Financial Data and Key Metrics Changes - Net revenues for Q2 2024 were $72.6 million, a 7% decrease compared to the previous year, primarily due to softness in the social casino portfolio [10] - Consolidated adjusted EBITDA was $14.1 million, down from $16.3 million a year ago, reflecting a decline in operating margins [11] - Daily Active Users (DAU) decreased to 3.2 million, a 12% decline year-over-year, while Monthly Active Users (MAU) were 13.6 million, down 2% [11] Business Line Data and Key Metrics Changes - The playGAMES division expanded its portfolio from four social casino apps to 20 games, including the Tetris franchise, which saw a 230% increase in DAU from 1.5 million to 3.4 million [3][4] - AdMon games now account for approximately 19% of total revenues, while direct off-platform purchases represent nearly 4% [4] - The myVEGAS and myKONAMI games showed increases in Average Revenue Per Daily Active User (ARPDAU) and the percentage of paying users, indicating improved monetization [7] Market Data and Key Metrics Changes - The social casino category continues to face challenges, attributed to the rise of sweepstakes products, which have grown significantly and are impacting traditional social casino engagement [36] - The casual gaming portfolio, particularly Brainium, is performing strongly, contributing positively to overall revenue despite the challenges in social casino [10] Company Strategy and Development Direction - The company aims to strengthen its game portfolio, improve monetization trends, and expand its direct off-platform business [7] - A key strategic initiative includes the launch of the myVIP World Tournament of Slots, aimed at increasing player engagement and brand awareness [8] - The company is actively pursuing M&A opportunities, focusing on both large transformative acquisitions and smaller tuck-in acquisitions [9] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the business despite challenges in the social casino sector, highlighting significant growth in casual revenues and adjusted EBITDA margins [13] - The company revised its 2024 revenue guidance to between $285 million and $295 million, down from previous estimates, due to ongoing softness in the social casino category [12] Other Important Information - The company repurchased nearly 15% of its Class A common stock, maintaining a strong balance sheet with over $106 million in cash and no debt [4][12] - The myVIP program has expanded to include 131 rewards partners, offering over $160 million in retail rewards [8] Q&A Session Summary Question: Guidance and Industry Challenges - Management indicated that the revised guidance is primarily due to ongoing challenges in the social casino category and delays in scaling the Tetris Block Puzzle product [15][16] Question: playAWARDS Pipeline - Management noted that while there are opportunities in the B2B space for playAWARDS, the current focus is on stabilizing the core casino portfolio [17] Question: Cost Structure and Marketing Investments - Management acknowledged that the cost structure needs improvement and confirmed plans to increase marketing investments for myVEGAS due to its positive performance [25][35] Question: Tetris Engagement and Retention - Early retention metrics for the new Tetris product are strong, but the company is cautious about scaling marketing until user acquisition costs are more favorable [24] Question: Social Casino Category Weakness - Management attributed the weakness in the social casino category to the rise of sweepstakes products rather than iGaming [36] Question: M&A Activity - The company remains active in pursuing both transformative and tuck-in acquisitions, with a focus on the growing sweepstakes market [38]

Investment thesis Company Overview notable progress in all these fronts, and I believe we're on our way to exiting the year at an improved run rate. Playstudios Revenue and Adjusted EBITDA $80 $60 $40 $20 $0 22Q1 23Q1 23Q2 23Q4 22Q2 22Q3 22Q4 23Q3 24Q1 Throughout 2023 management had shifted its focus away from revenue growth, towards driving higher profit margins. As shown above, this has led to revenue stagnating in recent quarters, while Adjusted EBITDA has significantly increased. In its latest quarter, ...

PLAYSTUDIOS, Inc. (MYPS) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change. A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years. Since a changing ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number 001-39652 PLAYSTUDIOS, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or orga ...

PLAYSTUDIOS, Inc. (MYPS) reported break-even quarterly earnings per share versus the Zacks Consensus Estimate of a loss of $0.02. This compares to loss of $0.01 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 100%. A quarter ago, it was expected that this company would post a loss of $0.03 per share when it actually produced a loss of $0.15, delivering a surprise of -400%.Over the last four quarters, the company has surpassed ...

Exhibit 99.1 PLAYSTUDIOS, INC. ANNOUNCES FIRST QUARTER RESULTS Consolidated AEBITDA of $15.3 million Las Vegas, Nevada – May 6, 2024 – PLAYSTUDIOS, Inc. (NASDAQ: MYPS) ("PLAYSTUDIOS" or the "Company"), an award- winning developer of free-to-play mobile and social games and the developer of the playAWARDS loyalty platform , today announced financial results for the first quarter ended March 31, 2024. First Quarter Financial Highlights Andrew Pascal, Chairman and Chief Executive Officer of PLAYSTUDIOS, commen ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number 001-39652 PLAYSTUDIOS, Inc. (Exact name of registrant as specified in its charter) Washington, D.C. 20549 FORM 10-K (Mark One) Indicate by check mark if the registrant is a well-known s ...

