Game Portfolio and Revenue Generation - The company has developed a portfolio of free-to-play social casino games, including award-winning titles like POP! Slots and myVEGAS Slots, which are available on multiple platforms[107]. - Revenue is primarily generated from the sale of virtual currency, with a significant concentration in North America, and players can also earn loyalty points through the playAWARDS program[110]. Player Engagement and Acquisition - The company incurs substantial costs related to player acquisition, focusing on advertising and marketing to grow its player base and reactivate lapsed players[116]. - The company invests significantly in game development and enhancing the playAWARDS and myVIP programs to drive player engagement and retention[121]. - The loyalty program offers real-world rewards at no cost to the company, which are crucial for maintaining player interest and encouraging in-game purchases[121]. Key Performance Indicators - Daily Active Users (DAU) and Monthly Active Users (MAU) are key performance indicators, with DAU defined as the number of individuals playing a game on a particular day[119][120]. - Daily Paying Users (DPU) measures the number of individuals making purchases in a game daily, with Average DPU calculated for performance tracking[124]. - Average Revenue Per DAU (ARPDAU) is used to assess overall monetization, calculated as game and advertising revenue divided by Average DAU[126]. - The Average Daily Payer Conversion rate fell to 0.8%, a decrease of 1.2 percentage points or 60.0% from 2.0% in the prior year[129]. Financial Performance - Net revenue for the three months ended March 31, 2023, was $80.1 million, an increase of $9.7 million or 13.7% compared to $70.4 million in the same period of 2022[131]. - Advertising revenue surged by $9.0 million to $13.1 million, reflecting a 221.1% increase, while virtual currency revenue decreased by $1.6 million to $64.4 million, a decline of 2.4%[129]. - Operating expenses decreased by $2.96 million to $82.3 million, a reduction of 3.5% compared to $85.3 million in the same period of 2022[132]. - The net loss for the three months ended March 31, 2023, was $25.2 million, compared to a net loss of $2.6 million in the same period of 2022, representing an increase in loss of 89.8%[127]. - Adjusted EBITDA (AEBITDA) for the three months ended March 31, 2023, was $17.8 million, with an AEBITDA margin of 22.2%, compared to $9.1 million and 12.9% in the same period of 2022[146]. Cash Flow and Liquidity - Cash and cash equivalents as of March 31, 2023, totaled $127.5 million, indicating sufficient liquidity to fund operations and capital expenditures for at least the next twelve months[148]. - For the three months ended March 31, 2023, net cash provided by operating activities was $4.5 million, a decrease of 61% from $11.6 million in the same period of 2022[151]. - Cash used in investing activities increased to $7.6 million in Q1 2023 from $5.1 million in Q1 2022, primarily due to game development and property purchases[152]. - Financing activities used $3.5 million of net cash in Q1 2023, compared to a cash inflow of $0.1 million in Q1 2022, largely due to $5.4 million in share repurchases[154]. - As of March 31, 2023, cash and cash equivalents totaled $127.5 million, down from $134.0 million at the end of 2022[159]. Risks and Economic Impact - The impact of COVID-19 has led to disruptions in operations and may affect player purchasing decisions due to economic conditions[112][113]. - The company faces risks from third-party platform agreements, which charge transaction fees of approximately 30% on in-game purchases[116]. - The company is exposed to foreign currency risks, particularly from transactions in currencies other than the U.S. Dollar, which could materially impact future operating results[160]. - A significant portion of headcount-related expenses is denominated in New Israeli Shekels, exposing the company to additional foreign currency risks[161]. Restructuring and Investment Strategy - Restructuring expenses decreased by $4.6 million to $4.0 million, primarily due to a non-cash impairment charge related to the suspension of a game development project[139]. - The company plans to continue significant investments to support business growth and may require additional funds for new game development and acquisitions[148]. - The company has not entered into investments for trading or speculative purposes, focusing instead on preserving capital and meeting liquidity requirements[159].

