GW PLC Trading Update - 22nd November, 2024

[Joe]

Quote

 

The Group is pleased to announce that trading since the last update on 18 September 2024 is ahead of expectations. The Board’s estimate of the results for the six months to 1 December 2024, at actual rates, is core revenue of not less than £260 million (2023/24: £235.6 million) and licensing revenue of not less than £30 million (2023/24: £13.0 million). The Group’s profit before tax (“PBT”) is estimated to be not less than £120 million (2023/24: £96.1 million).
 

Further details will be announced in the half yearly report which will be released on 14 January 2025.

 

 

Source.

 

Massive jump on licensing revenue (god bless Space Marine II there). 

[The Praetorian of Inwit]

Licensing gets a big bump but I expect they are going to see big sales from Krieg and Aledari too. Good. More success means at some point my ultimate dream of a Rogal Dorn plushie may happen. 

[Matcap86]

22 minutes ago, The Praetorian of Inwit said:

Licensing gets a big bump but I expect they are going to see big sales from Krieg and Aledari too. Good. More success means at some point my ultimate dream of a Rogal Dorn plushie may happen. 

 

The tank? 

[N1SB]

Perfect, thanks for keeping an eye on this.  Even this preview answers the questions I had in mind, which was...

 

On 11/23/2024 at 12:41 AM, Joe said:

Massive jump on licensing revenue (god bless Space Marine II there). 

 

Yeah, and I was also wondering, how much of a BUMP Space Marine II: the vidya game gave to Warhammer: The Hobby, y'know?  Like did we translate just a portion of Space Marine II players from PC, Xbox and Playstation to The Tabletop?  Remember, this half-year was mainly Age of Sigmar 4th edition's launch period.

 

So we got a very good Warhammer Store manager, he was actually a marketing manager for a fashion accessories retailer before.  You know how the best sales guys were marketing guys, because they see both sides?  He mentioned he saw 10 new ppl in his store on the MONDAY (not weekend) after Space Marine II.

 

So to compare oranges to oranges (Retributor Gold to Retributor Gold lol) I looked at the half-year of Age of Sigmar 3rd edition's launch period:

 

 

This DOES include licensing/royalties at that time, so £186.8m --> £191.5m is like...just rounding it...3% growth during last AoS ed's launch window.  I honestly greatly appreciate the fantasy line, I actually think (until yesterday's preview) they had the better minis, I love Warcry, but that is teeny tiny compared to, say, a 40k launch.

 

And it was considered the best fantasy launch of that time.  That breaks my heart.  3% growth's the biggest "by a considerable margin"?

 

 

Now THIS half-year's growth, to compare:

 

 

So to match it up with how they presented it with the above half-year report, £235.6m+£13m --> £260m+£30m...17% growth during this period.

 

In fact, forget the licensing revenue for a minute.  Just look at the £235.6m --> £260m a second.  That's 10% growth even without the buff of the royalties from Space Marine II.  Now, there were some very, very happy Skaven players...but no way that's all AoS's growth alone.  Space Marine II brought in a lot of new players.

(I just remembered Boarding Actions IS part of this period.  That almost certainly moved quite a few boxes of 40k.)

 

Oh my cog.  There's gonna be some split, how much did AoS + how many new 40k players did Lt. Titus the Primaris bring in.  That's gonna lead to a lot of splitting of hairs because, remember, GW doesn't break down its revenue by product line, but oh my cog.  This is white hot overheating plasmagun growth for an AoS year.

 

On 11/23/2024 at 3:35 AM, The Praetorian of Inwit said:

Licensing gets a big bump but I expect they are going to see big sales from Krieg and Aledari too. Good. More success means at some point my ultimate dream of a Rogal Dorn plushie may happen. 

 

And thanks for reminding me, they're releasing this Trading Update now because it's only their revenue from AoS 4th's launch to now...and it's exactly why the Warhammer Preview was yesterday, isn't it.

 

Also, reminder, it doesn't include Christmas.  So GW is like a strange football game where they actually ramp things up in the 2nd half.

