Shares in racing game developer Codemasters (CDM:AIM) accelerated 10% to 272p after it released a trading update for the year ended 31 March saying it had benefited from a shift to higher-margin digital sales, pushing adjusted profits 12% above analysts’ expectations.
The company expects to report full-year revenues 6.7% higher to £76m, below market expectations which were pinned at £81m, as the closure of major game retailers has impacted physical sales which historically account for around 40% of revenues.
However, the pandemic has accelerated the shift towards digital channels and improved overall profitability with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) expected to be around £18.1m, comfortably ahead of broker Shore Capital’s forecast of £16.6m.
LEFT ON THE GRID
The start to the new F1 Grand Prix season, which was due to begin in March, has been delayed with the first eight races postponed or more likely cancelled due to the global pandemic.
The company would normally benefit from the release of a new version of its F1 game during the season, so in its absence the PC version of the official F1 2019 PC video is being used in the new F1 Esports Virtual Grand Prix series, featuring several current F1 drivers.
Management believes the virtual event will provide some excitement and be a positive for game usage.
BROKER VIEW
Broker Shore Capital is taking a cautious view in light of the delay and lack of visibility around the start of the F1 season, and has trimmed its 2021 revenue forecast by 5% to £101m and its adjusted EBITDA forecast by 12% to £25.9m.
At 31 March the company had no debt and gross cash of £25.5m compared with £18.2m a year earlier.
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