HALF-YEAR 2023/2024 RESULTS
Atari®, a prominent name in consumer products and interactive entertainment, has disclosed its consolidated financial results for the first half of the fiscal year, concluding on September 30, 2023. The Board of Directors approved these results during a meeting on December 8, 2023, following a limited review by Statutory Auditors. The detailed financial report can be found on Atari’s investor relations page.
Key Developments for the First Half Ended September 30, 2023
Significant events during the first half of the fiscal year include the acquisition of the GTI catalog of retro games, updates related to listings on OTC markets in the U.S., and the procurement of M Network Atari 2600 titles along with associated trademarks. Additionally, Atari acquired Nightdive Studios, Inc., issued €30 million in convertible bonds, and formed a strategic partnership with Playmaji Inc. The company also announced the termination of a token project while providing compensation options for eligible token holders.
Post-reporting activities included the acquisition of Awesomenauts and Sword & Soldier from Ronimo Games, as well as Digital Eclipse Entertainment Partners Co. Atari’s Atari 2600+ was officially launched on November 17, 2023.
HY 2024 Financial Performance Summary
Atari reported revenues of €6.4 million for the period, an increase from €4.3 million in the previous year. Game revenues accounted for €5.3 million, including contributions from Nightdive, compared to €2.8 million last year. The current operating loss decreased to €3.4 million from €4.2 million, while operating income improved slightly to -€5.0 million from -€5.2 million. The net loss for the company was recorded at €6.6 million, compared to €5.4 million in the previous year.
Wade Rosen, Chairman and CEO, stated, “We have continued to implement our retro-focused strategy in the first half of this fiscal year by releasing new Atari games, announcing the 2600+, and enhancing our licensing pipeline. The acquisitions of Nightdive Studios and Digital Eclipse Entertainment, renowned for their dedication to gaming history and aligned with Atari’s vision, are key to our growth strategy.”
Highlights of the Period
Throughout the initial half of the fiscal year, Atari concentrated its efforts on four primary business segments while advancing its inorganic growth strategy.
Games: The company consistently invested in new game development, launching four titles: Mr Run and Jump, Quantum Recharged, Days of Doom, and Pixel Ripped 1978. Upcoming releases for the second half include Rollercoaster Tycoon Adventures: Deluxe, Haunted House, and Berzerk Recharged. Nightdive Studios also released System Shock Remake and Rise of the Triad: Ludicrous Edition, with planned launches for Star Wars Dark Forces and Turok 3 in the near future.
Hardware: Atari focused on enhancing the VCS operating system and expanded content with over 13 new games added to the VCS store. The first half saw the conclusion of two Atari XP releases, Mr Run and Jump and Outlaw, while pre-orders for the Atari 2600+ began in August 2023, with deliveries starting in November. A strategic partnership with Playmaji was also established to collaborate on innovative retro hardware and software projects.
Licensing: The company continued to develop new licensing opportunities across various categories and regions, collaborating with respected international brands.
Web3: Despite a challenging blockchain market, Atari X is shifting its focus from a Web3-only model to community development, fostering cross-collaborations, and exclusive offerings through the launch of Atari Club. In this regard, the company announced the termination of its previously planned token project and issued claims to eligible ATRI holders by September 22, 2023.
Other Corporate Developments
In terms of branding and e-commerce, Atari made significant strides in enabling scalable operations. The atari.com homepage and product pages were refined, new licensees were integrated into the platform, and targeted marketing efforts were launched to support the upcoming holiday season and Atari 2600+ campaign.
In financing, Atari successfully completed a €30 million offering of senior unsecured bonds convertible into new ordinary shares, with €16.3 million subscribed via debt set-off and €12.9 million in cash.
Several acquisitions throughout the first half were aimed at enhancing Atari’s intellectual property portfolio, bolstering retro-gaming publishing and development capabilities, and expanding its fan community with the acquisition of AtariAge.
Revenue Breakdown by Business Lines (M€)
| H1 23/24 | H1 22/23 | |
|---|---|---|
| Games | 5.3 | 2.8 |
| Hardware | 0.5 | 0.2 |
| Licensing | 0.4 | 0.6 |
| Web3 | 0.1 | 0.7 |
| Total Revenue | 6.4 | 4.3 |
Atari reported a total revenue of €6.4 million for the first half of the fiscal year, marking an increase from €4.3 million during the same period last year. This growth is largely attributed to the inclusion of Nightdive Studios’ contributions starting May 11, 2023, reflecting a 46% rise at current rates and 50% at constant rates.
Games: Revenues from games reached €5.3 million, a notable increase from €2.8 million the previous year, with €2.7 million attributed to Nightdive Studios. Without Nightdive’s contribution, game revenues would have totaled €2.6 million.
Hardware: Hardware revenues rose to €0.5 million from €0.2 million previously, excluding pre-order revenues from the Atari 2600+, which will be recognized in the second half of the fiscal year.
Licensing: Licensing revenues amounted to €0.4 million, down from €0.6 million, as the company builds a new pipeline of opportunities across diverse categories and regions.
Web3: Web3 revenues were recorded at €0.1 million, a decrease from €0.7 million, primarily generated by Atari’s Limited Edition Summer Camp Collection available through the Coinbase Onchain Summer Program in August 2023. The company is redirecting its Atari X model towards community management and collaborative efforts.