 

But back to the Trading Update!  So it's licensing, Space Marine II is making us mainstream, yaaay, we're getting a single episode in an Amazon animated series, yaaay, we're mainstream, yaaay.  What's really good is the quality of the royalties revenue...that's pure profit, Brothers and Sororitas (that's the bit that I appreciate).

 

So the core revenue from the core business for The Tabletop, The Hobby...GW's gotta pay to make stuff to sell you...that's like regular Wounds.  There's this increasing Saving Throw of inflation (GW suffers from inflation, too).  Royalties revenue, that's like pure money, man, no Saving Throws of costs, that's MORTAL Wounds.

 

And just when I was about to take a look at stock price, a friend from the Warhammer Store sent me this:

 

 

REMEMBER, stock prices ARE NOT Likes/Thumbs Up/Thumbs Down...it's more like points values in the Munitorum Field Manual.  They're just adjusting points costs in terms of the value of a unit.  GW's unit profile, particularly because royalty revenue from Space Marine II is pure profit a unit that just added Devastating Wounds.

 

TL;DR - sure, Space Marine II brought a lot of sweet, sweet pure profit to GW shareholders...but more importantly, it definitely brought more players to The Hobby.  Remember, I don't hold GW stock (I still feel there's a conflict of interests if I did and continue making these posts), but I am grateful to how the vidya game expanded The Hobby.

 

But...does that mean these new Space Marine II players will stay?  To be continued...and I'll post soon in Amicus Amedes about something Rick Priestley incidentally revealed about that in a recent Filmdeg Interview.  Please stay tuned.

Edited November 24, 2024 by N1SB

[LameBeard]

Thanks. I am rarely in my local GW because the manager definitely needs to go on @N1SB’s sales course, but by coincidence I have been in on a few week days lately, and I did see a chap who had caught the bug from Space Marine II. But he was pretty astonished at the prices. The manager did a bad job of pointing him to the products that would get him hooked. He still walked out with two boxes and glue, but I don’t know if he’s going to stick at the hobby. I interrupted and pointed him to Bolter and Chainsword. I bet that manager hates me interfering.

 

Full disclosure: I do have a little GW stock.

[Indy Techwisp]

Full Disclosure: I have Zero GW stock and probably won't ever.

 

The real kicker for this will be to see how much of the increased stock remains increased as we go forwards or if the stock price falls back to the Pre-SM2 release levels.

[Redcomet]

21 minutes ago, Indy Techwisp said:

Full Disclosure: I have Zero GW stock and probably won't ever.

 

The real kicker for this will be to see how much of the increased stock remains increased as we go forwards or if the stock price falls back to the Pre-SM2 release levels.

Stocks rise and fall with product releases all the time, so I would not be surprised if there is a small dip after SM2

[darkhorse0607]

I wonder how many of the new fans will fall off after they have either finished Space Marine 2's content, as it's not a live service to keep them coming back, and/or go to a local store as mentioned above and either see the prices (that's another new game they could get for the cost of a box of Intercessors, while we view that as "oh Intercessors give you more worth because you use them longer" many outside of the hobby will not), or just in the fact that a lot of stuff that they might see online they can't have for an unknown amount of time because it's out of stock. Not to mention, at least locally, fairly dismal store inventories. The whole "oh we can order it for you and it'll be here between 1-3 weeks might work on a regular customer, not on a new one. I don't know if it's a widespread issue, but there is one GW in the whole of SW Pennsylvania and I've gone 3 times recently, walked out without a purchase every time because they never have new releases, or half the time don't have main units for factions

 

Or just the fact that GW doesn't really have a easy onboarding program. Again, we might see something like a combat patrol or a starter box and think it's a good deal. But someone walking in off the street because they played Space Marine just to find out unless they buy a single character (which is still $40+), the minimum investment is going to be $112 for the starter box that managers are trained to push, plus paint, brushes, etc, which are all expensive. Or a single box which is normally $60, with the caveat that they won't be able to actually play the game with it

 

Oh well. Hopefully this shows GW that giving the licesnse to a company that's going to put out a higher quality product might yield better results than another card game, or the 500th turn-based strategy game

[Dudley Nightshade]

Comparing gross revenue from 2020 to 2024 seems to be missing a consideration for annual price increases. Is GW up in terms of stock shifted, or could it be the same amount at a higher price per box?

