Digital casino game platform PlayStudios (NASDAQ:MYPS) reported results in line with analysts' expectations in Q2 FY2023, with revenue up 13.8% year on year to $77.8 million. On the other hand, full-year revenue guidance of $315 million at the midpoint came in 0.86% below analysts' estimates. PlayStudios made a GAAP loss of $759 thousand, down from its profit of $5.5 million in the same quarter last year.

Is now the time to buy PlayStudios? Find out by accessing our full research report free of charge.

Andrew Pascal, Chairman and Chief Executive Officer of PLAYSTUDIOS, commented, “Our momentum continued in the second quarter of 2023 as we posted another solid quarter. Revenue and AEBITDA were well ahead of year ago results and exceeded Wall Street’s expectations for the third consecutive quarter. Similar to the first quarter, building momentum in our portfolio of games, increased focus on execution, and cost discipline are driving the results. Our AEBITDA margins grew over 1,000 basis points versus last year to 20.9%. This is a continuation of the strong year over year gains we achieved in the first quarter of 2023 and a reflection of our operational refinements over the past six months. Reaching margin parity with our peers is a primary goal of ours and something we’ll continue to advance as we balance our focus on operational improvements with our ongoing investments in future growth.”

Founded by a team of former gaming industry executives, PlayStudios (NASDAQ:MYPS) offers free-to-play digital casino games.

Since videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.

Sales Growth

PlayStudios's revenue growth over the last three years has been unimpressive, averaging 6.93% annually. This quarter, PlayStudios reported mediocre 13.8% year-on-year revenue growth, roughly in line with what analysts were expecting.

Ahead of the earnings results, analysts covering the company were projecting sales to grow 4.15% over the next 12 months.

While most things went back to how they were before the pandemic, a few consumer habits fundamentally changed. One founder-led company is benefiting massively from this shift and is set to beat the market for years to come. The business has grown astonishingly fast, with 40%+ free cash flow margins, and its fundamentals are undoubtedly best-in-class. Still, its total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.

Usage Growth

As a video gaming company, PlayStudios generates revenue growth by expanding both the number of people playing its games as well as how much each of those players spends on (or in) their games.

Over the last two years, PlayStudios's monthly active users, a key performance metric for the company, grew 95.4% annually to 13.9 million. This is among the fastest growth rates of any consumer internet company, indicating that users are excited about its offerings.

In Q2, PlayStudios added 7.24 million monthly active users, translating into 109% year-on-year growth.

Key Takeaways from PlayStudios's Q2 Results

With a market capitalization of $626.1 million and more than $127.7 million in cash on hand, PlayStudios can continue prioritizing growth.

We were very impressed by PlayStudios's robust user growth this quarter. That really stood out as a positive in these results. On the other hand, its full-year revenue guidance missed analysts' expectations and its revenue growth is decelerating. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. Investors were likely expecting more, and the stock is down 2.81% after reporting, trading at $4.49 per share.

So should you invest in PlayStudios right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 50% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned in this report.