Starbreeze Q4 on Thursday: PAYDAY 3 player numbers in focus

Starbreeze will report its Q4 results on Thursday at 6:45 am CET. During the fourth quarter, Starbreeze released a free and paid update for PAYDAY 3, which temporarily increased the number of players. Since then, however, the number of players (on Steam) has continued to decline. This naturally casts doubt on the game's future revenue potential and puts downward pressure on our estimates. Therefore, we will be particularly interested in any comments regarding how the company plans to get PAYDAY 3 back on track.

We expect an increase in revenue while operating profit is burdened by amortization

We expect Starbreeze’s Q4 revenues to increase to 64 MSEK compared to 34 MSEK in Q4’22. With the release of PAYDAY 3 in Q3'23, revenues will naturally decrease significantly on a quarter-to-quarter basis. The main revenue drivers in the quarter are PAYDAY 3 and PAYDAY 2. In addition, the third-party publishing game Roboquest was officially launched during the quarter, and we expect some minor revenues from the game.

We expect EBIT to be -29 MSEK (Q4'22: 4 MSEK). The negative development in operating profit is mainly due to increased amortization in connection with the release of PAYDAY 3 and increased game development costs.

PAYDAY 3’s player base has steadily declined since launch

Looking at the player numbers for PAYDAY 3 from Steam (the only publicly available source), we can see that the number of concurrent users (CCU) for PAYDAY 3 has been steadily declining since launch. During the quarter, Starbreeze released a free DLC in November and a paid DLC in December (free for Silver and Gold Edition owners). The release of additional content temporarily increased the number of players as players eagerly tried out the new content. However, the spike did not last, and the player count has continued to decline since then. In the last 24 hours, the peak has dropped to less than 500 players. At this point, it’s fair to say that PAYDAY 3 has failed to keep players engaged. The prospect of a recovery is not impossible, but the path now seems more doubtful.

Absence of recovery in PAYDAY 3 creates downward pressure on estimates

Our current full-year revenue estimate for 2024 is 260 MSEK, and our EBIT estimate is -26 MSEK. These estimates assume that PAYDAY 3 will attract new and old players back to the game. However, as there is currently little evidence to support this assumption, the revenue estimates will have to be revised downwards. Beyond PAYDAY 3, Starbreeze's revenues in 2024 and 2025 will be made up of PAYDAY 2 and third-party publishing projects, as Starbreeze's next major game, Project BAXTER, is scheduled for release in 2026. PAYDAY 2 continues to have a solid player base (CCU peak >30k). However, we expect declining revenues in the future, as we understand that Starbreeze is not currently developing additional content for PAYDAY 2. Starbreeze's balance sheet is in good shape, with net current assets of 423 MSEK and no long-term interest-bearing debt as of Q3'23. However, if PAYDAY 3 does not recover and no other compensating revenue source emerges, the company's cash position will naturally start to erode as it invests in the development of Project BAXTER (budget over 45-50 MUSD).