2022 Half-Year Results: Don't Nod

Key insights

6 takeaways

01
Don't Nod is executing a strategic pivot to become a developer and publisher of AA-tier games, focusing on narrative-driven original IP and long-term revenue retention.See it on page 4
02
The company maintains a strong financial position with €46.1 million in cash and cash equivalents as of June 30, 2022.See it on page 10
03
Total operating revenues for H1 2022 grew 16% year-over-year to €14.9 million, driven by a 34% increase in development revenue and a 46% rise in capitalized production.See it on page 9
04
Operating EBIT tripled to €1.9 million in H1 2022, supported by the capitalization of production costs and the video game tax credit (CIJV).See it on page 9
05
The current production pipeline consists of eight games scheduled for release between 2023 and 2025, featuring both self-published titles and co-productions with partners like Tiny Bull Studios and Studio Tolima.See it on page 17
06
Royalty income declined by 82% to €0.5 million during the first half of 2022, primarily due to the absence of new game releases during the period.See it on page 8

Summary

The 2022 half-year results for Don't Nod outline a strategic transition toward becoming a developer and publisher of AA-tier video games for PC and consoles. The company’s primary thesis centers on creating original intellectual property through a combination of internal development and strategic co-production partnerships. By focusing on narrative-driven, meaningful entertainment, the company aims to secure long-term revenue streams through IP retention and minimum guarantee arrangements, ensuring a sustainable return on commercial successes.

Financial performance for the first half of 2022 reflects this shift in business model. While total operating revenues reached €14.9 million—a 16% increase compared to the same period in 2021—the composition of these revenues changed significantly. Development revenue grew by 34% to €3.1 million, and capitalized production rose by 46% to €11.4 million, signaling a ramp-up in production chains. Conversely, royalty income declined by 82% to €0.5 million, attributed to the absence of new game releases during the period. Despite these fluctuations, operating EBIT tripled to €1.9 million, bolstered by the capitalization of production costs and the video game tax credit (CIJV). The company maintains a solid financial structure with €46.1 million in cash and cash equivalents as of June 30, 2022.

The operational scope covers a robust portfolio of eight games currently in production, scheduled for release between 2023 and 2025. This pipeline includes a mix of self-published titles and co-productions with external studios such as Tiny Bull Studios and Studio Tolima. The company’s strategy is supported by a favorable global market environment, characterized by the growth of subscription-based cloud gaming and high engagement across major platforms like Steam, PlayStation, and Xbox. By diversifying its budget allocations and strengthening partnerships with industry leaders, the company intends to double its current catalog and solidify its position in the action-RPG and narrative-driven segments.