PlayStudios(MYPS) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Second quarter revenue was $59 million, down approximately 18.3% year over year and 5.4% sequentially, reflecting continued softness in core casino and casual games [16] - Adjusted EBITDA for the quarter was $10.7 million, down 24% year over year and 14.2% sequentially, indicating limited flow through due to revenue softness [16] - DAU was 2.3 million, down from 2.6 million in the first quarter and 3.2 million in the previous year [16] - MAU was 10 million, down from 11.4 million in the first quarter [16] - ARPDAU was $0.28, up slightly from $0.26 last quarter and $0.25 a year ago, reflecting stronger monetization [16] Business Line Data and Key Metrics Changes - The core social casino portfolio continued to soften, with ongoing declines in DAU across most titles, partially offset by stronger unit level monetization in Mykonami [11] - Direct to consumer revenue for Q2 was $6.7 million, representing 13.9% of total in-app purchase revenue, up 107% year over year and 34% sequentially [11][18] - The casual portfolio remains under pressure due to challenging market dynamics, with a focus on product updates to improve engagement and retention [12] Market Data and Key Metrics Changes - The market is experiencing a rapid rise in social casinos leveraging sweepstakes mechanics, reshaping player behavior and monetization [4] - The company is seeing positive early signals in player retention, engagement, and monetization from its sweepstakes initiative, which is currently live in seven states [6][27] Company Strategy and Development Direction - The company launched a reinvention program last year to adapt to market changes, focusing on developing sweepstakes capabilities, expanding direct to consumer sales, and modernizing core games [5][20] - A phased approach is being taken to scale the sweepstakes initiative, with plans to open the product to all eligible states later this year [7] - The company is exploring strategic acquisitions to accelerate momentum and position itself for market leadership in the sweepstakes category [8][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in the core business but remains confident in the strategic steps being taken to adapt and evolve [19] - The company is not changing its full-year revenue and adjusted EBITDA guidance despite current performance being below expectations [18] - Management is optimistic about the early traction seen in new initiatives and believes investments made today will build a stronger foundation for future growth [20] Other Important Information - The balance sheet remains strong, with approximately $112.9 million in cash and no debt, providing strategic latitude for future investments [14][18] - The company is committed to maintaining a robust cash position to support growth initiatives [62] Q&A Session Summary Question: Can you split DAU and MAU declines between social casino and casual games? - Management indicated that declines were substantial in both categories, with more dramatic impacts in the casual space due to reduced user acquisition investments [25] Question: Any quantitative KPIs or user numbers from the sweepstakes initiative? - Management reported positive improvements across key metrics, including retention and conversion rates, and plans to open more jurisdictions as confidence grows [27] Question: What are the expectations for Q3? - Management expects Q3 to be similar to Q2, focusing on executing initiatives to restore momentum [32] Question: What is the medium or long-term goal for the casual portfolio? - Management does not expect meaningful growth from the legacy casual portfolio but is investing in upgrading products to drive better retention and engagement [44] Question: How will the company manage regulatory pressures regarding sweepstakes? - Management is actively assessing regulatory risks on a state-by-state basis and intends to help legitimize the sweepstakes opportunity [52][55] Question: Is the company comfortable with its cash position during this transition? - Management confirmed a strong cash position, allowing for aggressive investment in growth initiatives [62]