Frontier Developments shares gain on positive trading update, guidance boost
() , a Cambridge-based video game developer and publisher, issued a trading update for FY24 ending May 31, 2024.
Frontier reported continued strong trading since its last update in April, with particularly strong contributions from its creative management simulation (CMS) games portfolio, led by Jurassic World Evolution 2 and Planet Zoo: Console Edition. Volumes were boosted by a successful Frontier sale on the video games platform Steam from April 1-15.
As a result of last month's strong performance, Frontier projected revenues for FY24 of at least £85m. Adjusted EBITDA loss is now anticipated to be better than previously guided at £5m or better. Frontier is expected to release a further update on the outturn for FY24 in June 2024.
Jonny Watts, Chief Executive Officer, commenting: "I am pleased to announce that our expectations for our financial performance in the current financial year have improved following the excellent reception to Planet Zoo's arrival on console and a good ongoing performance from our other CMS titles. We are making strong progress following the reset of our strategy during 2023 and I'd like to thank our people for their support during a difficult period in Frontier's thirty year history. We look to the future with renewed confidence."
View from Vox
Another positive update and guidance boost from Frontier, as sales outperformed in April. Adjusted EBITDA is now projected to narrow to a £5m loss, based on a higher gross margin percentage from a greater proportion of own-IP revenue, lower operating costs following the completion of cost cutting programmes, and gain from the sale of the RollerCoaster Tycoon 3 publishing rights to Atari as announced on April 2, 2024.
Planet Zoo's console release performed particularly well, with positive reviews and strong initial sales. The game, previously only available on PC, launched on Xbox Series X/S and PS5 on March 26. Total sales up to and including the release day exceeded sales achieved by Planet Coaster when Frontier launched that title on consoles in late 2020.
The launch was further supported by 3 product options including a premium "Ultimate Edition". Strong initial sales of the Ultimate Edition should bolster cash in FY24, though revenues will be split between FY24 and FY25 since content will continue to be delivered into FY25.
The abovementioned sale of the RollerCoaster Tycon 3 publishing rights to Atari was finalised on On March 15, 2024. Atari purchased the rights so it could be the sole publisher of all Rollercoaster Tycoon titles. Total consideration for the sale was US$7m, including US$4m upfront cash and US$3 deferred cash. 's cash position was £23.4m on March 31, up from £19.9m on December 31.
Overall, strong sales across Frontier's CMS portfolio, boosted by a successful Steam sale and a robust balance sheet, underpinned strong April performance and a guidance upgrade. Markets reacted positively, sending shares 16% higher early on Tuesday. A further trading update is expected in June 2024.
Follow News & Updates from Frontier Developments:
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.