REG - Devolver Digital - Half Year Results
26/09/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220926:nRSZ5875Aa&default-theme=true
RNS Number : 5875A Devolver Digital, Inc. 26 September 2022
26 September 2022
Devolver Digital, Inc.
("Devolver Digital", "Devolver" or the "Company", and the Company together
with all of its subsidiary undertakings "the Group")
Unaudited results for the six months ended 30 June 2022
Strong second half expected to underpin 2022 recovery
Devolver Digital, an award-winning digital publisher and developer of
independent ("indie") video games, announces its unaudited results for the six
months ended 30 June 2022. All figures relate to this period unless otherwise
stated.
Financial highlights
o 1H revenues rose 14% year-on-year to US$53.0 million (1H 2021: US$46.4
million).
o Normalised gross profit increased 22% to US$19.0 million (1H 2021: US$15.5
million).
o Normalised Adjusted EBITDA fell 46% to US$6.8 million (1H 2021: US$12.6
million), reflecting underperformance of 1H releases, and increased
administrative and headcount costs.
o Statutory net loss for 1H 2022 was US$16.6 million (1H 2021: US$79.5
million profit), including non-cash impact of US$11.5 million of share-based
payments.
o Cash of US$74.2m supports investment in organic growth, and strategic
acquisitions.
Strategic highlights
o Engagement and quality of new titles benefitting from return to
face-to-face interaction.
o Post-Covid resumption of game-play testing, studio visits, game conference
participation.
o Strengthening the bench: targeted investment in talent to drive growth
& raise game quality.
o Back catalogue of 97 titles continues to perform strongly.
Title releases and industry recognition
o 7 new titles released in the first half of 2022 (2021 1H: 3).
o Back catalogue continues to perform, at 64% of total 1H revenue (2021 1H:
77%).
o 5 titles with 80+ Metacritic scores released year to date (2 in 2H,
average score 79 to date).
o 2021 hit releases - continued strong momentum as back catalogue
contributors in 1H 2022.
Current trading and outlook
o Guidance maintained for full year 2022: revenues are expected to range
between US$130 million and US$140 million, implying year-on-year growth of
over 30%, while adjusted EBITDA is expected to range between US$27 million and
US$32 million, implying year-on-year growth of c.15%.
o On-track to release 12 new games in 2022 across the Devolver Group.
o 2H 2022 titles include Cult of The Lamb, Return to Monkey Island, McPixel 3,
Reigns: Three Kingdoms, as well as subsidiary Good Shepherd's Hard West 2.
o August 2022 release Cult of The Lamb has already exceeded full-year
expectations.
o 2023 - 2025 titles: There are currently over 30 titles in the pipeline
for the next three years.
o Title success to date in 2H, particularly Cult of the Lamb, has been offset
by weaker than expected subscription deal demand.
Harry Miller, Executive Chairman of Devolver, said:
"Devolver's revenues grew by 14% year-over-year, despite a challenging first
half, underlining the resilience of our proven model. We expect a strong
second half based on highly anticipated new releases and the benefits of our
diversified model with a back catalogue of 97 fun-filled titles. Combined
with the performance of new releases such as Cult of the Lamb and Return to
Monkey Island, this supports our expectation of a strong recovery in the
second half of 2022."
Douglas Morin, Chief Executive Officer of Devolver, said:
"The return of face-to-face interaction and gaming conferences has helped
unleash the full potential of Devolver's unique culture and experienced team
of talented people. We are seeing this with the success of Cult of The Lamb,
which beat all Devolver records for first day and first week unit sales on all
platforms, excepting 2020's Fall Guys. Return to Monkey Island, released one
week ago, has also generated great excitement in its first week. We have a
clear strategy and a strong pipeline for the next three years that will
continue to diversify our revenues across titles, developers, platforms and
geography."
