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PI

PLAYSTUDIOS, Inc. (MYPS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 net revenue was $59.3M and diluted EPS was $(0.02); Consolidated AEBITDA was $10.7M with an 18.1% margin, reflecting ongoing softness in social casino and casual games amid sweepstakes-driven category shifts .
  • Management maintained FY2025 guidance ($250–$270M revenue, $45–$55M Consolidated AEBITDA) despite pacing below targets, citing developing sweepstakes, DTC momentum, and Tetris Block Party as second-half catalysts .
  • DTC revenue accelerated to $6.7M (13.9% of virtual currency), up 107% YoY and up from $5.0M in Q1, aided by Apple policy changes that enable more direct promotion and deep-linking; ARPDAU improved to $0.28 despite DAU/MAU declines .
  • Key stock narrative catalysts: measured sweepstakes rollout (live beta in seven states, scaling later in 2025), Q4 launch target for Tetris Block Party, and reinvention-driven cost efficiencies redeployed into growth; risks include regulatory scrutiny of sweepstakes and continued DAU pressure .

What Went Well and What Went Wrong

What Went Well

  • DTC monetization momentum: $6.7M DTC revenue in Q2 (13.9% of IAP), up 107% YoY and 34% sequentially; management expects further tailwinds from Apple policy changes enabling direct promotion and deep-linking .
  • ARPDAU improved to $0.28 (vs $0.26 in Q1 and $0.25 YoY), reflecting stronger monetization in core titles despite lower user counts .
  • Sweepstakes initiative advancing: open beta live in seven states with improving retention, conversion, and monetizer yields; measured plan to scale across eligible U.S. states later in 2025 .

What Went Wrong

  • Top-line and users under pressure: revenue down 18% YoY to $59.3M; Average DAU fell to 2.35M and MAU to 10.05M (~27% and ~26% YoY declines), driven by market shift to sweepstakes and pulled-back UA in casual portfolio .
  • Advertising revenue decreased 31% YoY, and playAWARDS purchases and retail value contracted as the company curated higher-value rewards over scale; reportable playAWARDS AEBITDA remained negative .
  • Management acknowledged pacing below FY guidance as revenue softness offset cost savings, keeping guidance but signaling Q3 likely similar to Q2 absent new catalysts scaling sooner .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$67.8 $62.7 $59.3
Net Loss ($USD Millions)$(22.4) $(2.9) $(2.9)
Net Loss Margin (%)(33.1)% (4.6)% (5.0)%
Consolidated AEBITDA ($USD Millions)$12.5 $12.5 $10.7
AEBITDA Margin (%)18.4% 19.9% 18.1%
Diluted EPS ($USD)$(0.18) $(0.02) $(0.02)
Wall St. Consensus (Revenue/EPS)n/a (unavailable via S&P Global)n/a (unavailable via S&P Global)n/a (unavailable via S&P Global)

Segment breakdown (reportable segments):

Segment MetricQ1 2025Q2 2025
playGAMES Net Revenue ($USD Millions)$62.6 $59.1
playAWARDS Net Revenue ($USD Millions)$0.15 $0.23
playGAMES Segment AEBITDA ($USD Millions)$18.3 $16.5
playAWARDS Segment AEBITDA ($USD Millions)$(2.29) $(2.39)

KPIs and monetization:

KPI / MonetizationQ2 2024Q1 2025Q2 2025
Average DAU (000s)3,220 2,632 2,347
Average MAU (000s)13,597 11,422 10,046
ARPDAU ($USD)$0.25 $0.26 $0.28
DTC Virtual Currency Revenue ($USD Millions)$3.23 $4.97 $6.68
DTC % of Virtual Currency Revenue5.7% 9.8% 13.9%
Advertising Revenue ($USD Millions)$16.0 $11.9 $11.1
playAWARDS Purchases (units)—281,501 199,520
playAWARDS Retail Value of Purchases ($USD Millions)—$17.0 $12.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2025$250–$270M $250–$270M Maintained
Consolidated AEBITDAFY 2025$45–$55M $45–$55M Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (prior)Q1 2025 (prior)Q2 2025 (current)Trend
Sweepstakes initiativePlan to introduce in coming quarters; structural category shift acknowledged -Internal alpha; limited release expected; compliance focus Open beta live in 7 states; improving KPIs; scale across eligible states later this year Accelerating execution
DTC monetization8% of IAP; target >20% longer-term $5.0M; 9.8% of virtual currency; Apple/Epic ruling seen as tailwind -$6.7M; 13.9%; Apple policy changes enabling promotion/deep linking Strengthening
Tetris Block PartyLaunch targeted later in 2025; design approach outlined -Technical validation; Q4 launch target On track for Q4 launch; monetization encouraging On schedule
playAWARDS strategyCurated partners; tournament franchise launched myVIP integration; premium partners; daily rewards value growth Continued platform investments; promotions around second annual tournament Focused curation
Cost structure / reinvention$25–$30M annual savings expected Tracking to plan; redeploy into priorities Savings offset by revenue softness; guidance maintained Savings redeployed
Regulatory/legal (sweepstakes)Emphasized compliance; measured approach -—Addressed state bans risk; operate measured; aim for integrity, potential M&A to accelerate -Risk monitored

Management Commentary

  • “We’re seeing growing traction in our direct-to-consumer channel, promising early momentum in our sweepstakes initiative, and continued progress on the development of Tetris Block Party.” — Andrew Pascal, CEO .
  • “We expect to be live across the full footprint of qualified U.S. states later this year… taking a measured and rigorous approach to scaling.” — Andrew Pascal on sweepstakes .
  • “DTC generated $6.7M… up 107% YoY and 34% sequentially… with Apple’s recent policy changes giving us more flexibility to promote the channel.” — Andrew Pascal .
  • “While we’re currently pacing below our full year revenue and adjusted EBITDA guidance… we are not changing guidance at this time.” — Scott Peterson, CFO .

Q&A Highlights

  • DAU/MAU declines: More pronounced in casual than social casino; UA pullback a contributing factor .
  • Sweepstakes rollout: Live in 7 jurisdictions; KPIs improving; measured expansion to all eligible states by year-end; potential strategic M&A to accelerate market position .
  • Near-term outlook: Q3 expected similar to Q2 absent new contribution visibility; guidance unchanged .
  • Regulatory risk: State-level bans acknowledged; company intends to operate responsibly and advance legitimacy of sweepstakes mechanics as promotional tools integrated with native apps .
  • UA and EBITDA: Sweeps growth will require UA spend with 4–6 month payback typical; near-term EBITDA impact expected during scaling, viewed positively for market share capture .

Estimates Context

  • S&P Global (Capital IQ) consensus for Q2 2025 revenue and EPS was unavailable; therefore, a direct beat/miss assessment versus Wall Street was not possible. Management noted they are pacing below FY guidance due to revenue softness more than offsetting cost savings .

Key Takeaways for Investors

  • DTC is a tangible monetization lever: mix shifted to 13.9% of virtual currency in Q2 (vs 9.8% in Q1), with Apple policy changes likely to further accelerate adoption and margin flow-through .
  • Sweepstakes execution is the core near-term catalyst: open beta KPIs improving and measured state-by-state scaling could reaccelerate social casino engagement and conversion in H2 2025 .
  • Tetris Block Party targets Q4 launch with encouraging monetization signals; post-launch UA will be paced by unit economics, balancing growth and EBITDA impact .
  • User base pressure persists (DAU/MAU declines), but ARPDAU improvement and DTC mix help defend margins; AEBITDA margin held at 18.1% despite top-line decline .
  • Guidance held ($250–$270M revenue; $45–$55M AEBITDA) but Q3 likely similar to Q2, making H2 execution on sweepstakes/Tetris critical for year-end trajectory .
  • Regulatory scrutiny remains a key risk factor for sweepstakes; management’s compliance-first, phased rollout mitigates exposure while preserving optionality (including potential M&A) .
  • Capital allocation flexible with $112.9M cash, undrawn $81M revolver, and ongoing buybacks; runway to fund UA and growth initiatives without leverage .