Digital casino game platform PlayStudios (NASDAQ: MYPS) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 19.1% year on year to $57.65 million. Its GAAP loss of $0.07 per share was significantly below analysts’ consensus estimates.

Is now the time to buy MYPS? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

PlayStudios’ third quarter was marked by continued revenue and user declines, a trend that management attributed to persistent category headwinds and the impact of recent cost-reduction efforts. CEO Andrew Pascal described the operating environment as “extremely challenging,” citing a shift in focus from content development to efficiency, which contributed to a further softening in the portfolio. Notably, Pascal acknowledged, “Our valuation today sits only slightly above our cash position, and we know some investors are questioning our direction,” signaling a cautious and self-critical tone throughout the call.

Looking forward, PlayStudios is concentrating on stabilizing its core business while scaling newer initiatives such as sweepstakes and the Tetris Block Party launch. Management highlighted intentional investments into direct-to-consumer channels and product innovation, with Pascal stating, “Our priority remains balancing disciplined investment with continued improvement in operating efficiency while advancing the initiatives that we believe can reenergize our growth over time.” However, ongoing market contraction and uncertainty around new product contributions add layers of risk to the company’s outlook.

Key Insights from Management’s Remarks

Management pointed to a mix of structural industry challenges, deliberate cost reductions, and shifts in player engagement as the primary factors shaping the quarter’s results and strategy.

• Cost discipline trade-offs: Leadership emphasized that expense reductions improved short-term profitability but limited the pace of new content and product development, leading to lower engagement and portfolio softening.
• Sweepstakes expansion: The Win Zone sweepstakes product, now live in 15 states, is gaining traction, with management noting improved retention and monetization. Despite regulatory contraction trimming the total addressable market, PlayStudios views sweepstakes as a key long-term growth lever and plans to launch in all eligible states before year-end.
• Tetris Block Party development: The company is preparing a broader rollout of Tetris Block Party, describing early beta results around user acquisition, retention, and monetization as encouraging. Management believes this franchise could become a large-scale mobile property if successful.
• Direct-to-consumer momentum: PlayStudios saw strong growth in direct-to-consumer revenue, aided by relaxed platform policies and improved merchandising within apps. This channel now accounts for a greater share of in-app purchases and is expected to contribute positively to margins.
• Category headwinds persist: Declines in daily active users and overall monetization continue, especially in the casual games segment, reflecting broader industry shifts toward sweepstakes and ongoing market contraction.

Drivers of Future Performance

Looking ahead, PlayStudios expects its performance to hinge on the adoption of new products, further cost discipline, and the evolving regulatory landscape for digital casino gaming.

• Scaling sweepstakes and new launches: Management is prioritizing the nationwide rollout of Win Zone and a focused marketing push for Tetris Block Party. The ability of these products to scale and retain users will be crucial for revenue stabilization and future growth.
• Core business stabilization efforts: The team is investing in player retention within the core social casino portfolio, especially as regulatory changes in major states such as California could shift user dynamics. Management hopes new offerings and targeted marketing can offset declines in legacy products.
• Margin improvement initiatives: Continued growth in direct-to-consumer channels and web-based sweepstakes is expected to support margin expansion. However, management cautioned that gross margin benefits may not be linear due to ad monetization mix and potential changes in redemption rates as new products scale.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will track (1) the full-scale rollout and monetization of Win Zone across all eligible states, (2) user acquisition and engagement trends for Tetris Block Party as it moves beyond beta, and (3) stabilization in the core social casino business, particularly in response to regulatory shifts in key states like California. Progress on direct-to-consumer channels and early signs of margin improvement will also be important indicators.

PlayStudios currently trades at $0.81, down from $0.90 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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