26 September 2024

 

Devolver Digital, Inc.

 

("Devolver Digital", "Devolver" or the "Company", and the Company together with all of its subsidiary undertakings "the Group")

 

Unaudited results for the six months ended 30 June 2024

 

Return to Adjusted EBITDA profitability as expected, on track to meet FY 2024 guidance

 

Devolver Digital, the award-winning digital publisher and developer of independent ("indie") video games, announces its unaudited results for the six months ended 30 June 2024. All figures relate to this period unless otherwise stated.

 

A focused strategy driving return to growth

·    1H 2024 trading in line with expectations.

·    Growth driven by strong back catalogue sales, contribution from new releases and improvement in platform deals.

o  3 new titles released in 1H 2024 (1H 2023: 4), with record-matching average Metacritic score of 80 (76 average for 1H 2023).

o  Back catalogue revenues up 22%, accounting for 89% of game sales revenues (1H 2023: 87%), reflecting the continued strong performance of Cult of the Lamb and other key titles, plus the new contribution from System Era's Astroneer title.

o  Platform deals saw recovery from 2023's low level, being weighted to 1H 2024.

·    System Era, acquired last year, is performing in line with expectations and is integrating well, adding a full six-month contribution to 1H 2024 revenues.

Financial performance - return to EBITDA profit

·    Revenues in line with FY24 expectations:

o  1H 2024 revenues up 18% to $51.6m; Adjusted Gross Profit up 62% to $15.3m.

·    Strong execution and operational discipline leading to improved Adjusted EBITDA profit, as previously guided:

o  1H 2024 Adjusted EBITDA profit of US$4.7m, pre non-cash impairment (1H 2023: US$2.5m loss).

·    Non-cash impairment of US$1.7m recorded in 1H 2024 (1H 2023: US$0.9m) relating to previous releases where sales have been softer than expected.

·    Statutory net loss of US$4.5m¹ (1H 2023: US$10.1m loss).

·    Cash of US$31.9m as of 30 June 2024 (year end 2023: US$42.7m), not including $9.8m net proceeds from the primary issuance of shares in early July 2024.

Current trading and outlook

·    10 new titles expected for full year 2024, with 7 releases in 2H 2024: Anger Foot, The Crush House, Sumerian Six, Demon's Mirror, The Plucky Squire, Neva and Stronghold Castles. 

·    System Era integration on track with full year contribution in FY 2024.

·    Strong Balance Sheet boosted by $9.8m primary share placement in July 2024.

·    On track to meet previous guidance: revenues over US$100m and Adjusted EBITDA after non-cash impairments in the mid-single digit US$ millions. We continue to expect an improvement in 2025.

·    Healthy pipeline of more than 30 new titles due for release in the next three years.

Harry Miller, Executive Chairman of Devolver, said:

 

"As expected, the first half of 2024 saw a return to Adjusted EBITDA profitability, driven by strong back catalogue revenues supplemented by new releases, an improvement in platform deals and a solid first half contribution from new acquisition System Era. We are pleased with the record high average Metacritic ratings in 1H 2024, which we believe can bolster the longevity of our games.

 

We are building momentum going into 2H 2024, with 6 new titles including the highly anticipated release of Neva in October, on the back of the recent success of The Plucky Squire. We reiterate our guidance for FY 2024, with improvements expected through 2025 and 2026."

 

 

Notes

1.   Including non-cash impact of US$2.4m of share-based payments.

 

 

About Devolver Digital

 

Devolver is an award-winning video games publisher in the indie games space with a balanced portfolio of third-party and own-IP. Devolver has an emphasis on premium games and has published more than 120 titles, with more than 30 titles in the pipeline scheduled for release over the next three years. Devolver has in-house studios developing first-party IP titles and a complementary publishing brand. Devolver is registered in Wilmington, Delaware, USA.

 

Enquiries

 

Devolver Digital, Inc. Harry Miller, Chief Executive Officer Daniel Widdicombe, Chief Financial Officer	[email protected]
Zeus (Nominated Adviser and Joint Broker) Nick Cowles, Kieran Russell (Investment Banking) Ben Robertson (Equity Capital Markets)	+44 (0)20 3829 5000
Panmure Liberum (Joint Broker) Max Jones, Matt Hogg (Investment Banking)	+44 (0)20 3100 2000
FTI Consulting (Communications Adviser) Jamie Ricketts / Dwight Burden / Valerija Cymbal / Usama Ali	[email protected] +44 (0)20 3727 1000

 

 

OPERATING REVIEW

 

1H 2024 - return to profit, with three new high Metacritic titles

Devolver released 3 new well-received titles in 1H 2024 - Dicefolk, Pepper Grinder and Children of the Sun - with an average Metacritic rating of 80, matching the record high average for a single six-month period. High Metacritic scores and positive user ratings are important as they help to bolster the longevity of releases.

