PLAYSTUDIOS Q2 2026 earnings: Legacy weakness widens losses

PLAYSTUDIOS (NASDAQ: MYPS) reported Q2 2026 revenue of $55.0 million, down 7.3% from $59.3 million a year earlier, while diluted EPS fell to a loss of $0.10 from a loss of $0.02. For the quarter ended June 30, the GAAP net loss widened to $13.3 million and non-GAAP consolidated AEBITDA declined to $7.3 million. Persistent weakness in legacy social casino games outweighed higher direct-to-consumer revenue, while restructuring charges and growth spending added pressure.

Core Financial Results

Revenue declined as audience and revenue erosion continued across the legacy portfolio. Direct-to-consumer revenue more than doubled to $14.7 million, but that growth was not enough to offset the broader decline.

Total operating costs increased even as revenue fell, widening the operating loss. Consolidated AEBITDA also decreased, showing that the deterioration was not limited to GAAP restructuring and other excluded expenses.

Consolidated AEBITDA and its margin are non-GAAP measures. Net loss, operating loss, and diluted EPS are reported on a GAAP basis.

Business and Portfolio Performance

Legacy social casino games remained the main source of pressure, with management citing persistent secular headwinds affecting both audience and revenue. Companywide average daily active users were 1.9 million, average monthly active users were 7.8 million, and ARPDAU was $0.32; no year-over-year comparisons were provided for these metrics.

Direct-to-consumer revenue increased 120% to $14.7 million from $6.7 million. Management said this channel represented a significantly larger portion of in-app purchase revenue and supported better platform economics by shifting more transactions away from third-party distribution channels.

Results from newer products were less favorable. Tetris Block Party reached approximately 123,000 daily active users as of June 2026, but new-user growth slowed following its first-quarter launch campaigns. Management said earlier engagement, monetization, and user-acquisition payback levels had been difficult to sustain.

The Win Zone also performed below internal expectations for engagement and monetization, prompting PLAYSTUDIOS to slow investment and limit significant marketing spending. The POP! Slots sweepstakes initiative continued validation and beta testing, which the company expected to complete in the third quarter.

Cost Savings Have Not Yet Offset Restructuring and Growth Spending

Some expense categories showed the benefit of earlier cost reductions. Cost of revenue, excluding depreciation and amortization, fell to $10.8 million from $14.6 million, while general and administrative expense declined to $8.8 million from $11.3 million.

Those savings were offset by higher spending elsewhere. Selling and marketing expense rose to $15.3 million from $13.1 million, research and development expense increased to $15.1 million from $14.2 million, and restructuring costs climbed to $4.8 million from $0.1 million. User-acquisition expense increased by $2.7 million because of growth-initiative investments, net of savings in the core business.

The earlier Reinvention program generated approximately $29 million in annualized operating-expense savings, but those savings initially helped fund more than $11 million of additional year-over-year investment in user acquisition and new product development. The current Renewal program is intended to produce another $33 million to $39 million in annualized savings through measures including the closure of four of nine studios, the elimination of 177 positions, team consolidation, lower marketing spending, and reduced cost of sales.

The net loss was also affected by items below operating income. PLAYSTUDIOS recorded $2.2 million of net other expense, compared with $0.7 million of net other income a year earlier, primarily reflecting a $2.5 million loss from a change in the fair value of contingent consideration.

Balance Sheet and Capital Allocation

Cash and cash equivalents were $102.7 million at June 30, 2026, down by about $2.3 million from December 31, 2025. Current assets totaled $130.4 million, compared with current liabilities of $43.5 million.

PLAYSTUDIOS had $38.5 million remaining under its share-repurchase authorization and adopted a Rule 10b5-1 trading plan. The company expects to continue repurchases subject to market conditions, legal requirements, and other considerations. At the same time, management is applying higher return thresholds to product investments and may reduce, restructure, or suspend initiatives that do not meet its standards.

Management’s Priorities

Management’s near-term focus is to complete the Renewal restructuring, stabilize the existing portfolio, and improve profitability and cash generation. Investment in Tetris Block Party and playSWEEPS will be staged and contingent on demonstrated returns rather than maintained at a fixed level.

The company is also introducing AI-enabled workflows selectively across development and operating teams. Management is prioritizing uses that can produce measurable gains in productivity, execution quality, or margins rather than treating AI as a separate growth initiative.

Recent Insider Transactions

The supplied insider data reports 1,313,335 shares purchased across seven transactions and 47,968 shares sold in one transaction during the preceding six months, resulting in net purchases of 1,265,367 shares. Among the latest records, the following entries contained an explicit purchase or sale price and transaction value.

These records describe the transactions but do not, by themselves, establish the insider’s view of the company’s prospects.

Risks Investors Need to Watch

• Continuing legacy portfolio erosion: Further declines in social casino audiences and revenue could keep total revenue under pressure even if direct-to-consumer penetration continues to increase.
• Uncertain returns from new products: Tetris Block Party’s retention, monetization, and payback metrics have been difficult to sustain, while The Win Zone performed below internal expectations. Further reductions or suspensions could limit future growth options.
• Restructuring execution and timing: Renewal is expected to reduce annualized costs, but the full benefit will take time to appear. Restructuring charges and implementation risks may continue to affect reported profitability in the interim.
• Marketing efficiency: User-acquisition expense increased during the quarter even as total revenue declined. Improving retention and payback will be important if the company continues funding newer initiatives.

Summary

PLAYSTUDIOS’ Q2 2026 results reflected a business still transitioning from a declining legacy portfolio toward a smaller, more disciplined operating model. Direct-to-consumer revenue provided a meaningful offset, but lower total revenue, higher growth spending, restructuring costs, and unfavorable non-operating items widened the loss and reduced AEBITDA. The next areas to monitor are the realization of Renewal savings, stabilization of the core portfolio, and whether Tetris Block Party and playSWEEPS can meet the company’s higher return thresholds.