RNS Number : 6837F
Devolver Digital, Inc.
26 September 2024
 

26 September 2024

 

Devolver Digital, Inc.

 

("Devolver Digital", "Devolver" or the "Company", and the Company together with all of its subsidiary undertakings "the Group")

 

Unaudited results for the six months ended 30 June 2024

 

Return to Adjusted EBITDA profitability as expected, on track to meet FY 2024 guidance

 

Devolver Digital, the award-winning digital publisher and developer of independent ("indie") video games, announces its unaudited results for the six months ended 30 June 2024. All figures relate to this period unless otherwise stated.

 

A focused strategy driving return to growth

·    1H 2024 trading in line with expectations.

·    Growth driven by strong back catalogue sales, contribution from new releases and improvement in platform deals.

3 new titles released in 1H 2024 (1H 2023: 4), with record-matching average Metacritic score of 80 (76 average for 1H 2023).

Back catalogue revenues up 22%, accounting for 89% of game sales revenues (1H 2023: 87%), reflecting the continued strong performance of Cult of the Lamb and other key titles, plus the new contribution from System Era's Astroneer title.

Platform deals saw recovery from 2023's low level, being weighted to 1H 2024.

·    System Era, acquired last year, is performing in line with expectations and is integrating well, adding a full six-month contribution to 1H 2024 revenues.

Financial performance - return to EBITDA profit

·    Revenues in line with FY24 expectations:

1H 2024 revenues up 18% to $51.6m; Adjusted Gross Profit up 62% to $15.3m.

·    Strong execution and operational discipline leading to improved Adjusted EBITDA profit, as previously guided:

1H 2024 Adjusted EBITDA profit of US$4.7m, pre non-cash impairment (1H 2023: US$2.5m loss).

·    Non-cash impairment of US$1.7m recorded in 1H 2024 (1H 2023: US$0.9m) relating to previous releases where sales have been softer than expected.

·    Statutory net loss of US$4.5m1 (1H 2023: US$10.1m loss).

·    Cash of US$31.9m as of 30 June 2024 (year end 2023: US$42.7m), not including $9.8m net proceeds from the primary issuance of shares in early July 2024.

Current trading and outlook

·    10 new titles expected for full year 2024, with 7 releases in 2H 2024: Anger Foot, The Crush House, Sumerian Six, Demon's Mirror, The Plucky Squire, Neva and Stronghold Castles. 

·    System Era integration on track with full year contribution in FY 2024.

·    Strong Balance Sheet boosted by $9.8m primary share placement in July 2024.

·    On track to meet previous guidance: revenues over US$100m and Adjusted EBITDA after non-cash impairments in the mid-single digit US$ millions. We continue to expect an improvement in 2025.

·    Healthy pipeline of more than 30 new titles due for release in the next three years.

Harry Miller, Executive Chairman of Devolver, said:

 

"As expected, the first half of 2024 saw a return to Adjusted EBITDA profitability, driven by strong back catalogue revenues supplemented by new releases, an improvement in platform deals and a solid first half contribution from new acquisition System Era. We are pleased with the record high average Metacritic ratings in 1H 2024, which we believe can bolster the longevity of our games.

 

We are building momentum going into 2H 2024, with 6 new titles including the highly anticipated release of Neva in October, on the back of the recent success of The Plucky Squire. We reiterate our guidance for FY 2024, with improvements expected through 2025 and 2026."

 

 

Notes

1.   Including non-cash impact of US$2.4m of share-based payments.

 

 

About Devolver Digital

 

Devolver is an award-winning video games publisher in the indie games space with a balanced portfolio of third-party and own-IP. Devolver has an emphasis on premium games and has published more than 120 titles, with more than 30 titles in the pipeline scheduled for release over the next three years. Devolver has in-house studios developing first-party IP titles and a complementary publishing brand. Devolver is registered in Wilmington, Delaware, USA.

 

Enquiries

 

Devolver Digital, Inc.

