Paradox Interactive AB (publ)

Hello, everyone, and welcome to the Q4 and Year-End Report from Paradox Interactive. With me, Fred…

And I'm Alex. Welcome, everyone.

Welcome. So we're going to guide you through the numbers and some of the releases and some of the comments as well.

I'll just warn you a bit upfront. We also made an acquisition today, it became -- it came through, Haemimont Games.

And we're not going to talk about Haemimont Games in this stream. So if you want to have more information about that, you will have to follow our newsletter or our postings in the future.

So we will hopefully announce something that we have going on together. But with that said, let's dig into the report.

As always -- very good. So we're -- Q4 has been a great quarter for us.

So we're ending the year confident about what's to come. We have many strong releases.

We released basically DLCs for all our major franchises, except for Europa Universalis IV in this quarter, which shows both on the top line and on the bottom line. We also have a number of good marketing activities.

We changed some in the pricing structure, and we've done a lot of good jobs all across the company, which led to this result. And last but not least is also the exchange tailwinds from currency gains from a weaker krona in this quarter.

But also this shows as well that the difference between the quarters is quite big. So we had a great EBIT result now because we had no write-offs at all, and we take more and more costs upfront as well.

So hopefully, in the future, we're going to avoid these big changes, and you're going to see a more consistent result on the bottom line. So at least that's our goal.

But if you summarize the year, the good underlying sales, a lot of the usual suspects are known IP and our known gamers. We've had some write-downs, most notably is Life by You, but we've had a couple of other games as well.

Some delays, Prison Architect 2, Bloodlines 2, both delayed. And we are continuing the work.

We've worked a lot with that in the past two, three years to make risk taking -- make it easier to oversee and manage risk when we manage the projects. So we won't have to close down projects that has cost more than $20 million, $25 million to make.

So the same with all third-party development is going through a different pipeline today, with more quality control and direct access to our teams. I'll comment a bit on Haemimont.

So I said I'm not going to answer any questions. But we've been working with Haemimont since 2017 and the game Surviving Mars when we first signed up with them.

It's a very good strategic fit for us. So they make management games just like we do as well with games like Cities: Skylines, Prison Architect and Surviving Mars.

And obviously, they share a lot of our nerdiness and culture they find in Paradox as well. And we have found during these eight years that we work together that we really have a good working relationship with the studio, and we are super happy to welcome them on board.

And it will be a wholly-owned subsidiary. They're situated in Sofia in Bulgaria, and it's just over 50 people in the studio at the moment.

And if you look at their games, Alien: Stranded Dawn with Frontier, Surviving Mars with us, they've also worked in the Tropico Franchise a couple of years back, and they also released Jagged Alliance 3 to critical acclaim all of these games. So it's one of the few studios that is 100% independent, and they basically made quality games for over 20 years in a row.

Super happy to have them on board.

Very exciting.

Very exciting. If you look at the releases, I said that we released for all major franchises, except for Europa Universalis IV.

We did Hearts of Iron. We did Stellaris and Stellaris for console as well, not least but not last, can't forget about the console players.

Victoria 3, Crusader Kings and console for Crusader Kings, Millennia and Age of Wonders on the strategy side as well as our first Content Creator Packs for Cities: Skylines II, no?

Yes.

Yes. Cities: Skylines II and for Cities: Skylines as well.

So busy quarter to say the least, and like we're going to see in the numbers, it shows there as well. We also released from Paradox Arc, Tlatoani in early access and Space Trash Scavenger in a 1.0 version.

So if you haven't checked them out, you really should.

Cool.

So it's time for your show, Alex. Down to the numbers.

Let's dig into them. Right.

So top line, revenues, SEK 709 million coming in Q4 of 2024 compared to SEK996 million of Q4 2023. So of course, a very tough quarter to compare with because back in Q4 2023, we released especially City: Skylines II with a very big impact on top line.

We also released Lamplighters, which was a failure financially, but it helped pushing up the top line. But -- so SEK709 million without coming out with any new games.

I'm pretty sure it's a record in terms of revenue for a quarter when we haven't released any new games.

Yes. It's also worth noting that we don't have any Game Pass Money, for example, in this quarter or anything else.

