Racing game developer Codemasters (CDM:AIM) reported flat first half revenues of £39.8m in a trading update for the period ended 30 September, meaning it needs to achieve £42m in the second half to meet its full year guidance. Shares nudged 0.5p higher to 213p.

Digital sales increased as a proportion of total revenues to 61.7% against 53% last year, resulting in an improved gross margin of 89.3% against 88.5%. The incremental costs of making digital sales are virtually zero and the company expects the growing trend towards digital sales to continue.

Trading benefited from the annual installment of the Formula One franchise F1 2019, which was released two months earlier than last year’s version and included extra features which proved popular with gamers.

Broker Jefferies believes the company will comfortably meet its full year revenue target due to the release of the new Formula One game GRID on PS4 and Xbox1 on 11 October and on Google Stadia in November. The release has been timed to take advantage of the peak selling season.

Additionally the company reckons revenues will benefit from promotions around the Black Friday and Christmas periods, which have historically delivered strong sales.

Jefferies has a full year forecast for earnings before interest, tax, depreciation and amortisation (EBITDA) of £19.4m.





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Issue Date: 09 Oct 2019