Harry Miller, Chief Executive Officer

Daniel Widdicombe, Chief Financial Officer

 

ir@devolverdigital.com

Zeus (Nominated Adviser and Joint Broker)

Nick Cowles, Kieran Russell (Investment Banking)

Ben Robertson (Equity Capital Markets)

 

+44 (0)20 3829 5000

Panmure Liberum (Joint Broker)

Max Jones, Matt Hogg (Investment Banking)

 

+44 (0)20 3100 2000

FTI Consulting (Communications Adviser)

Jamie Ricketts / Dwight Burden / Valerija Cymbal / Usama Ali

devolver@fticonsulting.com

+44 (0)20 3727 1000

 

 



OPERATING REVIEW

 

1H 2024 - return to profit, with three new high Metacritic titles

Devolver released 3 new well-received titles in 1H 2024 - Dicefolk, Pepper Grinder and Children of the Sun - with an average Metacritic rating of 80, matching the record high average for a single six-month period. High Metacritic scores and positive user ratings are important as they help to bolster the longevity of releases.

The quiet release schedule mirrored that of 1H 2023 (4 titles), but 1H 2024 overall revenue benefitted from a significant contribution from platform deals for front and back catalogue, as well as the addition of a full six-month contribution from recent acquisition System Era. These two factors drove an 18% YOY increase in total group revenue in the first half of this year compared to 1H 2023.

Hit releases support 22% growth in back catalogue

Fan favourite Cult of The Lamb provided strong revenue momentum in 1H 2024, a trend continuing through this summer. The contribution from Cult of The Lamb, in combination with a full six-month contribution from recent acquisition System Era's Astroneer game, drove a 22% increase in back catalogue revenues in 1H 2024 compared to the previous year period. BAFTA-winning Inscryption also continued to perform well in the first six months of 2024, alongside other evergreen titles in Devolver's back catalogue.

 

The strong growth in back catalogue revenues, coupled with a lighter release schedule in 1H 2024, meant that back catalogue revenues accounted for 89% of  game sales revenues (1H 2023: 87%). Our back catalogue includes all titles released in or prior to the last financial year (2023 or earlier). As of 1 January 2024, the back catalogue consists of over 120 titles, including numerous indie cult classics, supporting highly diversified revenues.

 

Summer Game Fest 2024

Devolver marked June 2024 with celebrations in the summer showcase to commemorate the company's 15th year anniversary of its founding. Devolver's iconic live broadcast formed part of the Summer Game Fest 2024 in June, featuring reveals of future new releases and expansions to fan favourites Cult of the Lamb and The Talos Principle 2. New titles included Possessors, a slick side-scrolling action game from developer Heart Machine, the creators of Solar Ash and Hyper Light Drifter, and a reveal for Tenjutsu, the pending release from Dead Cells lead developer Deepnight Games. The game puts players in the role of a renegade yakuza fighting through the criminal underworld and mixes pixel art visuals with some fast-paced action.

 

Recent releases Anger Foot and Crush House received attention, and we also highlighted the Road to Elysium expansion from The Talos Principle 2, introducing a host of new challenges spread across three chapters - Orpheus Ascending, Isle of the Blessed, and Into the Abyss - each with their own look and storyline. The broadcast also highlighted Cult of the Lamb's Unholy Alliance expansion (rolled out on August 12th), which included some new quests, gear and other items, and added a co-op gameplay mode, underscoring our commitment to successful title expansion.

 

Disciplined Cost Control

 

Devolver successfully controlled operating expenses in 1H 2024, with growth in revenues outstripping total operating expenses, resulting in margin expansion in both gross profit and Adjusted EBITDA.

 

FINANCIAL REVIEW

 

Unaudited first half 2024 results to June 30 2024

   

The unaudited financial results included in this announcement cover the Group's combined activities for the six months ended 30th June 2024 (prepared in accordance with applicable International Financial Reporting Standards, "IFRS").

