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(Sharecast News) - Shares in Frontier Developments plunged nearly 20% on Monday after the videogames developer and publisher said weaker-than-expected sales from its latest Warhammer release means full-year guidance won't be achieved.
Sales of real-time strategy game Warhammer Age of Sigmar: Realms of Ruin since its release on 17 November have been lower than forecasts despite a mostly positive critical response, meaning that revenue targets for the year to 31 May have been slashed to £80-95m, from £108m previously.
However, the company said that it if can meet the upper end of this new guidance, current market expectations for an adjusted EBITDA loss of £9m for the full year still remains achievable, due to cost savings and improved margins.
Frontier has announced it is now refocusing its portfolio towards so-called creative management simulation (CMS) games over recent years, which it says should help "at least break even" from next year onwards.
Its four CMS games have achieved over $100m in gross revenue each, hitting profitability within one month of release and delivering over 100% return on investment within 12 months of release. Frontier said it is planning to release one new CMS game in each of the next three financial years.
"Frontier's move to diversify its game portfolio during the last five years, including through third-party publishing and new games in 'adjacent genres', has not delivered the anticipated success. As a result, the company has refocussed on CMS games which have delivered stronger and more predictable returns through Frontier's expertise and leadership in that genre," the company said.
Commenting on the pivot, chief executive Jonny Watts said: "I am confident that our renewed focus on CMS will return Frontier back to profitability, deliver stimulating games to our players, and provide rewarding opportunities for our people. I'd like to thank our people and our shareholders for their patience and support as we go through a challenging period of change."
The stock was down 19.9% at 157p by 0958, taking the year-to-date fall to nearly 84%.
In other news, Frontier's chairman David Wilton has decided to step down from the board to pursue other interests, with non-executive director Ilse Howling announced as his replacement.
