Sumo Group (LON: SUMO), the provider of award-winning creative and development services to the video games and entertainment industries, announced today its unaudited half year results for the six months ended 30th June 2019 which are in line with management expectations.
During the Period, Sumo Group continued to deliver on its stated strategic objectives: to expand; to win new clients; to develop complementary new revenue streams; and to develop its own IP – both self-funded and co-funded.
The Group has strong revenue visibility for the year ending 31 December 2019 and beyond and these results reflect the significant H2 performance weighting expected in this year’s financial results. The Group remains on track to meet consensus market forecasts for FY19.
• Headcount increased by 15% from 592 at 31 December 2018 to 679 at 30 June 2019
• Red Kite Games acquired in January 2019, adding 27 people and new talent pool
• New studio opened in Leamington Spa to focus on the mobile games market
• Board and senior management team expanded and strengthened
• Expanded client base: Apple and Focus Home Interactive
• New partnership announced with publisher 2K
Financial key points
• H1 19 results in line with management expectations – considerable H2 weighting in FY 19
• Adjusted gross profit rose by 13.7% to £9.8m (H1 18: £8.6m)
• Adjusted gross margin excluding royalties increased to 46.3% (H1 18: 43.6%)
• Reported revenue £20.8m (H1 18: £19.3m), reported gross profit £9.3m (H1 18: £8.3m) and reported profit before taxation £1.3m (H1 18: loss before taxation £2.1m)
Current trading and outlook
• Strong cash and working capital performance post Period end: net cash of £8.9m at 31 August 2019 (30 June 2019: £4.3m)
• Further increase in headcount to 711 at 31 August 2019
• Two own-IP games announced: “Pass The Punch” and the acclaimed “Dear Esther” expanding to iOS
• Strong acquisition pipeline
• On track to meet consensus market forecasts for FY 19 and outlook remains positive
• Strong visibility on FY 20 revenue with more than 41% of forecast development fee revenue already contracted or near-contracted
Carl Cavers, Chief Executive Officer of Sumo Group, said:
“H1 19 has been another successful six months for Sumo Group. We have grown the business and delivered financial results in line with our expectations. Our market remains buoyant and we are seeing many exciting opportunities.
“We love to make great games. This is our primary motivation and we are very pleased with the games in our current development pipeline and with the new client partnerships we are building. The Group’s business model is developing in a way which allows us to capitalise on our flourishing own-IP capabilities, whilst maintaining an appropriate risk profile. Sumo Group has exceptional people and I am very grateful to the whole team for the passion and dedication they continue to demonstrate.
“The foundations of our business comprise both exceptional talent and valuable proprietary systems. These, combined with the tremendous growth opportunities presented by our markets, give me confidence in the financial prospects of the Group for this year and beyond.”