Interim report January - September 2018

Third quarter 2018

• Revenues amounted to SEK 225.0 (180.7) million, an increase by 25 % compared to the same period last year.
• Operating profit amounted to SEK 68.3 (52.9) million, an increase by 29 %.
• Profit before tax amounted to SEK 68.3 (52.6) million, and profit after tax amounted to SEK 52.9 (40.6) million.
• Cash flow from operating activities amounted to SEK 97.4 (70.3) million, and cash flow from investing activities amounted to SEK -82.4 (-79.2) million.
• By the end of the period cash and short-term placements amounted to SEK 344.1 (244.3) million.
• Earnings per share amounted to SEK 0.50 (0.38) per share.
• Revenue from the third quarter of 2018 are mainly attributable to Cities: Skylines, Europa Universalis IV, Hearts of Iron IV, Stellaris and Crusader Kings II.

Important events in the third quarter

• One new game was released during the period, Cities: Skylines - Nintendo Switch Edition, developed by Tantalus Media.
• Two new expansions were released during the period; Dharma for Europa Universalis IV, and Mass Transit for Cities: Skylines on console.
• Stellaris: Console Edition, currently in development by Tantalus Media, was announced with a planned release in 2019.
• Steam Summer Sale started June 21 and continued until July 5.
• Paradox Publisher Weekend on Steam took place September 6 to September 10.
• Ebba Ljungerud started as CEO for the company on August 1, and Fredrik Wester became the Chairman of the Board.

Words from CEO

Meet the New Boss

As of August 2018, I have officially taken the role of CEO at Paradox Interactive, and Fredrik Wester is now our Executive Chairman of the Board. It’s natural when a company makes changes in leadership for there to be trepidation or curiosity: will Paradox change course? Are there going to be bumps in the road or sweeping alterations to our business model? I am proud to report that Q3 2018 has not only continued the growth and success of the company, but has done so by continuing to embrace the core philosophies of Paradox.

The quarter generated 225.0 MSEK of revenue, a 25% growth from last year’s third quarter, and the operating profit grew with 29% from the same quarter last year, reaching 68.3 MSEK. This was driven by the ongoing support we have for our existing portfolio, even without the release of a new full game this quarter.

Our releases for the quarter have focused on new content and new platforms for existing games, continuing our strong long-tail support for all of our brands. We released the Mass Transit expansion for Cities: Skylines Console Edition in early August. That month also marked the 5th anniversary of Europa Universalis IV, one of our flagship internal brands -- and still, even five years after release, September saw the release of Dharma, the fastest-selling full expansion to date for this title.

September also brought Paradox to the Nintendo Switch for the first time, with the launch of Cities: Skylines Switch Edition. This expansion represents not merely an additional console platform for Paradox, but an exploration of what the audience for our brand of strategy looks like. We intend to delve further into these new waters with our first ever internally developed grand strategy game for console players, Stellaris: Console Edition, which we revealed for the general public to play for themselves at Gamescom this year.

At Gamescom, we unveiled Flashpoint, the first expansion for BATTLETECH, being developed by Harebrained Schemes -- the first step in providing ongoing support for the latest game to join our portfolio. Building and supporting this portfolio remains the bedrock of Paradox’s philosophy and strategy, and it continues to drive success for us, as shown by the results stated above. This is of course not to say that we aren’t also constantly looking to expand the portfolio with new titles: this quarter we have invested more in game development than in any single quarter before.

What’s more, this quarter also set a record for us that certainly speaks to our continued growth: we have just surpassed 1 Billion SEK in revenues over a rolling four-quarter period for the first time.

With continuing development in upcoming titles such as Age of Wonders: Planetfall by Triumph Studios, and Paradox Development Studios' Imperator: Rome, we’re looking forward to seeing results from more titles -- both revealed and yet-to-announce -- in the months to come. In short, the core strategy behind Paradox, its games, and its people remains as strong as ever, and I’m proud to be at the helm on this course to continued growth and success. Just like each game in our catalogue, I’m looking forward to supporting this journey for a long time to come.

Ebba Ljungerud, Chief Executive Officer

Presentation of interim report

Ebba Ljungerud and Alexander Bricca will host a live stream to answer report and financial related questions on our Twitch channel on November 13 at 12:00 PM CET https://www.twitch.tv/paradoxinteractive.

Submit your questions before via our forum https://forum.paradoxplaza.com/forum/index.php?threads/paradox-q3-2018-report-and-livestream.1127062/, by e-mailing them to ir@paradoxplaza.com or directly in the Twitch chat. The Twitch chat is open for anyone to view but to post comments or question you will need to create an account.

For additional information, please contact

Ebba Ljungerud, CEO of Paradox Interactive

Alexander Bricca, CFO of Paradox Interactive

Email: ir@paradoxplaza.com

Phone: +46703555418

This information is information that Paradox Interactive AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication on November 13, 2018.

About Paradox Interactive

The Paradox Interactive group includes publishing and internal development of games and licensing of White Wolf’s brands. The publishing operation publishes both internally developed titles and titles developed by independent studios as well as music and books. The game portfolio includes more than 100 titles and Paradox Interactive owns the most important brands, including Stellaris, Europa Universalis, Hearts of Iron, Crusader Kings, Cities: Skylines, Magicka and Age of Wonders. From the start over ten years ago, the company has published its games all over the world, initially through physical distribution using partners, but beginning in 2006 has primarily distributed digitally using its own publishing arm. The development platform is primarily PC, but the company has released games on console and mobile platforms as well. The largest markets today include the US, UK, Germany, France, Russia and Scandinavia. Today, more than three million gamers play a Paradox game each month and the number of Paradox registered users exceeds eight million.

Paradox Interactive AB (publ)’s shares are listed on Nasdaq Stockholm First North Premier under ticker PDX. FNCA Sweden AB is the company’s Certified Adviser. For more information, please visit www.paradoxinteractive.com.