Sales of €109.4M, up 15%
Current operating income of €11.2M, up 71%
Operating income of €8.4M, up 93%
Net profit of €1.8M, down 60%
Record net cash of €60.6M
Paris (France), September 10, 2013 - Gameloft’s financial statements for the first half-year ending June 30, 2013; breakdown as follows:
|
In millions of € |
H1 2013 |
% of sales |
H1 2012 |
% of sales |
|
Sales |
109.4 |
|
95.2 |
|
|
Cost of sales |
-19.1 |
-17% |
-13.7 |
-14% |
|
Gross profit |
90.3 |
83% |
81.5 |
86% |
|
R&D |
-51.6 |
-47% |
-50.0 |
-53% |
|
Sales and marketing |
-17.8 |
-16% |
-17.4 |
-18% |
|
Administration |
-9.2 |
-8% |
-8.5 |
-9% |
|
Other operating income and expenses |
-0.4 |
0% |
0.9 |
1% |
|
Current operating income |
11.2 |
10% |
6.6 |
7% |
|
Stock-based compensation |
-1.7 |
-2% |
-1.2 |
-1% |
|
Other income and expenses |
-1.1 |
-1% |
-1.0 |
-1% |
|
Operating income |
8.4 |
8% |
4.3 |
5% |
|
Financial income |
-2.7 |
-2% |
0.4 |
0% |
|
Net income before tax |
5.7 |
5% |
4.7 |
5% |
|
Tax expense |
-3.9 |
-4% |
-0.2 |
0% |
|
Net income |
1.8 |
2% |
4.6 |
5% |
Over the first half of 2013, Gameloft achieved consolidated sales of €109.4 million, up 15% year on year. On a constant-exchange-rate basis, growth for the first half was 17%. EMEA represented 32% of first half sales; North America, 25%; LATAM, 23%; and APAC, 20%. Sales continue to be driven by the worldwide success of Gameloft games on smartphones and tablets. Gameloft’s first-half sales on smartphones and tablets grew by 45% year on year. They represented 61% of total Group sales compared with 48% in the first half of 2012. Gameloft’s rapid growth is also driven by the success of virtual goods and advertising which currently account for 80% of the company’s smartphone revenues. This business model increases the longevity of the company’s products. Games dating from 2011 and 2012 such as Ice Age Village, Modern Combat 4: Zero Hour, World at Arms, MY LITTLE PONY, Order & Chaos Online, and Six-Guns have contributed to the solid performance of the company in the first six months of 2013.
The first-half gross profit reached €90.3 million, up 11%. The gross margin for the period reached 83%, down from 86% in H1 2012 but stable compared with the gross margin achieved in H2 2012.
The solid growth in sales, stable headcount and efficient cost control in the company's three departments - R&D, Sales and Marketing and Administration - have allowed Gameloft to increase significantly its current operating income which stood at €11.2 million, up 71%. R&D, Sales and Marketing and Administration costs all decreased as a percentage of sales during the first half of 2013. R&D costs for instance represented 47% of first-half sales in 2013, significantly lower than the rate of 53% achieved in the same period in 2012. The first-half current operating margin therefore reached 10.3% compared with 6.9% in the first half of 2012.
Compensation costs related to bonus shares awarded to employees stood at €1.7 million in the first half of 2013 from €1.2 million in the same period in 2012. Stock-based compensation costs do not impact negatively the company's equity and cash level. Other income and expenses of €1.1 million are linked essentially to the restructuring of Gameloft’s development studios in India and the Philippines. This restructuring reflects the major market changes of the last two years and in particular the technological evolution of feature phones and smartphones. The operating income for the first half of 2013 therefore reached €8.4 million, up 93% year on year, and the operating margin stood at 7.7%.
Net financial income for the first half of 2013 amounted to -€2.7 million and is essentially comprised of latent foreign exchange losses on intragroup receivables related to the fall of several foreign currencies against the Euro during the period (Brazilian Real, Argentine Peso, Canadian Dollar and Japanese Yen). The net income before tax therefore stood at €5.7 million, up 20% year on year.
The net income for the first half of 2013 stood at €1.8 million, down 60% year on year. The net income for the first half of 2012 was, however, positively impacted by the recognition of tax loss carry-forwards in France amounting to €2.0 million. This non-cash item renders a basic comparison of first-half 2013 and 2012 net income figures difficult.
The amount of unrecognized consolidated tax loss carry-forwards at the end of June 2013 was €11.7 million.
Healthy financial position
The company’s equity stood at €130.6 million and net cash reached an all-time high of €60.6 million at the end of June 2013. Cash generation was strong during the first six months of 2013: Gameloft’s operating cash flow stood at €12.9 million, up 52% year on year, and net cash increased by €5.0 million in six months. Therefore, the company has the financial resources necessary to continue to grow and increase its market shares around the world.
Given its healthy net cash position, Gameloft launched a share buy-back plan on April 16, 2013. At the end of June 2013 the company had bought 724,491 Gameloft shares on the market at an average price of €5.2 per share for a total amount of €3.8 million.
Outlook for 2013 and 2014
Gameloft has the development capacity to release annually between twenty and thirty high-quality games on feature phones, smartphones and tablets. These games are launched worldwide in thirteen different languages on 3,000 smartphone models and 350 feature phone models. There is, to our knowledge, no equivalent to Gameloft’s development and distribution capacity in the mobile gaming industry.
To this day, 800 million freemium and paymium Gameloft games have been installed on iOS and Android. During the last thirty days 150 million people have played a Gameloft game. The huge success of the company’s last two releases: Despicable Me: Minion Rush and Asphalt 8 Airborne highlights as well the ability of the company to release worldwide hits in a very competitive environment.
In 2012, 700 million smartphones were sold compared with 490 million in 2011[1]. Gameloft expects strong smartphone and tablet sales in 2013. In particular, the company expects, starting in 2013, a flood of low-end smartphones and tablets priced between €50 and €100 across the world. Games on these low-end smartphones and tablets will be radically different from the games that have been developed until now on smartphones and tablets, and Gameloft should be able to leverage its ten-year experience on feature phones in this new segment and take significant market shares. The momentum of the smartphone and tablet market should therefore continue to sustain Gameloft's growth in the upcoming quarters.
The company therefore confirms its target to reach between €235 million and €240 million in sales for the full year of 2013, as well as an increase of profitability and net cash. Sales for the third quarter of 2013 will be published on November 4, 2013, after the market closes.
