Frontier Developments (LSE:FDEV) Q4 2026 Earnings Call

0:01 OK, why don't we get started then? So thanks everyone for joining us for this FY26 financial results presentation. If you could please all turn your cameras off and go on mute. We'll have a Q&A session at the end where you can unmute and ask your question. So let's just flick over Tom please to the agenda. So first of all, we'll do a bit of a leadership recap and update. Joel then take us through Her core focus areas and a reminder on the strategy. We'll then talk about the financials and then come back and talk about our games, both the current franchises and the future games. And then we'll have a quick wrap up and then move to questions.

0:46 So starting with the leadership section. So I think as everyone knows we've had quite a change in leadership over the last 12 months. In June 2025 we established an executive board to lead the next phase of Frontier's evolution. Joe joined us as CMO in August 2025. Johnny decided to step down after some 27 years at Frontier, so I think he'd certainly done his stint at Frontier by then. and the obvious successor there was Joe to step up into that role. So Joe, do you want to take over from that timeline point? Yeah, sure. Thanks, Alex. Well, for those who don't know me, I started working in the games industry over 35 years ago, and this is not my first time in Frontier.

1:34 I originally joined the business to establish the publishing team to launch Elite Dangerous and Planet Coaster, and I returned in 2025 as CMO. because I believed really strongly in both the quality of our franchises and the potential of the CMS strategy that was being put in place. So following Johnny's departure earlier this year, I was delighted to step into the CEO role and lead Frontier into its next phase of growth. Hired a new CMO to bolster the exec board in Dan Lazaridis. And importantly, this is not meant to change in strategic direction. of our confidence. The confidence in the future direction of management has given David Braben the confidence to step down and take a non-executive advisory position, and we welcome him to our corporate board.

2:24 The CMS strategy established over the last few years is working, and our fiscal 26 results demonstrate that clearly. We have delivered record profitability, strong revenue growth and significant cash generation. My focus since returning has been on building on that foundation by placing even greater emphasis on our players and on the long-term nurturing of our games and our franchises. We know the greatest value in our business comes from creating games and franchises that players engage with for many years, not just at launch. By listening closely to our communities, using player data more effectively, and delivering a constant cadence of updates, expansions, and premium content, We can somebody mute the whoever is not on mute. Would you mind going on mute?

3:14 Thank you, appreciate it. Using player data more effectively, delivering a consistent cadence of updates, expansions and premium content, we can increase engagement, improve retention and maximize lifetime value. This player first approach now sits at the heart of everything we do. It informs how we develop games, how we invest in content, how we prioritize our roadmap and how we create long-term shareholder value. We have exceptional talent across Frontier, a growing portfolio of world-class CMS franchises, a strong balance sheet and a clear strategy. And this makes me really excited about the opportunities ahead. So strategy and focus, if you move on, thank you. Our strategy remains clear and highly focused.

4:01 We're strengthening Frontier's position as a global leader in creative management sim games by putting players first, nurturing existing franchises and building the next generation of CMS experiences through new game launches. We will continue nurturing our existing games through regular updates, expansions and premium downloadable content. We'll deepen our understanding of player behavior so that we can better deliver better experiences, improve retention and increase engagement across our portfolio. We'll continue growing our CMS portfolio through both established franchises and new intellectual property, and we'll continue investing in Cobra, which is our proprietary technology platform That provides us with a clear competitive advantage, enables us to deliver increasingly sophisticated CMS experiences efficiently and at scale. And finally, we will continue investing in our people, retaining key talent and developing future expertise through our graduate programme.

5:07 FY26 demonstrates not only a strong growth but a fundamentally lower risk business model for us. Alex will talk further about the numbers, but you can see on this slide that FY26 has been a good year for Frontier. These results have been delivered by proven CMS franchises, recurring nurture revenue and disciplined execution. We're increasingly becoming a business that is driven by long term franchise economics. And looking ahead, we have an excellent roadmap. Planet Zoo 2 launches next month. Warhammer 40k Chaos Gate Death Watch is scheduled for fiscal year 27. We've already talked about and announced a brand new planet franchise title, and that's planned for fiscal year 28. Beyond that, we remain committed to an average cadence of one CMS title a year.