Financial Performance - Fourth quarter 2023 revenue was $77.1 million, a decrease from $79.4 million in Q4 2022[2] - Net loss for Q4 2023 was $19.9 million, compared to a net loss of $1.7 million in Q4 2022[2] - Full year 2023 revenue reached $310.9 million, compared to $290.3 million in 2022[2] - Full year 2023 net loss was $19.4 million, slightly higher than the net loss of $17.8 million in 2022[2] - Total revenue for Q4 2023 was $77,112,000, a slight decrease of 2.9% from $79,378,000 in Q4 2022[35] - Net loss for Q4 2023 was $19,864,000, compared to a net loss of $1,703,000 in Q4 2022[35] AEBITDA and Margins - Consolidated AEBITDA for Q4 2023 was $14.7 million, up from $12.1 million in Q4 2022, with AEBITDA margins increasing by 390bps year-over-year[2] - Consolidated AEBITDA for 2023 was $62.3 million, a significant increase from $38.3 million in the prior year, with margins growing nearly 700bps[2] - Consolidated AEBITDA for Q4 2023 was $14,728,000, representing a 22% increase from $12,074,000 in Q4 2022, with a consolidated AEBITDA margin of 19.1%[31] - Segment AEBITDA margin for playGAMES improved to 29.6% in Q4 2023 from 21.8% in Q4 2022[35] - Total segment AEBITDA for playGAMES was $22,834,000 in Q4 2023, up from $16,731,000 in Q4 2022[35] Cash and Assets - As of December 31, 2023, the company had a cash balance of $133 million and full availability on its $81 million loan facility[7] - Cash and cash equivalents as of December 31, 2023, were $132,889,000, slightly down from $134,000,000 in 2022[29] - Total assets increased to $366,321,000 in 2023 from $352,009,000 in 2022, driven by growth in intangible assets and internal-use software[29] - Total liabilities rose significantly to $77,970,000 in 2023 from $49,696,000 in 2022, primarily due to an increase in accrued and other current liabilities[29] User Engagement - Average Daily Active Users (DAU) increased by 6.1% to 3,361 in Q4 2023 from 3,169 in Q4 2022[37] - Average Monthly Active Users (MAU) rose by 15.9% to 13,288 in Q4 2023 compared to 11,463 in Q4 2022[37] - Average Revenue Per Daily Active User (ARPDAU) decreased by 3.8% to $0.25 in Q4 2023 from $0.26 in Q4 2022[37] Future Projections - The company expects full year 2024 net revenue to be in the range of $315 - $325 million[5] - Full-year Consolidated AEBITDA for 2024 is projected to be between $65 - $70 million[5] Operational Insights - Operating expenses for Q4 2023 totaled $79,825,000, down from $83,840,000 in Q4 2022, with a notable reduction in cost of revenue by 10% year-over-year[26] - The company reported a significant increase in research and development expenses, totaling $70,298,000 for the year, up from $63,315,000 in 2022[26] - The number of available rewards units remained stable at 578 in Q4 2023 compared to 574 in Q4 2022[39] - Retail value of purchases in Q4 2023 was $27,702,000, a decrease of 8.3% from $30,212,000 in Q4 2022[39] Challenges - The company anticipates continued challenges in attracting and retaining players, alongside evolving technological developments in the gaming market[23]

PLAYSTUDIOS, Inc. (NASDAQ:MYPS) Q3 2023 Earnings Conference Call November 2, 2023 5:00 PM ET Company Participants Samir Jain - Head of IR and Treasury Andrew Pascal - Chairman and CEO Scott Peterson - CFO Conference Call Participants Ryan Sigdahl - Craig Hallum David Pang - Stifel Greg Gibas - Northland Securities Operator Greetings, and welcome to the PLAYSTUDIO's Third Quarter 2023 Earnings Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce ...

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section warns readers about forward-looking statements and their inherent risks and uncertainties [Part I - Financial Information](index=7&type=section&id=Part%20I%20-%20Financial%20Information) This section presents the company's unaudited financial information, including statements and management's discussion [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents PLAYSTUDIOS' unaudited condensed consolidated financial statements and notes, covering balance sheets, operations, and cash flows [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20September%2030,%202023%20and%20December%2031,%202022) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | ASSETS | Sep 30, 2023 | Dec 31, 2022 | | :--------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $129,807 | $134,000 | | Total current assets | $170,085 | $175,979 | | Total non-current assets | $174,614 | $176,030 | | **Total assets** | **$344,699** | **$352,009** | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $34,591 | $34,151 | | Total non-current liabilities | $7,872 | $15,545 | | **Total liabilities** | **$42,463** | **$49,696** | | Total stockholders' equity | $302,236 | $302,313 | | **Total liabilities and stockholders' equity** | **$344,699** | **$352,009** | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030,%202023%20and%20September%2030,%202022) This section details the company's financial performance, showing revenues, expenses, and net income or loss Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net revenue | $75,858 | $72,127 | $233,774 | $210,931 | | Total operating costs and expenses | $79,579 | $75,305 | $241,548 | $234,550 | | Loss from operations | $(3,721) | $(3,178) | $(7,774) | $(23,619) | | Total other income, net | $5,382 | $5,044 | $5,808 | $1,353 | | Income (loss) before income taxes | $1,661 | $1,866 | $(1,966) | $(22,266) | | Income tax benefit | $2,139 | $1,763 | $2,437 | $6,186 | | Net income (loss) | $3,800 | $3,629 | $471 | $(16,080) | | Basic EPS | $0.03 | $0.03 | $— | $(0.13) | | Diluted EPS | $0.03 | $0.02 | $— | $(0.13) | [Condensed Consolidated Statements of Comprehensive Loss](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030,%202023%20and%20September%2030,%202022) This section presents the company's comprehensive income or loss, including net income and other comprehensive items Condensed Consolidated Statements of Comprehensive (Loss) Income (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) | $3,800 | $3,629 | $471 | $(16,080) | | Change in foreign currency translation adjustment | $(393) | $(159) | $(871) | $(561) | | Total other comprehensive loss | $(393) | $(159) | $(871) | $(561) | | Comprehensive income (loss) | $3,407 | $3,470 | $(400) | $(16,641) | [Condensed Consolidated Statements of