Remedy Entertainment Oy · OMXHEX:REMEDY

Remedy Entertainment Oy — FY2023 Earnings Presentation

60 slides from Remedy Entertainment Oy's earnings presentation, Mar 20, 2024

Slide 1: Financial Statement January–December 2023
Financial Statement January–December 2023 MARCH 20, 2024 © REMEDY ENTERTAINMENT 2024
Slide 2: Agenda
AGENDA © REMEDY ENTERTAINMENT 2024 1 Q4 2023 Review 2 Q4 and FY 2023 Financial Results 3 Outlook 4 Status Update Tero Virtala Terhi Kauppi CEO CFO 5 Questions & Answers
Slide 3: Q4 and Full Year 2023 Review
Q4 and Full Year 2023 Review Tero Virtala, CEO
Slide 4: Q4 2023 Highlights
Q4 2023 HIGHLIGHTS © REMEDY ENTERTAINMENT 2024 ‒ Revenue decreased by 24.4% to 10.3 M€ (13.6) ‒ EBITDA decreased to -3.9 M€ (2.8) ‒ Operating profit -12.8 M€ (2.1), operating profit margin -123.9% (15.6%) ‒ Cash flow from operations 0.1 M€ (-3.8) ‒ Alan Wake 2 was launched on October 27, 2023 ‒ Alan
Slide 5: Full Year 2023 Highlights
FULL YEAR 2023 HIGHLIGHTS © REMEDY ENTERTAINMENT 2024 ‒ Revenue decreased by 22.2% to 33.9 M€ (43.6) ‒ EBITDA decreased to -17.0 M€ (1.9) ‒ Operating profit -28.7 M€ (-0.6), operating profit margin -84.4% (-1.3%) ‒ Cash flow from operations -16.0 M€ (11.1) ‒ Alan Wake 2 was launched on October 27, 2
Slide 6: Alan Wake 2 Development and Road to Launch
ALAN WAKE 2 DEVELOPMENT AND ROAD TO LAUNCH © REMEDY ENTERTAINMENT 2024 ‒ Intensive year of development and launch preparations. ‒ To finalize the game and ensure top quality, we kept more developers for a longer time with the project than initially planned. ‒ While this caused a scarcity of talents
Slide 7: Alan Wake 2 review scores
ALAN WAKE If 10/10 10/10 10/10 10/10 10/10 10/10 10/10 10/10 Thesixthaxis Gamereactor UK GamesRadar+ XboxEra Player 2 95/10 5/5 5/5 5/5 45/5 5/5 | 5/5 | 9/0 eenRant. «= = ss )~—SSC~*~CS~*«Stertcinent Geely = TheGamer S.I/10 99/10 9.5/10 99/10 9.5/10 9/10 S/10 9/10 Press Start COGconnected Gaming Bib
Slide 8: Accolades Across the Games Industry
ACCOLADES ACROSS THE GAMES INDUSTRY © REMEDY ENTERTAINMENT 2024 Over 200 awards
Slide 9: Alan Wake Sales and the Future
ALAN WAKE 2 SALES AND THE FUTURE © REMEDY ENTERTAINMENT 2024 1M 1.3M Units sold Units sold by the end of by the beginning of Q4 2023 February 2024
Slide 10: Alan Wake 2: Good Games Sell for a Long Time
ALAN WAKE 2: GOOD GAMES SELL FOR A LONG TIME. © REMEDY ENTERTAINMENT 2024 Alan Wake is in the very early phase of sales: We have so far just reached part of the fanbase, and not yet the larger audiences. Based on Control-learnings (2019 – 2023), there is lot of sales potential ahead of us. Genre try
Slide 11: Current Project Portfolio
CURRENT PROJECT PORTFOLIO © REMEDY ENTERTAINMENT 2024 Alan Wake Alan Wake II Condor* Control 2 Max Payne Kestrel * * Remastered 1&2 remake LAUNCHED LAUNCHED LAUNCHED PRODUCTION READINESS PROOF-OF-CONCEPT PRODUCTION READINESS CONCEPT WITH WITH WITH * project codename
Slide 12: Max Payne 1&2 Remake
MAX PAYNE 1&2 REMAKE © REMEDY ENTERTAINMENT 2024 ‒ Revive one of game industry iconic franchises with Rockstar Games. ‒ Development budget in the same range as Alan Wake 2: Max Payne is a significant project with great future potential. ‒ Development has progressed according to plans and project is