So everything here is basically underlying sales. It's very organic.

It's a very organic number.

Yes. Maybe one exception to that would be the release of City: Skylines II Content Creator Packs because when we released the game back in October 2023, we sold quite a lot of premium editions.

And we have been doing that up until now. And the prepaid revenue we get from that, we put on the balance sheet and we release it when we release the content.

So we unlock some other --

We have unlocked some of that money now in Q4. But it goes the other way around.

For example, on Hearts of Iron, the Expansion Pass, we released an Expansion Pass. I think it's -- is it for the first time we did it in Hearts of Iron?

It is the first time, yes.

So that generated a lot of sales. We got the money in, but we haven't recognized all that money.

Part of that is being pushed forward until we release the content...

First half of the year this year, probably.

Probably.

We'll see. No promises made.

Good. Good.

Right. So SEK709 million because we have released, as Fred said, on almost all big -- almost on all our core franchises, only Europa Universalis IV.

And when we do that, we get good revenues. And also the marketing activities that we have performed during the quarter have been very successful.

And they tend to be during Q4 because we have the autumn sale with Steam and the winter sale with Steam, and they are generally very good, but I would say, this year, it has been a bit extra. We have tried some heavy discounts on some of the products that have had a good impact as well.

So very strong quarter sales-wise. FX, you mentioned, Fred, it helps us or don't help us, but it impacts us a lot.

If we just compare Q4 '24 to Q4 '23, it's not much of a difference. The average in the quarter has been very similar, especially the dollar, but also the pound and the euro.

I think the pound went up 4%, dollar, maybe 1%, euro flat. But within the quarter, the movements have been bigger, and we will see that on a separate slide.

So top five contributors game-wise, Cities 1 and Cities 2, both on the top 5 list, which is, of course, very encouraging to see. We have had a bit of a challenge this year with Cities: Skylines II, but when we release content, it's very well appreciated among the players, which is very good to see.

So Cities: Skylines I and II on the top five list, Crusader Kings III as well, Hearts of Iron IV, of course, with a big expansion. And last but not least, Stellaris.

So the usual suspects, as you mentioned. Let's move on to the profit.

So operating profit, SEK395 million compared to SEK124 million of last year or Q4 2023. Q4 2023 was heavily pushed down due to Lamplighters that we mentioned earlier.

Lamplighters generated fairly okay revenues, but not in relation to how much the game had cost to develop. So I think that project impacted the operating profit with minus SEK250 million in Q4 2023.

But this year's -- or 2024 Q4, SEK395 million, a new record by far. Do you know which was the previous record quarter?

I should know this. Maybe --

It was Q2 2023. So we had a very similar quarter because we released --

Age of Wonders 4 was --

Age of Wonders 4, yes, and expansions and DLCs on almost all our games as well. So we did very similar revenue, but we have higher revenues this -- sorry, higher profit this year.

So I think we did SEK295 million back then. So SEK395 million.

So we are smashing that record massively, I would say. Profit after financial items, SEK404 million.

It's more than operating profit because we have a lot of cash assets, and we get interest on that. So that helps the profit as well.

Profit after tax, SEK311 million compared to SEK98 million the quarter one year before. So profit margin, 57%.

That is very high. It's not the record.

I went back to say I was sure it was a record, but I could actually find quarter that was slightly, slightly higher. I got a guess on that one as well.

Maybe release of Crusader Kings III. I don't know.

That was a good quarter as well. No, you had to go further back --

Cities: Skylines, maybe 2015, '16.

Yes, almost --

Yes. No, the release of Stellaris and Hearts of Iron IV second quarter, 2016.

Yes. So Q2 2016, Hearts of Iron IV and Stellaris, then we had slightly higher profit margins.

And it's fun because in Q4 2024 that we're talking about now, the very same games, Stellaris and Hearts of Iron IV, eight and half years later is contributing -- is being the top five contributors to the revenue and profit.

Still standing strong.

Eight and half years later, so that shows the strength, I think, in our games, in our business model.

Yes, the longevity of the games.

Yes. And so let's talk a bit more about the profit margin.

