PlayStudios(MYPS) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenue was $63 million, down approximately 19% year over year, reflecting continued softness in both social casino and casual portfolios [16] - Adjusted EBITDA for the quarter was $12 million, an 18.5% decline year over year and flat sequentially [17] - DAU was 2.6 million, down 25% versus Q1 of 2024, and MAU was 11.4 million, down 23% year over year [18] - Adjusted EBITDA margin was 20%, up 20 basis points from the same period last year [17] Business Line Data and Key Metrics Changes - The social casino portfolio faced category-wide headwinds, but monetization improved across several core titles, with ARPDAU increasing year over year in POP slots, Mykonami, and especially in the MyVegas franchise [8][10] - Direct to consumer channel generated approximately $5 million in in-app purchase revenue, representing 9.8% of total IAP revenue in the quarter, compared to $2.3 million or 3.9% in Q1 of 2024 [10][11] - Casual segment performance remained soft across both Brame and Tetris Prime, with Brame showing early signs of monetization improvement [11][12] Market Data and Key Metrics Changes - The social casino category is being impacted by the rising popularity of sweepstakes-style offerings, which are capturing increasing mindshare and spend from players [5] - The company is developing a sweepstakes solution to address the competitive landscape and has launched an internal alpha of its sweepstakes promotional platform [5][6] Company Strategy and Development Direction - The company is focused on a reinvention plan to operate with more clarity, efficiency, and discipline, aiming to stabilize its core business and unlock future growth [4][6] - Development continues on the new casual Tetris title, Tetris Block Party, with a planned Q4 launch [7][12] - The Play Awards platform is central to the company's strategy of being a leader in rewarded play, enhancing player engagement and loyalty [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the market but expressed confidence in the reinvention plan and the potential for future growth [4][16] - The company reaffirmed its full-year 2025 guidance of net revenue between $250 million and $270 million and consolidated adjusted EBITDA between $45 million and $55 million [20] Other Important Information - The company ended the quarter with approximately $107 million in cash and no outstanding debt [15] - The daily average retail value of available rewards increased by 5% to approximately $2 million per day [14] Q&A Session Summary Question: Confidence in Q2 launch of the new sweepstakes product - Management expressed confidence in the ability to introduce and slowly scale the sweepstakes offering in Q2, with a measured introduction in several jurisdictions initially [23][25] Question: Success factors driving DTC revenue growth - The growth in DTC revenue is driven by offering incentives for users to transact directly, with expectations for continued momentum due to recent legal rulings [26][28] Question: Changes in sweepstakes development phase - The focus has been on validating the technical stability and performance of the platform, with plans for a measured market introduction [32][34] Question: Benefits expected from the Apple Epic Games lawsuit - Management anticipates improved user adoption of direct purchases and margin improvement due to reduced fees on direct sales [36][38] Question: Integration of Play Awards with sweepstakes - Management believes that the loyalty program and sweepstakes promotional mechanic will complement each other, enhancing player engagement [42][44]