Here are Jenneli’s quick comments on Starbreeze’s Q3 results.
Starbreeze reported Q3 revenue in line with expectations, but adjusted profitability fell short of our forecasts, mainly due to higher-than-expected depreciations. As expected, the termination of the Baxter project led to a significant impairment, which dominated the headlines. While PAYDAY 2’s revenue surprised positively, PAYDAY 3’s revenue clearly fell short of our forecasts. The report offered limited updates on the implementation plan and future outlook, leaving key questions regarding the timing of accelerating content production and the contract work pipeline still open. We hope to get further clarity on these matters in the earnings webcast, which starts at 10:00 AM CEST.
And there are no changes in player data for Payday 3, so the promising start at the beginning of the year sharply turned back to its lowest figures… there’s a strong hate (PD3) and love (PD2) relationship towards Starbreeze’s products.
…but Payday 2 shifted to a subscription-based model during that quarter, so is there any information available on how many players have moved to PD2 because of this?
…will a similar thing happen to PD3?
…Payday 3 was previously promised to be converted to UE5 at some point, so now that the Baxter team has stopped, will this move quickly? Especially since Embark Studios, known for Arc Raiders, succeeded in its UE5 optimization, does Starbreeze still intend to implement an engine update?
Optimization would require expertise, and most of the Payday 2 developers left the company even before PD3’s release. Payday 3 and Baxter paint a grim picture of a company that only destroys its owners’ money without the ability to effectively create quality products. I am still of the opinion that all employees should be laid off and the remaining money distributed to the owners. Nothing will come of this business. The current situation is well illustrated by the fact that Starbreeze’s best employees now work either at Embark or MachineGames.
There isn’t much to share in the coffers; even those small amounts go purely into running the bureaucracy and finding a party that would then buy the PD license.
I’m just following this with interest… because one doesn’t know yet until the sign is finally on the door.
This is easy to follow when there are 2 games that need to bring money into the company, and one of them is keeping Starbreeze on life support. The other one (PD3) should somehow turn a new leaf.
The larger cash burn at least slowed down significantly when Baxter was discontinued; whether the pace is enough to turn that into a cash flow into the coffers in the future remains to be seen.
And I think that from that UE5 engine, one could try to disguise Payday 3 as version 2.0 with several new maps and other content, to see if this could still create a catalyst in the player base.
Christoffer and Atte have released a new company report on Starbreeze following the Q3 results.
Starbreeze reported Q3 revenue in line with expectations, but adjusted operating profit fell short of expectations primarily due to higher depreciation and amortization. PAYDAY 3 revenue was particularly low relative to our forecasts, but this was offset by the renewed strength of PAYDAY 2 following the introduction of a subscription model. As we understand it, monthly content updates for PD3 will begin from December onwards, and the company is offering shorter, continuous content plans instead of annual plans. However, visibility for new work-for-hire projects remains limited, and as the KRAFTON partnership nears completion, we have lowered our revenue assumptions due to timing effects. This, combined with changes in the expected revenue structure and slightly higher depreciation/amortization, led to downward revisions in our forecasts. Due to PD3’s continued low player activity, we believe the company has a lot to prove before a stronger scenario can be confidently priced in. Despite the low absolute valuation, the lack of clear short-term drivers keeps us on the sidelines. We reiterate our Reduce recommendation and lower our target price to SEK 0.14 (was SEK 0.15).
Christoffer has written a preview as Starbreeze reports its Q4 results on Thursday, Feb 19.
We expect the report to show moderate year-on-year revenue growth due to the quarter’s limited content offering and low player activity. While the termination of Project Baxter has streamlined the cost structure, which is expected to improve profitability, we believe the investment case remains heavily dependent on the company’s ability to revitalize player engagement and secure new work-for-hire projects. In the report and webcast, we are looking for comments on potential revenue drivers and the outlook for improved monetization, as well as progress toward positive cash flow in 2026.
Christoffer Jennel has written a quick comment on Starbreeze’s Q4 results.
