Remedy Q1'25 preview: In anticipation of FBC: Firebreak release

Translation: Original published in Finnish on 4/23/2025 at 7:00 am EEST.

Remedy will report its Q4 results on Wednesday, April 30, at 9.00 am EEST. Our expectations for revenue and earnings are close to last quarter's levels, which would still result in some losses. Remedy is guiding for a positive EBIT for this year, in which the FBC: Firebreak, to be released in the summer, and Alan Wake 2 royalties play a key role. The Q1 report is expected to provide more information and visibility into these factors. Of course, the progress of other game projects is also of interest as Remedy looks to achieve its goal of significant revenue growth by 2027.

Alan Wake 2 royalties of particular interest for Q1 revenue

We forecast Remedy's Q1 revenue to have been 11.6 MEUR, which would mean a growth of 7.5% year-on-year and stable development compared to the previous quarter. Development fees (Q1'25e: 9.0 MEUR) make up the bulk of our forecast. We estimate that most of these are from the Max Payne subcontracting project currently in production. Control 2, which entered full production in February, has also generated development fees (Annapurna finances 50% of the estimated production budget of around 50 MEUR).

In terms of royalties (Q1'25e: 2.6 MEUR), the quarter is particularly interesting because of Alan Wake 2. The game finally covered its development and marketing investment (recouped) at the end of 2024, having sold over 2 million copies by the end of Q4. So Q1 is the first "cleaner" quarter, with royalties from game sales rolling into Remedy's coffers. Seasonally, however, Q1 is a quieter quarter for game sales, so expectations are not particularly high. Our forecast for AW2 royalties is around 2 MEUR, but visibility on these is very low. 

Earnings expectations are weighted towards H2

We forecast Remedy's EBITDA margin in Q1 to be -0.9 MEUR (Q1'24: -1.2 MEUR). The evolution of Remedy's cost structure calmed down in 2024, as the investments in the implementation of the multi-project model were largely completed. With a predominantly fixed cost structure, the increase in revenue will therefore have a strong impact on profitability in the future. We forecast Remedy's revenue to be stable compared to the previous quarter, so the EBITDA forecast is therefore also in the same ballpark (Q4'24: -0.6 MEUR). Remedy's earnings expectations for this year are weighted towards H2, when the summer release of FBC: Firebreak, will begin to generate revenue for the company.

FBC: Firebreak and Alan Wake 2 royalties new earnings drivers for this year

In its outlook, Remedy expects revenue (2024: 50.7 MEUR) and EBIT (-4.3 MEUR) to increase compared to the previous year and that EBIT will be positive. The release of FBC: Firebreak (Q3 in our estimates) is naturally central to growth, but in addition, royalties from Alan Wake 2 and other older games create a base for revenue. The Max Payne project and Control 2 will continue to generate significant development fees this year. Our forecast for this year expects revenue of 65.8 MEUR (+30%) and EBIT of 1.7 MEUR. In the big picture, medium-term performance expectations are weighted towards 2027, when Control 2 is very likely to be released. Given the earnings potential thereafter, we believe the current valuation of the stock looks attractive.