Remedy Q3'25: Accelerating toward the next game releases

Translation: Original published in Finnish on 10/30/2025 at 7:01 am EET.

We reiterate our Buy recommendation and EUR 17.0 target price for Remedy. Given the preliminary information and profit warning, the Q3 figures were already known for the main lines, and the report did not result in any significant changes to our estimates. With the change in CEO, Remedy is looking to accelerate its operations, though, in the big picture, the company's strategy remains unchanged. We still see a high probability of success for the upcoming Max Payne and Control 2 games in the release pipeline, and if they are successful, we believe the stock has significant potential from current levels. 

Q3 figures were already known with preliminary data

Remedy's Q3 revenue decreased by 32% to 12.2 MEUR and EBITDA was 0.7 MEUR. The write-down of FBC: Firebreak's development costs weighed on EBIT, bringing it to -16.4 MEUR. Development fees for the quarter (6.1 MEUR) were lower than our expectations (8.0 MEUR), while own game sales and royalties (6.0 MEUR) came as a positive surprise. Here, FBC: Firebreak's B2B payments were a key driver as expected, but Alan Wake 2 royalties exceeded our expectations. The game has recently been launched in China, and according to the company, preliminary results are promising. The company's cash flow from operating activities for the quarter (11.3 MEUR) was strong, reflecting, among other things, payments received from FBC:  Firebreak's B2B contracts. This strengthened Remedy's financial position, and the current cash position (36.5 MEUR) provides flexibility for developing and publishing future games.

Changing the CEO to gain momentum

Remedy announced the change in its CEO just over a week ago, which we have already commented on here. The change was made because the board was not entirely satisfied with the management of Remedy's game projects and wanted to speed up the general decision-making process. No changes to the strategy are planned, so, as expected, Remedy is focusing on its bread and butter, the development of story-driven, single-player games.

Estimates updated after the profit warning remain unchanged

In its lowered outlook following the profit warning, Remedy estimates that revenue will grow from the previous year and EBIT will be negative and decline from the previous year. We did not make any significant changes to our forecasts based on the Q3 report, as we had already updated them in connection with the profit warning. While we no longer forecast revenue from game sales for FBC: Firebreak, we estimate that the game will generate approximately 4 MEUR in B2B payments from Sony and Microsoft between Q4’25-Q2’26. Previously, we estimated that the company would reduce its workforce to downsize its game team, but now we expect cost adjustments to be achieved more through a reduction in subcontracting and, to some extent, through natural attrition. Thus, our previous assumptions regarding the overall cost structure remain unchanged. Our forecast for this year expects revenue of 58.7 MEUR (+16%) and EBIT of -14.0 MEUR. We estimate EBITDA to be positive at 12.2 MEUR, and development will be supported in Q4, for example, by Alan Wake 2 being the PlayStation Plus monthly game in October.

Valuation is attractive considering the potential of upcoming major game releases

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 6.6x) is attractive. The long-term potential is also indicated by the value of the baseline scenario of the DCF model (EUR 21.2). However, the model is very sensitive to the success of future games due to the fixed cost structure and self-publishing. For Remedy's share, the most crucial factor for value creation is the successful release of Control 2, which we estimate is less 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.