Ladies and gentlemen, dear Remedy investors, welcome to the webcast for Remedy's third quarter of 2025. My name is Aapo Kilpinen from Remedy's Investor Relations. Joining me today are Remedy's Interim CEO, Markus Mäki , and Remedy's CFO, Santtu Kallionpää . Markus will guide us through the Q3 business review, and then Santtu will dive deeper into the financials. We'll then look at the outlook for the year and end with a Q&A session at the end of the webcast. If you have any questions already, feel free to send those over by leaving them in the box below the webcast. Without further ado, Markus, please, the stage is yours.
Thank you, Aapo, for the movie-style announcement and introductions. Welcome, everybody. I thought I would say a few words about myself to start with, since this is my first review. I'm here with you, with the audience. I'm one of the original Founders of Remedy. I've been Chairman of the Board since 1997 until this point now, and I've been operationally involved also since the founding of the company for the past 30 years. I've done almost every role outside of the kind of artistic domains during my history with Remedy. I've also been an Interim CEO before, about 10 years ago, just before we got listed to the First North Marketplace. It's not the first time I'm stepping into the issues either. I wanted to bring a bit of context to the history. Remedy's history has been built on games being successful, profitable in the past.
This is an exceptional track record for any games company. It's also rare that a games company is even alive after 30 years. This is the success that we built this company. If you look at the more recent history, we started what was for Remedy a massive growth spurt, both in personnel and in the number of simultaneous projects in 2017. For a company that had grown, let's say, much more slowly for the previous 20 years, I think in hindsight, if you look at the recent results, the expansion, the growth was a bit too rapid, and it has caused us to miss some critical signals. We've done some great stuff. We have a really talented, great team. We don't have a need for personnel or project count growth at the moment.
What we need to do is to learn to move faster and act more decisively in the future. The focus is on the games, and we have some really fantastic stuff coming up, and that's going to be my key focus as the Interim CEO to ensure that we succeed with those. If you go to the topic of today's cast, it's, of course, the Q3 highlights. I won't go too deep into the numbers. Santtu will cover them more. We also disclosed these in our profit warning as the pre-numbers a couple of weeks ago. I think the big thing that I would want to highlight here is the positive operating cash flow, which is something that is, let's say, really nice to have, money in the bank at this point. Looking at the quarter highlights, we had a great 30-year anniversary celebration in August.
We pushed really hard to improve Firebreak with a major update in September. As the results of that were not sufficient, we did recognize the non-cash impairment of the majority of the capital as development costs for it. It also caused us to update our outlook. As a last highlight, we had the change of the CEO and also a change of Chairman of the Board. Let's spend a bit of time talking about Firebreak. Just a few observations from my side. The game was launched in June, and we brought multiple smaller updates and then the major update in September. All of the focus was to improve the game, work with the player feedback, make what players want to do. We also had the first discount campaigns, and we did see the player metrics and the feedback improve after the update.
Unfortunately, our sales were not on a high enough level, and I think it's kind of easy to say now that changing the first impressions in players' minds is going to be really, really difficult. This resulted in the write-down of the capitalized development costs and the profit warning. I guess there's quite a lot of questions about the future of Firebreak, and we do still plan on updating the game, and we have the next update planned for later this year as it's been in an advanced state of development. We have had a roadmap based on the success of the game. Going forward in 2026 and onwards, we are going to evaluate the updates quite strictly based on the commercial viability of the game. This is not me saying that we wouldn't update the game. We will, but we will be critical about the return on investment.
While it didn't really go how we wanted, I still wanted to say that we gained some valuable learnings from the investment. First of all, I think it's a big achievement that a first multiplayer game that Remedy has done since Death Rally in 1996 was technically successful, launching on all of the major platforms at the same time and working for the players technically. This is something that not even all experienced multiplayer studios succeed in. We have also been able to operate the game in a live service model and managed to update the game and learned a lot about that.
I think the second part of the learning is gaining knowledge on how to really work with the digital marketing channels for games, what works there, what doesn't work there, how do we drive audience to, for example, the Steam page, and just opening up our experience on all of those channels. We have also gone through one round of full technical publishing steps, whether it's console certification, storefront setups, stuff like that. Both of these things have been, in most parts, done by our external publishing partners in the past. These are, in my mind, valuable experiences in the self-publishing journey we have undertaken, and it really hopefully lowers the risk profile for our future launches. As a last thing about Firebreak, I wanted to go back to a bit higher level and remind everybody that Firebreak was our smallest project, both budget and team-wise.