The quiet release schedule mirrored that of 1H 2023 (4 titles), but 1H 2024 overall revenue benefitted from a significant contribution from platform deals for front and back catalogue, as well as the addition of a full six-month contribution from recent acquisition System Era. These two factors drove an 18% YOY increase in total group revenue in the first half of this year compared to 1H 2023.

Hit releases support 22% growth in back catalogue

Fan favourite Cult of The Lamb provided strong revenue momentum in 1H 2024, a trend continuing through this summer. The contribution from Cult of The Lamb, in combination with a full six-month contribution from recent acquisition System Era's Astroneer game, drove a 22% increase in back catalogue revenues in 1H 2024 compared to the previous year period. BAFTA-winning Inscryption also continued to perform well in the first six months of 2024, alongside other evergreen titles in Devolver's back catalogue.

 

The strong growth in back catalogue revenues, coupled with a lighter release schedule in 1H 2024, meant that back catalogue revenues accounted for 89% of  game sales revenues (1H 2023: 87%). Our back catalogue includes all titles released in or prior to the last financial year (2023 or earlier). As of 1 January 2024, the back catalogue consists of over 120 titles, including numerous indie cult classics, supporting highly diversified revenues.

 

Summer Game Fest 2024

Devolver marked June 2024 with celebrations in the summer showcase to commemorate the company's 15^th year anniversary of its founding. Devolver's iconic live broadcast formed part of the Summer Game Fest 2024 in June, featuring reveals of future new releases and expansions to fan favourites Cult of the Lamb and The Talos Principle 2. New titles included Possessors, a slick side-scrolling action game from developer Heart Machine, the creators of Solar Ash and Hyper Light Drifter, and a reveal for Tenjutsu, the pending release from Dead Cells lead developer Deepnight Games. The game puts players in the role of a renegade yakuza fighting through the criminal underworld and mixes pixel art visuals with some fast-paced action.

 

Recent releases Anger Foot and Crush House received attention, and we also highlighted the Road to Elysium expansion from The Talos Principle 2, introducing a host of new challenges spread across three chapters - Orpheus Ascending, Isle of the Blessed, and Into the Abyss - each with their own look and storyline. The broadcast also highlighted Cult of the Lamb's Unholy Alliance expansion (rolled out on August 12^th), which included some new quests, gear and other items, and added a co-op gameplay mode, underscoring our commitment to successful title expansion.

 

Disciplined Cost Control

 

Devolver successfully controlled operating expenses in 1H 2024, with growth in revenues outstripping total operating expenses, resulting in margin expansion in both gross profit and Adjusted EBITDA.

 

FINANCIAL REVIEW

 

Unaudited first half 2024 results to June 30 2024

   

The unaudited financial results included in this announcement cover the Group's combined activities for the six months ended 30^th June 2024 (prepared in accordance with applicable International Financial Reporting Standards, "IFRS").

 

Adjusted results

 

The following refers to Adjusted results, as presented in the financial statements contained within this release. Adjusted results exclude any one-time exceptional items during the respective half-year periods.

 

Adjusted EBITDA results are not intended to replace statutory results and are prepared to provide a more comparable indication of the Group's core business performance by removing the impact of certain items including exceptional items (material and non-recurring), and other, non-trading, items that are reported separately. These results have been presented to provide users with additional information and analysis of the Group's performance, consistent with how the Board monitors results. Further details of adjustments are given in Note 4 to the condensed financial statements contained within this semi-annual results release.

 

P&L results and margins

 

Devolver Digital's first half 2024 performance was in line with expectations, with 3 new title releases compared to 4 titles released in 1H 2023. Revenues of US$51.6 million rose 18% year-over-year. Gross profit was US$15.3 million, an increase of 62% year-over-year. Adjusted EBITDA after non-cash impairments delivered a profit of US$3.0 million versus a US$3.5 million loss in 1H 2023.

