contentSlug

type

ContentSlug_ContentQuery

slug

ContentPageContentQuery

content

trendingContent

query ContentSlug_ContentQuery(
  $contentSlug: String!
  $type: [ContentType!]
) {
  ...ContentPageContentQuery_13QmVO
}

fragment CompanyDetails_Content on Content {
  __isContent: __typename
  companies {
    name
    description
    pageUrl
    id
  }
}

fragment ContentBasicInfo on Content {
  __isContent: __typename
  id
  type
  title
  lang
  companies {
    viewerIsFollowing
    id
    name
    pageUrl
  }
  tags {
    viewerIsFollowing
    id
    name
    pageUrl
  }
  ...PublishingDetails
  ...Reactions
}

fragment ContentMetadata on Content {
  __isContent: __typename
  type
  title
  lang
  pageUrl
  alternatePageUrls: translations {
    __typename
    pageUrl
    lang
  }
  imgUrl
  description
  ... on Video {
    liveTime
    videoUrl
  }
  ... on Webcast {
    liveTime
    videoUrl
  }
}

fragment ContentPageContentQuery_13QmVO on Query {
  content(slug: $contentSlug, type: $type) {
    __typename
    id
    type
    title
    isPremium
    lang
    htmlBody
    summary
    companies {
      forum {
        latestPosts {
          ...ForumPosts
        }
      }
      name
      id
      viewerIsFollowing
      pageUrl
      defaultInstrument {
        isin
        id
        marketOpen
        marketClose
        marketplace {
          region
        }
        returns {
          total
        }
      }
    }
    tags {
      viewerIsFollowing
      id
      name
      pageUrl
    }
    createdAt
    ... on Video {
      liveTime
    }
    ... on Webcast {
      liveTime
    }
    slug
    ... on CompanyReport {
      reportUrl
    }
    ... on ThirdPartyCompanyReport {
      reportUrl
    }
    ... on StockExchangeRelease {
      reportUrl
    }
    ...ContentBasicInfo
    ...ContentMetadata
    ...PriceAndRecommendation_Content
    ...CompanyDetails_Content
    ...ReportLink_Content
    ...KeyFigures_Content
  }
  ...TrendingContent_1jQ2Cn
}

fragment ForumPosts on ForumPost {
  text
  likesCount
  url
  author
  postedAt
  authorImgUrl
}

fragment KeyFigures_Content on Content {
  __isContent: __typename
  companies {
    defaultInstrument {
      estimateData {
        modelType
        reportingCurrency
      }
      snapshot {
        transaction {
          date
          actualized {
            year
            quarter
            revenue
            revenueGrowth
            ebitAdjusted
            ebitReported
            ebitda
            enterpriseValue
            epsAdjusted
            dividend
            dividendYield
            sharePrice
          }
          estimates {
            year
            quarter
            revenue
            revenueGrowth
            ebitAdjusted
            ebitReported
            ebitda
            enterpriseValue
            epsAdjusted
            dividend
            dividendYield
            sharePrice
          }
        }
      }
      id
    }
    id
  }
}

fragment PriceAndRecommendation_Content on Content {
  __isContent: __typename
  createdAt
  companies {
    name
    pageUrl
    defaultInstrument {
      priceData {
        tradeCurrency
      }
      snapshot {
        priceData {
          date
          lastPrice
          tradeCurrency
        }
        transaction {
          date
          recommendation
          targetPrice
        }
        prevTransaction {
          recommendation
        }
      }
      id
    }
    id
  }
}

fragment PublishingDetails on Content {
  __isContent: __typename
  createdAt
  publishers {
    name
    imgUrl
  }
  authors {
    __typename
    id
    name
    slug
    imgUrl
    jobTitle
  }
  ... on Video {
    liveTime
  }
  ... on Webcast {
    liveTime
  }
}

fragment Reactions on Content {
  __isContent: __typename
  id
  reactionGroups {
    reactionType
    reactionsCount
    viewerReacted
  }
}

fragment ReportLink_Content on Content {
  __isContent: __typename
  type
  isPremium
  ... on CompanyReport {
    reportUrl
  }
  ... on ThirdPartyCompanyReport {
    reportUrl
  }
  ... on StockExchangeRelease {
    reportUrl
  }
}

fragment TrendingContent_1jQ2Cn on Query {
  trendingContent(type: ARTICLE) {
    __typename
    id
    title
    lang
    pageUrl
    createdAt
    type
    imgUrl
    companies {
      squareLogoUrl
      name
      id
    }
    authors {
      __typename
      imgUrl
      id
    }
    publishers {
      imgUrl
    }
  }
}


remedy-buying-opportunity-those-who-play-long-game

__typename

title

isPremium

lang

htmlBody

summary

companies

createdAt

publishers

authors

reactionGroups

pageUrl

translations

imgUrl

description

Analyst

Atte Riikola

Remedy Entertainment is a game developer. Its operations are primarily focused on the development of action games, with a particular focus on 3D technology. Examples of games that the company has developed include several different versions of Alan Wake, Max Payne, and Control. Remedy also develops its own game engine and tooling technology that powers many of its games. The company was founded in 1995 and is headquartered in Espoo, Finland.

