- Economic performance in line with the acceleration of the strategy focused on the development of new original creations in self-publishing
- Increase in economic operating income by 19%
- Very strong growth in economic EBITDA +92% to €3.3m
- Reinforcement of available cash to €62.9 million to support the ambitious development plan
Dontnod Entertainment, an independent French studio for the creation, development and publishing of video games, presents its 2021 half-year results approved by the Board of Directors meeting on September 28, 2021. The statutory auditors’ limited review procedures on these accounts have been carried out and the auditors’ report will be issued in the coming days. The Half-Year Financial Report will be made available during the month of October.
On the occasion of the publication of the 2021 half-year results, Oskar GuilbertChairman and CEO of Dontnod, declares:
The performance of the first half of 2021 reflects the strategic changes made within the Group. This transformation has accelerated with the strengthening of our financial resources, our collaboration with Tencent, a major player in the sector, and our co-production and publishing agreement with the third-party studio PortaPlay. We are thus demonstrating our ability to place ourselves at the heart of the booming ecosystem of the video game sector by forging strategic alliances while remaining faithful to our creative independence. We approach the end of the year with increased financial capacity and reinforced creative and production resources which allow us to create significant growth today and which will continue to progress significantly in the medium and long term.“
Ramp-up of production lines
For the first six months of the 2021 financial year, Dontnod Entertainment posted a +19% increase in its economic operating income, which amounted to €12.8 million compared to €10.8 million at June 30, 2020. This performance relies on :
- a doubling of capitalized production, to €7.8 million, illustrating the acceleration of 5 entirely self-published projects (4 developed in the studios in Paris and 1 in Montreal), of the new co-production with Focus Entertainment, as well that of the project in co-production with the PortaPlay studio;
- a tripling of turnover from royalties to €2.7 million linked to Twin Mirror and a good performance of the back catalog (Vampyr, Life Is Strange franchise).
At the same time, in accordance with the Group’s strategy aimed at capturing more value from original creations through self-publishing, the studio recorded a drop in revenue related to publisher royalties (-62% to 2.3 M €) as of June 30, 2021.
Significant increase in economic EBITDA +92%
The ramp-up of the 7 ongoing projects is accompanied by a strong improvement in the studio’s operational performance for the first half of 2021, thanks to cost control.
Personnel costs amounted to €9.2 million as of June 30, 2021, compared to €8.8 million a year earlier, i.e. a limited increase of 5%, and other operating expenses up 7% amounted to €2.5 million for the first half of 2021, compared to €2.3 million for the same period of the previous financial year.
Economic EBITDA, including Video Game Tax Credits (French and Canadian), showed a strong improvement at €3.3 million in the first half of 2021, compared to €1.7 million a year earlier, an increase of 92% . This good performance, in view of the 18.5% increase in economic operating income, reflects the strategic choices made towards more assets held (via intellectual property on co-produced or self-published games).
After taking into account depreciation and amortization and provisions (mainly composed of the amortization of development costs for Twin Mirror and Vampyr), economic EBIT fell under control at €0.6 million in the first half of 2021 compared to €0.8 million € as of June 30, 2020.
Net income for the consolidated entity was €0.4m at June 30, 2021 including, among other things, an exceptional charge of €0.2m with no impact on cash and the amortization of related goodwill at Dontnod Eleven.
Strengthened financial position to support the studio’s ambitious development plan
Dontnod generated positive cash flow of €3.6 million in the first half of 2021, a strong improvement (+€1.9 million in 2020) and cash flows related to activity of €1.4 million. Associated with the fundraising of €50 million carried out in January 2021, the cash flows generated during the half-year made it possible to cover the investments made during this first period of the 2021 financial year (€8.1 million), mainly related capitalized production for co-production and self-publishing games.
At the end of June 2021, Dontnod’s financial structure was thus strongly strengthened with shareholders’ equity amounting to €89.1 million and available cash reaching €62.9 million.
Financial debts amount to only €3.9 million (including State Guaranteed Loan of €3.6 million obtained in April 2020 and a repayment period of 5 years) and other debts include €0.7 million of deferred revenue. In addition, other receivables include €7.2 million in uncollected tax credits as of June 30, 2021.
New offices in Paris & Montreal and implementation of a new work organization centered around telework
The move of Dontnod Paris to its new premises is now complete and Dontnod Montreal has settled in the heart of the Mile-Ex district.
At the same time, Dontnod implemented a new work organization, centered around freedom of choice. Each Dontnod employee based in Paris and Montreal now has the possibility of choosing between remote work, at home, and face-to-face work, within the premises. This is a permanent system that will continue beyond the current health situation, with the aim of improving work-life balance, as well as protecting the health and ensuring the safety of all employees, while guaranteeing an optimal level of production and maintaining the quality of the titles under development.
Prospects and development
The second half of 2021 will be marked by the launch on Steam, on December 1, of Twin Mirror, the first self-published game by the studio. In addition, the studio will continue to benefit from royalties from Twin Mirror and the back catalog (including Life Is Strange and Vampyr).
Dontnod will continue to develop its rich pipeline of 7 original creations, including 5 in self-publishing, 1 in co-production with Focus Entertainment and its collaboration in co-production with the Danish studio PortaPlay, which Dontnod will publish. The releases of all of these games are scheduled between 2022 and 2025.
Finally, Dontnod will maintain its development strategy mainly focused on:
- a game pipeline geared primarily towards self-publishing,
- the enrichment of the catalog within the framework of co-production and publishing collaborations with external studios,
- the development of the partnership with Tencent, particularly in the context of projects relating to the mobile segment and the Asian market,
- the strengthening of the marketing and publishing departments in order to support the monitoring of the production and marketing of future Intellectual Properties.