Games Workshop (GAW) Annual Earnings Recap
Raising PT on GAW; summarizing an exceptional quarter
This post was published prior to this platform’s re-branding as Sophon Microcap Atlas (with an exclusive focus on sub-$500M market cap companies). Coverage of GAW is moving to our sister publication - AlphaArk
Earnings season has been hectic, so there’s been a slight delay in getting my thoughts to all regarding the performance of our holdings.
GAW reported their earnings two days ago. The results were record-breaking and validate our thesis laid out in an initiation published back in February (you can read it here). FY25 EPS came in at £5.93, beating our model estimate of £5.72 by ~4%. We are raising our estimate of FY27 EPS from £7.02 to £7.50. It is worth noting that our estimates materially diverge from analyst consensus EPS, which is £5.27 for FY27.
We are raising our PT on shares of the stock from £190 to £250, which represents ~33x P/E on our FY27 estimate. We believe this is justified for a stock demonstrating solid top-line growth near 20% combined with profit margins of >40%. GAW continues to demonstrate exceptional profitability, maintaining industry-leading gross and operating margins. The company’s ability to pass on costs and drive efficiencies supports a robust margin profile, underscoring the pricing power of the Warhammer IP and strong in-house execution. We remain bullish on their strategic partnership with Amazon to develop a Warhammer 40,000 TV and film franchise - we think it could significantly expand the brand’s reach and create meaningful revenue optionality.
GAW reported PBT rising 29.5% YoY to £262.8m, reflecting strong momentum across both core product sales and licensing revenues. Revenue climbed 17.5% YoY to £617.5m, underpinned by continued consumer demand for Warhammer miniatures and games, as well as the breakout success of licensed titles.
Core revenues (miniatures and tabletop games) rose 14% YoY, driven by sustained demand for Warhammer 40,000 and complementary product lines. One of the biggest takeaways was licensing revenue jumping 69%, fueled by strong uptake of the Space Marine 2 video game and increasing monetization of the Warhammer IP across digital formats.
Management raised the annual dividend by 40%, highlighting a continued commitment to capital return. The dividend yield at current prices is ~3%.
A strong message in the 2025 Annual Report & results is that mgmt is proactively investing in operational upgrades and expanding its global retail footprint. These efforts aim to offset potential trade headwinds in FY26, including tariff exposure. Despite challenges the core tabletop gaming business remains resilient, supported by strong brand loyalty, community engagement, and strategic execution.
Worth noting is weakness in the online channel: reported online sales decreased by 0.1% compared to the prior period, primarily due to fewer customers ordering directly from home. However, there was an increase of 15.0% in orders placed from home and picked up in a Warhammer store, which is reported in online sales. The online webstore supports retail stores and trade partners, acting as a virtual stockroom portal to offer the widest range of products. The company continues to upgrade it with more payment options, accessibility tools, and extended live chat. A strong signal was that “My Warhammer,” the single login for webstore and apps, saw active users increase to approximately 735,000 from 565,000 in the prior year.
Lastly, another point worth mentioning is strong growth in the trade channel of 19.9%, adding approximately 900 new accounts to reach about 8,100 independent retailers in 71 countries. The majority of incremental growth in the year ahead is expected from sales to independent retailers.
Overall, we’re incredibly pleased with GAW’s performance and it continues to remain a high-conviction core long position in our portfolio. We think analyst consensus is completely removed from reality. At the same time, the upside case of Warhammer’s Amazon series becoming a mainstream cult franchise is difficult to underwrite but in our view could spell multi-bagger status. GAW remains our second largest holding in our portfolio besides cash, representing ~10% of our portfolio.