-Sales up 14%, profitability hit by tough release window
-Full year sales guidance maintained
-Implies 32% full year sales growth
Digital publisher and developer of independent video games Devolver Digital (DEVO:AIM) said revenue for the first six months of 2022 grew 14% year-on-year to $53 million.
However, as highlighted in the June trading update increased administrative expenses and higher headcount combined with the underperformance of releases impacted profitability, slashing EBITDA (earnings before interest, taxes, depreciation, and amortisation) to $16.6 million from $79.5 million in 2021.
The shares dropped 3.6% to 79p on Monday taking year-to-date losses to 61%. Devolver listed its shares on AIM on 4 November 2021 at 157p per share valuing the company at £649 million.
It has a focus on premium games and owns a back-catalogue of 97 games. Devolver plans to release between 10-and-15 new games a year.
FULL YEAR SALES GUIDANCE MAINTAINED
In line with guidance the company said it is on track to release 12 new games in 2022 having released seven in the first half of which five achieved Metacritic scores above 80.
This is the weighted average reviews out of 100 from top gaming critics. A score above 75 is considered favourable and influences potential buyers of the game.
The company said it anticipates generating full year revenues of between $130 million and $140 million implying 32% growth while adjusted EBITDA is expected to grow by roughly 15% to between $27 million and $32 million.
Given 14% first half growth this implies a large second half weighting. Leisure analyst Katie Cousins at Shore Capital believes this leaves a lot of work to do in the second half.
Cousins commented: ‘We believe DEVO is unlikely to recover the majority of depressed H1 sales, although additional content releases may provide a renewed gamer interest if released and of course successful.’
