• Revenue: SEK434 million, up 2% from last year's Q3 SEK426 million.

• Operating Profit: SEK143 million, compared to SEK85 million last year.

• Profit After Financial Items: SEK151 million, up SEK8 million from operating profit.

• Profit After Tax: SEK120 million, compared to SEK69 million last year.

• Profit Margin: 35% compared to 21% last year.

• Cost of Goods Sold (COGS): SEK217 million, down from SEK255 million last year.

• Amortization: SEK96 million, compared to SEK115 million last year.

• Royalties: SEK20 million, down from SEK24 million last year.

• Selling Expenses: SEK44 million, compared to SEK66 million last year.

• Admin Expenses: SEK22 million, compared to SEK23 million last year.

• Cash Flow from Operating Activities: Lower than last year despite higher operating profit.

• Cash Flow from Investing Activities: SEK115 million, down from SEK359 million last year.

• Average Number of Employees: 584, down from 634 last year.

• Warning! GuruFocus has detected 4 Warning Signs with PRXXF.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Revenue increased by 2% compared to last year's Q3, reaching SEK434 million.

• Operating profit significantly improved to SEK143 million from SEK85 million in the previous year.

• The company has strengthened its publishing division by creating a dedicated team for third-party projects.

• Paradox Interactive AB (PRXXF) has a strong pipeline with eight main games in development, excluding Paradox Arc projects.

• The company has reduced development CapEx significantly, focusing on smaller, high-risk projects with a more prudent financial approach.

Negative Points

• The Swedish krona's performance negatively impacted revenue by 3-4% due to unfavorable exchange rates.

• The company experienced a big negative working capital outflow due to the Expansion Pass setup and vacation salaries.

• There were no major game releases in Q3, which is typically a slow quarter for the company.

• The company had to delay the release of Prison Architect 2 to ensure quality, impacting potential revenue.

• Challenges remain in the publishing side, with mixed results from third-party titles.

Q & A Highlights

Q: Paradox has seen strong success with its first-party titles but mixed results on the publishing side. What strategic adjustments are being considered to strengthen the publishing portfolio? A: Frederik Wester, CEO: We have separated third-party operations into a dedicated team to focus on evaluating and launching successful projects. This approach aims to improve our publishing results and minimize financial impact by taking costs upfront.