5:56 And we have announced our exciting partnership with Disney last week, and that represents a significant milestone in our growth strategy moving forward. Over to you, Alex. So a little bit more on the numbers there. I'm sure you've all read the statement already, but delighted with that revenue performance driven by the success of Jurassic World 3, but also the rest of the portfolio doing very well. And Joe will talk a bit more about the current franchises in a few minutes on some of the other slides, but really pleased to get to just under 105 million. That's our second high ever revenue number. So great performance. On gross profit margin, as you all know, I think that tends to vary based on how much we have in terms of licensed IP games versus own IP games.

6:44 With the success there of Jurassic World Evolution 3, gross margin has just ticked down a few points to just under 67%. Looking ahead to this year where we have financial 27, we have Planet Zoo 2 as the big release. We expect that number to come back up maybe to 68%, something like that. gross operating costs so this is an adjusted income statement not an IFRS income statement so we ignore any Capitalization, amortization, share charges, any of the non-cash accounting charges are excluded from here. So this is gross operating costs on a cash basis effectively. Now we only increased by 3% year on year, so we're continuing to exhibit very strong cost control. Having said that, we are growing a little bit on the headcount, cautiously. We are investing in a few other areas to expand our franchises as well. In fact, the biggest cost increase year on year was the profit related bonus because we have an all staff profit share scheme and given the strong profitability, pretty much all of that increase year on year is driven by that increase in bonus.

7:52 So 62.5 on a gross OPEX basis for financial 26, probably looking at mid 60s, I would say for FY27 as we just start this financial year. Next line is tax credits on this adjusted income statement basis. We account for tax credits and tax reliefs directly in the year when the expenditure is incurred. Now that's a bit different from IFRS accounting in terms of both the location and the timing of those and I don't want to get too much into IFRS accounting in this presentation today because I know Joe might fall asleep so we'll focus here very much on the adjusted income statement basis and you can see that the very substantial tick up year on year I'm going to talk about this on a slide coming up so park it for now but 12.8 obviously very significant in generating that adjusted profit number at the bottom within other operating income In last year's number that 3.9 relates to selling publishing rights for Foundry game in FY26 towards the start of this financial year last financial year in FY26 we have started to sublet the ground floor of the building so that is all the sublet income that we have coming through and we expect that therefore a similar number to come back into FY27 as well So adding all that through from gross profit, deduct the gross OPEX, and then add back tax credits and the other operating income, we get a record adjusted operating profit of 21.4, just over 20% profit margin.

9:20 So really delighted with that performance, really strong set of numbers. Tom, if you could flick on to the next slide. So a bit more here on tax. I know Joe loves talking about tax, so we'll spend a few minutes on this. So we've benefited from a long time from video games schemes in the UK. People probably know video games tax relief as being the most established one there. That is transitioning to something called video games expenditure credits. Now the accounting for those is a bit different. and I'm not going to get into that on this slide. This slide represents the effective benefit we get in the financial year against the expenditure that we incur. And so you can see there that although VGR has ticked down because of that transition, VJEC is very substantial. Now some of that relates to some prior year adjustments because we were Uncertain about that transition from one scheme to the other.

10:18 We were pretty prudent in the prior year. So about 2.3 million of the VJEC number actually comes from a prior year adjustment. So if you strip that out, we're probably looking like a normalised number in FY26 across all four of these schemes of something like 10.5 million. Now that's a bit higher than we would normally expect. There's a couple of differences there. One is that we can get a full benefit for the IP costs where we couldn't under VGTR now that means that we can get a credit back for royalties that we have with Universal for Jurassic for instance and in the year because of that strong success with Jurassic World Evolution 3 that really helped us quite a lot so I know that people will ask later on on the questions about you know what do you expect going forward so Probably just head it off here.

11:07 We're probably looking at 8 to 9 million pounds of total tax credits and reliefs on an adjusted op basis in FY27. So not quite as strong as the 12.8 but as I said some of that did include a prior year adjustment. There's one other thing to note at the bottom here. is in addition to that prior year adjustment we have this one-off transitional credit 4.4 million pounds now that relates to how the legislation was drafted by HMRC so again we weren't sure whether we were going to get this we claimed it and we've actually received the cash now into our bank account As part of the reason that the cash ticked up to just over 50 million pounds at the end of August. So we've excluded that from the calculation of adjusted profit because you know is one off in nature.