 

Adjusted results

 

The following refers to Adjusted results, as presented in the financial statements contained within this release. Adjusted results exclude any one-time exceptional items during the respective half-year periods.

 

Adjusted EBITDA results are not intended to replace statutory results and are prepared to provide a more comparable indication of the Group's core business performance by removing the impact of certain items including exceptional items (material and non-recurring), and other, non-trading, items that are reported separately. These results have been presented to provide users with additional information and analysis of the Group's performance, consistent with how the Board monitors results. Further details of adjustments are given in Note 4 to the condensed financial statements contained within this semi-annual results release.

 

P&L results and margins

 

Devolver Digital's first half 2024 performance was in line with expectations, with 3 new title releases compared to 4 titles released in 1H 2023. Revenues of US$51.6 million rose 18% year-over-year. Gross profit was US$15.3 million, an increase of 62% year-over-year. Adjusted EBITDA after non-cash impairments delivered a profit of US$3.0 million versus a US$3.5 million loss in 1H 2023.

 

Gross profit margin increased to 29.6% in the first half of 2024, up from 21.4% in the year-earlier period. Gross margin expansion was a result of first-party IP contributions from late 2023 new releases, other new releases in recoup in 1H 2024, and a full six-month contribution from Astroneer, System Era's popular expandable game. This compares to 1H 2023 when the royalty pay-out mix was heavily weighted towards third party titles.

 

Adjusted EBITDA margins before non-cash impairments improved to a positive 9.1% from a negative 5.7% in the first half of 2023. The expansion in 1H 2024 gross profit had a direct flow-through effect which benefitted Adjusted EBITDA.

 

Statutory net loss for 1H 2024 was US$4.5m, improved from the US$10.1m loss in 1H 2023.

 

Cash Balances

 

Cash holdings at end of June 2024 were US$31.9 million, a reduction of US$10.8 million compared to end of 2023's level of US$42.7 million, on the back of continued investment into game development. After the period end, a primary share placement in July 2024 resulted in net proceeds of US$9.8m. Devolver has no borrowings across the Group.

 

Appointment of Joint Broker

 

We are pleased to have Panmure Liberum join the Devolver family as Joint Broker to assist in broadening our investor coverage and business scope.

 

CURRENT TRADING OUTLOOK

Our busy release schedule for 2H 2024 has already featured Anger Foot, The Crush House, Sumerian Six and Demon's Mirror, as well as major title The Plucky Squire. NEVA, from the developers of the award-winning Gris, will release in October, alongside the mobile title Stronghold Castles from our subsidiary Firefly. The Plucky Squire released with a Metacritic score of 81 and very positive user reviews. NEVA, slated for release in October, has had very positive pre-release trailers, and has also built a healthy wishlist ahead of launch.

Trading for the full year 2024 continues to be in line with consensus expectations of revenues exceeding US$100 million and Adjusted EBITDA to be in the mid-single digit US$ millions, with improvements expected through 2025 and 2026.

Our momentum, robust balance sheet, deep pipeline and strong contribution from extensive back catalogue all support our confidence of further progress in 2025 and in the future. The Board believes that we are well positioned for future success, and we look forward to reporting on our progress into 2025.

 

Harry Miller

Chief Executive Officer



 

Condensed Consolidated Statement of Profit or Loss

 

 


Unaudited


Unaudited


Audited



6 months ended

 

6 months ended

 

Year ended



30-Jun-24

 

30-Jun-23

 

31-Dec-23

 

 Note

US$'000

 

US$'000

 

US$'000

Revenue

     2 

51,583 

 

43,877 

 

92,356 

Cost of sales


(36,327)


(34,483)


(67,838)

Gross profit


15,256

 

9,394

 

24,518

Administrative expenses


(21,439)


(18,141)


(38,537)

Other income / (expenses)


1,134


(591)


1,011

Operating loss


(5,049)


(9,338)


(13,008)

Finance costs


(61)


(198)


(58)