Revenue Generation - PLAYSTUDIOS generated revenue primarily from in-game virtual currency sales, with a significant portion of revenue concentrated in North America[286][287]. - The company has expanded in-game advertising as a revenue source, particularly through its Tetris®-branded mobile game and Brainium games[288]. - Net revenue increased by $2.9 million, or 1.0%, to $290.3 million for the year ended December 31, 2022, compared to $287.4 million in 2021, primarily driven by increases in advertising and other revenue[306]. - Virtual currency revenue decreased by $18.47 million, or 6.6%, to $261.62 million in 2022, primarily due to a decline in Daily Payer Users (DPU)[306]. - Advertising revenue surged by $14.88 million, or 213.6%, to $21.84 million in 2022, driven by an increase in impression count and engagement opportunities[308]. User Engagement and Metrics - Daily Active Users (DAU) and Monthly Active Users (MAU) are key performance indicators, with DAU defined as individuals playing a game on a particular day[295][298]. - Average Daily Active Users (DAU) rose by 673, or 54.1%, to 1,917 in 2022 from 1,244 in 2021, while Average Monthly Active Users (MAU) increased by 3,821, or 92.9%, to 7,932[306]. - Daily Paying Users (DPU) measures the number of individuals making purchases in a game daily, with Average DPU calculated for performance tracking[299]. - Average Daily Revenue Per DAU (ARPDAU) is used to assess overall monetization, calculated as game and advertising revenue divided by Average DAU[301]. - The Average Daily Payer Conversion rate decreased by 1.2 percentage points to 1.5% in 2022 from 2.7% in 2021[306]. Financial Performance - Adjusted EBITDA (AEBITDA) decreased by $1.3 million, or 3.3%, to $38.3 million in 2022, with an AEBITDA margin of 13.2% compared to 13.8% in 2021[304]. - Operating expenses increased by $27.98 million, or 9.6%, to $318.39 million in 2022, with significant increases in general and administrative expenses by 44.3%[309]. - General and administrative expenses rose by $12.37 million, or 44.3%, to $40.27 million in 2022, increasing as a percentage of net revenue from 9.7% in 2021 to 13.9%[313]. - The company reported a total other income, net of $4.463 million for the year ended December 31, 2022, a decrease of 66.9% from $13.469 million in 2021[317]. - The income tax benefit for 2022 was approximately $5.8 million, reflecting an effective income tax rate of 24.6%, compared to a benefit of $0.3 million and a negative effective rate of 2.5% in 2021[318]. Investments and Acquisitions - The company acquired Brainium, enhancing its portfolio of free-to-play casual games and improving user retention and engagement[283]. - The company used $102.3 million in investing activities in 2022, primarily due to $70.4 million related to acquisitions and $10.0 million for property and equipment purchases[327]. - The company plans to continue making significant investments to support business growth and may require additional funds for new game development and acquisitions[320]. Operational Challenges - The impact of COVID-19 has led to operational disruptions and potential changes in player purchasing behavior due to economic conditions[289][290]. - Restructuring expenses increased by $9.94 million, or 322.5%, to $13.02 million in 2022, reflecting non-cash impairment charges related to the suspension of Kingdom Boss development[316]. Cash and Liquidity - As of December 31, 2022, the company had cash and cash equivalents of $134.0 million, sufficient to fund operations and capital expenditures for at least the next twelve months[320]. - The company reported a slight decrease in net cash provided by operating activities, totaling $33.4 million in 2022 compared to $33.9 million in 2021[326]. - Financing activities resulted in a net cash outflow of $9.6 million in 2022, compared to an inflow of $186.9 million in 2021, largely due to share repurchases and minimum guarantee obligations[328]. Tax and Compliance - The company accounts for uncertain tax positions in accordance with ASC 740, recognizing only those tax positions that are more likely than not to be sustained upon examination[350]. - The company had gross unrecognized tax benefits of $0.5 million as of December 31, 2022, with an additional $0.1 million for interest and penalties classified as long-term liabilities[330]. Revenue Recognition - The Company recognizes revenue from in-game purchases of virtual currency over an estimated average consumption period of approximately one day, with a timing difference between purchase and consumption ranging from one to seven days[343]. - The Company has determined that players who purchase virtual currency generally do not buy additional currency if their existing balances have not been substantially consumed[343]. - The Company has contractual relationships with various advertising service providers, recognizing revenue from advertisements at the point in time when they are displayed or completed[346]. - The transaction price for advertising revenue is determined by the number of advertising units delivered, with payment terms ranging from 45 to 60 days after the end of the month[347]. - The Company has concluded that virtual currency represents consumable goods, and revenue is recognized as the virtual currency is consumed[343]. - The Company continues to gather detailed player behavior data to assess its revenue recognition policy and make necessary adjustments based on changes in player behavior patterns[344]. Foreign Currency Exposure - The Company does not hedge its foreign currency exposure but may consider doing so in the future, as fluctuations in exchange rates could materially impact results[356]. - A hypothetical 5% strengthening or weakening of the U.S. Dollar would have an immaterial impact on the Company's foreign currency gain or loss for a twelve-month period[358]. Contractual Obligations - The company had total contractual obligations of $20.442 million as of December 31, 2022, with $6.585 million due within one year[329]. - The company entered into a credit agreement providing a revolving credit facility of $75 million, which was increased to $81 million in August 2022[321][323].

