Paradox Interactive FY2023 Q3 Earnings Release

Oct, 2023 *Please note that this is a translation for information purposes only –
in case of any discrepancies between this version and the Swedish,
the Swedish version shall prevail.

INTERIM REPORT
JANUAR Y – SEPTEMBER 202 3

INTERIM REPORT , JANUARY – SEPTEMBER 2023 2

INTERIM REPORT
JANUARY – SEPTEMBER 2023
THIRD QUARTER
• Revenues amounted to MSEK 426.4 (MSEK 458. 0),
a decrease by 7 % compared to the same period
last year.
• Operating profit amounted to MSEK 85.4 (MSEK
220.6 ), a decrease by 61 %.
• Profit after financial items amounted to MSEK 88.5
(MSEK 219.5), and profit after tax amounted to
MSEK 69.3 (MSEK 175.9).
• Cash flow from operating activities amounted to
MSEK 260.1 (MSEK 242.3 ), and cash flow from
investing activities amounted to MSEK -359.1
(MSEK -151.4 ). Investing activities include MSEK
-198.1 (0.0 MSEK) of short -term investments in
bonds.
• By the end of the period cash amounted to MSEK
734.9 (MSEK 665.9 ).
• Earnings per share before dilution amounted to
SEK 0.66 (SEK 1.6 7) and after dilution SEK 0.65
(SEK 1.6 7).
• Revenues in the quarter are mainly attributable to
Cities : Skylines, Crusader Kings III, Europa
Universalis IV, Hearts of Iron IV and Stellaris.
IMPORTANT EVENTS THIRD QUARTER
• New downloadable content was released to
games during the period; Wards & Wardens to
Crusader Kings III, Dawn of Wonder to Victoria 3,
and Sands of Ulminin to Across the Obelisk.
FIRST NINE MONTHS 2023
• Revenues amounted to MSEK 1,646.5 (MSEK
1,392.9 ), an increase by 18 % compared to the
same period last year.
• Operating profit amounted to MSEK 534.0 (MSEK
642.7 ), a de crease by 17 %.
• Profit after financial items amounted to MSEK
556.5 (MSEK 640.2 ), and profit after tax amounted
to MSEK 432.4 (MSEK 514 .5).
• Earnings per share before dilution amounted to
SEK 4.09 (SEK 4.87 ) and after dilution SEK 4.06
(SEK 4.86 ).
SUBSEQUENT EVENTS
• The new game The Lamplighters League,
developed by Harebrained Schemes was released
for PC and console. After revised sales forecasts, it
was decided to write down the game’s capitalised
development by MSEK 171 in addition to
amortisation according to plan . The game’s impact
on profit before tax for the fourth quarter is
estimated to amount to MSEK -248.
• The new game Cities: Skylines II, developed by
Colossal Order, was released for PC.
• The new game Star Trek: Infinite, developed by
Nimble Giant Entertainment, was released for PC.

INTERIM REPORT , JANUARY – SEPTEMBER 2023 3
COMMENTS BY THE CEO
WITH A CONSTANT FOCUS ON THE FUTURE
As we often point out, our quarters have significant
variations depending on relea ses. The third quarter
of the year is an example of that, as it has been one of
our thinnest quarters on the release side in a long
time. At the same time, we’ve focused a lot on the
future. Despite this, the revenue is at a reasonable
level and was mainly driven by back -catalogue sales
and sales activities during the quarter. Costs are at a
somewhat higher level than usual, largely driven by
marketing of upcoming games. Overall, it results in a
profit that is lower than what we are used to.
Regarding DLC for our live games, the low release
rate is , to some extent , an effect of a high release rate
in the second quarter and having many planned for
the fourth. Despite that, we should be able to
perform better.
Overall, a lot of focus has been on what lies ahead.
Not least of all, we’ve been spending a lot of time
looking towards October’s biggest game release,
Cities: Skylines II. Our core games have a long
lifespan, and it is their player engagement over time
that is crucial. At the time of writing, Cities: Skylines II
has been in players’ hands for about 36 hours. So far,
we can state that initial player numbers are at a high
level and sales are off to a good start. Performance
does not yet live up to the playe rs’ expectations, but
together with the developer we are hard at work with
optimi sing the game through continuous updates.
We also released Star Trek: Infinite and The
Lamplighters League after the end of the quarter.
Star Trek: Infinite is our first licensing game, based on
one of the world’s strongest sci-fi brands, which we
hope will help us attract new players to the grand
strategy genre. The Lamplighters League is a good
game with many strengths but, as we previously
reported, it has not sold anywhere near what we had
expected.
Games are inherently risky projects, and to continue
growing we will need to continue to take risks. The
difference, however, is that since 2021 we have a
clearer strategy for building our portfolio and for risk –
taking : Stock up and Break -out. That means that we
start new project on one out of two premises : either
sequels in existing franchises or new titles where we
deem that the risk is lower, and then we’re prepared
to invest more. Or we look for growth potential in
new territor ies , but then with a wider variety of
projects and with much smaller sums.
We have also announced two new titles around the
end of the period : the 4X strategy game Millennia and
factory builder F OUNDRY , both of which are slated for
release next year and which we look forward to
adding to the portfolio.
Finally, we really look forward to continuing to build
on Cities: Skylines II and our other core games and to
continue providing our players with fantastic and
endless gaming experiences.

