Devolver Digital Inc (AIM:DEVO), the indie games publisher and developer, fell 10% to a new low of 29p after reporting lower profits than expected due to non-cash impairments for under-performing games released in the past year.
A group-wide assessment was made of the commercial viability, carrying value and future prospects of each of its existing games and those in development, resulting in a further US$22.3mln in non-cash impairments to the carrying value of IP and US$47.7mln of non-cash impairments to balance sheet goodwill of previous acquisitions.
“We cancelled some titles, restructured [publishing subsidiary] Good Shepherd, and made impairments to IP and goodwill, reflecting the current lower sector valuations compared to the highs of 2021,” said executive chairman Harry Miller.
“With this reset completed we look forward to building for growth in 2024 and 2025,” he said, noting that there are 10-12 new games to be released this year and over 30 more in the pipeline for 2024 to 2026.
Revenues grew by 37% to US$134.6mln as 12 new titles were released in 2022 to take its back catalogue to 109, with a challenging first half was followed by a stronger second thanks to the success of Cult of the Lamb and Return to Monkey Island.
Normalised earnings (adjusted EBITDA) of US$23.2mln was down 9.7% on the prior year, with the US$9.3mln impairment taking this to US$13.9mln compared to US$25.7mln last time, while cash stood at US$79.5mln.
Devolver floated in London at a price of 157p in November 2021 and quickly rose to above 210p, but has plunged over 85% since, scraping a new low in morning trading.