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Codemasters issues ‘in-line’ trading update as digital business grows

The video game developer, best known for its racing franchises, reported revenues of £39.7mln for the first half, with digital sales growing to 53% of total revenues

Video game controller on piggy bank
Gross margins also improved to 88.5%

Codemasters Group Holdings PLC (LON:CDM) shares ticked up in early trading Monday after the company issued an ‘in line’ trading update ahead of its half-year results.

The video game developer, best known for its racing franchises, reported revenues of £39.7mln for the first half, with digital sales growing to 53% of total revenues and an improved gross margin of 88.5%.

READ: Codemasters races higher as it responds to recent share price fall with solid update

The group also had a net cash position of £17mln.

As a result of the performance, the firm said it expected its full-year results to be in line with its expectations.

The company added that the 2018 edition of its Formula 1 racing franchise, released at the end of August, was expected to make “a material revenue contribution” in the second half as it benefited from Black Friday and Christmas periods, which had traditionally delivered strong sales for the franchise.

Codemaster’s other release this year, its own IP game ONRUSH, was not expected to make a meaningful contribution in the second half but would continue to be supported with new content.

Growth in the firm’s digital business was also expected to grow with future releases and a strong performance of its back catalogue.

In the second half, the company said it would release F1 Mobile Racing, a free-to-play mobile game which will be accessible to a wider audience and could potentially provide new revenue streams, and the release of DiRT Rally 2.0, the sequel to its DiRT Rally game, in February 2019.

Codemasters will release its half-year results on 13 November.

In a note to clients, analysts at City broker Liberum said the company's shares looked "materially cheap" relative to the sector and in the context of Codemasters' "high value IP" in a sector where global technology platform players have "an increasing appetite to innovate".

Shares were flat at 176.5p.

-- Adds broker comment and updates share price --

Quick facts: Codemasters

Price: 216 GBX

AIM:CDM
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Market Cap: £302.4 m
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