Paradox Interactive Stock

Hello, and welcome to the Quarter 2 Stream 2026 for Paradox Interactive with me, Fred Wester and.

I'm Alex Bricca, the CFO. Welcome, everyone.

Welcome. Good to have you back. So we start rushing through this with my name, that's me. And starting by saying that this is a solid first half of 2026, no big surprises, no big things that are upsetting in any way. It's been sort of a typical quarter. We release content for -- we released 9 pieces of content for 7 of our franchises.

The only exclusion is Cities: Skylines. But however, we see a very positive trend for Cities: Skylines 2 since Iceflake Studios took over by New Year's. So we see Cities: Skylines actually having the best sales quarter since release without releasing any new content. So that gives us a lot of reason to look forward to the future when we're going to release a lot more content for Cities: Skylines 2 and for Cities: Skylines 1 for that matter.

Crusader Kings 3 and Stellaris launched new expansion passes and Hearts of Iron 4 and Age of Wonders 4 were both at the end of their expansion passes. So they're going to recharge as we say now and starting over with new expansion passes.

We entered the main list of the NASDAQ Stock Exchange in Stockholm, marking a new milestone for the company, giving us new opportunities to do new things like a share buyback program that we announced last night, just after our Board meeting, and it's going to take place as soon as we can, right?

So -- and as we said in my words from the CEO that we point out in the quarterly report, we have a very exciting Gamescom coming up in 3 weeks' time. So we might just as well ask you to follow us on Gamescom as well for more news on -- because we're getting a lot of questions on future releases, but we can't say anything in these streams. We have to keep it in a certain marketing schedule as well.

So the releases, the key releases, as you can see here, for all franchises, like I said, almost, Stellaris, Age of Wonders 4, Victoria 3, Hearts of Iron 4, Europa 5 and the last 2 pieces of content for Bloodlines 2 before we close that chapter of development. And that was very positive actually.

I think that -- I don't get any more attention this time. So -- but I think it was a good summary of what we've done so far on the product side. But I'll probably interfere with your.

It wasn't little.

I'll interfere with your numbers instead.

Sure. Let's go through them. So revenues for the second quarter came in at SEK 524 million, which is 14% up compared to same quarter of last year when we did SEK 459 million. Let's look into the drivers a bit. You that follows us knows that there are mainly 2 things that impact the revenues. One is quite often the currency changes when we compare quarter-to-quarter. It's negative for us this quarter as well, but not that much. It's roughly 2% negative on the revenue side. It has been much higher the latest quarters we have been through. So now it has been fairly stable. But -- so despite some 2% headwind on FX, we are still increasing 14%. And that, of course, has to do with the main driver, and that is what we release in the quarter.

And if we look a bit franchise by franchise, one of the biggest changes for Hearts of Iron 4, where we had a big release in the quarter. Last year, we had that one in Q1 instead. So therefore, Q2 versus Q2 comes with a substantial increase for Hearts of Iron 4.

We released on Stellaris, Nomads, but there, we had a big release last year as well. So we did a lot of revenue this year for Stellaris, but we did actually even more last year.

And what's worth mentioning on the product side for Hearts of Iron is that Peace for our Time that was released in Q2 is also made with one of our modern teams, which also emphasizes our push for more user-generated content. So a lot of -- we have a lot of talented community members among our 6 million gamers. And some of them are making a lot of quality content for our games as well. And this is one example of that.

Yes, you're right, we had 2 releases on Hearts of Iron 4 in the quarter.

Correct.

Crusader Kings 3 release, as Fred mentioned, a smaller release. Last year, we had a massive release on CK 3. So therefore, the revenues on Crusader Kings 3 is down if you just compare quarter.

Last year, it was Khans of the Steppe, which was a major in that one. I don't remember what was the name of the release this year.

Is Songs of the Realm?

Songs of the Realm, yes, it was a smaller release.

And as you mentioned, Fred, this is a bit strange for us. So Cities didn't have any release, but still made huge revenue because normally, we push this message that if we don't have releases, we don't do much revenues, but this didn't apply for Cities. And of course, it has to do with the fact that we have a lot of players that have bought Cities: Skylines 1 and our fans of the franchise that now little by little are starting to buy Cities: Skylines 2.

Yes, yes. And that is -- you can see the sales climbing for sure.

Age of Wonders 4, Victoria 3 had releases this year's Q2, but we had releases last year's Q2 as well. So not much movement there. And then, of course, if we compare quarter-to-quarter, it's or year-to-year, it's -- Europa Universalis was higher this year because we have Europa Universalis 5 and also Vampire: The Masquerade - Bloodlines 2 had some revenues in Q2 this year.

As you mentioned, Fred, we released the 2 final DLCs for Bloodlines 2 in the quarter. I think it was April and June, right? Top revenue contributors, the same ones, as always, Cities 1 and 2, Cities 3, Hearts of Iron 4, Stellaris, Europa Universalis 5, Victoria 3 and Age of Wonders 4 and Bloodlines 2. No surprises there.

Let's move to operating profit, SEK 182 million this year compared to SEK 133 million last year. So that's up almost SEK 50 million or 37% and that comes with the revenue increase, of course.

Profit after financial items or profit before tax, SEK 188 million compared to SEK 139 million. And the profit margin, 36% this year compared to 30%. But we think we can do better, right?

We think so, yes, on the margin side, we can probably be a bit over 40%. At least that's the long-term of strategy for us.

Even though it's, of course, very strong with 36%. Equity to asset ratio, 76% compared to 81% a very solid company balance sheet. The reason to the decrease is that we prolonged the office lease agreement here in Stockholm for several years, and that is according to the accounting rules put on the balance sheet. So it increases asset and it decreases debt. So therefore, the solid EBIT goes down.

Employees, number of colleagues to us during the quarter average 695. So that's up significantly, I would say, from 640 last year. The main growth is in our studios. Iceflake percentage-wise makes the biggest, of course, taking over Cities during this year. So naturally, they are increasing.

But we've increased in Haemimont that are working on -- they have one live game surviving Mars, and they're working on other things as well. Paradox Development Studios in Stockholm have increased. They have several projects going on and some increases on publishing as well, but most in the studios.

Let's move -- page. Let's see this chart. So it shows revenues and our 3 main costs, cost of goods sold, selling expenses and admin expenses. Cost of goods revenue we have discussed SEK 424 million compared to SEK 459 million last year. Cost of goods sold is up from SEK 232 million to SEK 259 million. We will look into that in detail on the next page. So let's say that.

Selling expenses is very similar to last year, SEK 53 million compared to SEK 54 million Q2 of 2025. So almost the same. Movements within each game depending on what has been released, of course, and what's about to be released. So last year, we had significant spending on EU 5 and Bloodlines, even though they weren't released, but we were starting to prepare.

This year, it's upon HOI's since we released and also on an unannounced game, which sooner or later will be announced. So the marketing costs we need to take in advance before we actually release the game and some of them even before we announce the game.

Admin expenses, slightly higher than usual this quarter, SEK 33 million compared to SEK 27 million last year. Half of that increase roughly is due to this mix change we had that came with significant one-off costs. We don't see any major cost increases from being on this list, but it came with extra cost to do the list change. So roughly SEK 3 million in Q2 was due to that.

And then -- so that means that it's up SEK 3 million, small changes between each quarter. So this year, we had a summer party for all employees here in Stockholm in June. Last year, we had it in

I wasn't even there.

No, you were invited.

I was invited, but I wasn't there. So it was not my fault. [ Paradox was there ].

No. It was good. But last year, we had it in September when we had the big staff conference. So that means that.

Moving costs around [indiscernible].

It moves a bit. And then -- so admin expenses normally stays quite flat, but with an increase of staff in general and increase of the business, admin expenses comes up a little bit. So let's -- yes, let's dig into COGS.

Here we go.

Which is the biggest cost we have, SEK 259 million, up from SEK 232 million last year. It's made up of 7 cost items or that's how we describe them. The one that is often the biggest one is amortization of capitalized development. So that came in at SEK 103 million this year, Q2 compared to SEK 79 million last year. So it's a SEK 24 million increase. And that is more than SEK 24 million is due to Europa Universalis 5 and Bloodlines. So only those 2 projects came with a higher amortization in Q2 then makes up this difference. So that means that the rest is down. And especially Crusader Kings III that is done. They had a huge release last Q2, which has been almost fully amortized by now. Also Millennia had significant amounts last year, but not this year.

Write-downs, 0 this year, 0 last year, which is, of course, good. Then we have amortizations of licenses, trademarks and similar rights. This is down from SEK 19 million to SEK 8 million. So the SEK 8 million, it refers to the acquisitions of Haemimont and the games Stranded: Alien Dawn, which we didn't have -- while we didn't have full of it last year.

So what we do is when we acquire companies like Haemimont or assets like Stranded: Alien Dawn, we prefer to put as much of the investment cost on to assets that we amortize. It pushes down the profit for the -- in short to midterm, but it's a prudent way to do it, and it helps us in the long term.

Yes, it keeps the balance sheet clean.

Exactly.

From all goodwill like items and stuff like that. I think our total goodwill now is under SEK 20 million.

Yes, it's somewhere around there.

That's right. So it keeps it clean.

For sure. And of course, so take Haemimont, for example, we expect the value of Haemimont to actually increase over the years as being part of Paradox. But that's not how we account for it. We account as the value actually disappears over -- I think it's fully after 5 years. So it's a very prudent way to handle it.

And why is it down? Well, last year, we had amortizations of Playrion that we acquired back in 2020 and 5 years has gone and then all amortizations have gone. Therefore, we have 0 amortizations left to do there.

Depreciation, SEK 7 million, same as last year, slightly, slightly down. But -- and this is how you account for the rent pretty much for all the studios.

Then we have noncapitalized development costs. So this is a spending on game development project that we don't capitalize for different reasons. It can be high risk, it can be early stages. For example, we have -- we released, as we mentioned, 2 DLCs on Bloodlines 2 in the quarter. We have taken the full cost of that development in.

In this quarter.

As they come, yes. And a significant part of that development came in this quarter. So therefore, that is high. We have the profit share, which is company-wise, it's 6%, 6.5% of the quarterly profit. That is taken as cost in the same quarter. And most of it ends up here because most of our employees are within the studios that are part of the cost of goods sold. And then we have some of the publishing costs as well for game development-related matters end up here.

Development support operation, maintenance of games. So it's tech -- pretty much the tech costs we have within the publishing unit. They do the launcher, mods, multiplayer functionality forums. It's up to SEK 30 million this Q2. It was SEK 24 million in Q2 of last year. This -- it fluctuates a little bit from quarter-to-quarter, and it also increases or decreases with the business. So when the business -- if we do more projects, if we hire more people, this goes up a little bit.

Royalties, the final item here or subitem, SEK 28 million in this year's second quarter and SEK 26 million last year second quarter. 2 things that drives our royalties or historically, it has been 2 things. It's the revenues of Cities: Skylines and Age of Wonders 4.

Yes, the earn-out from Age of Wonders 4 purchase. Yeah.

And that is fully paid now. So that means in Q2, we had much less. And in Q3, we won't have anything.

On Triumph Studios.

Correct.

All the games, yes.

Yes, correct. So we can expect royalties to slightly go down or it should go down in average. Let's move on to the next slide.

And yes, let's go.

So below our 3 main cost items, we have other income and other expenses. Net SEK 4 million this year and net last year, minus SEK 13 million. And this is mainly currency movements within the quarter. And last year's Q2, if you remember, the dollar weakened significantly, which impacted us negatively in that quarter. This year, it hasn't moved much. It has actually gone up a little bit during the quarter. So therefore, it's much less negative.

Fairly stable. Financial income is interest rate basically on money in the bank.

Exactly. And that's stable. It's down very similar as last year, SEK 6 million last year. I think it was very much the same. Yes, it was rounded off to SEK 6 million last year as well. So slightly changes in interest rates and the amount of money we have on the bank account.

Sounds good.

Let's move on.

Move on.

Rolling 12 months profit, this is to give you a better sensation of the trends. And you can, of course, see that over a longer period of time, the growth trend of the revenue is very solid. There are ups and downs if you look at shorter periods of time, but over time, there has been a very stable increase, and it varies with the releases.

Profit is down a lot since Q4. Profit, of course, also depends on the releases, but also if we release bad games or projects that comes with write-downs. And we had one in '23, we had one in '24, and we had one in '25. '25 one was Bloodlines 2. So that will still push down the rolling 12 months.

Until Q4.

Yes. So next quarter, it will still look like this, but then it will bump up again.

And I think we said it on the last stream, we have had 3 big negative projects. They are all gone now. So -- well, we have slightly little amortization left on Bloodlines. But in terms of what we have in the development pipeline, we don't have any big high-risk projects like these ones. So that's very good.

That's very good. That's very good news as well. Next.

Yes. Let's go to next.

Let's go.

