Remedy Entertainment Plc | Stock exchange release, August 11, 2023, at 09:00 a.m. (EEST)
Remedy Entertainment Plc | Half-Year Financial Report January–June 2023
Remedy Entertainment Plc: Investment phase continues with the Q4 release of Alan Wake 2 in sight
The response to the Alan Wake 2 marketing campaign has been promising
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 2023
• Revenue decreased by 5.3% to EUR 8.9 (9.4) million.
• EBITDA decreased to EUR -4.1 (-1.8) million.
• Operating profit (EBIT) was EUR -4.8 (-2.4) million, and the operating profit margin was -53.8% (-25.6%) of revenue.
• Cash flow from operations was EUR -7.0 (-8.3) million.
• Alan Wake 2 development has progressed well toward the Q4 release.
• In May, the Alan Wake 2 gameplay reveal trailer debuted at the PlayStation Showcase.
• In June, the Alan Wake 2 demo was presented to the US gaming media and influencers at Summer Games Fest. Selected European and Finnish outlets were invited to Remedy’s headquarters to see the same demo.
Highlights from January–June 2023
• Revenue decreased by 28.3% to EUR 15.8 (22.1) million.
• EBITDA was EUR -8.9 (1.5) million.
• Operating profit (EBIT) was EUR -10.4 (0.4) million, and the operating profit margin was -65.7% (1.6%) of revenue.
• Cash flow from operations was EUR -11.0 (9.4) million.
Key Figures
|
MEUR, IFRS, Group, unaudited |
4–6/2023 |
4–6/2022 |
1–6/2023 |
1–6/2022 |
1–12/2022 |
|
Revenue |
8.9 |
9.4 |
15.8 |
22.1 |
43.6 |
|
Growth in revenue, % |
-5.3% |
-0.2% |
-28.3% |
25.8% |
-2.5% |
|
EBITDA |
-4.1 |
-1.8 |
-8.9 |
1.5 |
1.9 |
|
Operating profit (EBIT) |
-4.8 |
-2.4 |
-10.4 |
0.4 |
-0.6 |
|
Operating profit, % of revenue |
-53.8% |
-25.6% |
-65.7% |
1.6% |
-1.3% |
|
Result for review period |
-2.7 |
-2.6 |
-8.3 |
-0.6 |
-1.7 |
|
Result for review period, % of revenue |
-30.0% |
-27.5% |
-52.5% |
-2.5% |
-4.0% |
|
Balance sheet total |
92.7 |
100.4 |
92.7 |
100.4 |
99.6 |
|
Cash flow from operations |
-7.0 |
-8.3 |
-11.0 |
9.4 |
11.1 |
|
Net cash |
31.7 |
53.1 |
31.7 |
53.1 |
49.9 |
|
Cash position |
28.9 |
53.6 |
28.9 |
53.6 |
49.0 |
|
Net gearing, % |
-39.3% |
-61.3% |
-39.3% |
-61.3% |
-56.4% |
|
Equity ratio, % |
86.8% |
86.2% |
86.8% |
86.2% |
88.8% |
|
Capital expenditures |
2.0 |
2.8 |
4.0 |
5.3 |
10.6 |
|
Average number of personnel during review period (FTE) |
334 |
300 |
331 |
295 |
307 |
|
Headcount at the end of period |
347 |
318 |
347 |
318 |
334 |
|
Earnings per share, € |
-0.20 |
-0.19 |
-0.62 |
-0.04 |
-0.13 |
|
Earnings per share, € (diluted) |
-0.19 |
-0.19 |
-0.60 |
-0.04 |
-0.13 |
|
Number of shares at the end of period |
13,477,900 |
13,302,700 |
13,477,900 |
13,302,700 |
13,448,600 |
Comments by CEO Tero Virtala
The marketing campaign for Alan Wake 2 began in the second quarter of 2023. At the May PlayStation Showcase, we unveiled a gameplay reveal trailer for Alan Wake 2. The organic engagement for the trailer was excellent. In June, together with Epic Games, we showed off a behind-closed-doors demo of Alan Wake 2 at the Los Angeles Summer Games Fest Play Days event. The response to the 35-minute live demo was very positive – every one of our 15 demo sessions was full, and we had to accommodate more people than originally anticipated. The game was especially praised by event participants for its stunning visuals, intricate sound design, compelling characterization of Saga and the deep narrative storytelling Remedy is known for. Alan Wake 2 was selected as the singular Most Anticipated Title as judged by more than 40 global media outlets that voted on the Game Critics Awards: Best of Summer Games Fest.
