Playtika Stock Dips 4.5% on Weak Q1 Results, Guidance

Digital entertainment company Playtika Holding Corp. (NASDAQ: PLTK) recently posted weaker-than-expected results for the first quarter ended March 31, 2022.

Following the muted results, shares of the company declined over 4.5% on Tuesday. The stock recovered marginally to close at $12.21 in the extended trading session.

Revenue & Earnings

Playtika’s revenues for the quarter stood at $676.9 million, up 6% year-over-year. The growth in revenues was driven by a 20.7% year-over-year rise witnessed in the revenues of its casual portfolio, which accounted for 52.5% of the total revenues of the company. Analysts had expected the company to post quarterly revenues of $681.88 million.

Earnings for the quarter stood at $0.20 per share, up 122.2% year-over-year. However, the figure failed to surpass the consensus estimate of $0.23 per share.

Other Operating Metrics

The company’s average revenue per daily active user (ARPDAU) improved from $0.68 in the previous year to $0.74. Further, the average daily payer conversion improved from 2.8% in the previous year to 3.2%.

The company’s net income margin stood at 12.3%, up from 5.6% a year ago. However, the adjusted EBITDA margin declined during the quarter to 32.6% from 40.4% last year.

Outlook

For 2022, the company expects revenue of $2.73 billion against the consensus estimate of $2.82 billion. The adjusted EBITDA forecast for the same period is $940 million.

Management Commentary

The CEO of Playtika, Robert Antokol, said, “We delivered strong revenue growth as a result of our continual efforts to improve and refine our monetization program and increase retention of our players.

“The year began with investment in our product roadmaps and new marketing campaigns to secure our foundation for ongoing growth. I want to thank our employees who have remained resilient through the war in Ukraine. I am forever grateful for their sacrifice and dedication to helping Playtika become a market leader in mobile gaming entertainment.”

Stock Rating

Overall, the stock has a Strong Buy consensus rating based on six Buys and two Holds. PLTK’s average price target of $23.25 implies upside potential of 90.6% from current levels. Shares have declined 52.9% over the past year.

Conclusion

Playtika’s revenues and earnings have witnessed solid year-over-year growth, even though the muted revenue outlook for 2022 acted as a dampener for the stock price. However, strong key operating metrics gives it a solid base to grow its operations.

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