Huuuge (HUG) Q2 2024 earnings summary

Executive summary

• Core franchises surpassed $2 billion in lifetime revenue, generating strong cash flows with $32.7M net cash from operations in H1 2024.

• Q2 2024 revenue declined 8.4% year-over-year and 5.4% quarter-over-quarter to $63.4M, mainly due to a weaker social casino market and delayed feature launches.

• Direct-to-consumer (D2C) channel accounted for 12% of Q2 sales, with ongoing investment and ambitions to reach mid-teens by year-end.

• $70M share buyback completed in April 2024, with a total of $220M returned to shareholders over the past year.

• Investment of $3.5M in Bananaz Studios Ltd. and ongoing development of new games and features.

Financial highlights

• H1 2024 revenue was $130.3M, down 7.5% year-over-year; net profit was $31.6M, a 28.3% decrease.

• Adjusted EBITDA for Q2 2024 was $19.4M, with H1 adjusted EBITDA at $41.4M; margin fell to 31.8% from 39.1% year-over-year.

• Net operating cash flow for H1 2024 was $32.7M, with a conversion rate to adjusted EBITDA at 82%.

• Cash and equivalents totaled $109.6M as of June 30, 2024, down from $259.6M a year earlier, mainly due to share buybacks.

• Gross margin for H1 2024 was 71.9%, up from 70.6% in H1 2023.

Outlook and guidance

• Full-year 2024 revenue, adjusted EBITDA, and margin expected to decline year-over-year due to macroeconomic headwinds and delayed product launches.

• Peak performance from new features anticipated in late Q4, but not enough to offset annual revenue decline.

• Marketing spend to grow year-over-year but will be reduced in H2 2024 to align with product performance and payback discipline.

• Two MVP/tech launches planned for new games in H2 2024, with continued focus on core franchises and D2C channels.