REG - Devolver Digital - Trading Update

Devolver DigitalAnnouncement

09/01/2023 07:00

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RNS Number : 0655M  Devolver Digital, Inc.  09 January 2023

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of MAR

 

9 January 2023

 

Devolver Digital, Inc.

 

("Devolver Digital", "Devolver" or the "Company", and the Company together
with all of its subsidiary undertakings "the Devolver Group")

Trading Update

 

Devolver Digital, an award-winning digital publisher and developer of indie
video games, announces an update for the financial year ended 31st December
2022 ("FY2022")(1).

 

We expect FY2022 revenue to be within the range of guidance set in June 2022,
with strong year-on-year revenue growth from continuing operations of greater
than 30%(2). Trading recovered in the second half of FY2022, with Normalised
Adjusted EBITDA(3) expected to be significantly greater than the first half.
However, the ongoing cost impact of three underperforming titles, and weaker
than forecast sales volumes in December, have resulted in lower than expected
performance in the second half of FY2022. Subsequently, the updated Normalised
Adjusted EBITDA range for FY2022 is $20m to $22m.

 

In addition to the above, the Company is performing a group-wide assessment of
the carrying value of balance sheet items relating to capitalised development
costs, and acquisition IP and goodwill. It is expected that these may be
material, and that some of the adjustments will impact upon Normalised
Adjusted EBITDA. However, these will be non-cash adjustments that are
non-recurring in nature. We will release further details regarding these
non-cash adjustments in due course.

 

The Company's pipeline for 2023 is healthy and diverse in terms of titles,
developers, platforms and geography. This includes announced titles including
Terra Nil, Gunbrella, Wizard With a Gun and Anger Foot, as well as new titles
yet to be revealed. The Company's confidence in the outlook for 2023 has been
reinforced by the strong wish-list interest in the first planned release of
the year, Terra Nil, which is due for release in 1Q 2023. However, management
expects the negative global economic outlook and reduction in consumer
spending to continue into 2023, which may affect sales volumes. We expect
FY2023 profitability to be heavily weighted towards the second half of the
year, reflecting the release schedule of new titles in FY2023.

 

Devolver Digital will provide further details in its FY2022 full year results
announcement, which is expected to be released in early April 2023.

 

Harry Miller, Executive Chairman of Devolver Digital, said:

 

"Devolver Digital will have posted annual revenue growth of over 30% in 2022.
Second half EBITDA was significantly higher than the first half, although the
performance for the year was constrained by three underperforming titles and
difficult market conditions in December, which contributed to a disappointing
result for profitability for full year 2022. The second half featured the
success of Cult of the Lamb, Return to Monkey Island and other released
titles, which have re-established our record of releasing high quality and
popular Indie games. Metacritic scores have risen to an historical high on the
back of the strong slate of releases in 2022. Moving into 2023, we believe
market conditions will remain difficult for our industry, however we believe
we are well placed to consolidate our greater scale of revenues and focus on
improving margins as we move through the year."

 

 

-ENDS-

About Devolver Digital

 

Devolver is an award-winning video games publisher in the indie games space
with a balanced portfolio of third-party and own-IP. Devolver has an emphasis
on premium games and has published more than 100 titles, with more than 30
titles in the pipeline scheduled for release over the next two years and
beyond. Devolver has in-house studios developing first-party IP titles and a
complementary publishing brand. Devolver is registered in Wilmington,
Delaware, USA.

 

Enquiries

 

Devolver Digital, Inc.
 
      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, Jamie Peel, Matt Hogg (Investment Banking)

 Ben Robertson (Equity Capital Markets)

 

FTI Consulting (Communications Adviser)
 
devolver@fticonsulting.com

Jamie Ricketts  / Dwight Burden / Valerija Cymbal / Usama Ali      +44
(0)20 3727 1000

 

Notes

1. Financial numbers contained within this Trading Update are based on
preliminary unaudited 2022 results and will be subject to impairments which
are currently being reviewed.

2. June 2022 guidance was for revenue of US$130-140 million and US$27-32
million of normalized adjusted EBITDA.

3. Normalised Adjusted EBITDA ("EBITDA") makes the following adjustments: it
excludes: 1) stock compensation (share-based payment) expenses and revaluation
of contingent consideration; 2) one-time expenses and other non-recurring
items; 3) amortisation of IP (but does not exclude amortisation of capitalised
software development costs), and; 4) impairments of goodwill and acquired
IP.

 

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