Cash flow in the quarter, we -- so if we look at cash flow from operating activities, it was SEK 105 million this year, but that includes SEK 185 million payment for the publishing rights to the game that we're co-publishing. So without those SEK 185 million, it would be significantly higher.

And I don't know exactly when we have -- if we have said when the game is -- no, we haven't said exactly when the game is going to come, but when it comes

It's basically for publishing rights for games. SEK 185 million in this quarter, which would have made it SEK 290 million if those were left out. But it's money that hopefully is coming back and hopefully quite soon.

Yes. Good point. So very strong cash flow.

Very strong cash flow.

Cash flow from -- sorry, from investing activities, SEK 166 million compared to SEK 161 million, so very similar to last year. And if you follow us, you know that this number, it fluctuates between the quarters. So I think it was like SEK 122 million or SEK 124 million in Q1. So it differs a bit depending on when we get the invoices for the different projects.

Great.

I think that was it.

Is that it?

Yes.

Yes. Let's move over to the Q&As.

Yes. We have received several questions during the morning and also during the stream, I think. First one, I think, is for you, Fred. Do you see potential in working with third-party owned IPs.

That's a good question. I mean we prefer as Paradox we always have to own our own IPs and work with our own games, our own trademarks, intellectual properties, all of it. If we see an opportunity, though, with something that matches our philosophy, matches our target audience, matches what we do and we can come in at a reasonable price with a good deal for both us and the partner, we're not alien to doing that deal.

So we're getting -- I mean, the way the market looks right now, it's been a bit volatile out there. I think Paradox is still very stable. I think we're having a good growth path forward. I think we have a great strategy, great team. But it also gives us a lot of opportunity to work together with talented teams that are looking for either a publishing partner or funding or other things.

So we can provide a lot of stability for a lot of gaming companies out there. So opportunities will come up for sure. That was a very long answer. But I think it was actually fulfilling to whoever asked the question.

So Alex, can you quantify the nonrecurring main market listing costs and FX?

Yes. I think I did the main marketing listing cost was SEK 3 million roughly in this Q2. It's roughly the same in Q1. And we expect it to be close to 0 in Q3. Yes. And I also touched upon the admin cost in general.

FX, I said we had roughly 2% headwind. Now these are estimates, and it's difficult to be exact for us when we talk about FX because we can, of course, see how much the different currencies have changed between the quarters. And we can weigh that change with the currency mix we see from our products when we look at Steam, for example. And that gives us in this quarter, 2% if we look at the average Q2 and compared to averaging of Q2 last year.

But FX actually impacts us when the payments are happening. So it depends when are Steam getting the payments from the players and when we are -- and when are we getting the payments from Steam. And that timing differs from when we recognize the revenues in our income statement, for example, due to expansion passes. We got the payment for the Age of Wonders expansion pass already last year, but some of it comes up now in the revenue. So therefore, you can't just take this 2% and multiply it with SEK 459 million, which I think was the revenue from last year's quarter and just say that, that is the impact.

But over time, it kind of balances out. So that's the point as well because the expansion passes sell at different times as well.

Yes, exactly.

So every day for the whole period of the expansion pass. So it's more complex than just saying 2% that's the thing. But it balances out over time.

Right. Here's one for you, Fred. Could you give an update on Prison Architect 2 and any other games in the pipeline? Follow-up question on that. Can we expect something at Gamescom? Can you comment on rumors circulating about future management [indiscernible].

Three questions in one. Let's start with Prison Architect 2. So I've played some Prison Architect 2 yesterday. The new planning mode is absolutely brilliant. You can build like plans that are like transparent and then you can say, push play when you have the money in the bank, right? So it's really good. It's getting there. We're going to come out with news during fall. That was Prism Architect 2.

Can we expect something at Gamescom? Yes, you can. It's going to be quite big for us this year. So -- and we already said at this stream, and I think I say that in words from the CEO in the quarterly report as well. So we're really hoping to follow our -- what we do with Gamescom basically and the release that we have because it's going to be a lot of fun.

And can you comment on rumors circulating on a future management game? No, I can't. I'm sorry. You have to wait until we do official releases because if we comment on all the rumors out there, it's going to be a completely separate stream about that. So not today, but hopefully, we can iron out some details in a couple of weeks from now.

So Alex, given quite a Q3 content schedule, how should we think about the sequential EBIT considering the higher headcount and ongoing amortization from Europa Universalis V and Bloodlines 2.

Right. So.

Good question.

Yes. What will EBIT be in Q3?

Exactly. Plus/minus 2%.

Yes. We don't give any guidance on EBIT or any other financials. But as the question points out, Q3 tends to be slower compared to Q2 if we count releases, and it's likely going to be like that this Q3 as well. Now -- so that, of course, impacts EBIT. Almost all Q3s are lower than the Q2. It's quite common for us as well, at least.

Considering the higher headcount, yes, we have had significant headcount increase compared to last year. Most of that is in the studios. So that means that it's for developing, which means that it's been capitalized and goes into the balance sheet. So that doesn't impact the short-term profit. It will impact the quarter when we release the game. But the plan is that, that game is going to come with more revenues than amortizations, of course. But it won't impact Q3 that much.

And also when we -- these are details, but when we speak about Q3, personnel costs tend to be significantly lower than other quarters because we have a lot of vacation and that has an impact on the P&L. Yes, there was also like a 3-part question.

Amortizations from Europa Universalis and Bloodlines, yes, good point. That is coming down. We released both games in Q4 last year, and we have aggressive amortization model, which means that we take much more in the beginning. Now we are coming in, in the kind of final period, where we have amortized the vast majority of both games. So that is going to come down.

Right.

Next one is for you, Fred. Is the team in Iceflake still working on the console version for Cities: Skylines II? And can you give any additional color on the possible release?

Short answer is yes. Any color on release? No. Because like I said, we can -- we're going out with official releases whenever we are ready. But the progress is looking good. And we I don't actually know when we're releasing more info on this, but I think it's fairly soon. So we're in a good place with Cities: Skylines II on console.

Alex, is SEK 200 million the entire amount up until the AGM? If so, why is that considering SEK 1 billion of cash post after dividend payment and the payment of the publisher contract?

So SEK 200 million refers to the share buyback program.

I guess so, yes.

I'm pretty sure.

Yes. It sounds like the round number that we agreed upon in the Board meeting yesterday.

Yes.

So yes.

Yes and that we announced later.

And why is it only SEK 200 million is the question I just have.

Yes. Well, the entire amount -- yes, it's a full amount that the Board decided on yesterday. So that's the total amount. But -- the Board made this decision based on the mandate that was given on the AGM that we had in May. And that mandate is bigger. So the Board has only used a part of that mandate. And technically, there's nothing hindering the Board to take a new decision later on.

I mean if I understand correctly, we can buy back almost 10% of the total shares, and that just takes a new Board decision. So this is -- but this Board decision has the mandate of SEK 200 million.

The decision was SEK 200 million, correct. Why isn't it more? Well, so the buyback program is SEK 200 million. Back in May, we distributed a little more than SEK 500 million in dividend. So it's SEK 700 million this year. If we complete the buyback program, a little more than SEK 700 million as shareholder distribution. Sure, we have more cash, but we think this is a good capital allocation for this year.

As always, our main priority is to invest our cash in game development. And if the opportunity arises acquisitions like we have done in the past. What is not needed for that should, of course, be distributed to the shareholders. We have, during the last years, increased that distribution. It's not many years ago that we did SEK 100 million in distribution, and then we increased it to SEK 200 million to SEK 300 million and then to SEK 500 million. And now with the complete buyback, it's at SEK 700 million. So we are increasing it.

Fred, when you think about releasing content more frequently across your main games, what's actually holding you back the most? Is it how much your teams can produce? How much players are willing to pay for or something else entirely?

I would say it's all of the above to different degrees. But the first and foremost, the ceiling is quality. I mean we've had uneven quality on some of our titles, some titles that do only things that get super reviews and some that are a bit up and down. But we need to be able to provide a strong player fantasy with quality content every time we release something. That's our goal.

So I wouldn't say there is one like dominant factor holding us back, but we strive to produce as much quality content as we can for our gamers. So there's nothing -- we don't hold back for other reasons than that, I would say. I mean you could always argue we could have parallel teams and stuff like that, but it also increases complexity.

But we have -- I would say that our live teams work really hard to provide the content that we come out with every year. And I think we found a good model with the season passes. We might do some adjustments to that in the future. But I think we found a good model.

I mean if we're describing like the Paradox, if you want to call it flywheel, which is very popular to describe it as that, what we need to do now partly is finding more games to fit the Paradox model that already is working, as you can see. The no new releases this year, still stable. We can see that our portfolio can still grow the company. It's just adding new games on top of that is going to be icing on the cake or maybe more than icing, maybe a fully new cake. You never know. I have a really long answer to that. I don't know. I just feel sort of inspired.

So regarding the SEK 30 million guaranteed to an external dev, how are the advances recouped and margins and revenue sharing economics from an investment standpoint? And what protections exist if the project is delayed or underperforms?

Okay. So several questions. How -- right. So to start, we can't comment on the particular contracts, but we're happy to explain our standard procedure. So when we publish games developed by other studios, the normal setup is that we as a publisher, we finance the full project. So we pay the full development costs, sometimes with a markup, sometimes just as cost basis.

And then upon release of the game, we take often the full revenue from day 1. And then once we have reached a certain threshold, normally, it's related to when our investment is recouped, sometimes it can be more than that, then we start to share the revenue with the development partner.

And it depends on when we come into the equation as well. If we start the funding from the beginning, the terms are in our favor, mostly, and it might be more balanced if we come in late and can evaluate the product.

Yes.

So it depends a bit on that as well.

Yes. And in this project, we came in quite late.

We actually have a couple of projects that we can't really -- some that we can't talk about.

Sure. But as you say, when we come in late, a lot of the risk is already taken. So -- and that's, of course, very beneficial for us that the risk is smaller. And that's -- normally, that is something that you need to pay for through the terms. So if you take less risk, it's likely that you get equally less upside. So with less risk, you could a bit roughly expect slightly less margins.

Yes. But also, you have to remember that this is -- when you make a completely new product, it's quite high risk. When you come in later, the risk is significantly lower as well. So it's always.

And then there was a sub-question in it, what protection exists if the project is delayed or underperformed? Yes, I think the best way to handle the risk is, of course, to come in late. That reduces the risk, the most.

The most, yes.

And another equally important thing is to work with studios that have a good track record, work with projects that have -- is it a sequel that takes down the risk because it's a recognized brand. It has a player base already. So those things impact the risk much more than the contractual terms, I would say.

Also a sequel to a previous game is a lower risk than a fully new game. If you have a lot of overlap with the Paradox current portfolio, it's a lower risk for us because we know the target audience. So there are a lot of factors that come into account when you make the decisions on what to publish.

Fred, given how the EU 5 launch has gone, including the issues along the way, how has it changed how you think about Paradox focus on grand strategy games?

No, not really. Grand strategy games is still our core, and it's also our deepest expertise, and we will continue to invest and expand that. We will continue to experiment a bit on what is considered grand strategy and maybe trying to reach certain new target audiences without leaving behind the core audience that we already have because I think that's a mistake a lot of people do.

But it means when we're looking at existing games and new titles, grand strategy is still at the core of what we do, even if we experiment with other things around it that fits the gaming formula and also the business formula of Paradox.

So Alex, how should we think about the net royalty cost trajectory given the expiry of Age of Wonders 4 earn-out, but higher royalties from stronger Cities: Skylines and Cities 2 sales?

Good point. Short answer, it should decrease over time. As we already mentioned, we have 2 main drivers, as your question suggest, revenues from Cities: Skylines and Age of Wonders 4. We already said it Age of Wonders 4 is from now on royalty free, you could say. And Cities, yes, revenues have increased over the last quarters. But then we pay royalties on the sales of content developed by Colossal Order.

And now when we and especially Iceflake have taken over the development, it means that revenue and sales on content that is produced by us, we don't pay any royalties on. So over time, the ratio of the revenue will likely swing towards own produced content. So that will decrease royalty rate as well even if the total revenue as we hope for will increase.

More questions. This one is for you, Fred. Why the choice to work with external developers? If I'm not mistaken, Paradox shifted its strategy more towards in-house development. Does this studio have a strong proven track record, which measures are in place to develop -- to evaluate the developers' progress?

Well, I think we explained it previously, but it's not a shift of focus. I would say -- so in 2021, we had, I think, 9 or 10 external developments, and we pretty much closed all of them. And we've reevaluated who we work with and why we work with external developers.

And I've explained it before, it has to meet the Paradox criteria for what a good game is or how we see games, also have a good overlap with how Paradox does business and what we value, including, for example, modding and other things that are important, both to drive revenue but also to drive player interest and make people more engaged in the game and basically drive player value.

