Video games developer Frontier Developments (FDEV:AIM) firms 6.7% to £11.78 on news of better-than-expected sales for the year ended 31 May 2019.
Backed by Chinese social media and gaming giant Tencent, Cambridge-based Frontier Developments now expects to report record annual revenue of around £89m.
That is north of analysts’ estimates, more than two and a half times the previous financial year’s £34.2m haul and reflects the successful launch of Jurassic World Evolution a year ago.
MONSTER HIT
Frontier Developments’ fantastic second half was driven by the strong debut of its third self-published title Jurassic World Evolution, which benefited from release alongside the smash-hit Hollywood movie Jurassic World: Fallen Kingdom.
In addition, it reflects long-tail recurring revenues from previous gaming hits Elite Dangerous and Planet Coaster, the group’s first two self-published titles.
Encouragingly, Frontier Developments is also guiding to a 21% operating margin for fiscal 2019, a huge leap on the 8% last year.
ANALYST UPS 2019 ESTIMATES
Finncap’s Lorne Daniel lifts his 2019 revenue estimate from £83m to £89m accordingly and thanks to the much improved margin, upgrades his pre-tax profit estimate from £18.6m to £20m.
Shore Capital notes the operational progress announced last week around the partnership with Bulgarian games developers, Haemimont Games.
‘Although we regard full year 2019 as an outlier (due to the impact of Jurassic World) we are positive on Frontier Development’s growth potential and expect future gaming titles, such as Planet Zoo, to perform on a similar scale to that seen with Elite Dangerous or Planet Coaster’, Shore Capital's analyst said today.
READ MORE ABOUT FRONTIER DEVELOPMENTS HERE
FRONTIER BOSS UPBEAT
Frontier’s chief executive officer David Braben enthuses about ‘our best ever year in terms of our financial performance’ and says ‘we are really excited about delivering our next game, Planet Zoo, later this year’.
Set for launch in the autumn, Planet Zoo will allow gamers to build and manage a ‘truly modern zoo where animal welfare and conservation comes first’.
For more background on Frontier Developments and a look at the bull and bear case, read our Under The Bonnet article from February here.