Finance income


272


897


1,361

Loss before taxation


(4,838)


(8,639)


(11,705)

Income tax benefit / (expense)


366


(1,426)


(1,019)

Loss for the period


(4,472)

 

(10,065)


(12,724)

Loss for the period is attributable to:







Equity holders of the parent


(4,414)


(10,042)


(12,742)

Non-controlling interests


(58)


(23)


18

Loss for the period


(4,472)


(10,065)


(12,724)

Basic and diluted loss per share ($)

(0.010)


(0.023)


(0.029)

Non-IFRS measures







Adjusted EBITDA* before performance- related impairments

 

4

 

4,713


 

(2,535)


 

1,677

Adjusted EBITDA*

4

2,967


(3,469)


(458)

 

 

*Adjusted EBITDA is a non-IFRS measure and is defined as earnings before interest, tax, depreciation, amortisation (but does not exclude amortisation of capitalised software development costs), share-based payment expenses, foreign exchange gains or losses and one-time non-recurring items and non-trading items.

 

For the six months ended 30 June 2023, the Group distinguished between Normalised Adjusted EBITDA and Adjusted EBITDA and presented both measures. This distinction was removed post June 2023 for a simpler, clearer presentation in line with industry peers,  and therefore the Adjusted EBITDA for the six months ended 30 June 2023 as previously reported is no longer presented, and the Normalised Adjusted EBITDA previously reported is presented as Adjusted EBITDA in the above table.

 

 



 

Condensed Consolidated Statement of Comprehensive Income

 

 

Unaudited

Unaudited

Audited

 

6 months ended

6 months ended

Year ended


30-Jun-24

    30-Jun-23

    31-Dec-23


US$'000

US$'000

US$'000





Loss for the period

(4,472)

(10,065)

(12,724)





Other comprehensive income: Items that may be reclassified




subsequently to profit or loss




Exchange differences on translation of foreign operations

 

 (329)

 

33

 

1,673





Total comprehensive loss for the period

 

(4,801)

 

(10,032)

 

(11,051)

Total comprehensive loss is attributable to:




Equity holders of the parent

(4,743)

(10,009)

(11,069)

Non-controlling interests

(58)

(23)

18

Total comprehensive loss for the period

 

(4,801)

 

(10,032)

 

(11,051)

 



 

Condensed Consolidated Statement of Financial Position

 

 


Unaudited


Unaudited


Audited

 


As at


As at


As at

 


30-Jun-24


30-Jun-23


31-Dec-23

 

Note

US$'000


US$'000


US$'000

ASSETS







Non-current assets







Intangible assets







  - goodwill

5

31,902


19,416


31,963

  - other intangible assets

5

97,506


72,356


95,936

Property, plant and equipment


190


91


266

Right of use asset


845


-


953

Employee loans


594


456


320

Deferred tax assets


10,968


10,598


8,100

Total non-current assets


142,005


102,917


137,538

Current assets







Trade and other receivables


21,561


12,173


13,778

Cash and cash equivalents


31,926


64,761


42,651

Employee loans


227


406


487

Current tax asset


1,227


3,905


2,354

Total current assets


54,941


81,245


59,270

Total assets


196,946


184,162


196,808

EQUITY AND LIABILITIES







Equity







Share capital


45


45


45

Share premium


146,106


146,062


146,106

Retained earnings*


44,219


48,326


47,092

Translation reserve


(923)


(2,234)


(594)

Capital redemption reserve


(34,505)


(34,857)


(34,531)

Equity attributable to owners of the parent


154,942


157,342

 

158,118

Non-controlling interest


(142)


(125)


(84)

Total equity


154,800


157,217

 

158,034

Non-current liabilities







Trade and other payables*


10,332


1,640


10,361

Deferred tax liabilities


238


1,046


259

Lease liability


782


-


873

Deferred revenue


-


-


1,309

Total non-current liabilities


11,352


2,686


12,802

Current liabilities







Trade and other payables


26,977


17,699


24,457

Lease liability


173


-


155

Deferred revenue


1,985


2,402


634

Current tax liability


1,659


4,158


726

Total current liabilities


30,794

 

24,259


25,972

Total liabilities


42,146

 

26,945


38,774

Total equity and liabilities


196,946


184,162


196,808

*Due to the identification of an additional tax liability for prior periods relating to state income taxes, the reported financials for the period ended 30 June 2023 have been adjusted for a US$1.6 million increase in the non-current Trade and other payables and a US$1.6 million decrease in opening Retained earnings.