Fredrik Wester, CEO

INTERIM REPORT , JANUARY – SEPTEMBER 2023 4
PARADOX INTERACTIVE
AT A GLANCE
Paradox Interactive is one of the premier developers and publishers of strategy and management games for PC
and consoles. By developing long -lived games with downloadable content, renewing its game portfolio with
engaging games and having a close relationship to its players, the company creates the strategy and management
segments’ best gaming experiences.
The group today consists of publishing business and seven studios in six countries that develop gaming experiences
for the company’s over five million monthly active players. Amongst its most important active games are Cities:
Skylines II, Hearts of Iron IV, Crusader Kings III, Europa Universalis IV, Victoria 3, Stellaris and Age of Wonders 4.
Paradox strives for a healthy profit margin, a stable operating cash flow and strong growth. Thus, enabling stable
operations and continuous investments in the company’s future.

5 +
Million MAU

1 1
Active games
35 %
R12 profit margin

9
Games in pipeline

Rolling 12 month revenues and operating profit

Quarterly revenues and operating profit
0
500
1 000
1 500
2 000
2 500
Rolling 12 months revenue Rolling 12 months operating profit -200
0
200
400
600
800
Revenues Operating profit

INTERIM REPORT , JANUARY – SEPTEMBER 2023 5
RELEASE S IN THE PERIOD

CRUSADER KINGS III: WARDS & WARDENS
Release date: 22 August 2023
Platforms: PC
Price: USD 4.99
Description: Child regents and guardians take the lead role in Wards & Wardens.
The theme is c hosen by the Crusader Kings community, and deals with the unique
challenge of raising young princes and nobles in a world where eternal glory is one
battle away and danger lurks in every shadow.
Publisher: Paradox Interactive
Developer: Paradox Development Studio

ACROSS THE OBELISK: SANDS OF ULMININ
Release date: 16 August 2023
Platforms: PC
Price: USD 19.99
Description: In Sands of Ulminin , players can delve into desert canyons, solve the
mysteries of the pyramids, and discover what lurks beneath. The expansion
introduces two new heroes, a new zone with new enemies and bosses, dungeons,
and new events to explore.
Publisher: Paradox Arc
Developer: Dreamsite Games

VICTORIA 3: DAWN OF WONDER
Release date: 28 August 2023
Platforms: PC
Price: USD 4.99
Description: From the glory of the sunrise to the glow of the gas lamp, this Art Pack
takes the theme of light and shadow to add new life to Victoria 3’s visual experience.
Publisher: Paradox Interactive
Developer: Paradox Development Studio

INTERIM REPORT , JANUARY – SEPTEMBER 2023 6
FINANCIAL OVERVIEW
REVENUE AND PROFIT THIRD QUARTER
Revenues amounted to MSEK 426.4 (MSEK 458.8), a
decrease by 7 % compared to the same period last
year. New downloadable content was released to
games during the period; Wards & Wardens to
Crusader Kings III, Dawn of Wonder to Victoria 3, and
Sands of Ulminin to Across the Obelisk. Revenues in
the quarter are mainly attributable to Cities: Skylines,
Crusader Kings III, Europa Universalis IV, Hearts of Iron
IV and Stellaris.
Cost of goods sold amounted to MSEK 254.5 (MSEK
197. 5), attributable to game development,
development support, operation and maintenance of
games, costs of licenses, brands, and similar rights, as
well as royalties and revenue based earn -outs to
development studios and external rights holders.
Amortisation of released games amounted to MSEK
113.6 (MSEK 55.6 ). The amortisations have increased
as a result of releases of new games and downloadable
content .

