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Paradox Interactive AB (SE:PDX)
:PDX
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Paradox Interactive AB
(PDX)
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Rating:61Neutral
Price Target:
kr137.00
▼(-9.99% Downside)
The score is supported primarily by strong cash flow and a conservatively financed balance sheet, plus constructive operational commentary on the earnings call. It is held back by sharp profitability compression, weak technical setup (price below major moving averages with negative momentum), and an elevated P/E that makes the stock less forgiving if earnings remain volatile.
Positive Factors
High Profitability & Margins
Sustained high gross and net margins indicate durable pricing power and low incremental costs for digital products. This margin profile supports reinvestment in game development, funds marketing/DLC cycles, and provides a buffer through cyclical downturns in releases or sales.
Strong Cash Generation
Operating cash flow well above net income and positive free cash flow growth signal robust cash conversion from operations. This enables steady funding of long-term development pipelines, strategic acquisitions, and shareholder returns without relying on external financing.
Very Low Financial Leverage
Extremely low leverage and a high equity ratio provide financial flexibility to invest in studios and IP and to absorb cyclical earnings shocks. Strong ROE shows efficient capital use, facilitating M&A or heavier R&D spending while keeping balance sheet risk minimal.
Negative Factors
Revenue Declines & Inconsistency
Recurring revenue volatility driven by uneven release cadence creates forecasting and planning risk. When major title launches are sparse, sales and profitability can decline despite strong margins, pressuring long-term revenue growth and complicating resource allocation across studios.
Concentration of Releases
Heavy reliance on a narrow release window concentrates revenue and profit generation into specific quarters. Delays or underperformance on these slated releases can materially affect annual results, making growth lumpy and increasing execution risk for sustaining momentum.
Currency Exchange Exposure
Significant exposure to FX translation across global sales introduces structural volatility to reported revenue and margins. Persistent currency moves can erode top-line growth even with stable unit sales, necessitating active hedging or pricing strategies to protect long-term profitability.
Paradox Interactive AB (PDX) vs. iShares MSCI Sweden ETF (EWD)
Market Cap
kr13.68B
Dividend Yield3.16%
Average Volume (3M)76.68K
Price to Earnings (P/E)109.0
Beta (1Y)0.58
Revenue Growth-18.54%
EPS Growth71.38%
CountrySE
Employees596
SectorCommunication Services
Sector Strength97
IndustryElectronic Gaming & Multimedia
Share Statistics
EPS (TTM)1.46
Shares Outstanding105,623,024
10 Day Avg. Volume105,035
30 Day Avg. Volume76,677
Financial Highlights & Ratios
PEG Ratio-1.74
Price to Book (P/B)6.87
Price to Sales (P/S)7.84
P/FCF Ratio13.92
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
kr183.50Price Target Upside20.57% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Paradox Interactive AB Business Overview & Revenue Model
Company DescriptionParadox Interactive AB (publ) develops and publishes games and brands for PC, mobile, and console platforms primarily in North and Latin America, Europe, the Middle East, Africa, and the Asia Pacific region. The company's game portfolio comprises various franchises and brands, including Stellaris, Europa Universalis, Hearts of Iron, Crusader Kings, Cities: Skylines, Surviving Mars, Prison Architect, Magicka, Age of Wonders, Victoria, and the World of Darkness. Paradox Interactive AB (publ) was founded in 1998 and is headquartered in Stockholm, Sweden.
How the Company Makes MoneyParadox Interactive generates revenue through multiple streams, primarily from game sales, which include both physical and digital copies of its titles. The company has a robust model of releasing expansions and downloadable content (DLC) that provide additional gameplay, storylines, and features, which are often sold at a premium price, significantly boosting revenue from existing games. Additionally, Paradox employs a subscription model for some of its products, allowing players to access a library of games for a monthly fee. The company benefits from a strong presence on digital distribution platforms such as Steam and its own Paradox Store, which facilitates direct sales to consumers. Collaborations and partnerships with other developers and publishers also contribute to its revenue, as does merchandise linked to its popular franchises. Overall, the combination of game sales, DLC, subscriptions, and strategic partnerships forms the cornerstone of Paradox Interactive's financial success.
