Frontier Developments reported a significant financial downturn in FY23 (ending May 31, 2023), with revenue decreasing to £104.6 million from £114.0 million in FY22, and an operating loss of £26.6 million compared to a £1.5 million profit in FY22.
02
The company's Adjusted EBITDA shifted from a £6.7 million profit in FY22 to a £4.6 million loss in FY23, primarily due to lower revenues and increased investment in future game titles.
03
A major factor contributing to the operating loss was £28.7 million in non-cash intangible asset impairment and accelerated amortisation charges, resulting from the closure of the Foundry publishing label and a re-assessment of the F1® Manager franchise's future performance.
04
Sales of F1® Manager 2022 were below original expectations, and F1® Manager 2023's initial sales in July 2023 also underperformed compared to its predecessor, leading to a £15.0 million impairment charge against the franchise's intangible assets.
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Frontier has ceased acquiring new third-party titles for its Foundry label, refocusing all efforts on its internally developed game portfolio.
06
Despite current challenges, the company expects to meet FY24 market expectations, with consensus revenue at £108 million and an Adjusted EBITDA loss of £9 million, supported by existing portfolio performance and upcoming releases like Warhammer Age of Sigmar: Realms of Ruin in November 2023.
07
Frontier benefits from UK tax incentive schemes, including Video Games Tax Relief (VGTR), R&D tax credits, and Patent Box, which help reduce taxable profits and provide future cash tax benefits.
Insights
01
Frontier Developments reported a significant financial downturn in FY23 (ending May 31, 2023), with revenue decreasing to £104.6 million from £114.0 million in FY22, and an operating loss of £26.6 million compared to a £1.5 million profit in FY22.
02
The company's Adjusted EBITDA shifted from a £6.7 million profit in FY22 to a £4.6 million loss in FY23, primarily due to lower revenues and increased investment in future game titles.
03
A major factor contributing to the operating loss was £28.7 million in non-cash intangible asset impairment and accelerated amortisation charges, resulting from the closure of the Foundry publishing label and a re-assessment of the F1® Manager franchise's future performance.
04
Sales of F1® Manager 2022 were below original expectations, and F1® Manager 2023's initial sales in July 2023 also underperformed compared to its predecessor, leading to a £15.0 million impairment charge against the franchise's intangible assets.
05
Frontier has ceased acquiring new third-party titles for its Foundry label, refocusing all efforts on its internally developed game portfolio.
06
Despite current challenges, the company expects to meet FY24 market expectations, with consensus revenue at £108 million and an Adjusted EBITDA loss of £9 million, supported by existing portfolio performance and upcoming releases like Warhammer Age of Sigmar: Realms of Ruin in November 2023.
07
Frontier benefits from UK tax incentive schemes, including Video Games Tax Relief (VGTR), R&D tax credits, and Patent Box, which help reduce taxable profits and provide future cash tax benefits.