Financial Performance and Key Metrics - The company reported $79.4 million in revenue for Q4 2022, an increase from $71.9 million in Q4 2021 and $72.1 million in Q3 2022, driven by the inclusion of Brainium and Tetris [30][58] - Adjusted EBITDA for Q4 was $12.1 million, compared to $12 million a year ago and $9.8 million in Q3 2022, with EBITDA margins improving to 15.2%, a 170 basis point increase [31][58] - Daily Active Users (DAU) reached 3.2 million, and Monthly Active Users (MAU) reached 11.5 million, marking increases of 145% and 137% year-over-year, respectively [59] Business Line Performance - The company expanded its game portfolio from 7 to 17 games, transitioning from a social casino operator to a diversified game publisher [7][14] - The playAWARDS program saw a 6% increase in available rewards, totaling 574 unique rewards, with purchases up 6% in Q4 and 13% for the full year [23][60] - The integration of Brainium is ongoing, with expectations of synergies but no specific quantification yet [61] Market Conditions - The economic environment remains challenging, with high inflation and labor pressures impacting consumer-facing businesses [6] - The company is focusing on maintaining its player network and converting existing players to payers amidst a difficult user acquisition landscape [16][42] Company Strategy and Industry Competition - The strategic focus includes diversifying the game portfolio and enhancing the playAWARDS program to drive growth and improve margins [44][55] - The company aims to leverage its unique model of rewarded play to outperform competitors struggling with user acquisition [42][44] Management Commentary on Future Outlook - Management anticipates continued economic headwinds but is optimistic about the company's ability to create its own momentum through specific initiatives [6][30] - The guidance for 2023 includes expected revenues between $300 million and $320 million and adjusted EBITDA between $47.5 million and $52.5 million, reflecting a focus on margin expansion [64] Other Important Information - The company initiated a share repurchase program, acquiring approximately 2.4 million shares for about $10 million [29][63] - The balance sheet remains strong with $134 million in cash and no debt, providing flexibility for M&A and growth initiatives [35][57] Q&A Session Summary Question: What are the assumptions around consumer and macro in guidance? - The company does not forecast any meaningful change in the macroeconomic environment and expects challenges in the industry to continue [90][91] Question: How has Brainium performed on a standalone basis? - Specific product performance is not disclosed, but the Brainium suite is performing as expected, and the integration is progressing well [75][76] Question: What factors contributed to the success of new game launches? - The company attributes success to meaningful returns on investments and the quality of player cohorts, despite a challenging user acquisition environment [78][79] Question: What is the timeline for Tetris casual products? - The Tetris casual products are in development, but no specific timeline can be provided due to the unpredictability of the process [112][113] Question: How will the restructuring impact cost savings? - The company is shifting operations to lower-cost regions, which is expected to yield cost savings, but specific figures are not yet available [94][95]

Financial Data and Key Metrics Changes - The company reported revenue of $72.1 million for Q3 2022, an increase from $70.6 million in the same quarter last year and $68.4 million in Q2 2022 [42] - Adjusted EBITDA was $9.8 million, compared to $9.6 million a year ago and $7.3 million in Q2 2022 [43] - Daily Active Users (DAU) were 1.5 million, and Monthly Active Users (MAU) were 6.7 million, showing a year-over-year increase of 24.6% and 87.1%, respectively, while remaining flat sequentially [43] Business Line Data and Key Metrics Changes - The core social casino games, including Pop! Slots, myVEGAS Slots, and myKONAMI Slots, showed stable performance, with ARPDAU increasing despite a year-over-year decline of 20% due to the inclusion of Tetris [42][43] - The loyalty program, playAWARDS, expanded to nearly 600 unique rewards, with reward purchases totaling 553,000 units, a 15% increase year-over-year [18][44] Market Data and Key Metrics Changes - The social casino genre faced a year-over-year decline of 2.2% over the past several quarters, but the company believes it is outperforming peers [13] - The user acquisition environment remains challenging, influenced by changes to IDFA on iOS, making it difficult to find and retain profitable players [11][12] Company Strategy and Development Direction - The acquisition of Brainium is viewed as strategically significant, diversifying the company's portfolio and expected to drive value with its casual games [8][36] - The company is focusing on