Remedy Entertainment Plc | Stock exchange release, August 12, 2022, at 09:00 a.m. (EEST)
Remedy Entertainment Plc | Half-Year Financial Report January–June 2022
Remedy’s Q2 revenue at the previous year’s level – increased external development investments burden profitability
Five games in development, including the remake of iconic Max Payne
The Half-Year Financial Report is unaudited. Figures in parenthesis refer to the comparison period in the previous year, unless otherwise stated.
HIGHLIGHTS FROM APRIL–JUNE 2022
- Revenue was at the previous year’s level, EUR 9.4 (9.4) million.
- EBITDA decreased to EUR -1.8 (2.3) million, mainly due to increased external development costs.
- Operating profit (EBIT) was EUR -2.4 (1.5) million, i.e. -25.6% (15.7%) of revenue.
- Cash flow from operations was EUR -8.3 (-0.8) million.
- In April, Remedy announced it will remake the iconic Max Payne and Max Payne 2: The Fall of Max Payne video games with Rockstar Games.
- On May 4, 2022, trading in Remedy’s shares was transferred from the First North Growth Market Finland marketplace to the official list of Nasdaq Helsinki.
HIGHLIGHTS FROM JANUARY–JUNE 2022
- Revenue grew by 25.8% to EUR 22.1 (17.5) million.
- EBITDA was EUR 1.5 (3.2) million.
- Operating profit (EBIT) was EUR 0.4 (1.3) million, i.e. 1.6% (7.3%) of revenue.
- Cash flow from operations was EUR 9.4 (3.5) million.
KEY FIGURES
|
MEUR, IFRS, Group, unaudited |
4–6/2022 |
4–6/2021 |
1–6/2022 |
1–6/2021 |
1-12/2021 |
|
Revenue |
9.4 |
9.4 |
22.1 |
17.5 |
44.7 |
|
Growth in revenue, % |
-0.2% |
-3.4% |
25.8% |
3.3% |
8.9% |
|
EBITDA |
-1.8 |
2.3 |
1.5 |
3.2 |
14.5 |
|
Operating profit (EBIT) |
-2.4 |
1.5 |
0.4 |
1.3 |
11.4 |
|
Operating profit, % of revenue |
-25.6% |
15.7% |
1.6% |
7.3% |
25.5% |
|
Result for review period |
-2.6 |
1.0 |
-0.6 |
1.0 |
8.8 |
|
Result for review period, % of revenue |
-27.5% |
10.6% |
-2.5% |
5.5% |
19.7% |
|
Balance sheet total |
100.4 |
90.7 |
100.4 |
90.7 |
101.1 |
|
Cash flow from operations |
-8.3 |
-0.8 |
9.4 |
3.5 |
6.1 |
|
Net cash |
54.6 |
56.9 |
54.6 |
56.9 |
47.5 |
|
Cash position |
53.6 |
60.6 |
53.6 |
60.6 |
51.4 |
|
Net gearing, % |
-63.1% |
-74.3% |
-63.1% |
-74.3% |
-54.4% |
|
Equity ratio, % |
86.2% |
84.4% |
86.2% |
84.4% |
86.4% |
|
Capital expenditures |
2.6 |
2.5 |
5.3 |
4.6 |
9.6 |
|
Average number of personnel during review period (FTE) |
300 |
280 |
295 |
277 |
280 |
|
Headcount at the end of period |
319 |
293 |
319 |
293 |
294 |
|
Earnings per share, € |
-0.19 |
0.08 |
-0.04 |
0.07 |
0.67 |
|
Earnings per share, € (diluted) |
-0.19 |
0.07 |
-0.04 |
0.07 |
0.65 |
|
Number of shares at the end of period |
13,302,700 |
13,072,150 |
13,302,700 |
13,072,150 |
13,298,450 |
COMMENTS BY CEO TERO VIRTALA
In the second quarter of 2022, our revenue, EUR 9.4 million, was at the previous year’s level. Key positive contributors were the development fees from Alan Wake 2 and Max Payne 1&2 Remake. At the same time, development fees from Codename Condor and Alan Wake Remastered and game royalties from Control decreased from the comparison period. Alan Wake Remastered and Crossfire games did not yet generate royalties.
