20-F: GDEV Inc. Navigates Gaming Headwinds, Boosts Profit

GDEV Inc. reports a significant increase in net profit for 2025 despite declining revenues and bookings, driven by efficiency in user acquisition and strategic portfolio adjustments.

Summary

• Net profit for the year ended December 31, 2025, increased to $69.3 million, up from $25.5 million in 2024.
• Total revenue decreased by 4% to $404.3 million in 2025 from $420.9 million in 2024.
• Bookings declined by 13% to $351.0 million in 2025 from $404.0 million in 2024.
• Selling and marketing expenses decreased by 24% to $159.3 million in 2025, reflecting a shift to efficiency-focused user acquisition.
• Monthly Paying Users (MPUs) decreased to 281 thousand in 2025 from 342 thousand in 2024, while Monthly Active Users (MAUs) fell to 8.6 million from 11.6 million.
• Average Bookings Per Paying User (ABPPU) increased to $98/month in 2025 from $92/month in 2024.
• Monthly Payer Conversion improved to 3.3% in 2025 from 2.9% in 2024.
• Hero Wars generated 93% of total revenues in 2025, with cumulative all-time Bookings exceeding $2.5 billion.
• The company increased its ownership in Castcrown Ltd to 57% in August 2025 and acquired Light Hour Games Ltd in August 2025.
• A one-time special cash dividend of $3.31 per ordinary share, totaling approximately $56 million, was paid in March 2025.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a mixed but strategically sound report. While top-line metrics like revenue and bookings declined, the significant increase in net profit and improved monetization efficiency (ABPPU, MPU conversion) suggest effective cost management and a focus on higher-value users, which is positive in a challenging industry environment. The strategic acquisitions and pipeline development also indicate future growth potential.

Positives

• Net profit for the year significantly increased to $69.3 million in 2025 from $25.5 million in 2024, demonstrating improved profitability.
• Selling and marketing expenses decreased by 24% to $159.3 million, indicating enhanced efficiency in user acquisition strategies.
• Average Bookings Per Paying User (ABPPU) increased to $98/month in 2025 from $92/month in 2024, reflecting stronger monetization from the core player base.
• Monthly Payer Conversion improved to 3.3% in 2025 from 2.9% in 2024, suggesting a more effective conversion of active users to paying users.
• Strategic acquisitions, such as increasing ownership in Castcrown Ltd to 57% and acquiring Light Hour Games Ltd, expand the game portfolio and development capabilities.
• Hero Wars continues to be a strong performer, ranking as the 2nd most downloaded RPG on Android and iOS in 2025 and surpassing $2.5 billion in cumulative all-time Bookings.
• The company maintains a highly diversified global user and revenue base, with developed markets like the US, Europe, and Asia accounting for the majority of revenue, providing protection against country-specific risks and currency fluctuations.
• Net cash flows generated from operating activities increased marginally to $29.4 million in 2025 from $28.5 million in 2024, supported by reduced user acquisition expenses.

Negatives

• Total revenue decreased by 4% to $404.3 million in 2025 compared to $420.9 million in 2024.
• Bookings declined by 13% to $351.0 million in 2025 from $404.0 million in 2024, reflecting a continued negative trend in the gaming market and the mobile RPG segment.
• Monthly Paying Users (MPUs) decreased by 18% to 281 thousand in 2025 from 342 thousand in 2024.
• Daily Active Users (DAUs) decreased by 7% to 736 thousand for Hero Wars in 2025 and overall average DAUs decreased by 321 thousand compared to the prior year, indicating a shrinking player base.
• The RPG genre, which includes the core franchise Hero Wars, continued to face significant revenue headwinds in 2025 across major regions.
• Game operation costs increased by 12% to $57 million in 2025, mainly due to increased investments in IT infrastructure.
• General and administrative expenses increased by 10% to $35 million in 2025, driven by higher salary and personnel expenses.
• A one-time special cash dividend of $56 million reduced the company's cash and cash equivalents, with an additional $4 million remaining unpaid due to legal restrictions.