 

 

Condensed Consolidated Statement of Changes in Equity

 

 

 

Share capital

Share premium

Translation reserve

Retained earnings

Capital redemption reserve

Total Devolver equity

Non-controlling interest

Total equity

 

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2023 (audited)

 

45

146,106

(594)

47,092

(34,531)

158,118

(84)

158,034

Loss for the period


-

-

-

(4,414)

-

(4,414)

(58)

(4,472)

Currency translation  differences


 

-

 

-

 

(329)

 

-

 

-

 

(329)

 

-

 

(329)

Other movements


-

-

-

(150)

26

(124)

-

(124)

Fair value adjustment


-

-

-

(647)

-

(647)

-

(647)

Transactions with owners in their capacity as owners:


 

 

 

 

 

 

 

 

Other movements


-

-

-

(76)

-

(76)

-

(76)

Share-based payments

 

-

-

-

2,414

-

2,414

-

2,414

Total transactions with owners


-

-

-

2,338

-

2,338

-

2,338

Balance at 30 June 2024 (unaudited)

 

45

146,106

(923)

44,219

(34,505)

154,942

(142)

154,800











 

 

 

 

Share capital

Share premium

Translation reserve

Retained earnings

Capital redemption reserve

Total Devolver equity

Non-controlling interest

Total equity

 

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2022 (audited)

 

45

146,044

(2,267)

54,618

(27,707)

170,733

(102)

170,631

Loss for the period


-

-

-

(10,042)

-

(10,042)

(23)

(10,065)

Currency translation  differences


 

-

 

-

 

33

 

-

 

-

 

33

 

-

 

33

Transactions with owners in their capacity as owners:










Issue of shares


-

-

-

-

-

-

-

-

Exercise of share options


-

18

-

-

-

18

-

18

Treasury share repurchase transactions


 

-

 

-

 

-

 

-

 

(7,150)

 

(7,150)

 

-

 

(7,150)

Share-based payments


-

-

-

3,905

-

3,905

-

3,905

Share-based payments recycling of charge

 

-

-

-

(155)

-

(155)

-

(155)

Total transactions with owners


-

18

-

3,750

(7,150)

(3,382)

-

(3,382)

Balance at 30 June 2023 (unaudited)

 

45

146,062

(2,234)

48,326

(34,857)

157,342

(125)

157,217

 

 

 

 

 

Share capital

Share premium

Translation reserve

Retained earnings

Capital redemption reserve

Total Devolver equity

Non-controlling interest

Total equity

 

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2022 (audited)

 

45

146,044

(2,267)

54,618

(27,707)

170,733

(102)

170,631

Loss for the period


-

-

-

(12,742)

-

(12,742)

18

(12,724)

Currency translation  differences


 

-

 

-

 

1,673

 

-

 

-

1,673

 

-

 

1,673

Transactions with owners in their capacity as owners:










Issue of shares


-

-

-

-

-

-

-

-

Exercise of share options


-

62

-

(312)

-

(250)

-

(250)

Treasury share repurchase transactions


 

-

 

-

 

-

 

-

 

(6,824)

 

(6,824)

 

-

 

(6,824)

Share-based payments

 

-

-

-

5,528

-

5,528

-

5,528

Total transactions with owners


-

62

-

5,216

 

(6,824)

 

(1,546)

-

(1,546)

Balance at 31 December 2023 (audited)