Enquiries:
Devolver Digital, Inc. ir@devolverdigital.com (mailto:ir@devolverdigital.com)
Harry Miller, Executive Chairman
Douglas Morin, Chief Executive Officer
Daniel Widdicombe, Chief Financial Officer
Zeus (Nominated Adviser and Sole Broker) +44 (0)20 3829 5000
Nick Cowles, Richard Darlington, Daniel Harris (Investment Banking)
Ben Robertson (Equity Capital Markets)
FTI Consulting (Financial PR) devolver@fticonsulting.com (mailto:devolver@fticonsulting.com)
Jamie Ricketts / Dwight Burden / Valerija Cymbal / Usama Ali +44 (0)20 3727 1000
Devolver Digital overview
Devolver Digital is an award-winning video games publisher in the indie games
space with a balanced portfolio of third-party and own-IP. The Company has an
emphasis on premium games and has a back catalogue of over 90 titles, with
more than 30 titles in the pipeline. Through recent acquisitions, Devolver now
has its own-IP franchises, in-house studios developing first-party IP and two
publishing brands. The Company is registered in Wilmington, Delaware, USA.
OPERATING REVIEW
Momentum regained after a challenging first half
Devolver released 7 new titles in 1H 2022, including Shadow Warrior 3, Weird
West, Tentacular and Trek to Yomi. Revenue growth was 14% in the first half
with sales from new games slower than anticipated, reflecting a competitive
release window and specific factors for certain titles which have been
actively addressed for future releases. In the first half there was an
expected step-up in amortisation costs expensed upon release, largely related
to three of the more heavily-invested games, as well as increases in general
operating expenses due to inflation, headcount increases and greater marketing
expenditure.
The second quarter of 2022 saw the relaxation of Covid controls and a
normalisation in travel, meaning we were able to meet again with our
colleagues, partners and game-developers, gamers, influencers, and everyone
involved in the complex game-production ecosystem. This has made an enormous
difference in terms of ensuring the quality and positioning of our games.
This resumption of normal activities has released great pent-up enthusiasm for
Devolver's games. At Pax East held in Boston in April there was a two-hour
queue for gamers to try out the demo of Cult of the Lamb, our recent new game
release. During the Steam Next Fest week in June, where 1,056 candidate games
were whittled down to 65, Devolver registered 3 game demos in the Top 10 out
of the candidate list. Cult of the Lamb was the Number 1 wish-listed game of
all demos featured, while future releases Anger Foot and Terra Nil were also
featured in the Top 10 most wish-listed games.
2021 hit releases support back catalogue strength
An encouraging trend through the first half was the strong performance of
titles launched in 2021 that continue to perform like newly-released titles in
2022. BAFTA-winning Inscryption was only released in October 2021 yet reached
a year-end 2021 total of 920,000 in unit sales. Since then, Inscryption has
motored on and as of end June 2022 had registered sales of 1.46 million units
since launch. Other 2021 hit releases Loop Hero and Death's Door also continue
to show strong sales year to date in 2022.
Our back catalogue includes all titles released in or prior to the last
financial year (2021 or earlier). As of 31 December 2021, the back catalogue
consists of 97 titles, including numerous indie cult classics, supporting
highly diversified revenues with minimal reliance on any one title release.
Back catalogue revenue accounted for 64% in 1H 2022, due to more new releases
in the period (7) compared to the 1H of 2021 (3 releases) when back catalogue
accounted for 77% of our revenues.
Investing for long-term growth
We continue to add talent across the group in several essential areas, from
production, quality assurance, marketing, finance and legal. New team members
have also been brought in to focus specifically on gameplay, marketing and
user engagement. New releases are increasingly complex, often involving same
day-date releases across multiple platforms, allowing Devolver to capitalise
on the synergies generated through a single launch campaign across these
platforms. Additional talent enables us to raise the level of 'polish' we
provide to the new titles we release and drive unit sales across multiple
platforms and geographies.
