Paradox Interactive AB (publ)

Revenue in Q2 2026 was SEK 524 million, up 14% year over year from SEK 459 million. Operating profit was SEK 182 million versus SEK 133 million last year, and profit before tax was SEK 188 million versus SEK 139 million; profit margin was 36% versus 30%. Cost of goods sold was SEK 259 million, selling expenses were SEK 53 million, and admin expenses were SEK 33 million. Cash flow from operating activities was SEK 105 million, but management said that included a SEK 185 million payment for publishing rights, which would imply SEK 290 million excluding that outflow. Looking ahead, management did not give formal EBIT guidance, but said Q3 is typically slower than Q2, amortization from Europa Universalis V and Bloodlines 2 should come down, and Q3 marketing/listing costs are expected to be close to 0. They also said the share buyback program is SEK 200 million and that full-year shareholder distributions will be a little more than SEK 700 million including the prior dividend.

Fredrik Wester described the first half as solid with no major surprises and emphasized strong performance from the portfolio, especially the continued improvement in Cities: Skylines without new releases. He said Paradox remains focused on grand strategy at its core, but will continue experimenting around that formula and looking for external partners when the fit is right. His tone was upbeat and confident, especially on Gamescom, Prison Architect 2, and the console version of Cities: Skylines II, which he said is progressing well.

Alexander Bricca walked through a stronger quarter driven mainly by releases, with revenue up 14%, operating profit up 37%, and margin up to 36%. He noted FX was a roughly 2% headwind, admin expenses were SEK 33 million partly due to roughly SEK 3 million in main market listing costs, and COGS rose to SEK 259 million mainly because amortization of capitalized development increased to SEK 103 million. He also said royalties should decrease over time as Age of Wonders 4 earn-out ends and more revenue shifts to internally developed Cities content, and he tied the higher cash flow to a SEK 185 million publishing-rights payment that should reverse into future returns.

Analysts pressed management on third-party IPs, the logic of working with external developers, and the economics and protections around a SEK 30 million guarantee to an outside studio. Management said Paradox prefers to own its IP, but will work with external partners when the fit is strong, risk is manageable, and the deal is reasonable; they emphasized late-stage involvement, sequels, and proven studios as key risk reducers. They also explained that publishing deals often involve funding development in return for recoupment and revenue sharing after a threshold is reached, and said they do not provide formal EBIT guidance even as they expect Q3 to be seasonally weaker than Q2.