Remedy Q2'25: Hands full with FBC: Firebreak

Translation: Original published in Finnish on 8/13/2025 at 8:15 am EEST.

We reiterate our Accumulate recommendation and EUR 18.0 target price for Remedy. The company's Q2 figures were in line with our expectations in terms of key figures, though there were some discrepancies in surface figures. FBC: Firebreak's game sales were modest initially, but B2B agreements with Sony and Microsoft significantly support the game's short-term revenue. Remedy remains confident that the game's challenges (e.g., the first-time experience for new players and replayability) will be resolved, and the next important step in this process will be a major update scheduled for release in September. We assess the uncertainty surrounding FBC: Firebreak is weighing on the stock's valuation in the short term, but we still find the stock appealing given the company's longer-term potential. Therefore, we remain cautiously optimistic about the stock. 

Q2 figures met our expectations for the main lines, but FBC: Firebreak sales were disappointing

Remedy's Q2 revenue (16.9 MEUR) and EBITDA (4.2 MEUR) were well in line with our forecasts, although a significantly larger portion than we had anticipated of FBC: Firebreak's revenue came from B2B agreements rather than game sales. We estimate that Firebreak's game sales amounted to approximately 1.5-1.6 MEUR, which roughly translates to only 50,000 copies sold during the first two weeks. The majority of the game's over one million players have therefore come through subscription services. According to Remedy, they managed to attract a significant number of players to the game's website on the release date, but the initial players' very poor reviews quickly took the wind out of sales, which is why marketing activities were also quickly put on hold. The main reason for the negative reviews has been the game's poor initial impression, with most of the negative reviews coming from people who played the game for less than two hours. Among those who have played the game for a little longer, the average rating rises to a reasonable level. According to Remedy, the game's poor initial experience was already somewhat apparent during testing, but the company decided to prioritize fixing other issues instead, which, in hindsight, seems like a clear mistake.

Guidance remained unchanged despite FBC: Firebreak's weak start

Remedy still expects its revenue to grow and its EBIT to be positive this year, even though the company has also lowered its estimates for FBC: Firebreak. The company still seems to believe in the game's potential for a comeback, with the first critical step being a major update to the game in September. Marketing activities surrounding the game will also increase then. The belief in the game's potential is reinforced by the fact that the basic gameplay experience is functional and enjoyable, especially for players who have invested more time in the game. However, the task will not be easy. We have lowered our estimates for FBC: Firebreak, as reflected by the decline in earnings estimates for the coming years (2025e EBIT 1.7 MEUR).

You're only as good as your last game

We believe in Remedy’s ability to create multiple high-quality and successful games in the long term, and considering the growth and profitability potential this offers, the valuation of the share (2027e EV/EBITDA 7x) is attractive. The long-term potential is also indicated by the value of the baseline scenario of the DCF model (EUR 25.3). However, the model is very sensitive to the success of future games due to the fixed cost structure and self-publishing. In the short term, though, the share valuation remains elevated, and FBC: Firebreak's release fell far short of original expectations. The game still has the potential to make a comeback, but we believe that the uncertainty surrounding the turnaround is weighing on Remedy's share price. However, the most important thing for creating shareholder value is to succeed in the Control 2 release, which we estimate is fewer than 2 years away. We believe that at some point in the next few years, Remedy's stock will begin to more accurately reflect the company's long-term potential as game projects move toward release.