Stockholders' Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030,%202023%20and%20September%2030,%202022) This section outlines changes in stockholders' equity, reflecting net income, stock transactions, and other adjustments Changes in Stockholders' Equity (in thousands) | Metric | Balance as of Dec 31, 2022 | Net Income (Loss) | Exercise of Stock Options | Restricted Stock Vesting, net | Stock-based Compensation | Repurchase of Common Stock | Other Comprehensive Loss | Balance as of Sep 30, 2023 | | :------------------------- | :------------------------- | :---------------- | :------------------------ | :---------------------------- | :----------------------- | :------------------------- | :----------------------- | :------------------------- | | Total Stockholders' Equity | $302,313 | $471 | $2,920 | $(2,876) | $15,731 | $(15,452) | $(871) | $302,236 | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Nine%20Months%20Ended%20September%2030,%202023%20and%20September%2030,%202022) This section details the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $36,396 | $31,231 | | Net cash used in investing activities | $(21,855) | $(26,103) | | Net cash used in financing activities | $(17,767) | $(5,648) | | Foreign currency translation | $(967) | $(913) | | Net change in cash and cash equivalents | $(4,193) | $(1,433) | | Cash and cash equivalents at beginning of period | $134,000 | $213,502 | | Cash and cash equivalents at end of period | $129,807 | $212,069 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [NOTE 1—BACKGROUND AND BASIS OF PRESENTATION](index=14&type=section&id=NOTE%201%E2%80%94BACKGROUND%20AND%20BASIS%20OF%20PRESENTATION) This note describes PLAYSTUDIOS' business, its loyalty program, and the basis for preparing the financial statements - PLAYSTUDIOS, Inc. develops and operates free-to-play online and mobile social gaming applications that incorporate a unique loyalty program offering **'real world' rewards**. Revenue is generated through **in-game virtual currency sales and advertising**[33](index=33&type=chunk) - The condensed consolidated financial statements are prepared in accordance with US GAAP and SEC rules, including the accounts of PLAYSTUDIOS, Inc. and its consolidated subsidiaries[35](index=35&type=chunk) - The company qualifies as an **'emerging growth company'** and has opted to use the **extended transition period** for complying with new or revised financial accounting standards[38](index=38&type=chunk)[39](index=39&type=chunk) [NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=15&type=section&id=NOTE%202%E2%80%94SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting policies used in preparing the condensed consolidated financial statements - The company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) on January 1, 2023, which **did not have a material impact** on the condensed consolidated financial statements[42](index=42&type=chunk) [NOTE 3—BUSINESS COMBINATIONS](index=15&type=section&id=NOTE%203%E2%80%94BUSINESS%20COMBINATIONS) This note details the company's acquisitions of WonderBlocks Labs and Brainium Studios, including purchase prices and goodwill - PLAYSTUDIOS acquired WonderBlocks Labs, Inc. on August 2, 2022, for **$3.564 million** (cash and note conversion), aiming to enhance its playAWARDS model with Web3 features. This resulted in **$1.176 million in goodwill**[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - The company acquired Brainium Studios LLC on October 12, 2022, for **$75.254 million** (cash and contingent consideration), a mobile game publisher. This acquisition generated **$40.898 million in goodwill**, expected to be deductible for federal income tax purposes[46](index=46&type=chunk)[47](index=47&type=chunk) [NOTE 4—RELATED-PARTY TRANSACTIONS](index=17&type=section&id=NOTE%204%E2%80%94RELATED-PARTY%20TRANSACTIONS) This note describes transactions with related parties, specifically the joint marketing agreement with MGM Resorts International - MGM Resorts International, a stockholder with a board representative, has a joint marketing agreement with PLAYSTUDIOS, recorded as an indefinite-lived intangible asset of **$1.0 million**[49](index=49&type=chunk)[50](index=50&type=chunk) [NOTE 5—RECEIVABLES](index=17&type=section&id=NOTE%205%E2%80%94RECEIVABLES) This note provides a breakdown of the company's trade and other receivables, including concentration of credit risk Receivables (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :--------------- | :----------- | :----------- | | Trade receivables | $28,802 | $25,020 | | Other receivables | $699 | $1,996 | | Total receivables | $29,501 | $27,016 | Concentration of Credit Risk (Percentage of Total Receivables) | Counterparty | Sep 30, 2023 | Dec 31, 2022 | | :----------- | :----------- | :----------- | | Apple, Inc. | 47.8% | 33.6% | | Google, Inc. | 20.9% | 27.2% | [NOTE 6—PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=18&type=section&id=NOTE%206%E2%80%94PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) This note details the components of prepaid expenses and other current assets, such as income tax receivable Prepaid Expenses and Other Current Assets (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Prepaid expenses | $4,168 | $5,148 | | Income tax receivable | $3,559 | $1,372 | | Other current assets | $3,050 | $8,443 | | Total | $10,777 | $14,963 | [NOTE 7—FAIR VALUE MEASUREMENT](index=18&type=section&id=NOTE%207%E2%80%94FAIR%20VALUE%20MEASUREMENT) This note presents financial liabilities measured at fair value, specifically public and private warrants Financial Liabilities Measured at Fair Value (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :--------------- | :----------- | :----------- | | Public Warrants | $1,346 | $2,153 | | Private Warrants | $955 | $1,529 | | Total | $2,301 | $3,682 | [NOTE 8—PROPERTY AND EQUIPMENT, NET](index=18&type=section&id=NOTE%208%E2%80%94PROPERTY%20AND%20EQUIPMENT,%20NET) This note details the company's property and equipment, net of accumulated depreciation, and related depreciation expense Property and Equipment, Net (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :------------------------- | :----------- | :----------- | | Total property and equipment | $32,589 | $33,386 | | Less: accumulated depreciation | $(14,562) | $(15,854) | | Total property and equipment, net | $18,027 | $17,532 | - Depreciation expense for property and equipment was **$1.2 million** for the three months ended September 30, 2023 and 2022, and **$4.2 million** and **$3.1 million** for the nine months ended September 30, 2023 and 2022, respectively[55](index=55&type=chunk)[57](index=57&type=chunk) [NOTE 9—INTANGIBLE ASSETS AND INTERNAL-USE SOFTWARE, NET](index=20&type=section&id=NOTE%209%E2%80%94INTANGIBLE%20ASSETS%20AND%20INTERNAL-USE%20SOFTWARE,%20NET) This note details intangible assets and internal-use software, including amortization and impairment charges Intangible Assets and Internal-Use Software, Net (in thousands) | Category | Sep 30, 2023 Net Carrying Amount | Dec 31, 2022 Net Carrying Amount | | :------------------------- | :-------------------------------- | :-------------------------------- | | Amortizable intangible assets | $73,717 | $76,231 | | Nonamortizable intangible assets (Marketing Agreement) | $1,000 | $1,000 | | Total intangible assets | $74,717 | $77,231 | - Intangible asset and internal-use software amortization was **$10.3 million** and **$7.4 million** for the three months ended September 30, 2023 and 2022, respectively, and **$29.5 million** and **$22.2 million** for the nine months ended September 30, 2023 and 2022, respectively[60](index=60&type=chunk) - The company recorded a **$1.1 million** non-cash impairment charge for intangible assets/internal-use software during the three and nine months ended September 30, 2023. A larger **$8.4 million** charge was recorded in the nine months ended September 30, 2022[61](index=61&type=chunk)[62](index=62&type=chunk) - Subsequent to September 30, 2023, new licensing arrangements increased 'Intangible assets and internal-use software, net' by **$32.0 million**, with an offsetting minimum guarantee liability[63](index=63&type=chunk) [NOTE 10—GOODWILL](index=22&type=section&id=NOTE%2010%E2%80%94GOODWILL) This note presents the company's goodwill balance, which remained unchanged during the reported periods Goodwill (in thousands) | Metric | Goodwill, Gross | Accumulated Impairment | Goodwill, Net | | :------------------------- | :-------------- | :--------------------- | :------------ | | Balance as of Dec 31, 2022 | $47,133 | $— | $47,133 | | Balance as of Sep 30, 2023 | $47,133 | $— | $47,133 | [NOTE 11—WARRANT LIABILITIES](index=22&type=section&id=NOTE%2011%E2%80%94WARRANT%20LIABILITIES) This note details the company's warrant liabilities, including outstanding public and private warrants and a tender offer - As of September 30, 2023, there were approximately **5.4 million Public Warrants** and **3.8 million Private Warrants** outstanding, exercisable for Class A common stock at **$11.50 per share**[65](index=65&type=chunk)[69](index=69&type=chunk) - In April 2022, the company launched a tender offer for warrants at **$1.00 cash per warrant**, resulting in **1.79 million Public Warrants** tendered and **$1.8 million** paid. The Warrant Amendment was **not approved**[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) [NOTE 12—ACCRUED LIABILITIES](index=23&type=section&id=NOTE%2012%E2%80%94ACCRUED%20LIABILITIES) This note provides a breakdown of accrued liabilities, including payroll, user acquisition, and minimum guarantee obligations Accrued Liabilities (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Accrued payroll and vacation | $8,991 | $9,666 | | Accrued user acquisition | $5,867 | $4,183 | | Income taxes payable | $1,954 | $702 | | Minimum guarantee liability | $4,790 | $1,500 | | Other accruals | $3,811 | $5,422 | | Total accrued liabilities | $25,413 | $21,473 | [NOTE 13—LEASES](index=23&type=section&id=NOTE%2013%E2%80%94LEASES) This note details the company's operating lease expenses and liabilities, including right-of-use assets and lease terms - Operating lease expense was **$1.2 million** for the three months ended September 30, 2023 (vs. **$1.0 million** in 2022) and **$3.7 million** for the nine months ended September 30, 2023 (vs. **$2.9 million** in 2022)[71](index=71&type=chunk) Operating Lease Liabilities (in thousands) | Metric | Sep 30, 2023 | Dec 31, 2022 | | :--------------------------------- | :----------- | :----------- | | Operating lease right-of-use assets, net | $10,212 | $15,562 | | Operating lease liabilities, current | $4,219 | $4,571 | | Operating lease liabilities, noncurrent | $6,545 | $11,660 | | Operating lease liabilities, total | $10,764 | $16,231 | | Weighted average remaining lease term, years | 3.2 | 4.0 | | Weighted average discount rate | 4.5% | 3.3% | [NOTE 14—LONG-TERM DEBT](index=24&type=section&id=NOTE%2014%E2%80%94LONG-TERM%20DEBT) This note describes the company's revolving credit facility, its terms, and financial covenants - PLAYSTUDIOS has a five-year revolving credit facility of **$75.0 million** (increased to **$81.0 million** in August 2022) for working capital, general corporate purposes, and permitted acquisitions. As of September 30, 2023, there were **no outstanding balances**[74](index=74&type=chunk)[77](index=77&type=chunk)[80](index=80&type=chunk) - The Credit Agreement includes financial covenants such as a Total Net Leverage Ratio of **3.50:1.00** and a Fixed Charge Coverage Ratio of **1.25:1.00**[76](index=76&type=chunk) [NOTE 15—REVENUE FROM CONTRACTS WITH CUSTOMERS](index=25&type=section&id=NOTE%2015%E2%80%94REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) This note disaggregates revenue by type (virtual currency, advertising) and by geographic region Revenue Disaggregated by Type (in thousands) | Revenue Type | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Virtual currency (over time) | $61,558 | $65,607 | $187,565 | $195,377 | | Advertising (point in time) | $14,190 | $3,807 | $41,608 | $11,364 | | Other revenue | $110 | $2,713 | $4,601 | $4,190 | | Total net revenue | $75,858 | $72,127 | $233,774 | $210,931 | Revenue Disaggregated by Geography (in thousands) | Geography | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :---------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | United States | $64,414 | $63,501 | $200,566 | $185,646 | | All other countries | $11,444 | $8,626 | $33,208 | $25,285 | | Total net revenue | $75,858 | $72,127 | $233,774 | $210,931 | [NOTE 16—INCOME TAXES](index=25&type=section&id=NOTE%2016%E2%80%94INCOME%20TAXES) This note details the company's income tax benefit