Paradox Interactive has released its interim report for January to June 2024. The focus of the report was on the cash flow for its second quarter. The company’s financial metrics took a hit after the cancellation of Life By You, a life simulator game.
Its revenue slumped by 22% compared to the same time last year while its operating profit declined by 90%, crashing from $27.1 million to $2.67 million year-over-year. Write-downs of $19.23 million are included in the operating profit—which caused the steep dip.
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It is not all gloom for Paradox Interactive. At the end of the period under review, the company’s cash amounted to $107.65 million which is significantly higher than the $78.1 million it had the same time last year—thanks partly to cash flow from sales of short-term investments in bonds.
Paradox Interactive’s revenue in the second quarter came mainly from its games—some of which received new downloadable content—including Age of Wonders 4, Crusader Kings III, Hearts of Iron IV, Stellaris, and Victoria 3. According to the company, the key events in Q2 include;
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Foundry, developed by Channel 3 Entertainment, was released to PC in Early Access.
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New downloadable content was released to games during the period; The Machine Age to Stellaris, Eldritch Realms to Age of Wonders 4, Sphere of Influence to Victoria 3, Winds of Change to Europa Universalis IV, The Obsidian Uprising and Nenukil, The Engineer to Across the Obelisk.
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The release of Life by You, developed by Paradox Tectonic, was cancelled, which led to a write-down of all capitalised development costs of MSEK 208.0.
Mixed feelings from Paradox Interactive’s CEO
Paradox Interactive’s CEO Fredrik Wester hinted at why Life By You was canceled. According to him, the tough decision was taken because they felt the game would not “meet our expectations”.
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“We end the second quarter of the year with mixed feelings,” wrote Wester. “On the one hand, our core business has performed very well, but on the other hand, we made the difficult decision to cancel the release of Life by You, as the game would not be able to meet our expectations.”
“Looking at the quarter’s results, we’ve released several strong expansions with good quality to our core games, which has a positive impact on the top line and provides a good cash flow from operating activities. The bottom line is sadly weighed down by the write-down of Life by You. It is painful but gives us a strong motivation to further improve our operations.”
The company started the year strong but their progress in the first half of the year was dampened by the singular decision to cancel Life By You. For context, the company’s revenue in the first six months was $112.82 million meaning the revenue for Q1 was 59.58 million while that of Q2 was 53.24 million.
Its investors also felt the pinch of the company’s poor financial numbers. The earnings per share for the second quarter was $0.024, a deep nosedive compared to the $0.21 they received in the same period last year.
