Starbreeze Q2 morning result: Better than expected results paving the way for a successful launch of PAYDAY 3

Starbreeze reported stronger than expected Q2 results this morning, with revenue and operating profit (EBIT) beating our estimates. Revenues were driven by higher than anticipated PAYDAY 2 sales that benefited from Starbreeze’s marketing strategy ahead of the launch of PAYDAY 3. Overall, the messaging from Starbreeze regarding PAYDAY 3 is positive, with good feedback received from the community and gaming journalists & influencers.

Revenue stronger than in previous quarters

Starbreeze’s Q2 revenue increased by 36% to SEK 43 million, significantly exceeding our estimate of SEK 33 million. The higher revenues were due to stronger than expected sales of PAYDAY 2, which accounted for 99% of the Q2 revenues. PAYDAY 2 sales were positively affected by marketing activities (Humble Bundle), strong sales during Steam’s summer sale, one-off revenue from platform owners, and a stronger dollar exchange rate.

EBIT and net profit better than expected

In Q2, Starbreeze’s operating profit (EBIT) decreased to SEK -3.0 million compared to SEK 3.4 million in Q2’22. The Q2 results were, however, better than our estimate of SEK -5.5 million, primarily due to stronger revenues than expected. EBIT being negative was to be expected as the organization is gearing up for the release of PAYDAY 3. Reported earnings per share significantly outperformed our estimate due to one-time positive income effects related to settling the renegotiation fee of the convertible loan. This led to Financial expenses coming in at SEK 27 million compared to our estimate of SEK -36 million.

The Year of PAYDAY

During the quarter, Starbreeze focused on creating the best possible prerequisites for a successful launch of PAYDAY 3 in 2023. This was started in June at the Xbox Showcase, where the first gameplay trailer was released. They followed up on this by inviting around a hundred journalists and influencers from all over the world to try out PAYDAY 3. According to Starbreeze, the reception has been fantastic, especially from the PAYDAY-community. This is also reflected in the membership growth of Starbreeze’s Nebula portal, that now has over a million members. In addition, as part of the PAYDAY 3 marketing campaign, Starbreeze offered PAYDAY 2 for free at the Epic Games Store for one week in June. During this week, more than 12 million people downloaded the game, highlighting the strong interest in the PAYDAY franchise. Starbreeze also announced project BAXTER (internal working title), which is the next game after PAYDAY 3. BAXTER is AAA cooperative multiplayer game. The game will be based on an iconic licensed brand characterized by collaborative experiences and storytelling in an expansive world. Starbreeze will act as both the developer and publisher but will also continually evaluate opportunities to add external partners for the project. This new game is expected to be launched in late 2025 or early 2026 and is included in our estimates.