Correction: Interim report January - June 2016

Interim Report attached
Second quarter 2016

  · Revenues for the second quarter amounted to SEK 234.9 (182.0) million, an
increase of 29 % compared to the same period last year.
  · Operating profit amounted to SEK 142.3 (68.4) million, an increase of 108 %.
  · Profit before tax amounted to SEK 142.9 (68.4) million, and profit after tax
amounted to SEK 110.6 (53.2) million.
  · Cash flow from operating activities amounted to SEK 62.1 (174.5) million,
and cash flow from investing activities amounted to SEK -25.1 (-20.7) million.
  · By the end of the period, cash and short term placements amounted to SEK
143.2 (176.4) million.
  · During the second quarter of 2016, the internally developed games Stellaris
and Hearts of Iron IV were released. In addition, an expansion for Europa
Universalis IV, “Mare Nostrum,” was released. Revenues from the second quarter
of 2016 are mainly attributable to Stellaris, Hearts of Iron IV, Cities:
Skylines, Europa Universalis IV, Pillars of Eternity and Crusader Kings II.

First six months 2016

  · Revenues for the first six months amounted to SEK 328.2 (386.7) million, a
decrease of 15 % compared to the same period last year.
  · Operating profit amounted to SEK 167.5 (166.0) million, an increase of 1 %.
  · Profit before tax amounted to SEK 168.0 (165.8) million, and profit after
tax amounted to SEK 130.0 (129.0) million.

Important events in the second quarter

  · On May 31, the Company was listed on Nasdaq First North. The aim was to
invite employees, fans, and other long-term stakeholders to participate in the
Company's continued journey. A total of 15.5 % of the company was offered, and
the Company gained over 22,000 new shareholders.
  · In June, Paradox participated at E3, a major global trade fair for
interactive entertainment. Among other activities, the upcoming role-playing
game Tyranny, developed by Obsidian Entertainment, was shown to invited media.
  · From June 23 to July 4, the annual "Steam Summer Sale" included several
popular Paradox titles.

Words from CEO

The best quarter in Paradox’s history

Over the past 5 years or so, Paradox has followed a clear path with one of the
main principles being growth while being profitable. Therefore it is neither a
coincidence nor luck that we have just had our strongest quarter in our company
history. On the basis of that, however, it’s important to remember that we will
continue to have stronger quarters and less strong quarters, just like we’ve
previously communicated.

The overriding objective has been to continue to build a company where we are
sustainable and profitable over a long period of time and where the foundation
is our existing target audience and our Paradox formula (the Paradox game
pillars). In addition, we will use strategic acquisitions and partnerships, like
the acquisition of White Wolf, to give ourselves additional strategic height to
continue developing and challenging ourselves to create even better products.

We have a strong product portfolio, which reduces risk by making us less
vulnerable during any single game release. However, any successful game launch
naturally increases our ability to invest more and continuously develop and
improve ourselves with regards to quality, to ultimately create better products.

Initial success also tends to correlate with a longer long-tail of revenue for
each brand, in particular since we continuously create and release new content
for our games. A larger player base also means there is a larger group of people
who create their own content like modifications, YouTube videos, and streams for
each game which helps to keep the brand alive over time.

During this second quarter, we released two internally developed games within
the niche that is our absolute strongest, and for this reason we knew results in
this quarter would be strong. That it would end up being our strongest quarter
in our company history did not become apparent, however, until we initiated the
sales campaigns for each game.

Stellaris has received a very positive reception on the market and beat the
previously held company revenue record for the first 24 hours of sales. Even
though the game to some extent builds on the formula that has made Paradox
Development Studio a world leader within their niche, the game has several
elements where the team has pushed boundaries, tested new things and implemented
changes.

Hearts of Iron is one of our biggest and most successful brands, and with so
many existing fans, expectations for a new title were gigantic. Not only did
Hearts of Iron IV meet these expectations, but it also became the fastest
-selling historical strategy from Paradox to date. User reviews and media
reviews show that the team managed to both meet the high customer expectations
and, much like with Stellaris, attract many new players.

