Remedy Entertainment Oyj (REMEDY) Earnings Call Transcript
August 11, 2026
Earnings Call Speaker Segments
[Audio Gap] I had two trailers that same week. The one we just saw and the second trailer at Summer Game Fest when hands on with a 3-hour build of the game. One thing I want to highlight here, the move to [indiscernible] was the most debated [indiscernible] that announcement for good reason. It was something new for [indiscernible] is that this has become one of the most positive feedback we got on the game, which is excellent to see. Alongside, of course, the atmosphere and story [indiscernible] very well known for. So encouraging as we approach launch. We have an ambitious global campaign for this game. After the trailers were revealed, we ramped up the activity and members of the team on the road to meet fans and support our hands-on demo. We got 20 billion impressions from that tour so far. Over 1,000 articles were written and 71 content creators engaged worldwide, which at this stage is really good and only the beginning. Just over a week ago, we were at China Joy in Shanghai with a very promising reception from the local audience. We are also listening [indiscernible] and localization quality, which, as I mentioned before, is extremely important for us. Next up, we're in [indiscernible] gearing up for a great show [indiscernible] including a community event where you're all invited. Our marketing accelerates further in the third quarter. I can't feel too much for now, but there's a lot to expect leading up to the launch. We got coverage, coding [indiscernible] gamer, how [indiscernible] do gone a border sequel that we ever could have expected. So we're very grateful for this reception, but we also keep it in [indiscernible] reviews of the finish game, obviously. But even from that demo, the game has come a long way, so we're very bullish. Interest has matched the sentiment, as of today, we have over 1.5 million wish lists across platforms, wish list growth, as you know, typically tracks campaign activity, which will keep intensifying further in [indiscernible] During the campaign window in June, our analytics showed that CONTROL Resonant was among the top 3 most preordered games on PlayStation in U.S., Germany and Brazil. And Chinese-speaking markets [indiscernible] strength in both our traditional and growth markets. So there's been a lot of talks around a very busy launch window and for good reasons. There are a lot of great games coming in September, but then to ship an outstanding game and a very unique experience that we believe has a real chance to stand out. The following factors also give us an [indiscernible] major platforms, which is a first for Remedy and our -- and this is our most localized product ever, which I believe I mentioned before [indiscernible] our audience. Also the price point [indiscernible] for the standard edition. This is basically AAA quality at an attractive price against comparable titles in autumn. We made the conscious decision to keep this product priced attractively. Overall, I just don't think there's such things as a perfect window these days. There are amazing games coming out all through the year. I think the real differentiators today is quality and uniqueness, where we're pushing really strongly on CONTROL Resonant. So that's it for CONTROL Resonant. Let's look at our games in the market. Alan Wake 2 passed 3 million lifetime copies sold during the second quarter. Consumer sales continue at an expected pace and royalties in Q2 were generated entirely from consumer sales. No platform deal accruals this quarter. Control is a good example of the power of franchisees, which is extremely important for me. In its seventh year on the market, Control grew year-on-year in Q2. Over 6 million copies sold, more than 20 million lifetime players. The CONTROL Resonant campaign is renewing interest in the original game, and Control remains the entry point into the franchise for new fans. On FBC: Firebreak, and fortunately, this is the main driver of the year-on-year decline in game sales and royalties because as mentioned previously, the comparison quarter contain its launch and the initial accruals that came with it. This quarter, most of Firebreak sales were revenue accruals from our subscription service agreements. And the game continues to be available on Xbox Game Pass and PlayStation Plus. Naturally, all eyes on CONTROL Resonant, but it's important to remember that we are a multi-project studio. Maxpain 1 and 2, remake remains in full production with Rockstar Games and our new project move to production readiness, the next stage gate on our development framework. And with that, over to Santuu for the financials.
