THQ Nordic AB (FRA: TH9) reported steady growth and a sustainable development plan for the quarter ending June 2019.

Net sales for the period were up 37% compared to the previous year, from SEK 837 million ($87 million USD) to SEK 1,142 million ($119 million USD). Total operating income was SEK 1,318 million ($137 million USD), up from the previous year’s SEK 960 million ($99 million USD). Operating profit for the quarter was SEK 81 million ($8 million USD), up from SEK 52 million ($5 million).

Earnings per share were SEK 0.52 ($0.054 USD), up from SEK 0.42 ($0.044 USD).

Digital back catalogue sales contribute to stable growth

CEO Lars Wingefors attributes the company’s stable growth to the strong performance of the back catalogues of its three divisions — Deep Silver, THQ Nordic, and Coffee Stain. Digital bookings across all three imprints to an average TTM of 58%.

Deep Silver reported net sales of SEK 373 million ($39 million USD), an increase of 10% from the previous year, driven primarily by February’s Metro Exodus. Coffee Stain’s sales amounted to SEK 83 million ($8 million), mostly from the Early Access launch of Satisfactory on the Epic Games Store in March. Coffee Stain had no major releases during the reported quarter. THQ Nordic’s net sales for the period grew 27% to SEK 185 million ($19 million USD).

Future of company in studio acquisitions and focus on core IPs

Back in February, THQ Nordic announced that it had raised a SEK 2,090 million ($225 million) war chest through a share issue, which it intended to use to fund studio acquisitions. In its earnings report, the company announced that it had purchased Milan-based Milestone Interactive, Austin-based Darksiders developer Gunfire Games, and Goodbye Kansas Game Invest, which gives the company stake in five startup studios.

The Milestone Interactive purchase was made for €45 million ($50 million USD) cash, and the Goodbye Kansas Game Invest acquisition came to SEK 42 million ($4 million USD). The financial details of the Gunfire acquisition were not made public.

Wingefors also announced an unusually high number of previously unrevealed titles in the company’s earnings report. Deep Silver Volition is reportedly working on a new entry in the popular Saints Row series, and Ukrainian developer 4A Games is following up the successful Metro Exodus with a new entry in the Metro franchise. Dead Island 2, initially announced in 2012, has been revived and handed to Deep Silver subsidiary Dambuster Studios.

THQ Nordic AB intends to release two AAA titles in the financial period ending March 31, 2021. The company has also presented a proposal to its board of directors to change its name to Embracer Group AB.

At the close of the market on August 14, TH9 was sitting at 20.84.

Patrick Lee
Patrick Lee is a contributing editor at Escapist Magazine and managing news editor at Gaming Street.

    You may also like

    More in Investing