Hello, welcome to Frontier's financial reports for year 2022. I'm Arthur, the Principal Community Lead here at Frontier. Here at Frontier, we broadcast well over 100 live streams to our various gaming communities throughout the year. We thought, for a change, we would deliver our financial results to you in the same format we do to our communities. Without further ado, I'll get onto the main show. Now, throughout this presentation, I'm sure you're gonna have a variety of questions and/or comments. If you look in the Teams chat or the window that you're in, you'll see a Q&A tab. Please feel free to put your comments and questions in there. As we go through the show, we'll work towards those at the end and get through as many as possible.
Without further ado, let's introduce the people I'm sure you're aware and you know who are on the sofa joining me. Welcome, David Braben, Jonny Watts, Alex Bevis. Everyone's familiar with you, but there have been some changes very recently. David, can you talk us through some of the recent board changes just briefly?
Absolutely. I was CEO since founding the company until earlier this year. But we've got a very collaborative board and, you know, a lot of the CEO role was already arguably being done by Jonny and by Alex, and that was a great thing. Jonny took over as CEO in August this year, and it's been fantastic. The plan is to increase the board's firepower. What it does is it frees me up to do some more strategic things. Jonny, who was already doing a lot of the day-to-day, is now doing more of the day-to-day, and it's been fantastic. Jonny has been a fantastic part of the company for over 24 years, and this is a natural transition, and a really good one. I'm very proud to
Oh
Hand over to Jonny.
Oh, what an introduction. That's absolutely amazing. I like to think of it, being a former zoologist, this is an evolution, exactly as you say, and it is trying to increase that capacity. Not only have we done our changes, there's been beautiful additions to the board and a whole management structure underneath, and this is because we wanna really scale up. You know, we've got more games to make, we've got more games to support. We've got 800 people now in the studio that really needs sort of leadership and really mentoring and everything like that. This is all one, it's just a great transition.
Absolutely. It's not only that, it's the fact that the board's joined by James Dixon.
Yes
... who's been with the company for a long time, and David Wilton is taking over from David Gammon as non-exec chairman. All of these are really good, positive changes for the board.
Absolutely.
Awesome. Thank you very much. It's exciting to see we're planning and structuring for the future. Jonny, congratulations again. I've said this in the past, but congratulations. There's a lot of information to go through today, do you wanna start with the headlines of what we're gonna go through?
Absolutely, yeah. So I think the real. Next slide, please. The real theme, there's three themes actually, is that we've had a record financial year 2022. We had an amazing start to financial year 2023, and what's even better, I think, is that we've got an exciting and diverse pipeline for financial year 2024.
Mm-hmm
beyond. You know, all this is setting ourselves up to succeed. If we just go through some of the headlines on here. One thing that we're gonna be talking about a lot, and David's gonna do an amazing presentation on this really fantastic chart.
No pressure, David.
Yeah, no, it is. Which really just describes our developed launch and nurture strategy because it does continue to get to deliver. You know, again, when we talk about it, we've launched 6 out of 6 games have been successful, so really amazing. If we talk a little bit about this year. Jurassic World Evolution 2 was our biggest contributor to FY 2022. You know, the Jurassic World Dominion film was a box office success, almost $1 billion box office. Amazing. We launched a PDLC at that same time, which was really material and really helped us get to this sort of GBP 60 million mark by the end of August. That's not the whole story.
It's our games which we launched pre-financial year 2022 are still selling, which is amazing.
Mm-hmm.
This is our long tail when we talk about nurture and long tail. A great example of that is Planet Zoo, which had a 94% sustain compared to this financial year and the year before, which is really amazing. It's a testament to, you know, everybody at Frontier on how we keep stimulating the community and keep delivering content for them. Then the other big part, and this is really more for financial year 2023, is F1 Manager launched, and it was a successful launch, and this is the start of an annual sports franchise. Really exciting. Moving on. Other things. Foundry achieved successes. We've had thee Foundry launches, and the reception to Chaos Gate has been absolutely amazing, so that's. I'm really, really pleased by that.
It's an amazing game and I love playing it. You know, as David's alluded to, we're 800 people now. In FY 2022, we grew by 25% to 792 people, which again is amazing.
A lot of people.
They're all talented as well.
Yeah.
They're all really contributing to making our games and supporting our players. Just some of the numbers at the bottom, which I know Alex will delight in explaining in more detail. As I said before, it's a record annual revenue of GBP 114 million. That's up 26% from FY 2021. Our EBITDA is in line with expectations, which is GBP 6.7 million. Our net cash is GBP 39 million. What's really nice, if I just skip to the last part of that sentence, that by the 31st of August 2022, we're up to GBP 53 million. I think it's just been a very successful year, and as we go through this presentation, you can see how it's successful this year, but for the future as well, which is really important.
That's great. Thanks so much, Jonny. I mean, I'm not the smartest man, but I understood the word record revenue, so I was like, "That's good news to me." Thank you so much for going through that. Now, David, no pressure, but we were told you're gonna deliver an amazing presentation.
Yeah, next slide, please.
... on the next slide. Over to you, David. Talk us through this.
Some of you, of course, will have seen variants of this slide before. The key thing here is, you know, as exactly as Jonny said, this develop, launch, and nurture strategy is perfectly illustrated by this slide. Left to right is time, up and down is cumulative cash flow for each game. You can see starting off with the pale gray line, which is Planet Coaster, now approaching its seventh year. Left to right, you can see the expenditure on the team. We hit the maximum expenditure at launch, then you see the revenue come back, and then what looks like very close to a straight line over many years, as that revenue continues to come in, you know, we do paid and free content for the game.
We went and wrecked it at the end of year 4, and when we released the console version, you see a nice tick up, then you see an increased sort of angular curve. If you also then look at the other titles, this is also a great illustration of how we've got better at doing it.
Absolutely.
How we've learned a great deal from what we do. You look at the other games that came. Look at Jurassic World Evolution, which was the next one, the pale blue at the top. A bit more wiggly, a bit more of a teenage audience as well.
Yeah.
Slightly more seasonal. You can see the first sort of inflection point, if you like, was Return to Jurassic Park where we used the original actors. A great pack, very successful. You see a slight dip down where there's an expenditure on that pack, but then it comes back up again, and again with the Nintendo Switch edition. All very successful ways of supporting a great audience who support that game.
Mm-hmm
the franchise. If you look at Planet Zoo, which is a PC-only game, much as Planet Coaster was for its first four years, you can see we've got a steeper gradient because we've got better at, we've learnt how to do paid content and free content. What we've found, with Planet Coaster, we started off doing quarterly updates. What we found, we've learnt very quickly that releasing an update just before a key selling period is much more valuable. That's what we've done with Planet Zoo, and you can see the result of that learning. You know, to echo the point that Johnny made on the first slide, you know, the year-on-year performance of Planet Zoo is pretty good.
In fact, for all the games, you can see from these graphs, which was 94% of last year.
Yeah
which was with no major events. That's a real achievement. Then you can see sort of finally, Dominion, where I think, you know, we responded, we pivoted very successfully when, you know, the original Jurassic World Dominion film was pushed back.
