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Playtika posts Q2 net profit growth despite revenue dip

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Playtika, a social gaming company, reported an increase in its net profit year on year for the second-quarter despite a decline in revenues.

Playtika’s six-month period ended 30th June was a time of mixed results. The Q2 social revenue was lower, and the average number of daily paying customers also decreased.

Playtika, however, was able reduce its costs, which allowed it to increase net profits and offset the drop in revenue.

The developer stated that it is in a very strong financial situation and continues to look at M&A transactions. Playtika agreed to purchase the Youda Games content portfolio from Azerion shortly after quarter’s end, which included the Governor of Poker game.

Craig Abrahams, Playtika’s president and chief financial officer said: “We were able to adapt early on to the rapidly changing mobile gaming landscape.” As a result of this, Playtika is in a good position to make M&A acquisitions, such as Governor of Poker. This will strengthen the growth profile for our entire portfolio.

We continue to enjoy the benefits of our strong player relationships, and expertise in live operations. “We remain committed to using our established brands and technological solutions to increase payer conversion.”

Playtika Q2 revenue for social casino down.

Revenue for the second quarter amounted to $642.8m (PS506.6m/EUR587.6m), down by 2.5% year-on-year.

Playtika didn’t disclose all of the financial details, but did release certain numbers. The social casino revenue dropped by 9.9%, while casual game revenue rose 3.7%. Blitz bingo revenue increased 6.3%.

The average daily user dropped by 1.0%, to 307,000. The average conversion rate of payers increased 3.2% on a year-on-year basis.

Net profit increases when costs are reduced

The lower cost was greater than the revenue reduction. Operating costs fell 11.4%, to $503.6m. R&D and sales, marketing, and administrative spending were all cut.

Playtika has also received positive interest of $23.1m. Pre-tax profits increased by 68.5%, to $116.1m. Taxes were $40.4m, which left $75.7m of net profit. This is an increase of 108.0%.

Developers also account for a change of $14.8m on fair value derivatives, and a $200,000 decrease in foreign currency conversion. The result was that the net profit for all of its components increased by 340.5% to $90.3m.

The adjusted EBITDA of the third quarter also increased by 6.7%, to $215.0m.

Playtika H1: Similar Story

The first six months and half-year ended 30th June showed a similar trend. The revenue was down 2.8% at $1.30bn but the costs fell by 10.4%, to $1.01bn.

Playtika reported $51.7m of positive interest. This means that pre-tax profits reached $239.9m (up 48.3%). Taxes were $80.1m for the developer, which left a net profit of $159,8m. This is a rise of 33.6%.

The figure is higher after including $2.9m for positive currency conversion and $7.0m fair value derivatives. The total net profit was $169.7m up by 41.9%. Adjusted EBITDA also increased 9.7%, to $437.7m.

Full-year mixed guidance

Playtika’s guidance on the impact of this change for the entire year is largely unchanged. Playtika has previously stated that revenue would be in the range of $2,57bn to 2,62bn.

The adjusted EBITDA would fall between $805.0m and $830.0m. Capital expenditures will be between $100.0m and $105.0m. This is down from the earlier estimate of $120.0m to $115.0m.

Playtika’s CEO Robert Antokol stated that “our operational expertise and our advanced technological capability are the drivers of strong profitability and robust Cash Flow Generation.”

The company’s CEO said, “By combining our human talent and our proprietary technology we unlock the full potential of titles, such as our Governor of Poker franchise. We are also well equipped to increase the value of assets acquired, like our recent Governor Of Poker franchise deal.”

Playtika’s evolving strategy

Playtika has been able to reduce costs by implementing several initiatives.

The company said it would lay off 600 workers – 15 percent of its workforce – at the end of the last year. This was part of a process to wind down “non core products” according to the business.

Playtika confirmed also in March that it would suspend the development of new games until they become “economically feasible”.

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