 

Gross profit margin increased to 29.6% in the first half of 2024, up from 21.4% in the year-earlier period. Gross margin expansion was a result of first-party IP contributions from late 2023 new releases, other new releases in recoup in 1H 2024, and a full six-month contribution from Astroneer, System Era's popular expandable game. This compares to 1H 2023 when the royalty pay-out mix was heavily weighted towards third party titles.

 

Adjusted EBITDA margins before non-cash impairments improved to a positive 9.1% from a negative 5.7% in the first half of 2023. The expansion in 1H 2024 gross profit had a direct flow-through effect which benefitted Adjusted EBITDA.

 

Statutory net loss for 1H 2024 was US$4.5m, improved from the US$10.1m loss in 1H 2023.

 

Cash Balances

 

Cash holdings at end of June 2024 were US$31.9 million, a reduction of US$10.8 million compared to end of 2023's level of US$42.7 million, on the back of continued investment into game development. After the period end, a primary share placement in July 2024 resulted in net proceeds of US$9.8m. Devolver has no borrowings across the Group.

 

Appointment of Joint Broker

 

We are pleased to have Panmure Liberum join the Devolver family as Joint Broker to assist in broadening our investor coverage and business scope.

 

CURRENT TRADING OUTLOOK

Our busy release schedule for 2H 2024 has already featured Anger Foot, The Crush House, Sumerian Six and Demon's Mirror, as well as major title The Plucky Squire. NEVA, from the developers of the award-winning Gris, will release in October, alongside the mobile title Stronghold Castles from our subsidiary Firefly. The Plucky Squire released with a Metacritic score of 81 and very positive user reviews. NEVA, slated for release in October, has had very positive pre-release trailers, and has also built a healthy wishlist ahead of launch.

Trading for the full year 2024 continues to be in line with consensus expectations of revenues exceeding US$100 million and Adjusted EBITDA to be in the mid-single digit US$ millions, with improvements expected through 2025 and 2026.

Our momentum, robust balance sheet, deep pipeline and strong contribution from extensive back catalogue all support our confidence of further progress in 2025 and in the future. The Board believes that we are well positioned for future success, and we look forward to reporting on our progress into 2025.

 

Harry Miller

Chief Executive Officer

 

Condensed Consolidated Statement of Profit or Loss

 

		Unaudited		Unaudited		Audited
		6 months ended		6 months ended		Year ended
		30-Jun-24		30-Jun-23		31-Dec-23
	Note	US$'000		US$'000		US$'000
Revenue	2	51,583		43,877		92,356
Cost of sales		(36,327)		(34,483)		(67,838)
Gross profit		15,256		9,394		24,518
Administrative expenses		(21,439)		(18,141)		(38,537)
Other income / (expenses)		1,134		(591)		1,011
Operating loss		(5,049)		(9,338)		(13,008)
Finance costs		(61)		(198)		(58)
Finance income		272		897		1,361
Loss before taxation		(4,838)		(8,639)		(11,705)
Income tax benefit / (expense)		366		(1,426)		(1,019)
Loss for the period		(4,472)		(10,065)		(12,724)
Loss for the period is attributable to:
Equity holders of the parent		(4,414)		(10,042)		(12,742)
Non-controlling interests		(58)		(23)		18
Loss for the period		(4,472)		(10,065)		(12,724)
Basic and diluted loss per share ($)	3	(0.010)		(0.023)		(0.029)
Non-IFRS measures
Adjusted EBITDA* before performance- related impairments	4	4,713		(2,535)		1,677
Adjusted EBITDA*	4	2,967		(3,469)		(458)

 

 

*Adjusted EBITDA is a non-IFRS measure and is defined as earnings before interest, tax, depreciation, amortisation (but does not exclude amortisation of capitalised software development costs), share-based payment expenses, foreign exchange gains or losses and one-time non-recurring items and non-trading items.

 

For the six months ended 30 June 2023, the Group distinguished between Normalised Adjusted EBITDA and Adjusted EBITDA and presented both measures. This distinction was removed post June 2023 for a simpler, clearer presentation in line with industry peers,  and therefore the Adjusted EBITDA for the six months ended 30 June 2023 as previously reported is no longer presented, and the Normalised Adjusted EBITDA previously reported is presented as Adjusted EBITDA in the above table.

