Games firm Team17 delivers record profit in year of staying home

Video games developer and creative partner Team17 reported revenue growth of 34% in its unaudited final results on Tuesday, to £83m, underpinned by the release of a record number of titles for the company.

The AIM-traded firm reported record profit before tax of £26.2m for the year ended 31 December, up 36% year-on-year, while its basic adjusted earnings per share improved by 34% to 18.2p.

It said it launched 12 titles during 2020, providing new revenue lines, including the release of a record 10 new games being supported by an “increasing depth” of back catalogue titles.

Team17 said it was approaching 400 digital revenue lines across its entire portfolio, and launched two titles on new ninth-generation consoles, Worms Rumble and Overcooked! All You Can Eat.

It also integrated cross-play technology in its ninth-generation titles, which it said would “form the wrapper” for future online game releases using the Unreal and Unity engines.

The company’s back catalogue put in a “solid” performance, making up 78% of Team17’s revenues, while first-party intellectual property reached 21% of revenues.

It said it made a “seamless” transition to remote working in early March 2020 ahead of the Covid-19 outbreak, and continued to invest in both its senior management and core infrastructure.

With the acquisition and integration of Yippee Entertainment making for a second UK development studio for the company in Greater Manchester’s MediaCityUK development, Team17 said overall headcount had grown by 25% to 250 at year-end.

Since the year ended, the company completed the acquisition of all rights and assets for existing third-party title Golf With Your Friends, making it a fully-owned intellectual property, for a total consideration of £12m.

Looking at the current year, Team17 said it had started “well”, with the expansion of both major new consoles and distribution platforms underpinning its optimism for the future of gaming, given its unique mixture of technology and entertainment.

The board said it was still mindful of the potential for headwinds coming from a prolonged pandemic, including uncertain macroeconomic and consumer environments alongside manufacturing and supply chain challenges.

However, it added that it remained confident that its “growing and diverse” portfolio, and its development and commercial teams, would continue to underpin performance.

It said it was continuing to review a “healthy pipeline” of potential merger and acquisition opportunities that could bring long-term value to the group.

“Team17 has been able to offer gamers a means of escapism and a way to interact with their friends and family more than ever before, even when they were unable to meet face-to-face,” said chief executive officer Debbie Bestwick.

“The ability to enjoy interactive entertainment between multiple households is something that is almost unique to gaming and we are pleased that our inclusive and family-oriented games have proven so popular.

“2020 was a significant year for the gaming industry as a whole, as we saw the launch of both Sony and Microsoft's next-gen consoles.”

Bestwick said 2021 would be an “exciting and busy” year for the company, with more games signed to its label than any time in its history, and new intellectual property launches including Rogue Heroes, King of Seas, Narita Boy, Epic Chef, Super Magbot, Greak: Memories of Azur, Honey I Joined a Cult and Hokko Life, with three new games still to be announced.

“Alongside these, Hell Let Loose is due to exit early access and launch on PlayStation 5 and Xbox X/S, Overcooked! All You Can Eat will launch on Nintendo Switch, PlayStation 4, Xbox One and PC, and Worms Rumble will launch on Xbox X/S, Xbox One and Nintendo Switch.”

At 1125 GMT, shares in Team17 Group were up 1.69% at 752.5p.