Sorry @Atte_Riikola, I didn’t mean to open a can of worms and cause extra work. I genuinely believe that you have done a commendable job with your analysis, for example, with a good scenario-based approach. Over time, I have learned a lot from your analyses and developed as an investor to the point where I can occasionally question things. Thank you for that ! I started asking about this out of genuine interest when the weak earnings development puzzled me, and I had to go back and consider if I had missed something in the analysis. I understand that more pessimistic assumptions would yield the same outcome as the current analysis, and I believe more pessimistic assumptions could be very well justified, for example, regarding revenue sharing or distribution costs, and certainly in other respects as well. However, the conclusion of the current analysis is such that even with excellent performance in the coming years, good sales success of games, and optimistic assumptions for revenue sharing and distribution costs, the company would not be able to make hardly any profit. At least for me, the question would arise: on what basis would the company then make a profit in the future? In the analysis, the company would not even reach the operating profit percentage of a mediocre IT consulting firm by 2030, even though the most important value drivers are already in place (self-publishing, multi-project). In that case, I believe the investment thesis of the analysis can be justifiably questioned. If cash flows are far off and earnings-based multiples are expensive in the coming years, I think it’s difficult to justify that the valuation/share would receive significant support from future releases. Especially when the company has been making heavy losses for years in a row with thin evidence. In the name of transparency, it may not come as a surprise to those reading the thread that I naturally have a conflict of interest here, as Remedy is significantly overweight in my portfolio, and my opinions should naturally be interpreted in that light. However, my intention is not to try to influence the analyst or the analysis, but to understand whether the error is in the analyst’s models or my own, as they were contradictory with the same assumptions.  In my opinion, these are somewhat open to interpretation depending on the language. Someone could, for example, ask about this in the next webcast, if they remember. Eng tiedote  Remedy will receive a greater revenue share from game sales after the initial investments have been recouped, proportional to the amounts invested.  Fin tiedote  After the recoupment of initial investments proportional to the amounts invested, Remedy will receive a greater share of game sales.

You sure are a precise guy, Akee! And I’ve been tangled up with my own Excels over the weekend. My calculations for Annapurna’s share are correct for 2026. Marketing costs of about 8 MEUR have also been deducted there, in addition to distribution costs, when calculating Annapurna’s share. And an assumed 50% share for Annapurna from net profits until the game’s production budget is covered. After this, from 2027 onwards, a 30% share for Annapurna has been assumed, but for that, the formula indeed now refers to gross revenue, from which only taxes have been deducted. On the other hand, we don’t currently know if that 30% assumption is correct, and of course, we also don’t know the game’s future sales figures, so there’s always uncertainty in these calculations. But if we keep the other assumptions unchanged, then it certainly has a clear upward effect on earnings forecasts from 2027 onwards. At this point, my assumption for the game’s release at the end of Q2 (practically June) is also still uncertain. When updating the forecasts, I debated whether to put June or August, but I thought kicking the can down the road would be easier later on, I’ve had years of experience with that  But the next time the forecasts are updated, I must remember to re-examine Annapurna’s share as well.

Thanks again for the good analysis @Atte_Riikola I read through the analysis last night. It may be, or is even likely, that I am an idiot or have made some simple mistake (or both), but because of this, or despite it, I can’t quite make sense of Resonant’s sales calculations.  In the calculation, it appears that Remedy’s net revenue has been calculated as gross revenue - Annapurna’s share (€35M - €10.7M = €24.3M) (?) Shouldn’t net revenue be €35M - €8.6M distribution costs = €26.4M, rather than gross revenue minus Annapurna’s share, as I interpret it to have happened?  Could it be that the wrong row was accidentally selected in Excel? Surely distribution costs must be deducted before there is any common good to be shared with Annapurna. Also, the assumed 25% distribution cost would be Q2’26 €35M * 25% = €8.75M, not €8.6M (?). This would, of course, be an insignificant rounding error in the grand scheme of things.  More importantly than the above, attention is drawn to the 2027 figures and assumptions. From 2027 onwards, the assumptions (see image above) state that Annapurna’s share is 30% of net revenue, i.e., gross revenue minus distribution and marketing costs. This means a 70/30 revenue share from net sales after the game has recouped by the end of 2026. However, for example, in Resonant’s Q2 2027 forecast: €25M gross revenue  €6.2M distribution costs  €7.5M Annapurna’s share  €17.5M Remedy’s net revenue. So, in this calculation, it seems Annapurna’s 30% has been calculated from gross revenue, because the assumed 30% share for Annapurna is certainly not achieved if compared to Remedy’s (erroneous?) net revenue (~43%) or Remedy’s gross sales minus distribution costs (~40%). If my interpretation is correct, then doesn’t the current analysis overestimate the shares payable to Annapurna and thus the costs for 2027 and beyond, and thereby impact the bottom line in the income statement? Assuming a 70/30 revenue share after recoupment and recoupment being achieved by the end of 2026. The potential impact on the income statement would be most significant for 2027, when Resonant’s sales largely carry the entire year according to the analysis’s forecasts. I’m not entirely sure, but in my interpretation, a potential error for the year 2026 is not as significant. From an overall perspective, if the error is real, then in the DCF calculation, this is more or less an insignificant factor, as the focus of cash flows is far in the future and in the TERM, but it might be significant for the near-term earnings forecasts.

