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Highlights
- Revenue Decline: Playside Studios saw a 21% drop in revenue to $28.5 million.
- Earnings Loss: The company reported an EBITDA loss of $2.8 million, a sharp contrast to last year’s $12.2 million profit.
- Guidance Cut: Playside has downgraded its FY25 revenue forecast to $50M–$54M, with a projected EBITDA loss of $6M–$10M.
Shares in Playside Studios Ltd (ASX:PLY) are facing significant declines today, falling by 40% to 22.5 cents in morning trade, following the release of its disappointing first-half FY25 update. The company, which is Australia’s largest video game developer and publisher, reported weaker-than-expected financials, triggering a wave of investor sell-offs.
Revenue and Earnings Fall Short
For the six months ending 31 December 2024, Playside Studios reported revenue of $28.5 million, reflecting a 21% year-on-year decline. The dip was primarily driven by a 44% drop in Original IP revenue, which fell to $9.9 million. This downturn was attributed to the absence of a major licensing agreement with the popular game Dumb Ways to Die, which had boosted last year’s figures. In contrast, Work for Hire revenue remained relatively stable at $18.6 million.
However, the company’s earnings were far more concerning. Playside posted an EBITDA loss of $2.8 million, a stark reversal from the $12.2 million EBITDA profit reported in the same period last year. Management attributed this loss to increased staffing costs and marketing expenses of around $3.5 million related to the development of major Original IP projects currently in the pipeline.
Declining Cash Reserves
As a result of the loss, Playside’s cash balance has been reduced to $28.5 million, down from $37.1 million in June 2024. The company’s cash reserves are expected to shrink further, with management forecasting a closing balance of just $10 million to $15 million by the end of FY2025.
Guidance Downgrade
Playside’s first-half performance was below expectations, prompting the company to downgrade its guidance for FY25. The company now expects FY25 revenue to fall between $50 million and $54 million, a substantial reduction from its previous forecast of $62 million to $68 million. The company also warned of an EBITDA loss of $6 million to $10 million, a sharp contrast to the earlier forecast of breakeven or a modest profit.
This guidance revision has raised concerns among investors, who now question Playside’s ability to recover its momentum in the coming months. The company’s cash burn rate and its reliance on upcoming projects to turn things around are key factors that will be closely monitored in the second half of the fiscal year.
