Remedy Entertainment Plc Business Review: January–September 2023

Key insights

6 takeaways

01
Remedy Entertainment reported a 21.1% revenue decline to EUR 23.6 million and an operating loss of EUR -15.9 million for the first nine months of 2023, driven by increased internal investment in game development.See it on page 2
02
The company maintains a strong financial foundation with an equity ratio of 86.4%, despite the deliberate strategy to prioritize long-term growth over short-term profitability.See it on page 7
03
The launch of Alan Wake 2 served as the primary operational milestone for the period, with management now shifting talent to accelerate development on other projects.See it on page 4
04
Remedy is currently managing a multi-project pipeline that includes the proof-of-concept stage for Control 2, production readiness for the Max Payne 1&2 remake, and ongoing development of Codename Vanguard and Condor.See it on page 4
05
Management expects a decline in annual revenue and a negative operating result for the full year 2023 as the company continues its transition phase.See it on page 3
06
The company aims to reduce future quarterly financial volatility by scaling its portfolio and generating consistent royalty streams from its upcoming game releases.See it on page 5

Summary

The business review for Remedy Entertainment covering January through September 2023 outlines the company’s financial performance and strategic progress as it transitioned into a major product launch phase. The primary thesis centers on the company’s deliberate strategy to increase internal investment in its game portfolio, which has temporarily suppressed short-term profitability and cash flow in exchange for long-term growth potential.

Financial results for the first nine months of 2023 reflect this investment-heavy approach. Revenue declined by 21.1% to EUR 23.6 million compared to the same period in 2022, while operating profit fell to EUR -15.9 million. The third quarter specifically saw revenue remain relatively flat at EUR 7.8 million, though operating losses widened to EUR -5.5 million. These figures are largely attributed to reduced development fees as major projects neared completion and increased spending on internal game development. Despite these losses, the company maintains a strong equity ratio of 86.4%.

Operationally, the period was defined by the finalization and subsequent launch of Alan Wake 2, which received strong critical acclaim. The company is currently managing a multi-project pipeline, including the proof-of-concept stage for Control 2, the production readiness phase for the Max Payne 1&2 remake, and the ongoing development of Codename Vanguard and the multiplayer title Condor.

The scope of this review encompasses the company’s global operations, headquartered in Finland with offices in Sweden. The outlook for the remainder of the year remains unchanged, with expectations of a decline in annual revenue and a negative operating result. Management anticipates that the transition of talent from the completed Alan Wake 2 project to other ongoing titles will accelerate development across the remaining portfolio, ultimately reducing quarterly volatility as more games reach the market and generate royalty streams.