Source: Inderes

Starbreeze's Q3 results were better than we expected, with both PAYDAY titles beating our forecasts. Headline profitability clearly exceeded our estimates, but we view the quality of this beat as modest, as it was largely driven by higher-than-expected capitalized development costs rather than underlying cash flow. PAYDAY 3 engagement improved during the quarter, albeit modestly in absolute terms. The more significant development came after the quarter, as the November free weekend drove the largest surge in player activity since launch, although we believe it is still too early to draw conclusions. With free cash flow still clearly negative and the cash balance down to ~36 MSEK, we consider the 2026 cash flow positive target effectively out of reach and see financing as the key near-term question.

PAYDAY carries the top line, with the older title still in the lead

Starbreeze reported Q3 revenue of 32.6 MSEK (Q3'25: 58.4 MSEK), slightly above our 31.1 MSEK estimate and down 44% year-on-year. As anticipated, the decline was mainly explained by work-for-hire, which generated no revenue (Q3'25: 19.9 MSEK) now that the engagement has ended, and by third-party publishing, which fell to 1 MSEK (Q3'25: 4.7 MSEK). Game sales were broadly stable at 31.1 MSEK (Q3'25: 32.5 MSEK), ahead of our ~29 MSEK estimate for the PAYDAY franchise. PAYDAY 3 revenue reached 14.5 MSEK (Inderes estimate: 13.2 MSEK; Q3'25: 17.7 MSEK). This was a sequential improvement, despite the company delisting all paid heist DLC in August to fold them into the base game, and even though the first paid Crimebond contributed only nine days of sales. PAYDAY 2 continued to perform well at 16.6 MSEK (Inderes estimate: 15.8 MSEK; Q3'25: 14.9 MSEK), supported by the 64-bit engine upgrade and the first paid DLC launch in three years. For another quarter, the older title generated more revenue than its successor. PD3 engagement improved during the quarter, with the company reporting that the player base tripled when the Anniversary update went live and recent Steam reviews having held above 72% positive since July. While encouraging, the increase was modest in absolute terms given the low starting point, and part of the uplift was driven by free content and seasonal discounting.

EBITDA beat driven largely by higher capitalization

EBITDA rose to 17.3 MSEK (Q3'25: 19.3 MSEK), clearly above our 10.5 MSEK estimate, corresponding to an EBITDA margin of 53%. Operating profit (EBIT) came in at -13.3 MSEK (Q3'25 adj.: -23.5 MSEK), also clearly better than our -21.8 MSEK expectation. The cost reductions are visible in the cost base, with headcount down to 89 employees at the end of the quarter (Q3'25: 160) and SG&A falling to ~14 MSEK (Q3'25: 20 MSEK), in line with our estimate. However, the bulk of the ~7 MSEK EBITDA beat is explained by capitalized development, which at ~29 MSEK was some 9 MSEK above our estimate as the company invested in the Anniversary update, the UE5 migration and new content. Depreciation and amortization amounted to 30.5 MSEK, slightly below our ~32 MSEK estimate.

Operating cash flow was positive at 16.5 MSEK (Q3'25: 21.8 MSEK), above our 8 MSEK estimate, but investments in own games of 28.6 MSEK were also clearly higher than we expected (Inderes estimate: ~20 MSEK). As a result, free cash flow was -12 MSEK (Inderes estimate: -14 MSEK), and including lease payments of 4 MSEK, the cash balance fell by ~16 MSEK q/q to 35.9 MSEK (Q2'26: 52.1 MSEK). At the current burn rate, this represents a thin buffer of only a couple of quarters, in our view. While the lower cost base is a step in the right direction, the cash flow profile has not yet improved structurally, as the higher capitalization merely shifts costs from the income statement to the cash flow statement. Notably, the report provided no assessment of liquidity or funding options and no reference to the 2026 positive cash flow target, with management instead pointing to cost discipline to protect cash generation and to incremental franchise revenue as the key lever for returning to sustained profitability. We still view the positive cash flow target effectively out of reach and see the funding of the business as the key near-term question.

November surge needs to translate into revenue as funding pressure mounts

Heading into the report, our FY26 estimates stood at 116 MSEK revenue and -123 MSEK adj. EBIT, reflecting a view that PD3 would improve modestly from depressed levels while the full effect of the cost reductions partially offsets the revenue headwind. Following the better-than-expected quarter, we expect to make minor upward revisions to our revenue and earnings estimates, but as the earnings beat was largely driven by higher capitalization, we expect the impact on our cash flow estimates to be limited.

The most significant development occurred after the quarter, as the PAYDAY 3 free weekend on 5–9 November drove Steam concurrent players to a peak of ~19,000, the highest since the game's launch month, and activity has so far held up well above the levels seen since the launch period. We view the engagement uplift positively, but we also believe it is too early to draw conclusions on the longer-term run-rate. Earlier engagement spikes have faded within a month, and the title now faces increased competition for player attention from other major releases (e.g. GTA VI, November 19). Furthermore, with all heists now free, lasting revenue per player has to come from paid Crimebonds and cosmetics.

While the partner-funded IP-expansion initiatives continue to progress, we expect their near-term financial impact to remain immaterial. In our view, the investment case remains firmly tied to the turnaround of PAYDAY 3, where the November surge is a promising step, but where evidence of sustained monetization, and of a funded path to cash flow positivity, is still lacking.