Team17 plunges 40% to new low as impairments to result in lower profit
Proactive Investors – Team17 Group PLC (LON:) shares plunged 40% to 187p as the games developer and publisher said it expected revenues to be “modestly ahead” of expectations, but said cost overruns and a number of accounting impairments will reduce earnings.
It now expects to deliver full year adjusted EBITDA of at least £28.5 million, which compares to £48.8 million in 2022 and £35.8 million in 2021.
The maker of said it has “strong traction” across its new releases such as fishing game Dredge and back catalogue titles but said certain titles within the Games Label segment are not selling as well as expected, resulting in a less favourable mix between higher margin own-IP titles and third-party titles than anticipated.
Cost overruns resulted from it being “too slow to address some project overspends”, with cost initiatives not coming through as quickly as hoped.
As well as reviewing the cost structure in Games Label, the company said it is reviewing the revenue potential of “a number of titles” in development and already launched to reflect the post-pandemic market environment, and this is expected to result in up to £11.5 million of non-cash impairments.