expanding its playAWARDS platform and integrating it into new games, including Tetris and the Brainium suite, to enhance player retention [20][54] - The company is also advancing its regional operating model, expanding teams in Vietnam and Serbia to improve operational efficiency and margins [15][16] Management's Comments on Operating Environment and Future Outlook - The management expressed concerns about the challenging macroeconomic environment, including high inflation and market volatility, which could impact consumer confidence [12] - Despite these challenges, the company remains optimistic about its performance and the potential of its new game initiatives, including Tetris and myVEGAS Bingo, to contribute to future results [53] Other Important Information - The company ended the quarter with a cash balance of approximately $212 million and no debt, maintaining a strong financial position [49] - The Board of Directors reauthorized a $50 million share repurchase plan for another 12 months [40] Q&A Session Summary Question: Diverging industry trends between casual and social casino - Management noted that it is too early to determine if there are structural changes between casual and social casino genres, as the casual portfolio is relatively new [59] Question: Update on direct-to-consumer platform - Management acknowledged ongoing challenges in creating a seamless direct-to-consumer experience but is actively working on enhancing this platform [61][62] Question: Fourth quarter guidance and expected trends - Management confirmed that the guidance includes approximately 2.5 months of Brainium's contribution, but did not provide specific quarterly guidance [71][74] Question: Observations on user acquisition and monetization trends - Management indicated that while the user acquisition environment remains difficult, they have not observed significant deterioration in their performance [85] Question: Fundamental drivers for improvement in user acquisition environment - Management did not identify any specific drivers for improvement but emphasized the importance of retaining existing audiences through strategic acquisitions [90]

Revenue Generation - PLAYSTUDIOS generates revenue primarily from the sale of virtual currency, with a significant portion concentrated in North America[142]. - The company has developed a portfolio of free-to-play social casino games, including award-winning titles like POP! Slots and myVEGAS Slots[139]. - Net revenue for Q3 2022 was $72.1 million, a 2.2% increase from $70.6 million in Q3 2021, driven by a $2.5 million increase in advertising revenue and a $2.7 million increase in other revenue, despite a $3.6 million decrease in virtual currency revenue[163]. - For the nine months ended September 30, 2022, net revenue decreased by $4.6 million to $210.9 million, primarily due to a $16.8 million decrease in virtual currency revenue[167]. - Other revenue reached $2.7 million in Q3 2022, attributed to a short-term licensing arrangement, and $4.2 million for the nine months ended September 30, 2022[168]. User Engagement Metrics - Daily Active Users (DAU) and Monthly Active Users (MAU) are key performance indicators, with DAU defined as the number of individuals who played a game on a particular day[152][153]. - Average Daily Active Users (DAU) increased by 24.6% to 1,462 in Q3 2022 compared to 1,173 in Q3 2021, while Average Monthly Active Users (MAU) rose by 87.1% to 6,683 from 3,571[166]. - Daily Paying Users (DPU) measures the number of individuals who made a purchase in a mobile game on a given day, which is crucial for understanding monetization[154]. - Average Daily Revenue Per DAU (ARPDAU) is calculated as game and advertising revenue divided by average DAU, serving as a measure of overall monetization[156]. - The company reported a decrease in Average Revenue Per Daily Active User (ARPDAU) to $0.52 in Q3 2022, down 20.0% from $0.65 in Q3 2021[166]. - Average Daily Payer Conversion decreased to 2.0% in Q3 2022 from 2.8% in Q3 2021, reflecting a dilution effect from the addition of the low-monetizing Tetris application[166]. Financial Performance - Net income for Q3 2022 was $3.6 million, a decrease of 67.7% from $11.2 million in Q3 2021, resulting in a net income margin of 5.0% compared to 15.9% in the prior year[163]. - Total operating loss for Q3 2022 was $3.2 million, compared to a loss of $799,000 in Q3 2021, marking a 297.7% increase in operating loss[163]. - Operating expenses for Q3 2022 totaled $75.3 million, a 5.5% increase from $71.4 million in Q3 2021, with general and administrative expenses rising by 70.4% to $9.9 million[169]. - Depreciation and amortization expenses increased by 19.0% to $8.6 million in Q3 2022 compared to $7.2 million in Q3 2021[169]. - Selling and marketing expenses decreased by $1.1 million to $59.3 million for the nine months ended September 30, 2022, with user acquisition costs decreasing