So all the studios that we work with have a strong proven track record, typically works with franchises that has been either proven before or has seen some sort of first touch with the market. So we have a couple of studios that we work with right now on the games that we will co-publish. And we think that's an excellent way to figure out ways to find new partners to work with over longer periods of time and sort of expand the Paradox universe for our gamers and for ourselves as well at a limited risk.

So which measures are in place to evaluate developer progress? Well, we monitor everything closely from a milestone schedule, just like we do with our internal games. So I mean, we do have more than 1/4 of a century experience in making games, even if we fail from time to time as well, which is inevitable in the entertainment industry. I would say that -- we monitor all developments that we're a part of because we're invested in them so.

Good.

Monthly active users in Q2, what is your reasoning behind no longer reporting these figures in the quarterly report?

SEK 6 million, was SEK 6 million in Q2. It's in the report. But unfortunately, the read there has missed it. So we have done several format changes to the report. One is that we have brought forward and increased the KPI sheet that we used to have. So we have much more -- we have more KPIs in it. That has replaced the slide or the page where MAU was previously set out. Now you can find MAU in the company description in the report. We have a page that talks about Paradox. There you will find the MAU.

Fred, I was wondering if you could break down your thoughts/rationale behind Transport Fever 3 in both qualitative fit in the context of Paradox portfolio more broadly and then how you think about ROI when you consider total sales of Transport Fever 2 so far? Several questions again in one.

I think we've kind of answered this in a lot of different ways. But you know what, I'll give it a new stab. First of all, I think the portfolio fit for this game is great, and we've done an extensive analysis on, for example, a wish list overlap in between this game, the Cities: Skylines series, Crusader Kings and a lot of other games in our portfolio and come to the conclusion that there are very few games out there that has more Paradox DNA than specifically the Transport Fever series.

The game looks great. We've all played it. We got the opportunity to play it when we signed it. And that was the -- actually one factor that got us to sign it is actually trying out the game's quality. Just like I have with Prison Architect 2, it's much easier if you sit down with the game and actually play it yourself. It gives a totally different sort of feeling to is this game a good game? Can this game actually sell? Can it reach the audience it's supposed to reach? This is a great game. It's exactly what this type of gamer wants according at least to our own internal and to somewhat -- to some extent, external user research tests as well has indicated.

So that's obviously -- it's a competent developer. They've done games before that is virtually the same thing. And it has everything we want, depth, replayability, engaged player base, modding scene. So pretty much this is what we do. It's just made in a different location than in the Paradox office.

So we never share details of like contracts or partnerships like that because we've never done before. But yes, we think this is a good opportunity for us to find a new good partner, all in all.

Good. No more questions.

And with that long sort of explanation on Transport Fever 3, the Q&A session is over for this time. So thank you, Alex.

Thank you. Thank you for watching. And if we missed to answer any questions, e-mail us, and we will answer them by e-mail.

We will. And don't miss the Paradox announcement at Gamescom. It's going to be a lot of fun.

Of course.

And see you at latest at the Q3 report.

Yes.

Perfect. Bye.

Have a good day. Bye.

Hello, everyone, and welcome to the Quarter 1 Interim Report Stream for Paradox Interactive. With me, Fred and

I'm Alex Bricca, the CFO.

Perfect. So as always, we start by going through all the projects that we released or the releases for Q1. And then we go over to the numbers, which Alex will present to you, and then we'll do the Q&A. And we even got our first batch of AI-generated questions for this stream. So we're super happy to see that we're in the AI age finally. So that's me, and we move on. It's a balanced, I must say, a bit boring first quarter with very few releases.

Worth mentioning here, like Alex will probably mention as well, is that we have a small, small growth on revenue. if we take foreign exchange into account because we see a bit of a weaker dollar compared to the same period last year. But overall, stable revenue, stable operating margin and stable cash flow.

So as we always say, I would say, in these streams, we still are in control of our future, and we can do the investments we need to make. And if opportunities should arise, we're well prepared to take care of those as well. The big thing on the gaming front is the sentiment change of Cities: Skylines II, which is now mostly positive in the last 30 days on steam, meaning more than 70% positive reviews, and it impacts sales a bit in a good way. So we're super happy with that.

So our studio in Tampere, Iceflake has made a great job of gathering the community and releasing a string of patches that has improved the quality of life on the product. Of course, there's still a lot of work to be done, and we look forward to a long life of this product with a lot of good products being released as well. And as I mentioned, it is a bit of a calm release quarter and gearing up for the year to come. Last year, we released in Q4 released DLCs for all our major products.

And in Q1, it's -- the only big DLC we had was for Age of Wonders 4, which is a good game, good stable game in community, but one of our smaller franchises. So we have a lot of stuff lined up later this year. So like I said, Rise from Ruin for Age of Wonders 4 was the only big DLC, then we did some releases for Hearts of Iron IV for Cities: Skylines I and -- yes, that's it. Cities: Skylines II, obviously, Office Evolution and City Stations. So overall, calm and controlled. I posted this on LinkedIn a couple of months ago, and it was picked up by a few people, but I think it's worth mentioning, so you can see how we see development from the inside. So some quarters will be better, some will be not so good because it depends on what we released and how we released and what cadence we have basically in the company. But if you want to go back 10 years in time, roughly from when we listed the company on Nasdaq First North in 2016, this is the development of daily peak users for all our games combined.

So we have more or less quadrupled the number of gamers that we have. And it shows in the monthly active users, which also happens to be the most important metric for us to see the health of the company, where does Paradox Interactive stand today because -- if you have a lot of monthly active users, it means that you also can sell a lot of the products that we make, like the DLCs and the content creator packs and whatnot. So keeping a healthy growth and pace of concurrent users is absolutely key to our business.

And of course, we look forward to adding more games to the already seven games that we have in our portfolio that we call live games that we constantly update and release new DLCs and all sorts of downloadable content for, I could say.

So we build games that players value for a long period of time as well. Stellaris and Hearts of Iron IV both turned 10 this year in May and June. So you can easily see the longevity on our franchises once we have a hit. And of course, we have the ambition to grow. So we're kind of taking aim here or preparing next sprint in the life of Paradox. So those are the seven franchises that we currently support. We have a couple of smaller ones like Across the Obelisk and Surviving Mars that are more in the experimental stages, but these are the seven key franchises.

And here, we focus on fine-tuning the player experience and making the player experience better while building our strategic moat for each game. Also, we're going to focus more on improving the player services around the games, if you want to call it Meta layer or Meta game or however you put it.

Well we used to say seven games in the pipeline is now eight, which means that we have a healthy amount of projects as well, and we hope to reveal at least some of them this side of the year. If some maybe even sooner than that, we'll see. But we also have the capacity to fund and to buy our way into new projects as well. We have money in the bank, and there are also a lot of projects out there that is currently looking for funding. They might have gone halfway through or 75% through on the project and they might need funding. So a partner like Paradox might come in handy there as well. But our focus remains on strategy and management games. So that's where our sort of our key efforts will still be focused.

So Alex, I'll let you go to -- go through the numbers.

Thank you, Fred. Right. So you mentioned it a bit. Revenues came in at SEK 431 million in Q1 this year compared to SEK 464 million in the same quarter last year. So that's a 7% decrease. As you know, if you follow Paradox, you know that we have two things that drives our revenue from quarter-to-quarter. It's what we release in the quarter and currency impact.

Let's start with currency impact since you touched upon it. I think the dollar is down 14% if you compare Q1 this year compared to Q1 of 2025. euro a bit less 5%, pound 8, Chinese yuan, 10. In average, it's about 10%.

Right.

So take away, take 10%, that's SEK 40 million to SEK 50 million from last year's revenue. So that means that we have grown 2 percentages, 3 percentages organically this year.

Not spectacular, but still...

No. And it doesn't make the most sense to do these comparisons because we don't have a stable release pattern from quarter-to-quarter.

Right.

So the next thing is, therefore, to look what have we released. Q1 tends to be slow. and it's no different this year. As you mentioned, Fred, we released on all our big franchises in Q4. So obviously, the following quarter is slow in terms of releases. It was Age of Wonders 4 that made the only big expansion release. So where is it down? We do less revenues on HOI, Hearts of Iron and Crusader Kings, this year compared to last year because last year, we had the release on Hearts of Iron and one on Crusader Kings. So therefore, we're a bit down this year.

Stellaris didn't have a release last year, but they released the expansion pass in Q1. So that -- so when we release expansion passes, it generates a lot of sales, but we don't put that on to the -- as revenue. We don't recognize it as revenue until we actually release what is in expansion pass.

Right.

But -- even so, when we release an expansion pass, it generates attention to the game because we do marketing. So other parts of the game like the base game and other DLCs are being acquired. So that happened in Q1 last year when we released the Stellaris expansion pass. Now that this year, it comes in Q2 instead, I think.

Right.

So we didn't have any big items on the balance sheet that we could count in for Q1 this year.

Right.

Well, we didn't release any -- we didn't announce or release an expansion pass on Stellaris.

All right.

That will come later this year. What is up on the other hand, is Age of Wonders because we released an expansion there. Bloodlines 2, of course, we didn't have that line last year. This year, we had it. And I think worth mentioning, even though it's flat fairly much is Cities because -- last year, when we released the content creator packs and radio stations on Cities II, that was part of the premium edition.

All right.

So -- and when we release premium editions with the original base game on our most successful titles, we sell a big chunk of premium editions. So a lot of the money sits on the balance sheet. And when we release the content, we release and recognize revenue. And that happened in Q1 last year.

Right.

So therefore, Q1 for cities last year is a very tough comparison due to this. But still, we managed to make very similar revenues this year. And that has to do with the fact, as you mentioned, Iceflake has been able to turn around the sentiment on the product. So the sales levels now is -- it looks very good. So that, I think, is one of the highlights of the quarter.

Yes. Top revenue contributors, it's the same as always. It's our big seven franchises, as you mentioned, plus Bloodlines this quarter. I'm afraid it's going to have a diminishing impact on the top line quarter-by-quarter, but Q4 has had a big impact, of course, still a significant impact in Q1. Let's see what happens in Q2.

Operating profit, SEK 101 million compared to SEK 147 million. So it's down SEK 46 million compared to last year. It's FX on top line and it's amortizations. We have higher amortizations this year. and we will come back to that, but that has to do with the fact that we released big games in Q4, Bloodlines [indiscernible] V, but also Surviving Mars. And with our digressive amortization model, we take a lot of cost in the earlier periods, most in the first quarter like Q4, but a significant amount also in the second quarter like Q1. So that pushes down profit. It also -- if we move on, so profit after financial items, SEK 106 million compared to SEK 154 million last year.

Profit after tax, SEK 86 million compared to SEK 124 million. Profit margin, 25% against 33% of Q1 last year. It's the same there. It's FX and it's the amortization of the base games we released back in Q4 that holds it down temporarily, I would say, in Q1.

Equity to asset ratio, very solid company, 80%. It's slightly down since a year back, and that has to do with the fact that we renewed the office lease agreement here in Stockholm. So we put that on the balance sheet as an asset and as a debt. So therefore, it decreases a bit.

Average number of employees in the quarter, 681 compared to 596 1 year ago. So it's a massive increase. A big chunk of that is Haemimont that has been added. But we also increased -- Haemimont has continued to grow because they are...

They have virtual projects.

They have projects that are moving into later phases, and that means that we add on people to the team.

And also Iceflake took over City Skylines.

Iceflake took over City Skylines too. That's right. And we see some smaller increases here and there in -- especially in the development studios.

Right.

Let's move on to the next slide.

Right. It's my job, right?

So this chart shows -- it's a standard chart as we have had before, revenue and our three main costs. Revenue we have talked about, but what the chart shows here is that it fluctuates quite a lot between the quarters with the releases.

The three main costs, cost of goods sold, selling expenses and administrative expenses, they also fluctuate with the releases, especially selling expenses and COGS. And you can see that in Q4, proportionally very big bumps. And now in Q1, it's back to much more normal levels.

Cost of goods sold, SEK 264 million this year in Q1 compared to SEK 221 million. So it's up -- we're going to talk -- we're going to deep dive a bit on that on the next slide. So let's take selling expenses there. We are down from SEK 48 million last year to SEK 41 million this year, and that has to do with -- we had more marketing on EU 5 last year. We started to take costs for the launch already in Q1. And we had slightly more releases last year. So we spent more marketing on Hearts of Iron and Crusader Kings.

Administrative expenses normally stays very flat. This time, it's up SEK 6 million almost, and that is one-off items, where the biggest one, which represents a little more than 50% of those almost SEK 6 million has to do with the list change. So we can touch a bit more on that. But we are having fees for applying for the list change to NASDAQ and also advisers to help us get prepared for this change.

Yes.

So that is something that is temporary and will go away as soon as we have completed the list change. So let's go to the next slide.

This is new, right?

This is new. Yes. So part of this has always been in the quarterly report number-wise. And part of it, we have talked about in the stream. So now let's also add a slide. So these are the seven kind of subcomponents of the cost of goods sold.