Thank you, JC, and good afternoon. So before jumping into financials, let's start with discussing the reporting logic. As this is now first time when we are receiving preorders as a self-publisher, it's good to walk through how these are shown in our P&L and balance sheet. So before the game loans, preorders are not recognized as revenue. As based on IFRS, sales cannot be accrued before the performance obligation has been fulfilled. In our case, this means delivering the game to the players. Based on this, on the launch date, our preorder revenue is recognized. And at the same time, also related platform fees and royalties are accrued as costs. After that, accruing sales and the related partner expenses will happen on a continuous basis. On balance sheet, preorders are shown in advances received only if we have received payments from the platforms before the game launch, as there's usually at least one month delay in receiving the payments there are no cash flow impacts from preorders in our Q2 reported figures. After the game launch, reported sales will be shown in trade receivables or in cash, depending on -- if the payment from platform to us has taken place. And as I said, there is usually at least one month delay with the actual payments related to sales, and this also varies depending on the platform. In outgoing cash side, it's good to note we are paying contract-based royalties to our partner with delay after first receiving the cash ourselves. Then let's move on to actual figures of our second quarter report and start with the revenue. So our second quarter 2026 revenue was EUR 10.2 million, decreased from the previous year was 40 percentage. The decline in revenue was mainly from the game sales and royalties side. The main factor for the decrease was the initial revenue across from FBC: Firebreak, subscription service agreements that were linked to the release of the game, the comparison period last year. In Q2, 2026, Control, FBC: Firebreak and Alan Wake 2, the main drivers of game sales and royalties revenue. Looking at the development fees, those also decreased from the comparison period. The development fees were from Max Payne 1 and 2 Remake and CONTROL Resonant. In this quarter, the exchange rates didn't have a big impact on the revenue level. Then looking a longer period, we can see revenue variations from quarter-to-quarter. The amount of development fees is based on accrete development milestones. In Q2 2026, those were on a lower level than during the last couple of quarters. In a longer perspective, we can see the effects of the self-publishing strategy. The game sales royalties have been on a higher level since the beginning of 2025 as our own published games generate meaningful game sales. FBC: Firebreak continues to be available in the gaming services. However, the game is already one year old, and we have not had new game launches since then, which explains the decline in game sales. And as I said, CONTROL Resonant preorders are not included in the Q2 figures as we cannot accrue these sales before the game is available to the gamers. Then moving on to profitability. So the operating profit was minus EUR 3.9 million in Q2 2026, which was EUR 3.5 million less than in the comparison period. EBITDA was at minus EUR 2.4 million, and on a lower level than in the comparison period. Our other operating expenses increased from a year ago as we ramped up our marketing efforts for CONTROL Resonant. As we head to the third quarter and the game launch approaches, the marketing expenses are expected to grow even more. Overall, the profitability was largely affected by the revenue increase in Q2 2026, driven by lower level in game sales and royalties and also partly in development fees. Then let's dive in our costs in more detail. So, gross external development and personnel expenses in total [indiscernible] by 8.5 percentage from EUR 12.6 million in Q2 '25 to EUR 11.6 million in Q2 '26. Following the year-on-year trend and taken a development needs in the game projects, the external work expenses were at EUR 2.6 million being clearly lower than a year ago. We have been able to complete more required external development in-house than before. Personnel expenses increased by 7.3 percentage and were EUR 9 million in Q2. The increase was mainly due to general increase in salary levels and additional efforts towards the game launch. The capitalized development expenses were EUR 3.7 million in Q2 '26, the amount of capitalization is higher than in the previous quarter, mainly due to the increased development efforts put into CONTROL Resonant. Then depreciation. In total, it was EUR 1.6 million and were on a level in Q2 2026 than -- sorry, it was on a lower level in Q2 2026 than during the previous quarters. EUR 0.9 million of the total depreciation was related to game projects. This included Alan Wake 2 and FBC: Firebreak depreciation. Depreciation closely follow the level of game sales of the games, which we are depreciating. Depreciation of CONTROL Resonant will start when the game has launched. And other depreciations have stayed on a similar level from quarter-to-quarter. At the end of June 2026, our total cash level was EUR 29.6 million, including EUR 9.6 million in cash and EUR 20 million in short-term cash management investments. Cash flow from operations was EUR 0.7 million negative. The main driver for the negative operating cash flow was the period low revenue level. Cash flow from investments at minus EUR 3.8 million had the biggest impact on the period-end cash position as the investments in our capitalized development projects mainly in CONTROL Resonant increased. Cash flow from financing included the IFRS lease liability payments and it was on a similar level as in previous quarters. Net cash flow in the first half of 2026, has been minus EUR 0.1 million, including EUR 7 million investments, offset by positive operating cash flow. So looking at the year-to-date revenue from the first half of the year, it was EUR 23.3 million. This is EUR 7 million less than the first half of 2025 as we had Firebreak launching in second quarter 2025. In the first half of 2026, we started investing more in marketing. At the same time, we have kept on working on our cost structure, and we have managed to decrease our outsourcing expenses. Ahead of the new game loans, our profitability declined from a year ago with EBITDA being in the first half of the year, 2.3%, it's positive and EBIT, 12.5%, it's negative. This year's profitability in overall will be the [ 1% ] of CONTROL Resonant. And now JC will continue with outlook.
Thank you, Santtu. So our outlook is for the year -- thank you. Our full year outlook is unchanged. We expect revenue and EBITDA to increase from the previous year.
All right. So let's get to the Q&A session next.