Paradox Interactive AB Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Neutral
The call communicated strong operational momentum: notable product releases, expanding franchises, solid cash generation (SEK 513m operating cash flow) and a strengthened balance sheet with a proposed dividend. However, reported profitability was materially impacted by a large, one-off write-down and elevated amortizations tied to Vampire: The Masquerade – Bloodlines 2, and the business faced FX headwinds (USD down ~12%, EUR down ~5-6%) that reduced reported revenue benefits. On a cash and operational basis the company appears healthy and strategically focused, but headline earnings were negative for the quarter due to one-time accounting charges.Q4-2025 Updates
Positive Updates
Revenue Growth and Quarterly Ranking
Q4 revenue SEK 875 million vs SEK 709 million in Q4 2024, an increase of 23%. This was the company's second-best revenue quarter on record.
Very Strong Operating Cash Flow
Cash flow from operating activities of SEK 513 million in Q4, described as exceptionally strong and close to record levels.
Successful New Releases and DLCs
Major releases and DLC performance: Europa Universalis 5 (well received), Crusader Kings III 'All Under Heaven' (map expansion to Japan), Cities: Skylines II 'Bridges & Ports' (strong reviews and sales), Stellaris: Infernals, Age of Wonders: Thrones of Blood, Victoria 3 'Iberian Twilight', Surviving Mars relaunch (good retention). These releases materially contributed to revenue.
Expansion of Core IP and New Franchises
Victoria 3 and Age of Wonders 4 established as additional core franchises with growing player numbers and improved retention; both added to the list of top revenue contributors.
Strategic M&A and Bringing IP In-House
Acquisition of Haemimont Games and bringing Cities: Skylines in-house noted as strategic moves; Haemimont added ~55 employees and early positive community effects observed for Cities: Skylines.
Healthy Balance Sheet and Capital Return
Equity-to-asset ratio at 79% (down slightly from 82%); company proposed a dividend of SEK 5 per share, indicating excess cash being returned to shareholders.
Monthly Active Users and User Base
Monthly active users cited at ~6 million (management notes occasional spikes above this and preference to report only stable million-level milestones).
Negative Updates
Large Write-downs Severely Impacting Profit
Operating profit (EBIT) in Q4 was negative SEK 245 million vs SEK 395 million in Q4 2024, a decline of SEK 640 million. The quarter included SEK 701 million in amortizations and write-downs related to Vampire: The Masquerade – Bloodlines 2, which drove most of the profit deterioration.
Profit After Tax and Margin Compression
Profit after tax fell to SEK 201 million from SEK 311 million (≈-35%), and reported profit margin moved from 57% in Q4 2024 to -28% in Q4 2025, a sharp swing of ~85 percentage points.
Significant Increase in COGS and Amortization
Cost of goods sold rose to ~SEK 1,000 million from SEK 263 million in the prior-year quarter (large increase driven by SEK 510 million amortization vs SEK 91 million prior year and SEK 355 million write-downs — the write-downs were 100% related to Bloodlines).
Foreign Exchange Headwinds
FX impacted top line negatively in the quarter: average USD weakened by ~12% and EUR down ~5-6% vs prior period, creating a material translation/headwind effect on reported revenues.
Higher Selling and Marketing Costs in Release Quarter
Selling expenses increased to SEK 84 million from SEK 59 million in Q4 2024, driven by marketing spend for new releases (Europa Universalis 5 and Bloodlines 2).
Net Profit vs Cash Flow Disconnect
Despite very strong operating cash flow (SEK 513 million), reported profitability was negative due to non-cash write-downs and amortizations, creating short-term profit volatility and lower reported earnings.
Headcount Increase Raises Operating Base
Average employees grew to 663 from 574 (increase of 89 employees, ~15.5%), largely due to acquisitions (Haemimont) and staffing to support Cities: Skylines — this raises fixed cost base going forward.
Limitations on Capital Allocation Tools
Management stated share buybacks are not a practical option while listed on Nasdaq First North, limiting one potential capital return mechanism (they favor dividends instead).