Mm-hmm.
We decided to release it at Christmas, and I think this vindicates that plan.
Mm-hmm.
Because what we do, we've essentially got a double dip. You can see from the dotted line how it went up and how it's got very close now to the original Jurassic World Evolution game. I think that's a great success of the team and, you know, a really good addition to the portfolio going forward. Now, since the financial year end not shown on this graph is, of course, F1 Manager. You know, we've built success on success, and that's the key point here.
Yep. Well, that's all very positive stuff, and thank you so much, David, for going through that. Now, no pressure, Alex, but you are the numbers man, and now this will be slides and a ton of numbers, and I'm gonna hand over to you to go through all of these numbers as well as David did. Over to you.
Yeah. David's stolen my best financial slide. Thank you, David. I'll run through now the financial results in a little bit more detail. Start with the profit and loss account, the income statement. We've talked a bit about revenue and GBP 114, which, as Jonny said, is a record up 26%. All of our games doing very well, all of them providing material contributions. David and Jonny have mentioned PDLC. You know, that's an important part of our strategy. In the round across the whole portfolio, it represented about quarter of all of our revenue, but of course, we had a big new launch.
If you take out Jurassic World Evolution 2, it was getting on for half of all our revenue across Elite Dangerous, Planet Coaster, Jurassic World Evolution 1, and Planet Zoo. You know, it's a very important element of our strategy. I know from your role on the community side, it's great with the community, right?
Yeah.
Moving on to gross profit margin. We tend to sort of vary between 60% and 70%. 70% when there's sort of more of our own IP, moving towards the 60% where there's more royalties payable for licensed IP. We're sitting at 65% for that year, and that's not surprising because as we talked about, Jurassic World Evolution 2 was the big launch, and of course, we're paying royalties. You know, very much in line with expectations. Moving on to some of the expenditure, some of our investment there. Gross R&D, you know, very significant investment. You know, there's a few different elements, of course. We talked about headcount growing. We've talked a little bit about Foundry and the investment in those titles. We also have spent a decent amount on outsource.
Now, we always outsource a certain proportion of our development costs. For the F1 Manager game, that was quite a big chunk.
Yeah, they had to.
where we had quite a long 22 tracks in short order and, you know, a bit. It is worth saying that we do treat outsource as part of our company as well. We have 800 people here, but we had over 100 people worldwide contributing to the game, and, you know, they need a shout-out as well because they did a great job. I think some of that is a little bit of a one-off. We'll continue to be investing in outsource, but that's part of the reason there's such a big increase of 36% increase. Of course, we'll then leverage that investment we've made in the first game and bring that to future titles.
Mm-hmm.
Looking ahead, I don't expect nearly so much of an increase in that gross R&D number as we look ahead into this financial year. Capitalized costs, as usual, we capitalize sort of anything between 70%-90% typically. This year it happens to be 74%, so it's a bit more investment made on free updates and free content, but very much in line with our sort of normal range. Big change on amortization. Now, this includes all the charges for Elite Dangerous: Odyssey. Don't wanna go over that too much. We've talked about a lot in previous announcements. Of course, we made a very big one-off non-cash charge relating to Odyssey. You know, team did an amazing job there, and it continues to still generate cash.
In terms of, you know, accounting profit, we've obviously fully amortized that. That's the reason you see such a big increase from GBP 15 million in the preceding year to GBP 34 million. You know, we consider that very much behind us now in accounting terms. Moving on to marketing costs. Quite a decent increase there. We tend to be very efficient on marketing. You know, often other companies will be spending maybe 15%, maybe even 20%, some of them, on of revenue on marketing. We tend to hover around the 10%, so, you know, marketing, publishing team do an awesome job. They're very efficient. Of course, we had some big launches. We had some big launches with Jurassic World Evolution 2. We also had some Foundry titles, so that's the reason that's increased.
G&A, general & admin, that didn't change too much. So there you see on total OPEX, the impact of the Odyssey charges coming through, and that's what's sort of depressed our operating profit. In total, those Odyssey charges were about almost GBP 16 million. Of course, if we'd have not had those charges, we'd have been sitting with operating profit of more like sort of GBP 17 million, so you know, that's the big drag on us. Just to dwell slightly on the next stage below operating profit, you can see interest and tax there at GBP 8.1 million. We had a tax credit of GBP 8.7 million. You know, we get a great benefit from video games tax relief from Patent Box. We also recognized some losses, a deferred tax asset that we recognized there.
That's pushed our profit after tax back up all the way up to GBP 10 million, so on a comparative basis, that looks pretty good.
Mm-hmm.
Next slide, please.
I understood most of that, so that's good.
Okay.
You're doing well.
Well, you were nodding.
I was nodding, yeah, but I was actually understanding as well, which is good.
Okay, we'll see how you get on with this one.
Okay.
This slide sets out a couple of our profit measures. We've always tried to consistently provide the accounting profit as, you know, we have to, and of course should do, but also a kind of cash profit number. Now, previously, it was called operating cash flow. We've sort of rebranded it and redefined it as adjusted EBITDA, so that's earnings before interest, tax, depreciation, amortization. The main thing there is we're unwinding all of that accounting around the game development. Whereas with accounting profit, we're capitalizing costs, and then we're amortizing them, with adjusted EBITDA, it's as if we just flow that cost through as we incurred it, so producing more of a cash profit. This is just a quick reconciliation that shows how we move between those numbers.
We've already touched on the amortization charges, particularly, you know, with the impairment charge for Odyssey there. We've you know adjusted back the amount we capitalized, which was GBP 35 million. The only other adjustments there at the bottom you can see which are non-cash are share-based payment charges, depreciation, and unrealized FOREX. For people on the call, I think hopefully this provides a useful snapshot of how we move from sort of a cash profit to an accounting profit. Okay, next slide, please. On cash flow, we've talked a bit here. This bridges the opening cash to the closing cash, so you can see, you know, the different gray bars.
Mm-hmm
How we move from one number to the other. We've talked about operating profit, amortization, impairment already, and the intangible asset additions is obviously the capitalization number. Working capital, we'll just call that out. There's an investment in working capital in the year. We had strong trading towards the end of the year with those launches, Chaos Gate helping, Jurassic World Evolution 2 obviously doing well. We also went into Microsoft Game Pass in May, so there's some monies that came in after the year. That's the main reason for the working capital growth. During the year, we spent GBP 5 million on shares, buying those into EBT, so that was a cash outflow, and then back on tax, we had GBP 4 million come into us from HMRC for video games tax relief claims.
Nice to get money back from HMRC.
Doesn't always happen, so that's a great result. GBP 38 million at the end of the financial year, and as Jonny mentioned earlier, we're up to GBP 53 million at the end of the last quarter.
Yes. Sure.