Any questions you have leave those in the text box below the webcast. We already have a couple of good questions in the pipeline, so let's begin with those. A bulk of the questions are in relation to CONTROL Resonant first, and let's start with the commercial indicators. After disclosing more than 1.5 million wish lists, what can you tell us about the conversions in the preorders?
Yes. Okay. So first, 1.5 million wish list is an achievement. We're very happy about where we stand, and we're pretty much on track with we were planning. So that's actually great news. When it comes to conversion, of course, it really depends. We've seen games actually with a lot of wish lists not converting as well. We've also seen some games, which were not as focused on wish list that did really well. So we -- this is not science. The one thing we control today is to push that number as high as we can. And of course, one thing that is really positive for game like CONTROL Resonant, it's the sequel of a well-established franchise which obviously has a nucleus of players of fans that are here, and we hope will be here day 1, and that is conversion, but also all the work that the team is bringing today to expand our global audience and make that a day 1 purchase. Obviously, we can expect through a healthy level of conversions.
Very good. And then looking at the conversions, are the preorders running ahead or in line or behind your internal plans?
Preorders are positive also. As I mentioned in the slides, we're very happy about being in top preorders in the kind of window that we released that -- did that announcement. So, so far, very happy, very bullish on preorders. Of course, we don't have internal as easy numbers to compare. But what I can say is that it's tracking ahead of some of our previous games, which is very healthy again on the preorder front.
Very good. And then on the wish list number, is the figure cumulative or net of cancellations?
Yes. So it is net of cancellations. So it's actually a true number. We've actually removed people that decided to pull out. So that's basically -- I could say here that is an absolute number. And yes, it is cumulative. But of course, removing people. One thing I wanted to mention also both for preorders and wish list, it's still early. And most of these numbers accelerate much further as we get closer to launch. So we're again tracking well.
Very good. Is there something you want to communicate for the split between platforms and the preorders?
So I can't give precise numbers on the split. What I can say is it's strong on all platforms.
Very good. Excellent. Then heading to China next, how has CONTROL Resonant been received in the Chinese market or the Chinese speaking market? And what are your expectations for that market?
So indeed, and I've said it before, China is a priority for us along all our core markets. But -- and the reason for that, by the way, is our data has shown that Control has done really well in China. This is a franchise that resonate well in China, which is also why this is grounded in reality, this is not kind of a shot in the dark. And also why we were at [ ChinaJoy ] just a bit more than a week ago, and we had actually a great show, allowing people actually fans, press, content creators to play the game. And the game has been really well received so far. So -- and as I said, extremely important for us to really feel how the game resonate locally. And also the quality of localization since, as you know, for Chinese, we also have [ VIO ]. So we're being very close to feedback from local audience.
Very good. Then next, maybe to Santtu, how does your niche -- how does your share of net sales with Annapurna change once the production and marketing investment is recouped?
Yes. First of all, when the recouping the investments is happening, it's happening in relation of the investments made. And after the investment has been recouped, then Remedy will receive a greater share of the net sales of CONTROL Resonant.
Very good. Then on the marketing spend, we said that the marketing will accelerate further in the third quarter, but will Q3 marketing spend for CONTROL Resonant exceed Q1 and Q2 [indiscernible] Santtu?
I think it's a good assumption that the kind of peak of the marketing cost and the investments made, it will happen around the launch window. I will not give an exact guidance for Q3, but I can say that the second half of the year, it's greater in marketing costs than the first half of the year.
Then the next one is what is the total budget for CONTROL Resonant? I mean it's in line with our AAA budget, is it something you want to add on that?
Well, I can say that, as you said, it's a AAA game which anyway, I think Remedy can make much more affordable way compared to many companies around that world.
Excellent. I think those were the questions for CONTROL Resonant as a moment, but let's continue with the Control franchise. So also Control grew in comparison to the comparison period, was this in copies revenue or both?
I would say it's in both. As currently, of course, the discounts are quite deep. So we get a lot of copies sold, but also in sales, we are getting a good traction with Control.
Excellent. Then heading into a bit more general questions next, JC. The third new project is moving with a solid pace in the development pipeline and a bit faster than the previous games. What are the key drivers behind us accelerating the pace with the new project?
Yes. That's a good question. I'm happy that's actually focus on other projects and how we develop games because obviously, Remedy, we always strive to improve on how we make games. And it was a priority for me when I joined Remedy. So it's indeed progressing well. I would say the main factors for this is a team that is well staffed, early. It's a project that is well managed and well planned, which allows us to basically be on time on quality for each of the milestones -- development milestones, always, always keeping quality product at the center of it. So I am, and we're not interested in just getting through the gates just for the sake of it. It has to be a great game that we're building every step of the way. And that's -- yes. So I just want to put it out there that, yes, it is, and it's actually progressing well, both on time and on quality.
