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Playtika posts Q2 net profit growth despite revenue dip

| By Robert Fletcher
Social gaming developer Playtika reported a year-on-year rise in net profit for the second quarter despite experiencing a drop in revenue.

The six months to 30 June proved to be a mixed period for Playtika. Q2 revenue from social was down, while average daily paying users also declined. 

However, Playtika was able to reduce costs during the quarter, which was enough to offset the revenue dip and allow for a net profit increase.

As such, the developer said it remains in a strong financial position, the point where it continues to consider M&A deals. Shortly after the quarter-end, Playtika agree to acquire the Youda Games portfolio of content from Azerion, including the Governor of Poker title.

“We adapted to the changing mobile gaming environment early on,” Playtika president and CFO Craig Abrahams said. “As a result, we are in a strong position to pursue M&A deals, like Governor of Poker, fortifying the growth profile of our portfolio.

“We continue to benefit from our close player relationships and live operations expertise. We remain committed to leveraging our technological solutions and established brands to drive payer conversion.”

Social casino revenue down in Playtika’s Q2

Revenue for the second quarter amounted to $642.8m (£506.6m/€587.6m), down by 2.5% year-on-year.

Playtika did not disclose full details of its financial performance, but it did publish certain figures. These include a 9.9% drop in social casino games revenue, although casual games revenue climbed 3.7% and Blitz Bingo 6.3%.

Average daily paying users slipped 1.0% to 307,000. In contrast, average payer conversion climbed 3.2% year-on-year.

Lower costs lead to net profit growth

Reduced revenue was more than offset by lower costs. Operating costs were down 11.4% to $503.6m, with spending across R&D, sales and marketing and general administrative all being cut.

Playtika also benefited from $23.1m in positive interest. As such, pre-tax profit hiked 68.5% to $116.1m. The developer paid $40.4m in tax, leaving $75.7m in net profit, up 108.0%.

The developer also accounted for $14.8m in change in fair value of derivatives and $200,000 less foreign currency translation. As such, comprehensive net profit was 340.5% higher at $90.3m.

In addition, adjusted EBITDA for the quarter increased 6.7% to $215.0m.

Similar story in H1 for Playtika

Turning to the first half and the six months to 30 June followed a similar pattern. Revenue was 2.8% lower at $1.30bn, but costs were reduced by 10.4% to $1.01bn.

Playtika noted $51.7m in positive interest, meaning pre-tax profit reached $239.9m, up 48.3%. The developer paid $80.1m in tax, leaving net profit of $159.8m, a 33.6% rise.

After including $2.9m in positive foreign currency translation and $7.0m of fair value of derivatives, the figure was higher. Comprehensive net profit hit $169.7m, up 41.9% In addition, adjusted EBITDA jumped 9.7% to $437.7m.

Mixed full-year guidance 

As to how this will impact the full year, Playtika says guidance remains mainly the same. Revenue is likely to be at the lower end of the $2.57bn to $2.62bn range previously set out by Playtika.

In terms of adjusted EBITDA, this would be at the higher end of the $805.0m to $830.0m. The developer also said capital expenditure would be in the range of $100.0m to $105.0m, down from an earlier estimate of $115.0m to $120.0m. 

“Our operational expertise and advanced technological capabilities are drivers of our strong profitability and robust cash flow generation,” Playtika CEO Robert Antokol said.

“By pairing our human talent with the transformative capabilities of our proprietary technology, we unleash the full potential of our titles and are well-equipped to enhance the value of acquired assets, as with our recent Governor of Poker franchise deal.”

Playtika’s changing strategy

The results come following several cost-cutting initiatives at Playtika. 

At the end of last year the company announced plans to lay off approximately 600 employees – 15% of its headcount. The business said this was part of the process of winding down its “non-core products”.

Playtika also confirmed in March it would largely suspend new game development until ROI on new games becomes “economically viable”.

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