Okay, next slide, please. Onto the balance sheet. I won't dwell too much on this, but worth saying, look at the intangible assets. It hasn't really moved, and of course, as we've already talked about, we've invested an awful lot of cash in our developments and our technology in the year, but we had those charges for Odyssey. The two sort of essentially netted off, producing you know a neutral position in terms of where the balance sheet is. Receivables, you can see the growth there, and that you know harks back to what we just talked about on working capital and then the tax asset there has increased, and that relates to those some of those losses that we recognized as a deferred tax asset. I won't go into deferred tax assets for you.
I was getting stuck, but thank you.
Mm-hmm.
Tax is Alex's favorite subject.
Hopefully we'll get some questions on it later.
Yeah.
I think that's probably me done, and I'll pass back to you all.
Yeah, no, it's great. Thank you so much. Like I say, it was great to go through it in more detail and understand sort of the workings of the company, so thank you so much, Alex. The company's all about its games. Let's talk a little bit more about the games and a little bit more color. Jonny, do you wanna start us off with, I guess, our newest release, which is F1 Manager 2022?
Yeah, no, absolutely amazing. The first thing to say, it's been a successful launch. Really pleased. This is the start of an annual franchise, very important for the business. A few things about the launch was that we launched on PC, console, both Gen 8 and Gen 9, and simultaneously on disc, and it was a really smooth launch, which I think is a
Mm-hmm
a testament to the team to do it all in one.
Mm-hmm
All in one go. Really nice to see the critic scores. You know, if you look at the top left there, a really nice cluster, and it's really nice to see those scores looking really good on console as well. You know, this is a big thing about Frontier. If you look at our recent titles, we're making these deep and sophisticated games which appeal to PC players and console players. Really important, really increasing that addressable audience. See Steam is positive, 72%. As with all our games, the community is so important. Our players, you know that. You know.
Yeah
That's your job. From a development point of view, we get it as well.
Yeah.
We're listening to all that feedback. I expect that percentage to go up with some amazing updates that we're doing. Absolutely proven, because that's happened on Planet Zoo, Planet Coaster, and the Jurassic game. We're gonna really invest in that. Unit sales are tracking slightly above Jurassic World Evolution 2 performance, so that gives a context to how well the game's doing. It's really interesting that it's. We've had good penetration in the U.K. and Europe. I see this as a positive by the way, at the moment sales are consistent with the audience that F1 has in America. Las Vegas.
Right.
Wow. What's that going to do? I think that's a real growth area, and I'm expecting you know, Formula 1 2023, 2024, and beyond to really start growing in there. Yeah,
It's just worth saying that Formula 1 is coming to Las Vegas next year. It's not in there this year.
Yeah. Yeah, I was just reading the BBC this morning, and everybody's getting hyped by it.
Yeah.
It's gonna be an amazing race. Really looking forward to it.
It's down the main strip as well, isn't it? It's gonna be an incredible
Well, we're gonna have to go there, aren't we?
Absolutely.
Research is important, Jonny.
Yeah. Again, just to recap on that, really successful launch. You know, it's Frontier Developments' doing probably one of the biggest sports licenses.
Yeah
On an annual franchise, and it's really nice to see the players playing it, and spending a lot of time playing it as well.
It's an incredible foundation for what's gonna be.
Yeah
an annualized title. It's a great start for this. That's really cool.
I'd also like to add as well, you know, hats off to the team.
Mm-hmm
Been a fantastic delivery. As Jonny said at the start, you know, but it's not just that. There are a load of new things to do. Loads of moving parts here.
Mm-hmm.
The team has done a fantastic job getting those delivered, you know. The game's wonderful. I've been playing it, and I know a lot of people that are.
Yeah. To Jonny's point, I mean, not to over-labor it, but I'm not into the sport as most, but I was enamored with that game as soon as I saw it, and I was like, "That, I think, why the audience is. It appeals to so many people.
Yeah.
It's a great title.
there's more we can do as well.
Yeah
In future games.
There's a fantastic thing as well. When you look at the reviews and you see people criticizing some tiny minutia like, I don't know, the tire response or whatever, it's good to see that actually that means the game is great, you know. Look at how many.
Yeah
hours people are playing it.
They're engaged.
Absolutely engaged.
Totally engaged. Yeah.
Yeah, absolutely.
Fantastic. Okay. That's F1. I think JWE 2 is next.
Yep.
Sorry, Johnny. Do you wanna talk a little bit about JWE 2?
Yeah. Again, just talk a little bit about the launch. We launched on, again, multi-platform.
Mm-hmm.
PC and console. Physical at the same time as well. Again, really smooth, seamless. Again, testament to the team and publishing on how we all did that. Again, you can see that when we launched. I think the Steam score was around about 70%. It's now up to 84%. Recent reviews are even higher. Again, it just really shows this nurture that we do.
Mm-hmm
It really does resonate with the players. As mentioned, as David said, when we launched it in November 2021, there was congestion. What I really like about that, and the pivot that you said, is that, you know, I think we played it really beautifully actually, by understanding that the film was gonna come out. We thought it was gonna be successful. It was. We did an amazing PDLC.
Mm-hmm
For that. You know, that expansion was really great, and you saw that second surge of sales. Really good. Again, it's what we planned for, understanding how we have to operate within a massive pivot due to COVID. The other thing is also again, numbers have already said that, you know, in the first 10 months it's done GBP 60 million. I think we're pretty confident that it's gonna track very closely to Jurassic World Evolution 1 sales over that 12-month period of around about GBP 70 million.
Okay.
The story hasn't finished yet.
Yeah.
We're in that nurture phase. We've got more PDLC to come out. We've just launched the Late Cretaceous Pack.
Mm-hmm.
Which everybody's familiar with those dinosaurs. We've got some amazing PDLC coming in the forthcoming months.
It's a really exciting time. I had noticed from David's incredible presentation that Planet Zoo did all right. Did okay.
Yeah.
I was looking at the graph, it was great. Do you wanna talk about Planet Zoo and why it's doing so well?
Yeah. Well, again, this is just a really great example of our development, launch, and nurture. Again, I just wanted to show the review scores. I wanna show that Steam score is at 90%, again, because we keep investing in the game, in the community, in the players. Not only did we launch PDLC, we launched DLC as well.
Mm-hmm
which is always listened to little bits of feedback, and the game's improving even if you don't spend any money on it. On top of that as well, is players are creating content.
Yeah
Uploading it to the workshop, and you can download it. That's just increasing the value proposition. There's a thing that in all our games people build toilets for some reason, and I've gone off-piste. What it just shows is there's so much passion.
Yeah.
Then you can. It's uploaded, then you can download it and really make your zoo look absolutely incredible. Some numbers here. 3 million base game units, which is absolutely amazing. We're coming up to our third anniversary. You know, again, just seems like that's gone in a flash. We're still making content for it, which I think is absolutely awesome.
Cool. Okay. That's some of the games that we in our current portfolio. Let's look to the future now. We've got some very exciting games. Now, I'm a super nerd on Warhammer stuff, 40K and Age of Sigmar stuff. I'm heavily invested in this, and will be super biased. Jonny, do you wanna tell us about Age of Sigmar, 'cause this is incredible.
Well, it is. It's incredible for a few reasons. One is, as you know, everybody loves Warhammer Age of Sigmar in this company.
