Shares in racing video games specialist Codemasters (CDM:AIM) traded 2% higher to 337p as it reported maiden full year revenues up 6.8% to £76 million and gross profit up 4.5% to £65.2 million for the period to 31 March 2020.
The reported numbers were already flagged in the trading update on 7 April with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £18.2 million.
Codemasters noted it had seen a significant shift in the sales mix towards the digital channel, which now generates 68% of revenues compared with 59% in 2019.
Higher revenues were the result of major game releases F1 2019 and GRID, as well as a full year’s revenue from DiRT Rally 2.0 which was released in February 2019.
During lockdown the company saw a significant shift towards digital channels as the physical outlets were closed. The number of active daily users increased over two-times to around 800,000.
While the number of active users has fallen slightly as economies have reopened, there is an expectation that they will level-out at a higher level than seen before the pandemic.
The company expects the shift to digital channels to continue in future which will see the gross margin increase.
STRONG ROSTER
Last year’s acquisition of Slightly Mad Studios (SMS) brought two highly rated franchises to the racing themed portfolio, including Fast & Furious Crossroads which will launch on 7 August, and Project CARS 3 later in the summer.
Management has indicated that SMS is expected to enhance earnings by around 30% during the first full year of ownership.
Meanwhile DiRT 5 is set to be released in October and the latest official F1 will be out on 10 July.
The company highlighted a significant opportunity for Games as a Service (GaaS), mobile gaming and esports, which will form a major part of the firm’s future growth strategy.
The first F1 Esports China Championship took place in January and attracted 1.6 million online viewers.
According to consultancy Newzoo, global esports revenues are expected to top $1 billion this year and reach $1.55 billion by 2023. The company hopes to generate revenues opportunities from sponsorship and broadcasting as the market develops.
Analysts at Shore Capital commented, ‘We are encouraged by the strong operational momentum that Codemasters has shown over the past couple of months and believe that this will only strengthen the company’s pipeline and financial position.’
