Paradox Interactive has published its financial report for the full year ended December 31, 2023. Despite strong revenue growth, the Swedish company is not satisfied with the quality and commercial performance of some of its games.
Financial highlights
- According to its year-end report, Paradox generated a record SEK 2.64 billion ($252.5 million) in revenue between January and December 2023, up 34% compared to the previous year.
- Operating profit decreased by 26% year-over-year to SEK 657.9 million ($62.8 million).
- Cost of goods sold in the second quarter amounted to SEK 1.96 billion ($187.5 million). This includes game development, support and operation of existing projects, royalties, and revenue-based payments to studios.
Paradox’s quarterly revenues and operating profit
- The US accounted for 86.4% of the company’s full-year revenue. The share of domestic sales (Sweden) was 1.9%, while the rest of Europe accounted for nearly 10% of the total.
- PC remained the main platform for Paradox Interactive, accounting for 83.4% of its total revenue It is followed by console (11.7%) and mobile (2.5%).
Game sales and plans for the future
Paradox Interactive currently has 10 “active games”, which receive regular paid DLCs and other content updates. The list includes Hearts of Iron IV, Crusader Kings III, Europa Universalis IV, Victoria 3, Stellaris, as well as two new titles released in 2023 — Cities: Skylines II and Age of Wonders 4.
Overall, these active games have over 6 million monthly active users (MAU).
Cities: Skylines II was Paradox’s flagship new game in the fourth quarter, having already sold over 1 million copies globally. It also ranked 10th in peak CCU among all new Steam releases last year, with over 104k concurrent players.
However, the company has mixed feelings about its launch. “We are upset that we didn’t live up to players’ performance expectations and couldn’t release on all platforms at the same time,” CEO Fredrik Wester said.
The game still has a “Mixed” rating on Steam, with 59% of the 33k user reviews being positive. But Paradox is committed to improving Cities: Skylines II, with Wester saying that “it is clear that we can and must do better.”
Speaking about The Lamplighters League, the CEO reminded that the company decided to write down the entire value of the game. Its impact on profit before taxes amounted to SEK 250.4 million ($24 million), but it won’t affect Paradox’s long-term finances.
Right now, the company has nine games in its pipeline, including life sim Life by You, Vampire: The Masquerade – Bloodlines 2 (currently developed by The Chinese Room), first-person factory builder Foundry, 4X strategy Millennia, and prison management sim Prison Architect 2.
“We are debt-free with a strong balance sheet, a substantial cash position and a good cash flow, this gives us good preconditions for growing and taking advantage of the opportunities that arise in uncertain times,” Wester concluded.