Executive Summary / Key Takeaways

• GDEV Inc. is strategically transforming its business by prioritizing long-term product enhancements and data-driven user engagement over short-term revenue gains, aiming to significantly boost player lifetime value (LTV) across its core franchises like Hero Wars and Pixel Gun 3D.
• Despite a Q3 2024 year-over-year bookings decline of 8% to $93 million, revenue grew 5% quarter-over-quarter to $111 million, surpassing analyst expectations for both revenue and adjusted EBITDA, demonstrating operational efficiency during this transitional phase.
• The company's proprietary data analytics and AI-driven approach to user acquisition and monetization, characterized by a focus on LTV/CAC optimization and robust retention metrics, forms a critical competitive moat, enabling efficient marketing spend and sustainable growth even in a volatile market.
• GDEV is actively pursuing geographic expansion into high-growth regions like Latin America, Asia, and the Middle East, adapting its product offerings for younger demographics, and opportunistically seeking M&A targets to diversify its portfolio and market reach.
• Recent capital market actions, including a one-for-ten reverse stock split and an at-the-market (ATM) offering, are designed to enhance stock liquidity and market appeal without diluting existing shareholders, signaling a commitment to improving shareholder value over the mid-to-long term.

A New Chapter in Gaming: GDEV's Evolution and Strategic Imperatives

GDEV Inc., formerly known as Nexters Inc., has evolved from its 2010 founding as a social games developer into an international gaming and entertainment company. This journey, marked by early successes like "Throne Rush" (Facebook's Game of the Year in 2014) and the mobile version of "Hero Wars" surpassing $1 billion in lifetime bookings by Q3 2021, underscores a foundational strength in developing enduring game franchises. The company's core business revolves around developing and publishing online games across mobile, social, and web-based platforms, with its flagship "Hero Wars" franchise leading the charge.

The gaming industry, characterized by rapid evolution, dynamic player preferences, and intensifying competition, demands a strategic approach focused on long-term value. GDEV's overarching strategy is precisely this: a commitment to "thoughtful, long-term product changes aimed at fostering sustained growth and deeper play engagement." This product-first philosophy, which includes refining core gameplay mechanics, meta progression, live operations, monetization models, marketing strategies, and art direction, is designed to enhance player retention, lifetime value, and cohort monetization. This approach is foundational to GDEV's ability to compete and thrive in a market where the mobile segment, in particular, has seen limited growth over the past two years.

The Power of Data: GDEV's Technological Edge in User Engagement

GDEV's core technological differentiation is not a singular hardware or software product, but rather its sophisticated, data-driven approach to game development, user acquisition, and long-term player monetization, significantly enhanced by artificial intelligence (AI) and machine learning (ML). The company leverages a "large set of first-party data" and "internal tools to analyze all the data," constantly "improving our forecasts capabilities, using ML solutions." This analytical prowess is central to its operational effectiveness.

This proprietary methodology offers several tangible benefits. It enables GDEV to achieve superior user retention and lifetime value (LTV) through deep cohort analysis, ensuring that product changes positively impact player experience. Furthermore, it underpins a highly efficient user acquisition (UA) strategy, where investments are made only in user cohorts that yield "sufficient returns" and a "fairly decent IRR and ROAS" (Return on Advertising Spend). Management emphasizes that "even small improvements in this ratio [LTV/CAC] can lead to major changes in company valuation." This data-driven approach also facilitates faster and more effective product iteration and content updates, allowing GDEV to adapt swiftly to market trends. For instance, while many competitors struggled with IDFA changes, GDEV asserted that "IDFA is not problem for us because we do other," highlighting its ability to leverage first-party data to maintain UA efficiency. The company aims for strong retention rates, with targets like "50% or higher on day one to stay competitive," and utilizes metrics like Average Revenue Per User (ARPU) to assess monetization efficiency. This technological differentiation contributes to a robust competitive moat, enabling higher profitability, stronger market positioning, and sustainable long-term growth.

Competitive Arena: GDEV's Position Amidst Industry Giants

GDEV operates in a highly competitive global gaming market, contending with both industry giants and agile niche players. Its primary competitors include large, diversified entities like Electronic Arts (EA), Tencent Holdings (TCEHY), and Take-Two Interactive (TTWO), which owns Zynga.

Compared to these larger rivals, GDEV holds a more specialized position, focusing on accessible, community-driven games that foster long-term player engagement. While GDEV's agility and user-focused strategy are strengths, enabling it to compete effectively in specific segments, it generally lags in operational scale and sheer resource allocation for advanced features and global distribution networks. For instance, GDEV's Gross Profit Margin (TTM) stands at 66.15%, which is notably higher than Tencent's 2024 Gross Profit Margin of 53%. However, Tencent's 2024 Net Profit Margin of 29% surpasses GDEV's TTM Net Profit Margin of 10.09%, indicating Tencent's superior efficiency in converting revenue to profit at scale. GDEV's strategic adaptability is notable, yet its smaller scale could hinder long-term execution against rivals like Tencent, who demonstrate stronger financial health and innovation capacity.

GDEV's competitive advantages stem from its deep understanding of player cohorts and its data-driven approach to LTV optimization. This allows for efficient user acquisition, as evidenced by its ability to maintain "fairly decent IRR and ROAS" even when the broader market was volatile. This contrasts with the resource-heavy approach of some larger competitors, allowing GDEV to achieve "greater efficiency in niche markets." The company's focus on long-term engagement also differentiates it from hypercasual game developers, for whom market changes like IDFA proved more problematic.