So in total, SEK 264 million, if you add everything together for Q1 this year compared to SEK 221 million last year. And the biggest item is the one you see on the left, that's amortization of capitalized development costs. It's a bit difficult to read there, but it's SEK 120 million Q1 this year compared to SEK 72 million last year. So that's a SEK 48 million difference. And if you take the three games that we released in Q4, Bloodlines 2, [ Europa Universalis V ] and Surviving Mars relaunch, the amortizations on those three games alone in Q1 explains this SEK 48 million difference and some more. So that means that the remaining games have slightly less amortization compared to Q1 of last year.

So -- and this is also a temporary effect that will, of course, go down, we will see impacts already in Q2 where the majority of the development costs for these games have been amortized.

Write-downs, 0 in Q1 this year and 0 Q1 last year. Then we have amortizations of licenses, trademarks and similar rights. So this is amortizations of acquired businesses and assets. So this year, we have taken SEK 8 million at cost. And last year, we took SEK 16 million. So this is acquisitions -- so this year, it's the acquisition of Haemimont and the acquisition of the games Stranded: Alien Dawn, both we made like 1 year ago.

Yes.

And why does it go down? Well, because in 2020, we acquired Playrion. And then we amortize these acquisition costs for Playrion, we did it linearly over 5 years. So that meant last year, it was fully amortized, so then we don't have any amortization left.

We do this quite, I think, prudent, not to say aggressively. So we like to allocate when we acquire a company like Haemimont we like to attribute the acquisition price to assets that we can amortize over time. So if you read the notes from the acquisition, I think we spent roughly EUR 10 million as a fixed amount for acquiring Haemimont, and that we are amortizing in different ways.

And then we have roughly SEK 10 million or SEK 11 million more in earn-out that we're also taking. I think in 2025, we took SEK 32 million as costs.

Right.

So that pushes down the profit and loss temporarily because we think the value of Haemimont, for example, is not decreasing. It's probably going upwards if we're doing the right things together.

Yes, for sure.

But as we recognize it, we take it as a cost over the initial years. So it's a very prudent way to do it. Let's move on. Non-capitalized development costs. So this is SEK 72 million this year compared to SEK 75 million last year. So it's not a big change. So this is development costs that we have for projects that we don't capitalize.

So that can [indiscernible] stages, for example, prototypes.

Yes. So it can be either prototyping for all projects, like even the low-risk projects that we do in-house, the prototyping stages, we don't capitalize. But for the more high-risk projects, everything that we have released under ARC, there we wait even further until we start capitalizing.

So now we're comparing this to last year's Q1, and it's not much different. But if we would compare this to 3 years, 4 years back, it has gone up quite a lot because then we used to capitalize this instead. So this is another, I think, prudent way to handle development costs.

So let's move on to the -- the sixth one, development support, operations and maintenance of game. So this is tech costs that we have in publishing. So it's the development of more generic tech. So it's not game development. So this is development and maintenance of the launch share, the mods tools, the forums, everything regarding that.

Everything that is not the game but still tech related.

Yes. And that also stayed fairly flat. So let's see, it was SEK 24 million this Q1 compared to SEK 22 million last Q1.

Finally, royalties and revenue-based earn-outs, SEK 34 million in Q1 this year compared to SEK 29 million in Q1 last year. It stays -- it has, over the last year, stayed at this level more or less. So it's mainly royalties on Cities and earn-out on the Triumph acquisition. So it means it's based on revenues from Age of Wonders 4.

Now -- and it goes up from Q1 last year because Age of Wonders 4 released an expansion this Q1, which generated more revenues and therefore, generated more royalties. Now that agreement ends today. So April is the last month that we pay this earn-out. So therefore, royalties and -- well, royalties will stay the same, but the revenue-based earn-out that is included here will drop in Q2 compared to Q1. Right. Next one.

Yes. That's it about COGS.

All right. So then we have -- if you look in the P&L, we have 4 more items. We have other income and other expenses to start with. So if you add those together, it's a positive impact of SEK 6 million this Q1 -- last year's Q1, it's a negative net impact of SEK 23 million. And this is mainly currency movements within the quarter, and it's especially dollar movements within the quarter. And if you might remember, last year's Q1, the dollar went down significantly. And that's why we had a negative impact during the quarter.

But it was still higher than it is now, right?

Yes.

Yes.

So this only explains dollar -- it mainly explains dollar in the quarter. But it's a good thing you're pointing out. If we compare Q1 in total this year compared to Q1 in total last year, then the FX movements have not been in our favor. So in total, 10% on top line down. is very good to point out.

Then we have the other two bars to the right, financial income and financial expenses. So that is -- it goes from net SEK 7 million to SEK 5 million. It's basically the interest -- the positive interest rate we have on our bank accounts. It has come down because the interest level has come down.

So good news for homeowners, not so good news for our money in the bank, right?

Exactly, exactly. All right.

And financial expenses is self-explanatory, I guess. So we'll move on to the next one.

Yes. Let's move on. Right. So this chart shows rolling 12 months to show you a bit more trend. bar shows revenue. The yellow line shows profit or operating profit. What you can see, if you look at the revenue trend, it has -- there are some ups and downs, but the trend is very clear. It's very similar to the CCU chart you showed, Fred, earlier in the presentation. It is steadily going up back from the first North listing in 2016 up until we are today. So that's a very healthy trend.

Yes, it's 4x both on the CCU and on the revenue, more or less. So it follows the same sort of which shows us that the health of the company can be measured pretty much by the monthly active users or the [ PL ]like the combined CCU curve that we see. Yes. Good point.

And profit, on the other hand, that's much more volatile with short releases, good releases just as the revenue has, but also with write-downs of projects that haven't gone very well. And as you can see, it happened in Q3 2021 when we took a big cleanup in the development pipeline. And then we have had three releases, The Lamplighters League, Life by You and latest Bloodlines 2 that has pushed down profitability.

But now we have a very clean balance sheet, I would say...

That's right.

It's very focused titles with -- so we -- while we can't promise anything, we think it's going to look a bit better from now on.

Yes. So I think just as you said, in our balance sheet now, we don't have any high -- big items on high-risk projects anymore. So -- and that's a great foundation to start building a nice growth on yellow line as well.

For sure. Okay. Let's move on.

Let's move on.

That's the Q&A.

I think you clicked this...

I double click, yes.

I don't want to miss this.

It's a cash flow.

Cash flow. Green bars going upwards is cash flow from operating activities. There, we made SEK 309 million in Q1 compared to SEK 266 million Q1 of last year.

Not bad.

Not bad at all. And you shouldn't look at single quarters because there are movements between the quarters. But look at Q4 as well last year, even stronger. So the cash flow in the company, the last two quarters have been truly amazing. The yellow bar shows here, if you have looked at our presentations before, it's worth pointing out, we made a little change here.

Now the yellow bar shows investments in capital development. Previously, we also had investments, for example, when we bought bonds and when we bought companies, I think this shows better how the underlying company is performing cash-wise. So there, we had very similar SEK 121 million in investments in capitalized development this year compared to SEK 120 million last year. So very stable.

Excellent.

That, I think, enabled us the questions.

For Q&A, so we've had some questions that popped in. And as I mentioned, -- there might be some AI generated.

Questions as well.

Because if you take our report and put it into Claude or whatever AI solution you have and say, ask a couple of questions on this, it will pop out questions for sure.

But don't do that, try to come up with your own questions. Here, we have a good one. How do -- it's Fred. How do you aim to replenish your pipeline with new projects?

That's a very good question. There are several different ways to do this, obviously. The first one is in-house development and working with prototyping and seeing what we potentially can do within the areas that we're active. Another one is, obviously, I mentioned this in the beginning, third-party projects. There are a lot of developers and publishers out there who have great projects and at the moment, need a good partner that has strong finances and the publishing pipeline. And that's where Paradox comes in handy.

So we're actively scouting for new opportunities, and we do have space for more projects in the pipeline, not a whole bunch because we want to do a great job for every project, but we might fit 1 or 2 more projects in there. We'll see if we can find something. We're not going to pick up just anything, but something that fits with our portfolio, with our business model, with our way of working pretty much.

Right. Alex, could you please quantify the impact of FX on revenue development in Q1 '26 versus Q1 '25?

Yes. I think we did, but it's worth repeating. So roughly, it's a 10% headwind on the revenue. So revenues are held back some SEK 40 million to SEK 50 million due to the increased value of the SEK compared to dollar.

But does that go directly all the way down to the bottom line as well, right?

Well, that part goes directly. But then, of course, we have some costs in euros for our European studios. We have some costs in dollars as well. So we have a small natural hedge, but we have some 97%, 98% of our revenues in foreign currency. Cost-wise, it's roughly 50%.

Question to you, Fred. Can you give some more color on the internal work with Skylines II and your expectations on new content releases for the game throughout the year?

That is a great question because I was -- I came home from Tampere yesterday. I visited the studio for 2 days. It was very enlighting for me. I haven't been there before, and I hadn't thus seen the new office where Cities: Skylines II is being developed. And they had a flying start with Cities II, you could say, releasing a string of patches that has had turned the sentiment on the game. So we're in a much better place now than we were in the beginning of the year. You can see that on the player sentiment. You can see that in the number of players, you can see that on the revenue. So it's positive across the board.

Obviously, bringing a new team and taking them up to speed where we want to be, it has taken some time, but we're going to start releasing new content. Hopefully, we're going to announce something soon, but we can't give any direct promises on what to do. But we hope to very soon be up to the speed where we want to be and the release cadence that we want to have for the game.

But the most important thing is that the game is in good shape once we start releasing this. So we're not running into more problems, especially on the performance side. So Cities II is getting there slowly but surely, and it has -- shows all the right signs. That's what I can say in summary.

And I can add without saying the numbers, but the revenues in Q1, if you add the franchise together, Cities I, Cities II, console part of Cities I, UGC, it did great revenues.

Great. So this is for both of us. Do you expect a change in the level of noncapitalized dev costs versus last year? And would AI allow you to do more with less, thus resulting in less development costs? So that's a... It's a double question, right?

Yes. So let me take the first one. Do you expect a change in the level of noncapitalized development versus last year?

That is what we showed, so noncapitalized development costs. It's very little change compared to last year. It's a big change if you go 2 years, 3 years, 4 years back.

Where we capitalized almost everything.

Yes. So it's fairly flat. And yes, I think let's answer that question.

Yes. And touching on the AI side, I could do that probably. I mean we think that, first of all, AI is going to help us release more things quicker and better with higher quality. And our aim with using AI tools is, first and foremost, to increase the cadence and increase the production quality of what we're doing. And we're slowly getting there.

So Alex, what's the time line for the move to the NASDAQ Stockholm main market? Would you be open to buybacks in the near term, '26, '27?

Right. So when we disclosed this, we said that we will make the move during this year, so some point during 2026. We sent in the application to NASDAQ at the end of February, and that means that it can't happen earlier than 3 months after that. So the earliest theoretically possible time it can happen is at the very beginning of June. And the latest according to our targets in December. So sometime between June and December. And we do everything we can to make it happen as early as possible.

December 2026.

Slightly earlier, I hope. And there was a second question, would you be open to buybacks in the near term? Well, so in the notice to the Annual Shareholders' Meeting that we have on the 12th of May, we have asked the shareholders to give the Board a mandate to make share buybacks during the upcoming 12 months. But that's the Board decision...

Yes. So whether the Board will use that or not, will have to be strategized by the Board over the next 12 months. But the possibility is there once we have completed the list change and once the Annual Shareholders' Meeting have given the Board a mandate.

Fred, Europa Universalis V reviews stood at approximately 80% shortly after launch, but have come down to below 50%. What went wrong in your opinion? And what will PDX do to improve the game and build back positive momentum?

First of all, it doesn't stand at 50%. It stands at around 74%, I think, of the total reviews, but the recent ones are 47%, 48% something just to correct. And what we did with EU 5 at Paradox Tinto, the development studio was a lot of rapid changes after the games release, and it had different impacts on the game and the reactions from the community was to a certain extent, negative. So we're working now to balance and work with the issues that people have with the game. And it's going at a really good pace as well. And they're improving the game day by day. As you know, we work with very complex games. So it -- sometimes it takes some time, but we think we're really on the right path of fixing all the things we need to fix. And right now, we're looking forward to a big update and the new DLC Rise of the Phoenix that is just around the corner here in the beginning of May. So you have a lot to look forward to all of the EU5 [indiscernible]. So Alex, what drives the strong sales in console in Q1? Is this a one-off or a trend shift? Are there plans to bring additional existing PC franchises to console platform as part of the pipeline strategy?

It's a bit of both. So if you look at one of the notes in the report, I think we made SEK 49 million of revenues in Q1 last year from console, SEK 49 million. And this year's Q1, we do SEK 71 million. So it's an increase. And the main explanation is Bloodlines 2.