Consolidated Income Statement Summary (M€)
| H1 23/24 | H1 22/23 | |
|---|---|---|
| Revenue | 6.4 | 4.3 |
| Gross Margin | 4.7 | 3.3 |
| Current Operating Income (Loss) | (3.4) | (4.2) |
| Operating Income (Loss) | (5.0) | (5.2) |
| Net Income (Loss) for the Year | (6.6) | (5.4) |
The gross margin for the period reached €4.7 million, an improvement from €3.3 million the previous year, driven by reduced costs of goods sold, particularly in hardware, and deferred revenue recognition from Nightdive. However, this was somewhat offset by increased royalty expenses for both Atari and Nightdive.
Current operating income stood at -€3.4 million, an improvement from -€4.2 million. Research and development expenses rose from €2.3 million to €3.3 million, largely due to the integration of Nightdive and amortization costs linked to game development. Marketing and sales expenses increased to €0.5 million from €0.3 million, while general and administrative expenses decreased by €1 million compared to the previous period.
Operating income for the period was reported at -€5.0 million, slightly better than -€5.2 million, factoring in €1.3 million in impairment losses on selected games and €0.3 million in expenses related to third-party tokens granted to ATRI holders. The consolidated net income showed a loss of €6.6 million, worsening from a loss of €5.4 million in the prior period.
Balance Sheet Assets (M€)
| H1 23/24 | FY23 | |
|---|---|---|
| Non-current assets | 42.3 | 18.1 |
| Current assets | 12.3 | 7.1 |
| Total assets | 54.6 | 25.2 |
The company’s non-current assets surged from €18.1 million in March 2023 to €42.3 million by September 2023, driven by an increase of €11.9 million in goodwill from the acquisition of Nightdive Studios, €7 million in other intangible assets related to premium game development, and €5.4 million in non-current financial assets, including a €4.6 million investment in Playmaji. Current assets also rose from €7.1 million to €12.3 million, primarily due to a €4.8 million increase in cash and cash equivalents, following the convertible bond issuance completed on June 1, 2023.
Equity & Liabilities (M€)
| H1 23/24 | FY23 | |
|---|---|---|
| Total equity | 11.2 | 7.8 |
| Non-current liabilities | 32.5 | 9.5 |
| Current liabilities | 10.8 | 7.9 |
| Total equity and liabilities | 54.6 | 25.2 |
Shareholders’ equity increased from €7.8 million to €11.2 million, primarily due to the issuance of 39,662,142 new shares. The share premium rose from €32.7 million to €36.2 million, reflecting the convertible bond derivatives valued at €3.6 million and a €0.9 million gain from the conversion of an Antstream convertible note. Non-current liabilities increased significantly to €32.5 million, largely due to the accounting of €26.8 million in convertible bond debt and a €3.9 million liability for the non-current portion of the earn-out payable to Nightdive. Current liabilities also rose to €10.8 million, encompassing a €2.3 million liability for the earn-out due to Nightdive, approximately €2 million in deferred revenues from ATRI Tokens, and €1 million in revenues from Atari 2600+ pre-orders, which will be recognized upon delivery in the second half of the fiscal year.
| H1 23/24 | FY23 | |
|---|---|---|
| Cash and cash equivalents | 6.5 | 1.7 |
| Non-current financial liabilities | (26.9) | (7.7) |
| Current financial liabilities | (0.6) | (0.2) |
| Net debt | (21.0) | (6.2) |
As of September 30, 2023, Atari’s net financial debt stood at €21 million, comprising €6.5 million in cash and €27.6 million in financial debt, compared to a net debt position of €6.2 million from the previous period.
Outlook
In the latter half of the fiscal year, Atari plans to maintain its focus on executing its strategic objectives across all four business lines while integrating the recently acquired Nightdive Studios and Digital Eclipse. The company aims to enhance its development capabilities and bolster its retro-focused strategy.
Games: Atari will continue to roll out new titles, including Neo Sprint, Roller Coaster Tycoon Adventure Deluxe, Haunted House, and Berzerk Recharged, alongside Nightdive’s releases like System Shock Remake on consoles, Star Wars Dark Forces, and Turok 3. The integration of Digital Eclipse will also be prioritized, along with exploring new digital partnerships with leading platforms.
Hardware: The company will focus on the launch and marketing of Atari 2600+, the continuation of the Atari XP program, and the integration of AtariAge, as well as implementing its strategic partnership with Polymega.
Licensing: Atari will persist in developing licensing opportunities across various markets and sectors.
Web3: The company aims to grow its Web3 ecosystem and the Atari X community through the Atari Club, fostering partnerships and collaborations with prominent Web3 entities. Given the unpredictable macroeconomic climate for video games and Web3, Atari acknowledges that its new growth strategy may necessitate additional funding. To address potential cash flow uncertainties during this transformation phase, the company may consider securing new shareholder loans under market terms and conditions or exploring new financing avenues, including potential public offerings. Atari continues to receive support from its main shareholder, Irata LLC, until the shareholders’ meeting that will approve the financial statements as of March 31, 2024.
About Atari
Atari is a recognized player in the interactive entertainment sector and a legendary brand in the gaming industry, appealing to a diverse audience across generations. The company is well-known for its multi-platform interactive entertainment offerings and licensed products. Atari oversees a portfolio comprising over 200 iconic games and franchises, including classics like Asteroids®, Centipede®, Missile Command®, Pong®, and RollerCoaster Tycoon®. The company maintains offices in both New York and Paris.
Atari’s shares are listed on Euronext Growth Paris under ISIN Code FR0010478248 and ticker ALATA, as well as on OTC Pink Current under ticker PONGF.