Financial Performance and Strategic Reinvestment

GDEV's recent financial performance reflects its strategic pivot towards long-term product evolution. In Q3 2024, the company reported revenue of $111 million, marking a 5% quarter-over-quarter growth and exceeding analysts' expectations for both revenue and adjusted EBITDA. This achievement came despite a 9% year-over-year decline in revenue and an 8% year-over-year decline in bookings to $93 million, which management attributed to a deliberate reduction in in-game events and general monetization efforts to prioritize player experience and retention. This disciplined approach, while impacting short-term bookings, is intended to build a stronger foundation for future growth.

The company's net profit in Q3 2024 was $15 million, down from $24 million in Q3 2023, primarily due to lower revenue and increased marketing spend. Adjusted EBITDA for the quarter was $16 million, a $13 million year-over-year decrease. However, cash flows generated from operating activities increased to $12 million in Q3 2024, up from $8 million in Q3 2023, demonstrating effective cash management during this transformation phase. The company's total cash position, including highly liquid government bonds, stood at $140 million at the end of Q2 2024, providing a substantial resource for future development.

GDEV's marketing investments increased by $9 million year-over-year to $52 million in Q3 2024, aligning with its strategic plan to scale activities and explore new channels. This follows a period of under-investment in marketing in 2022 and 2023 due to a challenging market, which had affected booking dynamics. The company's focus on enhancing user acquisition efficiency is evident, with the lifetime value of a payer divided by the cost of a payer increasing in Q2 2024 compared to the prior year.

Geographically, Europe has emerged as a key growth driver, with its share of total bookings increasing from 26% to 30% year-over-year in Q3 2024, fueled by targeted marketing initiatives in countries like Germany, France, the United Kingdom, and Poland. The U.S. remains the largest single market, contributing 34% of bookings in Q2 2024. The PC platform's revenue share also increased by four percentage points in Q2 2024, driven by the successful launch of Pixel Gun 3D on Steam and the performance of Hero Wars: Dominion Era.

Strategic Outlook and Growth Catalysts

GDEV's outlook is firmly rooted in its product-centric strategy and a clear roadmap for expansion. The company expects Q4 2024 marketing spend to remain comparable to Q3, as the immediate focus is on product development before a more aggressive marketing push. Bookings for Q4 are anticipated to be "very well within the consensus," with expectations for "very solid" growth in the second half of 2024 and especially in 2025.

The primary focus for the remainder of 2024 and into 2025 is on enhancing key franchises. For Hero Wars: Alliance (mobile), the team is driving product improvements to boost LTV, with plans to reinvest these gains into "more aggressive user acquisition efforts in the hot season" (Q4 2024 and Q1 2025). Pixel Gun 3D's PC Edition on Steam, a "huge success" with 2,500 to 3,000 concurrent users and growing, is slated for massive scaling on the PC platform in 2025 after further product preparation. Island Hoppers has seen significant improvements in retention and monetization, with marketing infrastructure being built for future UA scaling.

Geographic expansion is a "cornerstone" of GDEV's strategy, with plans to expand substantially into Latin America, Asia, India, and the Middle East. This involves adapting products to appeal to younger audiences prevalent in these markets. M&A is viewed opportunistically, with recent moves including the acquisition of Light Hour Games in August 2025 to expand its mobile casual games portfolio and increasing ownership in Royal Ark to 57% in September 2025 following the success of "Zombie Miner". The company also operates Nexters Boost, an accelerator for early-stage studios, to identify new growth opportunities.

To enhance its stock profile and liquidity, GDEV executed a one-for-ten reverse stock split in August 2025 and announced an at-the-market (ATM) offering in September 2025 to place up to 1.8 million treasury shares into the market, aiming to increase public float without diluting existing shareholders. This, coupled with plans to increase visibility to investors through conferences and non-deal roadshows, underscores a commitment to long-term shareholder value.

Risks and Considerations

Despite a clear strategic direction, GDEV faces several inherent risks. The rapidly evolving gaming landscape, characterized by dynamic player preferences and intensifying competition, necessitates continuous product innovation and adaptation. The mobile market's limited growth over the past two years presents a challenge, requiring GDEV to capture market share through superior engagement and monetization rather than broad market expansion.

The opportunistic nature of M&A, while a growth driver, also carries integration risks and the challenge of identifying suitable targets in new geographies. Furthermore, while GDEV's data-driven approach has mitigated the impact of changes like IDFA, the ongoing evolution of advertising and privacy regulations could introduce new complexities. The company's reliance on a few core franchises, primarily Hero Wars, means that any decline in their performance could significantly impact overall financial results.

Conclusion

GDEV Inc. is executing a deliberate and insightful strategy to cultivate sustainable growth in the dynamic global gaming industry. By prioritizing long-term product enhancements, leveraging its proprietary data analytics and AI-driven user engagement platform, and strategically expanding into new geographies, GDEV is building a resilient business model. The recent financial performance, marked by a quarter-over-quarter revenue increase in Q3 2024 despite a strategic slowdown in monetization, underscores the company's commitment to its product-first philosophy.

The investment thesis for GDEV hinges on its ability to translate its technological edge in LTV optimization and efficient user acquisition into sustained profitability and market share gains. With a clear roadmap for product development, opportunistic M&A, and initiatives to enhance stock liquidity, GDEV is positioning itself for a future where its deep understanding of player engagement and data-driven strategy can unlock significant shareholder value. The company's disciplined approach, coupled with its focus on adapting its core franchises for new markets, suggests a compelling long-term growth trajectory for discerning investors.