Strengthening our bench of talent has a knock-on positive effect on medium
term cost control, as we are able to bring key expertise in-house, generating
cost savings, delivering better products and reducing third-party payments
such as professional fees. As part of this, we are building a management
oversight team for Quality Assurance testing, and also strengthening our
in-house finance and legal capabilities.
The Group currently has operating subsidiaries in the United Kingdom, the
Netherlands, Croatia, Poland and the United States. Total headcount has
increased from 185 one year ago to 225 at the end of 1H 2022.
FINANCIAL REVIEW
Unaudited first half 2022 results to June 30 2022
The unaudited financial results included in this announcement cover the
Group's combined activities for the six months ended 30(th) June 2022
(prepared in accordance with applicable International Financial Reporting
Standards, "IFRS").
Normalised Adjusted results
The following refers to Normalised Adjusted results, as presented in the
financial statements contained within this release. Normalised Adjusted
results exclude any one-time exceptional items during the respective half-year
periods.
Sustained revenue momentum
Devolver Digital's first half 2022 performance was in line with updated
expectations set in the trading update dated June 13 2022. Revenues of US$53.0
million rose 14.1% year-over-year, representing approximately 40% of the
mid-point of the full year guidance range of US$130 to US$140 million.
Normalised gross profit was US$19.0 million, an increase of 22.1%
year-over-year. Normalised Adjusted EBITDA fell 45.8% to US$6.8 million,
representing 23% of the mid-point of the full year guidance range of US$27
million and US$32 million.
Revenue growth was driven by seven new title releases in the first six months
of 2022, including Shadow Warrior 3, Weird West, Tentacular and Trek to Yomi.
Growth was also supported by steady back catalogue sales including those
contained within bundled special deals, and a steady contribution from
subsidiaries.
Normalised gross profit margin increased to 35.8% in the first half of 2022,
up from 33.5% in the year-earlier period. Gross margin expansion was limited
due to the significant step-up of amortisation expense in 1H 2022 and
increased marketing costs following the release of three more heavily-invested
titles.
Normalised EBITDA and Normalised Adjusted EBITDA
Normalised EBITDA and normalised adjusted EBITDA results are not intended to
replace statutory results and are prepared to provide a more comparable
indication of the Group's core business performance by removing the impact of
certain items including exceptional items (material and non-recurring), and
other, non-trading, items that are reported separately. These results have
been presented to provide users with additional information and analysis of
the Group's performance, consistent with how the Board monitors results.
The statutory results for 1H 2021 include the gain of the sale of publishing
rights to the Fall Guys game, which is excluded from normalised comparative
numbers. Further details of adjustments are given in Notes 3 and 4 to the
condensed financial statements contained within this semi-annual results
release.
EBITDA margins
Normalised Adjusted EBITDA margins were depressed at 12.9% in the first half
of 2022, compared to 27.1% the previous year. Lower than expected revenues
were insufficient to offset the significant step-up in amortisation expense
recorded in cost of sales, and in addition operating expenses increased due
to: 1) higher payroll costs (excluding 1H 2021 Fall Guys-related bonus),
reflecting the 22% increase in headcount versus 1H 2021; 2) Increases in
professional fees for various work streams including audit, accounting, tax
and legal fees, and; 3) listed PLC-related costs (Director's fees, NOMAD fees
and D&O insurance).
Impairments/Writedowns
In the first half Devolver wrote-down the entire investment into a
discontinued game at a cost of US$721,000, reflected in additional
amortisation expense in cost of sales. This expense is adjusted out to derive
normalized adjusted gross profit.
Employee Benefit Trust (EBT)
Devolver established an Employee Benefit Trust (EBT) in May 2022 to facilitate
stock option exercise by employees and contractors who were awarded 2017 Stock
Option plan stock options. The EBT is a Jersey-incorporated Trust enabling
option exercise and share settlement off-market without impacting market
liquidity. Share purchases by the EBT are funded by way of a loan from
Devolver which can request settlement of the loan at any time in future. The
shares held by the EBT are consolidated within Devolver's share capital
balance. During 1H 2022 there were 1.1 million options exercised for a net
paid consideration by Devolver of US$1.5 million. At end 1H 2022 there were
38.9 million options still outstanding with a weighted average exercise price
of US$0.37 per option.