Company Guidance
Management guided that growth will come from a mix of live‑game content, sequels and new releases (notably Europa Universalis V, continued DLC cadence for Victoria 3 and Age of Wonders 4), with capital allocated primarily to development (cash invested in Q4 was SEK 145m, described as the new normal) and selective M&A while returning excess cash to shareholders (proposed dividend SEK 5; share buybacks not pursued on Nasdaq First North). They highlighted Q4 results of SEK 875m revenue (+23% y/y vs SEK 709m) and strong operating cash flow SEK 513m despite an EBIT loss of SEK 245m driven by major impairment items (management cited SEK 701m related to Vampire: Bloodlines 2 and also detailed amortization of SEK 510m and write‑downs of SEK 355m), profit after tax SEK 201m and margin -28% (vs 57% prior), equity/assets 79%, average employees 663 and ~6 million monthly active users (management targets a stable 7m before upgrading that metric). Management also warned of FX headwinds (USD ~-12% q/q, EUR ~-5–6%), said they do not hedge currency exposure, and emphasized prioritizing internal studios and live operations while keeping acquisitions and earn‑outs conservatively accounted.Paradox Interactive AB Financial Statement Overview
Summary
Strong cash generation and low leverage underpin financial strength (operating cash flow strong; free cash flow up sharply; debt-to-equity ~0.12). The main drag is sharply weaker 2025 profitability (gross and net margin compression and materially lower net income), which reduces earnings quality despite solid cash conversion.Income Statement
Revenue has grown modestly in 2025 (+8.2%), but the multi-year trajectory is choppy (decline in 2024; strong growth in 2022–2023). Profitability deteriorated sharply in 2025 versus 2024: gross margin fell to ~24% (from ~45%), and net margin compressed to ~5.7% (from ~26.6%), with net income down materially. While EBITDA margin remains very high, the step-down in gross and operating profitability in the latest year raises quality and sustainability questions.56
Neutral
Balance Sheet
The balance sheet looks conservatively financed with low leverage (debt-to-equity ~0.12 in 2025, historically even lower) and a sizable equity base. However, returns on equity weakened substantially in 2025 (~5%) versus the ~20–31% levels seen in 2022–2024, signaling lower profitability efficiency despite a still-strong capital structure.78
Positive
Cash Flow
Cash generation is a clear strength. Operating cash flow was strong in 2025 (~1.24B) and comfortably covered debt (~3.25x). Free cash flow expanded sharply in 2025 (+54.6%) and nearly matched net income (~1.0x), indicating solid cash conversion in the latest year. The main caution is volatility across years (including negative free cash flow in 2021 and a notable drop in 2024), which suggests swings in working capital and/or investment timing.86
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.19B | 2.20B | 2.64B | 1.97B | 1.45B |
| Gross Profit | 523.99M | 997.29M | 1.25B | 1.11B | 566.49M |
| EBITDA | 1.35B | 1.47B | 1.69B | 1.36B | 431.50M |
| Net Income | 125.46M | 584.63M | 530.63M | 708.71M | 247.77M |
Balance Sheet | |||||
| Total Assets | 3.17B | 3.53B | 3.58B | 3.14B | 2.52B |
| Cash, Cash Equivalents and Short-Term Investments | 1.38B | 1.47B | 1.30B | 747.51M | 599.72M |
| Total Debt | 302.64M | 64.79M | 108.58M | 140.46M | 168.97M |
| Total Liabilities | 671.30M | 622.71M | 959.67M | 849.05M | 861.13M |
| Stockholders Equity | 2.50B | 2.91B | 2.62B | 2.29B | 1.66B |
Cash Flow | |||||
| Free Cash Flow | 1.23B | 519.85M | 745.64M | 288.85M | -12.66M |
| Operating Cash Flow | 1.24B | 1.12B | 1.45B | 1.08B | 736.59M |
| Investing Cash Flow | -752.82M | -403.22M | -848.28M | -806.97M | -766.57M |
| Financing Cash Flow | -567.12M | -355.17M | -248.96M | -140.97M | -139.59M |
Paradox Interactive AB Technical Analysis
Negative
152.20
Price Trends
158.61
Negative
166.45
Negative
174.14
Negative
Market Momentum
-6.62
Positive
27.09
Positive
16.27
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SE:PDX, the sentiment is Negative. The current price of 152.2 is above the 20-day moving average (MA) of 149.66, below the 50-day MA of 158.61, and below the 200-day MA of 174.14, indicating a bearish trend. The MACD of -6.62 indicates Positive momentum. The RSI at 27.09 is Positive, neither overbought nor oversold. The STOCH value of 16.27 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SE:PDX.
Paradox Interactive AB Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | kr768.55M | 11.13 | 12.65% | 9.28% | -14.68% | -29.97% | |
64 Neutral | kr11.14B | 1.35 | 10.27% | ― | -46.66% | ― | |
61 Neutral | kr13.68B | 109.03 | 22.69% | 3.16% | -18.54% | 71.38% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
55 Neutral | kr12.71B | -61.64 | -1.61% | ― | 72.20% | -166.05% | |
52 Neutral | kr2.84B | -0.38 | ― | ― | -11.82% | -7499.16% | |
49 Neutral | kr1.09B | -6.25 | ― | ― | 1.74% | -5214.06% |
* Communication Services Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.