In a recent disclosure, international gaming and entertainment giant GDEV Inc. unveiled its unaudited financial and operational results for the third quarter (Q3) and first nine months ending September 30, 2023. The announcement, however, triggered a decline in the company’s stock during Friday morning trading.
At the time of this publication, GDEV Inc stock (GDEV) has witnessed a decline.
GDEV Inc
Current Price: $2.44
Change : -0.46
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GDEV Q3 2023 Financial Results
In the Q3 financial results GDEV Inc reported a year-over-year revenue decrease of $7 million (5%), totaling $121 million. This decline was attributed to a $6 million drop in bookings compared to the same period in 2022. The change in deferred revenue for Q3 2023 saw an insignificant decrease of $1 million compared to 2022.
Platform commissions experienced a notable 23% reduction in Q3 2023, primarily due to an 8% decrease in overall revenue generated from in-game purchases. This was accentuated by a shift towards the PC platform, associated with lower commissions compared to mobile and social networks.
Game operation costs increased by $2 million (19%) in Q3 2023 compared to the same period in 2022, reaching $12 million. This upswing was primarily attributed to an increase in average employee salaries following the relocation of personnel from Russia in the second half of 2022.
Selling and marketing expenses for Q3 2023 surged by $22 million, totaling $43 million. This growth was fueled by heightened investments in new players, a significant contrast to the reduced marketing spending in 2022.
General and administrative expenses saw a decrease of $6 million in Q3 2023 compared to the same period in 2022, primarily due to the absence of a $5 million loss on the disposal of Russian subsidiaries recorded in Q3 2022.
Consequently, total comprehensive income for Q3 2023 stood at $24 million, a decrease from $31 million in Q3 2022. Profit for the period, net of tax, amounted to $24 million, down from $32 million in the same quarter of 2022. Adjusted EBITDA decreased by $16 million compared to Q3 2022, amounting to $29 million.
Cash flows generated from operating activities in Q3 2023 were $8 million, marking a substantial decrease from $60 million in the same period of 2022. This decline was primarily attributed to increased cash outflows associated with investments in new players and decreased cash inflows from bookings.
GDEV First Nine Months 2023 Financial Performance
For the first nine months of 2023, GDEV reported a year-over-year revenue decrease of $25 million (7%), totaling $355 million. This decline was driven by a $32 million (9%) drop in bookings, partially offset by a $6 million increase in deferred revenues.
Platform commissions in the first nine months of 2023 decreased by 20%, primarily due to a 9% reduction in revenue generated from in-game purchases. The increasing share of revenue from the PC platform, associated with lower commissions, further contributed to the decline.
Game operation costs surged by $8 million (27%) in the first nine months of 2023 compared to the same period in 2022, reaching $39 million. This increase was primarily attributed to rising average employee salaries resulting from the personnel relocation from Russia in the second half of 2022, coupled with increased software support expenses.
Selling and marketing expenses in the first nine months of 2023 soared by $60 million, totaling $172 million. This growth was driven by substantial investments in new players, a stark contrast to reduced marketing spending in 2022.
General and administrative expenses decreased by $6 million in the first nine months of 2023 compared to the same period in 2022, primarily due to the absence of a $5 million loss on the disposal of Russian subsidiaries recorded in Q3 2022.
Consequently, total comprehensive income for the first nine months of 2023 amounted to $36 million, down from $87 million in the same period of 2022. Profit for the period, net of tax, was $35 million, compared to $84 million in the first nine months of 2022. Adjusted EBITDA decreased by $67 million, amounting to $33 million.
Cash flows generated from operating activities in the first nine months of 2023 were $8 million, compared to $99 million in the same period of 2022. This decrease was primarily attributed to increased cash outflows associated with investments in new players and decreased cash inflows from bookings.
Bookings declined by 6% year-over-year in Q3 2023 and by 9% in the first nine months of 2023. The company attributes this decline to significantly lower marketing investments in the first nine months of 2022, which impacted player acquisition. However, increased marketing investments in 2023 resulted in a 23% and 13% increase in MPU in Q3 and the first nine months of 2023, respectively, promising positive impacts on future bookings.
The share of advertisement sales as a percentage of total bookings increased to 7.4% in both Q3 and the first nine months of 2023, compared to 4.4% and 4.5% in the respective periods of 2022. This increase was attributed to substantially increased monthly active users and the successful implementation of advertisement functionality in Island Hoppers from Q2 2023.
In the first nine months of 2023, the share of PC versions of GDEV’s games increased by 1 percentage point, while the distribution of bookings across platforms remained largely consistent throughout Q3 2023.
The geographical split of bookings in both Q3 and the first nine months of 2023 compared to the respective periods in 2022 remained broadly similar, with a moderate increase in the share of Europe bookings.
