Paradox Interactive AB (publ)

Hello everyone and welcome to the Q4 and year end report from Paradox Interactive with me, Fred. And I'm Alex. Welcome everyone. Welcome. So we're going to guide you through the numbers and some of the releases and some of the comments as well. I'll just warn you a bit up front. We also made an acquisition. Today it came through, Hemimont Games. And we're not going to talk about Hemimont Games in this stream. So if you want to have more information about that, you will have to follow our newsletter or our postings in the future. So we will hopefully announce something that we have going on together. With that said, let's dig into the report. That's me, as always. Good talk. Very good. So Q4 has been a great quarter for us. So we're ending the year confident about what's to come. We have many strong releases. So we release basically DLCs for all our major franchises except for Europa Universalis 4 in this quarter, which shows both on the top line and on the bottom line. We also have a number of good marketing activities. We changed some in the pricing structure, and we've done a lot of good jobs all across the company, which led to this result. And last but not least is also the exchange tailwinds from currency gains from a weaker Krona in this quarter. But also... This shows as well that the difference between the quarters is quite big. So we had a great EBIT result now because we had no write-offs at all. And we take more and more costs up front as well. So hopefully in the future, we're going to avoid these big changes and you're going to see a more consistent result on the bottom line. So at least that's our goal. But if you summarize the year, the good underlying sales, a lot of the usual suspects are known IP and are known gamers. We've had some write downs. Most notably is Life by You, but we've had a couple of other games as well. Some delays, Prison Architect 2, Bloodlines 2, both delayed. And we are continuing the work. We've worked a lot with that in the past two, three years to make risk-taking, make it easier to oversee and manage risk when we manage the projects. We won't have to close down projects that has cost more than 20, 25 million dollars to make. So the same with all third-party development is going through a different pipeline today with more quality control and direct access to our teams. I'll comment a bit on Heimermont. So I said I'm not going to answer any questions. But we've been working with Heimermont since 2017 on the game Surviving Mars when we first signed up with them. It's a very good strategic fit for us. So they make management games just like we do as well with games like Cities Skylines, Prison Architect and Surviving Mars. And obviously they share a lot of our nerdiness and culture. They find in Paradox as well. And we have found during these eight years that we work together that we really have a good working relationship with this studio. And we're super happy to welcome them on board. It will be a wholly owned subsidiary. They're situated in Sofia in Bulgaria. And it's just over 50 people in the studio at the moment. And if you look at their games, Alien Stranded Dawn with Frontier, Surviving Mars with us. They've also worked in the Tropical franchise a couple of years back. And they also released Jagged Alliance 3 recently. to critical acclaim, all of these games. So it's one of few studios that is 100% independent, and they basically made quality games for over 20 years in a row. Super happy to have them on board. Yeah, very exciting. Very exciting. If you look at the releases, I said that we released for all major franchises except for Europa Inversalis 4. We did Hearts of Iron. We did Stellaris and Stellaris for console as well. Not least, but not last. Can't forget about the console players. Victoria 3, Crusader Kings and console for Crusader Kings, Millennia and Age of Wonders on the strategy side, as well as our first content creator packs for Cities Skylines 2, no? Nope. Yes. Yes. Cities Skylines 2. And for Cities Skylines as well. So, busy quarter to say the least. And like we're going to see in the numbers, it shows there as well. We also released from Paradox Arc, Tlatoani in early access and Space Trash Scavenger in a 1.0 version. So, if you haven't checked them out, you really should. Cool. So, it's time for your show, Alex. Thank you.

Down to the numbers. Let's dig into them. Right. So... Top line revenues, 709 million coming in Q4 of 2024 compared to 996 million of Q4 2023. So, of course, a very tough quarter to compare with because back in Q4 2023, we released especially City Skylines 2 with a very big impact on top line. We also released Lamplighters, which was a failure financially, but it helped pushing up the top line. But so 709 million without coming out with any new games. I'm pretty sure it's a record in terms of revenue for a quarter when we haven't released any new games.