Amortisations of licenses, brands, and similar rights
amount ed to MSEK 20.2 (MSEK 22.1 ).
In addition to depreciation, amortisation and write –
downs within the item, a total of MSEK 109.8 (MSEK
111.9 ) was expensed regarding non -capitalised
development costs, development support, operation
and maintenance of games, royalties and revenue
based earn -outs . Non -capitalised development costs
have increased compared with the comparison period
as a result of a greater number of games where
capitalisation begins in a later development phase
compared to the previous year . Costs for development
support, operation and maintenance of games are at
level with the comparison period. Cost of royalties has
decreased compared to the same period last year.
Selling expenses for the period amounted to MSEK 65.5
(MSEK 43.7 ). Costs have increased as a result of more
upcoming big game releases compared to the same
period last year.
Administrative expenses for the period amounted to
MSEK 22.8 (MSEK 22.9 ). Costs for administration are
generally unchanged over time and are relatively
unaffected by other operations .

Other income amounted to MSEK 1.9 (MSEK 27.0 ), and
other expenses to MSEK -0.2 (MSEK -0.3 ). Other income
and other expenses consist primarily of exchange rate
effects on the group’s cash and cash equivalents,
operating receivables, and operating liabilities during
the quarter.
Operating profit amounted to MSEK 85.4 (MSEK 220.6 ).
Financial items amounted to MSEK 3.1 (MSEK -1.1 ).
Other financial items primarily consist of calculated
interest on lease liabilities and interest received on
cash and cash equivalents.
Profit after financial items amounted to MSEK 88.5
(MSEK 219.5), and profit after tax amounted to MSEK
69.3 (MSEK 175.9 ). 0
20
40
60
80
100
120
140
160
Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
Write-downs 0
50
100
150
200
250
300
350
400
450
500
Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
COGS Selling expenses Administrative expenses

INTERIM REPORT , JANUARY – SEPTEMBER 2023 7
FINANCIAL POSITION
Capitalised development amounted to MSEK 1,7 85.7
(MSEK 1,519.1 ) by the end of the period. The item
refers to both games that have not yet been released
and games that have been released and subsequently
amortised . The increase in the item is primarily
attributable to games that have not yet been released .

Licenses, brands, and similar rights amounted to MSEK
127.0 (MSEK 180.6 ).
Goodwill amounted to MSEK 2 3.1 (MSEK 2 2.0 )
attributable to the acquisition of Iceflake Studios.
Right -of-use assets for offices amounted to MSEK 123.5
(MSEK 1 45.3 ).
Shares in associates amount to MSEK 0.0 (MSEK 31. 7)
by the end of the period, the change is attributable to
the sale of Seattle -based Hardsuit Labs.
Accounts receivable amounted to MSEK 219.3 (MSEK
196.6 ).
Bonds amount to MSEK 198.1 ( MSEK 0. 0) at the end of
the period. All bonds are short -term and constitute
investment s of excess cash .
Cash and cash equivalents amounted to MSEK 734.9
(MSEK 665.9 ).
Shareholders’ equity amounts to MSEK 2,528.5 (MSEK
2,098.5 ), of which MSEK 432.4 (MSEK 514.5 ) consists of
accumulated profit for the year.
Long term lease liabilities amount to MSEK 87.0 (MSEK
114.0 ) consisting of liabilities for office premises.
Deferred tax liabilities amount to MSEK 123.1 (MSEK
155.5), mainly relating to untaxed reserves and
intangible assets from acquisitions.
Short term lease liabilities amount to MSEK 3 2.7 (MSEK
35.6 ) consisting of short -term liabilities for office
premises.
Accrued expenses and prepaid income amounts to
MSEK 417 .0 (MSEK 300.8 ) by the end of the period.
Prepaid revenue is higher compared to the previous
year .
CASH FLOW THIRD QUARTER
Cash flow from operating activities amounted to MSEK
260.1 (MSEK 242.3 ), primarily attributable to the
operating profit. Cash flow from investing activities
amounted to MSEK -359.1 (MSEK -167.6 ). Investing
activities include MSEK -198.1 (0.0 MSEK) of short -term
investments in bonds. Cash flow from financing
activities amounted to MSEK -9.5 (MSEK -9.0 ) relating
mainly to amortisation of lease liabilities for office
premises.
THE FIRST NINE MONTHS IN SUMMARY
Revenues amounted to MSEK 1,646.5 (MSEK 1,392.9 )
an increase by 18 % compared to the same period last
year. Cost of goods sold amounted to MSEK 855.3
(MSEK 609.4 ), primarily attributable to game
development, development support, operation and
maintenance of games, as well as royalties and
revenue based earn -outs to third parties. Cost s of
royalties are in line with the comparison period.
Revenue based earn -outs have increased following the
release of Age of Wonders 4. Write -downs within cost
of goods sold amounts to MSEK 9. 6 (MSEK 0.0).
Operating profit amounted to MSEK 534.0 (MSEK
642.7 ), a de crease by 17 %. Profit after financial items
amounted to MSEK 556.5 (MSEK 640.2 ), and profit after
tax amounted to MSEK 432.4 (MSEK 514.5 ). Cash flow
from operating activities amounted to MSEK 926.3
(MSEK 740.5 ). Cash flow from investing activities
amounted to MSEK -701.7 (MSEK -555.3 ). Cash flow
from financing activities amounted to MSEK -238.8
(MSEK -132.2 ). 0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
Thousands
Capitalised development costs

