Video games developer Team17 (TM17:AIM) jumped 4.5% to 538p on Tuesday as the market applauded the delivery of record sales and operating profits for 2019.
Bossed by chief executive Debbie Bestwick, Team17 also flagged an exciting pipeline for 2020 and assured: ‘We are monitoring the situation regarding the Coronavirus carefully but to date have not seen any clear impact on the business.’
The stock has rallied strongly in recent days, defying the huge market sell-off, up from 462.5p on 28 February.
ABOUT TEAM17
Wakefield-headquartered Team17 is the leader in premium independent video games, famed for the iconic Worms franchise which recently celebrated its 25th anniversary.
Other exciting titles include Overcooked, Yoku’s Island Express, My Time at Portia and Hell Let Loose, Team17’s first 100 player game launched last year.
The AIM-traded star turn focuses on the premium, rather than free to play market, creating games for PCs and consoles as well as the mobile and tablet gaming markets.
DOWNLOADING STRONG GROWTH
Results for the year to December 2019 were stellar, showing sales up 43% to £61.8m as the portfolio of titles continued to grow strongly, with 7 new game launches culminating in over 300 digital revenue lines from which it generates back catalogue revenues.
In fact, over 70% of last year’s sales emanated from the back catalogue, a lucrative part of the business as it requires limited development and marketing spend.
Team17 finished 2019 flush with £42m cash and continues to invest in the long-term growth of the business, having snapped up UK-based software developer Yippee for £1.4m at the start of the current year.
POSITIVE OUTLOOK
Team17 also has a solid pipeline of new game launches for 2020 with ‘more new original game IP launches than in any previous year’. Titles announced so far include Moving Out, a new Worms title, Neon Abyss, Going Under, Main Assembly and Golf With Your Friends to name but a few.
However, due to the impact of these new releases, 2020 revenues are expected to be more heavily weighted to the second half compared with 2019.
Bulls are excited about Team17 because it has a compelling long-term opportunity in a video games market forecast by analytics outfit Newzoo to grow to $196bn by 2022 with a compound annual growth rate (CAGR) of 9%.
Among them is broker Shore Capital, which continues to like ‘the vast low-cost portfolio and huge digital presence’ of Team17. ‘Through targeting the indie market, the company has specialised strategically in a niche market with a typically loyal fanbase and is suitable with many genres and platforms.’
