Starbreeze AB (publ) Interim Report Q2 2022

Second quarter 2022

• Net sales totaled SEK 31.8 million (32.0). PAYDAY accounted for SEK 30.0 million (31.5).
• EBITDA totaled SEK 18.1 million (-51.8).
• Depreciation, amortization and impairment totaled SEK 14.8 million (15.5).
• Profit/loss before tax was SEK -10.8 million (-80.0).
• Basic and diluted earnings per share totaled SEK -0.02 (-0.11).
• On June 21, Midland Ranch Heist was successfully released as part of the Texas Heat campaign.

CEO Tobias Sjögren remarks on the report: WE CONTINUE ACCORDING TO OUR STRATEGY TO DEVELOP STARBREEZE

The games market in the first half of 2022 was generally strong, but showed some volatility and changes. In the world around us, we see rising interest rates and inflation, falling stock prices, the war in Ukraine, Covid-19 and a generally high level of uncertainty. However, the industry continues to see high player activity and strong demand for employees, although like most other gaming companies, our sales volumes were down on last year. The development of PAYDAY 3 continues according to our development plan, sales of PAYDAY 2 remain strong and we continued to attract and recruit the right people in the first half of 2022. Despite this, we are naturally cautious about the uncertainty we see in the world around us and the fact that the economy has moved from being buoyant to a more uncertain future in a short period of time. To ensure long-term and profitable activity, delivering high quality content to our players, growing and nurturing our community and being the best employer for game developers are our top priorities.

The work on developing new content for PAYDAY 2 continues to be very ambitious. This is to ensure the high level of interest in the game and to maintain good sales, and also to provide the best possible conditions for the launch of PAYDAY 3. June saw the successful release of Midland Ranch Heist, part of our new Texas Heat campaign, and we have also had other smaller releases and updates throughout the quarter. During the quarter, our MAU peaked at 585,000 players, which remains a high level of engagement, although the second quarter's highest measured level is slightly lower than that of the first quarter of the year.

In terms of sales, PC sales during the quarter amounted to SEK 24.7 million (27.3), a decrease of approximately 9 percent, and in console sales we saw an increase of approximately 19 percent to SEK 5.5 million (4.6). Overall, net sales for the quarter amounted to SEK 31.8 million (32.0). Underlying sales for the quarter are good compared to those seen in recent years, and we also experienced a positive impact from the stronger USD currency. The decrease in sales compared to strong sales on Steam in USD in the same period last year amounted to approximately 25 percent, which is in line with the previous quarter. In line with the rest of the market, PAYDAY 2 sales fell more at the end of the quarter than at the beginning of the quarter, indicating a likely decline in sales in the third quarter as well, as we face strong comparative figures from the third quarter of 2021.

EBITDA for the quarter amounted to SEK 18.1 million, compared to adjusted earnings of SEK 16.8 million for the same quarter previous year.

The decline in PC sales is due to several factors, as mentioned earlier, but the market seems to be returning to the more normal state and volumes which preceded the earlier positive sales effects related to Covid and restrictions. The number of competing game releases was high in the first half of the year, which meant competition for players' attention. However, as PAYDAY 2 is a game that, due to its age, has a relatively low price tag compared to the new games, we are well positioned. And as always, we have several PAYDAY 2 releases which will contribute positively to sales in the coming quarter. Our large and committed community and the interest in PAYDAY 2 is one of the keys to the strong and successful launch of PAYDAY 3 next year.

We continue to expand our development team according to plan, and in the quarter our team got two new members to reach a total of 152 employees at the end of the quarter. In line with our development plan, our organization related to PAYDAY 3 will be at its peak in the fall of 2022 while, in line with our strategy, we continue to strengthen the organization in order to develop more games and new business opportunities. As mentioned earlier, this will be achieved by acquiring other businesses and brands, publishing third-party games, and developing more entertainment products and games based on the PAYDAY IP. During the quarter, we started projects to develop new IP:s and new games and we are working on several fronts to develop our next game with a view to release in 2025. Our strategy for new games is to use our experience in games as a service, and our ability to build strong communities that create long-term entertainment value for our players and long-term revenue for Starbreeze. More games and proprietary IPs means that we are ensuring that there is a long-term and differentiated revenue model to help strengthen Starbreeze as a company.

Tobias Sjögren
CEO Starbreeze

This disclosure contains information that Starbreeze AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 18-08-2022 07:30 CET.

For more information, please contact:

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

For live presentation of the report, August 18, 2022, CET 11.00
visit: www.finwire.tv/webcast/starbreeze/q2-2022/

About Starbreeze

Starbreeze is an independent developer and creator of PC and console targeting the global market, with studios in Stockholm, Barcelona and Paris. 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 with the ISIN-codes SE0007158928 (A share) and SE0005992831 (B share). For more information, please visit starbreeze.com