INTERIM REPORT , JANUARY – SEPTEMBER 2023 8
RELATED PARTY TRANSACTIONS
No transactions have taken place between the group
and related parties that have affected the group’s
position and results.
PARENT COMPANY THIRD QUARTER
The parent company houses the publishing business.
Within the publishing business, the parent company
buys development services from both external and
wholly owned development studios and pays royalties
to these where applicable. The parent company also
provides administrative services to the subsidiaries. All
in all, this leads to the parent company’s turnover to a
large extent making up the group’s total turnover .
Parent company revenues for the quarter amounted to
MSEK 425.4 (MSEK 475.9 ). Operating profit amounted
to MSEK 32.7 (MSEK 138.2 ). Profit after financial items
amounted to MSEK 35.4 (MSEK 137.4 ). Profit after tax
amounted to MSEK 28.1 (MSEK 109.1 ).
ACCOUNTING PRINCIPLES
This interim report has been prepared in accordance
with IAS 34, Interim Financial Reporting as well as RFR
1 and the annual accounts act. The parent company
applies the Swedish Financial Reporting Board’s
recommendation RFR 2, accounting for legal entitie s.
Accounting principles and calculation bases are in
accordance with the principles applied in the
company’s most recent annual report. The carrying
amount of the Group’s long term financial instruments
valued at accrued acquisition value essentially
corr esponds to its fair value as the interest rate is in
parity with current market interest rates .
The carrying amount of the Group’s short -term
financial instruments valued at accrued acquisition
value essentially corresponds to its fair value as the
discounting effect is not significant. Accounting
principles and calculation bases are in accordance
with the principles applied in the company’s most
recent annual report .
RISKS AND UNCERTAINTIES
Paradox is, like most companies, exposed to certain
risks in its operations. The risks and uncertainties are
described in the Annual Report for 202 2, page 3 1. Risks
to be specifically mentioned include a dependency on
key employees, dependency on a few sales partners,
delays of game projects, low revenues from game
releases, and foreign currency. These risks and
uncertainties may have a direct or indirect impact on
the group’s financial position and results .

INTERIM REPORT , JANUARY – SEPTEMBER 2023 9
FINANCIAL CALENDAR
Year -end report 202 3
Annual report 202 3
Interim report January -March 202 4
Annual General Meeting 202 4
Interim report January -June 202 4
Interim report January -September 202 4
Year -end report 202 4
2024 -02-06
2024 -04-17
2024 -04-25
2024 -05-15
2024 -07-25
2024 -10-31
202 5-02-06
CONTACT
Additional information about the company can be
found on the corporate website
www.paradoxinteractive.com. The company can be
contacted by e -mail, ir@paradoxinteractive.com, or by
post Paradox Interactive AB, Magnus Ladulåsgatan 4,
118 66, Stockholm, Sweden .
ASSURANCE BY THE BOARD OF DIRECTORS
The board of directors hereby provide an assurance
that the interim report provides a true and fair view of
the parent company’s and the group’s business,
positions, and earnings, and describe the significant
risks and uncertainties faced by the companies making
up the group.
Stockholm October 26, 2023

The Board of Directors
This information is information that Paradox Interactive AB (publ) is
obliged to make public pursuant to the EU Market Abuse Regulation.
The information was submitted for publication 08:00 CE ST
on 26 October 2023 .

