Devolver Digital Inc on Tuesday said it swung to an annual loss, as costs of sales more than offset rising revenue, while it cited a ‘challenging’ first half of 2022.

Shares in Devolver were down 13% to 28.00 pence each in London on Tuesday morning.

The digital publisher and developer of independent video games said it swung to a pretax loss of $98.8 million in 2022 from a profit of $50.0 million in 2021.

This was despite revenue increasing by 37% to $134.6 million from $98.2 million, as cost of sales almost doubled to $112.1 million from $58.9 million.

‘Devolver’s revenues grew by 37% year-over-year, despite a challenging first half, underlining the resilience of our proven model,’ said Executive Chair Harry Miller.

‘From the game release perspective, we saw a stronger second half with the stand-out success of Cult of the Lamb and Return to Monkey Island [...] At the same time, we underwent a group-wide, title-by-title assessment of commercial viability, carrying value and future prospects. We cancelled some titles, restructured Good Shepherd, and made impairments to IP and Goodwill, reflecting the current lower sector valuations compared to the highs of 2021.’

As a result, Devolver said it expects to grow in 2024 and 2025, after ‘complet[ing] this reset’.

It said it is on track to release 10-12 new games in 2023, weighted to the second half, while there are currently over 30 titles in its pipelines, including ‘several exciting new titles’ to be announced during 2023.

‘We have a clear strategy and a strong pipeline for the next three years that will continue to diversify and grow our revenues across titles, developers, platforms and geography,’ said Chief Executive Officer Douglas Morin.

Copyright 2023 Alliance News Ltd. All Rights Reserved.