Paradox Interactive AB (PDX) Q2 2026 Earnings Report

The call was broadly positive: the company delivered solid revenue growth (+14% YoY), materially higher operating profit (+37%) and an improved margin (36% vs 30%). Strong adjusted operating cash flow, no new write-downs, the Cities: Skylines 2 sales surge, a conservative balance sheet and active capital returns (SEK 200m buyback plus earlier dividend) reinforce a constructive outlook. Headwinds include higher COGS and amortization driven by recent projects, elevated admin and support costs, FX timing impacts (~2% headwind), and rolling 12-month profit still depressed by past write-downs. Management flagged normal seasonality with a likely softer Q3 and did not provide explicit short-term EBIT guidance. Overall, positives outweigh the negatives, with operational momentum and financial strength balanced against some cost and timing pressures.

Management signaled directional guidance on seasonality, capital allocation and margins: Q2 revenue was SEK 524m (+14% y/y from SEK 459m) with roughly a 2% FX headwind, operating profit SEK 182m (vs SEK 133m), profit before tax SEK 188m (vs SEK 139m) and a 36% profit margin (vs 30%, with a long‑term aim “probably over 40%”), equity/assets 76% (vs 81%), average employees 695 (vs 640), COGS SEK 259m (vs 232m), selling expenses SEK 53m, admin SEK 33m (incl. ~SEK 3m one‑off listing cost), amortization of capitalized development SEK 103m (vs 79m), development support SEK 30m (vs 24m), royalties SEK 28m (vs 26m), other income net SEK +4m (vs -13m), financial income ~SEK 6m, operating cash flow SEK 105m (including a SEK 185m prepayment for co‑publishing; ex‑prepayment ~SEK 290m) and investing cash flow SEK 166m; the Board approved a SEK 200m buyback (after SEK 500m dividend this year, implying ~SEK 700m total shareholder distribution if completed), MAU ~6m, and management reiterated Q3 is typically slower (no explicit EBIT guidance), amortization from Europa Universalis V and Bloodlines 2 will decline, and royalties should trend lower as more content is produced in‑house.