INTERIM REPORT , JANUARY – SEPTEMBER 2023 10
THE AUDITOR ’S REVIEW
OF INTERIM FINANCIAL
INFORMATION
Introduction
We have reviewed the condensed interim financial
information (interim report) of Paradox Interactive AB
(publ.) as of 30 September 2023 and the nine -month
period then ended. The board of directors and the CEO
are responsible for the preparation and present ation
of the interim financial information in accordance with
IAS 34 and the Swedish Annual Accounts Act. Our
responsibility is to express a conclusion on this interim
report based on our review.
Scope of Review
We conducted our review in accordance with the
International Standard on Review Engagements ISRE
2410, Review of Interim Report Performed by the
Independent Auditor of the Entity. A review consists of
making inquiries, primarily of persons responsible for
financial and accounting matters, and applying
analytical and other review procedures. A review is
substantially less in scope than an audit conducted in
accordance with International Standards on Auditing,
ISA, and other generally accept ed auditing standards
in Sweden. The procedures performed in a review do
not enable us to obtain assurance that we would
become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express
an audit opinion.

Conclusion
Based on our review, nothing has come to our
attention that causes us to believe that the interim
report is not prepared, in all material respects, in
accordance with IAS 34 and the Swedish Annual
Accounts Act, regarding the Group, and with the
Swedish Ann ual Accounts Act, regarding the Parent
Company .
Stockholm October 26, 202 3
Öhrlings PricewaterhouseCoopers AB

Aleksander Lyckow
Authorized Public Accountant

INTERIM REPORT , JANUARY – SEPTEMBER 2023 11
KEY FIGURES FOR THE GROUP

For definitions of key figures, see the annual report. 2023-07-01 2022-07-01 2023-01-01 2022-01-01 2022-01-01
2023-09-30 2022-09-30 2023-09-30 2022-09-30 2022-12-31
Revenues, KSEK 426,442 457,994 1,646,553 1,392,896 1,972,906
Operating profit, KSEK 85,363 220,644 533,961 642,690 887,146
Profit after financial items, KSEK 88,465 219,520 556,486 640,219 884,440
Profit after tax, KSEK 69,294 175,859 432,356 514,531 708,709
Operating margin 20% 48% 32% 46% 45%
Profit margin 21% 48% 34% 46% 45%
Equity/assets ratio 74% 72% 74% 72% 73%
Equity per share before dilution, SEK 23.94 19.87 23.94 19.87 21.70
Equity per share after dilution, SEK 23.87 19.87 23.87 19.87 21.70
Earnings per share before dilution, SEK 0.66 1.67 4.09 4.87 6.71
Earnings per share after dilution, SEK 0.65 1.67 4.06 4.86 6.70
Number of shares by the end of the period before dilution 105,623,025 105,619,209 105,623,025 105,619,209 105,619,209
Number of shares by the end of the period after dilution 105,910,175 105,619,209 105,910,175 105,619,209 105,619,209
Average number of shares before dilution 105,623,025 105,619,209 105,620,481 105,606,403 105,609,605
Average number of shares after dilution 106,423,406 105,619,209 106,272,083 105,758,677 105,723,810
Average number of employees 634 654 658 677 672
Number of employees by the end of the period 627 654 627 654 656

INTERIM REPORT , JANUARY – SEPTEMBER 2023 12
GROUP INCOME STATEMENT ( K SEK)

OTHER COMPREHENSIVE INCOME (KSEK)

2023-07-01 2022-07-01 2023-01-01 2022-01-01 2022-01-01
2023-09-30 2022-09-30 2023-09-30 2022-09-30 2022-12-31
Revenues 426,442 457,994 1,646,553 1,392,896 1,972,906
Cost of goods sold -254,508 -197,464 -855,340 -609,398 -862,629
Gross profit 171,934 260,530 791,214 783,498 1,110,277
Selling expenses -65,544 -43,678 -203,595 -125,294 -170,490
Administrative expenses -22,750 -22,913 -71,935 -68,804 -91,618
Other income 1,899 26,985 18,780 55,250 56,635
Other expenses -176 -281 -503 -1,961 -17,658
Operating profit 85,363 220,644 533,961 642,690 887,146
Profit from shares in subsidiaries – – 15,440 – –
Financial income 5,847 798 15,798 1,527 3,952
Financial expense -2,745 -1,922 -8,713 -3,999 -6,658
Profit after financial items 88,465 219,520 556,486 640,219 884,440
Tax -19,171 -43,660 -124,129 -125,689 -175,731
Profit for the period 69,294 175,859 432,356 514,531 708,709
Profit for the period is attributable to the shareholders of the parent company.
Earnings per share before dilution, SEK 0.66 1.67 4.09 4.87 6.71
Earnings per share after dilution, SEK 0.65 1.67 4.06 4.86 6.70 2023-07-01 2022-07-01 2023-01-01 2022-01-01 2022-01-01
2023-09-30 2022-09-30 2023-09-30 2022-09-30 2022-12-31
Profit for the period 69,294 175,859 432,356 514,531 708,709
Other comprehensive income
Items that may be reclassified to profit or loss
Translation differences -4,201 8,983 7,684 23,095 20,780
Other comprehensive income -4,201 8,983 7,684 23,095 20,780
Total comprehensive income for the period 65,093 184,842 440,041 537,625 729,489
Profit for the period is attributable to the shareholders of the parent company.