 

45

146,106

(594)

47,092

(34,531)

158,118

(84)

158,034



 

Condensed Consolidated Statement of Cash Flows

 

 


Unaudited


Unaudited


Audited

 


6 months ended


6 months ended


Year ended

 


30-Jun-24


30-Jun-23


31-Dec-23

 


US$'000


US$'000


US$'000

 







Loss for the period before taxation


(4,838)


(8,639)


(11,705)

Adjustments for:







Depreciation of tangible fixed assets


94


31


186

Depreciation of right of use assets


108


-


-

Amortisation of intangible fixed assets


13,335


6,982


15,552

Impairment of intangible fixed assets


1,746


934


2,455

Finance income


(326)


(897)


(1,361)

Finance costs


115


198


58

Share-based payment charge


2,398


3,905


5,528

Other non-cash movements


(269)


(239)


9

Movements in working capital:







Receivables


(7,693)


1,616


3,692

Payables


(115)


792


(2,095)

Cash inflow from operations


4,555


4,683


12,319

Taxation paid


(83)


(361)


(778)

Taxation received


-


-


2,416

Net cash inflow from operating activities


4,472

 

4,322

 

13,957








Cash flows from investing activities







Purchase of intangible assets


(15,009)


(12,570)


(27,883)

Purchase of tangible assets


(56)


-


(51)

Acquisitions of businesses, net of cash acquired


-


(600)


(18,033)

Net cash outflow from investing activities


(15,065)

 

(13,170)

 

(45,967)








Cash flows from financing activities







Share capital issuance


-


18


62

Share repurchase transactions


-


(7,150)


(6,824)

Interest received


317


893


1,338

Interest paid


(77)


-


(58)

Repayment of lease liabilities


(72)


-


(22)

Net cash inflow/(outflow) from financing activities


168

 

(6,239)

 

(5,504)

 







Cash and cash equivalents


 

 

 

 

 

Net decrease in the period


(10,425)

 

(15,087)

 

(37,514)

At 1 January


42,651


79,493


79,493

Foreign exchange movements


(300)


355


672

At 30 June / 31 December


31,926

 

64,761

 

42,651



 

Note 1: Basis of preparation 

 

These condensed consolidated financial statements have been prepared in accordance with the recognition and measurement requirements of International Accounting Standard 34 Interim Financial Reporting. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. The condensed consolidated financial statements as at and for the six months ended June 30, 2024 have been prepared on the same basis as the audited annual financial statements.

 

Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the consolidated financial statements and footnotes thereto included in the Group's annual report for the year ended December 31, 2023.

 

The Directors are confident that the Group will remain cash positive and will have sufficient funds to continue to meet its liabilities as they fall due for a period of at least 12 months from the date of this first half 2024 announcement and have therefore prepared this unaudited semi-annual announcement on a going concern basis.

 

Tax charged within 6 months ended 30 June 2024 has been calculated by applying the effective rate of tax which is expected to apply to the Group for the year ending 31 December 2024 as required by IAS 34 Interim Financial Reporting.

 

The financial presentation in this release should be read in conjunction with the notes to the consolidated financial statements as at and for the first half ended 30 June 2024, as contained within this release.

 

These preliminary unaudited financial statements were approved by the Board of Directors on 25 September 2024.



 

Note 2: Revenue

 

 

 

Unaudited


Unaudited


Audited

 

 

6 months ended


6 months ended


Year ended

 


30-Jun-24


    30-Jun-23


    31-Dec-23

 


US$'000


US$'000


US$'000







 

Revenue analysed by class of business:

 

 

 

 

 

 

Game publishing

51,583


43,877


92,356

 

Revenue analysed by timing of revenue:






 

Transferred at a point in time

51,583


43,877


92,356

 












 

The Group does not provide any information on the geographical breakdown of revenues, as game publishing revenue is earned via third-party distribution platforms which hold the sales data of end consumers.

