everplay group plc Reports Mixed H1 2025 Results with Profit Growth Despite Revenue Dip
Why we think this is neutral
While everplay group's H1 2025 results present a mixed picture, there are several positive indicators that balance out the concerns. On the upside, the company reported a 16% increase in Profit Before Tax, improved gross and EBITDA margins, and a strong cash position. The performance of new releases was particularly impressive, with revenues up 40%. Moreover, the company expects full-year adjusted EBITDA to be slightly ahead of market expectations, which is encouraging. However, these positives are tempered by a 10% decline in group revenues and a 15% drop in back catalogue sales. The slight decrease in operating cash conversion from 109% to 94%, while still strong, also warrants attention. The company's outlook remains positive, with a strong pipeline for H2 2025 and beyond, including new first-party IP titles. Given these factors, the overall sentiment is neutral, as the revenue challenges are largely offset by profitability improvements and positive future prospects.
Key Points
- Group revenues decreased 10% to £72.4 million
- Profit Before Tax increased 16% to £14.3m
- Gross Profit Margin improved from 40.8% to 46.5%
- Adjusted EBITDA remained broadly in line at £19.2m, with margin up 240bps to 26.5%
- Cash and cash equivalents increased 9% to £59.5m
- New release revenues up 40%, back catalogue sales down 15%
- Operating cash conversion at 94%, down from 109% last year
- Full year adjusted EBITDA expected to be slightly ahead of market expectations
- Strong pipeline for H2 2025 and beyond, including new first-party IP titles
- Interim dividend of one pence per share declared
Summary
everplay group plc reported mixed results for H1 2025. Group revenues fell 10% to £72.4 million, but Profit Before Tax increased 16% to £14.3m. Gross Profit Margin improved from 40.8% to 46.5%, and Adjusted EBITDA margin increased by 240bps to 26.5%. The company's cash position strengthened, with cash and cash equivalents up 9% to £59.5m. New release revenues increased 40%, offsetting a 15% decline in back catalogue sales. Looking ahead, everplay expects full year adjusted EBITDA to be slightly ahead of current market expectations. The company has a strong pipeline for H2 2025 and beyond, including new first-party IP titles. Broker targets remain positive, with recent price targets ranging from 400p to 425p, above the current share price of 406p.