Starbreeze

Starbreeze's Q1 results missed our already-cautious estimates on both revenue and profitability, with player engagement remaining weak despite recent game updates.

The miss was driven primarily by weaker-than-anticipated PAYDAY franchise performance, which continues to struggle with player engagement despite recent content updates, game improvements, and progression system overhaul.

We expect a significant year-on-year decline in both revenue and profitability, primarily driven by the wind-down of the KRAFTON work-for-hire partnership and ongoing engagement challenges for PAYDAY 3 ("PD3").

While we view the continued effort to leverage the franchise's brand equity as a logical strategic move, the licensing nature of the deal and the relatively niche VR market lead us to expect a limited financial impact in the near term.

Starbreeze announced on Wednesday that it has entered into a partnership with VICE Studios to develop film and television adaptations based on the PAYDAY franchise.

Starbreeze delivered Q4 revenue clearly below our expectations, with the shortfall primarily driven by a particularly weak PAYDAY 3 (“PD3”) contribution.

Starbreeze delivered Q4 revenue clearly below our expectations, with the shortfall primarily driven by weaker PAYDAY 3 contribution.

We expect the report to show moderating year-on-year revenue growth due to the quarter’s limited content delivery and muted player activity.