F1 gaming company Codemasters (CDM:AIM) releases maiden annual results in-line with expectations for the year ended 31 March. However the shares, up 66% since November, take a pit-stop to trade down 7p to 248p.

For the year ended 31 March, the company reported pre-tax profits of £2.9m compared with a loss of £1.48m as revenue increased by 11.9% to £71.2m.

Gross profit increased by 16.0% to £62.4m for the year as the gross margin increased by 3.0% to a whopping 87.6% due to a higher proportion of digital sales which now represent 59.2% of revenues.

'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 chief executive (CEO) Frank Sagnier.


The company has delivered four new games to the market in 2019, including F1 New Balance eSports Series, a cross-collaboration with F1 and Gfinity where players compete across 1.1m qualifying laps. The series has been watched by 5.5m viewers across digital and TV channels.

In February the company launched DIRT Rally 2.0, a sequel and the 13th title in the series which began in 1998. Official PlayStation Magazine rated it 9/10.

The company has also seen the release of its ONRUSH arcade game which has already been played by more than 2.5m players and received an average score of 76% from Metacritic, a game reviewer.

In addition, the Group has signed an exclusive partnership with Subor for ONRUSH to be included for its newly-launched console. The Group is set to receive guaranteed revenues of at least $5 million from the game.

Codemasters has also entered into a strategic partnership with Chinese company NetEase Inc, one of the country’s leading internet and online game providers.

As part of the agreement, NetEase will invest in marketing and localising the games to accelerate growth in the territory. In January, Codemasters signed an additional agreement with NetEase to co-develop a new mobile game for the global market.


For the first time in the company’s history, digital sales represent the majority of revenues. The digital channel generates extra sources of revenue and also ensures greater longevity of the future back-catalogue in the market.

The company sees a continuing growth trend towards digital and has also introduced games as a service (GaaS) with the launch of DIRT Rally 2.0.

Additional content is released and sold separately to customers post-release. Engaging with its customers more frequently and providing fresh downloadable content is a top priority for the company.


Google recently announced the long-awaited streaming platform Stadia and Codemasters’ GRID game has been selected to launch on the service in November.

Broker Jefferies raises its price target from 300p to 321p, as it views the shares as cheap against their peer group, and sees good potential from the tie-up with NetEase.

The company expects the gaming market to grow by circa 10% per year over the coming years, underpinning its future prospects.


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Issue Date: 10 Jun 2019