by $3.1 million[173]. Investment and Development - The company invests significantly in game development and enhancements to maintain player interest and drive revenue growth[153]. - Research and development expenses increased by $0.6 million to $15.1 million for the three months ended September 30, 2022, primarily due to additional payroll and stock-based compensation[174]. - General and administrative expenses increased by $4.1 million to $9.9 million for the three months ended September 30, 2022, driven by higher payroll and stock-based compensation[176]. Cash Flow and Financing - Cash and cash equivalents as of September 30, 2022, totaled $212.1 million, with operations funded primarily through cash flow from operating activities[186]. - Net cash provided by operating activities increased to $31.2 million for the nine months ended September 30, 2022, compared to $20.8 million in the prior year[192]. - Financing activities used $5.6 million of net cash during the nine months ended September 30, 2022, compared to $186.7 million provided in the same period of 2021[196]. Acquisitions and Contingent Considerations - The company acquired two new leases related to the Brainium Acquisition, with minimum lease payments of approximately $5.2 million due through May 2028[199]. - In connection with the WonderBlocks Acquisition, the company agreed to pay contingent consideration of up to $3 million, with a fair value of $1.6 million as of September 30, 2022[200]. - For the Brainium Acquisition, the company agreed to pay contingent consideration of up to $27.3 million based on financial milestones for the fiscal year ending December 31, 2022[201]. Tax and Other Financial Considerations - The company reported a tax benefit of $1.8 million for the three months ended September 30, 2022, with an effective tax rate of (94.5)%[184]. - Total other expense, net decreased by $6.662 million to $5.044 million for the three months ended September 30, 2022, primarily due to a decrease in the change in fair value of warrant liabilities[183]. Risks and External Factors - The company faces risks from third-party platform agreements, which typically charge a 30% transaction fee on in-game purchases[148]. - The ongoing COVID-19 pandemic has impacted business operations and player purchasing behavior, with potential long-term effects on revenue[144][145]. - The company does not hedge its foreign currency exposure but may consider doing so in the future, as fluctuations in exchange rates could materially impact results[207][208]. - A significant portion of headcount-related expenses is denominated in New Israeli Shekels, exposing the company to foreign currency risks[208]. - The company has experienced fluctuations in net income due to transaction gains or losses from remeasurement of asset and liability balances in currencies other than the functional currency[209].

PLAYSTUDIOS, Inc. (NASDAQ:MYPS) Q2 2022 Earnings Conference Call August 9, 2022 5:00 PM ET Company Participants Joel Agena - Vice President, Legal Counsel Andrew Pascal - Co Founder, Chairman and Chief Executive Officer Scott Peterson - Vice President, Chief Financial Officer Conference Call Participants William Saltonstall - Craig-Hallum Operator Good day, ladies and gentlemen. Thank you for standing by. Welcome to the PLAYSTUDIOS Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please ...

Revenue Generation - PLAYSTUDIOS generates revenue primarily from the sale of virtual currency, with a significant concentration in North America[143]. - The platform providers charge a transaction fee of approximately 30% for processing payments for in-game purchases, impacting revenue[149]. - Virtual currency revenue decreased by $5.9 million, or 8.5%, to $63.8 million for the three months ended June 30, 2022, compared to $69.7 million for the same period in 2021[165]. - Advertising revenue increased by $2.4 million, or 223.6%, to $3.5 million for the three months ended June 30, 2022, compared to $1.1 million for the same period in 2021[165]. User Engagement Metrics - Daily Active Users (DAU) and Monthly Active Users (MAU) are key performance indicators, with DAU defined as the number of individuals who played a game on a particular day[152][153]. - Daily Paying Users (DPU) measures the number of individuals making purchases in a mobile game daily, which is crucial for understanding monetization[154]. - The average Daily Payer Conversion is calculated as DPU as a percentage of DAU, providing insight into player monetization[155]. - Average Daily Revenue Per DAU (ARPDAU) is used to measure overall monetization, calculated as game and advertising revenue divided by average DAU[156]. - Average Daily Active Users (DAU) increased by 17.2% to 1,469, while Average Monthly Active Users (MAU) rose by 54.4% to 6,634 for the three months ended June 30, 2022[165]. - The Average Revenue Per Daily Active User (ARPDAU) decreased by 17.7% to $0.51 for the three months ended June 30, 2022, compared to $0.62 for the same period in 2021[165]. Financial Performance - Net revenue decreased by $2.5 million, or 3.5%, to $68.4 million for the three months ended June 30, 2022, compared to $70.8 million for the same period in 2021[165]. - The company reported a net income of $5.5 million for the three months ended June 30, 2022, compared to a net loss of $7.0 million for the same period in 2021, marking a significant turnaround[163]. - The net income margin improved to 8.1% for the three months ended June 30, 2022, compared to a net loss margin of 9.9% for the same period in 2021[163]. - Total operating expenses for the six months ended June 30, 2022, increased by $8.9 million, or 5.9%, to $159.2 million compared to $150.4 million for the same period in 2021[167]. Operating Expenses - Operating expenses decreased by $9.9 million, or 11.8%, to $73.9 million for the three months ended June 30, 2022, compared to $83.8 million for the same period in 2021[167]. - Selling and marketing expenses decreased by $4.6 million, or 19.2%, to $19.5 million for the three months ended June 30, 2022, compared to $24.2 million for the same period in 2021, primarily due to reduced user acquisition costs[170]. - Research and development expenses decreased by $2.8 million, or 16.3%, to $14.5 million for the three months ended June 30, 2022, compared to $17.3 million for the same period in 2021, mainly due to a reduction in outside services[173]. - General and administrative expenses decreased by $3.2 million, or 25.6%, to $9.2 million for the three months ended June 30, 2022, compared to $12.4 million for the same period in 2021, primarily due to one-time charges related to the Business Combination[175]. - Depreciation and amortization expenses increased by $3.8 million, or 29.0%, to $16.7 million for the six months ended June 30, 2022, compared to $12.9 million for the same period in 2021, driven by amortization related to the Tetris license[178]. - The company experienced a significant increase in restructuring expenses, which rose to $10.2 million for the six months ended June 30, 2022, compared to $76,000 for the same period in 2021[167]. Cash Flow and Liquidity - Cash and cash equivalents as of June 30, 2022, totaled $220.6 million, with operations funded primarily through cash flow from operating activities[184]. - Net cash provided by operating activities was $20.9 million for the six months ended June 30, 2022, compared to $15.1 million for the same period in 2021, attributed to favorable changes in operating assets and liabilities[190]. - Cash and cash equivalents totaled $220.6 million as of June 30, 2022, compared to $213.5 million as of December 31, 2021, indicating a slight increase in liquidity[200]. - The company has no borrowings outstanding under its Credit Agreement or Revolver as of June 30, 2022, mitigating interest rate risk[199]. Risk Factors - The ongoing COVID-19 pandemic has materially altered business operations, with potential impacts on player purchasing decisions and advertising investments[145][146]. - The company is exposed to foreign currency risk due to transactions in currencies other than the U.S. dollar, which could materially impact future operating results[202]. - A significant portion of headcount-related expenses is denominated in New Israeli Shekels, exposing the company to currency fluctuations[203]. - The company does not hedge its foreign currency exposure but may consider doing so in the future[202]. - Changes in interest rates would primarily impact interest income due to the short-term nature of the company's investments[200]. - The company has experienced fluctuations in net income due to transaction gains or losses from remeasurement of asset and liability balances in foreign currencies[204]. Accounting and Financial Reporting - Adjusted EBITDA (AEBITDA) is a non-GAAP measure used to evaluate business performance, providing insight into operating performance and future budget decisions[157][158]. - There have been no material changes to the company's critical accounting policies and estimates compared to the previous year[198]. - Total other expense, net, increased by $3.5 million, or 2,097.0%, to $(3.7) million for the six months ended June 30, 2022, compared to $(0.2) million for the same period in 2021, primarily due to changes in fair value of warrant liabilities[181]. Corporate Actions - The Company entered into an amendment to the Credit Agreement on August 9, 2022, increasing the total available line of credit from $75 million to $81 million[188]. - The company terminated the lease for its Las Vegas office, saving approximately $2.1 million in remaining lease payments through January 2027[196]. - Financing activities provided $1.1 million of net cash for the six months ended June 30, 2022, a significant decrease from $187.2 million during the same period in 2021[194].

