Starbreeze AB (publ) interim report Jan-Jun 2023

"Imminent launch of PAYDAY 3, and more on the way"

Second quarter 2023

• Net sales totaled SEK 43.2 million (31.8).
  PAYDAY 2 amounted for SEK 42,7 million (30.0).
• EBITDA* totaled SEK 14.1 million (18.1).
• Depreciation, amortization, and impairment totaled SEK 17.0 million (14.8).
• Profit/loss before taxes amounted to SEK 24.1 million (-10.8).
• Basic and diluted earnings per share totaled SEK 0.03 (-0.02).
• April 28, Starbreeze decided on a rights issue of SEK 453 million. On June 21, Starbreeze announced the outcome of the oversubscribed rights issue.
• May 22, it was announced that Starbreeze is negotiating to license an IP for use as a base in game production.
• June 11, the release date of Payday 3 – September 21, 2023 – was announced.
• June 28, the Crude Awakening Heist, which is the fourth and final part of the Texas Heat campaign, was released.

January-June 2023

• Net sales amounted to SEK 69.9 million (55.3). PAYDAY 2 amounted for SEK 69.1 million (53.4).
• EBITDA* totaled SEK 18.1 million (22.7).
• Depreciation, amortization, and impairment totaled SEK 32.7 million (29.2).
• Profit/loss before taxes amounted to SEK -0.6 million (-34.6).
• Basic and diluted earnings per share amounted to SEK -0.0
  (-0.05).
• Cash and cash equivalents amounted to SEK 498.8 million (86.3).

Significant events after the end of the period

• July 19, Digital Bros initiated the conversion of its convertible loan of SEK 215 million, at a conversion rate of SEK 1.45.
• July 24, Starbreeze’ Nomination Committee proposed that the board be strengthened with two gaming veterans to support Starbreeze’ strategy and growth.
• August 10, Starbreeze announced that it will publish Roboquest by RyseUp Studios.

CEO’s message

Imminent launch of PAYDAY 3, and more on the way

Starbreeze has worked, and delivered, on a clear strategy for the past few years. We have created the best possible prerequisites for a successful launch of PAYDAY 3 in 2023, while also continuing to deliver high-quality content for PAYDAY 2. With both of these completed, it was time to look ahead and ensure that we create the best possible environment to take the next step. We have one of the gaming industry’s strongest brands in PAYDAY, and it will continue to be an important part of our growth, with more products and broader entertainment based on it. But Starbreeze will also grow beyond PAYDAY – by having several games in production and on the market simultaneously and by expanding our publishing activities for both third parties and our own titles. We have a proven business model, long experience in building and maintaining strong communities and a game strategy with a focus on cooperative multiplayer games.

RESULTS

Net sales for the quarter amounted to SEK 43 million and consisted to 99 percent of PAYDAY 2. In terms of units, sales were slightly lower than the same quarter last year but were positively affected by marketing activities (Humble Bundle), strong sales during Steam’s summer sale, one-off revenue from platform owners and stronger dollar exchange rate.

PAYDAY 3

In June, it was finally time to show the world what we have been working on. At the Xbox Showcase we released the first gameplay trailer and the release date for PAYDAY 3. Although many would have liked information sooner, we knew that the impact the event would have was well worth the wait. On September 21st, the game will be made available on all major platforms and 2023 will, as promised, be “The Year of PAYDAY”. The reception has been fantastic, especially from our large PAYDAY-community, which makes us very happy as it is incredibly important to have our most dedicated PAYDAY fans excited about the new game. The strength of our brand was clearly seen in the attention from both traditional and social media. In mid-June, we invited around a hundred journalists and influencers from all over the world to try out PAYDAY 3 – with a very positive response. The interest in PAYDAY has also accelerated the membership growth of our own portal, Starbreeze Nebula, which has now reached over a million members. With just over a month until launch, we have long since begun development of upcoming DLCs and content updates for the game – both free and paid.

