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Frontier Developments shares rise on record annual revenues

Published: 09:03 14 Jun 2022 BST

Frontier Developments shares rise on record annual revenues

Frontier Developments PLC (AIM:FDEV) shares advanced 18% after the videogame developer reported a strong second half and record revenue for the full year.

Its full-year revenue reached a record £114mln, up 26% on the prior year, it said in a trading statement. Revenue was boosted by a successful game release, Jurassic World Evolution 2, which the company said continued to build player numbers following its November 2021 launch, with some 1.3mln base game units sold across all platforms – excluding downloads via Microsoft’s Game Pass subscription service (it was added to that platform on May 17 2022).

It was further supported by sales of paid-downloadable content (PDLC) with the company telling investors it saw strong uptake of each of its three separate PDLC packs, as of 31 May.

A new PDLC pack, Jurassic World Evolution 2: Dominion Biosyn Expansion, launches today, it noted, and described the pack as the game’s ‘biggest DLC’ to date. The company said it was a major new expansion and its expected to help deliver a strong start to the 2023 financial year.

Across the rest of Frontier’s portfolio it released four PDLCs for Planet Zoo in 2022, meanwhile, it noted that revenue from the Elite Dangerous game fell below expectations for the year and it aims to support a growing player community and build on narrative aspects of the game during 2023.

Frontier’s third-party game distribution business, The Foundry, published Warhammer 40,000: Chaos Gate – Daemonhunters which is described as ‘already the platform’s most successful title’ following its launch on May 5. Three further Foundry titles are slated in the 2023 financial year.

The video games company told investors it expects to report adjusted earnings (EBITDA) in line with expectations, between £7mln and £8mln, versus £12mln in 2021 reflecting greater investment in significant game developments for release in future years. In particular, it noted the upcoming release of its F1 Manager 2022 sim game due out in September, followed by a Warhammer game in 2024.

It intends to fully amortise Elite Dangerous: Odyssey capitalised intangible asset, following its weak sales performance, resulting in a £7mln charge in 2022 results.

The company noted that it had a £39mln cash balance at the end of May and described its balance sheet as strong.

In London, Frontier Development shares were up 189.6p, or 18%, at 1,267.60p in mid-morning trading, valuing the company at almost £500mln.

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