All right.

So Bloodlines 2 had, of course, 0 last year, and it has a significant share of its revenues coming from console as we expected. But also Age of Wonders 4 released this quarter and City Skylines I, where we came out with a DLC, both on PC and console for the first time for some while. So I think the part of this -- the main part of this increase that is attributable to Bloodlines 2, that will decrease over the next quarter. But where we have an upside is, of course, Cities 2 because out of our core games, it's Cities Skylines I that has had most of its sales generated from console. And there we haven't yet -- we have yet to come out with the console version to Cities Skylines II. But apart from that, it's a decision that every game team or we make game by game. Some games are -- we think are the right thing to see shift from the start. Some games are not. Some games there we can port to a console version later on and some games are better just being a PC version. So it depends on the player base and the game.

Yes.

Fred and Alex, let's say, you increased pipeline by 1 from 7 to 8 in the quarter. Yes. Is that related to Note 4, all right, subsequent events? Is this in line with the strategy for publishing mentioned in the CEO comment? I can answer on the formalities.

Yes, in Note 4, we write that after the quarter, we have entered into a publishing partner agreement, and that is also why we have increased the games in pipeline from 7 to 8 because we've added a publishing game.

And it's a game -- we can't speak too much about that right now. We're going to come out with more information soon. But it's a game that fits our portfolio really well. That's all we can say at this point. I think we'll get back to you with more information. We wished we could have said more.

Yes.

To what extent is Paradox currently using AI in its development process? And how fast are you to adapt? Do you expect AI to disproportionately benefit smaller teams by improving efficiency compared to larger publishers? And more generally, how much of a threat do you see AI [ policing ] into the existing games industry?

Well, you talked a bit about it.

I spoke a bit about AI. So we are currently rolling out AI into most parts of the company. We are being very mindful about copyright infringements and other things when it comes on the art and music side. So we're a bit caution -- taking a bit more caution there.

On the programming side, I think most programmers are using some sort of AI tool to help them be more efficient and program faster. And then we review code, obviously, manually still to make sure that we're not bloating the code or our own engine. I think AI will benefit smaller teams, yes, to a larger extent than the larger teams. Maybe I'm biased because our teams are a bit smaller than the industry average. But I think you will get a lot more done on your small team now than you could 2 years, 3 years, 4 years ago. And how much of a threat? I mean, last year, 20,000 games were released on Steam. So there's for a long time, been a lot of games released. It's easier and easier to release a game for every year because the number of things you can -- the number of tools you can use to make a game just increases for every year.

Now AI is a jump forward on that sort of trend line, but it's not going to revolutionize anything for us. I think in the short to medium term, this is a strategic strength for us because it's going to increase our moat, it's going to increase our release cadence. It's hopefully going to increase the quality of what we release as well. So I see -- at least for Paradox, I see AI in the short to medium term as a big strategic benefit rather than a strategic threat. But it's always hard to see where the tech trend is going in the long term, right?

So -- but for the industry as a whole, sure, more games are going to be released. And I think also important to remember is that every technology shift that has happened in the games industry, be it the games engine or old like graphic improvements in the 1990s and even before that, has always benefited the gamer most of all. So they get better games at a lower cost pretty much. So quality is going to increase.

It's good.

Yes. It sounds like you paradise pretty much. Maybe it's not, but still a step in the right direction. Perhaps one more question for you, Fred. Players in China and Western markets often want pretty different things from your games. How are you handling that balance, both in how you design games and how you sell them?

We see -- our view of this is that we have gamers both in the West and in China or in Asia. And we see that China has been growing significantly for us in the past 6 years, 7 years. So we don't see the design component as critical to address a certain market. It's more about how you charge for the games and the price levels and stuff like that. There are differences in what type of content people prefer in different markets in our historical games. It has to do with for example, what countries we're actually touching upon. I mean the All Under Haven expansion for Crusader Kings III is focused on Asia and China, Japan, Korean Peninsula.

So of course, it's going to be more attractive to Asian gamers. But all in all, I mean, the marketing differs between the different areas as well, not as much as I think you would expect, but it's still -- you have to adapt to each market, especially when it comes to working with influencers and working with how to get into the market and also explain the game to the different markets. But all in all, I would say that our games are not -- saying that they are universal, it sounds a bit bombastic, but that's the way I would put it.

So Alex, is it possible to quantify how much the cost base could come down from Q2 given lower royalty fees from Age of Wonders 4 in Q2, '26? What was the nonrecurring item cost in administrative expenses and how large? And what CapEx run rate should we expect for this year? -- reasonable that it could come down as Bloodline 2 and EU V is out? Or do you have new projects filling the gaps? That's a lot of question.

How much time do we have?

We have 19 more minutes.

All right. I think we can do them fairly quick. So the first one, how much could the cost base come down in Q2 or from Q2 in terms of royalty fees? So there you see it, we had like SEK 30 million in total royalties and revenue-based earnouts. I think Q2 will tell you pretty much because we will have 1 month in that quarter where we still have the earnout and 2 months without it. So I'm not going to forego that and tell you how much of this.

You will see in the next report.

Yes. You will probably be able to do a fairly quick estimation going forward based on the next report.

Nonrecurring item cost...

Administrative expenses. Yes. So admin expenses went up from SEK 25 million to SEK 31 million, and we said it's mostly nonrecurring, so it's one-offs. And the slight majority of that increase has to do with this change, yes. So it's application fees to NASDAQ. It's cost for advisers that are helping us to prepare the company. Yes. So that's what it is. And it will come down, of course, once the project is done.

More questions in the same question. What CapEx run rate should we expect for this year? Reasonable that it could come down as [indiscernible] is out? Or do you have new projects filling the gaps here? So there you see it. I think -- I know we said when we presented Q4, we said that the investment in Cap that you saw in Q4 was probably at the good base level. That's probably where we will be going forward. So now we have come down slightly more from Q4 to Q1. So maybe something between Q4 and Q1 is a good estimate of where we will be in Q3 and Q4.

Sure, EU 4 is out, but...

EU 5.

Sorry... 5 is also out. But we still have investments to make in DLCs for that game. We are not decreasing the development on the game. And then we have the other 8 games in the pipeline where we increase on most as the projects are proceeding, we tend to increase. So -- but that's normal. So I think Q4, Q1 are good levels, maybe closer to Q4 and Q1, if I'm going to guess.

And that was the final question for the day. We want to thank you very much for watching this Q1 live stream with me Fred and Alex. And we hope to see you next time when we present the Q2 report.

Q2 report.

And that will be at the beginning of August.

Beginning of August. Yes.

Don't miss it. It will be a lot of fun.

Thank you for your time.

See you next time. Cheers.

Yes. Bye-bye.

Hello, and welcome to the Year-end Report and Quarter 4 Report for Paradox Interactive. My name is Fred.

I'm Alex Bricca, I'm the CFO. Welcome, everyone.

Welcome. So we'll take you through the releases and the numbers for the quarter. And as you know, we had a very eventful last quarter. It was [indiscernible] for many reasons. We had a lot of releases, first and foremost. So we released DLCs for all our major franchises. We created a good cash flow and a strong top line, where the results were hampered by a big write-off in the quarter. So we had a great release of Europa Universalis 5, which took this franchise to the next level, and it also celebrates 25 years. It celebrated 25 years last year. So it was a good time to release it as well. And we had some good results for a wider range of DLCs as well. Worth mentioning is the All Under Heaven DLC for Crusader Kings III, that expanded the map all the way to Japan. And as I said, the profit line or EBIT is affected by a big write-down of the game Vampire: The Masquerade – Bloodlines 2. And we were also facing some foreign exchange headwinds with a stronger krona and the weaker dollar, among other things. So we'll move on.

If you look at the year as a whole, we had a year-on-year improvement of cash flow, which is always a great sign. We strengthened the balance sheet as well during the year and got a new balance on the balance sheet. We released, like I said, a new base game in Europa Universalis 5 and strengthened all the core of our IPs by having a constant flow of releases. We established 2 new franchises as well. So Victoria 3 and Age of Wonders 4 are now both part of our catalog with growing player numbers, and we're going to continue -- and we hope to continue these games for a long time, typically 10 or more years.

So we also strengthened our foundation for building up the management games capabilities. We acquired Haemimont Games in February, creators of among other games, Surviving Mars and Tropico 3 and Tropico 4. And we took the Cities: Skylines franchise in-house, and we can already see the positive effects in the community of Cities: Skylines too. So those are all great news.

If we want to look specifically at the releases this quarter, I mentioned Europa Universalis 5, I mentioned All Under Heaven. We released Stellaris: Infernals. We released Age of Wonders; Thrones of Blood; Hearts of Iron IV; No Compromise, No Surrender; Victoria 3, Iberian Twilight. And a smaller DLC for Victoria 3 during the same chapter of the game.

On the management segment, we did a relaunch of the game Surviving Mars. It's been very popular in the community. We see great retentions. We hope to keep developing this game for a long time as well. And we released finally the first big DLC for Cities: Skylines II, Bridges & Ports, which had great results, great reviews and also good sales. At the same time, we released for Cities: Skylines II, 2 content creator packs and 2 audio packs. So talk about a very busy quarter.

Other releases, I touched briefly upon Vampire: The Masquerade – Bloodlines 2 and we also for our deck-builder Across the Obelisk, we released and Necropolis of the Damned, which has been quite well received and also good sales for the franchise. We'll see what happens if we can build that franchise over time together with Surviving Mars. So they're a bit smaller at the moment. All right.

And I'll leave to Alex for the numbers, a walk through.

Yes, let's do it. So revenues for the quarter came in at SEK 875 million, quite impressive. It can be compared to the SEK 709 million of Q4 of 2024. So that's an increase of 23%. Let's look at the drivers of that difference, mainly 3 things that make up the difference. Foreign currencies. So dollar was down, I think, 12% if you look at quarter average, euro down was at 5%, 6%. So all in all, it impacts our top line quite significantly in the wrong direction. Then the other 2 positives is the releases of Europa Universalis 5 and Bloodlines 2.

But it's also on revenue, it's our second best quarter ever. The record is still the quarter we released Cities: Skylines II.

Correct 2 years ago?

3 years…

So these 3 explains the difference, I would say, between SEK 709 million and SEK 875 million. Then we have released content on pretty much all our major franchises during Q4 '25. So that helped the revenue significantly. But Q4 2024 was also a very huge release quarter in terms of live game. So -- but all in all, the live games have performed similar over those 2 quarters if you remove FX impact. So some better in '25 and some better in '24. So you mentioned Crusader Kings III, they did a fantastic Q4 in 2025 and increased revenues. Hearts of Iron on the other hand, they did a fantastic Q4 in 2024 when we released the Gotterdammerung expansion, which was very, very popular. So that was -- we couldn't really match that in Q4 of 2025. Victoria 3 did a little bit better '25. Stellaris a little bit better in '24. It varies with each expansion. Is it a popular expansion? And do we get it right or less so. So that differs. But all in all, live games performed very similar on a revenue level, it's similar effect.

Yes, solid performance from the core portfolio…

Correct. So top revenue contributors, we normally call them the usual 5 suspects, Cities, Crusader Kings, Hearts of Iron, Stellaris. Now we have added 2 to that list, Victoria and Age of Wonders.

So the usual 7.

Then, it will be the usual 7. But good to see both Cities 1 and Cities 2 are on this list if you break out the franchises and separate them. And in Q4 '25, we also had an 8th, and that is Bloodlines. Even though it had a negative impact on profit, it had significant revenues.

Let's move on. Operating profit, minus SEK 245 million compared to SEK 395 million in the previous year's quarter. SEK 395 million was a record profit. So it's a difference of SEK 640 million. And the ones of you that followed our press releases in November when we took the write-down of Bloodlines, you know that we had SEK 701 million in amortizations and write-downs of Bloodlines 2 in Q4 '25, which we had 0, of course, in '24. So those SEK 701 million explains more than the difference of the SEK 640 million, you could say, if you want to do it super high level.

Yes, we chose to clean out the balance sheet. So it looks completely different today starting in '26.

Correct. So if you would disregard our Bloodlines 2, we would be at this record-breaking levels of EBIT despite the FX headwind.

Yes. That's great news because the dollar is down significantly.

It is. So profit after financial items, SEK 242 million compared to SEK 404 million, profit after tax SEK 201 million compared to SEK 311 million. And of course, profit margin is minus 28% and compared to 57%, which was a record high in Q4 of 2024. Asset or equity to asset ratio, very solid 79%. It has gone down a little bit from 82%. It's mainly driven by -- we prolonged the lease contract for the office here in Stockholm, with the accounting rules, you put the whole contractual agreement, the value of it on the balance sheet as a debt and as an asset.

All the years into the future.

All the years, exactly. Employees, average number in Q4 of '25 was 663. So that's up almost 90 -- 89 from 574 year before. The main driver is, of course, adding Haemimont to the team.