 

 

Note 3: Earnings Per Share



Unaudited


Unaudited


Audited



6 months ended


6 months ended


Year ended



30-Jun-24


30-Jun-23


31-Dec-23



US$'000


US$'000


US$'000



 


 


 

Loss attributable to owners of the company


(4,414)


(10,042)


(12,742)

Weighted average number of shares


444,832,441


444,818,506


444,825,531

Dilutive effect of share options


-


-


-

Weighted average number of diluted shares


444,832,441


444,818,506


444,825,531

Basic and diluted loss per share ($)


(0.010)


(0.023)


(0.029)

 







 

 

 

 

 

 



 

Note 4: Adjusted Results

 


Unaudited


Unaudited


Audited

 


6 months ended


6 months ended


Year ended



30-Jun-24


30-Jun-23


31-Dec-23

 


US$'000


US$'000


US$'000

Revenue







Reported Revenue


51,583


43,877


92,356

Reported Revenue growth


18.0%


(17.2%)


(31.4%)








Gross Profit







Reported Gross Profit


15,256


9,394


24,518

Reported Gross Profit margin


29.6%


21.4%


26.5%

Performance-related impairments


1,746


934


2,455

Adjusted Gross Profit


17,002

 

10,328

 

26,973

Adjusted Gross Profit margin, pre performance-related impairment


 

33.0%


 

23.5%


 

29.2%








Adjusted EBITDA*







Adjusted EBITDA


2,967

 

(3,469)


(458)

Adjusted EBITDA margin


5.8%


(7.9%)


(0.5%)

Performance-related impairments


1,746


934


2,135

Adjusted EBITDA pre performance-related impairment


 

4,713

 

 

(2,535)

 

 

1,677

Adjusted EBITDA margin, pre performance-related impairment


 

9.1%


 

(5.8%)


 

1.8%








*Adjusted EBITDA is a non-IFRS measure and is defined as earnings before interest, tax, depreciation, amortisation (but not excluding amortisation of capitalised software development costs), share-based payment expenses, foreign exchange gains or losses and one-time non-recurring items and non-trading items.

 

For the six months ended 30 June 2023, the Group distinguished between Normalised Adjusted EBITDA and Adjusted EBITDA and presented both measures. This distinction was removed post June 2023 for a simpler, clearer presentation in line with industry peers,  and therefore the Adjusted EBITDA for the six months ended 30 June 2023 as previously reported is no longer presented, and the Normalised Adjusted EBITDA previously reported is presented as Adjusted EBITDA in the above table.

 

A reconciliation from the operating loss to adjusted EBITDA is set out in the table below:

 

 



 

Unaudited

 

Unaudited

 

Audited


 

6 months ended

 

6 months ended

 

Year ended


 

30-Jun-24

 

30-Jun-23

 

31-Dec-23


 

US$'000

 

US$'000

 

US$'000








Operating Loss


(5,049)

 

(9,338)

 

(13,008)

Share-based payment expenses


2,414


3,905


5,528

Amortisation of intellectual property


4,840


1,832


3,918

Depreciation of property, plant and equipment


94


31


150

Depreciation of right-of-use asset


108


-


36

Foreign exchange losses (gains)/losses


(150)


(239)


9

Impairment of capitalised software developments costs


-


-


320

Non-recurring, one time expenses


710


340


2,589

Adjusted EBITDA

 

2,967

 

(3,469)

 

(458)

Performance-related impairments

 

1,746

 

934

 

2,135

Adjusted EBITDA pre performance-related impairments

 

4,713

 

(2,535)

 

1,677

 

 



 

Note 5: Intangible Assets


Software development cost

Purchased intellectual property

Subtotal other intangibles

 

 

Goodwill

 

 

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

Cost






As at 31 December 2023 (audited)

121,920

79,959

201,879

79,630

281,509

Additions

16,652

-

16,652

-

16,652

Fair value adjustment

-

-

-

(61)

(61)

As at 30 June 2024 (unaudited)