Even though it didn't succeed commercially, I'm still proud of what we achieved as a company. If you look at the larger market atmosphere and so on, especially Finnish stock-listed companies are often criticized that they don't invest in finding new businesses and finding new customers. That's what we tried to do here. We knew that Firebreak was the risky venture in our portfolio, and I think it was done for all of the right reasons. Let's move forward to looking at the other games we have in the market. Alan Wake 2 had good sales. Royalties grew in Q3 compared to the previous quarters this year. We have the game now as the PlayStation Plus Game for October , and that's great for the life cycle of the product as well.
We have seen, as with Control, that great games can sell for a long time in the digital marketplaces, and new opportunities can come up over time. For example, we had some encouraging early results in bringing the game to Chinese markets with Epic . On Control, we've been focusing on the marketing and sales since we've now been in full control, no pun intended, of the publishing of the game. We've been working with all of the sales channels there and had a great 30-year celebration activation to drive the sales. We have had good sales traction for what's now a six-year-old title. I think we are all amazed how it's doing still, and we will continue doing systematic work on expanding the reach of the franchise and, for example, looking at the outside of our traditional strong markets, what opportunities we do have.
As a reminder of our portfolio of the games we have in development for projects, Control and Max Payne have the bigger teams. They're in full production, and they're tracking towards their milestone goals. The new project, which we're not yet revealing anything, is in proof of concept phase with a smaller team. A quick look at the strategy and targets. Here, there's nothing really that's changing. On the top level, this is what we've communicated earlier. These are still our strategic goals. All of the building blocks for achieving these are in place. It is just a matter of execution and getting there faster. On strategy and targets, we do remain committed to what we communicated about a year ago in our CMD on these targets. With that, I will be passing over to Santtu for the financials.
All right. Thank you, Markus, and good afternoon, everyone. Now the financials. Let's start from the revenue. In the third quarter of 2025, our revenue was EUR 12.2 million, declining by 32% compared to the third quarter of the previous year. The decline was driven by development fees, which were EUR 6.1 million, being lower than in the comparison period. This is explained by a one-time payment, which was recognized in Q3 2024 related to the development work done for Control 2 before the start of the strategic partnership with Annapurna. During Q3 2025, the sources of the development fees were the Max Payne 1 & 2 Remake-related fees from our partner Rockstar and Control 2-related fees from Annapurna. Remedy game sales and royalties increased significantly from the comparison period and were EUR 6.0 million.
Growth was driven mainly by revenue from FBC: Firebreak's subscription service agreements, royalties from Alan Wake 2, and game sales of Control. Our revenue was impacted negatively by a weak USD rate. As additional information, FX neutral change for Q3 revenue was -29%, whereas the reported change was -32%. FX neutral change was calculated with 2024 average FX rates for USD, pound, and Swedish crown. If you look back at our historical revenues, the total revenue year to date for 2025 is now EUR 42.5 million, which remains on a higher level compared to the previous year's Q1 to Q3 revenue, EUR 39 million. We can start to see the effects of the self-publishing strategy, as the game sales and royalties have started to provide a larger share of our total revenue stream compared to the previous years.
In 2025, game sales and royalties have generated 43% of our total revenue so far. In comparison, during the first three quarters of 2024, royalties' share was 9% of the total revenue. In Q3 2025, development fees accounted for approximately half of the total revenue. If we exclude the one-time payment from Q3 2024, our total revenue would have been up +55% in Q3 2025 from the comparison period. The operating profit of the third quarter 2025 was -EUR 16.4 million . The operating profit was affected by recognition of a non-cash impairment of EUR 14.9 million related to FBC: Firebreak's capitalized development costs and allocated purchase, publishing, and distribution rights. The impairment covers the majority of these capitalized costs. Without the impairment, the operating profit would have been -EUR 1.5 million . Q3 EBITDA was +EUR 0.7 million .
The decline in EBITDA compared to the previous year is explained by the higher revenue level in the comparison period, which was driven by the recognized one-time payment for Control 2 development. In Q3 2025, the total operating expenses, excluding depreciations, remained on the same level as in the comparison period. Let's look at the analysis of unneeded amounts of expenses and capitalization, which provides transparency in our costs. If you look at the external development and personnel expenses in the third quarter of 2025, our total cost level decreased by 9% from EUR 11.4 million to EUR 10.4 million. External work expenses were EUR 3.1 million and on a 36.5% lower level than in the comparison period when they were EUR 4.9 million.
