Download PDF

1. Company Snapshot

1.a. Company Description

Paradox 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.

Show Full description

1.b. Last Insights on PDX

Paradox Interactive AB's recent performance was negatively impacted by the challenging European market conditions, as evident from the decline in the pan-European STOXX Europe 600 Index. The company's high-growth tech segment, which has been a key driver of innovation and adaptability, faces uncertainty amidst mixed economic signals, including steady inflation in Germany and a shrinking economy in France. Additionally, the company's recent earnings release was not publicly disclosed, making it difficult to assess its current financial performance.

1.c. Company Highlights

2. Paradox Interactive's Q3 2025: A Slower Quarter Amidst Currency Fluctuations

Paradox Interactive reported a revenue decrease of 9% to SEK 395 million in Q3 2025, primarily driven by currency fluctuations and fewer game releases. The operating profit was SEK 112 million, down from SEK 143 million in Q3 2024. The earnings per share (EPS) came out at 0.88, missing estimates of 1.31. The cost of goods sold was SEK 204 million, with amortization of capitalized game development being a significant component. The company's cash flow from operating activities was positive, at SEK 195 million, driven by operating profit and timing of tax payments.

Publication Date: Nov -12

📋 Highlights
  • Revenue Decline:: Q3 2025 revenue fell 9% to SEK 395 million, primarily due to fewer releases (e.g., Victoria 3) and a stronger kroner affecting international sales.
  • Operating Profit Drop:: Operating profit decreased to SEK 112 million from SEK 143 million in Q3 2024, driven by lower revenue and higher costs for Q4 game releases.
  • Strong Q4 Pipeline:: 2025 concludes with a busy Q4, including 2 base games, 1 remaster, 7 DLCs, 4 ports, and 7 content packs, reflecting strategic release timing for peak sales quarters.
  • Internal Studio Focus:: 90% of future revenue will come from fully owned studios (Paradox Development Studios), with smaller bets on external titles and scaled-up success.
  • Positive Cash Flow:: Operating cash flow reached SEK 195 million, supported by SEK 182 million in investing activities for game development, ensuring strong financial positioning for 2026.

Revenue Contributors and Pipeline

The top revenue contributors in Q3 2025 were Cities: Skylines 1 and 2, Crusader Kings III, Hearts of Iron IV, Stellaris, Victoria 3, and Age of Wonders 4, with the latter two showing positive player numbers, retention, and sales. As per Alexander Bricca, "the Victoria team has done a tremendous job in turning the game around," with the 1.9 Update and Charters of Commerce being cited as successes. The company is preparing for a busy Q4 with 2 new base game releases, 1 remaster, 7 DLCs, 4 ports, and 7 content creator packs.

Valuation Metrics

With a P/E Ratio of 28.36 and an EV/EBITDA of 13.82, the market seems to be pricing in a certain level of growth for Paradox Interactive. The ROE of 23.87% and ROIC of 23.31% indicate a strong return on equity and invested capital. The Dividend Yield is 2.8%, and the Free Cash Flow Yield is 3.97%. Analysts estimate next year's revenue growth at 9.5%, which may justify the current valuation multiples.

Strategy and Outlook

Paradox Interactive's future strategy will focus on internal development through Paradox Development Studios, with the majority of projects being done by fully owned studios. Fredrik Wester is confident in the pipeline beyond Q4, citing a strong cash flow, dominant games, and a strong customer base, making Paradox one of the best-positioned gaming companies. The pipeline includes a mix of smaller experimental titles and heavy hitters, with 2026 expected to be a great year.

Challenges and Opportunities

The company faces challenges in projecting sales due to the lack of historical correlation between Steam Wishlist numbers and actual sales for its major franchises. However, Paradox is exploring opportunities to expand its games into other media formats like television series or movies, particularly with the World of Darkness portfolio. Selling expenses in Q4 are expected to be high, with most marketing costs for new games and expansions recognized in that quarter.

3. NewsRoom

Card image cap

Undervalued Small Caps In Global With Insider Action December 2025

Dec -04

Source:

Card image cap

European Stocks That May Be Trading Below Their Estimated Value

Dec -04

Source:

Card image cap

High Growth Tech Stocks In Europe With Promising Potential

Dec -02

Source:

Card image cap

High Growth Tech Stocks To Watch In Europe November 2025

Nov -28

Source:

Card image cap

High Growth Tech Stocks in Europe to Watch This October 2025

Oct -30

Source:

Card image cap

Exploring 3 High Growth Tech Stocks in Europe

Oct -24

Source:

Card image cap

High Growth Tech Stocks in Europe Featuring Three Prominent Picks

Oct -01

Source:

Card image cap

Exploring Paradox Interactive And Two More High Growth Tech Stocks In Europe

Sep -02

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.16%)

6. Segments

Personal Computer

Expected Growth: 4%

Strong demand for gaming PCs, increasing adoption of PC-based simulation games, and Paradox Interactive's strategic expansion into new markets, such as Asia, drive the 4% growth of the Personal Computer segment. Additionally, the company's focus on developing engaging and immersive gaming experiences, as well as its commitment to innovation, contribute to the segment's growth.