It's also worth noting that we don't have any Game Pass money, for example, in this quarter or anything else. So everything here is basically underlying sales. It's very organic. It's a very organic number.

Yes, maybe one exception to that would be the release of Cities Skylines 2 content creator packs. Because when we released the game back in October 2023, we sold quite a lot of premium editions. And we have been doing that up until now. And the prepaid revenue we get from that, we put on the balance sheet and we release it when we release the content. So we unlocked some of the... We've unlocked some of that money now in Q4. Right. But it goes the other way around. For example, on Hodge of Iron, the expansion pass, we released an expansion pass. I think it's a... Is it for the first time we do it on Heart of Iron? It is the first time, yeah. So that generated a lot of sales. We got the money in, but we haven't recognized all that money. Part of that is being pushed forward until we release the content. First half a year this year, probably. Probably. We'll see. No promises made. Good, good, good. Right, so $709 million because we have released, as Fred said, on almost all our core franchises. Only Europe and Australia is for. And when we do that, we get good revenues. And also the marketing activities that we have performed during the quarter have been very successful and successful. They tend to be during Q4 because we have the autumn sale with steam and the winter sale with steam. And they are generally very good. But I would say this year it has been a bit extra. We have tried some heavy discounts on some of the products that have had good impact as well. So very strong quarter sales-wise. FX, you mentioned, Fred, it helps us or don't help us, but it impacts us a lot. If we just compare Q424 to Q423, it's not much of a difference. The average in the quarter has been very similar, especially the dollar, but also the pound and the euro. I think the pound went up 4%, dollar maybe 1%, euro flat. But within the quarter, the movements have been bigger. And we will see that on the separate slide. So top five contributors game-wise, Cities 1 and Cities 2, both on the top five list, which is, of course, very encouraging to see. We have had a bit of a challenge this year with Cities Skylines 2, but when we release content, it's very well appreciated among the players, which is very good to see. City Skylines 1 and 2 on the top five list. Crusader Kings 3 as well. Hearts of Iron 4, of course, with the big expansion. And last but not least, Stellaris. So the usual suspects, as you mentioned. Let's move on to the profits of operating profit 395 million compared to 124 million of last year or Q4 2023. Q4 2023 was heavily pushed down due to lamplighters that we mentioned earlier. Lamplighters generated Fairly okay revenues, but not in relation to how much the game had cost to develop. So I think that project impacted the operating profit with minus 250 million in Q4 2023. But this year's, or 2024's Q4, 395 million, a new record by far. Do you know which was the previous record quarter? No. I should know this. Maybe... It was Q2 2023. Oh. So we had a very similar quarter because we released... Age of Wonders 4 was released? Age of Wonders 4, yes. And expansions and DLCs on... Almost all our games as well. So we did very similar revenue, but we have higher revenues, higher profit this year. So I think we did 295 back then. So 395. So we are smashing that record massively, I would say. So profit after financial items, 404 million. It's more than operating profit because we have a lot of cash assets and we get interest on that. So that helps the profit as well. Profit after tax, $311 million compared to $98 million a quarter one year before. So profit margin, 57%. That is very high. It's not the record. I went back to see. I was sure it was a record, but I could actually find one quarter that was slightly, slightly higher. Get a guess on that one as well.

Maybe release a Crusader Kings 3.

I don't know. That was a good quarter as well. No, you had to go further back. I don't know.

City Skylines, maybe. 2015, 16. Yeah, one of those. Yeah, no. The release of Stellaris and Hearts of Iron 4.

Yes. Same quarter.

Yeah, yeah, yeah. 2016.

