Profit declines at Starbreeze ahead of pivotal 2016

The many investments of last year will start to show as Swedish company moves away from reliance on Payday 2

Starbreeze remains a company in transition, its profits sliding in the second quarter as its continuing reliance on revenue from Payday 2 started to show.

The Swedish company earned SEK 48.9 million ($5.7 million / €5.2 million) in net sales in Q2, a year-on-year increase of only 3 per cent. Payday 2 contributed SEK 47.7 million ($5.6 million / €5.1 million)) of that amount, a larger figure than the same quarter last year, but a similar proportion of the whole.

In an official statement, Starbreeze CEO Bo Andersson noted the achievement of building a, "a solid track record of profitable growth with one single franchise." However, as Starbreeze continues to make investments in new IP and diversifying its business, the reliance on Payday is becoming more and more obvious.

The company's pre-tax profit for the quarter was SEK 14 million ($1.64 million / €1.5 million), down from SEK 20.4 million ($2.39 million / €2.2 million)) last year. On December 31, 2015, its cash balance was SEK 85.4 million ($10 million / €9.1 million), down from SEK 184.4 million ($21.6 million / €19.8 million), and cash flow was actually negative SEK 3 million ($350,000 / €320,000), a significant turnaround from SEK 19 million ($2.23 million / €2 million) a year ago.

Starbreeze addressed its cash issues after the Q2 reporting period ended, however, taking on a $40 million investment from the South Korean company Smilegate. Following that cash injection, Bo Andersson Klint said, "Starbreeze will have a liquidity that stands out industry wide."

The coming year will be crucial for Starbreeze, as some of the investments it has made come to fruition. The first game from its publishing arm, which was established in May last year, will be released in 2016. We will also see the evolution of its VR strategy, as its public venue, Project StarCade, opens in Los Angeles in the summer.

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