Paradox Interactive’s Earnings Call: Engagement Up, Revenue Down

Paradox Interactive ((SE:PDX)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Paradox Interactive presented a mixed sentiment. While the company celebrated strong player engagement and successful expansions, it faced challenges with decreased revenue and profit margins, as well as unfavorable currency exchange impacts. Despite maintaining a positive cash flow, concerns were raised regarding increased costs and a reliance on Q4 releases to meet financial targets.

Positive Player Engagement for Key Titles

Age of Wonders 4 and Victoria 3 have demonstrated impressive player engagement, with high retention rates and robust sales numbers for downloadable content (DLCs). This indicates a strong and ongoing interest in these key titles, providing a solid foundation for future growth.

Strong Launch of Vampire: The Masquerade – Bloodlines 2

The recent release of Vampire: The Masquerade – Bloodlines 2 was met with positive initial feedback from players. This successful launch adds to Paradox Interactive’s portfolio of well-received games, contributing to its reputation for quality releases.

Expansion and DLC Success

Paradox Interactive has expanded its product offerings with a wide array of expansions and DLCs for popular franchises such as Cities: Skylines, Crusader Kings III, Hearts of Iron IV, Age of Wonders 4, and Stellaris. These additions have enhanced the company’s product lineup, catering to a diverse player base.

Employee Growth and Expansion

The company has increased its workforce from 584 to 654 employees, primarily due to the acquisition of Haemimont Games and the expansion of studios abroad. This growth reflects Paradox Interactive’s commitment to scaling its operations and enhancing its development capabilities.

Healthy Cash Flow

Paradox Interactive reported a positive cash flow from operating activities, amounting to SEK 195 million, up from SEK 154 million in the previous year. This financial health provides a stable platform for future investments and growth initiatives.

Revenue and Profit Decline

In Q3 2025, the company experienced a 9% decline in revenues, totaling SEK 395 million, compared to SEK 434 million in Q3 2024. Operating profit also decreased from SEK 143 million to SEK 112 million, highlighting the financial challenges faced during the quarter.

Currency Exchange Impact

The stronger kroner and weaker dollar and euro compared to last year negatively impacted Paradox Interactive’s revenue. This currency exchange fluctuation posed an additional challenge to the company’s financial performance.

Increased Costs

Paradox Interactive saw an increase in selling expenses from SEK 44 million to SEK 50 million, and administrative expenses rose to SEK 29 million due to one-time events such as a staff conference. These increased costs have put additional pressure on the company’s profit margins.

Concentration of Releases in Q4

The third quarter saw a slowdown in releases, leading to a heavier reliance on Q4 to meet financial targets. The company anticipates a busy upcoming quarter with significant releases planned to boost its financial performance.

Forward-Looking Guidance

Looking ahead, Paradox Interactive has outlined a busy upcoming quarter with two new base game releases, including Europa Universalis V and a remaster of Surviving Mars, alongside several DLCs and content creator packs. These releases are expected to drive revenue and engagement, helping to offset the challenges faced in Q3.

In summary, Paradox Interactive’s earnings call reflected a company navigating through both achievements and challenges. While strong player engagement and successful expansions were highlighted, the decline in revenue and profit margins, coupled with currency exchange impacts, presented hurdles. The company’s focus on upcoming releases in Q4 aims to address these challenges and sustain its growth trajectory.