Starbreeze AB (publ) Interim Report Q3 2022

Third Quarter 2022

• Net sales totaled SEK 38.7 million (34.7). PAYDAY accounted for SEK 36.1 million (31.2).
• EBITDA* totaled SEK 24.4 million (19.9).
• Depreciation, amortization and impairment totaled SEK 15.4 million (15.0).
• Profit/loss before tax amounted to SEK -7.5 million (-8.0).
• Basic and diluted earnings per share totaled SEK -0.01 (-0.01).
• On June 21, Midland Ranch Heist was successfully released as part of the Texas Heat campaign.

CEO Tobias Sjögren remarks on the report: Publishing and softlaunch, important milestones

Although global uncertainties remain, the gaming market continues to be strong, as well as the commitment to PAYDAY. This quarter we saw strong sales of PAYDAY 2 for PC, driven by the successful release of the Midland Ranch Heist DLC, which is part of the Texas Heat campaign. We continue to develop new, high-quality content for PAYDAY 2, and the demand from our players remain strong.

The development of PAYDAY 3 is proceeding according to plan, and together with our co-publishing partner, Plaion (which has changed its name from Koch Media group), we are working hard to ensure a successful launch in 2023. Many people are waiting for more information about the exact release date and to see content from the game, and we will provide updates closer to the launch.

In October, our partner, PopReach, conducted a soft launch of the mobile game PAYDAY Crime War in the Philippines. This means that the game is being tested in a very limited market to gather information from players to ensure the best possible player experience ahead of the global launch in 2023. The launch date is not yet set, but the date will be communicated by PopReach as soon as it is. It is great seeing PAYDAY being developed on multiple platforms simultaneously I am looking forward to offer our customers a much broader experience in 2023.

Our studio grew somewhat during the quarter, with the number of employees increasing from 152 to 156. This is according to plan and the team for PAYDAY 3 is reaching full size. We are continuing our efforts to build a lasting and profitable business, delivering high-quality content to our players, growing and nurturing our community, and working towards being the best employer for game developers. During the quarter, our MAU peaked at 727,000 players, an increase of around 140,000 monthly players compared to the previous quarter. Sustained high engagement levels are driving our sales, while our community is growing and now stands at close to 8.5 million members within the Steam community.

In terms of sales, PC sales for the quarter amounted to SEK 31.7 million (26.7), an increase of around 19 percent, while we saw slightly lower Console sales of around SEK 4.6 million (4.7). Overall, net sales for the quarter amounted to SEK 38.7 million (34.7), an increase of 12 percent compared to the same period last year. Underlying sales for the quarter are good compared to recent years, and we also had a positive impact from the stronger USD currency. Steam sales in US dollars decreased by about 10 percent compared to strong sales in the same period last year, but the gap has reduced compared to earlier quarters this year. The positive response to the marketing initiatives and launches we conducted in the latter part of the quarter contributed to an increase in sales, even when compared to a very strong quarter last year.

Earnings for the quarter (EBITDA) totaled SEK 24.4 million (19.9), which is an increase of 23 percent compared to the corresponding period last year.

There is some variation in sales between the quarters, particularly in terms of PC sales, due to several factors. The market has clearly returned to a more normal level, but the uncertainty we see in the world around us in relation to inflation rates and higher interest rates creates uncertainty about the strength of the market going forward. However, our well-established PAYDAY brand and the loyal player base we have go some way to counteracting these uncertainties and providing a solid foundation. We plan to release several PAYDAY 2 DLCs in the future, which will have a positive impact on sales in the coming quarter.

In line with our strategy to expand Starbreeze, we signed a publishing agreement in October to publish the game The Tribe Must Survive with the developer Walking Tree Games. This is an important milestone for us, as we can now take the step of relaunching the 3rd party publishing business. We are now taking the experience we gained from PAYDAY 2 in building long-term revenue-generating games and customer relationships and applying it to more products. Our mission is to build a strong Starbreeze community by offering more long-lasting products and linking them together in our user system “Starbreeze Nebula”.  The growth of the Publishing team gives us the opportunity to take greater ownership of the games we produce ourselves after PAYDAY 3. By combining more games with our own IP:s, we are ensuring a long-term and differentiated revenue model that will strengthen Starbreeze as a company.

Tobias Sjögren
CEO Starbreeze

For live presentation of the report, November 17, 2022, CET 10.30 visit:

https://www.finwire.tv/webcast/starbreeze/starbreeze-q3-presentation-2022/

For more information, please contact:

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. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on November 17, 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