This is the most profitable thing we can do in our business, releasing DLCs and expansions. And especially when we do it on our big successful franchises, and it should be mentioned, especially when we do it on the old ones like Hearts of Iron IV and Stellaris because there, we still have the linear amortization model.

So we only amortized 1 18 in the release month. Since 2020, like for CK III and Victoria 3, we have this digressive amortization model where we take third in the first month, right.

So when we release on the old games, it gets an extra bump in the margin.

Makes sense.

So very good. Equity through asset ratio has gone up from 73% to 82%.

So very solid balance sheet. Average number of employees has gone down from 622, which was average in Q4 2023, to 574 Q4 of 2024.

And it's basically the shutdown of the Tectonic Studio and the Harebrained Schemes Studio.

But now we're adding another 50 people from Haemimont --

Exactly.

We are going to be back at over 600, next quarter.

Looking forward. So let's move on.

Right. So this chart shows four lines.

Green line is the revenue. The yellow, blue and red shows our three main cost items.

The revenue, we have talked about already, but what is shown in this chart is that it's very volatile. And it's worth pointing out, it has been like that.

It's volatile because the revenues are driven very much by what we release. The business is very similar in Q3 to Q4.

We haven't done that much change to the business. The difference is that in Q4, we came out with the releases on almost everything and in Q3, almost nothing.

And that makes the whole difference. It's almost SEK250 million in difference.

And if you look at the chart, you can see that we have come in into a bit of a trend where we, every second quarter, have a lot of releases and a lot of revenues, and every second quarter, we have much less releases and therefore, much less revenues. You can go back almost three years and see that trend.

And we don't give forward-looking statements, but for sure, it's going to continue to be volatile. And if a game has released content in one quarter, it's unlikely that it's going to release the next as well.

So with this big Q4, it's not a big guess that Q1 is going to be much lighter in terms of releases. So cost-wise, let's go through them a bit.

Part of the reason why the profit is so strong is that the costs haven't gone up despite us having released quite a lot. So let's start with the cost of goods sold.

So this is all the costs we have to kind of make the game. So costs for our internal studios, external studios, royalties we pay brands and other material properties that we have acquired throughout the years that we amortize regularly on.

So total COGS,SEK 263 million compared to SEK712 million. But it's -- let's go through it a bit more in detail.

Let's start with the amortizations. So amortizations for Q4 2024 came in at SEK91 million.

That was SEK295 million, the same quarter one year before. So but -- so it's almost -- it is SEK200 million -- more than SEK200 million less than it's Lamplighters that is -- yes, we did over --

We wrote off more than we needed to reflect the sales that wasn't. We did --

We did both. So first, we amortized according to plan.

I think it was SEK150 million. So that is the reason why this is down so much.

But -- so SEK91 million. If you compare that to Q3 and Q2, it's very similar.

We were at SEK96 million in Q3 and Q2. So despite us having released so much, we still have gone down a little bit.

And it's because it's not the releases of expansions in DLC that drives this much as releases of new big games still. And we haven't released any big games for quite some while.

So therefore, it goes up. What do we have -- what can we mention more?

Yes, Fred, you mentioned the write-downs. We have had zero write-downs in Q4 2024.

One year before, we had much more. I think, it was SEK175 million or something like that in write-downs on Lamplighters League.

Then I mentioned, we have -- we do it in a prudent way. I think when we acquire companies or assets, we like to amortize the acquisition costs, so we don't have too much on the balance sheet.

We have taken SEK14 million as cost in Q1 -- sorry, Q4 2024 from that. That's the acquisition of Playrion, World of Darkness, Across the Obelisk, for example.

It's gone down from SEK19 million one year ago, and that's because Prison Architect and Harebrained Schemes have been fully amortized. What more?

Royalties. Yeah, royalties has gone up from previous quarter.

I think it was -- how much -- it was SEK20 million back in Q3. Now it's up to SEK45 million.

That's because we have released on Cities and Age of Wonders because that's where we pay royalties, Age of Wonders in terms of earnout to the sellers of Triumph. But it's -- so SEK45 million in Q4 2024.

If we go back a year, Q4 2023, then it was SEK111 million because we had obviously the Cities: Skylines II release, which generated a lot of royalties. The final item in COGS is the non-capitalized development cost and the tech cost we have in the publishing.

