MYPSW, the parent company of popular mobile gaming titles like POP! Slots, myVEGAS Slots, and Tetris, reported first quarter 2024 results that exceeded consensus expectations. While revenues and adjusted EBITDA declined year-over-year, the company's strategic initiatives to revitalize its portfolio and expand its loyalty program are showing early signs of progress.
Business Overview
MYPSW is a developer and publisher of free-to-play casual games for mobile and social platforms. The company's portfolio includes a mix of original content and third-party licensed brands, with its social casino games and Tetris franchise being the key revenue drivers.The company's games incorporate a unique loyalty program called playAWARDS, which allows players to earn real-world rewards from MYPSW's partner network. This program is a key differentiator for the company, providing an additional avenue for player engagement and monetization.
In addition to its gaming business, MYPSW also operates the playAWARDS platform, which it is looking to expand as a loyalty-as-a-service offering for third-party game publishers.
Q1 2024 Results
For the first quarter of 2024, MYPSW reported net revenues of $77.8 million, down 2.9% year-over-year. This decline was primarily due to the non-renewal of a licensing agreement that contributed $2.5 million in the prior year period. Adjusting for this, revenues would have been roughly flat year-over-year.Adjusted EBITDA for the quarter was $15.3 million, down 13.8% from the prior year period. The decrease was driven by higher operating expenses, partially offset by improved margins in the PlayGAMES segment.
Segment Performance
PlayGAMES, which includes the company's gaming titles, reported net revenues of $77.8 million, up 0.3% year-over-year. This segment benefited from strong performance in the Tetris franchise, which saw double-digit growth in daily active users (DAUs). However, this was offset by declines in the core social casino portfolio, which the company expects to continue throughout 2024.PlayAWARDS, the company's loyalty platform, reported no net revenue for the quarter, compared to $2.5 million in the prior year period. This decline was due to the expiration of a licensing agreement. The segment continues to focus on expanding its partner network and enhancing the platform's functionality.
Operational Highlights
- Tetris franchise saw significant growth, with the core Tetris Prime title benefiting from the viral success of a 13-year-old player becoming the first to defeat the game. The company plans to launch at least one new Tetris title in 2024.
- Ongoing efforts to revitalize the myVEGAS and myKONAMI social casino titles, including transitioning development to the company's Tel Aviv studio, are showing early signs of progress in daily conversion rates.
- Integration of the myVIP loyalty program across the entire portfolio remains a top priority, with the goal of completing this by the end of 2024.
- Brainium's casual game portfolio is seeing sequential improvements in monetization through expanded advertising efforts.
- Discussions with third-party game publishers for potential playAWARDS partnerships continue, with the company expecting to formalize a pilot relationship before the end of 2024.
Financial Position and Capital Allocation
MYPSW ended the first quarter with $127.0 million in cash and no outstanding debt, providing ample liquidity to fund its strategic initiatives. The company has $46.0 million remaining on its $50.0 million share repurchase authorization and views its stock as undervalued.In addition to share repurchases, MYPSW remains committed to identifying and completing strategic acquisitions that can enhance its product portfolio and capabilities.
Outlook
For the full year 2024, MYPSW is maintaining its guidance of revenues between $315 million and $325 million, and consolidated adjusted EBITDA between $65 million and $70 million. The company expects to see improvements in its performance throughout the year as its various initiatives, including the Tetris franchise updates and loyalty program integration, are implemented.Risks and Challenges
MYPSW operates in a highly competitive mobile gaming market, which has become increasingly challenging due to platform policy changes that have impacted user acquisition efforts. The company's social casino portfolio also faces industry-wide headwinds, with the segment expected to remain stagnant in 2024.Additionally, the company's reliance on third-party platform providers, such as the Apple App Store and Google Play Store, exposes it to risks related to changes in policies and fee structures.