11:54 But it has helped with the IFRS numbers and that's part of the reason you see such a strong growth in the IFRS operating profit. OK I think that's enough on tax for now. Hopefully we'll get some questions on it later. On cash flow, so this is a cash bridge from start to finish. Fairly straightforward because the adjusted operating profit measure is a pretty good proxy for free cash flow. You can see that 21.4 flows straight through a little bit of working capital difference. Sorry, Tom, the slides keep coming in and out. I don't know whether that's something you're up to them. and then we had pretty significant investment in our own shares. So share buybacks were 15.5 and then we had EBT share purchases as well.

12:40 So closing balance was 44 million. And if you go to the next slide, please, Tom, we'll talk a bit more about that capital allocation strategy. So clearly, first priority for us is investing sensibly in the business. As I said earlier, we are cautiously growing headcount. We have some other areas to invest in as well. But I'm not expecting any real significant tick up in the operating costs for the business. We already have a very strong balance sheet and with over 50 million pounds clearly it's strengthened even more. So then the third bullet there returning surplus capital to shareholders where appropriate. We certainly think that the buybacks benefits people in the long term. We still believe our valuation is very low given our performance, our strong balance sheet and the prospects that we have going forward.

13:30 So we've invested so far 20.5 since the 1st of June, including the share buybacks and EBT purchase. And we would expect that buybacks would feature within FY27. We'll be renewing the authority at the AGM in October. But as I said, you know, we really do believe we're significantly undervalued and it makes sense, therefore, to use that surplus cash to do those buybacks. Then the last point here, special dividends. So this is, I think, the first time that Frontier has ever paid a dividend out. dividend out, certainly since we've been a public listed company, really reflects the confidence that we have, the very strong financial position and the record financial performance. We also have that kind of windfall one off from HMRC of 4.4 million. So it pretty much covers that.

14:19 So we're going to be processing this over the next few weeks. And I think the payment date is early October. So nice to be declaring a special dividend of 5 million. I think it's about 14 pence per share. Okay, I think that's me done. I'll pass back to Jo to talk about our franchises in a bit more detail. Thanks, Alex. So one of Frontier's greatest strengths today is the maturity and the quality of our franchise portfolio, which you can see here. Across our major franchises, we've generated hundreds of millions of pounds in lifetime revenue, sold millions of units and delivered dozens of content releases over many years. Importantly, this revenue has not been generated solely at launch. It's been generated through effective nurturing. through premium content, platform releases, promotions and ongoing player engagement.

15:08 We've built recurring revenue streams in a more resilient business model. This means we have a lower dependency on individual launches and better visibility of future cash generation. And the scale of engagement in our games is absolutely extraordinary. In Planet Coaster alone, Planet Coaster 2 alone, players have laid more than 23 billion kilometers of tracks, which is enough actually to travel to the moon and back almost 30,000 times. And they've also placed more than 260 million items in game in the last six months, which shows the resilience and the demonstration of the creative engagement and longevity that CMS games can deliver. So if you go to the next slide, please. Driving this slide captures how we think about long term value creation.

15:57 So everything begins with creating market-leading CMS titles, CMS games. From there, we grow audiences, retain players, deepen engagement through content, and continually optimize lifetime profitability. Our future portfolio combines two complementary growth areas. The first is our own IP strategy. That's the Planet brand. And we'll continue to make Planet games in the future and grow that brand further. The second is our licensed IP strategy, which now includes Disney alongside Jurassic World. And beyond these confirmed games that we have, we plan to further expand our own IP portfolio and our licensed IP portfolio. Each new franchise expands our ecosystem, and creates additional opportunities for nurture, cross-sell, PDLC, and monetization.

16:49 Over time, this broadens our revenue base, increases diversification, and reduces risk. And this is how we intend to deliver sustainable long-term growth. The success of this strategy can be seen in this revenue mix. So CMS Games represent 89% of revenue in fiscal year 26. That's up from 77% in the previous year. Revenue from CMS titles increased 34% year-on-year. Jurassic World Evolution was the largest contributor, but Planet Zoo and Planet Coaster both contributed to make substantial differences to this number. What this demonstrates is the growing strength of our highest performing franchises and validates our strategic focus on CMS.

