Big Fish profits drop as focus turns to user acquisition
Churchill Downs-owned operator endures âchallenging quarterâ despite rise in bookings
 
Big Fish Games has reported a 30% drop in adjusted EBITDA to $23.4m in Q3, driven primarily by big increases in user acquisition spending, platform fees and developer fees.
However the investment also led to a 3% increase in bookings for Q3 2016, driven by a rise in casual and âmid-coreâ players.
Total bookings reached $118.5m, while net revenue increased $18.7m to $122.3m.
âOverall it was a fairly challenging quarter for Big Fish,â said analysts at Eilers & Krejcik Gaming.
âOn the plus side the company was able to control marketing expenses as EBITDA margins improved sequentially and were above our estimates; moreover, management appears to be taking a new approach to user acquisition with a renewed focus on long-term profitability.
âOn the negative side, bookings were down sequentially for all three reported segments and while we are entering the seasonally favorable Q4 period the ability to maintain positive momentum will likely be dependent upon successful new game launches.â
The operator said its growth was powered by its casual and mid-core free-to-play business unit which saw bookings grow by a quarter to $51.8m.
Conversely, bookings for both social casino and premium paid games slipped back year-on year to $44.2m and $22.5m respectively.
Social casino bookings declined by $3.3m compared to the third quarter of 2015, reflecting an 8% increase in average paying users but a 14% decline in average bookings per paying user.
Premium bookings declined $4.2m, or 16%, primarily driven by âcustomers continuing to shift from paid PC games to free-to-play mobile gamesâ.