Codemasters swings to a profit with digital sales growth

Video game development company Codemasters Group Holdings Limited (LON: CDM) has swung to a profit, driven by a spike in digital sales.

Positive maiden results for Codemasters

The Company announced that for the year ending March 31st, revenue grew 11.9% to £71.2 million. Additionally, the company turned around their loss from the previous financial year; booking a pre-tax profit of £2.9 million from a loss of £1.48 million on-year.

The company attributed the growth to strong growth in digital sales and said it anticipated that this would continue alongside a strong lineup of new games yet to be released. Gross profit increased 16% on-year to £62.4 million, and with digital sales now representing 59.2% of Company sales, margins were pushed up 3% to 87.6%.

Codemasters comment

“I am pleased to report on a milestone year in Codemasters’ rich history, including admission to AIM in June 2018 and considerable strategic developments made across the Group,” said Frank Sagnier, CEO of Codemasters.

“Significant progress was made against each of our key strategic objectives, as well as delivering profitability ahead of the expectations set at the time of the IPO.”

“We expect the continuing shift into digital distribution, together with the evolution of the Games as a Service model, the launch of streaming platforms and Next Gen consoles, our partnerships in China on both PC and mobile and the emergence of esports to provide further opportunities for Codemasters going forward.”

Trading update

The Company’s shares are currently trading down 2.5p or 0.98% at 255p a share 10/06/19 12:20 GMT. Liberum Capital and Shore Capital analysts reached a consensus on their respective ‘Buy’ stance on Codemasters stock, while Berenberg upgraded their stacne from ‘Hold’ to ‘Buy’.