Yeah. So Q2 2016. Hearts of Iron 4 and Stellaris. Then we had slightly higher profit margins. And it's fun because in Q4 2024 that we're talking about now, The very same games, Stellaris and Hearts of Iron 4, eight and a half years later, is being the top five contributors to the revenue and profits. Still standing strong. Eight and a half years later. So that shows the strength, I think, in our games, in our business model. Yeah, the longevity of the games. Yeah. So let's talk a bit more about the profit margin. This is the most profitable thing we can do in our business, releasing DLCs and expansions. And especially when we do it on our big successful franchises. And it should be mentioned, especially when we do it on the old ones, like Hearts of Iron 4 and Stellaris, because there we still have the linear amortization model. So we only amortize one 18th. in the release month. Right. Since 2020, like for CK3 and Victoria 3, we have this digressive amortization model where we take one third in the first month. Ah, right. So when we release on the old games, it gets an extra bump, the margin. Yeah. Makes sense. so very good equity through asset ratio has gone up from 73 to 82 so very solid balance sheet average number of employees has gone down from 622 which was average in q4 2023 to 574 q4 of 2024 and it's basically the the shutdown of the tectonic studio and the harebrained scheme studio

But now we're adding another 50 people from Hememont. So we're going to be back at over 600 next quarter.

Looking forward. So let's move on. Right. So this chart shows four lines. Green line is the revenue. The yellow, blue and red shows our three main cost items. The revenue we have talked about already. But what is shown in this chart is that it's very volatile and it's worth pointing out. It has been like that. It's volatile because the revenues are driven very much by what we release. The business is very similar in Q3 to Q4. We haven't done that much change to the business. The difference is that in Q4, we came out with the releases on almost everything and in Q3, almost nothing. And that makes the whole difference. It's almost 250 million second difference. And if you look at the chart, you can see that we have come in into a bit of a trend where we every second quarter have a lot of releases and a lot of revenues. And every second quarter, we have much less releases and therefore much less revenues. You can go back almost three years and see that trend. And we don't give forward-looking statements, but for sure it's going to continue to be volatile. Yeah. And... If a game has released content in one quarter, it's unlikely that it's going to release the next as well. So with this big Q4, it's not a big guess that Q1 is going to be much lighter in terms of releases. So cost-wise, let's go through them a bit. Part of the reason why the profit is so strong is that the costs haven't gone up despite us having released quite a lot. So let's start with the cost of goods sold. So this is... all the costs we have to kind of make the game so costs for our internal studios external studios royalties we pay uh brands and other immaterial properties that we have acquired throughout the years that we amortize regularly on so Total COGS 263 million compared to 712 million. But let's go through it a bit more in detail. Let's start with the amortizations. So amortizations for Q4 2024 came in at 91 million SEC. That was 295 million the same quarter one year before. So it is more than 200 million less than its lamplighters that existed.

We wrote off more than we needed to reflect the sales that wasn't up to what we expected.