So it's tech costs that we don't capitalize on. SEK105 million in Q4 2024 compared to SEK100 million Q4 2023.

So quite similar. That's about COGS.

We can mention something about selling expenses, too. We should -- SEK59 million in selling expenses down from SEK88 million one year before.

Of course, we didn't release any new games, so that keeps it lower. SEK58.5 million, it's not low.

It's quite a lot, but it's because we have released a lot of content.

No, we're active in marketing. Four quarters.

And so this is, of course, external expenses, but also the expenses for the whole marketing team.

And admin.

Admin tends to stay flat from quarter-to-quarter. It varies with a couple of million up and down.

But if you look back, you see the red line, it's at the bottom of the chart, it's very flat, which is good. Then we have two other items, other income and expenses, plus SEK32 million Q4 of last year compared to minus SEK45 million Q4 of the previous year.

And that is the dollar movement versus SEK during the quarter. So even if the average was the same or very similar between the quarters, the movements within the quarters were very different.

And Q4 2023, we had the dollar going down from SEK11 to SEK10, which impacted us negatively, of course, but minus SEK45 million. Q4 of last year, it went the other way.

So it impacted us positively. We also have -- within those SEK32 million, we also have the impact of selling back Mechabellum to the developer.

So Mechabellum was an Arc project that we released, I think, in the 1.0 version earlier last. Earlier --

Late '24, yes.

And we decided to part ways with the developer and sold back the game to them, and it generated some income that is shown here. Financial items we mentioned, it's the interest on our interest-bearing bank accounts.

So let's group the quarters together into four. So we see rolling 12 months.

We can see the trend is quite clear in terms of revenue. We have been going upwards quite a lot.

After 2020, started to be a bit more bumpy, but revenues has been sold in on quite a lot. Profit has had it pushed down since 2020, a lot from two big -- lately during the last 18 months, two big failures, [Indiscernible], Lamplighters League and Life by You.

It impacts the last 18 months with almost SEK500 million. So you see Q4 2024 coming up.

It's partially due to that, that we don't have any write-downs for Lamplighters in that number. And when we come to Q2 2025, we won't have any write-downs for Life by You either.

So that will be a release --

And as I mentioned, we use a different method of how to start and how to run game projects, which makes it a bit less risky for us. And we spend much less money upfront before we know if we want to continue with the game or not, which means as well on the flip side, we take a lot of costs upfront.

So in this 57% margin, we still have some games that we're paying for to be made into prototypes, where we hopefully follow through the whole way. But we cancel, I think, 70%, 80% of all the games that we start.

So it's a tough process. And -- but the big thing is getting to a no, as we say, as quickly as possible.

If we know -- if we don't want to make the game, we'll close it down. But then the cost is already taken.

So the hit on the specific quarter where the game is closed down, it's not going to be so big.

Very important. Yes --

Running cost for games.

Yes. So in the COGS, we have, as I mentioned, SEK105 million as cost -- tech costs that we take as cost directly.

Not everything is game development. Part is the tech organization we have in publishing.

We have to call them DevOps sometimes that do more generic development. But part of it is the Arc games.

Right. So I think this is cash flow always important and a very strong quarter cash flow-wise, let's say, SEK442 million as cash flow from the operating activities, very good, of course.

If you go back and compare it to one year ago, we had very strong cash flow at that point as well. We had much less profit, but the reason why the profit was low was due to the write-downs and amortization.

That doesn't impact cash in that quarter and there we see two very similar quarters. So we are getting the same amount of cash or slightly more the fourth quarter of 2024 than we did the year before when we released the guidance too.

So this shows how strong our business is just by releasing content on our existing games. And these are not new games.

These are old games. So very encouraging to see, I think.

Cash flow from investing activities, SEK159 million, very similar to one year ago when it was SEK146 million. But the cash flow from investing activities, just as cash flow from operating activities fluctuates a lot between the quarters.

It has to do how many milestones we approve, and they don't come evenly. So I -- so if you look over three, four quarters, you can see that we are now -- the last four quarters, we are at a much lower investing level than we were one year ago, and that has to do with Lamplighters and Life by You, two projects that we every year invested quite a lot in.

