Proactive Investors - Run By Investors For Investors

Frontier Developments coasts into 2017

Theme park sandbox game Planet Coaster has been well-received
Planet Coaster
A third gaming franchise is on the way in 2018

Independent computer games developer and publisher Frontier Developments PLC (LON:FDEV) shifted more than half a million units of its Planet Coaster title last year.

The title – the second Frontier game design that the company has published itself – was released in November to critical acclaim.

Meanwhile, the flagship franchise Elite Dangerous (yes, Commodore 64 fans, the successor to the seminal Elite game), continues to sell well, and by the end of 2016 had shifted more than 2.1mln units.

The company is mutating from a “game designer for hire” to a publishing house, and to that end it revealed earlier this week it has licensed rights from a major Hollywood studio to develop a game based on an enduring movie franchise of global renown.

Frontier said a game based on this franchise should be published in 2018.

Turning to the rear view window, results for the six months to the end of November revealed revenue surged to £18.1mln from £10.9mln the year before, topping management’s expectations.

Profit before tax soared to £3.65mln from £440,000 the previous year. Underlying earnings, or EBITDA, jumped to £5.8mln from £2.1mln in the same period of 2015.

The board said it is confident of meeting full-year sales expectations.

"I am delighted that, as planned and on schedule, Frontier is now self-publishing multiple franchises. This marks the end of the transition in our business model and the beginning of a new phase of growth,” said David Braben, the chief executive officer of Frontier.

“Our strong financial position enables us to further our investment across the business as we scale for long-term growth. We made another important step toward that goal by recently choosing to licence a globally-renown[ed] IP [intellectual property] from a major Hollywood studio to develop as our third franchise,” he added.

According to house broker finnCap, the main conclusion to derive from these results is that Frontier has grown revenue, profit and profit margin by launching an additional game (Planet Coaster).

“We believe this should give investors confidence that the company can repeat this process when its third and fourth franchises are released,” finnCap’s Harold Evans said.

“Thanks to the versatility of Frontier’s development software ‘COBRA’, Elite is also scheduled to debut on the PS4 in 2H17 and in doing so will again broaden the game’s addressable market and create further sales opportunities,” Evans suggested.

Shares were down 4.5p at 278p in mid-morning trading. 

View full FDEV profile View Profile

Frontier Developments Timeline

Newswire
February 09 2017

Related Articles

Big Data
Mon
The company provides data management and analytics services through RAPid, a platform that automatically extracts, aggregates, improves and organises data and documents
Mobile payments
February 15 2019
The firm works with tech giants such as Google, Amazon, and Microsoft to help them process payments from their mobile customers across their app stores
lock
October 18 2018
Managed services revenue jumped 52% in the first half of 2018 with the order book standing at £2.4mln.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use