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Starbreeze relies on Payday as full-year losses increase to $12m

Co-op heist game accounted for 99.4% of the developer's Q4 net sales

Starbreeze has released the full-year financial results for what has been one of the most difficult periods in the company's life.

For the 12 months ended December 31, the company reported net sales of SEK 280 million ($29 million), down 20% year-on-year from SEK 350 million ($36.3 million).

Earnings before interest, tax, depreciation and amortisation (EBITDA) was a loss of SEK 116.5 million ($12 million) -- a 1,031% change year-on-year from SEK 10.3 million ($1.07 million). Losses before tax, however, dropped by 66% to SEK 452.4 million ($46.87 million), reported in 2018 as a loss of SEK 1.35 billion ($139.9 million).

For the fourth quarter, net sales were reported as SEK 51.1 million ($5.29 million), down 38% year-on-year from SEK 82.5 million ($8.55 million), while EBITDA was actually in the black at SEK 26.8 million ($2.78 million) -- a 136% improvement on the SEK 73.7 million loss ($7.64 million) of last year.

Losses before tax were reduced by 87.6% from SEK 1.26 billion ($130.5 million) to SEK 156.7 million ($16.2 million).

The Payday developer spent the entire year in reconstruction, a period of reorganisation offered to Swedish companies facing insolvency, as Starbreeze was back in December 2018.

Starbreeze spent much of this period identifying ways to reduce costs and improve its efficiency, including laying off a quarter of its staff back in June.

It also sold off the publishing rights to System Shock 3 and 10 Crowns, as well as its Indian art production studio Dhruva Interactive, which was purchased by Rockstar Games.

Costs related to the reconstruction amounted to SEK 36.5 million ($3.78 million) for the full-year, of which SEK 8.6 million ($890,973) was attributed to the fourth quarter.

The reconstruction period was completed in December 2019, with an approved plan to pay all its debts in full. Efforts to improve its financial position continue, with the company selling its Smilegate assets to 505 Games parent Digital Bros in a €19.2 million deal last month.

It will surprise no one that Payday has been positioned as the key to Starbreeze's future, particularly based on these last results.

For the full-year, the series -- driven primarily by Payday 2 -- accounted for SEK 109.4 million ($11.3 million) or 39% of all net sales. SEK 50.8 million ($5.26 million) was generated in the last quarter alone, accounting for 99.4% of the company's Q4 net sales.

This was driven in no small part by new content released in October, which CEO Mikael Nermark says "generated higher than expected sales and player numbers" for Payday 2. He added that this "confirms the interest in a future release of Payday 3" and confirmed additional updates will be added to Payday 2 in 2020.

Starbreeze now finds itself in a similar position to where it was six years ago. Payday 2 accounted for 88.5% of its revenue in Q4 2014 -- despite launching more than a year beforehand -- and 88.4% of revenues the following quarter.

All hope is on Payday 3, then, to fully revive the company's fortunes, with Nermark confident that a publishing agreement for the game will be announced before the end of H1 2020. He also expects a publishing agreement for mobile spin-off Payday: Crime War to also be finalised by this time.

He reiterated that with the reconstruction process complete, Starbreeze is now "fully focused on the core business -- creating games, with Payday front and centre."

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