Remedy Entertainment Plc: Half year financial report January-June 2024: Codename Condor and Max Payne 1&2 remake in full production and Alan Wake 2 Night Springs expansion launched

Remedy Entertainment Plc Stock exchange release August 9, 2024, at 09:00 a.m. EEST

Remedy Entertainment Plc's Half year financial report January–June 2024

Codename Condor and Max Payne 1&2 remake in full production and Alan Wake 2 Night Springs expansion launched

Higher revenue and improved profitability versus the comparison period

The Half year financial report is unaudited. Figures in parentheses refer to the comparison period in the previous year, unless otherwise stated.

Highlights from April–June 2024

Revenue increased by 16.2% to EUR 10.3 (8.9) million.
EBITDA was EUR -2.4 (-4.1) million.
Operating profit (EBIT) was EUR -3.2 (-4.8) million, and the operating profit margin was -31.0% (-53.8%) of revenue.
Cash flow from operations was EUR 0.9 (-7.0) million.
In June 2024, Remedy launched Alan Wake 2’s first expansion Night Springs.
Control 2 progressed to the production readiness stage and Max Payne 1&2 remake entered the full production stage.
After the review period, in August 2024, Santtu Kallionpää was appointed Chief Financial Officer.

Highlights from January–June 2024

Revenue increased by 33.7% to EUR 21.1 (15.8) million.
EBITDA was EUR -3.6 (-8.9) million.
Operating profit (EBIT) was EUR -5.3 (-10.4) million, and the operating profit margin was -25.0% (-65.7%) of revenue.
Cash flow from operations was EUR 4.2 (-11.0) million.
In February 2024, Remedy acquired full rights to the Control franchise from 505 Games. Through the transaction, all rights to Control, codename Condor, Control 2, and all future Control products reverted to Remedy.

Key Figures

MEUR, IFRS, Group, unaudited	4–6/2024	4–6/2023	1–6/2024	1–6/2023	1–12/2023
Revenue	10.3	8.9	21.1	15.8	33.9
Growth in revenue, %	16.2%	-5.3%	33.7%	-28.3%	-22.2%
EBITDA	-2.4	-4.1	-3.6	-8.9	-17.0
Operating profit (EBIT)	-3.2	-4.8	-5.3	-10.4	-28.6
Operating profit, % of revenue	-31.0%	-53.8%	-25.0%	-65.7%	-84.4%
Result for review period	-2.2	-2.7	-4.2	-8.3	-22.7
Result for review period, % of revenue	-21.4%	-30.0%	-19.9%	-52.5%	-66.8%
Balance sheet total	90.3	92.7	90.3	92.7	79.3
Cash flow from operations	0.9	-7.0	4.2	-11.0	-16.0
Net cash	19.0	31.7	19.0	31.7	23.8
Cash and cash equivalents	22.4	28.9	22.4	28.9	20.1
Net gearing, %	-29.1%	-39.3%	-29.1%	-39.3%	-35.1%
Equity ratio, %	72.3%	86.8%	72.3%	86.8%	85.5%
Capital expenditures	3.4	2.0	23.0*	4.0	10.0
Average number of personnel during review period (FTE)	350	334	348	331	334
Headcount at the end of period	361	347	361	347	352
Earnings per share, €	-0.16	-0.20	-0.31	-0.62	-1.68
Earnings per share, € (diluted)	-0.16	-0.19	-0.31	-0.60	-1.66
Number of shares at the end of period	13,552,651	13,477,900	13,552,651	13,477,900	13,490,151

*Contains 16.9 million invested in publishing rights of Control franchise

Comments by CEO Tero Virtala

In the second quarter of 2024, revenue increased 16% from a year ago to EUR 10.3 million. Development fees increased from the comparison period due to higher development fees from Max Payne 1&2 remake. Royalties consisted mainly of game sales of Control and Alan Wake Remastered. Alan Wake 2 did not yet generate royalties. In the second quarter, operating loss was EUR 3.2 million, improving by EUR 1.6 million from the comparison period.

Games portfolio – steady progress in games development

In May, we announced the cancellation of codename Kestrel. This brought increased focus and better development synergies and enabled us to move experienced developers into other game projects.

One highlight of the quarter was the release of the Night Springs expansion for Alan Wake 2. The press reviews and fan feedback for the expansion have been excellent. In June, Remedy and Epic Games announced that the Physical Deluxe Edition of Alan Wake 2 is coming out in October and a Collector’s Edition will ship in December. At the time of publishing this report, Alan Wake 2 has recouped most of its development and marketing expenses.

Codename Condor is in full production. The development team has worked on multiple maps and different mission types, and we have organized a growing amount of internal and limited external playtesting for feature validation and feedback.

Control 2 has progressed to the production readiness stage. The development team reached an important milestone in delivering a build of the game showcasing several important features in playable form. This has supported the ongoing business negotiations. The development team is working towards scaling up the production of the project.

Max Payne 1&2 remake progressed from production readiness to the full production stage. The development team has been working towards developing the game to an early functional state from beginning to end.

Taking time to make the right decisions

Remedy has two games in full production and one in the production readiness stage. This is a great milestone for us and a result of improved processes and ways of working. To be ready to take on the challenges of the next phases of our strategy, we have taken steps to strengthen our core management team.

