Team17 warns on profits, shares slide

In an update for the year to the end of December, the company said revenues are set to be "modestly ahead" of current market expectations. However, adjusted earnings before interest, tax, depreciation and amortisation are expected to be "at least" £28.5m, which includes impairments of up to £11.5m.

Team17 highlighted "strong traction" across its new release and back catalogue titles, but said certain titles within the Games Label are not meeting internal expectations. This has resulted in a less favourable mix between higher margin own-IP titles and third-party titles - with higher royalty payments - than anticipated.

In addition, the company conceded that it was too slow to address some project overspends and has faced some delays in implementing key cost initiatives at the Games Label. "These are now at advanced stages and will continue to bring benefits into next year," it said.

Team17 also said it is reviewing a number of titles, both under development and already launched, to assess the revenue potential in the current market environment. This is expected to result in impairments recognised in FY23.

At 0950 GMT, the shares were down 41% at 184.80p.

Russ Mould, investment director at AJ Bell, said: "Failing to control overspending will not do anything for the firm’s credibility in the market and the decision to review games in development shows how this market has got tougher now people aren’t stuck indoors, with gaming representing one of the few possible escapes from the drudgery of lockdown."