PlayStudios(MYPS) - 2025 Q1 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements Disclosure This section outlines forward-looking statements, emphasizing reliance on current expectations and known/unknown risks - Forward-looking statements are based on current expectations and projections, subject to known and unknown risks and uncertainties[12][13] - Key factors that could cause actual results to differ include business strategy, financial performance, market acceptance, financing, operational changes, platform relationships, intellectual property, litigation, acquisitions, personnel, geopolitical conditions, and public health events[13][14] - The company uses its Investor Relations website, SEC filings, press releases, conference calls, webcasts, and social media for material information disclosure[16] Part I - Financial Information Item 1. Financial Statements (Unaudited) PLAYSTUDIOS' unaudited condensed consolidated financial statements report a net loss of $2.88 million for Q1 2025 Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Cash Flows Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------- | :---------------- | :----- | :------- | | Total assets | $313,775 | $322,955 | $(9,180) | (2.8)% | | Total liabilities | $69,693 | $78,240 | $(8,547) | (10.9)% | | Total stockholders' equity | $244,082 | $244,715 | $(633) | (0.3)% | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Net revenue | $62,709 | $77,828 | $(15,119) | (19.4)% | | Loss from operations | $(2,741) | $(1,703) | $(1,038) | 61.0% | | Net loss | $(2,880) | $(567) | $(2,313) | 407.9% | | Basic net loss per share | $(0.02) | $0.00 | $(0.02) | nm | | Diluted net loss per share | $(0.02) | $0.00 | $(0.02) | nm | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Net cash provided by operating activities | $3,300 | $4,998 | $(1,698) | (34.0)% | | Net cash used in investing activities | $(3,609) | $(6,522) | $2,913 | (44.7)% | | Net cash used in financing activities | $(2,456) | $(4,263) | $1,807 | (42.4)% | | Net change in cash, cash equivalents, and restricted cash | $(2,681) | $(5,909) | $3,228 | (54.6)% | Notes to Unaudited Condensed Consolidated Financial Statements This section details accounting policies, segment reporting, business combinations, and specific financial line items NOTE 1—BACKGROUND AND BASIS OF PRESENTATION NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 3—SEGMENT REPORTING NOTE 4—BUSINESS COMBINATIONS NOTE 5—RELATED-PARTY TRANSACTIONS NOTE 6—RECEIVABLES, NET NOTE 7—PREPAID EXPENSES AND OTHER CURRENT ASSETS NOTE 8—FAIR VALUE MEASUREMENT NOTE 9—PROPERTY AND EQUIPMENT, NET NOTE 10—INTANGIBLE ASSETS AND INTERNAL-USE SOFTWARE, NET NOTE 11—ACCRUED AND OTHER LIABILITIES NOTE 12—LEASES NOTE 13—LONG-TERM DEBT NOTE 14—REVENUE FROM CONTRACTS WITH CUSTOMERS NOTE 15—INCOME TAXES NOTE 16—COMMITMENTS AND CONTINGENCIES NOTE 17—STOCKHOLDERS' EQUITY NOTE 18—STOCK-BASED COMPENSATION NOTE 19—NET LOSS PER SHARE - PLAYSTUDIOS develops and operates online and mobile social gaming applications, primarily free-to-play, incorporating a loyalty program with 'real world' rewards[32] - The company adopted ASU 2023-07, Segment Reporting, for the year ended December 31, 2024, with no effect on financial position, results, or cash flows[42] - The company acquired Pixode Games Limited on July 1, 2024, for $3.5 million cash at closing, with potential additional contingent consideration up to $113.5 million based on product and financial milestones[53][54] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview PLAYSTUDIOS develops free-to-play mobile and social games, integrating a unique playAWARDS loyalty program for 'real world' rewards - PLAYSTUDIOS develops and publishes free-to-play casual games for mobile and social platforms, including social casino games and titles like Tetris and Brainium games[113] - The proprietary playAWARDS program allows players to earn loyalty points for 'real world' rewards, with most rewards provided by partners at no cost to the company[114][120] - Primary revenue sources are in-game virtual currency sales and in-game advertising[116][117] Key Factors Affecting Our Performance Performance is influenced by platform agreements, user acquisition, game development, and the playAWARDS loyalty program - Performance is significantly affected by third-party platform agreements (Apple App Store, Google Play Store) which charge transaction fees (typically 30%) and can unilaterally change terms[119] - User acquisition and player monetization are vital, involving substantial spending on advertising and optimizing virtual currency sales while managing game economies[119] - Continuous investment in game development, new content, and enhancements to the playAWARDS and myVIP programs is necessary to maintain player engagement and retention[119] - The ability to provide desirable real-world rewards, at no cost to the company from partners, directly impacts players' willingness to make in-game purchases[120] Key Performance Indicators PLAYSTUDIOS tracks KPIs for playGAMES and playAWARDS segments to monitor audience engagement, monetization, and program value playGAMES KPIs playAWARDS KPIs - Key performance indicators are used to track historical performance, identify player activity trends, and set strategic goals, but can fluctuate due to platform policies, seasonality, and new content[121] Results of Operations Net revenue decreased