Slide 13: Condor
CONDOR © REMEDY ENTERTAINMENT 2024 ‒ Co-op multiplayer game in the world of Control ‒ The game is playable, with proven core gameplay loop. ‒ Playtests show positive response for fun and engaging gameplay, as well as for the collaborative aspect of the game. ‒ Full production is expected to begin at
Slide 14: Control 2
CONTROL 2 © REMEDY ENTERTAINMENT 2024 ‒ Big sequel to Control. Our next step towards longer-engaging (single-player) direction. ‒ The game is playable. Significant proof of concept goals have been achieved including e.g. combat, world, gameplay, and visuals. ‒ Internal and external playtests are ver
Slide 15: Acquiring Full Rights to the Control Franchise
ACQUIRING FULL RIGHTS TO THE CONTROL FRANCHISE FROM 505 GAMES © REMEDY ENTERTAINMENT 2024 ‒ Remedy’s aim is to systematically grow Control into a major gaming franchise. This aim, and actions required, were not aligned with our partner’s interest and abilities. ‒ In February 2024, we acquired all pu
Slide 16: Q4 and FY 2023 Financial Results
Q4 and FY 2023 Financial Results Terhi Kauppi, CFO
Slide 17: Q4 2023: Revenue Decreased Y-o-Y with Less Development Fees
Q4 2023: REVENUE DECREASED Y-O-Y WITH LESS DEVELOPMENT FEES © REMEDY ENTERTAINMENT 2024 19.8 1.4 13.6 0.9 10.3 18.4 2.7 12.7 7.6 Q4 2021 Q4 2022 Q4 2023 Royalties (EURm) Development Fees (EURm)
Slide 18: Historical Breakdown of Revenue
HISTORICAL BREAKDOWN OF REVENUE © REMEDY ENTERTAINMENT 2024 -24% 13.6 12.7 0.9 1.0 10.3 9.4 8.9 7.9 7.8 2.7 2.0 6.9 1.0 0.4 1.1 12.7 0.5 11.6 7.4 7.5 7.9 7.6 6.4 6.7 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Royalties (EURm) Development Fees (EURm)
Slide 19: Q4 2023: Operating Profit Impacted by Vanguard Write-off
Q4 2023: SIGNIFICANT IMPACT ON OPERATING PROFIT BY ONE-OFF ITEM - THE VANGUARD WRITE-OFF. © REMEDY ENTERTAINMENT 2024 10.3 52.2% 15.6% 2.1 -123.9% -12.8 Q4 2021 Q4 2022 Q4 2023 Q4 2021 Q4 2022 Q4 2023 Operating Profit (EURm) Operating Profit Margin (%)
Slide 20: FY 2023: Decline in Revenues
FY 2023: -22.2% DECLINE IN REVENUES ORIGINATED FROM REMEDY HAVING RELATIVELY MORE CO-FINANCED PROJECTS THAN IN 2022 © REMEDY ENTERTAINMENT 2024 44.7 43.6 8.8 4.3 33.9 5.2 39.3 36.0 28.8 FY 2021 FY 2022 FY 2023 Royalties (EURm) Development Fees (EURm)
Slide 21: FY 2023: Operating Profit and Vanguard Write-off
FY 2023: LESS DEVELOPMENT FEES TO COVER DEVELOPMENT EXPENSES AND THE ONE-OFF IMPACT FROM VANGUARD ASSET WRITE-OFF REFLECTED IN OPERATING PROFIT. © REMEDY ENTERTAINMENT 2024 11.4 25.5% -1.3% -0.6 -84.4% -28.6 FY 2021 FY 2022 FY 2023 FY 2021 FY 2022 FY 2023 Operating Profit (EURm) Operating Profit Mar
Slide 22: Q4 2023: Personnel and External Development Costs
Q4 2023: PERSONNEL AND EXTERNAL DEVELOPMENT COSTS INCREASED Y-O-Y WITH LOWER LEVEL OF CAPITALIZED DEVELOPMENT COSTS © REMEDY ENTERTAINMENT 2024 2.0 2.0 2.1 2.0 1.3 1.4 1.1 1.0 -3.6 -3.8 -4.5 -4.3 -4.7 -4.9 -4.9 -5.7 -6.3 -6.5 -6.9 -6.9 -6.8 -7.5 -7.6 -7.6 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2