Starbreeze reported Q4 revenue clearly below our expectations, and the miss was mainly due to weaker revenue from PAYDAY 3. Profitability also fell clearly short of our forecasts, reflecting lower revenue and overall higher costs. In our view, the company’s weak result highlights ongoing challenges in PAYDAY 3 player engagement and raises questions about the achievability of the 2026 positive cash flow target. We expect to make downward revisions to our forecasts following the report.
Here is the company report on Starbreeze from Christoffer and Atte following Q4.
Starbreeze reported Q4 revenue significantly weaker than our expectations, and the shortfall was primarily due to particularly weak PAYDAY 3 (“PD3”) revenue. Profitability also fell significantly short of our forecasts, reflecting not only lower revenue but also a cost structure that is adjusting more slowly than expected. Although the Skills 2.0 release was a significant milestone, its minimal impact on player activity and revenue reinforces our view that fundamental engagement challenges remain unresolved. With visibility into work-for-hire now even more limited following management’s cautious commentary and the termination of the KRAFTON partnership, we believe the path to positive cash flow in 2026 has become increasingly uncertain. As Starbreeze operates as a single-IP studio with growing execution pressures, we believe it still has much to prove before a stronger scenario can be priced in with confidence. We reiterate our Reduce recommendation and lower our target price to SEK 0.09 (from SEK 0.14).
Brilliant performance by management and proof that the strategy works, if the goal is to drive the company into bankruptcy.
Half of the cash was burned in a year, and at this rate, this was likely the final Q4 report. Cash and cash equivalents amounted to SEK 102.6 million (191.9).
The efficiency measures aren’t showing up in the results at all, and it begs the question: why does the company still have 143 employees? At this rate, it’s only a matter of time before the number of employees is 0.
Christoffer has written some comments regarding Starbreeze’s new partnership.
Starbreeze announced on Wednesday that it has entered into a partnership with VICE Studios to develop film and television adaptations of the PAYDAY franchise. We see this as a logical step in the company’s strategy to expand its core IP into a broader entertainment platform beyond the gaming world. Although the move supports the franchise’s long-term brand value, we believe it is still too early to assess its explicit financial impact, and the limited information regarding the deal’s structure, financial details, and timeline does not lead to changes in our forecasts at this stage.
Starbreeze announced on Tuesday that it has entered into a licensing partnership with Fast Travel Games to develop and publish a VR co-op heist game called PAYDAY: Aces High, slated for release in 2026. This announcement closely follows a partnership with VICE Studios for film and television adaptations, supporting the company’s strategy to expand the PAYDAY intellectual property into new formats and platforms. While we consider the continuous effort to leverage the franchise’s brand equity a logical strategic move, the licensing nature of the agreement and the relatively niche VR market lead us to expect a limited financial impact in the near future. Thus, the announcement does not lead to changes in our forecasts at this stage.
Here are Jennel’s pre-game thoughts as Starbreeze reports its Q1 results next Tuesday
We expect a significant decline in revenue and profitability year-on-year, primarily due to the conclusion of the KRAFTON work-for-hire engagement and ongoing engagement challenges with PAYDAY 3 (“PD3”). Although the company recently announced strategic partnership agreements regarding VR transmedia adaptations and Roblox, we consider the short-term financial impact to be limited. In the report, we are looking for qualitative comments on these new partnerships, as well as updates on execution and the outlook for stabilizing PD3’s performance and achieving positive cash flow, as Starbreeze navigates a period of weakened visibility in its work-for-hire pipeline.
Christoffer Jennel has provided his comments on Starbreeze’s Q1 results.
Starbreeze’s Q1 report fell short of our expectations across the board. The miss was primarily due to the weaker-than-expected performance of the PAYDAY franchise, particularly PAYDAY 3, which continues to struggle with player engagement despite recent content updates, game improvements, and the progression system overhaul. At the same time, high depreciation and restructuring items weighed on the bottom line. In our view, the earnings miss increases uncertainty regarding the company’s ability to reach its stated goal of positive cash flow in 2026 and suggests that the stabilization of the franchise we cautiously anticipated is not yet materializing.