Then Santtu, extending on the marketing budget, is the budget fixed? Or is there a potential to increase it if the reception is good enough?
Yes. We have a certain base marketing plan, which we follow. But of course, when marketing this kind of game, there needs to be room to take also reaction depending on how we see things are working out. So yes, it's a flexible budget also.
Very good. Then heading to more general questions with JC. Will you report your older titles to mobile phones?
Early to say. We're very happy about kind of the quality of Control on mobile, which was released not long ago. That's actually a great proof of concept, I would say, but too early to say for other games. But if there's an opportunity, we're always looking at all new platforms. I see questions around the mobile, but there's questions around Switch 2. And these are platforms we always keep an eye on. We'll always keep in the future looking into. And if there's the ability both to do it and to get in the hands of more players, that's going to be a very, very important focus for Remedy. We talked about growing our global audience and you do it through marketing, our publishing strategy, on a specific game. You also do it by being on more platforms. So we'll absolutely be looking at moving to more platforms, be it mobile, console or others.
Excellent. Then looking more to the development pipeline, again, are you exploring live service games in the future?
Not a focus today. There's been -- of course, there's experience now in the studio with the different projects that were done in the past today. Today, and I think I said it in my first earnings call, and I said it again, we need to be extremely strong at the core, and we need to defend the core of what makes Remedy great. And today, what makes Remedy great is incredible, super creative, high-quality single-player experiences. I'm not going to move away from this until this is in an excellent place. If there is a good reason to look at a life service model, then we'll start looking at it. But I'll repeat, today, this is not a priority.
Very good. And then on the new project that is now in production readiness, can you comment on whether you're in the process of looking for financing and publishing partners? Or is it self-published?
It's too early to say. Today, our priority, of course, is to self-publish our own games.
Very good. And then I suppose going to the transmedia opportunities, have you considered expanding [ Remedy connected universe beyond games ], for example, transmedia or films?
Absolutely. And if you actually dig a little bit, you see that we've already made some moves in this space. And yes, Transmedia for such a story-rich studio that we are and story-rich franchises, it would be an enormous waste not to invest into the Remedy Connected Universe. And actually, that's something to me, I'm very bullish on. So yes, absolutely, one, the Transmedia strategy is central to Remedy. And two, the RCU is central to Remedy's future.
Very good. Then on the long tail of CONTROL Resonant, are you exploring DLC options for CONTROL Resonant?
So let's see how the game lands. I am not the type of going -- have a manifest destiny approach and -- but if the way we plan, it's going to be a great product and it's going to land well. We will absolutely be looking into content updates, if we can give more to happy players, we will do so.
Excellent, excellent. And then I suppose last question on the commercial topics of CONTROL Resonant. Are you considering adding additional language supports like Arabic or additional localizations? How do you view localization in general?
So we have heard wonderful people in [ MENA ] and the fact that -- and some of the disappointment that came from not supporting Arabic, Unfortunately, on the that side, it was a tricky one for us. But, we are not forgetting you. I can't give any promises, but as I said to me, as I said earlier, like localization is really important and high-quality organization to reach more and new markets. So we will be looking into it for sure. Now I can't say that we will add that to CONTROL Resonant, but Remedy as a whole is something that we need to solve.
Understood. Then a question for Santtu, on the cost side, will outsource development costs once again increase when the third new project moves closer to production?
Outsourced development cost. First of all, they, of course, depend on the needs of the game projects. I would say that there are certain things that it's wise to do outsourced as it adds a certain flexibility to our kind of internal capacity. But at the same time, we have been able to develop our ways of working so that we can do more in-house. So I would say that we are not expecting any significant increases in the external development costs.
Yes. Very good. And then a bit more general question on the shareholder side. Is there something you want to comment on [indiscernible] acquiring a large share of Remedy shares?
Well, this is a question for shareholders. But what I can say is that I'm actually very happy to welcome a long-term investor like [indiscernible]. And I think it's only good news for the strength of our cap table overall. Shareholder, and it's someone that is -- can bring a lot, I think, to Remedy.
There's a lot of questions concerning Max Payne, on that game, Rockstar Games is handling the publishing side. So we cannot comment on those questions. But otherwise, we have run out of questions. So thank you, gentlemen, for the great answers. Thank you for the questions. If there is any questions, you did not have the chance to ask, feel free to send those over at the e-mail address visible now on the screen. We'll be back with the next earnings webcast with our business review for the third quarter of 2026 on November 3, 2026, until then bye, bye from us.
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