55 people there.

55 people at the acquisition. And then we have increased a little bit in Haemimont. Iceflake, we have increased in order to be ready to support Cities: Skylines. We have increased here in Stockholm Studio as well. Triumph has increased a bit as well. So a solid number. Let's move on. Right. So this is a breakdown revenue, green and the 3 cost items in yellow, blue and red. Let's go through them and break them out a bit so we can all understand what has happened. So cost of goods sold, biggest item, SEK 1 billion pretty much exactly in Q4 2025, up from SEK 263 million the previous quarter. So a super quick explanation would be to say it's the SEK 701 million in amortization and write-down of Bloodlines that makes up the difference. Then there is something left, and that's, of course, amortizations on EU5. So that is a very high level. But let's go down…

We see the selling expenses in blue, right?

Selling expenses in blue. That's the same drivers.

It goes was up when we release a lot of content, as you can see on the line there as well.

Yes. So it goes -- it was SEK 59 million in Q4 of '24, and it goes up to SEK 85 million -- SEK 84 million in Q4 of 2025. And the big explanation is releasing EU5 and Bloodlines that drove more marketing cost. The rest was very stable. So -- but SEK 59 million is a decent number, and that's because we have had a lot of releases on the live games, both in '24 and '25 years Q4. But let's go back a little bit to COGS and break it down for you who are interested in that. Amortization is the biggest item, SEK 510 million in Q4. Last year's or the previous year's Q4 was SEK 91 million, so it's up SEK 419 million. And we have written in the report Bloodlines SEK 346 million of that increase. And the rest is pretty much EU5. Then we have movements up and down on all the other titles, but mainly, it's the releases of Bloodlines and EU5 that has made up the difference.

Write-downs is another item in the SEK 1 billion COGS. Write-downs was SEK 355 million, 100% regards Bloodlines, the previous year's Q4, 0 write-down. Then we take in COGS, SEK 8 million as cost for amortizations of the acquired businesses and assets. So this is down from SEK 14 million in the previous year's Q4. The reason it's down is because in 2020, we acquired Playrion and that was last summer, that was fully amortized from the books. But we add that we acquired Haemimont in the beginning of the year and in Q2, we acquired Stranded. So what we have done with the purchase price for those 2 assets is that we have fully allocated that to assets that we amortize.

Yes. So Stranded with Alien Dawn, the game, just to clarify [indiscernible]

Yes. So that is being amortized, I think, over 5 years. Haemimont, there we amortize it quicker. The fixed purchase price, it's amortized according to plan. Then we have taken -- then we have an earn-out for Haemimont as well that goes, I think, over 3 years roughly, and that is being driven by certain milestones being achieved. We have taken -- in 2025, we have taken SEK 32 million as earn-out. So that is all included in the COGS. So of course, we believe that the value of the studio is going to increase when we work together. But in our books, we are taking this as a cost. So it's kind of an aggressive way to do it. It pushes down our profits, but it's a very prudent way to handle it, perhaps overly cautious, but this is how we've always done things in Paradox, and we like to do it that way.

Yes. We have, I think, around SEK 20 million in goodwill.

Yes.

Something like [indiscernible]

Very little. All right. What sales in COGS, other depreciation, SEK 7 million, that's pretty much how the rent is being accounted for. We have royalties that's mainly regarding Age of Wonders and Cities: Skylines. That has gone down from SEK 45 million in Q4 '24 to SEK 35 million in Q4 '25. Then the remaining item, if you have memorized the numbers, then you will find out that we have SEK 85 million left in Q4, which is for noncapitalized development and tech costs in the publishing, so kind of support functions for the game development. So SEK 85 million in Q4 compared to SEK 105 million in Q4 the previous year. And here, we have items that moves both ways. But the main reason why this is lower is that when we have negative profit like we had in Q4, which is very rare, that has an opposite impact on the personnel cost because we share all the profits with the personnel. So a quarter when it's negative, we release previous balance sheet items. So it works like a bit of a hedge.

That's a small positive.

Yes, that's a small positive, correct. Selling expenses, we have already gone through. Admin is everything else. That tends to be quite fixed. So it was SEK 29 million Q4 '25 compared to SEK 25 million in the previous quarter. It might vary from time to time. Here, we have -- the reason why it's SEK 4 million higher this period is one-off things. We had a very massive popular staff conference in September. And part of those cost went into Q4. And then there were some other one-off items that made up SEK 1 million or SEK 2 million, so it differs from quarter-to-quarter.

Other income, I guess, is interest rate on money in the bank.

Other income is mostly currency movements on the working capital. So it's the movements on the foreign currencies during the quarter.

But last year, we also sold back the game Mechabellum to the developers, about SEK 13 million, I think, something in there.

Yes, that’s right.

That's one of the points of comparison in Q4 last year or Q4 in '24.

Exactly. So SEK 13 million or something SEK 12 million, SEK 3 million Mechabellum and the rest building up. So -- then we had some SEK 20 million positive effect last year's Q4 or '24 [indiscernible] we had a very strong dollar increase during that quarter. And this -- the Q4 2025, we have seen the opposite, especially in December, I think the dollar has come down. So there the net, if you add income and expenses together, you have SEK 6 million negative. So that's the difference. Interest, that's a financial item and the reason why it goes down from SEK 9 million to SEK 3.7 million is lower interest rates. Good if you have financed the company with debt, less good if you have cash positions.

If you have a house with a big mortgage, that's perfect.

Yes. But I'd rather take a company with a lot of cash than debt, even though...

I agree.

What else… Yes, let's move on then I think or did you have anything else?

Yes. Look, I say it's good. It's not very good. The result is not very good. But it's good to clean out the balance sheet as we will see in the next slide here.

Well, here we have...

The revenues…

Rolling 12 months of revenue and profit, it shows how volatile it is, but it also shows, especially if you look at the revenue line, there is a steady up growing trend, some accelerations and some falling down, but over time, it's a very strong growth. Profit-wise, it's more difficult to see it because when you have such a massive write-down and amortization like we had in Q4, it distorts the picture a bit.

It impacts a lot. And as you can see in Q4 '23 there, we released this guidance too, we had a peak on revenue on rolling 12. It's sliding down a bit, and now we're turning back up. So...

Yes. Let's say, now cash flow. So profit was or the result EBIT was minus SEK 245 million, but the cash flow is super strong in Q4. So cash flow from operating activities, SEK 513 million. It's not quite a record, but very close to the record we had 2 years ago when we released it too. So SEK 513 million, very strong. Cash flow from investing activities, that was SEK 145 million, that is what we have invested in game development. It's down from SEK 159 million Q4 of the previous year. And if you look a bit further or if you remember our report from 2, 3 years ago, when we had Lamplighters League in production, Bloodlines in production, Life by You in production, then we have come down significantly in cost for development. And now we are at SEK 145 million. I think that's a good representation of the new level that we are with. It fluctuates a bit between the quarter. But I would say SEK 145 million is a good representation of the new normal.

Unless something extraordinary happens, a big investment or requirement [indiscernible]

Sure, sure. Like you see it in Q1, it was -- the yellow bar is a bit bigger, and that's when we acquired Haemimont. So the upfront acquisition price went in as an investment. Do we have any more. No, I think that's it.

Actually, that’s hit. So we're open up for questions. We've got a lot of questions. So I hope you have time to listen to our answers.

So the first one is for you, Fred.

Yes, let's do it.

Could you share how Paradox is thinking about growth opportunities in Asia and whether there is a clear marketing or market entry strategy for that region?

Yes. I mean we've seen a very good growth in -- especially in China, but all over East Asia actually and that's also one of the reasons we expanded the map in Crusader Kings III to actually get more of the Asian users as well, not only make the gameplay more interesting, but we do have specific strategies to get into the Chinese market and the Asian market in general. We have all localized content, for example, we work with specialized PR agencies locally. We work with influencer networks locally. So we're really putting an effort into growing in these markets. And it has paid off for the past 7, 8 years, and we continue to see strong growth. I think China is our second biggest market when it comes to number of gamers. I don't know on revenue, but it's up there as well at these top 5. So yes, we're seeing a lot of positive movements on the Asian market.

So Alex, how does Paradox view currency fluctuations such as recent dollar depreciation? And what's your general approach to managing currency risk?

Yes, it's a big impact for us as we could see this quarter. It's a big part of our business and kind of a risk factor for us. We have roughly 97%, 98% of the revenues in foreign currencies. And there, it's a little more than 1/3 that is in U.S. dollars. Almost the same, a little bit less is -- so roughly 1/3, a little bit more is in euros. And the rest is in Chinese yuan, British pounds, Canadian dollar was the dollar, SEK and everything else. So that's the revenue split.

Cost-wise, it's a bit different. There, we have roughly 50% in Swedish krona. We have maybe 1/4, so maybe 25% in euros. So that's mainly our foreign studios in Finland, the Netherlands, Bulgaria, Spain, France. And so roughly 25% of the cost is in euros. Roughly 20% has been in dollars over the last year. So that is Marketing, all the tech tools we buy is in dollars. A lot of the external costs are in dollars. And then it's a mix, but the pound has been a big cost the last years because mainly the Chinese yuan that has developed Bloodlines. So if you add it all together, we are -- we depend -- the dollar movement has the biggest impact on us. But we don't -- we have decided to not hedge this. We have a strong cash flow, strong profit margins. So we have taken the decision that we rather live with the direct impact of the [indiscernible]

Yes. I mean we've been doing this for the past 15 years.

Yes. And it has gone -- if you look at over a 10-year period, this has gone in our favor.

One more for you, Fred. How is Paradox currently thinking about reinvesting its revenues into existing games and future projects?

Well, obviously, there is a mix in between these things. We have cut down a bit on third-party investments, for example, focusing more on the internal studios. We have more internal studios now as we have more games that we want to make. Obviously, we reinvest in 4 different areas. One is more content for the current games, the live games that we have. One is new titles and sequels within the core segments of what we -- grand strategy games and management games. And the lion's share there goes, as I said, to internally developed projects. A minor part is allocated to experimental projects and smaller projects in adjacent sectors, games that could be similar to Paradox games, but not necessarily GSEs or management games. And last, less frequently occurring are -- that we buy things, IP or studios like Haemimont last year. However, the core should come from the investments that we make and not from the acquisitions that we do is probably generally the ground rule.

Alex, are share buybacks something Paradox considered as part of its capital allocation strategy?

No, it's not now because we are -- our shares are listed on Nasdaq First North. And there, you can't do buybacks, at least not in a good way. So as long as we are on that list, we can't do buybacks.

It's limited too.

Yes, we are using dividends instead. In a situation where we would change list, then of course, that is a tool that would open up.

Yes, theoretically in the future.

Yes.

More questions for you.

The size of your catalogs can create a high entry barrier for new players. Are you exploring alternative long-term approaches to improve accessibility to legacy content, such as price restructuring or bundling strategies?

Yes. We're well aware that if you go in and see a barge of DLCs, it might be a bit off putting to buy the game directly if you're a new gamer. But we -- like I mentioned, we do bundlings to get different types of starter packs to make it easier to get on board. We also work with pricing in different territories, but also deep discounting and the publisher weekends and whatnot. We also have DLC subscriptions on -- is it a majority of our games or at least maybe half of our games. So that's an option as well. So you pay a smaller sum to try everything out and you can do it on a monthly basis. So those are the strategies we've tried so far, and they're working really well. But we continue to try to make our offerings more appealing to more gamers. That's for sure.

Right. Alex, do you see a Capital Markets Day as something that could be relevant for Paradox in the future?

I think so. I think it's about time to do one. Is it 3 years ago? May '23, we had one. I think now it makes good sense. We have cleaned up the balance sheet. We are finally at a position strategically that we have been talking about for a few years where we want to take the company to, where we have a solid balance sheet and strong cash flow and razor focus on what we're doing. So it's a good idea. I think we should plan for one.

Yes, we should. Very good. Let's do it.

Let's do it.

Fred, I feel like I've heard this sentence from Paradox before, there's a quote, "Strengthening our strategic focus." I think it's from the CEO word. What's different this time?

It is not different this time. That's the thing. So this is what we've been working for in the past 3, 4 years, at least to see focus on what we do best, continue to do that and also release the projects that we still had in pipeline, and then we have sort of a new slate to start with. So I mean, we start with almost -- not a blank paper today because we have a great pipeline of games coming out, but it's a different balance sheet and it's a different new year. So still proof is in the pudding. So we have to continue to deliver great stuff, both for our live games and for the games coming out. And I think we have Prison Architect 2 is the one that we announced. We're going to be happy to show more of, hopefully, this spring, but we'll see exactly the time line for that. But nothing changes. Everything is new. Is that how they say. I think that summarizes it.

Alex, with a more focused release pipeline compared to previous years, how is Paradox thinking about capital expenditure and the use of increased free cash flow going forward?