Slide 23: Q4 2023: Operating Cash Flow Improved
Q4 2023: OPERATING CASH FLOW IMPROVED © REMEDY ENTERTAINMENT 2024 18.0 4.7 0.1 -3.8 -3.9 -5.1 -7.0 -8.3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2022 2022 2022 2022 2023 2023 2023 2023 Operating Cash Flow (EURm)
Slide 24: Q4 2023: Cash Position Stable vs. Previous Quarter
Q4 2023: CASH POSITION STABLE VS. PREVIOUS QUARTER, BUT Y-O-Y SIGNIFICANTLY IMPACTED BY OWN INVESTMENTS TO GAME PROJECTS. © REMEDY ENTERTAINMENT 2024 73.4 7.0 63.3 60.4 6.8 55.9 6.8 49.7 6.8 9.9 39.0 66.4 10.1 31.7 30.4 53.6 56.5 10.0 10.3 49.0 39.8 28.9 21.7 20.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2022 2022 2
Slide 25: Historical Revenue and Profitability Profile
HISTORICAL REVENUE AND PROFITABILITY PROFILE © REMEDY ENTERTAINMENT 2024 FAS IFRS 50 40 44.7 43.6 45 41.1 35 40 30 35 33.9 31.6 25.5 24.1 30 25 20.6 25 18.9 20 17.6 20.1 20 17.2 15.5 16.4 15 15 13.7 11.7 9.8 11.9 10.5 10 10 6.1 4.7 3.8 4.7 5 3.0 5 2.4 1.7 0 -1.3 0 -5 -5 -10 -80 -15 -84.4 -20 -85 201
Slide 26: Multi-Project Future: Balancing Risk and Reward
MULTI-PROJECT FUTURE WITH MORE GAMES: BALANCING RISK AND REWARD © REMEDY ENTERTAINMENT 2024 Self-publishing Co-publishing Reward possibility Own IP with a publishing partner Codename Unassigned Kestrel Partner IP Risk
Slide 27: Multi-Project Future: Balancing Risk and Reward
MULTI-PROJECT FUTURE WITH MORE GAMES: BALANCING RISK AND REWARD © REMEDY ENTERTAINMENT 2024
Slide 28: Illustrative Example of Reward Potential
ILLUSTRATIVE EXAMPLE OF REWARD POTENTIAL © REMEDY ENTERTAINMENT 2024 All scenarios expect a development budget of 30 and a marketing budget of 5 Partner Partner Partner Partner Self- deal deal deal deal publishing Case 1 Case 2 Case 3 Case 4 Development fees paid by a partner (%) 100% 75% 100% 50% 0
Slide 29: Dividend Proposal
DIVIDEND PROPOSAL © REMEDY ENTERTAINMENT 2024 The Board of Directors proposes that no dividend will be paid for the year 2023.
Slide 30: Outlook
Outlook Tero Virtala, CEO
Slide 31: Outlook for 2024
OUTLOOK FOR 2024 © REMEDY ENTERTAINMENT 2024 Remedy expects its revenue to increase from the previous year and operating profit (EBIT) to improve. The revenue growth rate and EBIT improvement are meaningfully dependent on the choice between self- publishing and/or choosing a new publishing partner f
Slide 33: Guidelines We Have Followed Since 2016
GUIDELINES WE HAVE FOLLOWED SINCE 2016 © REMEDY ENTERTAINMENT 2024 ‒ Develop longer-engaging games on top of our proven strengths. ‒ Create and own growing game brands. ‒ Build a scalable multi-project organization. ‒ Strengthen our position in the value chain.
Slide 34: Growing Our Multi-Project Capabilities
GROWING OUR MULTI-PROJECT CAPABILITIES AND ITERATING FROM LEARNINGS © REMEDY ENTERTAINMENT 2024 450 6 5 5 400 5 350 4 4 4 300 4 3 250 3 GAME 385 200 366 PROJECTS 2 320 289 150 2 (end of year) 264 100 219 159 1 PEOPLE 50 0 0 2017 2018 2019 2020 2021 2022 2023 Transforming Heavy Building Stockholm Way
Slide 35: We Have Launched Good Games, But Not Yet Major Commercial Hits