Mm-hmm.
If you went around everybody's desk, you see all the figurines. Absolutely, it's so cool. We also like, RTSs as well. You know, again, as a genre, it's amazing. What's really important to Frontier is how we grow our business, and we have to, you know, we want to choose games in adjacent genres. An RTS is, you know, especially from a technology point of view, really works with Cobra. You know, we can render really amazing Stormcast Eternals with our fantastic animation system. With the brand, the Games Workshop brands, they really lend themselves to RTS. It's an enabler.
Yeah.
If you look from a risk management point of view, not just, you know, "Oh, wow, it's really cool to do," it just makes absolute sense.
Mm-hmm.
An adjacent genre, an amazing IP. You know, we've got the exclusive rights for Age of Sigmar. Really amazing. Other things which I'm really pleased about is that, again, when you look at our addressable audience, we want to do it on PC of course.
Mm-hmm.
We also want it to be really nicely playable on console as well, and we have a track record of doing that, so that's gonna be really exciting. Then there are some other features which we'll reveal later on which I think are very innovative because Frontier is an innovative company. I think these are going to give experiences to the players which develop as a game progresses. I don't want to say any more about that.
No
I'm tired and excited.
I'm trying to think because I wanna say this bit will be can't say whatever.
No, we can't.
It's incredible. Absolutely.
Finally, I've gotta say when it's coming out, which is scheduled for release in FY24. We haven't done an exact date, so again, it'll be in those really nice and vague. This is Alex telling me, "Here." "I wanna tell you when." It's gonna be during the 12 months to the 31st of May 2024.
Awesome. Jonny, thanks so much.
It's doing well.
Thank you so much for talking about the games and obviously what's coming up with Warhammer. It's not just that. We also have Frontier Foundry. David, do you wanna talk us through Frontier Foundry? Give us a bit of an update.
Absolutely. I mean, Frontier Foundry is really well placed now. We've seen Chaos Gate-
Mm-hmm
Released to really good acclaim. Our first Games Workshop title, of course.
Yeah
... to be followed by, you know, really exciting Age of Sigmar. You know, looking through this financial year, by the end of this financial year, we'll have had eight titles out. The key thing, we've talked about Chaos Gate and the wonderful people at Complex.
Mm-hmm.
We've got Stranded: Alien Dawn from Haemimont.
Yeah.
The first Foundry title we announced, in fact.
Yeah.
Really exciting. Those are the people who did Surviving Mars, of course, with Paradox.
Yeah.
A really great team. You know, really exciting game. Looking forward to that. Deliver Us Mars. You know, their previous title, Deliver Us The Moon, was very interesting, so that's also coming. There's a lot of footage available online.
Yeah
if you want to look into it. A very interesting sort of story-based game. Finally, from Petroglyph.
Mm-hmm.
Great studio. I mean, obviously.
I'm trying not to fanboy here, David.
I know.
I'm trying to be calm.
Well, yes, exactly. Well, Command & Conquer.
Yeah
Red Alert, and all that sort of thing, you know. They're doing, you know, a wonderful game, The Great War: Western Front.
Yeah
which I've been playing. Really exciting.
Yeah.
That's really coming together. You know, taking all those things together, it just shows we've got a really, you know, really good portfolio coming forward from these wonderful external companies. Which will also help add to our portfolio, you see new games coming out.
Yeah
that we can be really proud of. I think that's, it's sort of really well placed, you know, to look for the future and to look how it's growing and where we go in, you know, beyond FY2023 as well.
Yeah. It's super exciting. As a Warhammer fan as well, we're eating well at Frontier. We're eating very well.
The key thing is it will become a key part of the business. This is the process.
Yeah
of it becoming a key part of the business.
Cool. All right, thank you very much. Now, we talked a huge amount about games, but games can't really be about people. You alluded to this earlier, we're growing rapidly. Alex, people. Talk to us about people. We're 800, almost 800?
Yeah.
Somewhere there?
Yep. On the numbers front, you know, very strong growth over the last few years. I think, we said over 25% growth in headcount just in last year. We're now over 800, about 812 or something like that.
Mm-hmm.
You know, that's just part of the story. Of course, you know, what those people are up to, as Johnny said, you know, we've got a very talented bunch of people. Why do they come to us? Over the last few years, particularly during coronavirus, we've put a lot more focus on sort of consolidating all of the elements around how we manage and support people, how we bring into the company, into this engagement strategy.
Yeah.
You know, it's pretty obvious. You know, you've gotta pay people the right amount, you've gotta communicate with them, you've gotta provide opportunities for them to socialize, you've gotta get them excited about the future, and flexible benefits, and hybrid working. There's a whole load of bullet points there. We are putting, and we continue to put a lot of effort into this, because it's a very competitive market.
Yeah.
You know? There's a lot of options. People tend to come to us because they wanna work on, you know, really interesting, sophisticated games. They wanna work with interesting, sophisticated people, apart from us, obviously. It's a challenging. You know, it's a high bar.
Yeah.
It's a difficult place to get into. The quality bar is very high. I think our model lends itself to people staying with us quite a long time because of the range of projects that they can work on. You know, it's a very, very broad portfolio. I think also the thing that's attractive to people is being able to share in the success and see the full cycle from start to finish. You know, the fact that we self-publish our own games.
Mm-hmm
It is very attractive for people. All of those things are good, but we can't afford to be complacent. We're constantly looking at a lot of these areas. We just had our biggest ever summer party. We had almost 900 people.
Yep.
I'm sorry you made it.
I was there.
These things are really, really important. You know, you've gotta take them seriously, and we've just done our biggest ever round of pay raises as well in the summer.
Thank you.
We're in good shape. The other thing I'd just mention, the penultimate bullet there, merchandise. As you know, wearing the T-shirt there, people go crazy for T-shirts.
They do.
and CapEx and this stuff. That's a pretty important element of our strategy as well.
Yeah. No, it's a great place to work. I say it, obviously I'm sat on a
Yeah
It's not 'cause I have to say it. It's a great place to work. Thank you very much for that. We're approaching the end of this segment, and obviously, if you do wanna have any questions for Q&A, there is a Q&A tab. Please use it for comments and questions. We'll get to those in a short while. One of the things you mentioned earlier on just a second ago was about being excited for the future. Jonny, do you wanna talk us through about financial year 2023, and what's ahead for 2023?
Yeah. Absolutely. Again, I need to say following a record FY22, we have started FY23 in great shape. The first thing really is, you know, our portfolio continues to perform. You know, Jurassic World Evolution 2 has got more PDLC to come out, and I can't wait to share that with the world. You know, again, Planet Zoo, we still got PDLC coming out from that, so again, that's gonna do really well. You know, as we said before, the launch of F1 Manager 2022 has been very successful, so that's really great, and we're expecting those sales to continue. Foundry, as David said, you know, is gonna become a material part of the business.
You know, we've got three games coming out, and obviously we're still gonna have sales coming in from Chaos Gate, which again is doing very well. Based on performance to date, the board remains very confident of the current analyst expectations for FY2023. I read that line out perfectly, Alex.
