Remedy Entertainment Plc: Business Review January–September 2022

Key insights

5 takeaways

01
Remedy Entertainment is transitioning from a development-fee model to a self-financed, high-margin business, resulting in an operating loss of EUR -2.7 million for the first nine months of 2022 compared to a EUR 1.1 million profit in 2021.See it on page 2
02
Revenue grew by 20.2% to EUR 30.0 million during the January–September 2022 period, though profitability was offset by increased investment in internal project development.See it on page 2
03
The company is managing five active projects, including Alan Wake 2, which remains on schedule for a 2023 release, and the Max Payne 1&2 Remake, Codename Condor, Codename Heron, and Vanguard.See it on page 3
04
Management revised the 2022 financial outlook downward, citing the decision to extend the development phase of the multiplayer title Vanguard to meet quality standards.See it on page 4
05
The long-term strategy focuses on retaining greater intellectual property ownership to secure future royalty streams, with a goal to launch at least one new game annually between 2023 and 2025.See it on page 4

Summary

Remedy Entertainment’s business review for the first nine months of 2022 outlines a strategic transition toward a multi-project development model, characterized by increased investment in game production and a shift in business focus. While the company achieved revenue growth of 20.2% to EUR 30.0 million for the January–September period, profitability was significantly impacted by rising external development costs. Operating profit for the nine-month period fell to EUR -2.7 million, compared to a profit of EUR 1.1 million in the same period of 2021, reflecting the company’s decision to self-finance a larger share of development expenses for its current project pipeline.

The company is currently managing five active game projects, including the highly anticipated Alan Wake 2, which remains on track for a 2023 launch. Other projects, such as the Max Payne 1&2 Remake, Codename Condor, Codename Heron, and the multiplayer title Vanguard, are in various stages of development ranging from proof-of-concept to full production. Management notes that the decision to extend the development phase for Vanguard to ensure quality standards contributed to a downward revision of the 2022 financial outlook.

The long-term strategy focuses on evolving from a development-fee-based model toward a higher-margin, scalable consumer business. By retaining a greater stake in its intellectual property and co-financing projects, the company aims to secure long-term royalty streams. Despite short-term pressure on margins, the company maintains a strong financial position and expects to launch at least one new game annually between 2023 and 2025. The review covers the Finnish-headquartered developer’s global operations and reflects unaudited financial data for the first three quarters of 2022.