Paradox Interactive Q4 and FY 2019 financial results

Paradox Interactive has concluded their fiscal year with rising revenues and profits, and more monthly active users than ever before.

The Numbers

For the quarter, the company generated SEK 381.3 million ($39.0 million USD) in revenue, which is a 13% increase year-over-year. Profit before tax was SEK 156.7 million ($16.0 million), a 7% increase.

Those revenues are attributed to BATTLETECH, which received a new expansion, Cities: Skylines, Europa Universalis IV, Hearts of Iron IV, and Stellaris. They also released Surviving The Aftermath into Early Access, and added expansions for both Prison Architect and Age of Wonders: Planetfall.

Looking at the full year, revenues were SEK 1,289.3 million ($131.8 million), up 13%, and profit before tax was SEK 466.8 million ($47.7 million), up 3%.

Monthly active users across the full Paradox portfolio was over 4 million. This is 30% higher than the end of 2018, and is a new record for the company.

Analysis

Considering the relatively minor releases this quarter, and the heavy investments required for future titles, Paradox’s position is looking strong. Their playerbase is consistently growing, especially as they acquire new studios, which is supported by their long-term DLC strategy.

These days, success in gaming is all about ecosystems, and Paradox is executing on that well. They may not have the hardware and resources of a company like Microsoft/Xbox, but the overall approach is working, as evidenced by the quarter.

Looking Forward

CEO Ebba Ljungerud noted that 2019 was a year that prepared them for the future, marked by increased investments and marketing campaigns for future titles. If this is what they are calling a “preparation year,” with two full releases and a swath of DLC, then they are in an extremely good position for the upcoming year.

Vampire: The Masquerade – Bloodlines 2, originally slated for March, will be releasing in 2020. Backed by a cult following of the original game, a publicly passionate developer, and a strong marketing campaign, it will have the most immediate financial benefits to the company.

Crusader Kings III also has a yet unannounced 2020 release date. It will add to Paradox’s portfolio of 4X titles with long-term support, but will attempt to be more accessible to new players.

Empire of Sin releases in the fourth quarter of 2020, developed by Romero Games. Its success will very much depend on the quality of the game, something that is not as necessary in a title like Bloodlines. The Romero name will give it a spotlight, but long-term success will rely on the marketing and community goodwill.

This trifecta of releases should result in a strong 2020-21 fiscal year for the company, supported by their catalogue and DLC strategy.