 

 

 

Condensed Consolidated Statement of Comprehensive Income

 

		Unaudited		Unaudited		Audited
		6 months ended		6 months ended		Year ended
		30-Jun-24		30-Jun-23		31-Dec-23
		US$'000		US$'000		US$'000
Loss for the period		(4,472)		(10,065)		(12,724)
Other comprehensive income: Items that may be reclassified
subsequently to profit or loss
Exchange differences on translation of foreign operations		(329)		33		1,673
Total comprehensive loss for the period		(4,801)		(10,032)		(11,051)
Total comprehensive loss is attributable to:
Equity holders of the parent		(4,743)		(10,009)		(11,069)
Non-controlling interests		(58)		(23)		18
Total comprehensive loss for the period		(4,801)		(10,032)		(11,051)

 

 

Condensed Consolidated Statement of Financial Position

 

		Unaudited		Unaudited		Audited
		As at		As at		As at
		30-Jun-24		30-Jun-23		31-Dec-23
	Note	US$'000		US$'000		US$'000
ASSETS
Non-current assets
Intangible assets
- goodwill	5	31,902		19,416		31,963
- other intangible assets	5	97,506		72,356		95,936
Property, plant and equipment		190		91		266
Right of use asset		845		-		953
Employee loans		594		456		320
Deferred tax assets		10,968		10,598		8,100
Total non-current assets		142,005		102,917		137,538
Current assets
Trade and other receivables		21,561		12,173		13,778
Cash and cash equivalents		31,926		64,761		42,651
Employee loans		227		406		487
Current tax asset		1,227		3,905		2,354
Total current assets		54,941		81,245		59,270
Total assets		196,946		184,162		196,808
EQUITY AND LIABILITIES
Equity
Share capital		45		45		45
Share premium		146,106		146,062		146,106
Retained earnings*		44,219		48,326		47,092
Translation reserve		(923)		(2,234)		(594)
Capital redemption reserve		(34,505)		(34,857)		(34,531)
Equity attributable to owners of the parent		154,942		157,342		158,118
Non-controlling interest		(142)		(125)		(84)
Total equity		154,800		157,217		158,034
Non-current liabilities
Trade and other payables*		10,332		1,640		10,361
Deferred tax liabilities		238		1,046		259
Lease liability		782		-		873
Deferred revenue		-		-		1,309
Total non-current liabilities		11,352		2,686		12,802
Current liabilities
Trade and other payables		26,977		17,699		24,457
Lease liability		173		-		155
Deferred revenue		1,985		2,402		634
Current tax liability		1,659		4,158		726
Total current liabilities		30,794		24,259		25,972
Total liabilities		42,146		26,945		38,774
Total equity and liabilities		196,946		184,162		196,808

*Due to the identification of an additional tax liability for prior periods relating to state income taxes, the reported financials for the period ended 30 June 2023 have been adjusted for a US$1.6 million increase in the non-current Trade and other payables and a US$1.6 million decrease in opening Retained earnings.

 

 

Condensed Consolidated Statement of Changes in Equity

 

		Share capital	Share premium	Translation reserve	Retained earnings	Capital redemption reserve	Total Devolver equity	Non-controlling interest	Total equity
		US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 31 December 2023 (audited)		45	146,106	(594)	47,092	(34,531)	158,118	(84)	158,034
Loss for the period		-	-	-	(4,414)	-	(4,414)	(58)	(4,472)
Currency translation  differences		-	-	(329)	-	-	(329)	-	(329)
Other movements		-	-	-	(150)	26	(124)	-	(124)
Fair value adjustment		-	-	-	(647)	-	(647)	-	(647)
Transactions with owners in their capacity as owners:
Other movements		-	-	-	(76)	-	(76)	-	(76)
Share-based payments		-	-	-	2,414	-	2,414	-	2,414
Total transactions with owners		-	-	-	2,338	-	2,338	-	2,338
Balance at 30 June 2024 (unaudited)		45	146,106	(923)	44,219	(34,505)	154,942	(142)	154,800

 

 