We did both. So first we amortized according to plan. I think it was 150 million. So that is the reason why this is down so much. So 91 million... If you compare that to Q3 and Q2, it's very similar. We were at 96 million in Q3 and Q2. So despite us having released so much, we still have gone down a little bit. And it's because it's not the releases of expansions and DLC that drives this much as releases of new big games do. And we haven't released any big games for quite some while. So therefore it goes down. What can we mention more? Fred, you mentioned the write-downs. We have had zero write-downs in Q4 2024. One year before, we had much more. I think it was 175 million or something like that in write-downs on Lamplighters League. Then I mentioned we do it in a prudent way. I think when we acquire companies or assets, we like to amortize the acquisition costs so we don't have too much on the balance sheet. We have taken 14 million as cost in Q4 2024 from that acquisition of Plarion, World of Darkness, Across the Obelisk IP, for example. It's gone down from 19 million one year ago, and that's because prison architect and herbing schemes have been fully amortized. What more? Royalties. Royalties has gone up from previous quarter. I think it was... It was 20 million back in Q3. Now it's up to 45 million. That's because we have released on Cities and Age of Wonders because that's where we pay royalties. Age of Wonders in terms of earn out to the sellers of Triumph. So 45 million in Q4 2024. If we go back a year, Q4 2023, then it was 111 million because we had obviously the Cities Skylines 2 release which generated a lot of royalties. the final item in cogs uh is the non-capitalized development cost and the tech cost we have in the publishing so so it's tech costs that we don't amortize that we don't capitalize on 105 million in q4 2024 compared to 100 million sec q4 2023 so so quite similar Yeah, that's about COGS. We can mention something about selling expenses too. We should. 59 million SEC in selling expenses down from 88 million one year before. Of course, we didn't release any new games, so that keeps it lower. 58.5 million. It's not low. It's quite a lot. But it's because we have released a lot of content. Yeah, we're active in marketing. Very active. All quarters. Yes. Yeah. And so this is, of course, external expenses, but also the expenses for the whole marketing team. Yeah. And admin? Admin tends to stay flat from quarter to quarter. It varies with a couple of million up and down. But if you look back, you see the red line. It's at the bottom of the chart. It's very flat. Which is good. Then we have two other items, other income and expenses, plus 32 million Q4 of last year compared to minus 45 million Q4 of the previous year. And that is the dollar movement versus SEC during the quarter. So even if the average was the same or very similar between the quarters, the movements within the quarters were very different. Q4 2023, we had the dollar going down from 11 to 10, which impacted us negatively, of course, but minus 45 million. Q4 of last year, it went the other way. So it impacted us positively. We also have a night within those 32 million. We also have the impact of Selling back Macabellum to the developer. So Macabellum was an ARC project that we released, I think, in the 1.0 version earlier last year. Earlier, yes, late 2014. And we decided to part ways with the developer and sold back the game to them. And it generated some income that is shown here. Financial items we mentioned, it's the interest on our interest bearing bank accounts. So let's group the quarters together into four. So we see rolling 12 months. We can see the trend is quite clear in terms of revenue. We have been going upwards quite a lot. After 2020 started to be a bit more bumpy but revenues has been soldiering on quite a lot. Profit has had its push down since 2020 a lot from Two big, lately during the last 18 months, two big failures, Tecton, Lamplighters League and Life by You. It impacts the last 18 months with almost 500 million SEC. So you see Q4 2024 coming up. It's partly due to that, that we don't have any write-downs for Lamplighters in that number. And when we come to Q2 2025, we won't have any write-downs for Life by You either. So that will be a release.

And as I mentioned, we use a different method of how to start and how to run game projects, which makes it a bit less risky for us. And we spend much less money up front before we know if we want to continue with the game or not. Which means as well, on the flip side, we take a lot of costs up front. So in the 57% margin, we still have some games that we're paying for to be made into prototypes where we hopefully follow through the whole way. But we cancel, I think... 70, 80% of all the games that we start. So it's a tough process. But the big thing is getting to a no, as we say, as quickly as possible. If we don't want to make the game, we'll close it down. But then the cost is already taken. So the hit on the specific quarter where the game is closed down, it's not going to be so big. Very important, yes. Running costs for games.

Yeah, so in the COGS, we have, as I mentioned, $105 million as tech costs that we take as costs directly. Not everything is game development. Part is the tech organization we have in publishing. We have called them DevOps sometimes that do more generic development. But part of it is the ARC games. Yeah. Right. So I think this cash flow always important and a very strong quarter cash flow wise. Let's say 442 million SEC as cash flow from the operating activities. Very good, of course. You go back and compare it to one year ago. We had very strong cash flow at that point as well. We had much less profit, but The reason why the profit was low was due to the write-downs and amortizations. That doesn't impact cash in that quarter. And there we see two very similar quarters. So we're getting the same amount of cash or slightly more. The fourth quarter of 2024, then we did the year before when we released it in Skylines 2. So this shows how strong our business is just by releasing content on our existing games. And these are not new games. These are old games. So very encouraging to see, I think. Very much. Cash flow from investing activities, 159 million SEC. Very similar to one year ago when it was 146. But the cash flow from investing activities, just as cash flow from operating activities, fluctuates a lot between the quarters. It has to do how many milestones we approve and they don't come evenly. So if you look over... three, four quarters, you can see that we are now, the last four quarters, we are at a much lower investing level than we were one year ago. And that has to do with lamplighters and Life by You, two projects that we every year invested quite a lot in. Since summer of 2024, we haven't invested anything in those two projects.