Cash Balances
Cash holdings at end June 2022 were US$74.2 million, a reduction of US$12.0
million compared to end 2021's level of US$86.2 million. The reduction in cash
balances during the period was primarily due to: 1) lower EBITDA generation in
the first half being insufficient to cover US$15.6 million ongoing investment
in game development during the period; 2) approximately US$1.5 million spent
on settlement of exercised options utilising the Employee Benefit Trust (EBT),
and; 3) a US$2 million foreign exchange translation loss on non-US Dollar
foreign currency holdings.
Russia/Ukraine conflict
Revenue contributions from the Russia/Ukraine/CIS region remain low in the
wake of Russia's invasion of Ukraine, estimated at under 3% of total Group
revenues in the first half of 2022, while less than 2.5% of 1H royalty and
other expenses were payable into the affected countries in the conflict
region. The Company has no full-time employees in the affected geographies and
currently believes that the impact from the conflict will not materially
affect its operations, revenue or expenses.
CURRENT TRADING OUTLOOK
Titles released so far in 2H include Cult of the Lamb and Return to Monkey
Island, as well as Hard West 2 published by our Good Shepherd subsidiary. Cult
of the Lamb reached the milestone of selling one million units in just nine
days following its release in August, confirming its status as a hit title. It
currently enjoys an 82 Metacritic score and an 85 Open Critic rating. We
expect Cult of The Lamb to feature strongly in the Autumn and year-end sales
seasons. Monkey Island was only released one week ago, currently registering
an 88 Metacritic Score with a highly positive critical response so far.
The Board maintains full year 2022 guidance unchanged from the trading update
in June 2022, with revenues expected to range between US$130 million and
US$140 million, implying year-on-year growth of over 30%, while adjusted
EBITDA is expected to range between US$27 million and US$32 million, implying
year-on-year growth of c.15%.
The Board expects revenues and gross profit contribution to be weighted
towards the second half of FY22 due to new title releases and continued
evergreen back catalogue sales, particularly in the 4Q sales season from
Halloween through to the New Year which has historically been the strongest
quarter of the year. However, gross margin expansion is expected to be limited
due to the outperformance of Cult of The Lamb and the associated royalty
payment to the third-party game developer. Adjusted EBITDA is expected to be
higher in the second half of the year due to higher gross profit generation
and operational leverage.
The success of Cult of the Lamb, which has exceeded expectations for the year,
provides a cushion against prevailing industry headwinds. These include
weakness in subscription deal demand in 2H 2022, a trend being seen across the
sector, as well as the uncertain impact of the global slowdown and cost of
living crisis on new releases and back catalogue sales.
Devolver Digital has a healthy and diverse pipeline in terms of titles,
developers, platforms and geography. Our total pipeline for 2023 and beyond
comprises an exciting line-up of over 30 titles, with a balanced mix of
third-party IP and own-IP over a range of investment per title.
Devolver Digital has a strong balance sheet with cash holdings of US$74.2
million. Our momentum, deep pipeline and strong contribution from extensive
back catalogue all support our confidence of further progress in 2022 and in
the future. We have a proven strategy that has delivered success for the last
13 years. The Board believes that we are well positioned for future success,
and we look forward to reporting on our progress in the year ahead.
