PlaySide Faces Profit Loss and Lower Cash Guidance as Game Launches Delay

PlaySide's 1HFY25 Financial Snapshot

Australia’s largest video game developer and publisher, PlaySide Studios Limited (ASX: PLY), has revealed a challenging first half of fiscal 2025 with unaudited revenue falling 21% to $28.5 million compared to the prior corresponding period. The decline was driven primarily by a 44% drop in Original IP revenue to $9.9 million, reflecting the absence of a significant licensing fee that boosted the previous period.

Meanwhile, Work for Hire (WFH) revenue remained steady at $18.6 million, but the company reported an EBITDA loss of $2.8 million, a stark reversal from the $12.2 million profit recorded in 1HFY24. This loss was attributed to increased headcount costs and a substantial $3.5 million marketing spend on upcoming Original IP projects.

Revised FY25 Guidance and Underlying Challenges

PlaySide has lowered its FY25 revenue guidance to $50-54 million from the previous $62-68 million forecast, alongside an expected EBITDA loss of $6-10 million, a significant shift from earlier profit expectations. The company cites delayed decisions on major new Work for Hire contracts, pushing revenue recognition into the 2025 calendar year, as a key factor behind the $11 million shortfall in this segment.

Original IP revenue is also expected to fall short by $2 million, largely due to the underwhelming launch performance of 'Kill Knight.' Despite earning one of the highest Metacritic scores globally in 2024, sales initially lagged internal targets. However, recent updates and strong Steam Winter Sale results have improved momentum, suggesting a more positive medium-term outlook.

Cost Management and Cash Position

In response to the revenue pressures, PlaySide has implemented cost-saving measures including a reduction in headcount from 351 to 345 and the postponement of new Publishing investments, collectively saving $7 million. Discretionary overheads were also trimmed by $1 million. These efforts have moderated the impact on cash reserves, with closing cash expected between $10-15 million, down from prior guidance of $15-20 million but still providing a buffer for ongoing development.

Looking Ahead: A Strong Pipeline of Titles

Despite the current setbacks, PlaySide remains optimistic about its future. The company is preparing for a slate of major game launches starting in the second half of calendar 2025. Notably, 'MOUSE: P.I. For Hire' has seen wishlist growth from 330,000 to over 800,000 on Steam, with plans to expand marketing efforts across multiple platforms including PlayStation, Xbox, and Nintendo Switch.

Additionally, PlaySide is investing heavily in marketing for a Game of Thrones real-time strategy game and progressing development on a console title based on the popular Dumb Ways to Die IP. These projects are expected to enhance the company’s Original IP portfolio and drive long-term value.

Management’s focus remains on balancing development investment with financial discipline, positioning PlaySide to capitalize on new opportunities as Work for Hire contracts materialize and Original IP titles gain traction.