Since summer of 2024, we haven't invested anything in those two --

And we don't do forecasts. We've never done forecasts, but --

We don't share forecasts externally.

Very good way to put. I like that.

We don't share -- we actually do forecast internally. That's true.

But we don't share them because they're full of uncertainties that we don't want to spread around, right? But I think it's safe to say that the cash flow for '25 looks good.

Can we say that much?

It should be good, and then we'll say --

Okay. Are we happy with this slide?

Or do you want to comment anything more?

No.

No, this is the Q&A. My favorite part.

Yes. 30 minutes, so let's see -- I know that we got some questions already before the stream started and they tend to come in.

So the first one is for you, Fred. It's a long one.

It's been roughly 3 years since you, Fred, returned as CEO and the strategy of the company changed back to what it does best. Now that the core portfolio is performing well and the pipeline of games is almost clean of the decisions from the previous team, it seems like you can finally focus on building rather than fixing.

With this in mind, how do you see Paradox evolving over the next 5 to 10 years? Do you think it's about doing more of the same?

Or what does the Paradox Interactive with 2030 or 2035 look like? Several questions in one.

And you said, we have 30 minutes, you said.

No, for all the questions. I'll turn this one on.

Now but all in all, we are focusing now -- like we have 7 key franchises that we work with, and we are working to get more games into that, like stack of different franchises that we work with on an ongoing basis. We want to make games that can live for 20, 30 years and people can still play and enjoy them, and we can release content for them.

I think just what I'm looking at right now is that we're going to see much more of user-generated content in our games. And I think one of our great growth pivots in the future is going to come from user-generated content.

So I haven't stated this before openly. So maybe that's a great headline, right, I don't know.

But that's a part of it. I also think that we can use new methods to bring out content ourselves and to bring out games.

We're looking at a bit of different production methods together with third parties. There is also an opportunity.

I mean, we announced the acquisition of Haemimont Games today, and we have money in the bank. We have a good track record in the market mostly.

And I think a lot of people want to work with us. And since the market is in a crisis more or less and has been for over a year, at least our industry, I think there's going to be a lot of opportunities for mergers and acquisitions, not saying that we're going to do them because not all -- we want to make a certain type of game and we want to keep the Paradox formula, Paradox culture and the way we operate and do things.

And we're very, very selective when it comes to acquisitions as well. So Haemimont was perfect.

We've been dancing around for basically 5 years together and asking the question over and over. And finally, it came to a conclusion.

Was that even an answer to the question? I'm not sure.

I think so.

Yes, part of it. You can write me an e-mail, and I'll elaborate further on this.

Let's move on and see. I know there are several --

Now it's your turn to speak.

Let's see.

Alex, if Paradox doesn't have a major release in 2025 or if a release underperforms, how well positioned is the company to handle the financial impact?

It's a good question.

It is.

We are very well positioned to handle that because if you look at 2024, we generated a very strong Q4 and a fairly good full year without any major games being released. We released a couple of smaller games, like Millennia, Foundry, but they didn't contribute that much.

We didn't release any big games. We also had one huge cancellation in terms of Life by You that impact -- I think it -- the write-down was SEK208 million to SEK206 million, but the whole impact of the year was almost SEK250 million.

Yes, with marketing costs.

Marketing costs and other exactly. So without that, we had quite a good year.

So we are not dependent on neither releasing in the short term, at least, we're not dependent on releasing new games or that they perform. We have a very solid and strong business as is, which we're very happy about, right.

Next to you, Fred. Have you noticed any impacts from the recent AI advancements on game development efficiency?

How do you see AI influencing the future of ground strategy games?

No. AI is no silver bullet.

We can say that for certain, at least at the moment. And AI can help us be better and build better games and be smarter and work faster.

And I think we had a bit higher expectations for AI than has been delivered yet, but we follow AI development really closely, and we're super excited about what's going on. I think it's going to influence quite a lot in how we build and make games in the future, especially when it comes to different types of content production.

So yes, I mean, we -- I once said in an interview that I've never seen anything that will impact the industry as much as AI will. And I stand by that quote.

It's just that it's going to take a bit longer than I expected. I thought we would already be using more.