and effective tax rates, explaining deviations from the statutory rate - The company recorded an income tax benefit of **$2.1 million** for Q3 2023 (vs. **$1.8 million** in Q3 2022) and **$2.4 million** for the nine months ended September 30, 2023 (vs. **$6.2 million** in 2022)[84](index=84&type=chunk) - Effective tax rates were **(128.8)%** for Q3 2023 and **124.0%** for the nine months ended September 30, 2023, differing from the **21% federal statutory rate** due to factors like nondeductible stock compensation, warrant liability adjustments, and foreign taxes[84](index=84&type=chunk)[144](index=144&type=chunk) [NOTE 17—COMMITMENTS AND CONTINGENCIES](index=26&type=section&id=NOTE%2017%E2%80%94COMMITMENTS%20AND%20CONTINGENCIES) This note outlines minimum guarantee obligations, legal proceedings, and restructuring expenses Minimum Guarantee Obligations (in thousands) | Category | Sep 30, 2023 | Dec 31, 2022 | | :------------------------- | :----------- | :----------- | | Minimum guarantee liability-current | $4,790 | $1,500 | | Minimum guarantee liability-noncurrent | $— | $1,500 | | Total minimum guarantee obligations | $4,790 | $3,000 | | Weighted-average remaining contractual term (in years) | 1.3 | 2.0 | - The company has various legal proceedings, including a class action lawsuit alleging federal securities law violations and civil lawsuits/arbitration demands claiming games constitute illegal gambling. The company believes these claims are **without merit** and has **not made accruals**[88](index=88&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - An internal reorganization plan initiated in February 2023 reduced global employee headcount by approximately **14%**, incurring **$0.2 million** in Q3 2023 and **$3.4 million** year-to-date in restructuring costs, primarily for employee transition and severance[94](index=94&type=chunk)[95](index=95&type=chunk) [NOTE 18—STOCKHOLDERS' EQUITY](index=28&type=section&id=NOTE%2018%E2%80%94STOCKHOLDERS'%20EQUITY) This note describes the company's common stock classes, voting rights, and details of the stock repurchase program - Class A common stock holders have **one vote per share**, while Class B common stock holders have **twenty votes per share**. Class B shares are subject to 'sunset' provisions upon certain transfers or if the Founder Group's ownership falls below **20%**[98](index=98&type=chunk)[99](index=99&type=chunk) - As of September 30, 2023, the company repurchased **4.7 million Class A common shares** for **$20.0 million** under a **$50.0 million stock repurchase program**. The board **extended** the program through November 10, 2024, and **increased** the remaining authorized amount to **$50.0 million** on November 1, 2023[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) [NOTE 19—STOCK-BASED COMPENSATION](index=29&type=section&id=NOTE%2019%E2%80%94STOCK-BASED%20COMPENSATION) This note details stock-based compensation expense by category and unrecognized compensation for options and RSUs Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Selling and marketing | $205 | $165 | $585 | $646 | | General and administrative | $1,975 | $1,767 | $7,086 | $6,319 | | Research and development | $2,164 | $1,622 | $6,720 | $6,598 | | Total stock-based compensation expense | $4,344 | $3,554 | $14,391 | $13,563 | | Capitalized stock-based compensation | $412 | $430 | $1,340 | $1,966 | - As of September 30, 2023, unrecognized stock-based compensation expense was approximately **$0.5 million** for stock options (**0.9 years** weighted-average vesting) and **$39.3 million** for restricted stock units (**2.7 years** weighted-average vesting)[104](index=104&type=chunk) [NOTE 20—NET INCOME (LOSS) PER SHARE](index=30&type=section&id=NOTE%2020%E2%80%94NET%20INCOME%20(LOSS)%20PER%20SHARE) This note presents basic and diluted net income (loss) per share for Class A and Class B common stock Net Income (Loss) Attributable to Common Stockholders Per Share | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic EPS (Class A) | $0.03 | $0.03 | $0.00 | $(0.13) | | Diluted EPS (Class A) | $0.03 | $0.02 | $0.00 | $(0.13) | | Basic EPS (Class B) | $0.03 | $0.03 | $0.00 | $(0.13) | | Diluted EPS (Class B) | $0.03 | $0.02 | $0.00 | $(0.13) | - Equity awards **excluded** from diluted EPS computation due to **anti-dilutive effect** for the nine months ended September 30, 2023, included **5.382 million Public Warrants**, **3.822 million Private Warrants**, and **15.000 million Earnout Shares**[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on PLAYSTUDIOS' financial condition, operational results, key factors, and liquidity [Overview](index=32&type=section&id=Overview) This section provides an overview of PLAYSTUDIOS' business, including its free-to-play games and the playAWARDS loyalty program - PLAYSTUDIOS develops and publishes **free-to-play** casual games for mobile and social platforms, including social casino and Tetris® games, all incorporating the unique **playAWARDS loyalty program**[110](index=110&type=chunk) - The playAWARDS program allows players to earn loyalty points for 'real-world' rewards from various partners at **no cost to the company**, **enhancing player engagement and retention**[111](index=111&type=chunk)[112](index=112&type=chunk) - Primary revenue sources are **in-game sales of virtual currency** (largely concentrated in North America) and **in-game advertising**[113](index=113&type=chunk)[114](index=114&type=chunk) [Key Factors Affecting Our Performance](index=33&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) This section identifies critical factors influencing performance, such as third-party platform agreements and player acquisition - **Third-Party Platform Agreements:** Revenue is **substantially derived** from in-game purchases processed by platforms (Apple, Google, Amazon, Facebook), which charge transaction fees (**typically 30%**). Changes in platform policies or fees can **unfavorably impact** the company - **Player Acquisition:** **Significant spending** on advertising and marketing to grow and reactivate the player base, with a strategy focused on **optimizing spend** for new player acquisition and inactive player reactivation - **Player Monetization:** Revenue is **primarily driven by virtual currency sales**, whose perceived value is **sensitive** to in-game actions like