Team17 shares its win after a first record in a difficult environment for the industry

– Record turnover and profit in the first half

– Eight new game releases planned for the second half

– Acquisitions increase the size of the group

Global game developer and publisher Team17 (TM17: GOAL) achieved record first-half revenue and profit amid a challenging market environment that saw video game spending slump in the mid-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. The continued contribution from the back catalog should support second half performance.

Record first-half results and a positive outlook saw shares gain 2% to 377.2p.

RESILIENT PERFORMANCE

Revenue through June was up 33% year-on-year to £53.2m, while gross profit rose 26% to £25.5m. The growth was achieved despite just one game release in the half compared to six in 2021, with back-catalog sales growing in double digits.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) also hit a record high, up 10% to £18.2m. Pre-tax profit fell 20% to £11.2m due to acquisition-related costs.

The equity placement in January to fund the Astragon acquisition led to an increase in the number of shares, which dampened adjusted earnings per share growth to 3% at 10.4 pence.

Managing Director, Debbie Bestwick, commented: “The group now has more proprietary evergreen intellectual properties than ever before, along with a phenomenal portfolio of back catalogs and, in StoryToys, a revenue model of growing subscription.

“The new releases include additions to many established franchises and licensed global brands, as well as exciting new original IPs that are performing well.”

THREE GROWTH ENGINES

Team17 operates through three business segments. The Team17 Games label owns and manages several intellectual property titles that generated 75% of first-half revenue.

StoryToys was acquired in July 2021 and develops and publishes educational apps for children working with several major brands including Walt Disney and Lego. It generated revenue of £4.6m in the first half.

Astragon was acquired in January 2021 and is a developer, publisher and distributor of sophisticated work simulation games such as Police Simulator and Bus Simulator. The business generated revenue of £7.8 million in the first half.

EXPERT VIEW

Analysts at investment bank Berenberg said, “With the news flow on Team17’s pipeline very positive, we continue to believe the company has a number of catalysts in the second half.”

‘We are very excited about the Marauders; management has indicated that it is already making progress on “internal measures”. We think that could well mean pre-order numbers, and if so, it would confirm our view that the game could be on track to be bigger than hit title Hell Let Loose.

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Date of issue: September 13, 2022