Starbreeze's Q2 revenue came in below our estimates, but the shortfall was entirely attributable to the KRAFTON work-for-hire tail rolling off completely, while the core PAYDAY franchise was broadly in line with our expectations. PAYDAY 3 monetization remained depressed, and although engagement showed tentative signs of improvement, this has yet to translate into revenue. Earlier cost actions are slowly feeding through, with headcount down 20% q/q and full effects expected from Q3’26. However, with the cash balance now at 52 MSEK and free cash flow still firmly negative, we see the stated target of achieving positive cash flow by 2026 as increasingly unlikely and financing as a live question within the forecast period. The company continues to advance its capital-light IP-expansion strategy, which we view as strategically coherent but of limited near-term financial relevance. We believe Starbreeze still has much to prove on execution before a more constructive scenario can be justified, and we reiterate our Reduce recommendation and target price of SEK 0.08.

Top-line miss masks broadly in-line PAYDAY revenue

Starbreeze reported Q2 revenue of 26 MSEK (Q2'25: 54 MSEK), about 22% short of our 33 MSEK estimate and down roughly 52% year-on-year. The miss was, however, entirely attributable to work-for-hire and third-party publishing, which contributed no revenue in the quarter (0 MSEK vs. ~26 MSEK a year ago) as the KRAFTON partnership rolled off completely and the longer tail we had penciled in proved too optimistic. The core PAYDAY franchise, by contrast, was broadly in line with our 26 MSEK estimate at ~25 MSEK, though the mix differed. PAYDAY 3 undershot at 11 MSEK (Inderes: 13 MSEK) while PAYDAY 2 came in higher at ~14 MSEK (Inderes: 12 MSEK). The soft PD3 print signals that the monthly update cadence and larger game improvements have yet to translate into a meaningful monetization inflection, though engagement showed tentative signs of improvement during the quarter. EBIT came in at -36 MSEK (Q2'25: -17 MSEK), below our -32 MSEK estimate, mainly on the lower revenue base and still-elevated game amortization (~40 MSEK). EBITDA stayed positive at 3 MSEK (Q2'25: 6 MSEK), broadly in line with our 4 MSEK estimate.

2026 cash flow target looks increasingly out of reach

We have lowered our estimates following the Q2 miss, with the cuts concentrated in the "Special operations/Other" line, where the work-for-hire tail has now fully wound down. Our updated FY26-27 revenue estimates stand at 116-121 MSEK (was 143-140 MSEK), with adj. EBIT of -123 MSEK in FY26 (was -99 MSEK) and -8 MSEK in FY27 (was +7 MSEK). With free cash flow still negative and the cash balance down to 52 MSEK at the end of Q2 (Q1'26: 75 MSEK), we believe the company's 2026 cash flow positive target is looking increasingly unlikely and view the balance sheet as a key risk going forward. While the Q4'25 rightsizing measures should provide sequential cost relief from Q3’26, the revenue headwind leaves any path to sustainable profitability heavily dependent on franchise execution, which has yet to improve meaningfully.

Staying on the sidelines despite the low valuation

The Q2 report reinforces that Starbreeze has entered a defining transition, now standing as effectively a single-IP studio after the KRAFTON work-for-hire engagement fully wound down. The company's recent moves aim to evolve PAYDAY from a single game into a broader, multi-platform IP along two tracks: improving the monetization of the core game and widening the brand funnel through partner-funded reach (e.g. the PUBG crossover, the UEFN launch, VR and Roblox titles, and the VICE Studios screen adaptation). While we see this as a coherent, capital-light way to defend brand equity, the partnerships carry no disclosed economics and the payoff must ultimately show up in not only sustained, but improved core-game monetization and player activity, which we have not yet seen. Despite the low valuation (2026e EV: ~125 MSEK, EV/S: ~1.1x), we believe caution is warranted given the lack of evidence of PD3 stabilization and the unclear path to cash flow sustainability. Until we see sustained franchise execution and clear cash flow improvement, we remain cautious on the case.