discounts or promotions. Improper management of virtual economies can **harm reputation and future purchases** - **Investment in Game Development:** **Continuous investment** in new content, features, and games is **crucial** for player interest and revenue growth, with expenditures often preceding revenue generation and **risk of abandonment** - **Investment in playAWARDS and myVIP programs:** Resources are invested to enhance these loyalty programs to **drive player engagement and retention**, with **ongoing expenses** for updates and potential for non-revenue generating enhancements - **Real-World Rewards:** Offering desirable real-world rewards (dining, entertainment, hotel rooms) is **vital** for player willingness to make in-game purchases. These rewards are provided by partners at **no cost to PLAYSTUDIOS** [Key Performance Indicators](index=35&type=section&id=Key%20Performance%20Indicators) This section defines and presents key operational metrics like Daily Active Users, Monthly Active Users, and ARPDAU - **Daily Active Users (DAU):** Number of unique individuals playing a game on a particular day. Average DAU for Q3 2023 was **3,520 thousand**, **up 140.8% YoY** - **Monthly Active Users (MAU):** Number of unique individuals playing a game in a particular month. Average MAU for Q3 2023 was **13,712 thousand**, **up 105.2% YoY** - **Daily Paying Users (DPU):** Number of unique individuals making a purchase in a game on a particular day. Average DPU for Q3 2023 was **26 thousand**, **down 10.3% YoY** - **Daily Payer Conversion:** DPU as a percentage of DAU. Average Daily Payer Conversion for Q3 2023 was **0.8%**, **down 1.2 percentage points YoY** - **Average Daily Revenue Per DAU (ARPDAU):** Game and advertising revenue for the period, divided by days, divided by Average DAU. ARPDAU for Q3 2023 was **$0.23**, **down 55.8% YoY** [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section analyzes the company's financial results, including revenue, operating expenses, and net income or loss [Summarized Consolidated Results of Operations](index=36&type=section&id=Summarized%20Consolidated%20Results%20of%20Operations) This section provides a summarized view of the company's consolidated financial performance, highlighting revenue and operating expenses Consolidated Results of Operations (in thousands, except percentages) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | $ Change (YoY) | % Change (YoY) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | $ Change (YoY) | % Change (YoY) | | :------------------- | :------------------------------ | :------------------------------ | :------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | :------------- | | Net revenue | $75,858 | $72,127 | $3,731 | 5.2% | $233,774 | $210,931 | $22,843 | 10.8% | | Operating expenses | $79,579 | $75,305 | $4,274 | 5.7% | $241,548 | $234,550 | $6,998 | 3.0% | | Operating loss | $(3,721) | $(3,178) | $(543) | 17.1% | $(7,774) | $(23,619) | $15,845 | (67.1)% | | Net income (loss) | $3,800 | $3,629 | $171 | 4.7% | $471 | $(16,080) | $16,551 | (102.9)% | | Net income (loss) margin | 5.0% | 5.0% | — pp | —% | 0.2% | (7.6)% | 7.8 pp | (102.6)% | - Net revenue increased by **$3.7 million (5.2%)** to **$75.9 million** in Q3 2023, primarily due to a **$10.4 million increase in advertising revenue**, offset by a **$4.0 million decrease in virtual currency revenue**. The increase in advertising revenue was driven by higher impression counts and the addition of Tetris® and Brainium game portfolios[124](index=124&type=chunk)[126](index=126&type=chunk) - For the nine months ended September 30, 2023, net revenue increased by **$22.8 million (10.8%)** to **$233.8 million**, driven by a **$30.2 million increase in advertising revenue**, while virtual currency revenue **decreased by $7.8 million**[127](index=127&type=chunk) [Cost of Revenue](index=39&type=section&id=Cost%20of%20Revenue) This section analyzes changes in the cost of revenue, primarily influenced by advertising revenue and royalty expenses - Cost of revenue **decreased by $1.8 million (8.5%)** to **$19.9 million** in Q3 2023, and by **$5.4 million (8.5%)** to **$58.3 million** for the nine months ended September 30, 2023. This reduction is primarily due to an **increase in advertising revenue** (which does not incur platform fees) and **lower royalty expenses**[129](index=129&type=chunk)[130](index=130&type=chunk) [Selling and Marketing](index=39&type=section&id=Selling%20and%20Marketing) This section details changes in selling and marketing expenses, primarily driven by user acquisition costs - Selling and marketing expenses **decreased by $0.5 million (2.4%)** to **$18.8 million** in Q3 2023, mainly due to a **$1.0 million reduction in user acquisition costs**. For the nine months, expenses **decreased by $4.1 million (6.8%)** to **$55.3 million**, driven by a **$5.7 million reduction in user acquisition costs**[131](index=131&type=chunk)[132](index=132&type=chunk) [Research and Development](index=39&type=section&id=Research%20and%20Development) This section analyzes changes in research and development expenses, driven by IT services, employee costs, and stock compensation - Research and development expenses **increased by $2.3 million (14.9%)** to **$17.4 million** in Q3 2023, driven by **higher IT services, employee costs, and stock-based compensation**. For the nine months, expenses **rose by $6.9 million (14.9%)** to **$53.5 million**, primarily due to **increased employee costs, IT services, and facilities costs**[133](index=133&type=chunk)[134](index=134&type=chunk) [General and Administrative](index=39&type=section&id=General%20and%20Administrative) This section details changes in general and administrative expenses, primarily due to employee costs and stock-based compensation - General and administrative expenses **increased by $0.9 million (9.0%)** to **$10.7 million** in Q3 2023, mainly due to **additional employee costs**. For the nine months, expenses **increased by $4.9 million (17.1%)** to **$33.7 million**, driven by **higher employee costs and stock-based compensation**[135](index=135&type=chunk)[136](index=136&type=chunk) [Depreciation and Amortization](index=39&type=section&id=Depreciation%20and%20Amortization) This section analyzes changes in depreciation and amortization expenses, driven by recent acquisitions