WE HAVE BEEN ABLE TO LAUNCH GOOD GAMES, BUT NOT YET MAJOR COMMERCIAL HITS. © REMEDY ENTERTAINMENT 2024 2019 2021 2022 2023 • Sales of 4 m units • Sales of 1.5 m units • Work for hire • Sales of 1.3 m units by • Metacritic score 84 • Metacritic score 79 • Mixed player reception early February 2024 fo
Slide 36: 2023 Focus Was on Five Projects
2023 FOCUS WAS ON FIVE PROJECTS © REMEDY ENTERTAINMENT 2024 MAX PAYNE VANGUARD/ ALAN WAKE 2 CONDOR CONTROL 2 1&2 REMAKE KESTREL Four larger projects that continue in 2024, took major steps forward, and are now in much stronger position than they were in 2023.
Slide 37: We Now Have Two Established Franchises
WE NOW HAVE TWO ESTABLISHED FRANCHISES © REMEDY ENTERTAINMENT 2024 REMEDY CONNECTED UNIVERSE Supernatural Atmospheric Action Horror Player Driven Deep Narrative Explorable Colorful Strange World Characters CONTROL ALAN WAKE ‒ Control in 2019 ‒ Alan Wake in 2010 ‒ Control 2 ‒ Alan Wake’s American Nig
Slide 38: Key Operational Developments in 2023 and Early 2024
KEY OPERATIONAL DEVELOPMENTS IN 2023 AND EARLY 2024 © REMEDY ENTERTAINMENT 2024 ‒ Alan Wake 2 development into a great ‒ Clarifications to the game portfolio game and a successful launch ‒ Developments in portfolio and ‒ Mostly good project progress despite project management Alan Wake 2 keeping peo
Slide 39: Future Direction
© REMEDY ENTERTAINMENT 2024 In 2023 we successfully launched Alan Wake 2 and were able to advance other game projects. We also clarified our portfolio and partnerships, building a stronger basis for 2024 onwards. Based on this, we are currently in the process of updating our strategy. In that work,
Slide 40: Principles That Guide Us
PRINCIPLES THAT GUIDE US © REMEDY ENTERTAINMENT 2024 1 Increased focus and synergies 2 Great games earning back at least double the money invested 3 Growing franchises 4 Strengthened position to maximize the franchise potential
Slide 43: Project portfolio focus and synergies
© REMEDY ENTERTAINMENT 2024 In the past years, our project portfolio grew quite rapidly slightly too wide. Moving forward, we will focus to ensure that step-by-step our games become larger successes, and that we have even more capabilities to build, utilize and benefit from synergies across our game
Slide 44: Build and Utilize Synergies
BUILD AND UTILIZE SYNERGIES: BIGGER AND BETTER GAMES EFFICIENTLY, NEW INNOVATION WHERE IT MATTERS THE MOST © REMEDY ENTERTAINMENT 2024 Actively sharing resources and knowledge GAME 1 GAME 2 GAME 3 ... GAME Shareable assets Systematically utilizing, improving, Content pipelines and creating new resou
Slide 45: 2. Great Games Earning Back at Least Double the Money Invested
© REMEDY ENTERTAINMENT 2024 2. Great games earning back at least double the money invested
Slide 46: Reaching Major Commercial Success
WITH OUR GAMES AND SKILLS, WE CAN REACH MAJOR COMMERCIAL SUCCESS © REMEDY ENTERTAINMENT 2024 Minimum target for every future game: Earn back at least double the money invested. ‒ get back the money invested into a game ‒ generate profits to pay the development and marketing of the next game ‒ enable
Slide 47: Reaching the Right Balance