Harry Miller
Chairman
26 September 2022
Consolidated Statement of Profit or Loss
Unaudited
6 months ended Year ended 6 months ended
30-Jun-21 31-Dec-21 30-Jun-22
US$'000 US$'000 US$'000
REVENUES
Revenues 46,443 98,152 53,003
TOTAL REVENUES 46,443 98,152 53,003
COST OF SALES
Royalty expense (22,196) (46,573) (22,015)
Development expense (4,317) (4,384) (1,704)
Marketing (2,054) (4,275) (3,912)
Amortisation of intangible assets (2,160) (3,688) (7,112)
TOTAL COST OF SALES (30,727) (58,920) (34,743)
GROSS PROFIT 15,716 39,232 18,260
ADMINISTRATIVE EXPENSES
Payroll (8,746) (14,468) (6,295)
Stock compensation expense (12,931) (55,150) (11,477)
Professional fees (2,388) (9,455) (2,895)
Travel and entertainment (11) (271) (251)
Office (95) (342) (132)
Insurance (1) (202) (493)
Administration and other costs (1,892) (19,544) (2,571)
Foreign exchange movements 421 (212) (2,007)
Amortisation of intellectual property and depreciation of PPE (1,765) (5,651) (3,761)
TOTAL ADMINISTRATIVE EXPENSES (27,408) (105,295) (29,882)
Other income 115,280 116,080 5
OPERATING PROFIT/(LOSS) 103,588 50,017 (11,617)
Interest receivable income 25 10 26
PRE-TAX PROFIT/(LOSS) 103,613 50,027 (11,591)
Income tax expense (24,162) (19,400) (5,019)
PROFIT/(LOSS) FOR THE PERIOD 79,451 30,627 (16,610)
Equity holders of the parent 79,555 30,550 (16,560)
Non-controlling interests (104) 77 (50)
PROFIT/(LOSS) FOR THE PERIOD 79,451 30,627 (16,610)
Basic earnings per share ($) 0.224 0.081 (0.037)
Diluted earnings per share ($) 0.207 0.075 (0.037)
6 months ended Year ended 6 months ended
30-Jun-21 31-Dec-21 30-Jun-22
US$'000 US$'000 US$'000
Non-IFRS measures
Adjusted EBITDA* 118,332 110,818 5,627
Normalised Adjusted EBITDA 12,568 25,729 6,818
* Adjusted EBITDA is a non-IFRS measure and is defined as earnings before
interest, tax, depreciation, amortisation (but not taking out amortisation of
capitalised software development costs) and share-based payment expenses.
Consolidated Statement of Comprehensive Income
Unaudited
6 months ended Year ended 6 months ended
30-Jun-21 31-Dec-21 30-Jun-22
US$'000 US$'000 US$'000
Profit/(Loss) for the period 79,451 30,627 (16,610)
Other comprehensive income: Items that will be reclassified
subsequently to profit or loss
Exchange differences on translation of foreign operations (36) (986) (964)
Total comprehensive income for the period 79,415 29,641 (17,574)
Total comprehensive income is attributable to:
Equity holders of the parent 79,519 29,564 (17,524)
Non-controlling interests (104) 77 (50)
79,415 29,641 (17,574)
Consolidated Statement of Financial Position
Unaudited
6 months ended Year ended 6 months ended
30-Jun-21 31-Dec-21 30-Jun-22
US$'000 US$'000 US$'000
NON-CURRENT ASSETS
Goodwill 40,117 66,820 66,820
Intellectual property 56,829 53,381 49,640
Capitalised development costs 23,863 44,441 52,960
Total intangibles 120,809 164,642 169,420
Tangibles 188 226 237
Deferred tax assets 1,642 2,413 -
TOTAL NON-CURRENT ASSETS 122,639 167,281 169,657
CURRENT ASSETS
Accounts receivable 7,867 17,811 17,950
Prepaid and other current assets 1,835 1,544 2,039
Cash at bank and in hand 66,801 86,239 74,176
Prepaid income tax 569 8,512 4,705
TOTAL CURRENT ASSETS 77,072 114,106 98,870
TOTAL ASSETS 199,711 281,387 268,527
CURRENT LIABILITIES
Trade, other payables & Accrued Expenses 9,191 17,835 13,956
Deferred revenue 1,913 4,482 5,047
Current tax payable 6,916 1,434 -
Total trade and other payables 18,020 23,751 19,003
Loans 288 - -
TOTAL CURRENT LIABILITIES 18,308 23,751 19,003
NON-CURRENT LIABILITIES
Deferred tax liabilities - 9,316 9,316
Contingent consideration 10,406 1,567 1,567
TOTAL NON-CURRENT LIABILITIES 10,406 10,883 10,883
TOTAL LIABILITIES 28,714 34,634 29,886
CAPITAL AND RESERVES
Common stock 1 44 44
Additional paid-in capital 35,846 121,588 120,061
Retained earnings 135,290 126,184 120,942
Translation reserve (36) (986) (2,433)
