Starbreeze: Cautious approach remains
Research Update
2024-08-22
06:57
Redeye remains cautious about Payday 3's comeback. While increased player activity following new content releases offers some hope, we currently don't see strong enough signals to alter our somewhat pessimistic outlook on the commercial future of Payday 3.
Tomas Otterbeck
John Westborg
Net sales were SEK5m higher than expected, with an EBITDA almost SEK3m higher than our estimate. However, amortizations were much higher than our estimate, reflecting a more aggressive amortization rate on Payday 3. Payday 3 accounted for SEK22m of sales, while Payday 2 accounted for SEK9m. Its third-party publishing generated almost SEK9m, most likely with Roboquest as the main contributor. Notable, the Payday-franchise generated SEK31m for Starbreeze, which is in line with the sales Payday 2 has generated in Q2 since 2020 for the company. In total Payday 3, however likely generated approximately SEK44m, we estimate half of the revenue is shared with its publisher.
Our top-line estimates for the second half of 2024 remain unchanged. We have opted to maintain a cautious outlook due to uncertainty regarding how many current players have already paid for the DLCs included in the Gold Edition of the base game. Our EBITDA projection for the second half of 2024 also remains consistent with our previous update.
We estimate a net cash position of approximately SEK260m by the end of 2024, which result in a enterprise value (EV) at current levels around SEK0.28 per share of less than SEK150m. These are historically low levels for Starbreeze, and there is much indication that the IP rights for Payday are significantly more valuable despite the rough start for Payday 3. With some minor negative changes regarding cash flow especially in 2025, we have lowered our base case from SEK0.7 to SEK0.6 per share. Our fair value range of SEK0.35 – SEK1.2 per share.
| SEKm | 2022 | 2023 | 2024e | 2025e | 2026e |
| Revenues | 122.5 | 633.5 | 195.3 | 158.3 | 717.3 |
| Revenue Growth | -2.6% | 417% | -69.2% | -18.9% | 353% |
| EBITDA | 66.3 | 441.7 | 82.8 | 33.0 | 514.5 |
| EBIT | 6.7 | 190.4 | -173.9 | -79.0 | 222.0 |
| EBIT Margin | 5.5% | 30.0% | -89.1% | -49.9% | 30.9% |
| Net Income | -54.7 | 154.2 | -171.2 | -71.0 | 234.0 |
| EV/Sales | 9.8 | 1.6 | 5.8 | 8.2 | 1.3 |
| EV/EBIT | 179 | 5.5 | -6.5 | -16.4 | 4.2 |
Net sales were SEK5m higher than expected, with an EBITDA almost SEK3m higher than our estimate. However, amortizations were much higher than our estimate, reflecting a more aggressive amortization rate on Payday 3. This will dampen EBIT in the short-term but will have a positive effect on EBIT more long-term (1-2 years). D&A was SEK60m higher than our estimate in the quarter.
Payday 3 accounted for SEK22m, while Payday 2 accounted for SEK9m. Interestingly its third-parties publishing generated almost SEK9m, most likely with Roboquest as the main contributor.
Disclosures and disclaimers