INTERIM REPORT , JANUARY – SEPTEMBER 2023 13
GROUP BALANCE SHEET (KSEK)

2023-09-30 2022-09-30 2022-12-31
ASSETS
Non-current assets
Capitalised development 1,785,667 1,519,111 1,650,275
Licenses, brands and similar rights 126,991 180,591 159,501
Goodwill 23,148 21,991 22,415
Property and equipment 14,966 18,169 17,561
Right-of-use assets 123,494 145,345 136,118
Investments in associates – 31,678 32,555
Other long term assets 18,737 18,670 18,695
Total non-current assets 2,093,003 1,935,556 2,037,120
Current assets
Accounts receivable 219,261 196,614 259,948
Tax assets 66,277 10,308 709
Other receivables 44,989 42,907 34,769
Prepaid expenses and accrued revenue 77,186 47,258 61,376
Bonds 198,068 – –
Cash and cash equivalents 734,902 665,922 747,506
Total current assets 1,340,682 963,010 1,104,307
TOTAL ASSETS 3,433,686 2,898,566 3,141,427 EQUITY AND LIABILITIES
Equity
Share capital 528 528 528
Other capital contributed 29,748 29,542 29,542
Reserves 32,861 27,491 25,176
Retained earnings 2,033,034 1,526,382 1,528,422
Profit for the period 432,356 514,531 708,709
Total equity 2,528,527 2,098,474 2,292,377
Long term liabilities
Lease liabilities 86,965 114,044 104,845
Deferred tax liabilities 123,083 155,464 137,220
Total long term liabilities 210,048 269,508 242,065
Current liabilities
Accounts payable 73,811 68,327 52,487
Current tax liabilities 117,466 67,523 66,529
Lease liabilities 32,697 35,569 35,616
Other liabilities 54,105 34,184 33,725
Accrued expenses and prepaid revenues 417,031 324,981 418,628
Total current liabilities 695,111 530,584 606,985
TOTAL EQUITY AND LIABILITIES 3,433,686 2,898,566 3,141,427

INTERIM REPORT , JANUARY – SEPTEMBER 2023 14
CHANGE IN GROUP EQUITY (KSEK)

Share capital
Other
contributed
capital Reserves
Retained
earnings Total equity
At the beginning of the period 2023-01-01 528 29,542 25,176 2,237,131 2,292,377
Profit for the period 432,356 432,356
Other comprehensive income
Translation difference 7,684 7,684
Total other comprehensive income – – 7,684 – 7,684
Total comprehensive income – – 7,684 432,356 440,041
Transactions with owners
Premiums when redeeming warrants 0 1,008 – – 1,008
Re-purchase warrants – -802 – – -802
Share-based payments staff – – – 7,141 7,141
Dividends – – – -211,238 -211,238
Total transactions with owners 0 206 – -204,097 -203,891
AT THE END OF THE PERIOD 2023-09-30 528 29,748 32,861 2,465,390 2,528,527 Share capital
Other
contributed
capital Reserves
Retained
earnings Total equity
At the beginning of the period 2022-01-01 528 27,994 4,397 1,628,644 1,661,563
Profit for the period 514,531 514,531
Other comprehensive income
Translation difference 23,095 23,095
Total other comprehensive income – – 23,095 – 23,095
Total comprehensive income – – 23,095 514,531 537,625
Transactions with owners
Premiums when redeeming warrants 0 3,362 – – 3,362
Re-purchase warrants – -1,814 – – -1,814
Share-based payments staff – – – 3,338 3,338
Dividends – – – -105,600 -105,600
Total transactions with owners 0 1,548 – -102,262 -100,714
AT THE END OF THE PERIOD 2022-09-30 528 29,542 27,491 2,040,912 2,098,474

INTERIM REPORT , JANUARY – SEPTEMBER 2023 15
GROUP CASH FLOW STATEMENT (KSEK)

