Games Workshop is Still in Trouble With These Financials

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Games Workshop has released its 2022 financials, and things have basically come to a standstill in terms of growth for the company.

The Games Workshop Investor page just released a deep financial summary breakdown of revenue, costs, and profits for half their fiscal year, which ended on November 27, 2022.

However, this also shouldn’t be a shocker as the COVID boom is slowing, and things are returning to pre-COVID numbers and trends. Well, amid a general feeling of contempt by their customer base for years of broken promises, price increases, and paywalls.

Let’s first check out the insane jumps from last year, then check out the newest report.

GW Profits & Revenue (2021-2022)

This is when things really slowed to a crawl. However, they were really saved by licensing revenue here, as it accounted for a large portion of their profits. Compared to their previous growth, this was basically nothing for them in terms of growth. as dividends stayed the same, and profit did not increase all that much.

So, it looks like the trend will continue with the new 2022-2023 numbers.

Games Workshop is Still in Trouble: 2022 Financials

Here are some highlights:

• Licensing revenue actually went down 6 million. This saved their profits last year, and it’s quite down this time. One interesting thing to note, PC and console games make up 83% of their licensing. 
• Revenue at constant currency barely increased. 
• Core operating profit only increased by 1 million. 
• Operating profit went down by 5 million. this is the first time we’ve seen those numbers drop in a long time. 
• Operating profit at constant currency dropped even more. 
• Profit before taxation fell by 5 million. Again, this is the first time we’ve seen this in a while. 
• Earnings per share went down as well. This is interesting when looking at how much their stock rose recently due to Amazon and Henry Cavill. 
• Despite this, dividends per share actually went up a lot (by about 60% percent).
• Online sales went down by .5% but all forms of other trade went up. 

Reading through the packet, there are some other pretty big insights:

• They finally gave numbers for Warhammer+ and it only has 115,000 subscribers, much lower than we were expecting.
• The reason licensing went down is how they structure their contracts. 
• They made 6.8 million on exchange differences. Meaning they made almost 7 million pounds for charging in other currencies. 

Lastly, North America is still the largest region in terms of sales.

Is Games Workshop Stock Worth it Now?

At this point, it’s a hard sale as the stock just went sky-high in price due to the announcement of Henry Cavill’s involvement. If you bought it right before that, you’re in good shape.

For newer investors, and these numbers out, it would probably be better to wait and see how everything plays out in the next several months.

Then, when you couple this with all the macroeconomic indicators saying we may be headed into bad times financially and pressure from 3d printing and competitors’ gains around them, the outlook for Games Workshop in both the near and short term is not very good if they keep going about things the same way…

Will Games Workshop Survive This Slowdown?

Well, of course. It just feels like Games Workshop needs some sort of reset on the rules bloat (for 40k especially) and price, or all these other games and companies will keep creeping closer and taking more of Games Workshop’s precious market share…

Other game systems with well-rounded rules, popular IP, and low barriers to entry are taking players away from Games Workshop’s properties.

Slow growth can be fixed if Games Workshop pivots and changes how they do business, specifically with its product mix and apps that have been plagued by mismanagement and technical issues since the beginning.

Are you surprised by the Games Workshop profits and revenue numbers from this 2022 mid-year financial summary? 

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