In the second quarter, operating profit decreased to EUR -2.4 (1.5) million, mainly due to significant external development expenses. The composition of revenue also affected our profitability.
The highlight of the second quarter was the development agreement for Max Payne 1&2 Remake with Rockstar Games in April. Max Payne 1&2 Remake allows us to reignite the soul of that original world, story, and characters for the vast gaming audience of today. The game is currently developed by a small core team. Max Payne is a highly motivating game for our team and fits well with many of our strengths. The game has good business potential with well-managed risks, and it allows us to utilize and strengthen the production and technology synergies across our projects.
In May, we celebrated the 12th anniversary of Alan Wake and confirmed that Alan Wake 2 will be released in 2023 as planned. The Alan Wake 2 team is at its peak size, and game production continues at full speed on all fronts. In the second quarter, Remedy announced that Alan Wake Remastered will be released for Nintendo Switch, opening up a new audience for the game.
The development of Codename Condor, a spin-off game of Control, has progressed well. The project is moving from the proof-of-concept stage to the production readiness stage. Codename Heron, a bigger-budget Control game, is in the concept stage. At the moment, we are keeping the development team small and giving it time to fine-tune the game concept before expanding the team and taking the project to the proof-of-concept stage.
Codename Vanguard, a free-to-play (F2P), co-operative multiplayer game to be co-published with Tencent, is in the proof-of-concept stage. As announced after the review period on August 1, we decided, together with Tencent, to keep the game in the current proof-of-concept phase longer and postpone the significant expansion of the development team until 2023. This will give us time to further design and develop key elements of the game before moving to the next phase of development, even though it will come with the cost of postponing some of the development fees to the future.
On May 4, 2022, we achieved an important milestone, when trading in Remedy’s shares was transferred from the First North Growth Market Finland marketplace to the official list of Nasdaq Helsinki. In our view, a listing on the official list will increase Remedy’s brand awareness, improve the liquidity of shares, and help to broaden our shareholder base.
After the end of the review period, on August 1, we lowered our revenue and operating result outlook for 2022, due to lower-than-expected game royalties in 2022 as well as our decision to take extra time to develop Codename Vanguard.
To ensure a good progress of game development, it is paramount that we can recruit enough new talents. Our recruitment is now progressing faster than in 2021. While keeping the bar high, we have managed to onboard the same number of new people in the first half of 2022 as during the full year 2021. To support our game projects, our capabilities to use external development have improved, which is reflected in our increased external development costs. Our own development teams are now stronger than ever as well. The Northlight technology keeps on progressing and our way of working has continuously improved.
FUTURE OUTLOOK (as announced on August 1, 2022)
Remedy expects its revenue to remain at the previous year’s level and its operating result to decline significantly compared to the year 2021.
webcast and conference call
Remedy will host a webcast and conference call in English on its half-year financial report for investors, analysts and media on Friday, August 12, 2022, at 2:00 p.m. (EEST). Remedy’s half-year financial report will be presented by CEO Tero Virtala and CFO Terhi Kauppi.
Webcast details:
Register in advance for the webcast:
https://remedy.zoom.us/webinar/register/WN_knLaEt2WRSOLTMd-kybDqw
After registering, you will receive a confirmation email containing information about joining the webcast.
Conference call details:
Dial in by calling your local phone number a few minutes before the briefing begins. International numbers are available at https://remedy.zoom.us/u/kyOvxC4TO
Finland: +358 9 7252 2471
Sweden: +46 850 539 728
United Kingdom: +44 330 088 5830
United States: +1 646 558 8656
Webinar ID: 831 1823 7596
Passcode: 338475
A recording of the webcast will be available after the briefing at https://investors.remedygames.com/presentations/
More information:
Tero Virtala, Chief Executive Officer
Phone: +358 9 435 5040
Email: tero.virtala@remedygames.com
Terhi Kauppi, Chief Financial Officer
Phone: +358 9 435 5040
Email: terhi.kauppi@remedygames.com
Remedy in brief
Remedy Entertainment Plc is a globally successful video game company known for story-driven and visually stunning console and PC games such as Control, Alan Wake and Max Payne. Remedy also develops its own Northlight game engine and game development tools. Founded in 1995 and based in Finland, the company employs over 320 game industry professionals from 32 different countries. Remedy’s share is listed on the Nasdaq Helsinki’s official list.
