Sparks - Games Workshop Group

Games Workshop Group’s FY26 trading update indicates another year of strong growth, beating our expectations; however, there was a slowdown in the core revenue growth rate in H226 versus H126 and the profit margin was lower. To have exceeded FY25’s profit with a much lower contribution from high-margin licensing is good on the back of the strong performances in FY24 and FY25, which benefitted from the launches of new editions of 40K and Age of Sigmar, respectively.  The coming financial year will see the launch of the next edition of 40K, keeping to the recent three-year cycle for new releases, so investors will be eagerly watching to see how well this is received by the hobbyists.

Core revenue is stated to be not less than £625m (FY25 £565m) and licensing revenue is not less than £30m (£52.5m), a growth rate for core of at least 11% and a decline for licensing of c 40%, respectively. The decline in licensing had already been well flagged given the exceptional performance in FY25. While these are both ahead of, or broadly in line with, our respective estimates of c £616m and £30m, they indicate a slowdown in growth in H226 for core revenue to at least 4% from 17% in H126.

The company has also indicated PBT will be not less than £265m (FY25 £263m), again ahead of our estimate of c £250m. The implied PBT margin of at least 40.5% for FY26 is lower than Fy25’s 42.6% and the implied margin for H226 of c 38–39% compares with H126’s 42.4%.