PROJECT ”BAXTER”

The game carrying the internal working name “BAXTER”, is the next AAA title in our niche of cooperative multiplayer games. In May, we announced that we are in advanced negotiations to license an iconic brand characterized by collaborative experiences and storytelling in an expansive world. Fans of our games will recognize themselves, but at the same time it is a completely new project, in a completely new genre, compared to PAYDAY.

The budget for the project is split into three parts – 1) development of the base game, 2) marketing around launch and 3) development of DLCs and content. Until launch, the development cost is estimated to amount to approximately 60 percent of the total budget. Starbreeze will act as both developer and publisher, but we will continually evaluate opportunities to add external partners for the project – for example for physical and digital distribution – to achieve a good balance between risk and margin in the project.

PAYDAY 2

Together with Epic Games, we celebrated “The Year of PAYDAY” by offering the world's premier heisting experience – the base game of PAYDAY 2 – one week free on the Epic Games Store in June. It is, of course, part of the strategy to let more people experience PAYDAY as a game and brand ahead of the launch of PAYDAY 3 in September. More than 12 million people downloaded the game, and we launched sales of all DLCs on the Epic Games Store at the same time. The successful campaign contributed to June's MAU reaching 1,541,309. During the quarter, our team delivered three additional DLCs for PAYDAY 2, culminating in the Crude Awakening heist that launched at the end of June. 10 years after launch, the game now contains close to ninety heists and has received hundreds of updates with both new content and new features. Continuous development with lots of new content is a pillar of all games Starbreeze develop.

THIRD PARTY PUBLISHING

Our strategy for the publishing arm of our business is to find games that are fantastic on their own, but also fit into our philosophy and the community we built over the past decade. Roboquest – developed by RyseUp Studios – is one of those games. The game is toady available through Steam Early Access and currently enjoys an average rating of around 95 percent positive. Our strengths as a publisher, combined with a community connected through Starbreeze Nebula, will enable us and our games to reach new audiences.

OTHER PROJECTS

In early June, our partner PopReach launched the mobile game PAYDAY Crime War, globally. It enables more people to get a taste of our brand, and of course play more PAYDAY on more platforms. Our collaboration with Stockholm Syndrome to develop a film or TV series based on PAYDAY is progressing according to plan. The current strike among writers and actors currently underway in the US does not affect the project in its current phase.

ORGANIZATION

During the quarter, the number of employees increased by 8, primarily within game production to have capacity to develop content for PAYDAY 3 and BAXTER in parallel. We are also incredibly proud to, as a studio, have achieved HBTQI-certification by RFSL. The equal rights of all people, and the right to equal treatment, is something we as a company, and I personally, take very seriously.

In connection with the oversubscribed rights issue, Starbreeze received capital and trust to pursue or stated strategy. At the same time, we resolved SEK 380 million in debt on our balance sheet, in the form of a loan and a convertible loan – a heavy legacy from the reconstruction is thus resolved. We now have the necessary conditions to build Starbreeze even stronger and we will continue the hard and long-term work to achieve our goals.

TOBIAS SJÖGREN, CEO

Webcast
Time: 11.00 CEST
Participation: To connect to the webcast– click here.

For more information, please contact:

Tobias Sjögren, CEO
Mats Juhl, CFO
Tel: +46 0(8) - 209 229
Email: ir@starbreeze.com

This information is information that Starbreeze AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, via the contact persons set out above, at 7:30 am CEST on August 17, 2023.

About Starbreeze

Starbreeze is an independent developer, publisher, and distributor of PC and consoles targeting the global market, with studios in Stockholm, Barcelona, Paris and London. Housing the smash hit IP PAYDAY™, Starbreeze develops games based on proprietary and third-party rights, both in- house and in partnership with external game developers. Starbreeze shares are listed on Nasdaq Stockholm under the tickers STAR A and STAR B

Read more at www.starbreeze.com och corporate.starbreeze.com

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