Frontier Developments' revenues rise with new video games in the pipeline

Video game developer Frontier Developments’ half year revenue increased as it invested in forthcoming projects expected to yield sales.

The AIM listed company reported in its half year trading update ended 31 May that revenue in its self-publishing unit grew year-on-year by 13%, which was 99% of the Frontier Developments’ total revenue.

Total revenue for the year was £21.3m and the company expects to report adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £6.1m and an operating profit of £1.2m.

The Cambridge-based company said it is transitioning to self-publishing multiple revenue generating franchises. Sales for its first franchise, Elite Dangerous, launched in October 2015, are currently 1.7m, as unit sales increased by 1m during the year.

The company also released Elite Dangerous: Horizons, a paid-for season pass of additional content of the game in December 2015, and lower-priced Elite Dangerous: Arena.

The company’s next franchise Planet Coaster is due to be launched in the fourth quarter of this year. It has already exceeded the company’s expectations as it has 34,000 unit sales to date during the Alpha stage of development, which made over £1.5m.

Frontier Developments said that they invested significantly in both franchises during the year but the company’s balance remains strong as at 31 May it has net cash of about £8.6m.

The company maintained that it “remains in a strong financial position to support its continuing investment plans going forward”.

“With the anticipated launch of Planet Coaster in [the fourth quarter of] 2016, Frontier has a strong release pipeline for the forthcoming year. The board have been pleased by the reception of Horizons on Xbox One, and are encouraged by the potential for Planet Coaster.”