Starbreeze reported somewhat stronger-than-estimated revenues for Q4 this morning. Meanwhile, operating profit (EBIT) was significantly lower than our estimates due to higher-than-expected costs across the board. According to Starbreeze, PAYDAY 3’s sales and player activity are currently at significantly lower levels than they would like. The company’s focus and absolute priority is now to identify the changes that need to be implemented to ensure that PAYDAY 3 lives up to expectations.

Revenues grew slightly above our estimates

Starbreeze’s Q4 revenues increased by 106% to 69 MSEK, exceeding our estimate of 64 MSEK. The higher revenues were primarily due to stronger-than-expected sales from third-party publishing, which amounted to 14 MSEK. Revenue from PAYDAY 3 amounted to 36 MSEK (Q3’23: 194 MSEK), while PAYDAY 2 sales decreased more than we expected and amounted to 18 MSEK (Q3’23: 52 MSEK).

EBIT and net profit were significantly lower than expected due to higher costs across the board

In Q4, Starbreeze’s operating profit (EBIT) decreased to -95 MSEK, which was significantly lower than our estimate of -29 MSEK. The lower EBIT was due to a higher amortization, server costs, payroll costs, and one-off costs related to the launch of PAYDAY 3. Net financial items came in at 3.5 MSEK, resulting in a net profit of -92 MSEK and EPS of SEK -0.06. Cash flow from operating activities was 63 MSEK, while investments totaled -54 MSEK. At the end of the quarter, Starbreeze had cash and cash equivalents of 348 MSEK and virtually no debt.

Long-term focus on PAYDAY 3

Sales and player activity for PAYDAY 3 are currently significantly lower than the company would like. Starbreeze's focus and absolute priority is to identify changes that need to be implemented to ensure the game meets expectations. Together with co-publisher Plaion, Starbreeze is working to identify changes that can be implemented in both the short and long term. In February, the PAYDAY team will announce the changes and improvements that have been prioritized for implementation. It's clear that Starbreeze is still invested in trying to revive PAYDAY 3, but whether it will be successful remains to be seen. The player base for PAYDAY 2 remains strong, with more than 400,000 active players per month. Converting these players over to PAYDAY 3 offers, in our opinion, the best shot at revitalizing the player activity of PAYDAY 3. If the company is unable to revive PAYDAY 3 while revenues from PAYDAY 2 continue to decline, Starbreeze would be left without an obvious major revenue stream until the release of its next game, Project BAXTER, in 2026.