Devolver Digital (DEVO) H1 2024 earnings summary

Executive summary

• Returned to EBITDA profitability in 1H 2024, reversing a loss in 1H 2023, driven by strong back catalogue sales, new releases, and improved platform deals, in line with prior guidance.

• System Era acquisition contributed positively, integrating well and supporting revenue growth.

• Revenues grew 18% year-over-year to $51.6m, with strong back catalogue sales and System Era's contribution.

• Maintained high Metacritic scores, averaging 80 in 1H 2024, supporting game longevity.

• Disciplined cost management led to revenue growth outpacing operating expense increases.

Financial highlights

• Net revenue for 1H 2024 was $51.6m, up from $43.9m in 1H 2023.

• Adjusted EBITDA was $3.0m after impairment, compared to a loss of $(3.5)m in 1H 2023; pre-impairment Adjusted EBITDA was $4.7m.

• Gross profit increased 63% year-over-year to $15.3m, with gross margin rising to 29.6%.

• Cash balance at 30 June 2024 was $31.9m, not including $9.8m from a July share placement.

• Statutory net loss narrowed to $4.5m from $10.1m in 1H 2023.

Outlook and guidance

• Full year 2024 guidance maintained in line with consensus, with revenues expected over $100m and mid-single digit $ millions Adjusted EBITDA after impairments.

• Strong 2H 2024 release schedule, including anticipated success from Plucky Squire and 7 new titles.

• Pipeline of 30+ titles planned for 2024-2026.

• System Era expected to contribute for the full year in 2024.

• Improvements expected through 2025 and 2026, supported by robust balance sheet and back catalogue.