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Frontier Developments PLC on Wednesday reported a plunge in profit for its recently ended financial year, as ballooning research & development costs more than offset double digit growth in revenue.
For the 12 months ended May, the Cambridge, England-based video game maker and publisher posted a pretax profit of £944,000, down significantly from £19.2 million the year before.
The plunge in profit was due to research & development expenses more than doubling to £46.2 million from £22.0 million, reflecting an increased investment in newly released and future content, as well as a one-off non-cash charge related to Elite Dangerous: Odyssey, and the decision to cancel further console development of the expansion due to lower than expected engagement on PC.
Revenue meanwhile, grew 26% year-on-year to a record £114.0 million from £90.7 million, driven by the new release of Jurassic World Evolution 2, as well as ongoing momentum from the company's portfolio of games and Foundry titles, including Warhammer 40,000 Chaos Gate - Daemonhunters.
Looking ahead, Frontier Developments said it has made a pleasing start to its current financial year, with an ongoing strong performance from Jurassic World Evolution 2, strong initial sales from the most recent major release F1 Manager 2022, while the Foundry looks set for a robust period.
As a result,the group is confident of meeting analyst expectations, and over the medium term, expects to continue growing revenue by 20% on average per annum.
‘Our team did a terrific job during FY22 and we were delighted to achieve record annual revenue with growth of 26%. In the last 12 months we have successfully released three new games with each achieving chart-topping success; Jurassic World Evolution 2 in November 2021; Warhammer 40,000: Chaos Gate - Daemonhunters in May 2022; and F1 Manager 22, which released just a few weeks ago at the end of August. We have three more exciting titles coming in FY23 from Foundry, as well as PDLC for Jurassic World Evolution 2 and Planet Zoo,’ said Chief Executive Officer Jonny Watts.
Shares in Frontier Developments were up 0.8% at 1,202.00 pence on Wednesday in London.
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