SoftBank-backed Improbable posts steep losses, higher revenue with updated results

  • SoftBank-backed simulation startup Improbable has posted steep losses and higher revenue growth for the 7 months to 31 December 2019.
  • These new financials come after Improbable shortened its financial period. It earlier posted results for the year to 31 May 2019, showing heavy losses and minimal revenue.
  • Improbable provides software to enable game developers to create giant multiplayer worlds, and has also signed multiple defense contracts during 2020.
  • Visit Business Insider's homepage for more stories.

SoftBank-backed simulation startup Improbable has posted updated financial results for 2019 that indicate heavy losses but stronger revenue growth.

The UK-headquartered startup offers its SpatialOS simulation software to gaming and defense firms. Its big promise is to enable massive, complex multiplayer environments online.

It raised $500 million from SoftBank in 2017, and was valued above $2 billion when it signed a deal with Chinese gaming firm NetEase.

This latest set of results cover the seven months to 31 December 2019, after the company shortened its accounting period. 

The upshot is that there is no direct comparison available for Improbable's newest results against prior years. The firm previously posted its results for the full year to May 31, which it has used as a comparison.

Improbable said the change was a one-off to bring its financial year in line with the calendar year.

Here are the key numbers for the 7 months to 31 December 2019:

  • Revenue up to £10.9 million ($14.9 million). This is not directly comparable, but earlier results for the full year to 31 May 2019 showed just £1.2 million ($1.6 million) in revenue.
  • Operating loss of £60.2 million ($82 million) over the seven months. The earlier results showed an operating loss of £64 million ($87.2 million).
  • Gross profit of £4 million ($5.4 million) over the seven months. The earlier figures covering a year show a gross profit of £290,755 (around $400,000).
  • Research and development spend of £26.5 million ($36.1 million). The earlier results showed spend of £17.4 million ($23.7 million) in the year to 31 May.

The results indicate that despite stronger revenue growth through 2019, Improbable's losses remain steep, thanks to heavy administrative expenses and R&D spend.

The firm says it is still in the early stages of commercializing its software in the gaming and defense industries, and that the bulk of its revenue came from proofs of concept in the US and UK.

A spokesman said in a statement: "Although this period lasted for only seven months, it was a period of considerable activity for Improbable, and featured several significant moves towards our goal of becoming both the company for creators and consumers of multiplayer games and the leader in innovative virtual worlds for defense and national security applications."

As Business Insider has previously reported, not all of Improbable's attempts to persuade external game developers on board have been successful, and 2019 was a tough year in this respect.

Bossa Studios built the multiplayer game "Worlds Adrift" on Improbable's software, but killed it after low traction in May 2019. Another game built by indie studio Spilt Milk, "Lazarus," shuttered in August the same year. And Automaton, a small studio that was developing a game based on Improbable's software, separately collapsed in August 2019.

At the beginning of 2020, Business Insider reported that Improbable had lost its chief financial officer, its chief creative officer, and a top HR exec through 2019. The firm announced a new CFO, former Disney exec Dan Odell, in February 2020.

In its statement, Improbable said it was confident of revenue growth in 2020, and said it had transitioned to remote working through the pandemic without major disruption. The company will post its results for the full-year 2020 in September this year.

It has through 2020 shifted focus to developing games through the three studios it has acquired, such as the upcoming title "Scavengers" by Midwinter Entertainment. Improbable said it anticipated more in-house releases to boost its top line from 2021.

The firm also bought multiplayer developers The Multiplayer Guys in 2019, as well as German game hosting firm Zeuz in 2020.

And Improbable signed two contracts in 2020 with the British Army to create virtual training environments for soldiers.

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