We use AI in most departments, your department, finance, legal, you use it. I use it from time to time.

And so it's in the organization. It's just that we're not doing it on scale in game development at the moment.

But I guess it's coming. Good.

Alex, what have been your biggest missteps in the past year, not you personally.

Probably the company --

And how do you plan to address them in '25?

Also a good question. Financially, the biggest mistake that became evident in the numbers was Life by You.

So we just mentioned it.

Financially.

Financially, SEK250 million in -- negative profit impact in 2024. And -- but all that failure didn't happen in 1 year.

It happened over a long time. And I think we have learned that lesson already from before because since -- it was when you came back, Fred, 3.5 years ago.

So since 3.5 years back, we have not started any expensive high-risk projects, you could say. So the first thing we do when we start a project is to check whether it's high risk or low risk.

If it's high risk, then we don't invest any SEK250 million into it. We invest very little, especially during the early stages.

And we try to be very scrutinizing and make sure that we find errors and cancel games early on or cancel projects early on. So I think those still come through are supposed to be --

Great when they come out, right?

Sure. But -- so I think we learned this lesson already before.

We had hopes and expectations on Life by You. But I think what perhaps we learned last year with Life by You was that if we do high-risk projects, it doesn't really matter if we have them in-house.

If they're high risk, they are high risk. Taking them in-house doesn't decrease the risk much.

It kind of increases the risk because then you sit with the responsibility for the studio in a different way.

The best ones are low-risk, high-reward projects. Those are the ones we like.

And we have them. I mean, making another DLC on Hearts of Iron and Stellaris, sure, it's a great effort and there is a lot of work, but the risk --

Is low.

The risk is low. The market risk, the development risk is very low, and the reward is very high.

So it's a very favorable business to be in once you have established by very strong franchises.

Right.

All right. More questions.

Fred, what role does Paradox play in the development and promotion of Paradox Arc games? How much of a priority is Paradox Arc within the company?

Yes. So Paradox Arc operates separately from the rest of the organization.

And one of the reasons is that new games is so much fun that if you start asking people about new games, they will just want to play them and be a part of it, right? But it's also very stressful.

It's a lot of pressure because you have to cancel a lot of games. And so it's not like a walk in the park to work with this either.

So it's a mixed bag of things. It's a lot of fun.

It's a lot of pressure. I spend an unreasonable amount of time actually with Paradox Arc because I love to work in the new game segments and see what's going on in the market and how to take things from a prototype to a full game.

So I want to at least -- I'm not active, but I want to at least see what's happening. But it's a great avenue for exploration for Paradox and because we are always in a growth mindset.

We always look for what can be the next great thing for Paradox and add to our portfolio. And we have a simple or a simple, but a formula that we follow that we -- in short, we call it Alice.

You can read more about that on our web page. We're 100% transparent that if you want to work with Paradox, we have a certain way of looking at games, and we have a certain type of games that we want to make.

So -- and that's for us to find the right developers to work with.

Now I'm just scrambling here, so we can take the next question.

Alex, this is one of the best questions. How are the questions for these streams selected?

I don't know.

I don't know either, but --

So the questions are coming in -- some are coming in earlier, but most of them are coming in during the morning once we have released the report. Maybe people think I write these questions to myself.

Maybe they do. But if you do, we don't take them because it's not you and I that choose them.

They are being brought up here...

Basically, we answer all questions that come in, basically. If it's not game related, like specific, like when is the next deal you'll see for Hearts of Iron.

It's like you have to talk to the Hearts of Iron team for that.

And we try to choose questions that has a more general relevance as well.

Company-wide questions.

All right. Perfect.

Fred, can you give an update on Prison Architect 2?

Actually, I approved this question, although it's a game-related question because a lot of people were asking. So first of all, have I played this game?

I have. Yes, I have over 200 hours in this game.

So I know it's a game. I know it's going to come out at some point.

What we need to do now is just polish the game and make sure that it's up to standards of what people can expect from the game. Prison Architect 1 was a great game.

It's a great game. And so Prison Architect 2 will come with expectations.

And we are right now working to try to fulfill the expectations of the gamers. And when the game is ready, we're going to release the game.

I can't say when now, but we have the best for the game in mind. That's it.

