Frontier Developments Lauds Strong Outlook -- Update

By Simon Zekaria

LONDON--Frontier Developments PLC (FDEV.LN) said Thursday its outlook is strong and reported its fiscal-year revenue has more than doubled, as the U.K. video games developer carves a lucrative niche in the competitive gaming market.

Revenue in the year to May 31 rose to over 22 million pounds ($34.6 million), it said, in line with previous guidance. The company also expects to report an operating profit of over GBP1.25 million, compared with a loss the previous year. It had net cash of GBP10.5 million on May 31, which it says puts it in a strong position to make further investments.

At 1118 GMT, shares rose 1.9% to 218 pence, valuing the company at GBP72 million.

In April, the Cambridge, U.K.-based group said it expected its fiscal-year revenue will be higher than previously forecast, boosted by sales of its flagship gaming title "Elite: Dangerous." The company said total paid unit sales are currently in excess of 640,000.

The group is adding new platforms and distribution channels to further expand its audience for the game--available on Apple Inc. (AAPL) computers and Microsoft Corp.'s (MSFT) Xbox One games console this year.

"Elite: Dangerous is being continually improved by regular game updates which creates publicity and stimulates demand. We are also increasing the addressable market by adding platforms and new distribution channels," said Chief Executive David Braben.

Analysts say the company's trading performance is encouraging, with sales of "Elite: Dangerous" ahead of bull-case scenarios and supported by higher-than-expected pricing of the game.

Still, they warn the company's challenge will be to maintain momentum in a congested market where gaming companies are scrapping to win consumer spend.

Write to Simon Zekaria at [e-mail]

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