and additional intangible assets - Depreciation and amortization expenses **increased by $3.0 million (34.4%)** to **$11.5 million** in Q3 2023, and by **$8.4 million (33.3%)** to **$33.7 million** for the nine months ended September 30, 2023. This increase is primarily due to the **amortization of intangible assets from the Brainium and WonderBlocks acquisitions and additional intangible assets**[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) [Restructuring Expenses](index=40&type=section&id=Restructuring%20Expenses) This section details restructuring expenses, including impairment charges and costs related to internal reorganization - Restructuring expenses **increased by $0.5 million** in Q3 2023, primarily due to a **$1.1 million non-cash impairment charge**, partially offset by reduced M&A fees. For the nine months, expenses **decreased by $3.9 million**, mainly due to **$6.3 million less in non-cash impairment charges** and reduced Tender Offer costs, partially offset by **$2.8 million related to internal reorganization**[140](index=140&type=chunk)[141](index=141&type=chunk) [Other Income, Net](index=40&type=section&id=Other%20Income,%20Net) This section presents other non-operating income and expenses, including changes in warrant liabilities and interest income Consolidated Non-Operating Income (in thousands, except percentages) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | $ Change (YoY) | % Change (YoY) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | $ Change (YoY) | % Change (YoY) | | :--------------------------------- | :------------------------------ | :------------------------------ | :------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | :------------- | | Change in fair value of warrant liabilities | $4,216 | $4,676 | $(460) | (9.8)% | $1,381 | $1,139 | $242 | 21.2% | | Interest income | $1,364 | $843 | $521 | 61.8% | $3,521 | $1,050 | $2,471 | 235.3% | | Other (expense) income | $(198) | $(475) | $277 | (58.3)% | $906 | $(836) | $1,742 | (208.4)% | | Total other income, net | $5,382 | $5,044 | $338 | 6.7% | $5,808 | $1,353 | $4,455 | 329.3% | [Provision for Income Taxes](index=40&type=section&id=Provision%20for%20Income%20Taxes) This section details the company's income tax benefit and effective tax rates, explaining significant deviations from statutory rates - The company reported an income tax benefit of **$2.1 million** in Q3 2023 (effective tax rate of **-128.8%**) and **$2.4 million** for the nine months ended September 30, 2023 (effective tax rate of **124.0%**). These rates **differ significantly** from the **21% federal statutory rate** due to various adjustments including foreign taxes, R&D credits, warrant liability fair value changes, and non-deductible expenses[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) [Non-GAAP Measures](index=41&type=section&id=Non-GAAP%20Measures) This section defines and reconciles non-GAAP Adjusted EBITDA to net income, providing insights into operational performance - Adjusted EBITDA (AEBITDA) is a **non-GAAP measure** defined as net income before interest, income taxes, depreciation and amortization, restructuring costs, stock-based compensation, changes in fair value of warrant liabilities, and other income/expense items[146](index=146&type=chunk) Reconciliation of AEBITDA to Net Income (Loss) (in thousands, except percentages) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) | $3,800 | $3,629 | $471 | $(16,080) | | Depreciation & amortization | $11,537 | $8,583 | $33,686 | $25,265 | | Income tax benefit | $(2,139) | $(1,763) | $(2,437) | $(6,186) | | Stock-based compensation expense | $4,344 | $3,554 | $14,391 | $13,563 | | Change in fair value of warrant liability | $(4,216) | $(4,676) | $(1,381) | $(1,139) | | Change in fair value of contingent consideration | $— | $— | $(950) | $— | | Restructuring and related | $1,280 | $796 | $7,112 | $10,968 | | Other, net | $(1,081) | $(367) | $(3,328) | $(212) | | **AEBITDA** | **$13,525** | **$9,756** | **$47,564** | **$26,179** | | Net income (loss) margin | 5.0% | 5.0% | 0.2% | (7.6)% | | **AEBITDA Margin** | **17.8%** | **13.5%** | **20.3%** | **12.4%** | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, cash flow activities, and sufficiency of capital for future operations - As of September 30, 2023, PLAYSTUDIOS had **$129.8 million in cash and cash equivalents**. The company believes existing cash, cash from operations, and borrowing capacity under its Credit Agreement are **sufficient for at least the next 12 months**[150](index=150&type=chunk) Summary of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $36,396 | $31,231 | | Net cash used in investing activities | $(21,855) | $(26,103) | | Net cash used in financing activities | $(17,767) | $(5,648) | | Effect of exchange rate on cash and cash equivalents | $(967) | $(913) | | Decrease in cash and cash equivalents | $(4,193) | $(1,433) | - **Operating Activities:** **Provided $36.4 million** in net cash for the nine months ended September 30, 2023, an **increase from $31.2 million** in the prior year, primarily due to **improved financial performance**[153](index=153&type=chunk) - **Investing Activities:** **Used $21.9 million** in net cash for the nine months ended September 30, 2023, a **decrease from $26.1 million** in the prior year, mainly due to **$5.7 million less in property and equipment purchases**, offset by **increased internal-use software additions**[155](index=155&type=chunk) - **Financing Activities:** **Used $17.8 million** in net cash for the nine months ended September 30, 2023, an **increase from $5.6 million** in the prior year, primarily due to **$15.5 million in share repurchases** not present in the prior period, partially offset by **fewer minimum guarantee payments**[157](index=157&type=chunk) [Contractual Obligations, Commitments, and Contingencies](index=43&type=section&id=Contractual%20Obligations,%20Commitments,%20and%20Contingencies) This section outlines the company's deferred tax assets, including net operating loss carryforwards and R&D credits - As of September 30, 2023, the company had approximately **$21.0 million in net deferred tax assets**, including **$8.7 million in net operating loss carryforwards** and **$3.2 million in R&D credits**. A partial valuation allowance of **$2.2 million** is recorded against California