CAPITAL AND RESERVES TO OWNERS 171,101 246,830 238,614
Non-controlling interest (104) (77) 27
TOTAL EQUITY 170,997 246,753 238,641
TOTAL EQUITY AND LIABILITIES 199,711 281,387 268,527
Consolidated Statement of Changes in Equity
Share capital Share premium Translation reserve Retained earnings Total Devolver equity Non-controlling interest Total equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 31 December 2020 1 - - 71,512 71,513 - 71,513
Profit for the period - - - 79,555 79,555 (104) 79,451
Currency translation differences - - (36) 184 148 - 148
Transactions with owners in their capacity as owners:
Dividends - - - (30,000) (30,000) - (30,000)
Issue of shares - 36,320 - - 36,320 - 36,320
Exercise of share options - 634 - - 634 - 634
Shareholder share buy-back - (1,108) - 1,108 - - -
Share-based payments - - - 12,931 12,931 - 12,931
Total transactions with owners - 35,846 - (15,961) 19,885 - 19,885
Balance at 30 June 2021 1 35,846 (36) 135,290 171,101 (104) 170,997
Balance at 31 December 2020 1 - - 71,512 71,513 - 71,513
Profit for the period - - - 30,627 30,627 (77) 30,550
Currency translation differences - - (986) - (986) (986)
Transactions with owners in their capacity as owners:
Dividends - - - (30,000) (30,000) - (30,000)
Issue of shares 43 119,230 - 3 119,276 - 119,276
Other - 2,358 - (1,108) 1,250 - 1,250
Share-based payments - - - 55,150 55,150 - 55,150
Total transactions with owners 43 121,588 - 24,045 145,676 - 145,676
Balance at 31 December 2021 44 121,588 (986) 126,184 246,830 (77) 246,753
Prior year adjustment - - - (159) (159) 154 (5)
Loss for the period - - - (16,560) (16,560) (50) (16,610)
Currency translation differences - - (1,447) - (1,447) - (1,447)
Transactions with owners in their capacity as owners:
Dividends - - - - - - -
Issue of shares - - - - - - -
Exercise of share options via EBT - (1,527) - - (1,527) - (1,527)
Share-based payments - - - 11,477 11,477 - 11,477
Total transactions with owners - (1,527) - 11,477 9,950 - 9,950
Balance at 30 June 2022 44 120,061 (2,433) 120,942 238,614 27 238,641
Statement of Cash Flows
Unaudited
6 months ended Year ended 6 months ended
30-Jun-21 31-Dec-21 30-Jun-22
US$'000 US$'000 US$'000
Operating activities
Net Profit/(Loss) for the period 79,451 30,627 (16,610)
Amortisation & Depreciation 4,780 9,338 10,873
Gain on sale of Publishing Rights & IP (114,976) (115,576) -
Share based payments 13,638 55,150 11,477
Working capital movement 3,356 140 468
Other operating activity and FX movement (50) 2,891 1,409
Cashflow from operating activities (13,801) (17,430) 7,617
Investing activities
Investment in software development intangibles (13,761) (31,734) (15,631)
Sale of Publishing Rights & IP 126,900 127,500 -
Acquisitions (net of cash acquired) (25,797) (34,083) -
Other (99) - (5)
Cashflow from investing activities 87,243 61,683 (15,636)
Financing activities
Change in Borrowings 33 - (510)
Legal fees on share issue/IPO - (68) -
Settlement of option exercise 634 49,362 -
Settlement of option exercise in EBT - - (1,527)
Repayment of Shareholder Loan (20,837) (20,837) -
Dividends paid (30,000) (30,000) -
Cashflow from financing activities (50,170) (1,543) (2,037)
Cash and cash equivalents
Cashflow in the period 23,272 42,710 (10,056)
At 1 January / 1 July 43,529 43,529 86,239
Foreign Exchange Movements - - (2,007)
At Period End 66,801 86,239 74,176
Note 1: Basis of preparation and consolidation
These condensed financial statements have been prepared in accordance with the
recognition and measurement requirements of International Accounting Standard
34 Interim Financial Reporting. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for fair
presentation have been included. The condensed consolidated financial
statements as at and for the six months ended June 30, 2022 have been prepared
on the same basis as the audited annual financial statements.