		Share capital	Share premium	Translation reserve	Retained earnings	Capital redemption reserve	Total Devolver equity	Non-controlling interest	Total equity
		US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 31 December 2022 (audited)		45	146,044	(2,267)	54,618	(27,707)	170,733	(102)	170,631
Loss for the period		-	-	-	(10,042)	-	(10,042)	(23)	(10,065)
Currency translation  differences		-	-	33	-	-	33	-	33
Transactions with owners in their capacity as owners:
Issue of shares		-	-	-	-	-	-	-	-
Exercise of share options		-	18	-	-	-	18	-	18
Treasury share repurchase transactions		-	-	-	-	(7,150)	(7,150)	-	(7,150)
Share-based payments		-	-	-	3,905	-	3,905	-	3,905
Share-based payments recycling of charge		-	-	-	(155)	-	(155)	-	(155)
Total transactions with owners		-	18	-	3,750	(7,150)	(3,382)	-	(3,382)
Balance at 30 June 2023 (unaudited)		45	146,062	(2,234)	48,326	(34,857)	157,342	(125)	157,217

 

 

 

		Share capital	Share premium	Translation reserve	Retained earnings	Capital redemption reserve	Total Devolver equity	Non-controlling interest	Total equity
		US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 31 December 2022 (audited)		45	146,044	(2,267)	54,618	(27,707)	170,733	(102)	170,631
Loss for the period		-	-	-	(12,742)	-	(12,742)	18	(12,724)
Currency translation  differences		-	-	1,673	-	-	1,673	-	1,673
Transactions with owners in their capacity as owners:
Issue of shares		-	-	-	-	-	-	-	-
Exercise of share options		-	62	-	(312)	-	(250)	-	(250)
Treasury share repurchase transactions		-	-	-	-	(6,824)	(6,824)	-	(6,824)
Share-based payments		-	-	-	5,528	-	5,528	-	5,528
Total transactions with owners		-	62	-	5,216	(6,824)	(1,546)	-	(1,546)
Balance at 31 December 2023 (audited)		45	146,106	(594)	47,092	(34,531)	158,118	(84)	158,034

 

Condensed Consolidated Statement of Cash Flows

 

		Unaudited		Unaudited		Audited
		6 months ended		6 months ended		Year ended
		30-Jun-24		30-Jun-23		31-Dec-23
		US$'000		US$'000		US$'000
Loss for the period before taxation		(4,838)		(8,639)		(11,705)
Adjustments for:
Depreciation of tangible fixed assets		94		31		186
Depreciation of right of use assets		108		-		-
Amortisation of intangible fixed assets		13,335		6,982		15,552
Impairment of intangible fixed assets		1,746		934		2,455
Finance income		(326)		(897)		(1,361)
Finance costs		115		198		58
Share-based payment charge		2,398		3,905		5,528
Other non-cash movements		(269)		(239)		9
Movements in working capital:
Receivables		(7,693)		1,616		3,692
Payables		(115)		792		(2,095)
Cash inflow from operations		4,555		4,683		12,319
Taxation paid		(83)		(361)		(778)
Taxation received		-		-		2,416
Net cash inflow from operating activities		4,472		4,322		13,957
Cash flows from investing activities
Purchase of intangible assets		(15,009)		(12,570)		(27,883)
Purchase of tangible assets		(56)		-		(51)
Acquisitions of businesses, net of cash acquired		-		(600)		(18,033)
Net cash outflow from investing activities		(15,065)		(13,170)		(45,967)
Cash flows from financing activities
Share capital issuance		-		18		62
Share repurchase transactions		-		(7,150)		(6,824)
Interest received		317		893		1,338
Interest paid		(77)		-		(58)
Repayment of lease liabilities		(72)		-		(22)
Net cash inflow/(outflow) from financing activities		168		(6,239)		(5,504)
Cash and cash equivalents
Net decrease in the period		(10,425)		(15,087)		(37,514)
At 1 January		42,651		79,493		79,493
Foreign exchange movements		(300)		355		672
At 30 June / 31 December		31,926		64,761		42,651

 

Note 1: Basis of preparation 

 

These condensed consolidated financial statements have been prepared in accordance with the recognition and measurement requirements of International Accounting Standard 34 Interim Financial Reporting. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. The condensed consolidated financial statements as at and for the six months ended June 30, 2024 have been prepared on the same basis as the audited annual financial statements.

 

Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the consolidated financial statements and footnotes thereto included in the Group's annual report for the year ended December 31, 2023.

 

The Directors are confident that the Group will remain cash positive and will have sufficient funds to continue to meet its liabilities as they fall due for a period of at least 12 months from the date of this first half 2024 announcement and have therefore prepared this unaudited semi-annual announcement on a going concern basis.

