- Record first half revenues and profit
- Eight new game releases due in second half
- Acquisitions increase scale of the group
Global games developer and publisher Team17 (TM17:AIM) delivered a record first-half sales and earnings against a tough market backdrop which saw video game spending falling by high single-digits.
The company said it entered the second half with ‘significant traction’ across all parts of the business. It has already launched two games and plans to deliver major app updates. Continued contribution from the back catalogue is expected to underpin second half performance.
The record first half results and positive outlook saw the shares gain 2% to 377.2p.
RESILIENT PERFORMANCE
Revenues through June grew 33% year-on-year to £53.2 million while gross profit increased 26% to £25.5 million. Growth was achieved despite only one game release in the half compared with six in 2021, as back catalogue sales grew by double digits.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) also hit a record, up 10% to £18.2 million. Pre-tax profit fell 20% to £11.2 million due to acquisition-related costs.
The share placing in January to fund the Astragon acquisition resulted in a higher share count which held back adjusted earnings per share growth to 3% at 10.4p.
Chief executive Debbie Bestwick commented: ‘The Group now has more evergreen first-party IP's (intellectual properties) than ever before, alongside a phenomenal back catalogue portfolio, and in StoryToys, a growing subscription revenue model.
‘New releases include additions to many established franchises and licensed global brands as well as exciting new original IP's that are tracking well.’
THREE ENGINES OF GROWTH
Team17 operates across three business lines. The Team17 Games Label owns and manages multiple intellectual property titles which generated 75% of first half revenues.
StoryToys was acquired in July 2021 and develops and publishes educational apps for children working with several leading brands including Walt Disney and Lego. It generated revenues of £4.6 million in the first half.
Astragon was acquired in January 2021 and is a developer, publisher and distributer of sophisticated working simulation games such as Police Simulator and Bus Simulator. The business generated first half revenues of £7.8 million.
EXPERT VIEW
Analysts at investment bank Berenberg said: ‘With the newsflow on Team17’s pipeline very positive, we continue to believe the company has a number of catalysts in the second half.
‘We are most excited by Marauders; management has indicated it is already tracking ahead on “internal metrics”. We believe this could well mean pre-order figures and, if so, that would confirm our view that the game could be on track to be larger than the successful Hell Let Loose title.’
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