Redeye updates its view on Starbreeze. The company continues to build a solid foundation around its primary asset Payday.  Last year one good example was the community platform Nebula and this year, an announced partnership with a production company to create a TV series or movie. Despite the fact that all investors are focused on Payday 3, we are glad to see that a pipeline of other games is started to grow beyond Payday.

Bioinvent International

Arise

Bredband2

Heliospectra

BrightBid

Starbreeze

* Industry's 10-year median ROIC is below 15%, indicating potentially lower long-term returns.
* Signs of weakening competitive advantage may lead to declining profit margins and cash flows.
* Lack of diversified revenue base increases vulnerability to market fluctuations and potential revenue loss.
* Products do not significantly contribute to the greater good, potentially limiting appeal to ethically-conscious investors.

* Strong recurring revenue model enhances business stability and predictability, making scaling easier.
* Asset-light business model allows for efficient scaling without costly reinvestment, enabling faster expansion and better cash generation.
* Partnership with Krafton for PUBG positions the company to capture significant value in the gaming market.

* Gross Profit Margin and Operating Margin (EBIT) are below the desired thresholds, indicating potential profitability challenges.
* Return on Equity (ROE) has not consistently reached 20% over the last five years, suggesting inefficient use of shareholder capital.
* Stock price has not compounded by at least 10% since IPO, indicating underperformance in long-term investor returns.
* Earnings (EPS) growth has been inconsistent and below the desired 10% threshold over the last five years.

* Revenue growth has consistently outperformed the industry average over the last five years, suggesting market share gains and competitive strength.
* Current assets are 1.5 times greater than current liabilities, demonstrating strong short-term liquidity and financial health.
* Net Debt is less than two times Operating Cash Flow, indicating a favorable debt repayment capacity using operating cash flow.
* Cash and short-term investments cover expected cash burn for more than two years, signaling market resilience and reduced need for immediate fundraising.

* Short tenure of senior team and CEO, with CEO lacking extensive business experience
* Inconsistent delivery on promises and poor track record of value creation
* Increase in share count without corresponding EPS growth, indicating potential dilution
* Low insider ownership and lack of significant stakes held by board members and management

* Clear strategic plan focused on creating value and commitment to innovation
* Incentives aligned with long-term shareholder value
* Presence of a controlling owner with long-term commitment and promotion of female representation in leadership


SEKm	2020	2021	2022	2023e	2024e
Total Revenue	118.0	125.7	122.5	974.0	792.6
Revenue Growth	-57.9%	6.6%	-2.6%	695%	-18.6%
EBITDA	49.3	6.3	66.3	370.7	168.3
EBIT	-16.2	-53.7	6.7	286.5	22.2
EBIT Margin	-13.7%	-42.7%	5.5%	29.4%	2.8%
Net Income	-151.0	-100.1	-54.7	257.9	14.2
EV/Revenue	7.8	7.1	8.6	0.8	0.9
EV/EBIT	-57.0	-16.5	156	2.6	31.5

Solid result in the wait for Payday 3

Time to build a company after Payday 3

Valuation

Key financials

Solid result in the wait for Payday 3