I think you have touched a bit upon it already, Fred, but what we spend most of our cash to is development, development of new games and new content for the live games. That's how we've been doing it the last years, and that's how we're going to continue to do it. And the second-best part we can do, I think, is if we find attractive assets that we can acquire studios or IPs. But we are -- we have high requirements on both. So if we're going to acquire something, we have high requirements on the risk-reward offering. When we invest in new projects, we have now very strict requirements on the risk/reward offering as well. And we have a very strong cash flow from our operating activities. So that means that we are generating more cash than we like to spend. And that excess cash, it should go out to the shareholders. And we set out in the report SEK 5 as a proposed dividend to the Annual Shareholders Meeting in May.

More questions?

Yes. Fred, this is for you. Many companies are expanding their IPs beyond games into other products and media. How does Paradox think about brand extension and additional revenue streams outside of traditional game development?

Yes. I mean we have been experimenting a bit with this. We do merchandising. We do board games. We do licenses to other video games companies for some of our IP, most notably White Wolf IP. But it's a great way to strengthen IP recognition. It hasn't had any significant impact on revenue or profit, but it's still a good way to keep the IP alive and to reach new target audiences. So this is something we're going to continue. I mean there are no -- just -- I think what they're after here is like a TV dealer equivalent. There's nothing like that on the table at the moment.

But who knows in the future, but I think we need to work more on deepening and strengthening our IP as they are. We work a lot with history in our Grand Strategy games. We work with the fantasy IP in Age of Wonders. We work with Stellaris, for example, that are very strong or Stellaris and Age of Wonders are their own IP where we own everything. When you use history as your background, it's harder to sort of work with the IP, if you like. But also the White Wolf catalog offers a wide range of really interesting ways to expand into new universes of opportunities.

Exciting.

Yes. Alex, last year, Victoria 3 had many very well-received DLCs and updates. The team behind the game is doing great work. Maybe this is from the Victoria 3 team. It sounds like, especially with communications later in my opinion.

Do you see a positive effect of the well-received DLCs and updates financially? And is the game generally on a positive trajectory?

Someone that works in communications.

For Victoria 3.

Exactly. But it's a great question regardless who it's from. Yes, we have seen a strong positive effect since Q2 when we released, I forgot the name of it, but...

The trade expansion.

Yes. It put…

Chambers of Commerce, thank you very much, our camera man. He knows his games.

So with that release, especially, there were signs…

Charters of commerce. Sorry, not Chambers of... Charters of Commerce. Sorry to interrupt...

So with that release, something happened with the monthly active users. And so we got up to a healthy level and also the studio has made good work efficiency-wise. So now that game has reached a level of healthy profit margins...

And good retention.

Good retention. And with that comes a stable, strong revenue level as well. And we foresee that it's going to continue like that. So we very much look forward to treat this as like a staple in our portfolio for '26 and for the following years.

That's right. It's a great game. Go play it.

Fred, will the Tinto Talks method used in the development and lead up to EU5 become the standard for future Paradox releases as it seems to have worked with great success with EU5? Or will it be up to the individual studio leads discretion as to how to handle community outreach and feedback?

As a ground rule, we prefer that the studio handle their own way of communicating the way they feel is the most comfortable and best way to explain and talk about their game, but we always encourage direct talks to the community because it's a great way to receive feedback and to change things in the game that might need some feedback from people who love our games and spend a lot of time with our games. So I think Tinto Talks is a great framework on how to operate, but we will continue to encourage the studios to find their own way to connect to the community. But it's great. I really like that. I really enjoyed it personally to watch.

Alex, how has Paradox monthly active users developed?

It's 6 million. It varies from time to time. We have sometimes been up well above 6 million, but we only talk about full million. So we want to be stable at 7 million before we start to say 7 million.

Can we say that we've been above 7 million as well? I think we have.

You just said it, so…

I just said it. But not until it's a stable level. We want to communicate it.

Yes. Because the number we communicate is where we are stable.

We don't count spikes as something that we want to communicate. I said it.

Exactly. Correct. Good. Okay. More questions.

Fred. Where do you think growth will come from versus last year? Will it be higher DLC velocity, new game releases, pricing, player base increasing?

If the answer can be all of the above, I choose to answer all of the above. But I think say -- we have a couple of examples here that will grow over a couple of years coming. As we mentioned, Victoria 3 and Age of Wonders 4 are now more stable, have better retention. They have stable release schedules. So our view is that they're going to continue to grow. You can see that the Europa Universalis franchise has been declining over a couple of years because we made less DLCs and material for Europa Universalis IV because we were working on V. So we're looking for V to grow over the next couple of years sort of not automatically because we can't just sit on our assets and wait for it to happen, we actually have to work actively with it, but that's something that we see as one of the core growth things within live games.

But we will also continue to grow our live games, both on number of releases, hopefully, and the number of gamers by attracting people more often to come back and play the game. Of course, I mean, the larger jumps in revenue can come from a new release. If we get more games out this year, it's spiking in revenue as well. But we want to have it from actually several different sources, the revenue growth. So it all adds up.

Alex, how should we view a risk for a write-down in Europa Universalis V?

That's a low risk. When we look at the risks or when we look at the write-downs we have made over the last years, it has been on projects where we are kind of far outside of our core. Europa Universalis V is as in the middle as we can get in our core. And now we don't break up normally and share revenues and profit by game, but Europa Universalis was highly profitable already in its release quarter, so in Q4. And we expect that it's going to continue to be highly profitable for many, many years. So…

And as you can see, I mean, initially, you get a huge spike of gamers. It slows down a bit, which is natural. And then we continue to grow from the [indiscernible] slope there. And that's true for all our games. If you take Hearts of Iron is going into its 10th year in June, it's going to turn 10. And we have more gamers than ever on a monthly basis for Hearts of Iron IV. So that's basically how we operate. So we focus on the retention and the retention brings revenue with it. So, that’s it.

Alex again, could you maybe quantify the FX hit on the P&L? Would you break out the sales from the new releases in the quarter in order to get a feel for the performance in the back book?

The short answer is no.

And do some math in your head…

So we got another question whether -- to what extent we're impacted by FX and I gave you the rough split of the revenues and the costs in currency. So you can do your own…

You do your own math.

Exactly. But of course, as any exporting company, we are doing great when the Swedish krona is doing less great.

Yes. So 3% is krona and the rest is foreign currency.

In the revenue, yes.

Something like that.

Exactly.

And there was a sub-question, would you break out the sales from the new releases in the quarter? No, we don't go into that level of detail.

No.

So that was the final question. So thank you for watching. It was, like we said, a very intense quarter with not a great outcome due to different reasons that we have explained now.

Profit-wise, but…

Profit-wise, but cash flow-wise, exceptional actually, even by our standards. And I think just to summarize, I think we're in a great place to do great things in the coming years. I hope you continue to follow us, and thanks a lot.

Thanks for watching. And see you in end of April with Q1 report.

See you then. Take care.

Bye.

Bye.

Hello, everyone, and welcome to the Paradox Interactive Quarter 3 of 2025 live stream. With me, my name is Fred and...

I'm Alex. I'm the CFO. Welcome, everyone.

Great. So as you can see, I'm not in the office today, so I'm on the road, but we will get this going anyways. And I hope you'll enjoy what you see. So let's start with the first slide. I can't control the slides. That's my name, so you know who I am or to direct the questions. So it's been -- it's been an intense period for Paradox. So a lot of the Q3 has been actually focused on preparing for Q4, which is the most intense and busy quarter in the history of Paradox with 2 new base game releases, one remaster of Surviving Mars. We have 7 DLCs, 4 ports and 7 content creator packs. So as you can imagine, our release team is put to the test as we speak.

But Q3, speaking of that, it's a bit of a slower quarter as we come to see them, fewer releases. And also, you can see that the stronger kroner has worked in our disadvantage to a certain extent, which was expected because previously, we've seen a historically high dollar, also some temporary cost increases stemming from different sources of more of the onetime nature.

On a positive note, we can see that Age of Wonders 4 and Victoria 3, both have shown very positive player numbers, very positive retention numbers and very positive sales numbers when it comes to DLC -- is an attachment rate on the DLCs. So we -- they continue what we call the path to endlessness. So we can continue to develop on these games for many years to come. And we continue to build capability in the Management Game segment with a couple of games coming out already next year, as you know. So very busy over here or maybe not where I am right now, but at least in Paradox office.

So a couple of small releases in the quarter. You see on the strategy gains we had some releases for Stellaris, Age of Wonders 4, Victoria 3 and Crusader Kings III as well. And on the Management Games segment, there was a couple of smaller releases, content creator packs for Cities: Skylines. So overall, quite calm, good reception on what was released, but no big dent in any curve to be had right here. And you've all been waiting for and wondering about Vampire: The Masquerade - Bloodlines 2. It's a long awaited game, and we're super happy to release it. And those who play the game are really happy with what they see. And that's great. We're not going to comment on anything more than that because it's only been 48 hours since release. But we focus currently on giving us good post-launch support as we can. But we're going to comment more on this game before year's end, is at least our promise to you guys.

A couple of the release, as I said, it was like 16 or 17 releases, I counted on the previous slide. So the big one, obviously, being Europa Universalis V, followed by Surviving Mars - Remastered and then big expansion packs and DLCs for basically all our key franchises, starting with Cities: Skylines 2, Crusader Kings III, Hearts of Iron IV, Age of Wonders 4 and Stellaris. So you have a lot to look forward to those who play our games. It's a fantastic quarter to be a Paradox Interactive gamer.

And with that, I think I'm leaving the word to Alex, who is going to lead us through the numbers as per usual.

Thank you very much, Fred. And let's do exactly that. Let's go through the numbers a bit more in detail. So revenues in the third quarter came in at SEK 395 million. Last year, same quarter was SEK 434 million. So it's a decrease by 9%. And as often for Paradox, there are 2 main drivers of our revenue development, what we release and how the currency is moving. And if we compare the big currencies for us, which is dollars and the euros, compared to the same quarter last year, I think the dollar is down 9% and the euro is down 3%. So that in combination lowers our revenue.

Looking at the releases, Q3 tends to be a slow quarter for us at Paradox, 2 summer months, July and August, where we don't normally release much. Same this quarter and the same last year's Q3, similar amounts of releases slightly higher last year because then we had a big release on Crusader Kings III: Roads to Power, which we didn't have this year. So that also explains why we are slightly down in revenues compared to last year.

Top revenue contributors, no surprises there. It's Cities: Skylines 1 and 2, Crusader Kings III, Hearts of Iron IV, Stellaris, Victoria 3 and Age of Wonders 4. Very good to see that Age of Wonders and Victoria is up there and yet another quarter where they show that they have established themselves as long-term providers of substantial revenues and strong profit margins. So that is very good to see.

Operating profit came in at SEK 112 million. This year's Q3 compared to SEK 143 million Q3 of last year. Revenues is the main difference. And that flows through the entire P&L. So profit after financial items, SEK 116 million this year compared to [indiscernible] ] last year and profit after tax, SEK 93 million this year compared to SEK 120 million last year.

Profit after financial items margin, 29% this year compared to 35% last year. If we look at the last 12 months combined, we are at a profit margin of 40%. Equity through asset ratio has come down a little bit from 80% to 78%. That has to do with the fact that -- I think on the very last day of the quarter or the day before, we prolonged our office lease contract here for the headquarter in Stockholm. So we added 5 years to the contract, which means that the contractual value of those 5 years comes up on the balance sheet both as an asset and as a debt. So therefore, the equity through asset ratio goes down a little bit, but still very strong and solid.

Employees. Average number of employees during the quarter was 654 million this year, compared to 584 million last year. So we have increased some 70 colleagues. The main reason is the addition of Haemimont that we were happy to see in Q1 this year. I think that added some 55, 60 colleagues to us. On top of that, it's mainly the studios abroad from Swedish terms spoken that have increased. So we have Tinto in Barcelona that has increased a little bit and Triumph and Iceflake.

Let's move on and look at the costs. Revenues we've already discussed, but what this chart shows is that the revenues are very volatile with the releases. And the ones of you that have followed us during the last quarters now that in Q2 and Q1 as well, we haven't released that much. So this is a very Q4-heavy year for us. We tend to be more spread out with every second quarter. Q2 tends to be big for us. But this year, we have a lot of concentration into Q4.

Fred mentioned 2 new games -- 2.5 new games with Surviving Mars 1.5 and content releases, DLCs and expansions are on pretty much all the big franchises for us. So -- but Q3 was slow. So therefore, you see the green line dipping down in Q3.

