Video games maker Frontier Developments upgrades guidance after cost-cutting drive
The AIM-listed firm said in a trading update on Tuesday that its portfolio had "performed well" over the last month "with pleasing contributions from all games".
Cambridge-based video game publisher Frontier Developments has raised its full-year earnings guidance after reporting a strong sales across its portfolio and lower operating costs as it looks to bounce back from a rough 2023.
The AIM-listed firm said in a trading update on Tuesday that its portfolio had “performed well” over the last month “with pleasing contributions from all games”.
It highlighted strong performance from its creative management simulation titles, boosted by a Frontier publisher sale on PC storefront Steam between 1 and 15 April.
The firm added that its console edition of Planet Zoo continued to sell well following its release in March.
Frontier said it expected revenue of at least £85m for its financial year to 31 May 2024. The firm added that it now anticipated its adjusted earnings before tax (EBITDA) to come in better than previously guided at loss of £5m or better.
The company pinned the upgrade on a higher gross margin percentage from a greater proportion of its own-IP revenue, lower operating costs following an “organisational review” and the gain from a $7m sale of its RollerCoaster Tycoon 3 publishing rights to Atari last month.
Frontier’s stock price has more than doubled in the year to date but is down 55 per cent from a fresh peak last July. The firm announced last October that it would layoff a number of staff as part of an operational review aiming to cut up to 20 per cent of costs.
It took another hit in November when its then-new release, Warhammer Age of Sigmar: Realms of Ruin, came in below expectations over the critical Black Friday period. Frontier subsequently downgraded its full-year sales guidance by as much as 20 per cent.
Chief executive Jonny Watts said on Tuesday: “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.”
Frontier’s shares gained six per cent on Tuesday morning.