In the second quarter of 2023 our operating profit margin was negative as it was affected by higher investments in game projects than in the comparison period. One part of our strategy is to move our operations toward game publishing and take a stronger position in the value chain, which requires increased investments in our game brands. This has a negative impact on profitability in the short term but will increase the royalty potential for the upcoming years. During the first half of the year, we were able to continue hiring more talent across the organization resulting in higher personnel expenses than a year ago. We expect a slight increase in our total headcount due to targeted recruitments to further strengthen our teams. As many other companies have slowed down recruitments, our position to gain great talent continues to be strong.
Control 2 continues in the proof-of-concept stage. The development team focused on proving gameplay and world concepts as well as expanding the enemy palette. Codename Condor is also in the proof-of-concept stage. In the second quarter of the year, the team adjusted and finetuned the game concept, related designs, as well as the overall player experience, and focused on proving these in the game build. Progress has been good, and the project is nearing the production readiness stage.
Codename Vanguard continues in the proof-of-concept stage. The development team continued proving the core gameplay loop and the key metagame designs. The game has made better progress than before, and we are aiming to complete the proof-of-concept phase by the end of the year.
Max Payne 1&2 remake’s proof-of-concept stage, which started in the first quarter, has begun well. The project has made solid progress overall. The development team continues building on the solid foundation it has established.
The year has been busy so far for us Remedians. Alan Wake 2 is our largest game project to-date and will be a testimony of our ability to create immersive worlds and stories that keep players engaged. We are happy that the initial reception has been impressive and expect the return of Alan Wake to reinvigorate existing fans and expand the brand’s reach to new audiences. Accompanied with the other four games in our games pipeline, this release is the next step in our journey to release exciting new games for years to come.
2023 outlook (unchanged)
Remedy expects its revenue to decline from the previous year and its operating result to be negative.
Long-term business prospects
We have several games in development, each with a world-class partner and agreed long-term development fees. These development fees form a strong and predictable revenue basis for many years. On top of these revenues, we have the less predictable but highly scalable revenue streams arising from game royalties.
Our assumptions for individual game royalties are inherently conservative, due to the amount and nature of the variables impacting game sales. However, each high-quality game that stands out in the market has the potential to succeed in a bigger way, which would drive significant revenue and operating profit growth. Our games and brands are transforming into longer-lasting experiences that typically continue to sell for years.
In relation to our longer-term game roadmap, we now have five game projects in development and will have major game launches starting from 2023. The timing of individual game launches and new game development agreements may cause variation from quarter to quarter and year to year. With several games out in the market accruing royalties and several new ones in development, this variation is expected to decrease in the coming years.
Webcast and conference call
Remedy will host a webcast and conference call in English on its financial results for investors, analysts and media on Friday August 11, 2023, at 2:00 p.m. (EEST). Remedy’s financial results will be presented by CEO Tero Virtala and CFO Terhi Kauppi.
The Half-year financial report will be available after publication on Remedy’s Investor Relations website: https://investors.remedygames.com/announcements-and-releases/.
Webcast details:
Register in advance for the webcast:
https://remedy.zoom.us/webinar/register/WN_EhJhOgqNTjqtjS7JcgwazQ
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/kbfxsVlWtO.
Finland: +358 9 7252 2471
Sweden: +46 850 539 728
United Kingdom: +44 330 088 5830
United States: +1 646 558 8656
Webinar ID: 882 3531 0281
Passcode: 338475
A recording of the webcast will be available after the briefing at https://investors.remedygames.com/presentations/
More information
Veli-Pekka Puolakanaho, Head of Corporate Development and IR
Phone: +358 50 430 0936
Email: veli-pekka.puolakanaho@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.
The company employs over 370 game industry professionals from 32 different countries. Remedy’s shares are listed on Nasdaq Helsinki’s official list.
