PopReach Swings to Profit in Q1, Revenue Falls

PopReach Corporation (POPR) reported mixed first-quarter results on Monday morning. The developer of free-to-play games for mobiles, desktops, and tablets, swung to a profit in the quarter but experienced a decline in revenues year-on-year.

Revenue came in at $4.1 million in Q1 2021, a decrease of 12.8% from $4.7 million in the prior-year quarter, but flat from Q4 2020. Revenues from mobile platforms (Amazon, Apple, and Google) totaled $3 million, down 6.3% from $3.2 million reported in Q1 2020. The deployment of successful enhancements from growth franchises led to sequential mobile revenue growth of 14% quarter-on-quarter.

The continued implementation of operating cost reductions led to an improvement in gross profit margin to 62% from 61.3% in Q4 2020, and 48.8% in Q1 2020.

Meanwhile, net income amounted to $2.2 million ($0.03 per share) in the three months ended March 31, compared to a loss of $0.7 million (-$0.02 per share) a year ago.

PopReach Co-founder and CEO Jon Walsh said, “We are thrilled to see our investments in growth franchises begin to yield fruit, with mobile game revenue growing 14% sequentially from the fourth quarter. PopReach continues to be cash and EBITDA positive and is committed to executing its growth initiatives on an ROI-positive basis. Although revenue from the Facebook Canvas platform was down, this reflects industry-wide declines attributable to Adobe Flash technology’s end of life at the end of 2020; however, our Facebook games are expected to continue to be cash positive, and prove our investment thesis, having already paid back our original 2018 investment on a net cash basis.”

The company ended the quarter with $14.8 million in cash on hand, compared to $18.1 million at the end of 2020. (See PopReach Corporation stock analysis on TipRanks)

A month ago, Echelon Wealth Partners analyst Rob Goff assigned a Buy rating to POPR with a C$2.00 price target (194% upside potential).

Goff stated, “We view PopReach’s strategy of acquiring mature games as a key differentiator supporting sustained outperformance as a consolidator.”

The rest of the Street is bullish on POPR with a Strong Buy consensus rating based on 3 Buys. The average analyst price target of C$1.70 implies 150% upside potential to current levels. Shares are down nearly 80% since the beginning of the year.

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