Frontier Developments shares surge on record £114m annual revenue

Frontier Developments shares surged 19.2% to 1,286p in early afternoon trading on Tuesday after the group reported a record annual revenue climb of 26% to £114 million in FY 2022.

The company’s adjusted EBITDA is estimated to hit management expectations at approximately £7 million to £8 million against £12 million in FY 2021.

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Frontier Developments attributed the drop in EBITDA to higher levels of investment in significant game developments for release in the coming years, including F1 Manager 2022 for the summer this year and Warhammer Age of Sigmar scheduled for FY 2024.

The group highlighted that it had chosen to cancel the console development of its Elite Dangerous: Odyssey PC game due to a lack of engagement, and the board confirmed the capitalised intangible asset would be fully amortised from 31 May 2022, with a resulting additional charge of £7 million.

The company reported that its operating profit was projected to hit £1 million to £2 million following the deduction of the one-off £7 million amortisation cost for Elite Dangerous: Odyssey.

Meanwhile, Frontier Developments added that its balance sheet had £39 million against £42 million in the previous year, with the decrease linked to greater investment in future game offerings and a £5 million purchase of shares by the Employee Benefit Trust executed in April 2022 to satisfy future exercises of share options by employees.

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The company said it expected its revenue to climb around 20% on average per year, with FY 2023 trading off to a strong start.

Frontier Developments mentioned its portfolio remained in a positive position, with Elite Dangerous, Jurassic World Evolution 2 and Planet Zoo set to benefit from new DLC over FY 2023 and its major release in F1 Manager 2022 receiving a positive response in advance of its launch later in the year.

The firm’s Frontier Foundry business has also benefited from the reception to its Warhammer 40,000: Chaos Gate – Daemonhunter release in May 2022.

“We’ve had another year of solid growth. Following its launch in November 2021, our player base for Jurassic World Evolution 2 has continued to expand, as expected,” said Frontier Developments CEO David Braben.

“We are now very well set up for the future, with the Dominion expansion and bundles launching today for Jurassic World Evolution 2, and F1 Manager 2022 due later this summer. The team has done a great job this year, overcoming many challenges and working tirelessly to support our games and our players.”

“Our games label, Frontier Foundry, has performed well too, with Warhammer 40,000: Chaos Gate – Daemonhunters launching right at the end of the financial year and looking good for FY23 too, with further exciting Foundry releases to come.”

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