And we don't do forecasts. We've never done forecasts, but it's safe to say.

We don't share forecasts externally, right?

Very good way to put it. I like that. We actually do forecasts internally. That's true. But we don't share them because they're full of uncertainties that we don't want to spread around, right? But I think it's safe to say that the cash flow for 2025 looks good. Can we say that much?

It should be good.

Then we'll say it. Okay. Are we happy with this slide or do you want to comment on anything more? No, this is the Q&A. Yes. My favorite part.

30 minutes. So let's see. I know that we've got some questions already before the stream started and they tend to come in. So the first one is for you, Fred. It's been roughly three years since you've returned as CEO and the strategy of the company changed back to what it does best. Now that the core portfolio is performing well and the pipeline of games is almost clean of the decisions from the previous team, it seems like you can finally focus on building rather than fixing. With this in mind, how do you see Paradox evolving over the next five to 10 years? Do you think it's about doing more of the same, or what does the paradox interactive of 2030 or 2035 look like? Several questions in one. Oh, and you said, we have 30 minutes, you said.

For all the questions, I'll bring this one on. No, but all in all... We are focusing now... We have seven key franchises that we work with, and we are working to get more games into that sack of different franchises that we work with on an ongoing basis. We want to make games that can live for 20, 30 years, and people can still play and enjoy them, and we can release content for them. I think... What I'm looking at right now is that we're going to see much more of user-generated content in our games. And I think one of our great growth pivots in the future is going to come from user-generated content. So I haven't stated this before openly. So maybe that's a great headline to write. I don't know. But that's a part of it. I also think that we can use new methods to bring out content ourselves and to bring out games. We're looking at a bit of different production methods together with third parties. There is also an opportunity. I mean, we announced the... The acquisition of Heyman Month Games today, and we have money in the bank. We have a good track record in the market, mostly. And I think a lot of people want to work with us. And since the market is in a crisis, more or less, and has been for over a year, at least our industry. I think there's going to be a lot of opportunities for mergers and acquisitions. Not saying that we're going to do them because not all. We want to make a certain type of game and we want to keep the Paradox formula and Paradox culture and the way we operate and do things. And we're very, very selective when it comes to acquisitions as well. So Heyman was perfect. We've been dancing around for basically five years together and asking the question over and over again. Finally, it came to a conclusion. Was that even an answer to the question? I'm not sure. I think so. Yeah, parts of it. You can write me an email and I'll elaborate further on this.

Let's move on. I know there are several.

Now it's your turn to speak.

Yeah, let's see.

Alex, if Paradox doesn't have a major release in 2025 or if a release underperforms, how well positioned is the company to handle the financial impact?

It's a good question. It is. We are very well positioned to handle that because if you look at 2024, We generated a very strong Q4 and a fairly good full year without any major games being released. We released a couple of smaller games like Millennium Foundry, but they didn't contribute that much. We didn't release any big games. We also had one huge cancellation in terms of Life by You that impact. I think the write-down was 208 or 206 million SEC, but the whole impact of the year was almost 250 million. Yeah, with marketing costs. Marketing costs and other, exactly. So without that, we had quite a good year. So we are not dependent on neither releasing, in the short term at least, we're not dependent on releasing new games or that they perform. Right. We have a very solid and strong business as is, which we are very happy about. Right. Next to you, Fred. Have you noticed any impacts from the recent AI advancements on game development efficiency? How do you see AI influencing the future of ground strategy games?

So AI is no silver bullet. We can say that for certain, at least at the moment. And AI can help us be better and build better games and be smarter and work faster. And I think we had a bit higher expectations for AI than has been delivered yet. But we follow AI development really closely and we're super excited about what's going on. I think it's going to influence quite a lot in how we build and make games in the future, especially when it comes to different types of content production. So... Yeah, I mean, I once said in an interview that I've never seen anything that will impact the industry as much as AI will, and I stand by that quote. It's just that it's going to take a bit longer than I expected. I thought we would already be using it more. We use AI in most departments, your department, finance, legal, you use it. I use it from time to time. So it's in the organization. It's just that we're not doing it on scale in game development at the moment, but I guess it's coming. Good. Alex, what have been your biggest missteps in the past year? Not you personally.