2023-07-01 2022-07-01 2023-01-01 2022-01-01 2022-01-01
2023-09-30 2022-09-30 2023-09-30 2022-09-30 2022-12-31
Cash flow from operations
Operating profit 85,363 220,644 533,961 642,691 887,146
Adjustment of depreciation, amortisation and write-downs 146,798 88,593 488,313 320,420 473,498
Other adjustments 2,678 3,329 1,655 4,322 4,362
Interest received 5,847 798 15,798 1,527 3,952
Interest paid -2,745 -1,922 -8,713 -3,998 -6,658
Tax paid -42,375 -30,970 -153,909 -66,414 -126,703
Cash flow before changes in working capital 195,566 280,471 877,105 898,549 1,235,598
Changes in working capital
Change in current receivables 32,079 -38,075 9,060 -71,902 -141,060
Change in current liabilities 32,495 -64 40,161 -86,122 -9,799
Cash flow from current operations 260,140 242,332 926,326 740,525 1,084,740
Investing activities
Cash flow from sales of associated companies – – 53,174 – –
Investments in capitalised development -160,696 -167,353 -553,945 -543,093 -793,771
Investments in equipment -365 -273 -2,821 -1,111 -2,119
Investments in subsidiaries – – – -11,055 -11,055
Investments in bonds -198,068 – -198,068 – –
Investments in other financial assets – – – -25 -25
Cash flow from investing activities -359,129 -167,626 -701,660 -555,284 -806,969
Amortisation of lease liability -9,525 -9,015 -27,581 -26,569 -35,371
Paid dividend – – -211,238 -105,600 -105,600
Cash flow from financing activities -9,525 -9,015 -238,820 -132,169 -140,971
Cash flow for the period -108,513 65,692 -14,153 53,071 136,800
Cash and cash equivalents at the beginning of the period 844,209 594,867 747,506 767,561 767,561
Exchange rate effect -793 5,363 1,550 13,125 10,981
Cash and cash equivalents at the end of the period 734,902 665,922 734,902 665,922 747,506

INTERIM REPORT , JANUARY – SEPTEMBER 2023 16
PARENT COMPANY INCOME STATEMENT (KSEK)

2023-07-01 2022-07-01 2023-01-01 2022-01-01 2022-01-01
2023-09-30 2022-09-30 2023-09-30 2022-09-30 2022-12-31
Revenues 425,416 475,938 1,645,505 1,405,636 1,992,191
Cost of goods sold -311,026 -300,149 -1,129,492 -916,261 -1,276,664
Gross profit 114,390 175,788 516,013 489,375 715,528
Selling expenses -61,025 -41,424 -190,096 -119,682 -163,264
Administrative expenses -22,251 -22,982 -70,733 -69,031 -91,873
Other income 1,632 26,820 14,061 53,864 54,248
Other expenses – – – -1,404 -17,060
Operating profit 32,746 138,202 269,244 353,122 497,578
Profit from shares in subsidiaries – – 35,381 – –
Financial income 4,680 250 12,698 250 1,952
Financial expense -2,000 -1,010 -6,002 -1,079 -2,391
Profit after financial items 35,425 137,442 311,321 352,293 497,140
Year-end appropriations – – – – 200,000
Income tax expense -7,298 -28,313 -67,626 -72,152 -145,215
Profit for the year and total income for the year 28,128 109,129 243,695 280,140 551,925

INTERIM REPORT , JANUARY – SEPTEMBER 2023 17
PARENT COMPANY BALANCE SHEET (KSEK)

2023-09-30 2022-09-30 2022-12-31
ASSETS
Non-current assets
Capitalised development 1,445,530 1,338,234 1,408,095
Licenses, brands and similar rights 42,742 44,027 37,495
Property and equipment 7,516 10,531 10,116
Shares in subsidiaries 305,812 305,812 305,812
Investments in associates – 16,766 16,766
Other long term assets 17,393 17,393 17,393
Total non-current assets 1,818,993 1,732,763 1,795,677
Current assets
Accounts receivable 211,318 193,064 255,031
Receivables from group companies 4,753 15,280 79,656
Tax assets 64,573 9,630 –
Other receivables 38,986 35,560 28,163
Prepaid expenses and accrued revenues 82,002 45,070 59,969
Bonds 198,068 – –
Cash and cash equivalents 469,550 439,411 448,013
Total current assets 1,069,249 738,014 870,832
TOTAL ASSETS 2,888,242 2,470,777 2,666,508 EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital 528 528 528
Capitalised development reserve 1,445,530 1,338,234 1,408,095
Non-restricted equity
Share premium reserve 29,748 29,542 29,542
Retained earnings 72,724 -169,847 -237,669
Profit for the period 243,695 280,141 551,925
Total equity 1,792,226 1,478,598 1,752,422
Untaxed reserves 485,000 555,000 485,000
Current liabilities
Accounts payable 65,069 59,802 45,619
Liabilities to group companies 177,228 104,466 28,016
Current tax liabilities – – 4,352
Other liabilities 3,926 5,499 4,339
Accrued expenses and prepaid revenues 364,793 267,412 346,760
Total current liabilities 611,016 437,179 429,086
TOTAL EQUITY AND LIABILITIES 2,888,242 2,470,777 2,666,508

