- Full year profit significantly ahead of expectations
- News leads to raft of analyst upgrades
- Strong pipeline of game releases
Global video games developer and publisher Team 17 (TM17:AIM) pleased investors on Wednesday after saying 2022 sales and profit would be significantly ahead of market expectations.
The news comes as a relief following profit warnings earlier this month from fantasy video games developer Frontier Developments (FDEV:AIM) and French games developer Ubisoft Entertainment (UBI:EURONEXT).
The shares surged 8% higher to 446.7p leaving them down 40% over the last year.
WHAT DROVE THE INCREASE?
Management said the group traded ‘strongly’ in the second half driven by multiple first- and third-party games releases and strong support across the portfolios with additional new content updates.
Chief executive Debbie Bestwick commented: ‘2022 was a well-executed year delivering on our highly ambitious plans for the group, specifically strong lifecycle management across a very diverse portfolio and on time delivery of astragon first party IPs launched in 2022.
‘We look forward to 2023 with an exciting pipeline of releases and updates as well as ongoing return on investment from the investments we have made in people and products.’
ANALYST UPGRADES
Consensus forecasts for the year ended 31 December imply a 40% increase in sales and net profit to £127 million and £33.1 million respectively according to Refinitiv data.
A significant beat usually implies a 10% beat which would imply sales of £140 million and profit of around £36 million.
Numis increased its 2022 sales forecast by 7% to £137 million and adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) by 7% to £47.6 million which is around 9% ahead of consensus.
Analysts at Peel Hunt made similar upgrades to their forecasts saying, ‘Team 17’s thesis of careful life cycle management alongside thoroughly researched M&A has stood the test of time and once again produced strong results, especially in the context of competitors struggling.’