PLAYSTUDIOS, Inc. (NASDAQ:MYPS) Q1 2022 Earnings Conference Call May 5, 2022 5:00 PM ET Company Participants Joel Agena ??? Corporate Security and General Counsel Andrew Pascal ??? Chief Executive Officer Scott Peterson ??? Chief Financial Officer Conference Call Participants Ryan Sigdahl ??? Craig-Hallum Matthew Cost ??? Morgan Stanley Mike Hickey ??? The Benchmark Company Greg Gibas ??? Northland Securities Martin Yang ??? Oppenheimer and Company Operator Ladies and gentlemen, good day. Thank you for stan ...

Game Portfolio and Revenue Generation - PLAYSTUDIOS has developed a portfolio of free-to-play social casino games, including award-winning titles like POP! Slots and myVEGAS Slots, which are available on multiple platforms[118]. - The company generates revenue primarily from the sale of virtual currency, with a significant concentration in North America, and also from in-game advertising[121][122]. Key Performance Indicators - Daily Active Users (DAU) and Monthly Active Users (MAU) are key performance indicators, with DAU defined as the number of individuals who played a game on a particular day[131][132]. - Daily Paying Users (DPU) measures the number of individuals making purchases in a mobile game daily, which is crucial for understanding monetization[133]. - Average Daily Revenue Per DAU (ARPDAU) is calculated as game and advertising revenue divided by average DAU, serving as a measure of overall monetization[135]. Player Engagement and Retention - The company invests significantly in game development and its loyalty programs, playAWARDS and myVIP, to enhance player engagement and retention[132][136]. - PLAYSTUDIOS plans to expand and diversify its real-world rewards offerings to enhance perceived value for players, which is crucial for driving in-game purchases[132]. Financial Performance - Net revenue decreased by $3.6 million, or 4.9%, to $70.5 million for the three months ended March 31, 2022, compared to $74.1 million for the same period in 2021[144]. - Average Daily Active Users (DAU) increased by 23.5% to 1,555, while Average Monthly Active Users (MAU) rose by 85.2% to 6,913[143]. - Operating expenses increased by $18.7 million, or 28.2%, to $85.3 million for the three months ended March 31, 2022, compared to $66.5 million in 2021[142]. - Net loss for the period was $25.2 million, compared to a net income of $5.9 million in the prior year, representing a decrease of $31.1 million or 526.0%[142]. - AEBITDA decreased by $5.5 million, or 37.6%, to $9.1 million for the three months ended March 31, 2022[142]. Cost and Expense Management - The cost of revenue decreased by $3.5 million, or 14.1%, to $21.0 million, primarily due to a decrease in virtual currency revenue[146]. - Selling and marketing expenses increased by $3.5 million, or 20.8%, to $20.5 million, driven by higher user acquisition costs[149]. - General and administrative expenses surged by $5.5 million, or 129.5%, to $9.7 million, largely due to increased stock-based compensation and insurance costs[151]. Cash and Liquidity - As of March 31, 2022, the company had cash and cash equivalents of $220.0 million, sufficient to fund operations and capital expenditures for the foreseeable future[157]. - For the three months ended March 31, 2022, net cash provided by operating activities was $11.6 million, an increase from $4.8 million in the same period of 2021[161]. - Cash used in investing activities decreased to $5.1 million in Q1 2022 from $11.9 million in Q1 2021, primarily due to a reduction in notes receivable purchases[163]. - The company had cash and cash equivalents totaling $220.0 million as of March 31, 2022, compared to $213.5 million as of December 31, 2021[170]. Credit and Financing - The Credit Agreement provides for a five-year revolving credit facility with an aggregate principal amount of $75 million, with applicable margins of 2.50% for Eurodollar loans and 1.50% for Alternate Base Rate loans[158]. - As of March 31, 2022, the company had not drawn any amounts under the Credit Agreement[158]. - The company must maintain a Total Net Leverage Ratio not to exceed 3.50:1.00 and a Fixed Charge Coverage Ratio of not less than 1.25:1.00 as of the end of each fiscal quarter[158]. - Financing activities provided $0.1 million of net cash in Q1 2022, compared to $2.2 million used in financing activities in Q1 2021[165]. Foreign Currency Exposure - The company does not hedge its foreign currency exposure but may consider doing so in the future due to potential impacts from currency fluctuations[171]. - A significant portion of headcount-related expenses are denominated in New Israeli Shekels, exposing the company to foreign currency risks[172]. - The company experienced fluctuations in net income due to transaction gains or losses related to remeasurement of asset and liability balances in currencies other than the functional currency[173]. Impact of COVID-19 - The ongoing COVID-19 pandemic has caused disruptions, affecting player purchasing decisions and overall business operations[123][124].