INTERIM REPORT , JANUARY – SEPTEMBER 2023 18
NOTES (KSEK)
NOTE 1. SEGMENT REPORTING
Group Management has determined the operating segments based on the information processed by the CEO and which is the basis f or making
strategic decisions. The operations consist of one segment.
Group revenue from clients based on where the distributor is located is divided into the following geographical areas ;

During the quarter and the 9-month period respectively MSEK 323.2 (MSEK 282.5 ) and MSEK 1,143.3 (MSEK 827.8 ) of the group’s revenue came
from one and the same customer.
Group revenue divided into major product categories;

Prepaid revenue amounted to MSEK 269.7 (MSEK 199.4 ) at the end of the period. Of these, MSEK 269.7 is expected to be reported as revenue
during the next 12 -month period, and MSEK 0.0 within 24 months .
The revenues for the quarter and the 9-month period respectively include MSEK 26.7 (MSEK 31.0 ) and 173.2 (MSEK 157.7) respectively which
were included in prepaid revenue at the beginning of the period .
NOTE 2. DEPRECIATIONS, AMORTISATIONS AND WRITE -DOWNS BREAKDOWN PER FUNCTION

2023-07-01 2022-07-01 2023-01-01 2022-01-01 2022-01-01
2023-09-30 2022-09-30 2023-09-30 2022-09-30 2022-12-31
USA 366,268 386,826 1,426,093 1,206,819 1,679,021
Sweden 8,466 8,167 27,419 11,979 21,318
Rest of Europe 43,139 52,861 162,363 145,671 234,297
Rest of the World 8,569 10,140 30,679 28,426 38,269
Total 426,442 457,994 1,646,553 1,392,896 1,972,906 2023-07-01 2022-07-01 2023-01-01 2022-01-01 2022-01-01
2023-09-30 2022-09-30 2023-09-30 2022-09-30 2022-12-31
PC 330,970 374,949 1,310,551 1,173,091 1,678,253
Console 65,066 61,129 231,557 162,873 218,810
Mobile 16,704 9,984 51,534 28,130 41,766
Other 13,702 11,932 52,910 28,800 34,076
Total 426,442 457,994 1,646,553 1,392,896 1,972,906 2023-07-01 2022-07-01 2023-01-01 2022-01-01 2022-01-01
2023-09-30 2022-09-30 2023-09-30 2022-09-30 2022-12-31
Cost of goods sold 144,677 85,500 479,882 311,028 460,407
Selling expenses 497 1,067 2,959 2,811 4,506
Administrative expenses 1,624 2,026 5,472 6,581 8,585
Total 146,798 88,593 488,313 320,420 473,498

INTERIM REPORT , JANUARY – SEPTEMBER 2023 19

NOTE 3. EMPLOYEE STOCK OPTION PROGRAM 2023/2027
The Annual General Meeting on May 17, 202 3, decided to introduce an employee stock options program aimed at employees of the group. The
number of outstanding employee stock options amounts to 510 ,000 with the right to subscribe for the same number of shares in Paradox
Interactive AB (publ).
Allotted employee stock options were issued free of charge at a market value of SEK 55.82 according to a valuation based on the Black & Scholes
model. The exercise price for the options was set at SEK 300 .53 and subscription of shares is expected to take place 30 days after the publication
of the company’s interim reports for the second quarter of 2026, the third quarter of 2026 and the first quarter of 2027 resp ectively .
The strike price corresponded to 120 % of the average share price during the period 28 April to 5 May 2023. Vesting of options is conditional on
continued employment with the company. Personnel -related costs excluding social security contributions for the program amount to MSEK 2.4
(MSEK 0.0) during the period. In the event that these options are fully subscribed, the parent company’s equity will be added t o MSEK 153.3.

INTERIM REPORT , JANUARY – SEPTEMBER 2023 20