In May 2022 Devolver established an Employee Benefit Trust (EBT) to facilitate
settlement of employee stock options granted under the 2017 Stock Option Plan.
The EBT is a Jersey-based Trust and the Trustees act to the benefit of the
employees. The accounting treatment determined that Devolver controls the EBT
and must consolidate the EBT in its consolidated financial statements. Most
transactions eliminate upon consolidation, with the exception of the purchase
by the EBT of Devolver shares from employees. These are recognised at cost as
"Issued shares held within the Group". These shares are a separate reserve
within equity but may be presented in aggregation with other reserves. The
Devolver shares held by the EBT are not revalued. When the EBT sells the
shares to a third party, any gains or losses are recognised directly in
equity.
Operating results for the six months ended June 30, 2022 are not necessarily
indicative of the results that may be expected for the year ending December
31, 2022. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Group's annual report for the
year ended December 31, 2021.
The Directors are confident that the Group will remain cash positive and will
have sufficient funds to continue to meet its liabilities as they fall due for
a period of at least 12 months from the date of this first half 2022
announcement and have therefore prepared this unaudited semi-annual
announcement on a going concern basis.
Tax charged within 6 months ended 30 June 2022 has been calculated by applying
the effective rate of tax which is expected to apply to the Group for the year
ending 31 December 2022 as required by IAS 34 'Interim Financial Reporting'.
The effective rate of (44.57)% varies from the statutory rate of 21% due to
permanent book to tax differences related to stock compensation deductions for
foreign entities, which is not deductible for US income taxes.
The financial presentation in this release should be read in conjunction with
the notes to the consolidated financial statements as at and for the first
half ended 30 June 2022, as contained within this release.
These preliminary unaudited financial statements were approved by the Board of
Directors on September 24 2022.
Note 2: Earnings Per Share
6 months ended Year ended 6 months ended
30-Jun-21 31-Dec-21 30-Jun-22
US$'000 US$'000 US$'000
Profit/(Loss) attributable to the owners of the company 79,555 30,550 (16,560)
Weighted average number of shares 354,541,250 376,034,064 442,464,268
Basic earnings per share ($) 0.224 0.081 (0.037)
Profit/(Loss) attributable to the owners of the company 79,415 30,550 (16,560)
Weighted average number of shares 354,541,250 376,034,064 442,464,268
Dilutive effect of share options 29,676,325 32,367,003 -
Weighted average number of diluted shares 384,217,575 408,401,067 442,464,268
Diluted earnings per share ($) 0.207 0.075 (0.037)
Note 3: Normalised Adjusted Results*
6 months ended Year ended 6 months ended
30-Jun-21 31-Dec-21 30-Jun-22
US$'000 US$'000 US$'000
Revenue
Reported Revenue 46,443 98,152 53,003
Reported Revenue growth 94.7% 111.3% 14.1%
Normalised Revenue 46,443 98,152 53,003
Normalised revenue growth 94.7% 111.3% 14.1%
Gross Profit
Reported Gross Profit 15,716 39,232 18,260
Reported Gross Profit margin 33.8% 40.0% 34.5%
Normalised Gross Profit adjustment (175) - 721
Normalised Gross Profit 15,541 39,232 18,981
Normalised Gross Profit margin 33.5% 40.0% 35.8%
Adjusted EBITDA
Reported Adjusted EBITDA 118,332 110,818 5,627
Reported Adjusted EBITDA margin 254.7% 112.9% 10.6%
Normalised Adjusted EBITDA adjustment (105,764) (85,089) 1,191
Normalised Adjusted EBITDA 12,568 25,729 6,818
Normalised Adjusted EBITDA margin 27.1% 26.2% 12.9%
* Normalised Adjusted EBITDA makes the following adjustments: it excludes 1) a
net gain from the sale of Fall Guys publishing rights; 2) stock compensation
(share-based payment) expenses and revaluation of contingent consideration; 3)
one-time expenses related to the IPO and other non-recurring items; and 4)
amortisation of IP (but does not exclude amortisation of capitalised software
development costs), and 5) impairment.