[N1SB]

12 hours ago, Dudley Nightshade said:

Comparing gross revenue from 2020 to 2024 seems to be missing a consideration for annual price increases. Is GW up in terms of stock shifted, or could it be the same amount at a higher price per box?

 

Thanks for asking, because this is well worth clarifying (especially with GW).

 

Thankfully, we're NOT comparing gross revenue from 2020 to 2024.  Instead, we're comparing 6-month snapshots with one another.

 

We're comparing PERCENTAGE up in, and it is in revenue terms.  We're trying to compare stock shifted, but yes, there are other factors.

 

So to break it down, it's late May 2020 to Nov 2020 VERSUS May 2021 to Nov 2021: that's the 3% up (incl. royalties).

 

Then we're comparing May 2023 to Nov 2023 VERSUS May 2024 to Nov 2024: that's the 17% up (incl. Space Marine II royalties).

 

There IS indeed always some background pricing update/inflation going on, but it's pretty much going on constantly within each of these periods, usually around 3% to 5%.  Since every period we look at has this constant background noise, these horrid hum of increasing prices, it mostly balances out.

 

In other words, when I point out there's 3% growth in AoS 3rd ed's time frame there is some price increase effect...but there's also some in 4th's 17%.

(I reflected on this and thought about last AoS 3rd ed's 3% growth...some of that WOULD be price increase.  That makes it really low.)

 

Other factors this half-year includes Boarding Action, for example.  I know a lot of people that picked up a 40k box or two due to a sudden new meta.  That would've contributed to this 17% growth.  Pricing updates, in comparison, happen every year.  You see where I'm coming from.

Edited November 24, 2024 by N1SB

[The Praetorian of Inwit]

@Matcap86 Ha, no way. If GW releases a Primarch Rogal Dorn plushie there revenue would be up 1000%

[ZeroWolf]

I do wonder if GW will get their wish of another successful LotR boost like times previous (mainly thinking original trilogy) as the movie tie in box is going on preorder this Sunday 

[Marshal Rohr]

If GW drops Krieg, Lord of the Anime, AoS faction launches, Eldar, and Heresy 2.0 by next summers year end report this will be a massive windfall. 

[Vassakov]

https://www.theguardian.com/business/2024/dec/01/games-workshop-promoted-ftse-100-quarterly-reshuffle

 

Waaagh Biznezz!

[The Praetorian of Inwit]

This isn't nessacarily a good thing. 

[Marshal Rohr]

5 hours ago, The Praetorian of Inwit said:

This isn't nessacarily a good thing. 

There’s no retail market or silly goose firms that will think the drop of a sick video game means every year will look like this forever. 

[alfred_the_great]

10 hours ago, The Praetorian of Inwit said:

This isn't nessacarily a good thing. 

Why?

[Robbienw]

The bigger you get, the more chance you have of activist investor buying your shares, or even larger companies trying to buy you.

 

[Dark Shepherd]

10 hours ago, alfred_the_great said:

Why?

I would have said investors expecting this wvery year/attempting to do something like this way more often than possible

[ZeroWolf]

4 minutes ago, Robbienw said:

The bigger you get, the more chance you have of activist investor buying your shares, or even larger companies trying to buy you.

 

To be fair I don't think the people at the top of the company will be bothered with the latter somehow. In fact, I bet some are counting on that to get a big payday.

[Robbienw]

I’m more thinking from the point of view of fans and creatives.  Not something anyone wants to happen.

[N1SB]

  

On 12/2/2024 at 2:18 AM, Vassakov said:

https://www.theguardian.com/business/2024/dec/01/games-workshop-promoted-ftse-100-quarterly-reshuffle

 

Waaagh Biznezz!

 

Brothers and Sororitas, regarding breaking into the FTSE 100, I'll give you what you've always seemed to find helpful: the workman's view.

