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01/11 03:11
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects a mixed outlook. While there are positive developments like the expansion of the Sweepstakes initiative and strong D2C growth, significant declines in MAU and DAU, coupled with anticipated revenue and EBITDA reductions, offset these positives. Management's lack of clarity on financial impacts further adds uncertainty. The Q&A reveals cautious optimism but also highlights ongoing challenges in the core business. Given these factors, a neutral sentiment is appropriate, suggesting a stock price movement within the -2% to 2% range.
Total Revenue $57.6 million, down approximately 19.1% year-over-year and down 2.7% sequentially, primarily reflecting a decline in DAU.
Year-to-date Revenue $179.7 million, down 18.9% year-over-year.
Adjusted EBITDA $7.2 million, down 50.5% year-over-year, resulting in a 12.6% operating margin compared to 20.5%. Year-to-date adjusted EBITDA was $30.5 million, down approximately 31% year-over-year. This contraction reflects reduced revenue scale and an increase in investment for new growth projects, partially offset by cost savings from last year's reinvention program.
Direct-to-consumer Revenue $7.7 million, a 48% quarter-over-quarter increase, representing 16.7% of total in-app purchase revenue, up from 9.1% in Q3 of 2024.
MAU (Monthly Active Users) Declined 24.9% year-over-year and down 5.4% sequentially, primarily concentrated in the casual segment, consistent with industry trends.
DAU (Daily Active Users) Decreased 25.3% year-over-year and 5.8% sequentially, primarily concentrated in the casual segment, consistent with industry trends.
Cash Position Approximately $106.3 million, with no debt and access to a fully undrawn $81 million credit facility.
Retail Value of Rewards Purchased Decreased year-over-year but increased 16% sequentially for the third quarter.
Win Zone: Gaining traction, live in open beta across 15 states, with plans for broader rollout by year-end. Improvements in retention, engagement, and monetization observed. Addressable market estimated at $3.5 billion to $4 billion.
Tetris Block Party: Upcoming launch with promising results in open beta. Focused go-to-market test planned ahead of broader rollout in Q1 2026. Combines puzzle mechanics with social meta game.
Social Casino Market: Challenged by broader market conditions and shift towards sweepstakes offerings. Year-over-year declines in DAU and ARPDAU, except for myKONAMI, which showed double-digit ARPDAU growth.
Direct-to-Consumer Revenue: Increased to $7.7 million, a 48% quarter-over-quarter growth, representing 16.7% of total in-app purchase revenue.
Cost Efficiency: Reduced fixed cost base through reinvention initiatives, enabling disciplined investment in growth projects while preserving profitability.
AI Adoption: Modernizing development approach with AI for game development, creative tooling, UA modeling, and player targeting, aiming for efficiency and faster operations.
playAWARDS Loyalty Platform: Streamlined to focus on high-quality partners and aspirational rewards. Expanded digital benefits, resulting in a 16% sequential increase in retail value of rewards purchased.
myVIP World Tournament of Slots: Hosted a live event in the Bahamas, connecting in-game engagement with real-world experiences, enhancing player loyalty.
Category headwinds: The company continues to face significant challenges in its core markets due to structural market-wide headwinds, which have not been resolved by recent cost-cutting measures.
Expense structure and operational trade-offs: Efforts to reduce expenses and improve efficiency have led to trade-offs, including a reduced pace of new content, live operations, and product development, contributing to portfolio softening.
Regulatory contraction in sweepstakes market: The broader sweepstakes market has faced regulatory contraction, reducing the total addressable market (TAM) by approximately 25%.
Decline in DAU and ARPDAU: Year-over-year declines in daily active users (DAU) and average revenue per daily active user (ARPDAU) across most of the portfolio, except for myKONAMI, which showed growth.
Casual segment pressure: The casual business segment continues to experience pressure on DAU, contributing to sequential audience declines.
Revenue and EBITDA contraction: Total revenue for the quarter decreased by 19.1% year-over-year, and adjusted EBITDA declined by 50.5%, reflecting reduced revenue scale and increased investment in growth projects.
Softness in player activity and monetization: Recent softness in player activity and monetization has led to expectations of full-year results falling below previously provided guidance ranges.
Win Zone rollout: Win Zone is currently in open beta across 15 states and is expected to roll out in all qualified jurisdictions by year-end. The company is focused on improving efficiency, long-term player value, and scaling the product. Despite a 25% reduction in the total addressable market (TAM) due to regulatory contraction, the remaining open states represent a $3.5 billion to $4 billion market opportunity.
Tetris Block Party launch: Tetris Block Party is set for a broader rollout in Q1 2026 following a focused go-to-market test. The game aims to become a super scaled mobile franchise by combining a familiar puzzle mechanic with a deeper social meta game. Early performance in open beta has been encouraging across user acquisition, retention, engagement, and monetization.
Direct-to-consumer revenue growth: Direct-to-consumer revenue increased by 48% quarter-over-quarter, reaching $7.7 million and representing 16.7% of total in-app purchase revenue. This growth is attributed to relaxed Apple policy changes and is expected to support future revenue expansion.
Casual business user acquisition: The company plans to renew user acquisition efforts in 2026, supported by improvements in ad monetization technology and yield, which have already led to meaningful year-over-year ARPDAU improvements for Brainium and Tetris Prime.
AI adoption: The company is modernizing its development approach by adopting AI across game development, creative tooling, user acquisition modeling, and player targeting. This is expected to drive long-term efficiency and innovation.
Financial guidance: The company expects full-year net revenue and consolidated adjusted EBITDA to fall below the low end of previously provided guidance ranges due to recent softness in player activity and monetization. Near-term market conditions remain challenging, but the company is focused on initiatives to strengthen its long-term competitive position.
The selected topic was not discussed during the call.
The earnings call reflects a mixed outlook. While there are positive developments like the expansion of the Sweepstakes initiative and strong D2C growth, significant declines in MAU and DAU, coupled with anticipated revenue and EBITDA reductions, offset these positives. Management's lack of clarity on financial impacts further adds uncertainty. The Q&A reveals cautious optimism but also highlights ongoing challenges in the core business. Given these factors, a neutral sentiment is appropriate, suggesting a stock price movement within the -2% to 2% range.
The earnings call summary reveals mixed signals: a decline in DAU and MAU, but strong D2C growth and cash balance. The Q&A section shows cautious optimism about future initiatives like Sweepstakes and Tetris Block Party. However, lack of guidance and DAU decline weigh negatively. Without market cap data, the prediction remains neutral, assuming a moderate market reaction.
The earnings call summary highlights several challenges, including a significant decline in revenue and user metrics, competitive pressures, and market conditions. Despite cost savings and some positive initiatives, the overall financial performance is weak, with revenue and EBITDA down significantly. The Q&A section reveals confidence in new product launches but lacks clarity on long-term strategies. The share repurchase program is a minor positive, but overall, the company's financial health and market strategy issues lead to a negative sentiment.
The earnings call reveals a 12% revenue decline, EPS miss, and decreased daily and monthly active users, indicating operational challenges. Although there is optimism about future products and a share repurchase program, regulatory concerns, restructuring impacts, and uncertain future revenue guidance pose significant risks. The Q&A session further highlights management's evasiveness on timelines and regulatory impacts, adding to investor uncertainty. Overall, these factors suggest a negative sentiment, likely leading to a stock price decline.
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