Thank you. Probably the company. We'll take that on another stream.

And how do you plan to address them in 2025?

Also a good question. Financially, the biggest mistake that became evident in the numbers was Life by You. We just mentioned it. Financially? Financially. 250 million in negative profit impact in 2024. But all that failure didn't happen in one year. It happened over a long time. And I think... We had learned that lesson already from before because it was when you came back, Fred, three and a half years ago. So since three and a half years back, we have not started any expensive high-risk projects. You could say. So the first thing we do when we start a project is to check whether it's high risk or low risk. If it's high risk, then we don't invest any 250 million into it. We invest very little, especially during the early stages. And we try to be very scrutinizing and make sure that we find the errors and cancel games early on or cancel projects early on. So I think those who still come through are supposed to be great when they come out. Sure. But so I think we learned this lesson already before we had hopes and expectations on life by you. But I think what perhaps we learned last year with life by you was that. If we do high risk project, it doesn't really matter if we have them in house, if they're. If they're high risk, they are high risk. Taking them in-house doesn't decrease the risk much. It kind of increases the risk because then you sit with the responsibility for the studio in a different way.

Yeah, right. Okay. The best ones are low risk, high reward projects. Those are the ones we like.

And we have them. I mean, making another DLC on Hearts of Iron and Stellaris, sure, it's a great effort and a lot of work, but the risk is low. The market risk, the development risk is very low, and the reward is very high. So it's a very favorable business to be in once you have established five very strong franchises. Right. Alright, more questions. Fred, what role does Paradox play in the development and promotion of Paradox Arc games? How much of a priority is Paradox Arc within the company?

Yeah, so Paradox Arc operates separately from the rest of the organization. And one of the reasons is that new games is so much fun that if you start asking people about new games, they will just want to play them and be a part of it, right? But it's also very stressful. It's a lot of pressure because you have to cancel a lot of games. And so it's not like a walk in the park to work with this either. So it's a mixed bag of things. It's a lot of fun. It's a lot of pressure. I spend an unreasonable amount of time actually with Paradox Arc because I love to work in the new game segments and see what's going on in the market and how to take things from a prototype to a full game. So I want to at least – I'm not active, but I want to at least see what's happening. But it's a great avenue for exploration for Paradox because we are always in a growth mindset. We always look for what can be the next great thing for Paradox and add to our portfolio. And we have a simple, or a simple, but a formula that we follow that we, in short, we call it ALICE. You can read more about that on our webpage. We're 100% transparent that if you want to work with Paradox, we have a certain way of looking at games and we have a certain type of games that we want to make. And that's for us to find the right developers to work with. Now I'm just rambling here, so we can take the next question. Alex, this is one of the best questions. How are the questions for these streams selected?

I don't know. I don't know either. So the questions are coming in. Some are coming in earlier, but most of them are coming in during the morning once we have released the report. Maybe people think I write these questions to myself. Maybe they do. But if you do, we don't take them because it's not you and I that chose them. They're being brought up here.

Basically, we answer all questions that come in. If it's not game related, like specific, like when is the next DLC for Hearts of Iron? It's like you have to talk to the Hearts of Iron team for that. Yes.

And we try to choose questions that has a more general relevance as well. Yeah, company-wide questions. All right. Perfect. Fred, can you give an update on Prison Architect 2?

Actually, I approved this question, although it's a game-related question because a lot of people were asking. So first of all, have I played this game? I have, yes. I have over 200 hours in this game. So I know it's a game. I know it's going to come out at some point. What we need to do now is just polish the game and make sure that it's up to standards of what people can expect from the game. Prison Architect 1 was a great game, is a great game. And so Prison Architect 2 will come with expectations. And we... are right now working to try to fulfill the expectations of the gamers and when the game is ready we're going to release the game i can't say when uh now but uh we have the best for the game in mind that's it i hope that answers the question but you keep on following our our new channels but yeah i'm gonna play more this weekend so i'll might keep you updated what's happening cool Alex, how much costs were related to non-capitalized development costs and costs for development support, operation, and maintenance of games in this quarter? Right. That was a long, complicated question.

