(Boursier.com) — DON ‘T NOD climbs more than 8% after presenting its 2023 half-year results. For the first 6 months of the financial year, DON’T NOD shows an increase of 10.3% in its revenue. economic operations which amount to 16.5 ME, compared to 14.9 ME as of June 30, 2022.
This performance is based on:
-An increase in sales of 28.2%, driven by the dynamics of the back catalog (Vampyr and the Life is Strange license) and the contribution of Harmony: the Fall of Reverie, released last June,
– An increase of 21.4% in capitalized production, to 13.8 MEUR, illustrating the ramp-up of production in the 2023/25 line-up,
-Development revenues down 33.4%, linked to the completion of development of Banishers: Ghosts of new Eden.
An increase in costs in a project launch cycle
The 2023 half-year accounts confirm the progress of ongoing developments as well as costs incurred, illustrating the acceleration of the game launch cycle in 2023 and the growing share of self-publishing.
Personnel expenses, at 13.6 ME as of June 30, 2023, increased following the recruitments necessary for the production of the projects. Furthermore, other operating expenses, up 23.5% to €5.3 million as of June 30, 2023, reflect the increase in subcontracting commitments as well as marketing and publishing costs to support marketing of games.
Thus, economic EBITDA including tax credits (French and Canadian) stands at 1.1 ME in the first half of 2023, down 0.8 ME compared to June 30, 2022.
After taking into account depreciation and provisions ((0.5) ME) over the period and deferred taxes ((0.2) ME), the economic EBIT including tax credits amounts to 0. 4 ME as of June 30, 2023 compared to 1.9 ME a year previously.
During the first half of 2023, the Group’s exceptional result amounted to (1.3) ME, compared to (0.5) ME as of June 30, 2022. The Company carried out the strategic redirection of certain assets in the development phase. pre-production, developed within the Parisian studio. This reorientation resulted in the exit of a part of the assets that did not comply with the new development challenges, the amount of which amounted to 1.4 ME.
Thus, the Group’s share of net income amounts to (0.9) ME as of June 30, 2023, compared to 1.7 ME for the first half of the previous financial year.
DON’T NOD generated a positive cash flow margin of 1.4 ME for the first half of 2023, compared to 2.2 ME for the first half of 2022. The investments made during this first period of the 2023 financial year (14 ,1 ME) are mainly linked to games in development.
Following the fundraising carried out in February 2023 (45.9 ME per capital increase open to institutions and individuals with elimination of preferential subscription rights), as part of the financing of the next growth cycle beyond 2025 on the Action-RPG segment, DON’T NOD’s balance sheet strengthened at the end of the half-year.
Shareholders’ equity thus amounts to 132.6 ME at June 30, 2023 compared to 88.1 ME at the end of December 2022 and available cash and equivalents reach a solid level of
64.2 ME, compared to 34.9 ME as of December 31, 2022.
Outlook and development
In the second half of 2023, DON’T NOD will benefit from the marketing of Jusant, the next self-published Intellectual Property, scheduled for release on October 31, 2023 on PC (Steam), PlayStation 5, and Xbox Series X/S.
On February 13, 2024, Banishers: Ghosts of New Eden, the studio’s next narrative action-RPG, will be released on Steam, PlayStation 5 and Xbox Series X/S.
Finally, with considerably strengthened financial resources, DON’T NOD will maintain its development strategy which aims to:
*Strengthen its ownership of Intellectual Properties while favoring a balanced model between self-publishing and co-production;
*Focus its production force on the growing segments of Action-RPG and Action Adventure/Narrative Adventure;
*Confirm the objective of 2 releases per year on average, in order to ensure both recurring turnover and the creation of a dynamic back catalog.
Thus, with a rich pipeline of 8 original creations, including 5 self-published, DON’T NOD confirms its status as a developer-publisher in the global video game ecosystem.
“Don’t Nod has yet to demonstrate the viability of its business model after a series of commercial disappointments… That being said, the recent evolution of the price (-41% over one month) reflects sales at all costs which are successful according to we have a valuation anomaly” comments Portzamparc who underlines that the current capitalization is close to net cash (61 ME at the end of June, PZP 51 ME at the end of December) while a significant part of the budgets for the next games has already been disbursed… Verdict: “We therefore maintain our ‘Buy’ recommendation with an objective, however, lowered initially from 9.7 to 8.9 euros (scenario adjustment, increase in rates and drop in comparables).”