research credit carryforwards[159](index=159&type=chunk) [Critical Accounting Policies and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to critical accounting policies and estimates since the last annual report - **No material changes** to critical accounting policies and estimates were reported compared to the 2022 Annual Report on Form 10-K, except as described in Note 2—Summary Of Significant Accounting Policies[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines PLAYSTUDIOS' exposure to market risks, focusing on interest rate, investment, and foreign currency risks [Interest Rate Risk](index=43&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to interest rate risk, primarily from its revolving credit facility with floating rates - The company's exposure to interest rate risk primarily relates to its Credit Agreement, which has **floating interest rates**. **No borrowings were outstanding** under the Credit Agreement as of September 30, 2023, and December 31, 2022[162](index=162&type=chunk) [Investment Risk](index=43&type=section&id=Investment%20Risk) This section addresses investment risk related to cash and cash equivalents, noting immaterial impact from interest rate changes - Cash and cash equivalents totaled **$129.8 million** as of September 30, 2023, primarily held in cash on hand and money market mutual funds. A hypothetical 100 basis point change in interest rates would have an **immaterial impact** on interest income due to the short-term nature of investments[163](index=163&type=chunk) [Foreign Currency Risk](index=44&type=section&id=Foreign%20Currency%20Risk) This section details the company's exposure to foreign currency risk due to operating expenses denominated in various currencies - While revenue is primarily in U.S. Dollars, a **significant portion of operating expenses** (salaries, leases) are denominated in New Israeli Shekels (NIS) and other foreign currencies (HKD, EUR, MXN, RSD, SGD, VND). Fluctuations in exchange rates can **negatively affect operating results**[164](index=164&type=chunk)[165](index=165&type=chunk) - Subsequent to September 30, 2023, the company entered into derivative contracts to **hedge** approximately **$7.5 million** in foreign currency purchases, primarily NIS, **maturing within 12 months**[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of PLAYSTUDIOS' disclosure controls and procedures, with no material changes in internal control - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2023, providing **reasonable assurance** for timely and accurate reporting[168](index=168&type=chunk) - **No changes** in internal control over financial reporting occurred during the three months ended September 30, 2023, that materially affected or are reasonably likely to materially affect internal control over financial reporting[169](index=169&type=chunk) [Part II - Other Information](index=45&type=section&id=Part%20II%20-%20Other%20Information) This section provides other information not covered in Part I, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) PLAYSTUDIOS is involved in ordinary course litigation, not expecting a material adverse effect on its business - The company is party to ordinary and routine litigation, but **does not expect** the outcome of any pending litigation to have a **material adverse effect** on its financial statements[171](index=171&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, focusing on new risks related to managing business operations in Israel due to regional instability [Risks Related to Managing Our Business Operations in Israel](index=45&type=section&id=Risks%20Related%20to%20Managing%20Our%20Business%20Operations%20in%20Israel) This section details risks to PLAYSTUDIOS' Israeli operations from regional instability, including employee call-ups - PLAYSTUDIOS has a significant number of employees in Tel Aviv, Israel, making its operations **vulnerable to political, economic, and military instability** in the region, including the ongoing war between Israel and Hamas[173](index=173&type=chunk) - Operations may be **disrupted** by employees being activated for military service, as occurred after October 7, 2023. While business continuity measures are in place, extended call-ups could **materially affect business**[177](index=177&type=chunk)[178](index=178&type=chunk) - The company incurs **significant operating expenses** in New Israeli Shekels (NIS) and other foreign currencies, exposing it to **currency exchange rate fluctuations** that could **harm financial condition and results of operations**[179](index=179&type=chunk)[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activities, including shares for tax withholding and under its stock program Share Repurchases of Class A Common Stock (Quarter Ended September 30, 2023) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Dollar Value of Shares that May Yet be Purchased Under the Program at Period End (In thousands) | | :--------------------------------- | :----------------------------- | :--------------------------- | :-------------------------------------------------------------------------------- | | July 1, 2023 - July 31, 2023 | 905 | $4.80 | $30,000 | | August 1, 2023 - August 31, 2023 | 429,544 | $3.80 | $30,000 | | September 1, 2023 - September 30, 2023 | — | — | $30,000 | - The total number of shares purchased includes shares surrendered to satisfy **tax withholding obligations** upon the vesting of equity awards, which are considered repurchased under the Plan, **not a publicly announced program**[183](index=183&type=chunk) [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) No directors or officers reported adopting or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - **No directors or officers reported adopting or terminating** Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended September 30, 2023[184](index=184&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of this Quarterly Report, including organizational documents, credit agreements, and certifications - Exhibits include the Certificate of Incorporation, Bylaws, Amendment No. 3 to Credit Agreement, Joinder Agreement, and certifications from the CEO and CFO[186](index=186&type=chunk) [Signatures](index=49&type=section&id=Signatures) This section contains the required signatures for the Quarterly Report on Form 10-Q