The change in external services cost level is part of the normal game development process, and there is variation in the level of outsourcing following the needs of the game projects. Personnel expenses increased year on year by 11.7% and were EUR 7.2 million in Q3 2025. Headcount grew by 7.7%. Capitalized development expenses were on a higher level than in the comparison period. Capitalized amount is in relation to the direct costs of the project's development costs. In the third quarter of 2025, the depreciations related to game projects were on a high level due to the recognized non-cash impairment of EUR 14.9 million related to FBC: Firebreak. This impairment represents a majority of the game's capitalized development costs and allocated purchase, publishing, and distribution rights. Excluding the impairment, depreciation expenses in total were EUR 2.2 million, of which EUR 1.5 million were related to game projects.
The other depreciations remained on a stable level year on year, also in Q3 2025. In the comparison period Q3 2024, we depreciated EUR 3.4 million expenses capitalized related to Control franchise products, which was connected to entering the deal with Annapurna. Going forward, following the impairment that we recognized in Q3 2025, depreciations related to FBC: Firebreak will be on a low level, as the remaining activated cost related to the game is modest. In addition to FBC: Firebreak, depreciations will keep running also for Alan Wake 2. Let's move to the cash flow. During the third quarter of 2025, cash flow increased compared to the previous year as we received more inflowing sales-related payments. Paid operating expenses remained on a similar level to the comparison period Q3 2024. This year's Q3 includes also considerable non-recurring elements related to Firebreak's subscription service contracts.
Also, if you look at our networking capital at the end of Q3 2025, it was on a similar level compared to the networking capital at the end of 2024. It's anyway good to keep in mind the timing of development fee payments, as well as some royalty and game sales-related payments are agreement-based, and there are variations in the timing of revenue accruals and the actual cash flow impacts. End of the third quarter, our total cash level was EUR 36.5 million, increasing by EUR 8.9 million from the previous quarter. The main explanation for the increased cash reserve is the timing of incoming revenue cash flows. At the end of Q3 2025, we had EUR 17.7 million in cash management investments and EUR 18.8 million in cash. Let's still look at our results from the historical perspective.
From Q1 to Q3 2025, our revenue was EUR 42.5 million, with the share of game sales growing steadily during this year compared to the previous years. We can see that our EBITDA margin has been improving year on year since the end of year 2023 and is now year to date 17.6%. Additionally, positively, development of game sales and royalties as share of total sales is definitely one of the positives for this year. However, this year, our year-to-date operating profit margin is worse than the previous year, being 36.7%- following the impairment booking done for Q3. Now, Markus will continue regarding the outlook.
This is going to be fairly short. Thank you, Santtu. This is the updated outlook we did on 10th of October together with the profit warning, so that we expect our revenue to increase from the previous year, but the operating profit will be negative and below the previous year. That's kind of it from the presentation part, and I think now it's time for Q&A.
Correct. Thank you so much, Santtu. Thank you so much, Markus. We are moving forward to the Q&A session. Feel free to leave any questions by typing them in the field below the webcast. We already have a couple of good questions in the pipeline, so let's begin with those. The first question is, now that Remedy announced its CEO change, what will change in the company?
That's a good question. I think it's first best to say that I am the Interim CEO, and my role is here to make sure that our path and key targets are getting hit, and we are moving as fast as possible towards the direction that will bring us profitability. I think it's too early to speculate on larger scale changes.
Very good. Can you elaborate on what kind of a background, emphasis, or expertise is Remedy looking for in its next CEO?
I've seen kind of what we collected in the Board, what we expect, and often these things kind of become some kind of a unicorn. You want everything and everything. I think the key thing is experience in leading a company of our type and size, but I don't want to go too much into the detail. I think it's going to be about the person that we find rather than an exact set of past competencies or work history.
Very good. Another question. Can you elaborate on why the CEO change happened quickly?
The CEO change is a Board decision, so I don't know what's quickly there. I can't comment more on that.
Very good. Moving towards FBC: Firebreak, have you made or are you planning to make personnel reductions as a result of balancing the investments made in FBC: Firebreak?
We are moving people from Firebreak to help with some of the other teams, but we don't have any other plans at this point.
The next question is, how large of a team is working on FBC: Firebreak at the moment?
At the moment, we haven't really disclosed the exact team sizes. I just said that it's the smallest team in our kind of portfolio of products that we work on, and it is now clearly smaller than it was at or before or immediately after launch already.
Very good. What have been the specific key learnings in self-publishing from FBC: Firebreak? What worked and what did not work, and what will be done differently going forward?
