In the face of a challenging second quarter, social gaming developer Playtika demonstrated resilience by posting a year-on-year rise in net profit despite a drop in revenue.
A Mixed Bag for Playtika in Q2
Playtika’s performance during the six months leading up to 30 June was a blend of highs and lows. There was a noticeable decrease in Q2 revenue from social games, and daily paying users also experienced a decline. However, the company managed to reduce operation costs significantly during the same period, successfully offsetting the revenue dip and paving the way for an increase in net profit.
The cost reduction measures have helped Playtika maintain a strong financial position, enabling it to consider potential mergers and acquisitions (M&A). In fact, shortly after the quarter’s end, the company agreed to acquire the Youda Games app portfolio from Azerion, which includes the popular Governor of Poker title.
“We adapted early to the changing mobile gaming environment, and as a result, we are in an advantageous position to pursue M&A deals that can strengthen our portfolio,” said Playtika’s president and CFO, Craig Abrahams. He added that the company is committed to leveraging its technological solutions and established brands to drive payer conversion.
Key Financial Outcomes from Playtika’s Q2
Playtika reported a Q2 revenue of $642.8m, marking a 2.5% year-on-year fall. While the company did not disclose full details of its financial performance, it shared some key figures. Social casino games revenue experienced a 9.9% drop, while casual games revenue climbed by 3.7%, and Blitz Bingo saw a 6.3% increase.
Operating costs were down 11.4% to $503.6m, with reductions across research and development, sales and marketing, and general administrative sectors. This cost reduction, combined with $23.1m in positive interest, led to a pre-tax profit increase of 68.5% to $116.1m.
Looking Ahead: Playtika’s Full-Year Guidance and Strategy
Playtika’s full-year guidance remains largely the same. Although revenue is expected to be on the lower end of the $2.57bn to $2.62bn range, adjusted EBITDA is predicted to be at the higher end of the $805.0m to $830.0m range.
The company’s strategy has evolved over time, with a particular focus on cost-cutting initiatives. These measures include plans to lay off approximately 600 employees, or 15% of its headcount, and suspending new game development until return on investment (ROI) becomes economically viable.