Note 4: Reconciliations to Adjusted EBITDA
6 months ended Year ended 6 months ended
30-Jun-21 31-Dec-21 30-Jun-22
US$'000 US$'000 US$'000
Operating Profit/(Loss) 103,588 50,017 (11,617)
Share-based payment expenses 12,931 55,150 11,477
Foreign Exchange adjustment - - 2,007
Amortisation of purchased intellectual property 1,765 5,504 3,741
Depreciation of property, plant and equipment 48 147 20
Adjusted EBITDA 118,332 110,818 5,627
6 months ended Year ended 6 months ended
30-Jun-21 31-Dec-21 30-Jun-22
US$'000 US$'000 US$'000
Adjusted EBITDA 118,332 110,818 5,627
Net Exceptional income from IP disposal & sale of publishing rights (113,076) (113,166) -
Non-recurring, one-time expenses related to IPO & others 2,148 7,857 470
FV of contingent consideration - 15,056 -
Exceptional bonus payment relating to sale of publishing rights 5,164 5,164 -
Write-down for investment in discontinued game title - - 721
Normalised Adjusted EBITDA 12,568 25,729 6,818
Note 5: Intangible Assets
Goodwill Intellectual Property Royalty Rights Development Cost Total
US$'000 US$'000 US$'000 US$'000 US$'000
Cost
As at 31 December 2020 159 24,184 2 44,064 68,409
Additions - business combinations 66,661 35,633 - - 102,294
Additions - - - 31,735 31,735
Disposals - - - (14,403) (14,403)
As at 31 December 2021 66,820 59,817 2 61,396 188,035
Additions - business combinations - - - - -
Additions - - - 15,631 15,631
Disposals - - - - -
As at 30 June 2022 66,820 59,817 2 77,027 203,666
Amortisation and impairment
As at 31 December 2020 - 931 - 15,746 16,677
Amortisation charge for the period - 5,504 2 3,688 9,194
Disposal - - - (2,479) (2,479)
As at 31 December 2021 - 6,435 2 16,955 23,392
Amortisation charge for the period - 3,741 - 6,391 10,132
Impairment - - - 721 721
Disposal - - - - -
As at 30 June 2022 - 10,176 2 24,067 34,245
Carrying amount
As at 31 December 2020 159 23,253 2 28,318 51,732
As at 31 December 2021 66,820 53,382 - 44,441 164,643
As at 30 June 2022 66,820 49,640 - 52,960 169,420
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR SELSIMEESEEURecent news on Devolver Digital
See all newsREG - Devolver Digital - Publication of 2024 Annual Report and Accounts
AnnouncementREG - Devolver Digital - Unaudited preliminary results
AnnouncementREG - Devolver Digital - Notice of Results
AnnouncementREG - Devolver Digital - Trading Update
AnnouncementREG - Devolver Digital - TR-1: Notification of Major Holdings
Announcement