BoomBit S.A. Q3 2025: Operational Decay Masked by Cost Cutting and Accounting Adjustments
Revenue contracts 14% and Net Profit collapses 96%. Management's pivot to cost-cutting and one-off accounting gains fails to hide the deterioration of the core gaming portfolio.
Executive Summary: The Shrinking Pie
BoomBit S.A.’s results for the first three quarters of 2025 present a bearish picture of a company in contraction. While the narrative focuses on "optimization" and "strategic shifts," the financial reality is undeniable: the core business is shrinking. Total revenue is down 14% year-over-year (YoY), driven by a massive 27% decline in advertising revenue—the lifeblood of their Hyper-Casual portfolio. Even more concerning is the collapse in Net Profit, which plummeted 96% to a negligible 0.4M PLN, essentially break-even.
The "elephant in the room" is the quality of earnings. The company reported a positive Operating Result of 1.2M PLN, but this was heavily assisted by a 2.5M PLN reversal of provisions related to token bonuses in the Blockchain segment. Without this non-cash, one-off accounting adjustment, the company would likely have reported an operating loss. Furthermore, the decision to slash User Acquisition (UA) spend by 16% is not a sign of efficiency; in the mobile gaming sector, a reduction in UA investment often signals a lack of confidence in the LTV (Lifetime Value) of the current portfolio. BoomBit is not growing; it is liquidating its user base to preserve cash.
Key Financial Metrics (9M 2025 vs. 9M 2024)
The YoY comparison reveals a broad deterioration in fundamental metrics.
| Metric | 9M 2025 (Current) | 9M 2024 (Prior Year) | Change (YoY) |
|---|---|---|---|
| Total Revenue | 143.8M PLN | 167.7M PLN | -14% |
| Advertising Revenue | 78.9M PLN | 108.3M PLN | -27% |
| Micropayments (IAP) | 46.2M PLN | 51.1M PLN | -10% |
| EBITDA | 15.0M PLN | 26.2M PLN | -43% |
| Operating Result (EBIT) | 1.2M PLN | 14.1M PLN | -92% |
| Net Profit | 0.4M PLN | 11.0M PLN | -96% |
| UA Spend (Cost of Sales) | 75.6M PLN | 88.4M PLN | -14% |
Portfolio Performance: The Mid-Core Myth
Management has long touted a pivot from Hyper-Casual (HC) to Mid-Core to improve revenue stability. These results challenge the success of that strategy.
- Hyper-Casual Meltdown: Advertising revenue, primarily derived from HC titles, dropped by nearly 30M PLN. This confirms the broader industry trend that the classic HC model is facing severe headwinds. BoomBit’s portfolio is aging, and new hits are not replacing the churn of the back-catalog.
- Mid-Core Stagnation: Revenue from Mid-Core/Casual games declined by approximately 12%, totaling 80.8M PLN. If the "pivot" were working, we would expect this segment to grow and offset the HC decline. It is not. The 3.7M PLN impairment write-off for Train King Tycoon (a cancelled project) further highlights the risks in their development pipeline; capital was burned on a title that will generate zero return.
- The Blockchain Implosion: The Blockchain segment has effectively ceased to be a business. Revenue collapsed from 5.5M PLN in 2024 to a mere 0.3M PLN in 2025 (-94%). While the company reversed provisions here to boost the P&L, structurally, this vertical is dead weight.
Future Outlook & Pipeline
The company is placing significant pressure on Q4 2025 releases to salvage the fiscal year.
- Upcoming Releases: The outlook hinges on Hunter's Origin (released Oct 2025) and Big Helmets: Heroes of Destiny (released Sept 2025). Investors should remain skeptical of the projected impact until hard DAU/ARPU data is released.
- Services Diversification: The push into "Applifters" (B2B services for playable ads and BI) is a classic defensive maneuver. When a studio cannot generate enough organic growth from its own games, it tries to monetize its tools. While this generates cash, it commands lower valuation multiples than IP ownership.
- MyBots Joint Venture: The 50/50 partnership for MyBots reduces financial risk but also caps the upside. It essentially relegates BoomBit to a "work-for-hire" status on this title for the development phase, sharing future profits equally.
Risk Assessment
- Currency Headwinds (FX Risk): The report explicitly mentions the strengthening Polish Złoty (PLN) as a negative factor. Since BoomBit incurs costs in PLN but earns revenue in USD/EUR, a strong domestic currency compresses margins.
- Capitalization Aggression: The company capitalized 20.3M PLN in development costs (down from 26.9M PLN). While a reduction is positive, capitalization remains significant. If the new releases flop, these capitalized assets will turn into future impairment charges.
- Talent Drain: Headcount was reduced by 41 people (-14.5%). While this lowers OpEx, a "brain drain" in a creative industry can cripple long-term innovation capabilities.
Management Commentary: Reading Between the Lines
Management attributes the revenue decline to the strong PLN and a "transitional" period. However, the explanation for the drop in User Acquisition (UA) is evasive. They claim to be focusing on "efficiency," but a 16% drop in UA spend combined with a revenue drop suggests that their audiences are saturated.
Furthermore, the emphasis on the "performance bonus" from the new IronSource mediation deal (2.8M PLN revenue recognized) smacks of reliance on one-off commercial restructuring rather than organic player spending. Management is effectively engineering quarter-to-quarter survival through cost-cutting and B2B deals, masking the erosion of their consumer-facing business.