So I mentioned it. So it's under COGS. So it's a part where we don't capitalize development costs. It's for the ARC games, for example, and the cost that we have in the publishing business. 105 million SEC in Q4 2024 and 100 million SEC in the same quarter a year before. So flat, more or less. Yes.

Very small changes. How much of the sales come from the two new games from ARK, Tlatoani and Space Trash Scavenger, in this quarter?

I don't have it, and we don't share revenue per game, but I would say very small.

Yeah, it doesn't change the course of the company in any way, no. Yes, small, very small.

Okay. Brad, are you still looking into potential bigger acquisitions if anything comes up? Or are your preference for smaller bolt-ons?

Right. I mean, one concern we have when we do acquisitions is culture. And we have a certain way of operating here, and we want to keep it that way. So I think making too big acquisitions is going to be problematic for us if it's not handled totally separate from what Paradox is doing. But we're not an investment company or anything like that. We are a publishing and development company that tries to stay focused on what we do. Smaller studios, hopefully with IPs, if there are, might be interesting. But we have a short list of studios we would like to acquire, and we don't go around shopping for anything. And most of those studios are not interested in selling in the first place. So it's just studios that we have on our sort of wanted list, sort of. But, you know, we'll see what happens. We're not actively being super aggressive in the market either. Alex, Q4 24 revenues was clearly higher than what people expected and the previous quarters when you did not have releases. Given you have achieved it by just back catalog and DLCs, does it mean there is underlying change to back catalog growth and that we have to account for higher baseline in the next quarters too? Or was it just a one-off? It's a bit of a perfect storm this quarter. We have to admit that, you know, it is some things just came together.

But it is a relevant question. So the reason why Q4 is 250 million higher than Q3? it's due to what we have released and due to what marketing campaigns we have had so it's not that we have lifted everything up to a new level uh that we try to do quarter by quarter by quarter as well but but that is not the explanation it's the releases of the dlc's on hoy on stellaris on cities all that has helped so so it's going to continue to fluctuate uh like before

And like I mentioned before, we have no, for example, Game Pass money in this quarter, which is worth mentioning because it means that the underlying sales is strong. Even if we're helped by a weaker Krona and a couple of other things.

So going forward, quarters where we release a lot are going to be great. Quarters where we don't release a lot are going to be considerably much less revenue generating. Brad, 2025 is a crowded space on the release side. How do you plan to optimize the event release window?

Yeah, everyone is talking about GTA, right? When is GTA release? But to be honest, I... We do not focus on the competition. We focus on our own games. Of course, when it specifically comes to GTA, I think everyone in the business has to sort of position yourselves towards that release. Our games are niche and we release them when they're ready for release. And that's a rule that we're going to follow in the future as well. If there's a big reason to change it a couple of weeks back or forth, we might do that. But normally we just set a release date and we release it because we know our market. We know our gamers. And when the quality of the game is right, you know, we think we can sell it. Good. Last question. Alex, Hearts of Iron 4, how was consumer interest in a new expansion pass? Is demand comparable to other games?

Yes, let's say expansion pass is something that we have noticed is very popular amongst the players. So it's obviously the reason why we have started to do it for more and more of our franchises. And without going into the numbers, yes, it's been very popular for Hotshot Iron 4 as well. I think it's a great way to sell the games, both for us and for the players. 100%. Was that the last question, or has it come out of time? Yeah, 45 minutes.

Okay, thank you very much. Thanks for listening. And if you have any more questions, you have the IR at ParadoxInteractive.com, where your team happily answers, or I can answer as well, if you want to answer directly from me.

Thank you. Thank you very much. And if not earlier, see you for the Q1 report. April, I don't know, April 25 or something like that. Sometime in April. Same time, same place. Take care until then. Thank you. Bye.