Cost-wise. So biggest cost, as always, is cost of goods sold, SEK 204 million this Q3, compared to SEK 217 million last year. It's built up of a few different items. So let's go through the main of them. Amortizations of capitalized game development is a big one. So SEK 71 million in Q3 this year compared to SEK 96 million in Q3 last year. The amortization level has to do is correlating with what we are releasing in the quarter, especially, but also the quarters leading up to the quarter we are in. And last year, we released a big expansion for CK III, which we didn't this year. So that explains a big reason why amortization has gone from SEK 96 million Q3 last year to SEK 71 million this year.

Also, a year ago, we had released Millennia, I think we did it in March or April, but that also came with significant amortizations in the third quarter last year, which it did this year. Let's move on to the second kind of sub-row within COGS, write-downs, 0 write-downs this Q3 and 0 write-downs last year's Q3, so no difference. Then we have amortizations of acquired businesses and assets. So we have SEK 9 million there today for Q3 this year, which is down from SEK 14 million last year. So amortizations of acquired businesses and assets is exactly that. When we acquire companies or games or IPs, we put them on the balance sheet, and we tend to depreciate them over 5 years. It's a bit different. But in general, you could say we'll do it over 5 years.

So it went up, you might remember in Q2 from Q1 because in Q1, we added Haemimont, which increases our depreciation. And in Q2, we added Stranded: Alien Dawn, the game, which we also amortized over 5 years. So that also pushed up the depreciation. But it's down compared to last year, and that's because Plerion, the mobile studio we acquired a little more than 5 years ago, that has been fully depreciated in our book. So we have taken the full acquisition value. We have taken that as cost over 5 years. Now that is done. So in our consolidated accounts, the book value is 0, and therefore, we don't have any more depreciation. So therefore, Q3 has come down.

We have other amortizations as well in the COGS line, which is mainly -- it's SEK 7 million. That's no change. It was SEK 7 million in Q3 last year as well, that's mainly how the rent for our studios is accounted for. Royalty is another main item in COGS, SEK 23 million in Q3 this year compared to SEK 20 million in Q3 last year, so very similar. The main change -- difference is that we released an expansion on Age of Wonders IV, this year's Q3, which added to the revenues, and therefore, it also added to the royalty costs.

Noncapitalized development and tech costs in our Publishing business, that went up from SEK 80 million last year's Q3 to SEK 93 million this year. Two things that have changed. One is development costs for games that are in early stages or high-risk stages has gone up a little bit. That fluctuates from quarter-to-quarter, but that is one of the explanations. The other is that back in Q4 last year, we changed -- we did a reorganization here in Stockholm, where we changed or moved some functions that were within the Stockholm-based Studio Organization to our publishing best tech organization, still at the very same offices, but the difference is that it's not capitalized anymore, but it's taken us cost directly. So I think that pushed up the direct cost and decreased the capitalizations with some SEK 6 million per quarter. So that we see the effect in this year's Q3, if we compare it to last year's Q3. So that is it about COGS.

Selling expenses went up from SEK 44 million to SEK 50 million. Similar expense costs for games that have been live during the quarter. But the main difference is that this year's Q3, we started to have costs for games that are being released in Q4. So it's Europa Universalis V Bloodlines 2. So therefore, you see increased cost for selling expenses.

Administrative expenses stays normally flat and they are often around SEK 22 million, SEK 23 million. This year's Q3, it went up SEK 29 million. We have had a few different cost items of onetime nature. One was that we we gathered the whole 600 staff plus here in Stockholm for a very nice staff conference. So we don't expect that one to be at SEK 29 million going forward.

Then we have other income and other expenses. There you have movement in currencies. And during -- or its movement within the quarter, especially of the dollar. And so it doesn't move that much this year. Last year's Q3, it had a much more negative movement. So it's minus SEK 1 million this year compared to minus SEK 8 million last year, if you add income and expenses together.

Financial items below that is mainly the interest we have -- we get from the banks on our excess cash holdings. And that has gone down from SEK 8 million to SEK 4.5 million, mainly because the interest has come down, but also because we have slightly less excess cash on our bank accounts compared to last year.

All right. This chart shows the 4 quarters group together to show a bit more of a trend line. You can see that up and down, but the trend both for revenues in the green bars and profit in the yellow line, this drives upwards, which we like to see. All right. Let's talk about cash flow. We had a positive of SEK 195 million positive cash flow from our operating activities in Q3, and it fluctuates a bit. It's, of course, mainly driven by our operating profit, but then it can shift between quarters a bit. So if you compare it to last year's Q3, we are actually up. It was SEK 154 million then, now it's SEK 195 million. Even though we had better profit last year. And one of the reasons is timing on -- I think it was a large VAT tax payment we did this or last year's Q3 that we didn't have this year.

Cash from investing activities, SEK 182 million, compared to SEK 115 million last year is Q3. So this is game development, investments in game development, live games that we do expansions and DLCs for but also new games. This has gone up quite significantly compared to Q1 and Q2. And the main reason is that we got a substantial invoice for Bloodlines 2 in Q3 this year. We had almost had no invoices earlier this year. So pretty much everything came now, when the game was completed by our partners at the Chinese room.

Finally, I think of the slides No, that's it. Those were all -- very good.

That's very quick and efficient. And to the point, I think we'll have more to talk about in the quarter that's coming that is more busy as well. So we'll move over to the Q&A. I guess, then.

Yes.

And we do it per usual that one will read the question and the other one will try to answer as good as they can.

Yes, and I'm not sure whether you can see the questions. So Fred, I can read all the questions and we can answer every second one.

Sure. Sure, we can do it that way.

I'll do the first one that goes to you, Fred. What effect do mods have on the success of your games?

That's a very good question. And I would say that mods is an integral part of our gaming ecosystem, and it plays a big role in keeping the games up and running, keeping the retention high and the creativity among our gamers are helping other gamers as well to come into our universe. So modding is absolutely an important and integral part of what we do with our games, and we welcome -- we also try to support our modders as much as we can to -- well, by making the pilot structure to our games quite accessible. And we'll see, maybe we'll develop more tools to make it even easier to moding in the future because it is important. That's right.

Good. All right. I'll take the next question then. Which quarters or sales seasons have historically been the most or least successful for Paradox? And how does that inform future release planning? I mentioned it a bit. We tend to have very strong Q2s and Q4s. Q3s are, as you can see this year and last year, normally slower because we have July and August, so 2 months with a lot of vacations in them. So game releases tend to be pushed either earlier to be released in Q2 or later to be released in Q4 from that reason.

But then we also have more marketing activities in the second and fourth quarters. So we tend to have our Steam Publisher Weekend in Q2, at least the last 4 or 5 years, I think it has been in the second quarter. We also have the start of the summer sale in the second quarter. And similar for Q4, we have the Autumn Sale with the Steam and the Winter Sale start in Q4 as well.

So -- and quite often it can be good to release not only new games, but DLCs and expansions in relation at the same time as we have these quarterly marketing activities. So that is the reason why we tend to release more in Q2 and Q4. It's not always optimal for how we plan and how we do the publishing. But the focus is to release the games when they are done and when we have a good marketing bid to accompanying them.

All right. Question to you, Fred. Will Paradox future strategy place greater focus on internal development through Paradox Development Studios, or will publishing external titles remain a key pillar of the business?

Good question again. We foresee that the majority of our projects in development work will be done by fully owned studios within the Paradox Group. And we are taking steps to ensure that we have a strong capability within both strategy and management games. Recently, the acquisition of Haemimont Games in the Management Game side. So we feel that we we want to own and control most of the things that we do. We do not totally walk away from publishing third-party either, but we will do it in kind of a different way than we previously have done, placing smaller bets and scaling up when we see that the concept works. So yes. So we will do both, but I would say the vast majority of the revenue -- or the cost will come from our internal studios going forward.

Okay. I can take the next one. How do you judge the success of Victoria 3 as of right now? From the outside, it looked like the 1.9 Update and Charters of Commerce was quite a success. Is this true from your perspective as well? And do you think that this access will have a longer-lasting effect on Victor 3 success as a whole?

Yes. So we are very happy with what Victoria 3 has turned out to be. Charters of Commerce was a milestone for sure. But also in this third quarter, we released content that was appreciated by the players, and we can see the player activity is high. But there was also quite a lot of work going into the base game before Charters of Commerce as well, which we think has had a very positive impact to the game.

Victoria 3 is a project that if you look at the whole project up until now, it has had the kind of poor financial performance, everything accumulated or aggregated. But as of now, the financial performance is quite strong. And so it has been quite a long investment for us that we are now finally seeing the benefits from. So it is very good. And I think Victoria 3 will continue to be successful for us for many years. But I don't think it's -- Charters of Commerce has helped us to take it to a certain level, but if it's going to continue to be successful, we need to continuously come out with qualitative content that the players want and with a good pace as well. And I'm confident that the team will be able to do that.

Yes. I mean, the Victoria team has done a tremendous job in turning the tide on the game and from all perspectives, I mean quality-wise, gameplay wise, retention, if you look at it from who are playing the game and how much. So we're super happy with the trajectory of the game at the moment, for sure.

So one more question to you, Fred. What are Paradox plans for Paradox Arc? The labels announced schedule is currently limited, should we expect adjustments to its release cadence or portfolio approach?

Right. So Arc is working in a bit of a different way. So -- which means that they start more projects, but they also kill off more projects along the way. And if it's one thing that we learned at Paradox, sometimes the hard way is not to announce any projects too early. So we will announce the Arc projects when they're ready to be announced. So they have a really promising catalog of new games, but we will not announce any of them until we are 100% sure it's going to reach the market at the quality level we expect on release as well. So expect more, but we're not trying to hype anything. We're not -- we're just -- it's a lot of experiments and some of them look really promising.

Great. Are there more questions? Yes. This is one, I think, for me, maybe. What is the historical correlation between Steam Wishlist numbers and actual sales for your major franchises? Have you ever considered communicating to the market an expected conversion range from Wishlist to sales as some independent publishers do?

No, we don't because our experience is that the correlation is quite spread out. So it's very difficult for us at least and probably for you too, to use Steam Wishlist numbers projecting sales. And that's the reason -- I mean, we don't provide forecast at all. And this is the main reason, it's very uncertain. And then projecting or releasing forecast on projected sales is something that we avoid.

And Bloodlines, for example, I think we've had record high Wishlist numbers for Paradox game. But taking that as an example, I think the Wishlist opened back in 2019. So that means that, that Wishlist is very old. So that also makes it very difficult to compare one Wishlist to another.

Do we have more questions? Here's one for you, Fred. Is Paradox exploring opportunities to expand its games into physical formats or other types of consumer experiences?

I'm sure what you mean physical formats, but I guess it means different media formats -- sorry about that -- different media formats like television series or movies or other forms of entertainment and licensing. And of course, we have explored for many of our brands, where I would say that the World of Darkness portfolio is one that lends itself the best to external licensing, but we're doing smaller licensing deals right now, but we're exploring opportunities all the time.

And it's a great way to strengthen our brands. It's financially safe and sound. The upside is limited, but it's a great way to expand small steps with a low risk. So we're currently working with a small-scale licensing operation, and we'll see if we scale that up over time. But nothing that we have that is worth mentioning at the moment, might pop up in the future.

All right. Thanks, Fred. Was that the last one? No, we have one more. Yes, we have few ones. How should we view selling expenses in Q4? Have most of the marketing costs for new games and expansion release has been recognized in this quarter? I can take this one.

No, we have most of the selling expenses we have in the quarter when we release the game. So for Bloodlines 2, for Europa Universalis V, we have had costs in Q3, but they will most likely be bigger in Q4. And especially for the live games where we have expansions and DLCs, then the kind of allocation of expenses to the release quarter is much higher. So Q4 should be a big spending quarter in terms of marketing costs.

Fred, what is your confidence on the pipeline beyond Q4?

That's a good question. Beyond Q4, we're so into Q4 operationally right now, it's hard to sometimes hard to think beyond it. But if I put it this way, without being banging our own drum too much, I think we are one of the best positioned gaming companies in the world right now. We have a strong cash flow. We have money in the bank. We have very strong games within certain niches that we're dominating. I think we have a strong customer base. So I think there are very few companies that have the huge opportunities that we have right now.

And what it's all about is taking advantage of these opportunities. If you speak about the pipeline specifically, I think we have a strong pipeline with a healthy mix of smaller, more experimental titles through Arc with some games like Prison Architect 2, that is fully developed externally, to some super heavy hitters that comes from the internal [indiscernible] . So I say 2026 just bring it on. We're ready. So that's going to be great.

Sounds good. And I think those were all the questions that we have got so far. If we haven't answered -- if we missed the question, we will make sure to find them in the e-mails and the form post and also send them separately. If you come up with questions after this stream, feel free to contact us, and we will try to answer them. But that's it for this stream. So we have the next one coming up. That will be for the fourth quarter, much more action full quarter compared to this third quarter for sure.

I think it's at the very beginning of February next year, so quite some time until then.

Up until then it will be even colder and more unhospitable than ever, but we look forward to it anyways. And thank you very much for watching and hope to see you next time as well.

Thank you for watching.