Risks

• Reliance on third-party distribution platforms (iOS App Store, Facebook, Google Play Store) and payment processors (Xsolla) which may adversely change policies or experience disruptions.
• Substantial portion of revenue generated by a single core game, Hero Wars, with no assurance of its continued success.
• Majority of revenues generated by a small percentage of total users, making the business vulnerable to changes in spending habits of these high-paying users.
• Free-to-play business model and value of virtual items are highly dependent on proper management of game revenues and pricing models.
• Inability to successfully develop new games or acquire and integrate new businesses could limit growth.
• Operating in a highly competitive industry with low barriers to entry, facing competition from numerous participants and evolving technologies like AI.
• Legal or regulatory restrictions or proceedings, including those related to loot boxes, data privacy, and content moderation, could adversely impact business and growth.
• Security breaches or other disruptions could compromise information, expose the company to liability, and harm reputation.
• Inability to protect intellectual property and proprietary information, including AI-generated content, could adversely impact business.
• Use of open-source software may pose risks to proprietary software and services.
• Exposure to added business, political, regulatory, operational, financial, and economic risks due to international operations and distribution in various countries.
• Potential for disagreements among largest shareholders (Andrey Fadeev and Everix Investments Limited) who collectively own a significant portion of outstanding shares, potentially affecting key decision-making.
• Volatility in the price of ordinary shares and warrants due to various market and industry factors.
• Failure to maintain an effective system of disclosure controls and internal control over financial reporting could impair ability to produce timely and accurate financial statements.
• Loss of foreign private issuer status in the future could result in significant additional cost and expense.
• Incurrence of additional expenses after ceasing to be an emerging growth company (expected December 31, 2026).
• Reports published by analysts, including projections that differ from actual results, could adversely affect share price and trading volume.
• Characterization as a passive foreign investment company (PFIC) for U.S. federal income tax purposes could lead to adverse U.S. federal income tax consequences for U.S. Holders.
• Vulnerability to damage or interruption from natural disasters, power losses, telecommunications failures, cyber-attacks, terrorist attacks, acts of war, human errors, break-ins and similar events, with no insurance coverage for resulting losses.
• Reliance on skilled employees with creative and technical backgrounds; loss of key employees or inability to attract and retain talent could harm business.
• Reliance on information technology and other systems, with potential for failures, errors, defects, or disruptions.
• Business could be adversely impacted by changes relating to electronic marketing or the restriction of the use of third-party cookies and similar tracking technologies.
• Exposure to fluctuations in currency exchange rates, which could negatively affect financial condition and results of operations.
• Potential for increased tax obligations due to changes in tax laws, new tax rulings, and audits or examinations of filing positions, including withholding taxes.
• Dispute with a contractual counterparty with claims for substantial damages, the outcome of which cannot be reliably estimated.

Future Outlook

The company aims to become a leading global multi-genre gaming company through continuous organic development, growth investments, and selective M&A. It plans to enhance existing IP, expand product offerings, improve monetization models to increase player lifetime value, and refine marketing efforts to acquire high-quality paying users. The company also expects to face increased compliance costs as an emerging growth company and potential additional expenses after ceasing to be one by December 31, 2026.

Management Comments

• The decline in MAUs throughout 2025 reflects the reduced inflow of new players following our strategic shift toward more disciplined, efficiency-focused user acquisition spending in 2024 and 2025.
• The increase in ABPPU in 2025 was due to the greater decline in MPUs in 2025 in comparison to the decline in Booking in 2025, which we attribute to a shift in our user acquisition strategy to enhance efficiency by focusing on a smaller, more targeted audience that possesses characteristics that we deem to be linked to higher-paying opportunities.
• Management believes that the latest geopolitical developments will have certain residual negative effects on the Company's future financial performance, limited to the share of Bookings deriving from the markets of the former Soviet Union (FSU), which stood at 8% of our total for 2025 and which, as a percentage of our total Bookings, generally declined over the past few years. The exact effects cannot currently be reliably estimated due to the constantly changing environment.
• Management believes that there is no material uncertainty that may cast significant doubt regarding the Company's or the Group's ability to continue as a going concern.

Industry Context

StockSavvy.ai notes that the global digital gaming market, particularly mobile gaming, continues to grow, with mobile IAP revenue reaching approximately $81.75 billion in 2025. However, the market is increasingly driven by deeper monetization of existing players rather than expanding the player base, as total mobile gaming downloads declined. The RPG genre, where GDEV's core franchise Hero Wars operates, faced significant headwinds in 2025, with IAP revenue declining across major regions. This trend aligns with GDEV's reported decline in Bookings and MAUs, but its improved ABPPU and Monthly Payer Conversion suggest a successful adaptation to the industry's shift towards higher-value player retention and monetization efficiency. The consolidation of advertising spend around fewer platforms also highlights the competitive pressures on user acquisition costs.

Comparison to Industry Standards

• GDEV's core game, Hero Wars, was ranked the 2nd most downloaded game in the RPG genre on Android and iOS combined in 2025, demonstrating strong market presence despite genre-wide headwinds.
• The mobile gaming industry saw 828 games surpass $10 million in annual global IAP revenue in 2025, with only 134 exceeding $100 million and nine exceeding $1 billion. GDEV's Hero Wars, with cumulative all-time Bookings exceeding $2.5 billion, positions it among the elite titles capable of achieving critical scale and sustained monetization.
• While the broader mobile gaming market saw IAP revenue growth of approximately 1% year-over-year in 2025, GDEV's Bookings declined by 13%, indicating underperformance relative to the overall market, but this is attributed to a deliberate strategy shift rather than a lack of competitiveness.
• The RPG genre experienced material IAP revenue declines in 2025 across Asia, North America, and Europe, which directly impacts GDEV's core franchise, Hero Wars. GDEV's ability to increase ABPPU and Monthly Payer Conversion in this challenging environment suggests effective internal monetization strategies.
• Day-7 retention rates among top-performing casual games declined steadily from 2022 through 2025, according to Sensor Tower. GDEV's focus on long retention horizons for its core franchises and continuous investment in live content aims to counteract this industry-wide content fatigue.