138,572

79,959

218,531

79,569

298,100







Amortisation and impairment






As at 31 December 2023 (audited)

67,990

37,953

105,943

47,667

153,610

Amortisation charge for the period

8,496

4,840

13,336

-

13,336

Impairment charge for the period

1,746

-

1,746

-

1,746

As at 30 June 2024 (unaudited)

78,232

42,793

121,025

47,667

168,692







Carrying amount






As at 31 December 2023 (audited)

53,930

42,006

95,936

31,963

127,899

As at 30 June 2024 (unaudited)

60,340

37,166

97,506

31,902

129,408

 

 


Software development cost

 

Intellectual property

Subtotal other intangibles

 

 

Goodwill

 

 

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

Cost






As at 31 December 2022 (audited)

94,037

59,817

153,854

66,820

220,674

Additions - business combinations

-

815

815

263

1,078

Additions

13,570

-

13,570

-

13,570

As at 30 June 2023 (unaudited)

107,607

60,632

168,239

67,083

235,322







Amortisation and impairment






As at 31 December 2022 (audited)

53,901

34,035

87,936

47,667

135,603

Amortisation charge for the period

5,150

1,863

7,013

-

7,013

Impairment charge for the period

934

-

934

-

934

As at 30 June 2023 (unaudited)

59,985

35,898

95,883

47,667

143,550







Carrying amount






As at 31 December 2022 (audited)

40,136

25,782

65,918

19,153

85,071

As at 30 June 2023 (unaudited)

47,622

24,734

72,356

19,416

91,772

 


Software development cost

Intellectual property

Subtotal other intangibles

 

 

Goodwill

 

 

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

Cost






As at 31 December 2022 (audited)

94,037

59,817

153,854

66,820

220,674

Additions - business combinations

-

20,142

20,142

12,810

32,952

Additions

27,883

-

27,883

-

27,883

As at 31 December 2023 (audited)

121,920

79,959

201,879

79,630

281,509







Amortisation and impairment






As at 31 December 2022 (audited)

53,901

34,035

87,936

47,667

135,603

Amortisation charge for the period

11,634

3,918

15,552

-

15,552

Impairment charge for the period

2,455

-

2,455

-

2,455

As at 31 December 2023 (audited)

67,990

37,953

105,943

47,667

153,610







Carrying amount






As at 31 December 2022 (audited)

40,136

25,782

65,918

19,153

85,071

As at 31 December 2023 (audited)

53,930

42,006

95,936

31,963

127,899

 

 



 

Note 6: Impairment to Software Development Costs

 

The Group assessed software development costs for indicators of impairment, considering both qualitative and quantitative factors. For the titles exhibiting indicators of impairment, the Group recorded an impairment loss of $1.7 million in Cost of Sales against the carrying value of software development costs at 30 June 2024.

 

The impairment is related to titles published in 2023 by Devolver Digital Inc. and Good Shepherd Entertainment. As a result of lower than expected sales and future projections, these titles were impaired to their recoverable amounts, being value in use.

 

In assessing value in use for games identified with indicators of impairment, the Group has prepared a cash flow forecast reflecting management's estimations of future performance of these titles. Key assumptions on which this forecast was based includes title revenue generation and revenue decay curves.

 

The cash flows were discounted to their present value utilising a pre-tax discount rate of 21.9%, calculated based on the particular circumstances of the Group and its CGUs, derived from its Weighted Average Cost of Capital.

 

 

Note 7: Events After the Reporting Date

 

On 1 July 2024, Devolver announced a successful placing of 23,917,151 new common shares at a price of 33 pence per share, which represents a 10% premium to the closing price on 1 July 2024.

 

The gross proceeds from the placing amounted to approximately £7.9 million (circa US$10 million). The new shares represent approximately 5.4% of Devolver's issued and outstanding share capital.

 

Following admission, Devolver's issued and outstanding share capital totalled 468,749,592 common shares.

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