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IO Interactive Annual Report 2020/21: best year for the company yet, 300% ROI for Hitman 3

DarkDetective

Staff
真実はいつもひとつ! There's only one truth
On 1st October 2021, IO Interactive management approved the Annual Report 2020/21 of the company (covers FY21, ending 31st March 2021).

Revenue: DKK 502586k (~$78.2m)
Operating profit: DKK 343598k (~$53.4m)
Profit: DKK 270676k (~$42.1m)

Key highlights:
- Record year for the company, above target
- Hitman 3 has earned 300% of the initial sales budget
- Backlog sales of Hitman (2016) and Hitman 2 have been strong, attributed to bringing these games to new platforms and to strong synergies with Hitman 3
- COVID-19 has a positive effect on sales
- Established IOI Barcelona

Looking ahead:
- IO Interactive aims to diversify its portfolio by developing new games that cater to audience different from the Hitman fans
- Currently developing live content for Hitman 3, including premium extensions
- Currently developing Project 007 (James Bond) and an unannounced project
- Management expects between DKK 200m and DKK 250m in FY22 (1st April 2021 through 31st March 2022).

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Thanks for the report!
Fantastic news for them, I'm mostly interested in how they'll handle the Barcelona studio tbh, as a dev.
Also hope they will remain independent for a while, would lead to more interesting project decisions at first I think.
 
I adore IOI, and I adore the new Hitman games, so I am so happy for them. I hope they keep on keeping on.
 
Thanks for the report!
Fantastic news for them, I'm mostly interested in how they'll handle the Barcelona studio tbh, as a dev.
Also hope they will remain independent for a while, would lead to more interesting project decisions at first I think.
I don't know what they do, but there's also a Malmö studio. Of course that's only a bridge away from Copenhagen, so easier to do support work or something. But at least it's not the first time they set up a new studio.

I think that sentence about wanting to diversify and also cater towards people who do not play Hitman is an interesting one. Of course there's James Bond, but that makes me wonder if that other, unannounced game is something not Hitman too. Perhaps another license, or a new IP?
 
I don't know what they do, but there's also a Malmö studio. Of course that's only a bridge away from Copenhagen, so easier to do support work or something. But at least it's not the first time they set up a new studio.

I think that sentence about wanting to diversify and also cater towards people who do not play Hitman is an interesting one. Of course there's James Bond, but that makes me wonder if that other, unannounced game is something not Hitman too. Perhaps another license, or a new IP?
Well, the main rumor atm is that they're doing an Xbox exclusive. Who knows if it's true, but it's been going the rounds through relatively credible people.

I just hope for them that the Barcelona studio doesn't become a basic support studio, it'd be a shame. And James Bond feels like a good way to attract more fans to me.
 
Does the Hitman 3 stat include the money received for EGS exclusivity?
EGS exclusitity works with revenue guarantees. Looking at the balance sheet, there's still DKK 375m on the balance sheet as Retained earnings, which I assume is money from deals like with Epic. I don't know what method they use to move it from the balance sheet to the income statement (acknowledge revenue), but my guess is most of this DKK 375m number (~$58.4m) is either a) money from the Epic deal that has not been earned yet through Hitman 3 sales on EGS or b) they have an expected revenue curve and they move everything from the balance sheet to the income statement along that line over a specified period of time.

I don't work in finance though, so this is just my guess based on what I've heard in other situations. If someone with more knowledge could share their thoughts, that would be great.

Edit: as it turned out, I was wrong:
Retained earnings is not an operational metric, it's an accounting metric for the company to disclose what profits are not paid out as dividends to shareholders. It's more related to shareholder equity type calculations.
It doesn't have any direct relationship to ESG payouts.

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Very strong and it makes total sense that they want to establish themselves with more stuff than just Hitman.
The last 10 years they have been doing nothing but Hitman and over their 12 released games eight have been a Hitman title.
 
EGS exclusitity works with revenue guarantees. Looking at the balance sheet, there's still DKK 375m on the balance sheet as Retained earnings, which I assume is money from deals like with Epic. I don't know what method they use to move it from the balance sheet to the income statement (acknowledge revenue), but my guess is most of this DKK 375m number (~$58.4m) is either a) money from the Epic deal that has not been earned yet through Hitman 3 sales on EGS or b) they have an expected revenue curve and they move everything from the balance sheet to the income statement along that line over a specified period of time.

I don't work in finance though, so this is just my guess based on what I've heard in other situations. If someone with more knowledge could share their thoughts, that would be great.

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I appreciate the insight.
 
EGS exclusitity works with revenue guarantees. Looking at the balance sheet, there's still DKK 375m on the balance sheet as Retained earnings, which I assume is money from deals like with Epic. I don't know what method they use to move it from the balance sheet to the income statement (acknowledge revenue), but my guess is most of this DKK 375m number (~$58.4m) is either a) money from the Epic deal that has not been earned yet through Hitman 3 sales on EGS or b) they have an expected revenue curve and they move everything from the balance sheet to the income statement along that line over a specified period of time.

I don't work in finance though, so this is just my guess based on what I've heard in other situations. If someone with more knowledge could share their thoughts, that would be great.

YwwAYQe.png

Retained earnings is not an operational metric, it's an accounting metric for the company to disclose what profits are not paid out as dividends to shareholders. It's more related to shareholder equity type calculations.
It doesn't have any direct relationship to EGS payouts.
 
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Retained earnings is not an operational metric, it's an accounting metric for the company to disclose what profits are not paid out as dividends to shareholders. It's more related to shareholder equity type calculations.
It doesn't have any direct relationship to ESG payouts.
Ah, that makes a lot of sense. Thanks for clarifying!
(cc @Jaded Alyx)

I confused it with Deferred revenue, which CD Projekt reports.
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(cc @Jaded Alyx)
Weird how this tag didn't notify me... Might want to look into that.

Sort of related but do we have any indication at all how well Cloud Switch games are performing? One might say that they keep coming so they must be doing ok, but on the other hand it's probably not costly for the developer so why not?
 
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