Management Changes

Corporate Governance

Legal Proceedings

• Currently involved in a dispute with a contractual counterparty, with claims for substantial damages related to breaches of relevant agreements. The effects and outcomes cannot be reliably estimated, but the company intends to rigorously defend its interest.
• Subject to various claims, complaints, and legal actions in the normal course of business, with no expectation of a material adverse effect on results of operations, financial condition, or liquidity based on current information.

Related Party Transactions

• Andrey Fadeev purchased 2,730,384 ordinary shares from Boris Gertsovskiy in a private placement transaction on March 17, 2026, increasing his beneficial ownership to 37.0%.
• Boris Gertsovskiy irrevocably transferred his director appointment rights to Andrey Fadeev on March 11, 2026.
• Igor Bukhman, a director, is the ultimate beneficial owner of Everix Investments Limited, which beneficially owns 41.0% of outstanding ordinary shares.
• Everix Investments Limited has the right to appoint two directors to the board.
• Andrey Fadeev and Boris Gertsovskiy, acting jointly, previously had the right to appoint two directors, now consolidated with Andrey Fadeev.
• The company entered into a secured loan agreement with MX Capital Limited (an equity-accounted associate) for up to $43.0 million, with $22.9 million outstanding as of the date of the report.
• Loans to Castcrown Limited (an equity-accounted associate) were restructured into a non-convertible secured loan of $10.2 million at 10% interest, maturing July 31, 2029. $8.1 million of convertible loans were converted into equity in August 2025, increasing ownership to 57%.
• Loan agreement with LEVELAPP Ltd for $260 thousand, with additional notes acquired. Maturity date extended to October 30, 2026.
• In the 2024 tender offer, 1,000,000 shares were tendered by Boris Gertsovskiy and 30,216 by Anton Reinhold (then COO).

Stakeholder Impact

• Shareholders: Experienced a one-time special cash dividend of $3.31 per share in March 2025. Potential for dilution from warrant exercises and equity incentive plans. Concentration of ownership by Andrey Fadeev and Everix Investments Limited could influence decision-making and share price.
• Employees: Subject to the 2021 Employee Stock Option Plan for equity-settled compensation. Company focuses on attracting and retaining best-in-class talent. Increased general and administrative expenses driven by higher salary and personnel expenses.
• Customers/Players: Impacted by declining DAUs and MAUs, but improved ABPPU and Monthly Payer Conversion suggest effective monetization of the remaining or targeted player base. New games (Pixel Gun 2, Idle Zombie Miner) and content enhancements aim to improve player experience and retention. Subject to evolving regulations on loot boxes and online safety, which may affect game design and monetization.
• Regulators: Increased scrutiny and evolving regulations regarding loot boxes, data privacy (e.g., COPPA, GDPR, EU AI Act), and online safety (e.g., UK Online Safety Act) require ongoing compliance efforts and may lead to increased costs and potential liabilities.
• Suppliers/Partners: Reliance on third-party distribution platforms (Apple, Google, Facebook, Huawei) and payment processors (Xsolla) exposes the company to policy changes and disruptions from these partners. Strategic partnerships with studios like Royal Ark and Cubic Games are key to portfolio expansion.

Next Steps

• Continue organic development and growth investments for existing IP.
• Develop the pipeline of new games, including Pixel Gun 2 (expected 2026 launch).
• Evaluate selective M&A expansion opportunities in Europe and other regions.
• Enhance brand advertising and create rich worlds around existing IPs to attract and retain users.
• Improve current monetization models and add new ones to increase player lifetime value.
• Flexibly adapt marketing budgets to channels and platforms offering attractive LTV/CAC returns.
• Continue restructuring marketing and product development departments for enhanced cooperation.
• Focus on attracting and retaining best-in-class talent globally.
• Comply with the amended COPPA Rule by April 22, 2026.
• Comply with the EU Cyber Resilience Act reporting obligations by September 11, 2026, and main obligations by December 11, 2027.
• Comply with the EU AI Act provisions as they come into force, with the majority scheduled for August 2, 2026.

Key Dates

Recommendation

The company demonstrates strong profitability growth and improved monetization efficiency (ABPPU, MPU conversion) despite declining revenues and user metrics, indicating effective cost management and a focus on high-value players. Strategic acquisitions and a pipeline of new games offer future growth potential. However, the overall decline in Bookings, MAUs, and DAUs, coupled with significant industry headwinds in the core RPG genre and increasing regulatory complexities (loot boxes, AI, data privacy), present notable uncertainties. The concentration of ownership and potential for disagreements among major shareholders also adds a layer of risk. Given these mixed signals, a 'hold' recommendation is appropriate, suggesting investors monitor the execution of strategic initiatives and the impact of industry and regulatory changes before making further investment decisions.

Keywords

Mobile Gaming, RPG, Hero Wars, In-App Purchases, Gaming Industry, User Acquisition, Monetization, SEC Filing, Financial Performance, Game Development, Cybersecurity, Data Privacy, International Operations, Shareholder Structure, Corporate Governance, Risk Management, Financial Reporting, GDEV