 

I mention this because we were talking about this months ago.  I do appreciate Brother Vassakov letting us know the media finally noticed:

 

 

In fact, I thought GW was already breaking into it, and I was corrected...'cos I never worked on that bit.  That's relevant later.

 

 

+++ THE FTSE 100 IS LIKE TIER 1 UNITS +++

 

 

The FTSE ("Footsie") is like the London Stock Market, like the Dow Jones or Nasdaq in the U.S.  It's actually a list...like a Codex.

 

The FTSE 100 ("Footsie One Hundred") is like when your favourite tactics website/channel posts a Tier List for a new Codex, and it's Tier 1.  And then suddenly everyone you know is buying only the units from Tier 1, like they want only the top models.  You visit your Warhammer Store/FLGS and the whole painting area are JUST Tier 1 units!

 

Even if YOU don't metachase (good for you, I don't either, it's too exhausting), if some new player were to ask your recommendation...you'd probably still tell them what you noticed to be Tier 1.  Though I don't use them, if someone asks about me for Necron advice, I'm like "yeah...it's hard to go wrong with 6 Wraiths w/ a Cryptek."

 

I use this Warhammer analogy because now you know exactly how it feels, all the nuances.  The financial market feels the same way.

 

Entering the FTSE 100 is like a unit suddenly making it into Tier 1; they get a lot more visibility.  Just as players skip a Tier List video just to see the Tier 1 units, certain investment groups will ONLY invest in FTSE 100 units; they're safe bets, like 6 Wraiths w/ a Cryptek.  GW's stock price should shoot up just from that effect.

 

The share price should shoot up.  If you're already a GW investor, you can sell off for huge capital gains.  It'll probably be a bad time to buy, though, because since so many new investment institutions are buying into GW as a blue chip (i.e. safe bet) company, it'll drive up the share price by quite a bit.

 

GW's increased visibility is also already happening.  Can be good or bad.  Just depends how they manage it.

 

 

+++ YES, THOSE COULD BE ACTIVIST INVESTORS +++

 

 

Could they be activist investors (btw, that's not like "political activist", they're just people who use their authourity as a part owner to ask questions and steer the management towards business decisions they prefer)?  Yes, because GW entering the FTSE 100 makes the more visible to everyone, large and small investors alike.

 

(Actually, to those who own GW stock...you can be OUR activist investors.  You'll have to do some checking, but when GW holds its annual general meetings, you show up and bring up their prices are getting way too high.  With video games or Amazon deals, you want to make it easier for new players to enter The Hobby.)

 

Activist investors could be interfering.  Think about how obnoxious some of those cable news commentators can be...those aren't activist investors, those are what activist investors want to be, to get attention for themselves, to make news.  (No srsly, honestly, somebody should bring up to GW in their AGM their prices are way too high.)

 

But there are all sorts of crazy investors.  I know of 1 case with a major company here in Hong Kong, so big they run part of the London Underground, the 1 good line, the Elizabeth line.  So they're big with world influence...and they had 1 investor who raised a motion that he should have more soft drinks in the AGM.  An extra can of Coke.

 

My favourite kinda activist shareholder with this company is this sweet little old lady who was a retired high school teacher.  She'd show up like a profession to these AGMs, asked these questions in a schoolmarm manner, grilled the executive directors, but they loved her.  She kinda stopped showing up, she was getting too old.

 

(In case you're wondering what happened with the little old lady.  Their investor relations team found out she's thinking of not showing up to the AGMs anymore, like her leg acts up.  The very executive directors she grilled arranged for a huge bouquet of flowers, a photo op and transportation home for her in her last AGM.)

 

There are just crazy people in the world, and cool ones.  Some of them are investors.  Companies have to deal with them.

 

 

+++ BUT ALSO THE GOVERNMENT LISTENS TO YOU +++

 

 

This is NOT a political view (which is prohibited in B&C,) but whatever your politics, you KNOW government listens to corporations.

 

Whenever you hear some politician is holding a business roundtable, who do you think they invite?  It's the CEOs of the FTSE 100.

 

The situation is different in the UK vs. the US, but GW would hold influence.  It's NOT lobbying for cutting corporate taxes, or some marketing campaign for "New Britannia", but stuff like, "Can we get Factory 4 built ANY faster please?"  The government controls things like permits for land use, and they can actually help with that.

