Frontier Developments plc: Interim Results 2019

Key insights

6 takeaways

01
Frontier Developments achieved record financial performance for the six months ending November 30, 2018, with revenue surging 240% to £64.7 million.See it on page 1
02
Operating profit grew significantly to £17.2 million, up from £3.0 million in the same period the previous year.See it on page 5
03
Basic earnings per share increased to 40.2 pence from 8.0 pence, supported by a strong cash position of £39.5 million.See it on page 14
04
Growth was driven primarily by the launch of Jurassic World Evolution alongside sustained sales from existing titles Elite Dangerous and Planet Coaster.See it on page 1
05
The company effectively managed rising operating expenses—attributed to marketing, staff bonuses, and facility investments—while maintaining an 11% tax rate.See it on page 5
06
Management is executing a strategy to diversify its intellectual property, with plans to launch a fourth major game franchise in the near future.See it on page 2

Summary

Frontier Developments achieved record financial performance during the six months ending November 30, 2018, characterized by a 240% surge in revenue to £64.7 million. This growth was primarily catalyzed by the successful launch of Jurassic World Evolution, which complemented the sustained commercial momentum of the company’s existing portfolio, including Elite Dangerous and Planet Coaster. By prioritizing long-term post-launch support for these core titles, the firm has successfully established a scalable model for franchise development that continues to drive significant unit sales milestones.

The company’s profitability improved substantially, with operating profit rising to £17.2 million from £3.0 million in the same period the previous year. This financial strength is further evidenced by a robust cash position of £39.5 million and a significant increase in basic earnings per share, which climbed to 40.2 pence from 8.0 pence. While operating expenses grew due to increased marketing requirements, staff bonuses, and facility investments, these costs were effectively managed alongside a favorable 11% tax rate and the strategic use of foreign exchange forward contracts to mitigate currency volatility associated with international sales.

Looking toward the remainder of the 2019 fiscal year, the company remains focused on balancing the expansion of its asset base—evidenced by substantial investments in both tangible and intangible assets—with the diversification of its intellectual property. The strategic roadmap centers on the upcoming launch of a fourth major game franchise, signaling a commitment to sustained growth. By maintaining a disciplined approach to development and operational efficiency, the firm is well-positioned to leverage its current momentum to secure long-term market relevance within the global interactive entertainment sector.