2023 proved a tough year for Lego Bricktales maker Thunderful with financial results revealing a net loss of SEK 609.4 million ($59.2 million) across the year with a 574% decrease in operating profit through Q4 alone.
The challenging year has led to a new restructuring programme, increasingly common in the games industry in recent years, and ultimately layoffs. Thunderful has already started implementing the restructure and plans to let go of 20% of its workforce in the first half of 2024 as a cost-cutting measure, the financial impacts of which are expected to be seen in H2.
Troubling 2023
Thunderful’s key performance indicators were overall negative in 2023, with revenue, profit, adjusted EBITDA, and earnings per share all down - the latter by a huge 604.1%; earnings per share were SEK 1.72 ($0.17) in the 2022 fiscal year, but fell to SEK -8.67 (-$0.84) in 2023.
While net revenue only fell by 4.6%, from SEK 2.95 billion ($286 million) to SEK 2.82 billion ($274 million), Thunderful’s expenses become apparent when looking at its profits: they declined from SEK 121.2 million ($11.8 million) in 2022 to SEK -609.4 million (-$59 million) in 2023, falling into the red.
Adjusted EBITDA fell 35.6% from SEK 375.6 million ($36.5 million) to SEK 241.9 million ($23.5 million).
However, one of few wins was made by Thunderful’s subsidiary Bergsala, a Swedish distributor of Nintendo games; successful new title launches in the Mario and Zelda franchises led Bergsala’s sales to increase in 2023, as is reflected in Nintendo’s IP sales growth. This gave Thunderful a slight boost, though not nearly enough to offset its steep profit fall.
Times are changing
Thunderful’s 20% layoffs amount to approximately 100 employees, all due to lose their jobs in the first half of the year. The company already underwent restructuring in management in 2023 with Martin Walfisz stepping up as CEO almost six months ago.
Then, in December, Claire Boissiere, Harriet Hughes, Kathrin Strangfeld and Sue Smith were all appointed to key executive positions "with more than a century of experience at the highest level" between them.
"During the fourth quarter, Thunderful Group faced challenges in the games segment but saw positive results in Distribution. As part of our restructuring program announced in January 2024, we have taken significant measures, including write-down of goodwill and capitalised development expenditure, which have had a considerable impact on the results reported for the fourth quarter," said Thunderful CEO Martin Walfisz.
"Despite the negative results for 2023, the Group had a positive cash flow from operating activities of over 300 MSEK.
"Performance in the Games segment has been mixed. Although sales of SteamWorld Build in December came in somewhat below our expectations, transactional sales for the portfolio reached their highest level ever.
"When I assumed this role, I did not foresee that we would have to carry out such a thorough restructuring as we have now begun, but there is no doubt that the group will be in a stronger financial position once it is completed."
Of course, Thunderful's mass layoffs are far from an isolated incident. They have become an undesirable norm in the games industry in recent months, with global Gameloft employees among the latest to be affected.