Which, knowing GPU development, would primarily be neural texture compression support.               The idea is to generate extremely detailed material textures “on the fly” using Tensor cores, thus saving a huge amount of texture memory and game installation file size compared to what textures of similar quality would take if they were pre-created with such precision. And adding this to Northlight is probably not a huge undertaking, and knowing how NVIDIA is now promoting this technology, I wouldn’t be surprised if NVIDIA’s guys have already been at Remedy’s office consulting a bit. The only major problem with these is that current consoles cannot really run such technology, and if goodies are added to the PC version for modern cards, all such materials will have to be made twice - once in the new way, once in the old way. PS6 and the next XBox will probably be able to use these if the GPU is rumored to be of a newer vintage, so they will become generally realistic to use in multiplatform games perhaps within a three-year timeframe. Control Resonant will come out early enough that at most they might add some bling to the PC version with NVIDIA support; AW3 would probably already use these if they want the latest bling in the engine. Beyond this, the future is just more path tracing, which is already a “solved problem” and which Northlight supports - it just requires hardware to evolve. The RTX 5090 can already run such games reasonably, but consoles and low-end hardware cannot, so this is still waiting for hardware development.

To me, this genre change feels mostly like a small nuance difference compared to the original Control. Based on the trailer, the camera would be moved a degree further from the character, and probably more emphasis would be placed on collecting scrap, character development, and the impact of choices than in the original, which would result in the genre changing from Action-adventure –> Action RPG. Based on the trailer, website, and social media content, I don’t see this as very different from the first in terms of genre. I also don’t believe in Ate’s Q2 release window; I think it would make sense to release this during September-October. And I believe that despite the quality of the trailer, there’s probably enough work to do until then. If the release were within six months, the Reveal trailer might have already mentioned this vaguely, e.g., “Coming Summer 2026” or something. Control 1 was also released around this time (September-October), with good success back then. Copy n’ paste. Control Resonant looks graphically very much like its predecessor, and AW2’s technologies especially come strongly to mind. I remember Tero mentioning at the time that when developing AW2, more investment was needed in Northlight and other development tools than perhaps planned. Let’s hope that this previous development work now bears fruit in shortened development schedules. At least until the engine needs its next major update cycle…

Well, I was thinking about that RPG element. The things you mentioned were already done in the first Control. I don’t remember if all of them were included, but almost. The point was that there probably won’t be a huge change. They won’t go very far from what has been done before.

Related to this, from Kasurinen’s interview  Despite the developer’s relative inexperience with melee combat games, Kasurinen says they are confident in their work.   “We know what the competition is, and we feel we’re going to be very competitive on that front, so expect combat to be good,” he remarked. “It has a lot of versatility, a lot of choices, a lot of agency for the player, a lot of inventive ways you can fight.”    Actually, the answer to this is also from the same interview   “This is not a Soulslike game. I want to be very clear about that,” he asserted when the moniker was brought up.

Remedy Entertainment

As we expected, Remedy’s Q4 result was exceptionally strong, partially because of timing-related factors. Thanks to the company’s outlook and the Tencent agreement for the Vanguard projects, the earnings growth outlook for 2023-2025 starts to clear up. 

<p>As we expected, Remedy’s Q4 result was exceptionally strong, partially because of timing-related factors. Thanks to the company’s outlook and the Tencent agreement for the Vanguard projects, the earnings growth outlook for 2023-2025 starts to clear up. Materializing the earnings potential of the games currently under development seem to focus more strongly on 2024-2025, in contrast to our previous estimates (2023-2024). Thus, a bit of patience is required. Then, the share’s valuation becomes so low that we consider the expected return very attractive for investors who play the long game. </p> 

	2021	22e	23e
Revenue	44.7	47.4	60.9
growth-%	8.9 %	6.0 %	28.5 %
EBIT (adj.)	14.7	11.5	15.8
EBIT-% (adj.)	32.9 %	24.3 %	26.0 %
EPS (adj.)	0.88	0.68	0.93
Dividend	0.17	0.20	0.25
Dividend %	0.4 %	1.3 %	1.6 %
P/E (adj.)	45.3	23.2	16.8
EV/EBITDA	29.9	11.6	5.7

Remedy: Buying opportunity for those who play the long game

Key Estimate Figures2022-02-14

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