Codemasters Group Holdings PLC (LON:CDM) shares surged in early trading Monday after the video game developer said its adjusted earnings for the latest full year ended 31 March would be “ahead of market expectations”.
The AIM 100 firm, which develops the official Formula 1 video game, said in an update that trading in the second half had been “strong” and as a result expected adjusted earnings (EBITDA) for the year of £18.5mln with revenues of £71mln and gross cash of £18.4mln.
READ: Codemasters surges as it ups earnings forecasts on back of development partnership with Chinese firm
The outperformance had been driven by an increasing portion of the company’s revenues being generated from digital channels as well as an earlier than expected delivery of technology and support for a deal with Chinese internet and online gaming firm NetEase Inc (NASDAQ:NTES), meaning a greater portion of the contracted revenues would be recognised in the 2019 financial year.
When the deal was announced, Codemasters said it was expecting to receive US$4mln in the current year and a minimum of US$8mln over the next three years.
The new estimates are the second time the group has upgraded its forecasts in 2019, having previously upped its expectations in January. The results will also be the first since the company listed on AIM on 1 June 2018.
Forecasts beat broker estimates
In a note to clients, analysts at the company’s house broker Liberum said the earnings and cash figures were ahead of their own forecasts and that they expected “positive newsflow over the next 12 months”.
The broker also noted a number of “trading positives” for the coming year, including the launch of titles F1 2019 and GRID Autosport.
“It is increasingly clear that CDM has valuable car racing gaming IP, and a proven successful strategy to develop a diversified portfolio of racing games, as a number of major players look to enter and partner with leaders in the market.”
Codemasters intends to publish its final results for the year ended 31 March 2019 in June 2019.
Shares were up 4.5% at 248.7p.
