• Revenue: $71.2 million, a 6% decrease year-over-year.
• Adjusted EBITDA: $14.6 million, an 8% increase year-over-year.
• Adjusted EBITDA Margin: 20.5%, expanded by 270 basis points year-over-year.
• Cost Savings Plan: Expected annual savings of $25 million to $30 million.
• Direct to Consumer Revenue: 7.2% of total revenues, up from 4.5% last quarter.
• Cash Position: Approximately $105 million in cash, no borrowings.
• Share Repurchase: $29.2 million of stock repurchased, nearly 10% of total issued stock.
• DAU (Daily Active Users): 3 million, down 16% year-over-year.
• MAU (Monthly Active Users): 12.7 million, down 8% year-over-year.
• ARPU (Average Revenue Per User): $0.26, up 13% year-over-year.
• 2024 Financial Guidance: Revenue between $285 million and $295 million; Adjusted EBITDA between $55 million and $65 million.

Release Date: November 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Revenues and adjusted EBITDA exceeded consensus estimates, with adjusted EBITDA increasing by 8% year-over-year.
• The company launched a reinvention plan expected to save $25 million to $30 million annually.
• Adjusted EBITDA margins improved by 270 basis points year-over-year, driven by efficiencies and reduced user acquisition costs.
• The direct-to-consumer business grew to 7.2% of total revenues, up from 4.5% last quarter.
• The integration of the recent acquisition, Pixel, is progressing smoothly, with plans to leverage the Tetris brand.

Negative Points

• Year-over-year revenues decreased by 6%, primarily due to continued weakness in the social games category.
• The company announced a significant workforce reduction of over 30%, which may impact future operations.
• The Tetris brand's 40th anniversary had a more muted effect on revenues than anticipated.
• Daily Active Users (DAU) and Monthly Active Users (MAU) declined by 16% and 8% respectively, year-over-year.
• The company is facing challenges in the social casino segment, particularly with the Pop Slots game.

Q & A Highlights

Q: Can you comment on the drivers of the double-digit growth in MyVegas and other titles, and whether these gains are sustainable? A: Scott Peterson, CFO: The growth in the casual portfolio, particularly in the brand portfolio, is driven by new ad units incorporated into the games. We expect this lift in performance to continue as there are more ad products and opportunities yet to be exploited. In the Social Casino portfolio, improvements are driven by increases in conversion and ARPU, translating to the growth we need.

Q: Can you provide more color on the sweepstakes initiatives and how they might reverse headwinds in the MyVIP program? A: Unidentified Company Representative: The emergence of sweepstakes as a promotional mechanic is significant, with a $3 billion market. We see an opportunity to leverage our games and player network to drive engagement and monetization. We have constituted a formal team to advance our technology tools for sweepstakes, aiming to enhance our existing Play Awards capabilities.

Q: How will the recent workforce reduction impact your existing live services and pipeline, particularly for 2025 revenue growth? A: Unidentified Company Representative: We've worked hard to minimize adverse impacts on revenue performance. While there may be near-term unpredictability, we believe the changes will bring more focus and allow us to perform better, ultimately enabling us to invest in future growth. We remain confident in our year-end guidance.

Q: Regarding the $25 million to $30 million cost savings, when do you expect to fully realize these savings? A: Unidentified Company Representative: The workforce reduction was initiated last week and will be completed in the next week to 10 days. We expect to realize these savings throughout the balance of this year, entering the new year with a reset cost structure. The cash implications will be borne in the current quarter.

Q: Can you provide a timeline for incubating sweepstakes capabilities and why you chose to build rather than buy in this category? A: Unidentified Company Representative: We chose to build due to favorable economics and execution capabilities. We expect to be in the market with sweepstakes capabilities in the first half of the coming year, with testing and validation by the end of the first quarter and active promotion in the second quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.