17:35 And when we talk about nurturing, this also translates into risk reduction and value creation. Successful CMS franchises do not behave like traditional hit-driven games. We attract players, we retain them for years, we deepen engagement through content and continue monetizing through expansions, PDLC, platform launches, and further promotions to get new audiences in. Each additional year that a franchise remains healthy, extends the return on our original development investment. The result is a more predictable revenue model with strong lifecycle economics. This is one of the core reasons our CMS strategy is delivering such strong financial performance. And then this chart shows why we have such confidence in our strategy.

18:20 The majority of value generated by our franchises comes after launch, not at launch. Significant value comes at launch, but the majority comes later. Planet Coast, Planet Zoo and Jurassic World Evolution have all generated substantial revenue over many years through content support and ongoing player engagement. This significantly reduces dependencies on launch performance and extends the revenue and growth opportunities for every franchise. We believe future CMS releases can and will follow a similar long-term trajectory. And this next chart shows an even better picture. how nurture compounds cash returns over time. Development costs are incurred upfront, but successful franchises continue generating attractive cash flow for many years afterwards.

19:07 And this creates stronger return on capital, greater financial flexibility and a lower risk investment model. Put simply, successful nurture increases both profitability and predictability. And let's see this with a couple of our games. So Planet Zoo is one of the clearest examples of our nurture strategy in action. More than six years after launch, the franchise continues to attract players, generate revenue and deliver exceptional returns. And if you think about year one, we generated revenues of 40 million. and now the franchise has generated revenues of 161 million. That's very evident. Across PC, PlayStation and Xbox, we've now delivered 21 PDLC releases. The franchise has generated 404% return on investment, while PDLC now represents 45% of total franchise revenue. And our community remains engaged and we're getting new players into the franchise every day.

20:05 In the past month alone, over a million players were playing Planet Zoo and this performance gives us significant confidence as we prepare for the launch of Planet Zoo 2. On the next slide, Jurassic World Evolution franchise remains one of the strongest licensed franchises in the whole management sim category. Across three games, 23 PDLC releases, the franchise has reached almost 20 million players globally. Importantly, each successive title benefits from the audience expertise and infrastructure built by previous releases, and that helps reduce the risk while increasing potential future returns. Players have placed more than 1 billion buildings across the franchise. And maybe not surprisingly for Jurassic World, more than 63 million park guests have been eaten in Jurassic World Evolution 3, including over 18 million Velociraptors alone. These statistics, whilst funny, also highlight the scale and engagement of the audience that we continue to build.

21:07 Next slide. Thank you. So looking ahead, we believe this is the strongest and most stable pipeline in Frontiers history in the near term with Planet Zoo 2 and Chaos Gate Death Watch. In FY28, we'll be adding a new Planet franchise which will bring long-term growth opportunities in the future. And we have longer-term opportunities through Disney and future licensed and own IP development. Combined with our nurture program, this gives us multiple opportunities for growth. The strategic reset implemented in 2023 and 2024 has transformed Frontier into a focused CMS franchise business, delivering record financial performance. We've demonstrated that our games and franchises can generate meaningful revenue and cash flow for many years beyond launch through disciplined nurturing and content support. And we now have stronger profitability, stronger cash generation and a significantly lower operating model.

22:05 We have proven franchises an expanding player ecosystem, a disciplined release cadence and a strong balance sheet and exciting future opportunities, including Disney. We're becoming a franchise led CMS business where nurture recurring revenues and lifestyle lifecycle management reduce risk while demonstrating long term growth. And I personally feel positive and very confident for the coming years ahead. So with that, we'll open up to questions. Thanks, Joe. If you could put your hand up if you've got a question, please. And we'll start with Andrew Renton.

22:45 Good morning, both. Thank you. Great set of results. So yeah, a few from me. Any ideas on how pre-orders are going for Planet Zoo 2 versus Planet Zoo 1? and then anything around sort of revenue mix between Deathwatch and Planet Zoo 2. Anything on that? And then also if you could give us an idea just on the development costs for a new franchise versus a follow-on game. Okay, so maybe I'll tackle those. So do we have any numbers on pre-orders for Planet Zoo 2? The answer is yes, of course we do.

