Frontier Developments reports record revenue, earnings in line

Video games developer and publisher Frontier Developments reported record revenue of £114m in its full-year results on Wednesday, making for annual growth of 26%.

The AIM-traded firm put its revenue performance down to the successful release of the Jurassic World Evolution 2 title, as well as the ongoing performance of its established portfolio of “genre-leading” games and its Foundry titles.

Adjusted EBITDA was in line with expectations at £6.7m for the 12 months ended 31 May, down from £11.8m, with EBITDA rising to £41.1m from £38.1m.

Operating profit reduced to £1.5m from £19.9m, following the previously announced one-off non-cash accounting charge due to the under-performance of the major Elite Dangerous: Odyssey expansion, which was released in May last year.

Frontier said its cash resources remained “strong”, at £38.7m on 31 May, compared to £42.4m at the end of the 2021 financial year.

The board said the £3.7m reduction over 2022 reflected a greater investment in “significant” game developments for release in future years, working capital movements, and the £5m purchase of shares by the employee benefit trust in April.

Cash balances after the end of the period, on 31 August, had risen to £53.1m.

“Our team did a terrific job during 2022 and we were delighted to achieve record annual revenue with growth of 26%,” said Frontier’s new chief executive officer, Jonny Watts.

“In the last 12 months we have successfully released three new games with each achieving chart-topping success - Jurassic World Evolution 2 in November; Warhammer 40,000: Chaos Gate - Daemonhunters in May; and F1 Manager 22, which released just a few weeks ago at the end of August.

“We have three more exciting titles coming in the 2023 financial year from Foundry, as well as PDLC for Jurassic World Evolution 2 and Planet Zoo.”

For 2024, Watts said Frontier had two more “major” internally-developed titles in the Warhammer Age of Sigmar real-time strategy game, and F1 Manager 23.

“We look forward with confidence based on our strong existing portfolio, and our exciting roadmap of new releases which includes unrevealed future developments.”

At 1530 BST, shares in Frontier Developments were up 6.54% at 1,270p.

Reporting by Josh White at Sharecast.com.