Revenue growth has stalled after a record FY17. However, the Group's newest game is due for release this in Summer 2018.
Companies: Frontier Developments Plc
Frontier Developments (LON: FDEV) shares have taken a hit this morning as it released a trading update flagging a slowdown in growth after a record FY17.
The video game development company, who has released successful titles such as Elite Dangerous and Planet Coaster, said it expects to report Revenues of approx. £19m in H1 18, up from H1 17 Revenues of 18.1m. H2 17 Revenues were, however, slightly higher at £19.3m.
It also said Christmas trading was in-line with expectations., with both titles "performing well in price promotion events". The Group has sold almost 4.7 million units of both titles combined.
The update went on to say...
"The Board anticipates that Elite Dangerous revenue will normalise down from the first half to the second half of the financial year as PlayStation 4 sales settle to a post-launch run-rate, but that underlying run-rate sales (including downloadable content) will sustain at healthy levels. As a consequence, the Board remains confident about achieving its expectations for the current financial year ending 31 May 2018."
Investors may have been hoping for slightly stronger growth figures, as shares in FDEV fell 12% to 1300p immediately after markets opened this morning.
All eyes will be on the Group come June with the release of its third and arguably largest game to-date, Jurassic World Evolution. The game's release will coincide with that of the franchises newest film, Jurassic World Fallen Kingdom.
David Braben, Chief Executive of Frontier Developments, commented:
"We are pleased with our performance in the first half of the financial year and the ongoing success of both Elite Dangerous and Planet Coaster, and we welcome our new audience of PlayStation 4 players for Elite Dangerous. We continue to be excited about our third franchise, Jurassic World Evolution, which is on-track for launch in summer 2018."
FDEV was a standout performer on London's junior market in 2017, growing over 330% in 12-months from c. 300p to today's price of 1300p. The Group reported 75% Revenue growth to £37m and over 430% Net Profit growth to £7.7m in FY17. Whilst these figures are forecast to fall considerably in FY18, consensus says Revenues and Net Profits could reach c. £60m and £12m respectively in FY19.
It trades at a forecast earnings ratio of 68x.