23:30 I think we'll just say, you know, we're feeling good about that launch. It's coming together really well. There's an event coming up this weekend, which will be very important. So we're comfortable with where we are right now. I don't think we did. Yeah, I don't think we did pre-orders with Planet Zoo. But after such a long period of time, that wouldn't be a measurement for us to share, to compare one to the other anyway. Pre-orders for Planet Zoo 2, yes, are very, very positive. And this weekend, we're doing a very similar event to the event that we did for JWE3 last year, where we've got our major stakeholders of players, influencers, press, all coming together at Chester Zoo to play a couple of hours of the game. So we'll see how they enjoy it.

24:21 We're very happy with the game itself. So it's going to be great validation. seeing them play the game. On the second question on revenue mix, certainly between the two launches, certainly Planet Zoo 2 is a good one you know that's the big CMS because we're very focused on CMS so we're looking for that one to do certainly more than the the first game did you know it's going to be multi-platform the first game was PC only so we're looking for you know 30 million plus I would say would be would be a good number it's got potential for more but that sort of range I think in the analyst numbers people are maybe you know sensibly being a bit cautious maybe 25 million or something.

25:06 The Chaos Gate game Death Watch is a smaller game it's coming out later in the year so that's probably more in the maybe a 5 to 10 million revenue contribution in this financial year. It's coming together really well, the game's looking good, but just naturally, you know, the budget for that is smaller, it's a smaller audience. And then on dev costs, we've talked about this quite a lot on calls before about the range of outcomes. We've had quite a lot of differences over the few years with the different franchises. For Manet Zoo 2, we're probably looking at a dev budget of somewhere around 17 million. so it has been a bit more and part of that is making sure we really uh put a lot of investment into the into the animals you know the stars of the show um so we've gone again on pretty much all of the animal tech and you'll see that when you when the game launches and you see the behavior uh and uh you know the visuals for those animals um so i think a a normal CMS may be going forward probably around that level maybe a bit lower sort of the 13 to 15 million mark I would say the Disney game probably more like 20 million you know that's a very substantial opportunity and you know we want to make sure we we put our backs into that and put some some costs behind it and make it a really good game

26:26 And then just finally, just on, you know, an entirely new CMS franchise, is that is that significantly different to follow on game in a previous franchise? I'll take that if you want. So we with a new franchise, we've obviously look at the size of that market would probably spend a little less on the first iteration of it, because we want to make sure that we can grow an audience in that space. and then subsequent ones will no doubt have greater investment if it grows. So we're very confident in introducing new planet franchises into our portfolio because that gives us years to come of growth. That's great. Thank you. Thanks, Andrew. Katie, over to you.

27:15 Thank you. Good morning. Good morning. Can you add any guidance around the capitalisation rate obviously fallen to 66% this year and how should we think about that as you work your way through the pipeline and then just on surplus cash obviously it's great that you're declaring the special dividend and talk about further buybacks but how should we think of what defines surplus cash at Frontier and how much do you need for Investment and then finally just on the Disney game. I know it's fully funded by you guys, but should we expect marketing help from Disney? Are they going to be able to advertise in on the streaming service in their parks or exhibitions and the likes? Just the way we kind of got the film release help with the Jurassic games in the past. So anything around that that you could share?

28:17 Thank you. Well, I'll start on that one and just talk about the Disney game for a moment. Disney are no strangers to having IP partners and they have a great program for shared marketing opportunities. They also have many, many different assets that you can use in order to be able to do that. So we anticipate good partnership with Disney going forward and we'll take every opportunity we can to reach wider Disney audience. Yeah, I think just to add that on the sort of contractual side, the deals we tend to do are always based on us producing a game and then publishing that game. I don't think in any of the agreements that we've had, there is an obligation for the party to sort of support us. But generally, we have got good support.

29:06 But just so you're aware, it's not like a contractual thing. It just makes sense for them because, of course, they're getting a royalty. So the more they push the game, the more they're going to benefit. The first question you had was on capitalisation rate, proper finance question, thank you very much. So just a reminder for anyone on the call, we tend to capitalise game developments once they're into proper production, so past the pre-production and scoping phase, entering production. The rate was relatively low, I suppose. We've had anything between 70% and 80% in the past, only 66%. Part of that is our decision to stop capitalising any content for Planet Coaster 2. Now we put a lot of effort into free content. Of course, that means we're expending that even where we've started to develop paid content.