 

GW's biggest bottleneck is that it can't make more stuff to meet demand, their sales have increased like 5x and they're using the same 3 Factories.  Yes, there are government civil servants that need to consult environmental experts and the effect on the neighbourhood of a new Factory, this is all good, but I found this out recently: Nottingham is bankrupt.

 

(There's a number of cities in the UK that are bankrupt right now, like 6 was what I noticed recently...probably more to come.)

 

Like the state of Nottingham is broke.  When you're broke, your priority to hire some consultant is pretty low.  That can be the hold up.

 

But if GW enters the FTSE 100, he might get invited to the house of the Chancellor of the Exchequer, "Hey James Workshop, how can we improve UK's economy?  Oh...you need ANOTHER new Factory and Nottingham doesn't have the resources to help?"  The Chancellor just slams on the wall...because he's neighbours with the Prime Minister.

 

I'm not kidding.  You've heard of 10 Downing Street.  The UK head of, like, the economy lives on 11 Downing Street.  I've known CEOs who'd be invited for meeting with the Prime Minister then go next door to meet with the Chancellor while they're there.  Sometimes they act as marriage counsellors.  Yes, it's crazy.

 

It's not a bribe or corruption.  The Chancellor is literally doing his job of trying to make the UK economy better, as 1 of the top 100 in the UK economy he SHOULD listen to you, and being next door neighbours with the Prime Minister alone means he can do something if not with his own considerable power.

 

GW can get their message through to maybe UK politicians who clearly misunderstand their own economy.

 

 

+++ LESS LIKELY TO GET BOUGHT OUT IN FTSE 100 +++

 

 

On 12/3/2024 at 2:01 AM, Robbienw said:

The bigger you get, the more chance you have of activist investor buying your shares, or even larger companies trying to buy you.

 

 

I never had to work with a company entering the FTSE 100...there's more criteria and there's paperwork I've never even seen.

 

But I did work with Mergers & Acquisitions.  M&A is when companies buy one another.  GW is probably safe from that for now.

 

Disclaimer: I never, ever got anyone fired...afaik.  I helped small tech startups that would've probably otherwise folded join large companies.  Those small companies were basically a small group of smart people, to fire anyone of them would be to burn the very company they bought down.

 

When you enter the FTSE 100, your share price will probably shoot up because of that increased visibility.

 

From a M&A perspective, that's the WORST time to buy...too expensive, and everyone knows it's too expensive.  You want to have done it before.  I was actually right here, in the News & Rumour page, when I broke my own code and recommended a Buy on GW stock (I didn't work in Equities, I shouldn't have done that.)

 

That was right when GW finally showed a sudden uptick after AoS General's Handbook came out with the Season of War campaign, right around the time of the Gathering Storm, Cadia was JUST falling.  Stock price was still low, the market took like 2 or 3 weeks to notice...then GW's share price has been shooting up ever since.

 

On the other hand, that's when other companies and bankers might take notice, like a big US megacorp.

 

Technically, investment bankers like what I used to be do want companies to buy expensive things, because our renumeration is based on commission from loans based on how big it is.  But it's also a harder sell.  We'd probably go for an easier sale regardless.  There's also a years lead-lag with big deals.

 

However, you can make a case that NOW is their most vulnerable time, GW got a lot more visibility RIGHT BEFORE they enter the FTSE 100.

 

Basically, if I were still doing M&A, I would've reached out to GW around the time of 8th ed, a deal would already be in the works.  The irony is, especially back in the bad times, before AoS's launch GW would've been below my notice.  I actually got politely admonished for looking at companies of "only" £100 million revenue.

 

The issue now is investment banks would reach out to GW, see if GW wants to buy out other companies.

 

+++ BOTTOM LINE +++

 

 

The FTSE 100 means GW itself is getting more visibility.  It's not fame because there's no glamour to it.  And there's good and bad to it.
 

But to be continued...

 

No, seriously, Rick Priestley revealed something recently which is strangely relevant to this.  I'll be posting in Amicus soon enough.

