(News Bulletin 247) – The Bigben Interactive subsidiary specializing in gaming peripherals and video game publishing reported better-than-expected annual results. Nacon benefited from dense editorial news throughout its staggered 2023-2024 financial year.

Nacon passed the level of annual results without incident and favorably defied analysts’ expectations. The Bigben Interactive subsidiary specializing in gaming peripherals and video game publishing benefited from solid editorial activity as well as a significant back catalog, i.e. games released during previous years.

Nacon stood out in particular with the release at the end of 2023 of the game “Robocop: Rogue City”, which “is very successful”, according to Nacon.

For its staggered financial year 2023-2024 (i.e. from April 1, 2023 to March 31, 2024) Nacon announced Monday evening after the stock market a gross margin of 104.2 million euros, or 62.1% of turnover. of 167.7 million euros, already published last April.

The publisher records a sharp increase in gross operating income (Ebitda) to reach 70.9 million euros compared to 48.9 million euros for the 2022-2023 financial year, which is above expectations. TP ICAP Midcap which were located at 61.4 million euros. The corresponding margin logically follows this trend to reach 42.3% (compared to 28.8% in 2022-2023).

The annual current operating profit (Ebit) increased by 20.5% to 20.9 million euros, which is higher than the expectations of Invest Securities which was counting on 12 million euros, and the consensus cited by the design office (15.7 million euros).

The net result, for its part, is also higher than market expectations, at 17.5 million euros, where Invest Securities’ expectations were less ambitious at 5.9 million euros, when the consensus was at 11.6 million euros.

“Good cost control”

“If the results include exceptional items (recovery of earn-outs (additional price during a sale, Editor’s note), proceeds from the sale of rights to Gollum), it would seem that Nacon has rather well controlled its operational costs in the second half of the year. “, appreciates Invest Securities.

“The group reveals rather reassuring annual results, with a priori good control of costs and working capital requirements (WCR),” continues the research office.

Cash from activity amounts to 73.1 million euros at the end of March 2024 compared to 47.4 million euros at March 31, 2023, also driven “by a positive working capital effect of 17.9 million euros thanks to a reduction in inventories of 8.2 million euros”, recalls TP ICAP Midcap.

On the Paris Stock Exchange, the market continues to welcome Nacon’s publication above expectations. The stock jumped another 14.5% to 1.56 euros, around 2:30 p.m., after having already gained 7.9% the day before. With this bullish sequence, Nacon shares returned to their highs at the beginning of February.

As an outlook, Nacon said it was confident in its ability to once again generate growth accompanied by an increase in its operating profit. The Bigben group subsidiary does not provide further numerical details, so this information will have to be gleaned from analysts.

The consensus cited by Invest Securities targets revenues increasing by 13% to 194 million euros and current operating income of 19.5 million euros, for 2024-2025.

TP ICAP Midcap, for its part, has adjusted its profitability scenarios upwards for the current and future financial years. The research office now expects Ebitda margins of 40.3% and 41.6% respectively compared to 38.6% and 39.6% previously, after the results presentation meeting on Tuesday.

Fewer outputs but more quality

In terms of editorial news, management announced the arrival of around fifteen games during the year, including “the long-awaited” Test Drive Unlimited: Solar Crown, whose release is scheduled for September 12, 2024 and which is “the fruit of the largest investment in Nacon’s history”, underlines Corentin Marty, analyst at TP ICAP Midcap.

Of the entire line-up which was perceived by Corentin Marty as “very qualitative”, only one game will not be developed internally by a Nacon studio, continues the analyst.

Like Dontnod or Pull Up Entertainment (formerly Focus Home Interactive), Nacon is positioned on the publishing of “AA” video games, i.e. productions with a capped budget and a lower level of technical ambition but placed on promising niches – as opposed to Ubisoft, which produces so-called “AAA” games, also called “blockbusters”.

“With the confirmed release of Test Drive and several major games across Nacon, as well as the control of R&D expenses, the 2024-25 financial year looks favorable, with Test Drive as a possible game changer,” says for its part Invest Securities.

“The presentation (of the annual results by management) focused in particular on GreedFall II (as a reminder the first opus had sold more than 2 million copies), Tiebreak on the sports part which has a potential greater than a million exemplary thanks to holding the ATP and WTA licenses and obviously Test Drive”, adds Corentin Maty.

Its manager Alain Falc “indicated in particular that in just 3 days and D-95 from the release date, the number of pre-orders (for Test Drive) was already twice as high as those of Robocop which were D-35 A significant success of Test Drive could allow the company to outperform our expectations as well as those of the consensus,” he adds.

“The outlook remains strong for the financial year, particularly in the games segment, which should lead the stock to continue its recovery,” concludes Corentin Marty, who renews his purchase recommendation and his price target of 2.60 euros.