I hope that answers the question. But keep on following our news channels.

But yes, I'm going to play more this weekend. So I might keep you updated on what's happening.

Alex, how much costs were related to non-capitalized development costs and costs for development support operation and maintenance of games in this quarter?

Right.

Yes, that was a long complicated question.

Yes. So I mentioned it.

So it's under COGS. So it's a part where we don't capitalize development cost.

It's for the Arc games, for example, and the cost that we have in the publishing business. SEK 105 million in Q4 2024 and SEK 100 million in the quarter -- in the same quarter the year before.

Yes. So flat more or less.

How much of the sales come from the 2 new games from Arc, Tlatoani and Space Trash Scavenger in this quarter?

I don't have it, and we don't share revenue per game, but I would say very small.

Yes, it doesn't change the course of the company in any way, no. So it's small --

Yes, small. Very small.

Okay. Fred, are you still looking into bigger -- are you still looking into potential bigger acquisitions if anything comes up?

Or are your preference for smaller bolt-ons?

Right. I mean one concern we have when we do acquisitions is culture.

And we have a certain way of operating here, and we want to keep it that way. So I think making 2 big acquisitions is going to be problematic for us if it's not handled totally separate from what Paradox is doing.

But we're not an investment company or anything like that. We are a publishing and development company that tries to stay focused on what we do.

So smaller studios, hopefully, with IPs, if there are, might be interesting, but we have a short list of studios we would like to acquire, and we don't go around like shopping for anything. And most of those studios are not interested in selling in the first place.

So it's just studios that we have on our sort of wanted list. But we'll see what happens.

We're not actively being super aggressive in the market either. Alex, Q4 '24 revenues was clearly higher than what people expected and the previous quarters.

When you did not have releases. Given you have achieved it by just back catalog and DLCs, does it mean there is underlying change to back catalog growth and that we have to account for higher baseline in the next quarters, too?

Or was it just a one-off? It's a bit of a perfect storm this quarter, right?

We have to admit that -- it is some things just came together.

But it is a relevant question. Yes.

So the reason why Q4 is -- was it SEK250 million higher than Q3, it's due to what we have released and due to what marketing campaigns we have had. So it's not that we have lifted everything up to a new level that we try to do quarter by quarter by quarter as well.

But that is not the explanation. It's the releases of the DLCs on HOI, on Stellaris, on Cities, all that has helped.

So it's going to continue to fluctuate like before.

And like I mentioned before, we have no, for example, Game Pass Money in this quarter, which is worth mentioning because it means that the underlying sales is strong, even if we're helped by a weaker krona and a couple of other fronts.

So going forward, quarters where we release a lot are going to be great, quarters where we don't release a lot are going to be considerably much less revenue generating. Fred, 2025 is a crowded space on the release side.

How do you plan to optimize the event release window?

Yes. Everyone is talking about GTA, right?

When is GTA release? But to be honest, we do not focus on the competition.

We focus on our own games. Of course, when it specifically comes to GTA, I think everyone in the business has to sort of position yourselves towards that release.

But our games are niche, and we release them when they're ready for release. And that's the rule that we're going to follow in the future as well.

If there's a big reason to change it a couple of weeks back or forth, we might do that. But normally, we just set a release date and we release it because we know our market, we know our gamers.

And when the quality of the game is right, we think we can sell it. Last question.

Alex, Hearts of Iron IV, how was consumer interest in the new Expansion Pass? Is demand comparable to other games?

Yes. Let's say, Expansion Pass is something that we have noticed is very popular amongst the players.

So it's obviously the reason why we have started to do it for more and more of our franchises. And without going into the numbers, yes, it's been very popular for Hearts of Iron IV as well.

I think it's a great way to sell the games, both for us and for the players.

100%.

Was that the last question or -- out of time. 45 minutes.

Okay. Thank you very much.

Thanks for listening. And if you have any more questions, you have the [email protected], where your team happily answers or I can answer as well if you wanted to answer directly from me.

Thank you.

Thank you very much. And if not earlier, see you next quarter, the Q1 report, April, I don't know, April 25 or something like that.

Sometime in April.

Same time, same place.

Take care until then. Thank you.

Bye. Bye.