REACHING THE RIGHT BALANCE WITH © REMEDY ENTERTAINMENT 2024 Great games that gradually expand Successful marketing, sales and the audience and can sell more community management Well managed productions where Right publishing model and ambitions, capabilities, budget and partnerships for each game s
Slide 49: We Have Two Key Business Areas
WE HAVE TWO KEY BUSINESS AREAS THAT SUPPORT EACH OTHER © REMEDY ENTERTAINMENT 2024 OWN FRANCHISES PARTNER FRANCHISE Self-publishing / co-publishing / publishing by partner Work-for-hire CONTROL ALAN WAKE MAX PAYNE Control Alan Wake Control 2 Alan Wake 2 Max Payne 1 & 2 Remake Condor Alan Wake Remast
Slide 50: Objective with the Partner Franchise
OBJECTIVE WITH THE PARTNER FRANCHISE © REMEDY ENTERTAINMENT 2024 MAKE AN EXCELLENT, BUILD A STRONG, COMMERCIALLY SUCCESSFUL REMEDY ACTION- MAX PAYNE 1&2 REMAKE GAME TEAM Reaching these objectives will give us significant strategic options for the longer-term future, both in relation to ‒ potential p
Slide 51: Objective with Our Own Franchises
OBJECTIVE WITH OUR OWN FRANCHISES © REMEDY ENTERTAINMENT 2024 By 2030 we will grow CONTROL AND ALAN WAKE FROM TO ESTABLISHED SUPER FRANCHISES FRANCHISES
Slide 52: From Established to Super Franchises
CONTROL AND ALAN WAKE © REMEDY ENTERTAINMENT 2024 FROM TO ESTABLISHED SUPER FRANCHISES FRANCHISES ‒ Based on 1-2 games, no regular sequels yet. ‒ Based on 3-4 games, regular sequels. ‒ Highly appreciated and well-known by ‒ Highly appreciated among core players a subset of core players. and well-kno
Slide 53: Franchises Grow Step by Step
FRANCHISES GROW STEP BY STEP AND OFFER POTENTIAL FOR NEW EXPERIENCES AND AUDIENCES © REMEDY ENTERTAINMENT 2024 AAA SEQUELS Spin-offs / Multiplayer games
Slide 54: 4. Aim for a Strong Position to Maximize Franchise Potential
© REMEDY ENTERTAINMENT 2024 4. Aim for a strong position to maximize the franchise potential
Slide 55: Stronger Position in the Value Chain
© REMEDY ENTERTAINMENT 2024 From 2016 onwards we have built a stronger position in the value chain. We are now in a unique situation: the future of both Alan Wake and Control is fully in our hands. We will carefully evaluate the next steps.
Slide 56: Step-by-Step Strengthening Our Position in the Value Chain
STEP-BY-STEP STRENGTHENING OUR POSITION IN THE VALUE CHAIN © REMEDY ENTERTAINMENT 2024 SELF- Control (2025 onwards) PUBLISHED Future model for our other games is being evaluated. Condor 505 Partner had long-term REMEDY FRANCHISE, Control 2 sequel rights CO-PUBLISHED Partner has selected Vanguard / K
Slide 57: Evaluating the Model to Succeed with a Game
EVALUATING THE MODEL TO SUCCEED WITH A GAME, GROW THE FRANCHISE AND MAINTAIN CONTROL © REMEDY ENTERTAINMENT 2024 PUBLISHING CO- SELF- BY PARTNER PUBLISHING PUBLISHING
Slide 59: Summary
SUMMARY © REMEDY ENTERTAINMENT 2024 ‒ We have two established own franchises, Control and Alan Wake, with major growth potential. ‒ Unique situation: We are free to decide the best way forward with both Control and Alan Wake. ‒ Max Payne is an excellent fit to us, and important game with both short-
Slide 60: Contact
Contact: ir@remedygames.com investors.remedygames.com RemedyGames