Well done.
Perfect.
I didn't wanna paraphrase that. It's a good line. Yeah, we're confident. Then.
Sorry, go, sorry Jonny.
Well, absolutely, as I said at the very start, we're looking long-term. Outlook is we're very well-positioned for the future. You know, again, I want to reiterate that, you know, we have delivered six out of six internally developed major game launches, and they've been successful. I think that's a really amazing hit ratio. I think, you know, in our pipeline we have a lot of diverse sort of income streams coming in. We've got the games which are already out there, which we're gonna support with PDLC. We've got the current games out that we've announced, you know, F1 Manager and all the different iterations on that. We've got Warhammer Age of Sigmar. Foundry, as I said, is gonna become a material part of the business.
With over 800 talented people, I'm sure there's a few more games in the pipeline that we're working on and ideating on, and they're going to be released in forthcoming financial years. You know, again, I'm not gonna read that one verbatim. There's too much of a sentence, but based on all these factors, I think we are going to see, you know, a 20% sort of growth. Obviously some timing issues around launches before and after financial years, but a success. We are building a team, growing a team. All the changes that we've done, all the games that we're making, all the partners that we're working with is growth. You know, that's what we want to do.
There are more things we need to bring to our players, and I think we're very well positioned to do that.
Amazing. Thank you. I mean, thank you all for going through all the slides and stuff. For someone like me, it's very interesting as well. It's great to see you've had a record year and all the stuff we've got planned for the future. Some stuff we've alluded to, some stuff we can't talk about, but that's really great to hear. We have got some questions coming in, so I will put them to the group as they come in. The first question is on some of our featured games. I'll read this out verbatim, so apologies if I get this wrong. "The new titles you flagged for financial year 2025 and financial year 2026, they are very classic FDev genre type games. Anything you can share, please?
Johnny, congratulations on the move to CEO. Could you comment on the strength of the, on the bench below you and the creative side, please? Any early observations, having moved into the hot seat? I mean, the bench. I'm assuming they don't mean this because these are very sturdy, by the way. They are good build oak. It's not oak, but they're strong.
There was quite a few questions in that one.
There was a lot of questions in there.
I'll speak to a few and then David, if you want to chip in.
Yeah, sure.
First of all on being CEO, wow, what a privilege, you know? I quite like games. I love Frontier. I've been here for 24 years. You know, I've been mentored by David, and maybe I've mentored him a little bit as well. You never know. Yeah, I just want to really, you know, work so hard making these amazing games, working with our amazing people, and really setting ourselves up to succeed and really growing the company. The bench feels very comfy and nice, if that makes sense. Future games, very difficult to talk about.
Welcome to my world, Jonny. This is what I've gotta do every day. You can only say what I say.
Exactly, and I've learned from the master. I can't say too much. I can tell you the games will be good.
Yeah.
I can tell you these games are in development and some of the games are in the vision side, because it takes a long time to make a game. They're games which you're gonna be very proud. I think they're games which are going to have a large addressable audience. I think they're going to follow our develop, launch and nurture sort of template as well. Yeah, I just can't say any more. That's it.
Exciting.
I'm waiting for David to reveal everything now, but.
Yes, okay. The key thing is what we're doing is we're continuing to build a portfolio.
Mm-hmm.
With all of these things we've got a mix of genres, we've got overlapping audiences that overlap but not by very much. If you look at each of the games, you look at the zoo audience, look at the roller coaster audience.
Mm-hmm
Look at the space game audience, look at the Formula 1 audience, look at the dinosaur audience, you know, they've all got different demographics, different age targets, if you like, or the people who buy the games. You know, looking forward to the games that we can talk about, like Age of Sigmar.
Mm-hmm
we're expecting that to be different again, as it was with Chaos Gate, where of course there will be some intersection, but that's also very healthy to have that diversity of audience. Also, you know, from a portfolio point of view, some of the games are licensed, some of the games are not licensed. That will continue and-
It's a balance.
Yeah, exactly.
I feel like what you're saying is that, you know, I said in one of the early slides about adjacent genres, and that applies to the audience as well.
Yeah.
It's very methodical how we pick our games. There's a grand plan. I still think they have the DNA of Frontier, and they always will. Yeah, it's just finding new markets.
I do think that's what you're doing to the other audiences, though, when you talk about.
Yeah
different demographics. I think the DNA of a Frontier game, when it moves into an adjacent genre, those players understand it's gonna be a quality product.
Yeah.
I'm excited for. I keep saying about Sigmar, because I am. Sorry. We'll move on. There's another question.
The key thing is also to have a good audience around the game.
Yeah.
Like with Age of Sigmar, but also like with the games that we've already released.
All right, I have a question, and I think it's for you, Alex.
Mm-hmm
Can you comment on churn recruitment and wage inflation, plus hybrid working? Thanks.
Oh.
They put thanks at the end, so.
Oh, that's nice.
Put me on there.
We talked about it in previous results sessions.
Mm-hmm.
You know, it has been quite a competitive period. I think the work from home environment has encouraged people to think a bit more about themselves, and polish up CVs, and maybe talk, take calls from recruitment agents. That generally has helped us a lot, you know, it's helped us find and leverage out people to come and join us. Excuse me. Of course there is a higher level of churn, we have seen a higher attrition rate. It's probably sitting in the sort of 15%-17% rate, you know, sort of high teens.
Mm-hmm
which is much higher than it was pre-COVID. You know, that was probably more like a 10% rate. You know, we're not particularly happy about that, but having said that, you know, that sort of factor has helped us in the other direction.
Yeah.
We've put a lot of effort into, you know, the other question was about wage inflation. We've just done our highest ever pay rise, the previous year was the highest ever previous pay rise before that. We're putting a lot of effort into benchmarking, having schemes for sharing and success, like bonuses and equity plans as well, and all the engagement stuff that we talked about earlier, you know, merchandise, parties, communications, all those things are really important. I think we're in pretty good shape. Not so many concerns on the more junior end, you know, in terms of getting grads, as I said earlier, we've got a very high quality bar, you know.
Mm-hmm
It's pretty difficult to get into Frontier if you're a grad. In the more sort of senior end around principals, that can be more of a concern, you know, if we lose a couple of really good people there, sometimes that's a bit harder to recruit for. I think around your senior team, Jonny, you know, you've got a lot of strength in depth there.
Yeah.
I think the question earlier was kind of around the bench sort of strength of your senior team.
Oh, right, okay.
on the creative side.
Mm-hmm.
You know, you've got a lot of people that work with you for a long time.
For a very long time. It's a really tight team. You know, we know what we need to do and we do it, and you know, amazing collaboration and communication. I think that's just another point I want to make on communication is we're doing this live stream here to our investors and analysts. We have started doing live streams internally, because there's a massive communication plan.
Mm-hmm.
I think the other way to retain people is, you know, we've always been very open, but as we have 800 people, we have to work doubly hard to really communicate what we're doing, what the vision is, and why we're doing it. When we explain why, people get it. You know, again, we have.
