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Summary
- Frontier Developments Plc had reported a surge in revenues of 15% during H1 FY21 ended on 30 November 2020.
- The net cash balance stood at £34.9 million at 30 November 2020.
- The next major release, Elite Dangerous: Odyssey is scheduled for release on PC by FY21.
- The PAT had increased from £3.6 million during H1 FY20 to £5.8 million for H1 FY21.
Frontier Developments Plc (LON:FDEV) is the LSE listed consumer stock. The Company is the leading developer of video games. FDEV’s shares have generated a return of about 123.34% in the last 12 months. The Company is listed on FTSE AIM UK 50 Index.
Business Model
FDEV is one of the most prominent video-game developer headquartered in Cambridge, England. The Company was founded in 1994. The Company is generating its revenues out of three successful own-IP franchises and one licensed-IP franchise –
- Elite Dangerous
- Planet Coaster
- Planet Zoo
- Jurassic World Evolution
The Company is engaged in the creation of innovative games through its game development technology – ‘COBRA’. FDEV is also focused on third-party publishing through Frontier Foundry.
Trading update for December 2020 (as on 03 February 2021)
- The Company had witnessed more than expected sales across all significant franchises during December 2020, which is the biggest month in the context of video game sales.
- FDEV had expected to accelerate its progress during H2 FY21 carrying the positive momentum achieved during the first half of FY21.
- During November 2020, FDEV had released Jurassic World Evolution: Complete Edition on Nintendo Switch and Planet Coaster: Console Edition.
H1 FY21 Financial Highlights (for six months period ended 30 November 2020, as on 03 February 2021)
(Source: Company result)
- FDEV had demonstrated a jump of 15% to £36.9 million during H1 FY21 driven by the continuous resilient performance of all four major franchise titles.
- The Company had reported a jump of 400 basis points in its gross profit to 71% during H1 FY21 driven by an increased proportion of revenue from own-IP sales.
- The gross R&D expenses had increased from £12.4 million during H1 FY20 to £15.8 million for H1 FY21 due to the continuous growth of employee headcounts to support the development plans of the Company.
- The Company had incurred £3.4 million in sales & marketing during H1 FY21.
- The PAT (Profit After Tax) had increased from £3.6 million during H1 FY20 to £5.8 million for H1 FY21.
- The Company had a net cash balance of £34.9 million as of 30 November 2020, while it was £45.8 million as of 31 May 2020 due to share purchase activity of £10.0 million completed during September 2020.
- The receivables of the Company jumped to £15.0 million as of 30 November 2020 largely due to resilient business performance during the holiday period.
- The Company had generated £3.1 million of cash from operating activities during H1 FY21, more than £1.9 million of cash generated during H1 FY20.
H1 FY21 Operational Highlights (as on 03 February 2021)
- FDEV had increased its headcounts to 600 people as of 31 December 2020.
- The first partner title of Frontier Foundry, Struggling, had released in August 2020.
- The sales of Planet Zoo had crossed 1.5 million base units ever since its launch on PC during November 2019.
- The Company had released Console edition of Planet Coaster on PlayStation and Xbox in November 2020. It had already proven to be successful on PC from the last four years. The Company had sold a total of 3 million base game units across all platforms.
- The Company had expanded Jurassic World Evolution into Nintendo Switch in November 2020, taking total sales to over 4 million units across all platforms.
- The next major launch, Elite Dangerous: Odyssey is anticipated to be available on PC by the end of FY21, and its Console version will be ready by the end of calendar 2021. The trailer of Elite Dangerous: Odyssey had garnered positive response right since its premier in The Game Awards on 10 December 2020.
- Elite Dangerous had crossed 12 million base game owners.
Share Price Performance Analysis of Frontier Developments Plc
(Source: EODHD/Others, chart created by Kalkine group)
Shares of Frontier Developments Plc were trading at GBX 3,253.18 and were up by close to 0.87% against the previous closing price as on 04 February 2021, (before the market close at 09:18 AM GMT). FDEV's 52-week Low and High were GBX 952.00 and GBX 3,470.00, respectively. Frontier Developments Plc had a market capitalization of around £1.27 billion.
Business Outlook
FDEV had anticipated tasting success from its next major release, Elite Dangerous: Odyssey, which would be scheduled for release on PC by the end of FY21 and subsequently, Playstation & XBOX release are planned for FY22. The chargeable aquatic pack for Planet Zoo would be launched during H2 FY21. The Company had considered the impact of operational headwinds created by Covid-19 pandemic during 2020 and expected it to continue during 2021 as well. The Company had anticipated FY21 revenue to be ranging from £90 million to £95 million, greater than the FY20 levels of £76.1 million. FDEV is in great shape to capitalize on the increasing market demand through its innovative launches and anticipated robust performance from its existing portfolio. The FY22 revenues had projected to be ranging from £133 million to £153 million. The major release of Frontier Foundry, Lemnis Gate is scheduled in FY22.
