Five years after its public debut on the London Stock Exchange, Devolver Digital has announced its intention to return to private ownership. The company's board of directors stated that they believe the indie game publisher is undervalued, largely due to perceived incompatibilities between the cyclical nature of the video game industry and the demands of the stock market.
Devolver went public in November 2021, with CEO Douglas Morin at the time expressing a desire for continued growth and the support of more games, while aiming to retain the company's culture. However, the company's recent filing indicates that the intervening years have seen significant disruption and volatility within the video game sector. This includes widespread layoffs, platform rationalization, and substantial impairments across the industry.
These challenging conditions have resulted in Devolver facing the "ongoing challenge of delivering growth in line with market expectations." The company's filing elaborates that the lifetime and long-tail revenue generation inherent in video game development are not always reflected by market expectations, which often prioritize "predictable, sequential growth." This has led to Devolver experiencing "increased pressure to deliver short-term market expectations that do not necessarily reflect the underlying long-term value creation potential of its portfolio and development pipeline."
The board also pointed to the inherent unpredictability in the timing and scale of new game releases as a factor that clashes with market demands for consistent performance.
Beyond the operational pressures, returning to private status is projected to save Devolver approximately $1.6 million annually. The company's shares have also seen limited trading activity, suggesting that public market participation has not significantly benefited its liquidity or visibility. A representative for Devolver stated that being private will allow the team to "singularly focus on the long-term health of the company and less on satisfying the requirements of the public market, which have nothing to do with being a successful game publisher."
Shareholders will have the opportunity to vote on the proposal to take Devolver Digital private again in September.