Mm-hmm.
Our methodologies are really, you know, quite. Yeah, they're really deep, and we do know what we're doing. I just want people to understand the why, and then they can contribute and make what we do even better. Loads of live streams. We're gonna be doing one later.
Yeah
Later on anyway.
Yeah.
You got the bug now, Jonny, that's it, so just keep doing it.
It's you just put me at so much ease and rest. I'm fine.
All right. Well, look, I've got another question for you. Looking at the cash flow chart, the gap between JWE1 and JWE2 today appears to simply be incremental cash outflow prior to launch of JWE2, which implies you are very much on track. Are PDLC packs generally higher return on investment, and hence is it fair to assume that as the launch and nurture strategy continues, JWE2's line should go above JWE1 very soon?
Okay. Well, I'll tell you that one, Adam, could you maybe bring up the cash flow slide? It might be helpful for.
Oh, yeah, I knew you wanted to go back to your cash flow slide.
In fairness, Alex wanted to hear yeah.
Yeah, I know.
He's gonna get it. He's gonna find a way to go back to it.
Yeah, that's right.
Yeah, the cash flows slide.
The one you briefly showed.
The one with the chart. That's it.
That's the one.
That's the one. I think the question here is if you look at.
Can you also share it with the audience?
Sorry Adam.
Fantastic.
I think the question is the right blue line, Jurassic World Evolution 1, the dotted black line, Jurassic World Evolution 2. If you look at the launch position, of course, you know, there's a lot more expenditure.
Mm-hmm
has gone into the second game. The question is, you know, doesn't that mean that, you know, we're on track to kind of beat and overtake? There's some questions about ROI. You know, as Jonny and David have already-
Mm
talked about, and we talked about in the presentation, very happy with Jurassic World Evolution 2. Had that really nice double bounce from the Dominion film. We also had, the Game Pass-
Yes
income.
Yeah.
You know, that fee we recognize as soon as it goes into.
Yeah
The Game Pass service. You know, that was very helpful and that's within that sort of bubble there, pre-Dominion. That's been very useful for us. As Jonny talked about, we've got more PDLC coming. PDLC, the return on investment, as the question sort of highlights, it is very strong. It's quite hard to unpick PDLC on a specific basis versus other PDLC versus the base game, because of course everything helps to sell everything else.
Mm-hmm.
what we tend to do, and you can kind of see from the cash charts, even though we're investing over a period of time, we tend to see stronger and stronger return on investment percentage because, you know, we're leveraging that initial investment, we're supplementing that with the PDLC investment. Some of our games, we can be getting up to 250, maybe 300% return on investment.
Wow
Over 3, maybe 4 years. You know, really strong.
Those things are understood. They were like, "Oh, okay, that's good.
Yeah. Absolutely, you know, Planet Zoo is the great example that-
Mm-hmm
that Jonny discussed earlier. You know, that's the kind of model for us of a launch, you know, happens to be a single platform on PC, but very regular, you know, three monthly PDLC.
Mm-hmm.
That ROI is very strong.
Yeah.
So-
It's also worth saying that, you know, it's not just, you know, looking at the greater costs. You know, we've had the Hollywood talent and all that sort of thing is a bit more expensive, so all of that side of it is.
We've got the marketing costs for the double bounce as well.
Absolutely
because of course we had to sort of have almost like a relaunch around Dominion.
Sure
to get people excited about it.
Mm-hmm.
We wanted the Dominion PDLC pack to be meaty.
Yeah
as well.
Yeah, it's a big investment.
You know, we didn't want to go cheap with our players.
Yeah.
You know, we wanted to give them great value and great experiences.
Yeah. Yeah
Talking about our great value, next question's about Planet Zoo. It continues to deliver. Will you take Planet Zoo to console as you did with Planet Coaster? As accumulative cash flow line steepened materially with the latter. Any plans for Zoo to go to console?
I'd say it's a never say never. Again, the PDLC is doing well. It's really what we do is we look at all our opportunities and stack rank them.
Mm-hmm.
You know, again, I think our investment in Warhammer Age of Sigmar's gonna be, that's just really exciting. Some of the other games that we're developing, which we can't confirm or deny, would probably give some color to the question.
Yeah.
Yeah, no immediate announcements.
It's the animals, isn't it, that's the
Yeah
sort of technical challenge.
There is a technical, yeah. Again, I didn't wanna really. Well, you're getting into my area now. I'm gonna rattle. Yeah. Those animals are incredibly beautiful. You know, the amount of fidelity on them. You know, it would be difficult to bring them to the, I know the Gen 8 consoles.
Yeah
to be honest, and so maybe when the console market develops a bit more and everybody has transitioned from Gen 8 to Gen 9, that would really feed into the equation. Because whatever we do, if it comes to console, it has to be absolutely stand out.
Mm-hmm.
You know, we don't want to do any compromises, and the behavior, and the look, the animation of those animals is absolutely key.
Yeah.
It's also worth saying that in a zoo, each animal is different. Not just it looks visually different, but behaves differently.
Mm-hmm.
The AI for all those animals, to get that natural level of behavior interaction, is a key thing, and as Johnny's rightly said, the Gen 8 consoles wouldn't necessarily do a great job. They'd do a great job of a small number of animals, but people love to fill their zoo with every one of every animal.
Yeah
five of every animal.
Yeah.
It just ends up being a big, you know, technical challenge to get that performant.
Yeah.
We've gotta look at that.
Yeah.
At some point, there will be a natural time to do so.
Okay. Cool, thank you very much. I have a question about Foundry. Will we be disclosing Foundry revenues going forwards?
Shall I take this one, yeah?
Yeah.
On the disclosure point, you know, we've given you some comments today about Jurassic World Evolution 2. We don't tend to routinely, when we do results, say, "Right, here's the breakdown.
Mm-hmm.
What we tend to do is sort of give you some, you know, useful bits of information when there's some key things.
Mm-hmm.
A bit like we do on the units, you know?
Mm-hmm.
Tends to be when we cross thresholds. Frontier Foundry for last year, including Chaos Gate and all the other games, including RollerCoaster Tycoon 3 as well, was around about GBP 10 million of revenue for last year. You know, building nicely. I suspect when we get to the end of this financial year, we'll probably sort of tell people what that number looks like.
Yeah.
If you look at most analysts' expectations, most people are expecting it to kind of double.
Mm
Maybe even, you know, treble, sort of between GBP 20 million and maybe GBP 30 million.
Has the launch strategy marketing campaigns, future pack releases, plans et cetera differed significantly for F1 Manager compared to previous Frontier titles?
I can say part of that, Dave.
Yeah, sure.
then you can chip in. The big thing, it's an annual franchise, so that really does change how we do things. That's the first point I want to make.
Mm
is that, you know, we are already working on.
Mm-hmm
2023 already. Maybe working on 2024 as well. Looking at all the new features that we want to add, listening to player feedback, and also a big suite of things that we wanted to do to keep expanding that game. There are gonna be updates in the first part, and these are gonna be free updates. We really want to listen to the players. You know, I want to get that Steam score, which is still very positive, more than glass half full, but I wanna get that up higher. We do that by listening to our community.
