Shares in racing car games developer and publisher Codemasters (CDM:AIM) raced 9% higher on Wednesday to 395p after the company said it expected to report a doubling of revenues to approximately £80.5 million for the six months to 30 September.
Digital sales as a proportion of total sales increased to 73% from 61.7% which resulted in an improved gross margin to 92.9% from 89.3% reflecting the virtually zero incremental cost of digital sales compared with physical. Some of the improvement was attributed to Covid-19 impacting the sales mix.
The higher gross margin dropped through to EBITDA (earnings before interest, taxes, depreciations and amortisation) which grew 123% to around £21 million representing a margin of 26% compared with 23.6%.
NEW RELEASES
Improved trading benefited from the launch of F1 2020, Fast & Furious Crossroads, Project Cars 3 and continued sales of the back catalogue.
Looking ahead to the second half the highly anticipated launch of DiRT 5 is scheduled for release on 6 November on Xbox One, PlayStation 4 and PC with versions for the next generation consoles (Xbox Series X/S and PlayStation 5) launching from 10 November.
A Google Stadia version will also launch. DiRT 5 has already received the Best Racing Game award at Gamescom 2020.
Project CARS GO will be released which will help broaden the mobile offering while the commercial partnership with Netease is on track to release a new game in 2022.
‘FURTHER UPGRADES COULD BE LIKELY’
Broker Shore capital said although it had already upgraded its full-year forecasts for revenues and EBITDA following the August update to £120 million and £29 million respectively, ‘we expect the company to positively benefit from the key promotion period (CY Q4) and if current trading conditions and increased digital sales continue for Codemasters, we believe our forecasts will be too light and therefore upgrades could be likely.’