That's something that warrants quite a lot more analysis also on our part and quite a long kind of an answer. I would say one thing maybe that kind of change, as I said, changing people's opinion after the launch is going to be super difficult. Driving conversion in a game that has mixed team reviews is supremely hard. That also kind of limits some of the, for example, marketing conversion and so on learnings that we can actually do with a title like Firebreak, but we've still learned a lot.
Very good. A bit looking into the future, to what degree are live service model and/or multiplayer modes something you want to pursue in your games currently in the production pipeline?
This is something that we haven't announced anything on. Let's take one step at a time as well, and when we have something more on this, we will talk about it. I want to repeat the fact that every company should invest into finding new audiences, new customers, new business models, and I hope that Remedy will continue to do that in some way or form in the future as well.
Very good. Markus, in hindsight, what do you think about the Vanguard, Kestrel, and Firebreak projects from the perspective of a Founder-owner and the former Chairman of the Board?
I think both for Vanguard and Firebreak, there was a solid reason to start them and do them. I think there is, like I just said also, that growth is very difficult, and we were growing too fast. I think having, for example, two projects that were kind of new business for Remedy at the same time, at least partially at the same time, in hindsight, I think that was too much. That was also on the Board, so lesson learned, at least for me.
Very good. Markus, you discussed the need of increasing speed and decisiveness inside the organization. Has there been advances in development speed in the past years, and currently, how do you plan to increase development speed and decisiveness?
I think speed is, in an organization of our size, speed is dependent on the information that our people and our team have, and that's something that I'm trying to be very open to with everybody. What are the goals? What are the targets? What are the key decision points that we have? I think that will bring on more speed in, I don't say in development necessarily that we need it. We need it in decisions. We need to make better quality decisions faster. I think that's across the organization. It's not just a CEO thing, and that requires transparency, openness, frank discussions, and information.
Very good. Reflecting a bit, what have been the biggest lessons Remedy has learned from developing multiplayer games, and can these be utilized in future game projects?
I think it depends on the future project, whether we can use them or not and how much. I certainly think that even in single-player games, having some sort of persistent online side might be very valuable for the gamers in the future, and we build competencies around that, for example. Yeah, definite maybe. Let's say it that way.
Very good. A question. You have moved development resources to other projects from FBC: Firebreak, but also during the last quarter, employee count increased. What headcount for Remedy would be sufficient at this stage?
I think we are currently at a fairly comfortable place with the headcount. We also have a lot of external development outsourcing. Some of our projects have been ramping down a bit on those. This will also, of course, be visible in the financial data going forward. I think we're in a good place with the personnel we have right now. We have the least amount of open positions that we've had in years.
Yeah. Very good. A final question regarding FBC: Firebreak. Are you planning on shutting down their project at the moment?
I have absolutely no plans on shutting down the project because it's not a cost issue. We don't have an expensive, super expensive infrastructure, for example, that we would need to run, and so on. It's going to be available for the gamers going forward as well.
Very good. Moving forward to the games on the market, can you comment on the reception of Alan Wake 2 through PS Plus , considering that the channel might attract players that are not traditional Remedy or survival horror genre fans?
I think we're going through the questions fairly quickly. What do you say, Aapo? On PlayStation Plus, I think that it's a great place to, at this point, two years after the launch, get a bit more visibility into the project and get a bit new audience into it. I think it was Sam who said yesterday that, hey, it's great. I haven't heard about this game, but it's the best game ever. That's also, of course, positive for the game, for the brand, for our business in the future.
Very good. Regarding the new proof of concept project announced, is it too early to comment if Remedy has already committed on a specific publishing model, etc., self-publishing or financing model for this specific game?
It's too early to comment.
Very good. Perhaps the next question is towards Santtu. How will Remedy ensure that enough cash flow is produced in the future two to three years to fund the ongoing projects?
We can say that we have strong games in the pipeline, and currently we have a very strong cash position, so we are confident with our financial position also going forward.
I would add to that that we do have a partner project with Max Payne right now. We have had partner projects before that can be, let's say, a tool in the toolbox in the future as well. Yeah, again, too early to go to specifics.
Yes. The next question kind of builds on that. The impairment had a EUR 15 million negative impact on the health of your balance sheet. What kind of an impact will that have on your target to move to self-publishing as it requires a solid balance sheet?
I would say that even after the impairment, our balance sheet is still very healthy. We can say that now the financial risk that was related to balance sheet values of FBC: Firebreak, that has been taken away. As I said, we have EUR 36.5 million in our cash at the moment, so that is enough for our future needs.
Very good. A question regarding Alan Wake . How many copies has Alan Wake sold so far, and how does it compare to your own expectations?
