SUMO.L Share News (SUMO)

(Sharecast News) - Video game creative and development service provider Sumo Group reported revenue growth of 40.7% in its final results on Wednesday, to £68.9m.
The AIM-traded firm said that revenue growth consisted of 24% organic and 16% acquisitive growth, delivered in a year impacted by the Covid-19 pandemic.

Adjusted EBITDA was up 17.1% year-on-year for the 12 months ended 31 December, at £16.5m, while the company's adjusted gross margin narrowed to 41.8% from 44.8%, using a new definition following the acquisition of Pipeworks and the evolution of the firm's royalty model.

The board said Sumo's underlying adjusted gross margin remained "strong" at 43.2%, adding that the gross margin was impacted by the cost expensed on Snake Pass 2, and the higher-than-usual holiday pay accrual as a result of the pandemic.

During the year, the company said it delivered 279 'milestones' and launched or announced 12 games, including five own-intellectual property games.

Sumo completed its first major acquisition in October, being Pipeworks, which it described as an "innovative and well-established" United States west coast games developer, for an enterprise value calculated at the time of acquisition of up to $99.5m.

Leamington Spa-based cross-platform work-for-hire studio Lab42, acquired in May, was performing ahead of expectations, the board added.

Total headcount increased to 1,043 at year-end, from 766 a year earlier despite pandemic restrictions, including a total of 163 people who joined through the acquisition of Lab42 and Pipeworks.

Net cash as at 31 December was ahead of management expectations at £6.8m due to a number of timing effects, down from £12.9m at the end of 2019.

Since the year ended, Sumo completed the strategic acquisition of PixelAnt Games in Wroclaw, Poland, providing it with an "established, low-risk base" for growth in a video games talent "hotspot".

The company said it was now working on more than 40 projects with 28 different clients, up from 21 projects with 12 different clients in April last year.

Looking ahead, Sumo said it had an ongoing group focus on increasing headcount organically and via acquisition, adding that it had a "strong" acquisition pipeline with a number of targets being actively pursued.

It also said it had "strong" visibility, with 85% of Sumo Digital's budgeted development fees for 2021 contracted or near-contracted at the end of February, while Pipeworks was at 50%.

"The year ahead is packed with even more exciting opportunities for our talent to shine, and we are excited about the launch of Secret Mode, our new publishing business, announced earlier this month," said chief executive officer Carl Cavers.

"Our focus remains on delivering further strong growth organically and by acquisition, and the pipeline of opportunities remains strong.

"We have an enviable level of visibility on development fees in 2021 and, with our markets continuing to perform strongly, are increasingly confident about the future of the business."

At 0932 BST, shares in Sumo Group were down 3.31% at 350p.