Remedy Entertainment — FY2023 Earnings Presentation on 6ix

Remedy Entertainment Oy — FY2023 Earnings Presentation

Slide 1: Financial Statement January–December 2023

Slide 2: Agenda

Slide 3: Q4 and Full Year 2023 Review

Slide 4: Q4 2023 Highlights

Slide 5: Full Year 2023 Highlights

Slide 6: Alan Wake 2 Development and Road to Launch

Slide 7: Alan Wake 2 review scores

Slide 8: Accolades Across the Games Industry

Slide 9: Alan Wake Sales and the Future

Slide 10: Alan Wake 2: Good Games Sell for a Long Time

Slide 11: Current Project Portfolio

Slide 12: Max Payne 1&2 Remake

Slide 13: Condor

Slide 14: Control 2

Slide 15: Acquiring Full Rights to the Control Franchise

Slide 16: Q4 and FY 2023 Financial Results

Slide 17: Q4 2023: Revenue Decreased Y-o-Y with Less Development Fees

Slide 18: Historical Breakdown of Revenue

Slide 19: Q4 2023: Operating Profit Impacted by Vanguard Write-off

Slide 20: FY 2023: Decline in Revenues

Slide 21: FY 2023: Operating Profit and Vanguard Write-off

Slide 22: Q4 2023: Personnel and External Development Costs

Slide 23: Q4 2023: Operating Cash Flow Improved

Slide 24: Q4 2023: Cash Position Stable vs. Previous Quarter

Slide 25: Historical Revenue and Profitability Profile

Slide 26: Multi-Project Future: Balancing Risk and Reward

Slide 27: Multi-Project Future: Balancing Risk and Reward

Slide 28: Illustrative Example of Reward Potential

Slide 29: Dividend Proposal

Slide 30: Outlook

Slide 31: Outlook for 2024

Slide 32: Status Update

Slide 33: Guidelines We Have Followed Since 2016

Slide 34: Growing Our Multi-Project Capabilities

Slide 35: We Have Launched Good Games, But Not Yet Major Commercial Hits

Slide 36: 2023 Focus Was on Five Projects

Slide 37: We Now Have Two Established Franchises

Slide 38: Key Operational Developments in 2023 and Early 2024

Slide 39: Future Direction

Slide 40: Principles That Guide Us

Slide 41: 1. Increased Focus and Synergies

Slide 42: Our Focus on the Market

Slide 43: Project portfolio focus and synergies

Slide 44: Build and Utilize Synergies

Slide 45: 2. Great Games Earning Back at Least Double the Money Invested

Slide 46: Reaching Major Commercial Success

Slide 47: Reaching the Right Balance

Slide 48: 3. Grow Franchises

Slide 49: We Have Two Key Business Areas

Slide 50: Objective with the Partner Franchise

Slide 51: Objective with Our Own Franchises

Slide 52: From Established to Super Franchises

Slide 53: Franchises Grow Step by Step

Slide 54: 4. Aim for a Strong Position to Maximize Franchise Potential

Slide 55: Stronger Position in the Value Chain

Slide 56: Step-by-Step Strengthening Our Position in the Value Chain

Slide 57: Evaluating the Model to Succeed with a Game

Slide 58: Conclusion

Slide 59: Summary

Slide 60: Contact