 

Tax charged within 6 months ended 30 June 2024 has been calculated by applying the effective rate of tax which is expected to apply to the Group for the year ending 31 December 2024 as required by IAS 34 Interim Financial Reporting.

 

The financial presentation in this release should be read in conjunction with the notes to the consolidated financial statements as at and for the first half ended 30 June 2024, as contained within this release.

 

These preliminary unaudited financial statements were approved by the Board of Directors on 25 September 2024.

 

Note 2: Revenue

 

				Unaudited			Unaudited		Audited
				6 months ended			6 months ended		Year ended
				30-Jun-24			30-Jun-23		31-Dec-23
				US$'000			US$'000		US$'000
Revenue analysed by class of business:
Game publishing			51,583			43,877			92,356
Revenue analysed by timing of revenue:
Transferred at a point in time			51,583			43,877			92,356

 

The Group does not provide any information on the geographical breakdown of revenues, as game publishing revenue is earned via third-party distribution platforms which hold the sales data of end consumers.

 

 

Note 3: Earnings Per Share

		Unaudited		Unaudited		Audited
		6 months ended		6 months ended		Year ended
		30-Jun-24		30-Jun-23		31-Dec-23
		US$'000		US$'000		US$'000
Loss attributable to owners of the company		(4,414)		(10,042)		(12,742)
Weighted average number of shares		444,832,441		444,818,506		444,825,531
Dilutive effect of share options		-		-		-
Weighted average number of diluted shares		444,832,441		444,818,506		444,825,531
Basic and diluted loss per share ($)		(0.010)		(0.023)		(0.029)

 

 

 

 

 

 

 

Note 4: Adjusted Results

		Unaudited		Unaudited		Audited
		6 months ended		6 months ended		Year ended
		30-Jun-24		30-Jun-23		31-Dec-23
		US$'000		US$'000		US$'000
Revenue
Reported Revenue		51,583		43,877		92,356
Reported Revenue growth		18.0%		(17.2%)		(31.4%)
Gross Profit
Reported Gross Profit		15,256		9,394		24,518
Reported Gross Profit margin		29.6%		21.4%		26.5%
Performance-related impairments		1,746		934		2,455
Adjusted Gross Profit		17,002		10,328		26,973
Adjusted Gross Profit margin, pre performance-related impairment		33.0%		23.5%		29.2%
Adjusted EBITDA*
Adjusted EBITDA		2,967		(3,469)		(458)
Adjusted EBITDA margin		5.8%		(7.9%)		(0.5%)
Performance-related impairments		1,746		934		2,135
Adjusted EBITDA pre performance-related impairment		4,713		(2,535)		1,677
Adjusted EBITDA margin, pre performance-related impairment		9.1%		(5.8%)		1.8%

*Adjusted EBITDA is a non-IFRS measure and is defined as earnings before interest, tax, depreciation, amortisation (but not excluding amortisation of capitalised software development costs), share-based payment expenses, foreign exchange gains or losses and one-time non-recurring items and non-trading items.

 

For the six months ended 30 June 2023, the Group distinguished between Normalised Adjusted EBITDA and Adjusted EBITDA and presented both measures. This distinction was removed post June 2023 for a simpler, clearer presentation in line with industry peers,  and therefore the Adjusted EBITDA for the six months ended 30 June 2023 as previously reported is no longer presented, and the Normalised Adjusted EBITDA previously reported is presented as Adjusted EBITDA in the above table.

 

A reconciliation from the operating loss to adjusted EBITDA is set out in the table below:

 

 

		Unaudited		Unaudited		Audited
		6 months ended		6 months ended		Year ended
		30-Jun-24		30-Jun-23		31-Dec-23
		US$'000		US$'000		US$'000
Operating Loss		(5,049)		(9,338)		(13,008)
Share-based payment expenses		2,414		3,905		5,528
Amortisation of intellectual property		4,840		1,832		3,918
Depreciation of property, plant and equipment		94		31		150
Depreciation of right-of-use asset		108		-		36
Foreign exchange losses (gains)/losses		(150)		(239)		9
Impairment of capitalised software developments costs		-		-		320
Non-recurring, one time expenses		710		340		2,589
Adjusted EBITDA		2,967		(3,469)		(458)
Performance-related impairments		1,746		934		2,135
Adjusted EBITDA pre performance-related impairments		4,713		(2,535)		1,677