Console

Expected Growth: 6%

Paradox Interactive's console segment growth is driven by increasing demand for strategy games, successful titles such as Hearts of Iron and Europa Universalis, expansion into new markets, and a growing gamer base. Additionally, the company's focus on PC-to-console game conversions and partnerships with console manufacturers contribute to its 6% growth.

Mobile

Expected Growth: 3%

Paradox Interactive's mobile segment growth is driven by increasing demand for mobile gaming, successful titles such as Prison Architect and Cities: Skylines, and strategic partnerships to expand its mobile presence. Additionally, the company's focus on game development and continuous updates contribute to the segment's growth.

Other

Expected Growth: 2%

Paradox Interactive AB's 'Other' segment growth is driven by increasing revenue from licensing and partnerships, expansion into new markets, and growing demand for its game development services. Additionally, the company's strategic acquisitions and investments in emerging technologies, such as AI and cloud gaming, are expected to contribute to future growth.

7. Detailed Products

Hearts of Iron

A grand strategy game series that focuses on World War II and the early Cold War era, allowing players to control any nation and guide it through the challenges of war, diplomacy, and nation-building.

Europa Universalis

A grand strategy game series that explores the early modern period, allowing players to guide a nation from the Renaissance to the early modern era.

Crusader Kings

A grand strategy game series that focuses on the medieval period, allowing players to control a noble family and guide it through the complexities of medieval politics and warfare.

Stellaris

A grand strategy game that explores the galaxy, allowing players to guide a civilization from its early days to a dominant intergalactic empire.

Cities: Skylines

A city-building simulation game that challenges players to design, manage, and grow a thriving metropolis.

Surviving Mars

A city-building simulation game that challenges players to establish a human settlement on Mars.

Age of Wonders

A turn-based strategy game series that explores fantasy worlds, allowing players to build and manage their own empire.

8. Paradox Interactive AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Paradox Interactive AB (publ) is medium, as there are some alternatives to their video games, but they have a strong brand and loyal customer base.

Bargaining Power Of Customers

The bargaining power of customers is low, as individual customers have limited influence over the company's pricing and product offerings.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low, as Paradox Interactive AB (publ) has a diverse supply chain and is not heavily dependent on a single supplier.

Threat Of New Entrants

The threat of new entrants is high, as the video game industry is highly competitive and new companies can easily enter the market with innovative products.

Intensity Of Rivalry

The intensity of rivalry is high, as Paradox Interactive AB (publ) operates in a highly competitive industry with many established players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 3.98%
Debt Cost 4.58%
Equity Weight 96.02%
Equity Cost 4.58%
WACC 4.58%
Leverage 4.14%

11. Quality Control: Paradox Interactive AB (publ) passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
PlayWay

A-Score: 7.1/10

Value: 4.7

Growth: 8.0

Quality: 9.8

Yield: 9.4

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

View Full Report
Stock-Card
GDEV

A-Score: 5.6/10

Value: 6.8

Growth: 6.4

Quality: 7.4

Yield: 8.8

Momentum: 4.0

Volatility: 0.0

1-Year Total Return ->

View Full Report
Stock-Card
Paradox Interactive

A-Score: 4.6/10

Value: 1.9

Growth: 8.2

Quality: 8.4

Yield: 3.1

Momentum: 1.5

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
11 bit studios

A-Score: 4.1/10

Value: 5.4

Growth: 4.4

Quality: 6.9

Yield: 0.0

Momentum: 5.5

Volatility: 2.3

1-Year Total Return ->

View Full Report
Stock-Card
Team17

A-Score: 3.9/10

Value: 4.9

Growth: 6.1

Quality: 3.4

Yield: 0.0

Momentum: 6.5

Volatility: 2.3

1-Year Total Return ->

View Full Report
Stock-Card
Stillfront

A-Score: 3.6/10

Value: 9.8

Growth: 4.4

Quality: 3.1

Yield: 0.0

Momentum: 3.5

Volatility: 1.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

165.3$

Current Price

165.3$

Potential

-0.00%

Expected Cash-Flows