The market seems to have liked the AGM update -- most likely due to the guidance upgrade noted by @Strawman. No disagreements here. I would say however that their most recent reporting (Q1) provided some insight into their possible revenue run rate, with 15.5m reported revenue, so I am not particularly surprised. Re: the guidance, they are either being conservative with their estimates (I am a big fan of this, the market is punishing companies for failing to meet this at the moment) or we are likely seeing the DWTD franchise performing above expectations. I think it is a bit of both.
I think discussion around staff numbers is a fair one. That said, I appreciate management transparently indicating that scaling up operations has been challenging. They could quite easily report fluffy figures they think the market wants to hear, with the same commentary, but they don't shy away from the difficulties with being a growing company. Fair play to them. In short, I have been really impressed with the Gerry and the board more broadly. They had some big decisions to make months ago, pivoting away from a theme that was previously popular, but no longer was -- they could have very easily doubled down or funnelled capital into relevant projects knowing full well they were unlikely to be successful.
Perhaps famous last words, but I don't anticipate staff costs will rise significantly (on numbers already reported). They had 290 staff as of Q1, with the company suggesting they were appropriately resourced. That said, they also indicated they would opportunistically add talent, a strong position to be in, noting there have been significant layoffs in the gaming industry more broadly i.e. high quality staff were losing their jobs elsewhere, providing some opportunity for Playside who themselves have a strong balance sheet.
With 290 staff in Q1, and staff costs 8.1m during the quarter, we shouldn't be looking at a significant increase on this figure in the next quarterly. There have been 10 staff hired since this point, with my calculations suggesting they pay most of their staff just under 100k a year. Perhaps we need to be conservative re: the Q1 figure, noting new staff may have arrived in that time that aren't included in the full quarter staff costs. That said, I am reasonably confident staff costs won't exceed 10-11m per quarter -- as things stand, anyway. This will take FY24 staff costs to somewhere around 35-40m at a guess, vs FY23s 24m. This is a significant increase, but this is also a company with a strong growth runaway ahead of it in multiple segments. As we have seen, they only need one game to perform well to see impressive organic growth. As it stands they are currently funding their growth, and with more than 30m on the balance sheet, they have some breathing room. Also, the new head office will cost 375k plus GST, so no significant expense there.
I thought this comment from Gerry was interesting:
'I want to take this opportunity to confirm to our investors that the business is in the strongest position it has ever been - both financially and in terms of the opportunities that lay in front of us - and we have a very clear plan in place to create value for shareholders over the medium-term'.
Like Gerry, I think they have enormous potential provided they keep their feet on the ground. I also don't think the current valuation takes into account their publishing division, which could grow to be a strong segment in its own right as they mature as a company.