Mm
Just keep it improving. You know, that's the long tail. It's the nurture part on it. David, I don't know if you want to add.
Yeah
Any more to that.
I think every game has a different plan.
Mm.
It can just be dependent on the style of the game, whether it's a license or not. You know, if you think of Jurassic, for example, the first Jurassic game, it was logical. We did it, you know. Then with Dominion, you know, tying in with the film, getting support from the wonderful people at Universal. With Formula 1, it's different again. We've been supported by the wonderful people at Formula 1. You know, whether it's the for those who haven't seen it, the excellent Guenther Steiner and Pietro Fittipaldi playing the game.
Yeah. Yeah.
You know, all of those sort of things, they all add up. They all help with the social media thing, that the fact that we had demonstration pods at the Silverstone race and, you know, and at Spa where.
Yeah
We launched the game. You know, all of those sort of things, and the subtle things that, you know, like Formula 1 retweeting our tweets, all of those sort of things all help. I think with each one it's, you know, as they say, horses for courses. It's balancing it. As Johnny says, you know, it's a first in an annualized franchise, so we've gotta think about that as well.
Yeah.
Think about how it all fits in. Absolutely, I mean, and hats off to the team for doing each of these things is a difficult thing to
It's the
to pull it out. They've done it.
They do.
Exactly
... have that coherent strategy. You know, we see what all the publishing things that we're gonna do, how they're gonna support each race.
Yeah.
things throughout its life cycle. Again, yeah, absolutely that they're amazing.
It's like the most recent thing, which is not particularly planned. You know, when one of the drivers was talking about his engineer, I thought that was very.
Yeah.
Very funny.
In that two race for me.
He actually did it in the race.
Yeah.
Yeah, he did, yeah.
That was the amazing thing.
Yeah.
Saying that his engineer is, by the way, the fourth best. That's still great. In other words, he's still great.
Yeah.
Maybe he will get up through the seasons.
Yeah.
You know, it's those sort of comments, you just go, "Oh, that's interesting. He obviously plays the game.
Okay, thank you very much for those answers on those ones. I have a question about some financial results. Can you talk about cash guidance for financial year 2023E? I'm assuming that means something.
Yes.
There we go. Thank you. Consensus has GBP 46 million. You have yet to be acquisit-
Acquisitive.
Thank you.
Buying stuff.
There we go. Should we expect M&A? Is this about internal development, or might you increase the EBT investment?
Well, there's some things in the next one. Let's rewind and talk about where we were at the end of last financial year. GBP 39 million of cash on the balance sheet at the end of May. At the end of August, up to GBP 53 million. You know, obviously, the working capital stuff that we talked about, there's a bit of an unwinding there. We should see, you know, we will see strong cash generation certainly over the next six months, particularly with F1.
Mm-hmm.
Christmas is obviously very important, so that will do well. I think we're feeling pretty good that we should be, you know, at least GBP 60 million I would say by the end of this financial year. If you look at the numbers that analysts have and sort of work that through into the cash flow. Of course, that gives us a pretty tidy problem.
You know, we've got probably more, much more cash than we really need to run the business, and quite rightly, people are saying, "Well, what are you gonna do with it? Are you gonna buy some more shares in the EBT?" Probably not in the next six months I don't think. You know, the EBT's pretty well-funded now in terms of the share position. What about acquisitions?
Of course, that's where, you know, we've talked in the past about being, you know, pretty cautious on that. It's not like we need to do it. It's not a sort of core part of our strategy that we must sort of buy companies.
Mm-hmm.
We've grown organically. Having said that, you know, we do from time to time look at interesting things.
Mm
Sometimes those interesting things sort of don't work out and don't turn into anything. I should think at some point, you know, acquisition might feature as part of Frontier's strategy, but right now we're pretty focused on the organic. Plus, of course, the foundry model, which is
Yeah, absolutely.
Is not acquisition, but it's partnership.
Yeah.
You know, we're working with a lot of great studios on developing games. We're investing in their games. We're sharing in success. It's not a formal acquisition, but in a way, you kind of get the best of both worlds. You know, you don't necessarily have to own the company, but you get the financial results from it.
Sure. Okay. I think I've reached the end of my questions that I've gone through at the moment. I don't know if there's any more points you guys wanna talk about that we haven't covered. It's been quite in-depth to be fair. You've gone through.
Mm
A lot of charts, which I understood. Some numbers, which I understood.
Good.
It's been great to sit and have you guys go through it, from my perspective at least. I hope it's been good for everyone on the call.
Yeah. Just one final sort of summing up. As Jonny said at the end of the conclusion, we're really well-placed for the future.
Yeah.
I'm delighted that Jonny has taken over as CEO. I think that really gets us, you know, sets us up and all of the other board changes, for the next phase of the company, the next stage of growth. You know, we can do a lot of things strategically that we're really excited about. You know, we talked about the new games coming through, so you know, really well-placed for the future.
Yeah.
Yeah. All I want to say is games really.
Mm.
I want to support the games we've already made, I want to launch the new games, and I want to publish the games from our excellent partners. Games.
Fantastic. Thank you very much. Thanks everyone for joining us.
Thank you.
Thanks everyone for tuning in. I hope that's been useful.
Yeah.
Um-
There's more questions.
There's more questions.
Oh.
Wow.
They are. They just, they've literally just come through. Half the press. There we go. They literally just popped on the screen.
Sorry.
I wasn't trying to avoid them.
Yeah.
Here we go. Well, you have to start up again. It was a good sum up though. Okay.
Yeah.
Any comments on potential M&A activity?
Oh, we talked about that.
We did actually.
Okay. Any updates on the turnaround plan at Odyssey or for Odyssey?
Obviously, there are exciting things, which I don't want to put any spoilers out there, but things are happening at the moment.
Yeah
in Elite Dangerous. You know, we've got console transition, which is working very well for people. That was a really interesting plan.
I'm just thinking it might be worth, for this audience, just explaining.
Oh, yeah.
About that console transition.
We're allowing people to move from console to PC if they wanna play Odyssey. Also, the other thing-
How much are we charging for it? It's a free-
It's free, yeah.
It's a free transition. It really is part of this amazing win back of sentiment and, you know, the plan is that they'll be delighted with the PC version, and then they'll buy Odyssey. You know, it really is.
Yeah.
Yeah.
It's a free base game, isn't it?
It's a free base game, yeah.
And, and-
We have upsell, yeah.
There was one of the story arcs came to a conclusion recently.
Mm-hmm
where they're trying to fight.
Get David.
Well, no, fighting back against the Thargoids, the aliens in the game. It may not have gone to plan.
May not have, no.
They have now been seen, distant, lights in the distance traveling at what is actually quite a high speed.
Yeah.
That's all I'm gonna say, but it's interesting.
Yeah. It's, I'll say some just things in general terms, and then you can chip in. The first thing is after Odyssey, we've done I think it's 13 updates.
13 updates, yeah.