With full control of the IP and publishing rights of Control and Alan Wake, we can choose how to bring our future games to the market. We have been weighing self-publishing and related business models, as well as discussing different partner publishing opportunities.

We are preparing to take a more significant role in growing the two franchises and especially in the way we commercialize, market, and publish our games. We look forward to sharing more about the strategy towards the end of the year.

Outlook 2024 (unchanged)

Remedy expects its revenue to increase from the previous year and operating profit (EBIT) to improve.

The revenue growth rate and EBIT improvement are meaningfully dependent on the choice between self-publishing and/or choosing a new publishing partner for the games in the Control franchise (codename Condor and Control 2).

We will specify the Outlook for 2024 when the decision for the business model and the potential agreements for Control 2 and Condor have been made.

Long-term business prospects

We have two established own franchises, Control and Alan Wake, which are linked through the Remedy Connected Universe. Growing and expanding these franchises will be a key part of our future. In addition, we work with a partner franchise Max Payne that was originally created by Remedy.

Games portfolio

Overview

All games in development at Remedy made progress during the second quarter of 2024. We have re-allocated certain development team members to strengthen the different game teams’ needs in specific areas of development.

One of the quarter's highlights was the June 8, release of the Night Springs expansion for Alan Wake 2. This coincided with the announcement of the physical Deluxe Edition of Alan Wake 2 and the limited Collector’s Edition, which will be released in October and December 2024, respectively.

At their Worldwide Developer Conference on June 10, 2024, Apple announced that Control Ultimate Edition, developed by Apple and Remedy, is coming to Apple silicon Macs. The release is expected to happen in 2024.

As gamers like to spend more time on their beloved franchises, it has become increasingly important to continue to maintain our existing games. To ensure we look after our games as well as possible and service our player base, we formed a new, dedicated team to manage our portfolio of games currently available on the market.

Alan Wake 2

In the past quarter, the Alan Wake 2 development team finished work on the Night Springs expansion and Photo mode and progressed in the design work of the development of The Lake House expansion.

The Night Springs expansion was announced at Summer Games Fest and released on June 8, 2024. The reviews have been excellent across the board. At the time of publication of this report, the Metacritic score for Night Springs stands at 85.

Remedy and Epic Games announced the Physical Deluxe Edition of Alan Wake 2 coming on October 22, 2024, and a Collector’s Edition produced by Limited Run Games shipping in December. The Collector’s Edition has been keenly requested by our fan base and the Physical Deluxe Edition will help in giving the game added exposure.

Through iam8bit.com, another Airam Oh Deer Diner thermos batch was released on June 11, 2024, and was sold out in minutes.

Codename Condor

Stage gate status: in full production

The development team has worked on multiple maps and different mission types, and we have organized a growing amount of internal and limited external playtesting for feature validation and feedback.

Control 2

Stage gate status: passed the proof-of-concept stage and has progressed to the production readiness stage during the second quarter of 2024

The development team reached an important milestone in delivering a build of the game that showcased several important features in playable form. This was used in a large-scale internal playtest to gather valuable feedback. The development team is working towards scaling up the project's production.

Max Payne 1&2 remake

Stage gate status: passed the production readiness stage and has progressed to the full production stage during the second quarter of 2024

The development team has been working towards developing the game to an early functional state from beginning to end while focusing on key differentiating gameplay features.

Webcast and conference call

Remedy will host a webcast and conference call in English on its H1 2024 financial results for investors, analysts and media on August 9, 2024, at 2:00 p.m. (EEST). Remedy’s financial results will be presented by CEO Tero Virtala.

The half-year financial report will be available after publication on Remedy’s Investor website: https://investors.remedygames.com/financials-and-reports/financial-reports/.

Webcast details:

https://remedy.zoom.us/j/82829148142?pwd=zCNw0z0T5o6TOOhrD93OmF0JgbGg0X.1

After registering, you will receive a confirmation email containing information about joining the webcast.

Conference call details:

Dial in by calling your local phone number a few minutes before the briefing begins. International numbers are available at: https://remedy.zoom.us/u/kbZXDFBZgc.

Finland: +358 9 7252 2471

Sweden: +46 850 539 728

United Kingdom: +44 330 088 5830

United States: +1 646 558 8656

Webinar ID: 857 828 2914 8142

Passcode: 487991

A recording of the webcast will be available afterwards on Remedy’s Investor website: https://investors.remedygames.com/financials-and-reports/webcasts-and-presentations/.

More information

Liisa Eloranta, Senior Investor Relations Specialist

Phone: +358 50 4334 992

Email: liisa.eloranta@remedygames.com

Remedy in brief

Remedy Entertainment Plc is a pioneering, globally renowned video game company founded in 1995 and headquartered in Finland with an office in Stockholm, Sweden. Known for its story-driven and visually stunning action games, Remedy has created multiple successful, critically acclaimed franchises such as Control, Alan Wake and Max Payne. Remedy also develops its own Northlight game engine and tools technology that powers many of its games. Remedy’s shares are listed on Nasdaq Helsinki’s main list.