Paradox Interactive says "we have areas where we need to do better" after reporting $44 million in Q1 revenue

Paradox Interactive has released its report for the first quarter of 2024 ended March 31. The publisher posted stable financial results, also admitting that the quality of its games should be more consistent.

Financial highlights

• According to its new interim report, Paradox reached SEK 482.1 million ($44.4 million) in revenue in Q1, down 0.1% year-over-year.
• Cities Skylines 1-2, Crusader Kings III, Hearts of Iron IV, and Stellaris were the main revenue drivers.

• Operating profit decreased by 1% year-over-year to SEK 154.4 million ($14.2 million).
• Cost of goods sold in the second quarter amounted to SEK 268.1 million ($24.6 million). This includes game development, support and operation of existing projects, royalties, and revenue-based payments to studios.
• The US accounted for 84% of Paradox’s total revenue in the quarter. The share of domestic sales (Sweden) was 3.8% (vs. 0.4% in Q1 2023), while the rest of Europe accounted for just over 10% of the total.
• PC remained the main platform by revenue, accounting for 83.8% of the total. It is followed by console (12%) and mobile (2.7%).

• “We have a very strong foundation with a large cash position and a solid recurring cash flow,” Paradox CEO Fredrik Wester said. “This gives us a good position for taking advantage of the opportunities that open up in a games market that is turbulent at the moment.”
• It is also worth noting that Paradox’s headcount has been reduced by 55 employees over the past three months (649 employees as of December 31, 2023 vs. 594 as of March 31, 2023). The company didn’t announce any layoffs, so the reasons behind the staff reduction are unclear.

Game releases and areas for improvement

In the first quarter, Paradox released one new title, 4X strategy title Millennia. It received mixed reviews from Steam users and peaked at 8,382 concurrent players.

Despite the initially mixed reception, Wester noted that “many players appreciated the game’s core mechanics, and we believe that there is a lot of potential to develop.” With Millennia, the company plans to gain a foothold in a new niche for itself, “creating a base from which we can continue to evolve in the genre.”

Paradox also launched new DLCs for its live games such as Crusader Kings III, Hearts of Iron IV, and Age of Wonders IV.

One of the major setbacks was the Beach Properties expansion for Cities: Skylines II. Released on March 25, it received less than 10% positive reviews — player feedback was so negative that the DLC soon was soon made free for all users.

The base game, which received huge criticism at launch last year, is still struggling to get positive feedback. Its recent score currently sits at just 26% positive (“Mostly Negative”) based on 2,300 reviews left in the last 30 days. Users complain about performance, broken simulation, and the lack of overall fixes.

In his statement, Wester acknowledged the issues, saying that Colossal Order and Paradox are putting a lot of effort into improving the game.

“We have areas where we need to do better, not least, our games must maintain a good and consistent quality,” he noted. “In Cities: Skylines II in particular, we are well aware that lately we have not met the players’ expectations in this area; this will not stay the case.”