Free updates. We've done the console migration.
Mm.
What I like to see is the team who are making it are really enthused by the new content. I won't say anything about that. The players are responding and sentiment is increasing.
Mm-hmm.
We've always said that every game that we make at Frontier, it's nothing without its players, and that's what I'm really proud about, is how, you know, the developers and obviously community are engaging with our players. Again, I don't know if you wanna say anything about that, Selena. You are right on the coal face of dealing with our Elite Dangerous community.
Yeah. It's. Look, I can't to your level I can.
Yeah
I speak from my level. It's a very exciting time for the community of Elite Dangerous, and there's a really very exciting story that's been worked on for a long time by a lot of very talented people behind the scenes. Some great content that's on its way. It's nice to see the community respond and react in a positive way and see them actively in the game and engaging with that storyline. The console and transition was smooth, and that's a testament to, I think, how we do things here at Frontier. It was planned, and it was tested, and we've seen thousands and thousands of players come across, which is really exciting to see. They wanna continue their journey with Elite Dangerous. So I love Elite, so that's that.
I will not say too much more about it, but it's a great time to be there.
I will put my Alex hat on. It is generating revenue.
It's-
Which again, you know, that's the win-win.
Mm-hmm.
I'm not allowed to use that term, but I am. The players are happy and it's generating revenue.
Yeah.
Long may it continue.
Profit, yeah.
Yeah, profit, yeah. Yeah.
Cool. Okay, then I have one more question here, unless it pops up and something else appears. F1 Manager franchise looks like it will be a key driver going forward, and it's and that's a licensed IP. Should we expect gross margins to remain in the mid-60%, or is there any scope for increases?
So, um-
I'll take that one.
I'll throw that one at you.
Look, the last couple of years we were 70% for FY21, we moved to 65% for FY22. I'm expecting for FY23 will be probably in the low 60s%.
Mm-hmm.
If you think about the makeup of our revenue this year, we've got a lot of revenue from Jurassic World Evolution 2, which is licensed. We've got a lot of revenue coming from F1 Manager. I think for FY2023 it'll be low 60s. I would think probably the same for FY2024.
Mm
Because, you know, we've got Warhammer coming through, so another licensed game. We haven't said what we're doing in the future, so for now, I would certainly assume if you're doing your-
Mm
Your models, low 60s%. You know, maybe 61% or something like that.
Okay. Cool, so that's it announced and understood. Excellent. Well, next question. It'd be interesting to hear what audience do you think the current portfolio, including Age of Sigmar, are not currently addressed and are attractive? Any audiences we haven't necessarily, or we wanna address that we haven't already or going to in the future?
It's a trick question in many ways, isn't it? There are a lot of people on the planet that we don't currently reach. It's we will address an increasing number of those people that we don't reach. Sorry, that's what I mean is.
The, the-
There are always gonna be people we don't reach.
The only detail I can say is-
Right
That they're gonna be adjacent audiences.
Yeah.
Mm.
You know, you won't be seeing anything wild where we've gone into something totally new, totally different. Again, we have a real methodical plan where we keep growing by managing the risks. Also doing things which are in our wheelhouse and really exciting.
Mm
Adjacent genres, adjacent audiences.
It makes sense with the, you know, F1 Manager.
Yeah.
Seeing an adjacent franchise.
Yeah
Taking in an audience, and the same with Sigmar. Again, we have Frontier Foundry where we will have
Yeah
different audiences we'll pick-
Absolutely, yeah.
From those titles, that's cool to see. Okay, there's a couple more questions I've been assured. Could you provide a rough split of sales for F1 '22 Manager between PC and console if you have it? How meaningful were physical disc sales?
Let's start with the physical disc sales. That's pretty early doors really. You know, we're just starting to get some initial reports, 'cause there's always a lag on the physical. I think it will be quite a bit less meaningful than-
Mm
Jurassic World Evolution 2.
Okay.
You know, physical there was quite strong on console. I think for this particular title, I think it'll be more digitally focused on console, and obviously PC we don't do discs. You know, probably quite a low, maybe let's say GBP 2 million of revenue from discs or something like that. The split between PC and console, sort of Jonny Watts hinted at, but you know, very pleased on both.
Mm
The performance on both of those has done well. Across PlayStation and Xbox, you know, slightly weighted towards PlayStation I think, but both of those platforms doing very well.
Yeah, it's very pleasing. The game was designed to be played across
Mm
A range of platforms, and so it is very encouraging and gratifying to see, you know, the console audience engaging with a simulation game.
Yeah.
I think with as well with both console, you know, obviously with PC it's wholly digital. With console we're seeing a real move towards digital. There will come a point where it sort of becomes less attractive to us to support physical.
Mm-hmm.
Especially as Gen 9 consoles become the bigger factor. Gen 8 is still important.
Yeah
Actually physical is still there. We didn't wanna leave it on the table, but at some point it will become so small it's not worth the candle.
Okay. Thank you. I have another question here, which is, development costs. You mentioned you do not expect much of an increase in development costs in 2023. However, you will have continued investment in financial '23. Warhammer and now,
F1 2023
F1 2023, sorry.
That's all right.
F1 '23, Warhammer, and now,
A new title.
Yeah, sorry, yes. A new title announced in financial 2025. Can you be more specific on guidance for R&D in financial year 2023 and financial year 2024?
Okay.
Well, maybe.
Well, you wrote my emails for me.
Let's get some proper glasses. As I talked about earlier, on the gross R&D spend, we saw an awful lot of spend on outsource. We will still have outsource, 'cause of course there's new tracks to
To model, as we talked about, you know, with Vegas. I'm expecting that we might only see maybe a 10% increase or something in gross R&D, whereas the previous year we saw something like a 36% increase. I think in future maybe it'll accelerate again. It depends a little bit. We're at the stage with Warhammer Age of Sigmar where we're starting to get into a bit more outsourcing now. I think it will continue to grow, but each year it might be a slightly different rate. I don't know if that helps particularly, but that's all I have to say about that.
There we go. That's the answer we have. We have any more questions? We have one more question that's yet to come through the ether towards me. Oh, there it is. Financial year 2025, new game, are you able to indicate if this will be a licensed game or not?
I think no is the short answer there.
We're not indicating.
We are not indicating anything. There we go. That's answered that one. Right, that was the last question, so apologies for making you wrap up again. Can you wrap up again? It's been fantastic to go through all these details. It's the record revenue is what I took away from this, and the strong platform for building for the future is what I understood.
Yeah
From a layman's perspective, but I'm sure you guys will have some other words.
Yeah. Great game portfolio, great people. That's what I'd say to sum it up.
Yeah. Great position, great growth, 26% growth. Really well-placed going forward, as I said before. Thank you for joining.
Yeah.
For joining this year.
I can't beat what these two gentlemen have just said, apart from I'm gonna do it.
Amazing stuff. Thank you everyone for joining us for our financial live stream, and we'll do more of this in the future I hope.
Absolutely.
Thanks a lot.
All right.
Thanks for joining.
Thanks, everybody.
Take care.