Game Portfolio and User Engagement - PLAYSTUDIOS has developed a portfolio of free-to-play social casino games, including award-winning titles like POP! Slots and myVEGAS Slots, which are available on multiple platforms[278]. - The playAWARDS loyalty program allows players to earn loyalty points redeemable for real-world rewards from over 265 partners across 17 countries[279]. - The company invests significantly in game development and enhancing the playAWARDS and myVIP programs to drive player engagement and retention[292]. Revenue Generation and Financial Performance - Revenue is primarily generated from the sale of virtual currency, with a significant concentration in North America, and also includes in-game advertising[282]. - Net revenue increased by $17.5 million, or 6.5%, to $287.4 million in 2021 compared to $269.9 million in 2020[301]. - AEBITDA decreased by $18.4 million, or 31.8%, to $39.5 million in 2021 compared to $57.9 million in 2020[301]. - Advertising revenue surged by $5.2 million, or 299.1%, to $7.0 million in 2021 compared to $1.7 million in 2020[302]. - The sale of virtual currency contributed $36.4 million to the revenue increase, reflecting a 15.7% growth year-over-year[315]. - Average Revenue Per Daily Active User (ARPDAU) increased by $0.12, or 30.8%, to $0.51[315]. User Metrics - Daily Active Users (DAU) and Monthly Active Users (MAU) are key performance indicators, with DAU defined as the number of individuals playing a game on a particular day[290][291]. - Daily Paying Users (DPU) measures the number of individuals making purchases in games, with average DPU calculated for each day during the reporting period[294]. - Average Daily Active Users (DAU) decreased by 215 to 1,244, a decline of 14.7% year-over-year[302]. - Average Monthly Active Users (MAU) decreased by 140 to 4,111, a decline of 3.3% year-over-year[302]. Operating Expenses - Selling and marketing expenses increased by $21.9 million, or 38.4%, to $79.0 million in 2021, representing 27.5% of net revenue[307]. - Research and development expenses increased by $9.6 million, or 18.7%, to $61.3 million in 2021, representing 21.3% of net revenue[308]. - General and administrative expenses increased by $10.9 million, or 64.5%, to $27.9 million in 2021, representing 9.7% of net revenue[309]. - Total operating expenses increased by $30.9 million, or 11.9%, to $290.4 million in 2021[304]. Cash Flow and Financing - Cash and cash equivalents as of December 31, 2021, were $213.5 million, primarily funded through operating activities[329]. - In 2021, the company provided $33.9 million in net cash from operating activities, a decrease from $48.4 million in 2020, primarily due to a one-time charge of $5.0 million and a $2.5 million charitable donation[333]. - Financing activities generated $186.9 million in net cash in 2021, a substantial increase from a net cash outflow of $3.6 million in 2020, mainly due to $185.2 million in net proceeds from the Business Combination and PIPE Financing[338]. Tax and Compliance - The effective income tax rate was negative 15.0% for the year ended December 31, 2020, compared to negative 2.5% for the year ended December 31, 2021[328]. - The company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes, following ASC 740 guidelines[356]. - The company has elected to account for the impact of global intangible low-taxed income (GILTI) and base erosion anti-avoidance tax (BEAT) based on the period cost method[357]. Risks and Challenges - The ongoing COVID-19 pandemic has impacted business operations and player purchasing behavior, with potential long-term effects on revenue[283][284]. - The company faces risks related to third-party platform agreements, which charge transaction fees of approximately 30% on in-game purchases[287]. - Foreign currency risks arise from sales of virtual currency to players outside the U.S., with potential material impacts from exchange rate fluctuations against the U.S. Dollar[361]. - A significant portion of headcount-related expenses is denominated in New Israeli Shekels, exposing the company to foreign currency risks[362]. Accounting and Revenue Recognition - The company recognizes revenue from in-game purchases of virtual currency over the estimated average period between purchase and consumption, recording unconsumed virtual currency as "Deferred revenue"[350]. - Revenue from advertisements is recognized at the point in time when the advertisements are displayed or when the player completes the offer, as the advertising service provider simultaneously consumes the benefits[352]. - The company reports revenues gross of payment processing fees, as it is considered the principal in providing access to virtual currency and controlling game content[354].