 

 

 

Note 5: Intangible Assets

	Software development cost	Purchased intellectual property	Subtotal other intangibles	Goodwill	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Cost
As at 31 December 2023 (audited)	121,920	79,959	201,879	79,630	281,509
Additions	16,652	-	16,652	-	16,652
Fair value adjustment	-	-	-	(61)	(61)
As at 30 June 2024 (unaudited)	138,572	79,959	218,531	79,569	298,100
Amortisation and impairment
As at 31 December 2023 (audited)	67,990	37,953	105,943	47,667	153,610
Amortisation charge for the period	8,496	4,840	13,336	-	13,336
Impairment charge for the period	1,746	-	1,746	-	1,746
As at 30 June 2024 (unaudited)	78,232	42,793	121,025	47,667	168,692
Carrying amount
As at 31 December 2023 (audited)	53,930	42,006	95,936	31,963	127,899
As at 30 June 2024 (unaudited)	60,340	37,166	97,506	31,902	129,408

 

 

	Software development cost	Intellectual property	Subtotal other intangibles	Goodwill	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Cost
As at 31 December 2022 (audited)	94,037	59,817	153,854	66,820	220,674
Additions - business combinations	-	815	815	263	1,078
Additions	13,570	-	13,570	-	13,570
As at 30 June 2023 (unaudited)	107,607	60,632	168,239	67,083	235,322
Amortisation and impairment
As at 31 December 2022 (audited)	53,901	34,035	87,936	47,667	135,603
Amortisation charge for the period	5,150	1,863	7,013	-	7,013
Impairment charge for the period	934	-	934	-	934
As at 30 June 2023 (unaudited)	59,985	35,898	95,883	47,667	143,550
Carrying amount
As at 31 December 2022 (audited)	40,136	25,782	65,918	19,153	85,071
As at 30 June 2023 (unaudited)	47,622	24,734	72,356	19,416	91,772

 

	Software development cost	Intellectual property	Subtotal other intangibles	Goodwill	Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Cost
As at 31 December 2022 (audited)	94,037	59,817	153,854	66,820	220,674
Additions - business combinations	-	20,142	20,142	12,810	32,952
Additions	27,883	-	27,883	-	27,883
As at 31 December 2023 (audited)	121,920	79,959	201,879	79,630	281,509
Amortisation and impairment
As at 31 December 2022 (audited)	53,901	34,035	87,936	47,667	135,603
Amortisation charge for the period	11,634	3,918	15,552	-	15,552
Impairment charge for the period	2,455	-	2,455	-	2,455
As at 31 December 2023 (audited)	67,990	37,953	105,943	47,667	153,610
Carrying amount
As at 31 December 2022 (audited)	40,136	25,782	65,918	19,153	85,071
As at 31 December 2023 (audited)	53,930	42,006	95,936	31,963	127,899

 

 

 

Note 6: Impairment to Software Development Costs

 

The Group assessed software development costs for indicators of impairment, considering both qualitative and quantitative factors. For the titles exhibiting indicators of impairment, the Group recorded an impairment loss of $1.7 million in Cost of Sales against the carrying value of software development costs at 30 June 2024.

 

The impairment is related to titles published in 2023 by Devolver Digital Inc. and Good Shepherd Entertainment. As a result of lower than expected sales and future projections, these titles were impaired to their recoverable amounts, being value in use.

 

In assessing value in use for games identified with indicators of impairment, the Group has prepared a cash flow forecast reflecting management's estimations of future performance of these titles. Key assumptions on which this forecast was based includes title revenue generation and revenue decay curves.

 

The cash flows were discounted to their present value utilising a pre-tax discount rate of 21.9%, calculated based on the particular circumstances of the Group and its CGUs, derived from its Weighted Average Cost of Capital.

 

 

Note 7: Events After the Reporting Date

 

On 1 July 2024, Devolver announced a successful placing of 23,917,151 new common shares at a price of 33 pence per share, which represents a 10% premium to the closing price on 1 July 2024.

 

The gross proceeds from the placing amounted to approximately £7.9 million (circa US$10 million). The new shares represent approximately 5.4% of Devolver's issued and outstanding share capital.

 

Following admission, Devolver's issued and outstanding share capital totalled 468,749,592 common shares.