29:52 We're not capitalizing that based on that initial initial performance. So that's sort of moved us down a bit. The other thing in the year was the development for the new planet game. So because we really want to make sure we invest sensibly and get that right. We've had quite a long pre-production phase and that means we haven't started capitalization. So I think probably for this financial year we just started now we'll have a similar rate I think you know in the 60 to 65% bracket. I would have thought we're continuing to support Planet Coaster 2 as you've seen and you know we're really pleased with the results for that.

30:37 Some good PDLC responses that we've seen there. The game for 28 is now into full production. So we start capitalizing that but then the obviously Disney with which we just signed is in pre-production so that that game will be won't start to capitalize that yet. Hopefully that answers your question Katie and the second. Well, the second one you had was on surplus cash. I certainly think we don't really need too much more than say 20 million. We have a bit of working capital flow around big launches. We'll tend to build up big receivables and then the game launches and then we collect that cash in. But certainly 50 million is pretty substantial for us.

31:26 I'd get a bit nervous if we were getting back to below 20 million. We're limited as to what we can do on the buybacks. There's a sort of 10% limit on that. So I think we will be looking to do buybacks again. I've seen today the share prices ticked up a little bit. But when you consider that we made adjusted up profit of over 20 million and you look at the enterprise value, take off the cash number, the multiple is really low. So I think it makes sense to keep going with those programs. Thanks, Katie. Over to Oli. Hi guys, I know you briefly touched on it, but in terms of framing a new franchise, how does it differ in terms of market scoping and assessing your target market? And how much have you looked at the existing Frontier player base?

32:20 I know you have quite good cross-sell in terms of a player will buy two or three of your games, multiple games. But how much are you targeting that existing base for that franchise? And how much are you looking to bring in new players? Because I guess anyone new you bring in, you then have a chance to cross-sell your existing games too as well. Exactly. So CMS is quite broad, you know, content and management. So people behave differently and look for different kind of gameplay styles. What we do, though, is we start with the CMS audience as a whole. So that's everything from creative stuff right the way through to tycoon and look where the opportunities are there. Within that, we'll then look at what the subject matter might be and start looking at not just our player data, but players within those interest areas and look at their affinity titles.

33:09 There are a whole load of different places where we can go now to look at Steam data, to look at other data, and we do our own research. So in doing that, we get a sense of where the interest might lie, within the audience that we know will buy a CMS game and where that might be. Is it a more management style game? Is it more creative style game? And then we'll think about how we layer the commonalities across all our games so that we get that crossover from our games. The key is for us, we don't want to cannibalize our own audience, but we do want to bring new audiences in. And every time we introduce a new subject matter, It brings new audiences in and it gets people into our ecosystem. Our price promotions do the same.

33:56 So we've got Planet Zoo players now who've probably bought at 90, 95% discount. There'll be future players for Planet Zoo too. There'll be future players for our new franchises that we launch. So we look across that whole area and we kind of create a continuum of interest from highly engaged players through to they may be possibly interested in the subject matter will target them at different stages during the life cycle of that game. Brilliant, thank you. Excellent. Sean's up next. Hi Sean. Hi morning Alex morning Joe sorry I don't think my camera's quite working a bit of an issue with that um thank you for taking questions I've got just two if that's all right um are you still so I think last year you announced Planet Zoo 2 around November time do we is is that a reasonable time frame to expect announcement for the FY28 game and then secondly Alex I know you wanted some questions on tax so here's one for you um good I know you've been able to offset the Jurassic licensing costs with the with with or that you can get get a tax credit towards that.

35:18 Do you expect that to be the same for the Disney IP licensing cost? And then relating to that, I know you won't disclose exact commercials on the on the partnership with Disney, but would it be fair to assume that the gross margin or the Disney game should probably be a similar sort of level to Jurassic? or could there be any differences from there? I'll take the first question then. So announcing in November, probably not because we want to give Planet Zoo its space because people will be very excited about the next game. So we'll wait probably until around about January, I would think. Who knows? We might change our mind on that, but I think it's more likely to be January than November. I think that one thing to add there is for those people that have followed us for a few years, we tended to always have a ta-da moment. You know, we'd keep very quiet and then start the launch campaign.

