Sumo Group’s annual results were released this morning and the company is in very good shape, with revenues up 40.7 per cent and EBITDA up 17.1 per cent.
Big results are currently expected for gaming companies, of course, although as we discussed this morning with Sumo Group CEO Carl Cavers, Sumo is “one step removed from both the commercial risk but also the commercial opportunity” that the pandemic presented say publishers.
That said, the business has grown, organically and through acquisitions, and its order book is stacked for the future Cavers told us.
“We announced last September that at that point we had 85% of our revenue secured for that year so basically needing 15% which is normal.” But this year it’s six months ahead on reaching that figure. “We’re already at 85% this year, we’re at 60% for 2022 and we’re at 35% for 2023… so you know we’re in a phenomenally good position.”
Part of that is thanks to the pandemic, Cavers admits he was initially worried about securing business for the future without the usual round of events and in person meetings, but that the opposite proved to be true.
“It was one of our deep concerns initially, although we’ve got a lot of revenue already, years ahead. But because we’ve got such strong partnerships with our clients already… they just doubled down on the relationships they’ve already got, so that helped tremendously.”
Another potential issue was clients allowing sensitive data and even dev kits to be moved to remote working environments. Something that may not have happened had the pandemic not forced everyone’s hand.
“If you’d have asked me before the pandemic, could we work from home? It would have been a no, mainly because our clients wouldn’t let us. We’ve now proved over the last 12 months, we can maintain security and integrity around IP. So hopefully, that will feed into a solution going forward.”
Sumo Group was already making acquisitions before the recent spree, with US-based Pipeworks and Leamington-based Lab42 being the most recent. And it plans to continue to expand in this respect, despite a highly competitive environment.
“Our ability to find good acquisitions,” is the key point Cavers highlights for growth ahead. “The challenge there is that when you find a good acquisition target, they’re already busy, it doesn’t actually solve our pipeline!” He notes that the best developers already have work booked in, so it’s a long term solution rather than a quick fix.
“In terms of acquisitions for us though, we want to remain quite disciplined in what we do, we absolutely believe that being part of something larger is better. That’s partly because most of the projects we work on now need teams of over 200 people at peak and as a small studio, even a smaller studio with 150 people, can’t really fulfil a large game anymore and that’s what people of that size studio want to work on, so being part of something larger gives them that opportunity.
“We’re trying to buy businesses that aren’t in competitive processes so we’re relying on our network and where we’ve been approached by people that recognise that opportunity. We absolutely invest in management teams rather than buying businesses, we want people that are ideally going to stay with the business going forward and help it grow with the synergies we’ve got across the rest of our group.”
And speaking of larger games, we have to discuss Sumo’s recent double BAFTA win for Sackboy: A Big Adventure. With Sumo carrying on its work on the IP from Little Big Planet 3.
“It’s absolutely everything to us. To our businesses, our people, the creative environment and culture that we have. Being recognised in that way, is tremendously important.”
And the strong results are simply an indication of that, he feels.
“They’re great, and we’re really pleased. But ultimately, the results are a reflection of something we’ve always said, we just keep running a good business. And by that I mean making great games. Keeping everybody happy at Sumo and having that right culture, the numbers only happened because of that.”