 

Remember, this surge is coming from Space Marine II.  They're not releasing a Space Marine III any time soon.  I'll talk about that soon.

 

Edited December 5, 2024 by N1SB

[Mithrilforge]

I think the Video game players of SM2 that aren't Gamers that go in a store will get a bit of a shock.... Video games are generally a set price, everyone agrees that it's an ok buy in price,

GW plastic toys is a way different price bracket...  they will most likely think that's way too expensive!!   (and honestly they would be right...)

 

 

M

[N1SB]

54 minutes ago, MithrilForge said:

I think the Video game players of SM2 that aren't Gamers that go in a store will get a bit of a shock.... Video games are generally a set price, everyone agrees that it's an ok buy in price,

GW plastic toys is a way different price bracket...  they will most likely think that's way too expensive!!   (and honestly they would be right...)

 

 

M

 

EXACTLY this.  Sheer sticker shock.

 

How many times have you recommended Warhammer to a video gamer friend, only for everyone to be disappointed, because of prices?

 

When I was a kid, a Nintendo game was priced at US$40, like all of them were, it was a standard price point.  Now, it's like $60.  Number's higher, but with inflation...it's actually cheaper (should be $80), and that's assuming I don't get games for exactly $0 every week off of Epic.  All of you understand all this.

 

Here's a huge problem in the video game industry.  The cost to develop games increased exponential.  This doesn't get talked about.

 

The cost to make something like Fallout 1 was iirc around US$3 million.  How much does it cost now?  About a quarter billion, basically 80x.  Yes, there are more video gamers in the world, and price went up about 50%, but costs are up 8,000%.  This is the cause of all the things we hate, the microtransactions, the drop in quality, etc.

 

(Most industries, production costs go DOWN as technology advances.  With video games, costs go UP...because as technology advances, graphics become movie quality, now you have Hollywood actors to play NPCs, all these costs add up to developmental costs of US$250 million.  No wonder they talk about AI.)

 

A video game player expects that the price of a video game should cover the miniatures and rules; that's what he's used to.  Like he's not getting into full 40k, fine; here's a Space Marine Kill Team for exactly US$59.99 or something.  I just looked it up, the Phobos Kill Team is $75.00, before the rules, the paints, the brushes, etc.

 

(The Titus starter set with the gaunts, with paints and a brush, was US$65, I think.  That's the right direction, just wish it was 3 Marines.)

 

But a video game player is used to DLCs, microtransactions, the nickels & diming.  But how about an Amazon streaming customer?  Prolly not.

 

+++

 

And there has been a precedent...the launch of the original Lord of the Rings trilogy, that's what I'll talk about soon.

 

But also remember this uptick in the share price is really a reaction from the pure profit licensing revenue from royalties.  You're not getting a Space Marine video game every year, it's gonna get another burst from Christmas sales, so this year GW will look really good, the share price is reflecting that.  But no one should expect that every year...the share price doesn't seem to take that into account, I think it's only looking at this half-year's high performance.  Please take note if someone asks your opinion.

Edited December 5, 2024 by N1SB

[Stitch5000]

5 hours ago, MithrilForge said:

I think the Video game players of SM2 that aren't Gamers that go in a store will get a bit of a shock.... Video games are generally a set price, everyone agrees that it's an ok buy in price,

GW plastic toys is a way different price bracket...  they will most likely think that's way too expensive!!   (and honestly they would be right...)

 

 

M

I actually think people that AREN'T exposed to the hobby are probably less likely to be shocked, or if they are, probably more likely to get over it quickly and rationalise their expense. 

Other hobbies ARE expensive and much of the time the cost is on consumables or intangibles. 



Golf, you are looking at £400-500 for a entry level set of clubs (with additional ancillaries required) and £50 every time you play on top of fuel expenses.

Cycling, depending on discipline you are looking at £2000 for a starter bike (literally add another zero at the end if you so wish). A day at a venue costs £80 just to get in.

Paintball, £500 for a marker. Probably £250 almost that much every weekend you want to play.

Cars... Don't get me started. Going to the pub... Yep.