Devolver Digital Inc on Monday said that the second half of the year saw a considerably improved performance from the first, but remained ‘constrained’ overall on difficult market conditions.

Devolver Digital is a Texas, US-based video game publisher.

The company’s revenue expectations remained unchanged from June, set in the range of $130 million and $140 million.

Trading recovered in the second half of the year, with normalised adjusted earnings before interest, tax, depreciation and amortisation initially expected to be ‘significantly greater’ than the first.

In the six months to June 30, Devolver reported adjusted Ebitda of $6.8 million, down 46% from $12.6 million a year before.

However, Devolver highlighted the ongoing cost impact of three underperforming titles, and weaker than forecast sales volumes in December.

As a result, it has seen lower than expected performance in the second half of the year.

The company’s updated adjusted Ebitda guidance range for the year is now between $20 million and $22 million. Adjusted Ebitda was $25.7 million in 2021, and pretax profit was $51.9 million.

Devolver is also performing a group-wide assessment of the carrying value of balance sheet items relating to capitalised development costs, and acquisition IP and goodwill.

It is expected that these may be material, and that some of the adjustments will impact upon Ebitda.

Looking ahead, Devolver said its pipeline for 2023 was healthy and diverse in terms of titles, developers, platforms and geography.

It expects profitability for 2023 to be heavily weighted towards the second half of the year.

‘Devolver Digital will have posted annual revenue growth of over 30% in 2022. Second half Ebitda was significantly higher than the first half, although the performance for the year was constrained by three underperforming titles and difficult market conditions in December, which contributed to a disappointing result for profitability for full year 2022,’ said Executive Chair Harry Miller.

‘The second half featured the success of Cult of the Lamb, Return to Monkey Island and other released titles, which have re-established our record of releasing high quality and popular Indie games. Metacritic scores have risen to an historical high on the back of the strong slate of releases in 2022. Moving into 2023, we believe market conditions will remain difficult for our industry, however we believe we are well-placed to consolidate our greater scale of revenues and focus on improving margins as we move through the year.’

Devolver shares dropped 13% to 55.00 pence each in London on Monday morning.

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