The first quarter of the fiscal year brought a bag of both promising news and challenges for the gaming giants Red Rock and PlayStudios. Each company achieved some advancements, yet they also encountered setbacks in crucial financial indicators.
Kicking off with Red Rock, the most notable information is the 12.8% year-over-year growth in revenue, clocking in at $488.9 million. This is a notable increase from the $391.9 million reported last year. A detailed look into the revenue sources shows that $485.6 million was earned from Las Vegas operations, marking a 13.0% uplift, while $3.3 million was attributed to corporate and other activities.
The earnings can be broken down further, with casino operations bringing in the lion’s share at $316.9 million – an impressive 10.0% increase. Additionally, positive gains were seen across other sectors with food and beverage earning $93.3 million, room sales hitting $52.9 million, and other activities garnering $25.9 million.
On the flip side, a significant increase in operating expenses, which rose by 12.5% to $333.4 million, overshadowed this upward trajectory. The greatest expenditure for Red Rock lay in general and administrative costs totaling $104.8 million. Furthermore, the company faced a $57.2 million bill in interest expenses and, divergent from last year’s figures, took a hit from loss on debt extinguishment and modification, amounting to $14.4 million.
After taking these increased costs into account, Red Rock’s pre-tax profit suffered an 11.6% drop to $86.6 million. The operator also recognized tax expenses of $6.3 million and a subtraction of $35.5 million in profits due to non-controlling interests, culminating in a net profit of $42.8 million, which is a 4.3% decrease from the previous year.
Yet, amidst these figures, a glimmer of positive news emerged as the adjusted EBITDA rose by 7.7% to $209.1 million. Interestingly, the financial pattern for Q1 mirrored the one in 2023, marked by increased revenue but a net profit decline.
Turning the lens onto PlayStudios, Q1 presented a contrasting scenario. The company reported a slight revenue dip of 2.9% to $77.8 million, yet experienced an improvement in net loss. This year’s revenue was exclusively generated by the PlayGAMES division, in contrast to the previous year when an additional $2.5 million was earned from the PlayAWARDS loyalty platform, which did not generate revenue this period.
Andrew Pascal, chairman, and CEO of PlayStudios, commented, “The focus for PlayAWARDS remains on readying the platform for external usage. We continue our conversations with other game publishers and strategic partners and are optimistic about finalizing agreements. Simultaneously, we’re integrating the platform into all our games.”
Lower revenue was slightly offset by reduced operating expenses, which decreased by 3.4% to $79.5 million, with restructuring costs falling a remarkable 84.3%. With $1.3 million coming in as other income, predominantly from interest, the pre-tax loss narrowed from $2.3 million to $453,000. Post-tax, the net loss stood at $567,000, a marked improvement from the $2.6 million figure of the previous year. Despite these strides, PlayStudios saw a 14.0% decline in consolidated adjusted EBITDA, with the margin settling at 19.7%.
Despite the tough start to the year, CEO Pascal remained positive, stating, “We began the year well with revenue and consolidated adjusted EBITDA surpassing consensus expectations. We achieved this despite enduring industry and economic challenges that have complicated operations.”
In terms of strategic progress, Pascal believes that these efforts will lead to PlayStudios emerging as a more robust company by year-end. Holding onto their annual forecast, the company maintains its guidance with revenue projected between $315.0 million and $325.0 million and a consolidated adjusted EBITDA range of $65.0 million to $70.0 million.
As the fiscal year advances, both Red Rock and PlayStudios will continue to navigate the turbulent waters of the business world, with shareholders and enthusiasts alike closely monitoring the companies’ ability to turn these mixed Q1 results into steady growth.