36:10 And something that Joe encouraged us to do, and I think has worked really well, is to call things out much earlier. because then we get the player feedback. It actually worked very well for Jurassic. We think it's going to work well for Zoo as well. So gathering up that feedback from players because we think we know what players want, but actually them telling us is really very valuable and it helps the dev teams if we can do that early. I will say, though, with that game, the unannounced Planet game, we have already started testing it with players. So we've been getting feedback. and introducing it behind closed doors. So that will help with that process. Second question was about tax and licensing costs.

36:55 And yes, we do expect that the IP royalties that we can claim at the moment with Universal, they would extend to Disney as well. So there's some real benefit from the transition from VGTR to video game expenditure credits. And you asked about the commercial terms. Most of the agreements that we've done with licensed partners have tended to be similar in the sort of 10 to 20% of net revenue in terms of royalties. So, you know, midpoint of around 15%. So I'd say that that's a pretty good expectation going forward. So it's not on the gross revenue. It's that sort of 10 to 20% rate is applied after deducting Steam Commission and Microsoft and PlayStation Commissions.

37:44 Thank you very much.

37:45 Thanks, Sean. Well.

37:51 Morning, thanks very much for the presentation. One, just on platforms, sort of relationships with platforms, particularly ahead of the Planet Zoo 2 release. When can we expect a deal potentially and the feedback you've been getting there? Secondly, just in terms of, we've spoken a lot about CMS games, but obviously you have Elite Dangerous within the portfolio. How does that fit in in terms of sort of the medium term plans? Will you continue to invest in in that game? And then finally, I think you should call it out on slide for just about, you know, investing more into technology and your engine in Cobra. Wondering if you could just expand that a little bit more and then particularly around, you know, how you're integrating things like AI into the business.

38:40 Yeah. Okay. Why don't I start with Cobra then, as I'm thinking about it when you say it. So our Cobra platform, it's It's been specifically designed to support our course runs. So to help us create deep simulation games, it's very effective at handling large amounts of interacting systems, which is how we do our piece by piece. And it also works incredibly well for Elite Dangerous for the same reason when you're talking about, you know, billions of star systems. In terms of continuing investing in it, what I think we're going to be looking at now is finessing some of the tools, making sure that we have a strong tool chain running all the way through, improving the way that we can get people using it more quickly, because we want our graduates to all become COBRA specialists very, very quickly, and optimising its core performance overall. That helps us across using it across different games.

39:46 So what we do in one game, then we can move to the other. And so it's always iterating all the way through, which is actually an advantage of using our own engine. Because if you're using a non-proprietary engine, you're not in a position necessarily to iterate each time with every game. You're waiting for them to iterate the engine. So it's very helpful for us to do that. In terms of AI, AI for us is we're thinking about it, not from a creative point of view. And I think we've had these conversations before on these calls. It's around efficiencies and what we can do to use it to drive efficiencies. So we are looking at it and we are thinking about how that works.

40:31 AI is really good in operational efficiencies and that's the area that I think we'll be seeing what we can do to integrate it into our overall corporate systems. As for the engine, that's one for us to discuss at a later date. And we'll probably, if anybody's coming to our Capital Markets Day later at the beginning of next year, we'll talk about Cobra a lot more in more detail and get some of the team along to explain in much more fluency than I do on our engine. Just while I'm talking, I'll just mention Elite. Elite continues to grow its revenues for us. It sits, yes, it sits outside of our CMS strategy, but it is a very special part of our business.

41:21 And I think the brand equity of Elite is baked into Frontiers history. As long as Elite continues to, we're able to monetize it and make sure that we can continue to support it, we will. And we're looking at all sorts of things that we can do with Elite that will continue to grow the franchise. I think the first bit of the question was around platforms as well and relationships. I think it's fair to say that Joey had an extremely positive gamescom. The platforms are very excited about the roadmap. So we've got great potential with the platforms there. Yeah.

42:07 and then that was it. Okay, let's see anyone else got a burning question about tax credits. I mean there are some great tax slides at the back of the deck if anyone wants to take a look at those.

42:26 No, still no questions. Okay, well thank you everyone for making the time. Great to have you on board. on the call. If anyone has follow ups, feel free to reach out. We've got some time during the schedule. So thank you very much. Thank you, everybody.