We don't really comment on the exact number of copies in these kind of forums. When we have something to release on those, we will then release it via other channels. We're happy with the sales.
Could you open up the split between royalties and game sales during this quarter?
We are currently reporting royalties and game sales in the same bucket, so we are not sharing details regarding that. We can, of course, say that if you're talking about the game sales, the kind of FBC: Firebreak-related B2B income, the revenue from the B2B deals, that is a major part of our game sales. Additionally, we have said that there are Alan Wake 2-related royalties and also game sales from other Remedy game catalogs in the market.
Very good. A question regarding the development fee, Santtu. Can you elaborate on why the development fees were only EUR 6.1 million in Q3, the lowest since 2021?
Yeah. Development fees are based on the milestones that have been accurate in the contracts, and they are not necessarily split evenly in the calendar. It means basically that the kind of income from the development fees varies depending on the stage of the project, and there may be variation also going forward. Development fees might be going higher level and lower or also lower level going forward.
Another question then. What is included in the current intangible assets on the balance sheet, and is Control 2 a large majority?
Yeah, we can say that Control 2 is a major part of our intangible assets at the moment. Additionally, now when we have one project in the proof of concept stage, we have also started the activations related to it.
Very good. Are you still expecting Firebreak's B2B income to come in the coming quarters?
Yeah. We will continue accruing Firebreak-related B2B income until the end of the subscription service deals. Additionally, we can say that the majority from the cash flow related to those deals is now in our cash, but there will also be some following payments going forward.
Very good. A question. In general, what is the plan with the big cash pile? Is there a consideration for buybacks?
I think this is for me. Obviously, things like share buybacks are a tool that the Board has in their toolbox, but this is not for the management to comment at this point.
Very good. A couple of final comments on the pipeline. Can you shortly comment on the production developments of Max Payne 1 & 2 Remake and Control 2?
No, not more than I kind of said earlier that they are proceeding according to the milestone plan. This is something that we are actually changing the line a bit, and you saw that from the quarterly report that we are. When there are some highlights in the projects, we will, of course, be forthcoming with them to everybody. At the same time, these are multi-year projects, and expecting key highlights for every project for every quarter, I think, is just going to send wrong signals, and we are not going to be doing that in the future in the same way.
Very good. Okay, a couple more general questions then at the end. Regarding the long-term tail and ongoing sales for Alan Wake 2, are there plans to expand the global accessibility to added locations, etc., the Middle Eastern and North African markets?
That's a nice question. This is definitely something that obviously we want our games to have the widest possible audience. With Alan Wake, we are working with our publishing partner Epic and do these decisions with them. This is not, I would say, fully also not in our control. There's also kind of Alan Wake is a huge game, and for example, a full voiceover localization is not, let's say, pennies and requires quite a lot of effort. We are looking at these opportunities optimistically, and we would want our game to be accessible to as wide an audience as possible.
Very good. Expanding on that question, looking at the success of Alan Wake 2, what have you learned about the distribution model as you think about maximizing the long-term tail and audience reach for the game?
On Alan Wake 2, I think what we now, for example, did, we opened with Apple in China and saw some success. Yes, we are looking together with Epic on various ways to kind of boost the long tail of the sales of the game. This is a discussion that we continuously have with Epic .
Very good. A question in regards to Northlight. Would you consider to release the Northlight engine, for example, sourcing it as a B2B or for a more wide public?
This is a question that's about as old as Remedy itself. I've gotten this at least 20 years, and I think the answer is kind of yes and no, but we've always trended on the no because Northlight's strength is that it's a focused engine for our team, for our kind of games. That means that it is a subset of platforms, features, and so on compared to a general-purpose engine like Unity or Unreal. That is actually also its competitive advantage, and that is why we can do it with a smaller team than the hundreds and hundreds of developers working on those engines. We don't need to do external support, for example, that we would need to do. I think open sourcing is probably the more interesting path. I've also always been kind of a proponent of modding and user-generated content.
I would love to see more of that, but these are not, let's say, trivial things to kind of implement well in the current technologies. Yes and no.
Very good. The final question: Considering the suboptimal outcome of FBC: Firebreak, what specifically makes you confident in reaching the targets set for 2027?
What makes me confident is that we have a strong portfolio of products coming up and how they are proceeding. That's the quick, quick answer.
Simple as that.
Yeah.
All right. Thank you, everybody, so much. It's time to wrap up the Q&A session. If you have any additional questions, feel free to send those over at the email address now visible on the screen. We'll be back with the next earnings webcast, which is our financial statements release for the full year. Until then, bye-bye from us.