That both new and existing players appreciate both games is a good example of
how we as a company can capitalize on our existing strengths while at the same
time develop and challenge ourselves.

In addition to these games, the games released during the period 2012-2015,
mainly Crusader Kings II, Europa Universalis IV and Cities: Skylines have also
showed good sales during the second quarter. One of the common denominators for
all of these games is that the player base is very active, both in the number of
played hours but also (perhaps more importantly) because they create a lot of
new content that they share with other players.

In addition to the already announced projects as well as those already out on
the market, we currently have several active projects in the different stages of
the production cycle including the pre-production phase. Out of these projects,
some will never reach the production stage or be announced.

In June, Paradox passed 1.5 million monthly active users for the first time. The
number of active players is a good indication of how a company in the games
industry is doing, particularly when the numbers and trends are looked at over a
longer period of time. In our case, we’ve had a very clear trend upwards for the
last couple of years.

We have had a very close relationship with our community from the very beginning
and all of our employees, particularly our developers, are encouraged to have
direct contact with our players. This has absolutely been a contributing factor
to us growing our player base while retaining that important personal touch, as
well as understanding what our players want. A good game is a game that players
play often, play for a long time, and are willing to pay for.

We remain well financed with a strong cash position and we will continue to
focus on financing games that match our portfolio and are based on the brands
owned by Paradox to a large extent.

White Wolf publishing now has a team of 5 people working on the licensing
business and we hope to soon be able to reap the rewards of this work.

On May 31, Paradox was listed on First North Premiere and we received more than
22,000 new shareholders. Since our goal was to invite more people on our journey
in the long term, we were particularly excited to see so many fans and employees
among the new shareholders. The development for the stock price has been
positive and is currently at 85 % above the introductory price.

With the listing we have started a new chapter for Paradox. This new chapter
presents many new possibilities but the same basic principles upon which we have
built this company remain. In many ways our journey has only begun. Expect ups
and downs but growth with profit over time. Or as we like to call it “business
as usual”.

Fredrik Wester, CEO

Presentation of interim report

Fredrik Wester and Andras Vajlok will host a live stream to answer report and
financial related questions on our Twitch channel at 12:00 PM CET (noon)
https://www.twitch.tv/paradoxinteractive.

Submit your questions before via our forum
https://forum.paradoxplaza.com/forum/index.php?threads/quarterly-report-q-a
-stream-12-pm-cet-noon.964121/, by e-mailing them to ir@paradoxplaza.com or
directly in the Twitch chat. The Twitch chat is open for anyone to view but to
post comments or question you will need to create an account.

This information is information that Paradox Interactive AB (publ) is obliged to
make public pursuant to the EU Market Abuse Regulation and the Securities
Markets Act. The information was submitted for publication on August 25, 2016.
For more information, please contact:
Fredrik Wester, CEO of Paradox Interactive
Andras Vajlok, CFO of Paradox Interactive
Email: ir@paradoxplaza.com
Telephone: 070-355 54 18
About Paradox Interactive

The Paradox Interactive group includes publishing and internal development of
games and licensing of White Wolf’s brands. The publishing operation publishes
both internally developed titles and titles developed by independent studios as
well as music and books. The game portfolio includes more than 75 titles and
Paradox Interactive owns the most important brands, including Stellaris, Europa
Universalis, Hearts of Iron, Crusader Kings, Cities: Skylines and Magicka.

 From the start over ten years ago, the company has published its games all over
the world, initially through physical distribution using partners, but beginning
in 2006 has primarily distributed digitally using its own publishing arm. The
development platform is primarily PC, but the company has released games on
console and mobile platforms as well. The largest markets today include the US,
UK, Germany, France, Russia and Scandinavia. Today, more than one million gamers
play a Paradox game each month and the number of Paradox registered users
exceeds five million.