crusader Kings 3 and Hearts of Iron 4. So it's going to be a packed quarter, quarter four for our live games. If you look at the next part of our growth strategy, it's called Stock Up. It's basically we make games that we are fairly certain that our core audience of six million people who play our games every month are going to like. So you have games like Foundry, Millennia, Cities 2 that I already talked about and Star Trek Infinite that released earlier in Q4. It's off to somewhat a bumpy start as well, but it's doing fairly well also. So we hope to build on the Star Trek game going forward. The third part of our growth strategy is called breakout and this is where Paradox Arc or what we call the new games team comes in. So we're looking to find new niches or find new games that has a breakout potential and the potential to make it into our main portfolio where we continue to support the games for 10 to 15 years into the future. Some of the examples from here is Across the Obelisk that I already mentioned, but also Mechabellum, Stellaris Nexus, and releasing later on this year, I think, is Space Trash Scavenger. Right. And with that, I want to leave the word to you, Alex, to go through the numbers. I might comment on the numbers as well. Thanks, Fred.

And thanks for the repetition of the strategy. So let's dig in. Let's start at the very top. So revenues for the quarter came in at 426 million compared to 458 million in the third quarter of last year. And you that follows us knows that our revenue and financial performance is heavily dependent on two things. One, what we release in the quarter. But also when you compare two quarters against each other, it's a difference in currency movements between them. So if we look at those two factors, we can see that the currency movements from a year ago has been slightly in our favor. Dollar is up a little bit, but the British pound and euro is up roughly 10% from a year ago. So that benefits us. So on that side, we're good. Release-wise, as Fred mentioned, we have had a very weak quarter because we released on almost everything in Q2 and we have a lot lined up for Q4.

As compared to Q3 last year, where we released a lot of DLC for most of our live games, if I remember correctly.