IO Interactive Annual Report 2021/22: another huge year for Hitman 3

[DarkDetective]

IO Interactive Annual Report 2020/21 details can be found here.

IO Interactive's annual report over the fiscal year 2021/22, which ended on 31st March 2022, has been out for quite a while already, but I never made a thread for some reason, so here I go, as I believe it's not widely known public information.

Revenue: DKK 538.02 million (~$78.4m; +7%)
Operating profit: DKK 230.12 million (~$33.5m; -33%)
Profit for the year: DKK 188.95 million (~$27.5m; -30%)

Available cash at the end of the fiscal year grew from DKK 256.2 million (~$37.3m) with DKK 380.5m (~$55.4m) to DKK 636.7m (~$92.7m).

Key highlights:
- Hitman 3 overperformed against expectations in its first year
- Hitman 3 continues to sell well in its second year so far, thanks to the releases on Steam and Game Pass
- Revenue was higher than expected thanks to a content deal with Microsoft for Game Pass, which included a minimum guarantee and a performance bonus

Looking ahead
- FY23 revenue expected somewhere between DKK 450m and 500m, with expected profits before tax somewhere between DKK 250m and 300m.
- Management expects big drops in revenue and profit in FY24 and FY25, due to lack of releases.
- IO Interactive aims to diversify its product line-up through new platforms, namely mobile gaming, and publishing opportunities for the games of other studios.

My personal thoughts: No update on projects in development. Last year, there was Hitman 3 post-launch content, Project 007, and an unannounced project. It looks like those 2 games in development are still very far away, given the management's expectations for FY24 and FY25, which ends March 2025.

Spoiler: Images from the document

 

[Ryuichi Naruhodo]

Good for Them , Hitman Reboot trilogy is one of the fine GaaS examples that felt smooth

 

[DCSales]

Granted that they were building off of assets that had already been produced prior, which would've significantly reduced the budget needed for Hitman 3, but very impressive all the same.

 

[DarkDetective]

Granted that they were building off of assets that had already been produced prior, which would've significantly reduced the budget needed for Hitman 3, but very impressive all the same.

For those interested, that Hitman 3 budget number is based on the intangible assets on IO Interactive's balance sheet.

IO Interactive fully depreciates the value of completed games in 3 years in a straight line. During 2021/22, IO Interactive didn't release any new games, but the "Completed development projects" assets were reduced by DKK 51.571.000. The day one value of that project would be 51.571.000 * 3 = 154.713.000. Hitman 3 came out in January 2021, so two months before the previous financial report came out. We can calculate the depreciation of the Hitman 3 project in 2020/21 with the 2021/22 number: 51.571 / 12 * 2 = DKK 8.595.000. Adding that number to the value of "Completed development projects" at the end of 2020/21 gives us a value for January 2021, which is DKK 155.476.000. Since we're using rounded numbers, and IOI may have started depreciating at a different date than the exact end of January 2021, there is a margin of error, but these two numbers (154.713.000 and 155.476.000) are so close to one another that they should be a good enough indication to estimate the development budget of the game at DKK 155m.