by 19.4% to $62.7 million in Q1 2025, leading to a net loss of $2.88 million Overall Financial Performance Net Revenue by Reportable Segment playGAMES Segment Performance playAWARDS Segment Performance Operating Expenses Analysis Other Income, Net Provision for Income Taxes Segment AEBITDA Comparison Consolidated Results of Operations (in thousands, except percentages) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | $ Change | % Change | | :---------------- | :-------------------------------- | :-------------------------------- | :------- | :------- | | Net revenue | $62,709 | $77,828 | $(15,119) | (19.4)% | | Operating expenses | $65,450 | $79,531 | $(14,081) | (17.7)% | | Operating loss | $(2,741) | $(1,703) | $(1,038) | 61.0% | | Net loss | $(2,880) | $(567) | $(2,313) | 407.9% | | Net loss margin | (4.6)% | (0.7)% | (3.9)pp | 557.1% | Net Revenue by Reportable Segment (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | playGAMES | $62,555 | $77,828 | $(15,273) | (19.6)% | | playAWARDS | $154 | $0 | $154 | nm | playGAMES Net Revenues and Key Performance Indicators (in thousands, except percentages and ARPDAU) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Virtual currency revenue | $50,692 | $60,247 | $(9,555) | (15.9)% | | Advertising revenue | $11,863 | $17,442 | $(5,579) | (32.0)% | | Net revenue | $62,555 | $77,828 | $(15,273) | (19.6)% | | Average DAU | 2,632 | 3,495 | (863) | (24.7)% | | Average MAU | 11,422 | 14,752 | (3,330) | (22.6)% | | Average DPU | 21 | 27 | (6) | (22.2)% | | ARPDAU (in dollars) | $0.26 | $0.24 | $0.02 | 8.3% | Operating Expenses (in thousands) | Expense Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | $ Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------- | | Cost of revenue | $15,779 | $18,951 | $(3,172) | | Selling and marketing | $13,169 | $18,576 | $(5,407) | | Research and development | $13,674 | $18,021 | $(4,347) | | General and administrative | $11,861 | $11,779 | $82 | | Depreciation and amortization | $9,632 | $11,566 | $(1,934) | | Restructuring expenses | $1,335 | $638 | $697 | | Total operating expenses | $65,450 | $79,531 | $(14,081) | Non-GAAP Measures This section defines and reconciles Consolidated Adjusted EBITDA (AEBITDA) and Consolidated AEBITDA Margin - Consolidated 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[152] - Consolidated AEBITDA Margin is calculated as the percentage of Consolidated AEBITDA to revenue[152] Consolidated AEBITDA and Margin (in thousands, except percentages) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | $ Change | % Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------- | :------- | | Consolidated AEBITDA | $12,487 | $15,314 | $(2,827) | (18.5)% | | Consolidated AEBITDA Margin | 19.9% | 19.7% | 0.2pp | 1.0% | Liquidity and Capital Resources PLAYSTUDIOS maintains $107.1 million in cash, with sufficient liquidity for the next 12 months Debt Cash Flows Contractual Obligations, Commitments, and Contingencies - Cash and cash equivalents totaled $107.1 million as of March 31, 2025[157] - The company believes current liquidity is sufficient for operations and capital expenditures for at least the next twelve months, but may seek additional financing opportunistically for growth investments[157][158] - No outstanding balances under the $75.0 million revolving credit facility as of March 31, 2025[159] Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash provided by operating activities | $3,300 | $4,998 | $(1,698) | | Net cash used in investing activities | $(3,609) | $(6,522) | $2,913 | | Net cash used in financing activities | $(2,456) | $(4,263) | $1,807 | Critical Accounting Policies and Estimates Financial statements adhere to U.S. GAAP, with no material changes to critical accounting policies since the 2024 10-K - Financial statements require estimates and assumptions affecting reported amounts of assets, liabilities, revenue, and expenses[165] - No material changes to critical accounting policies and estimates compared to the 2024 Annual Report on Form 10-K[166] Item 3. Quantitative and Qualitative Disclosures About Market Risk Market Risk Disclosures PLAYSTUDIOS is exempt from market risk disclosures as a 'smaller reporting company' - PLAYSTUDIOS is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a 'smaller reporting company'[167] Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2025, ensuring timely and accurate reporting - The company's CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[168] - Disclosure controls provide reasonable assurance for timely and accurate information recording, processing, summarizing, and reporting[168] Changes in Internal Control over Financial Reporting No material changes occurred in internal control over financial reporting during Q1 2025 - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2025[169] Part II. OTHER INFORMATION Item 1. Legal Proceedings PLAYSTUDIOS is involved in routine litigation, not expected to materially affect its financial position - The company is party to ordinary and routine litigation incidental to its business[170] - Management believes the final outcome of current legal matters will not have a material adverse effect on the company's business[170] Item 1A. Risk Factors No material changes to risk factors were reported since the 2024 Annual Report on Form 10-K - No material changes to risk factors previously disclosed in the 2024 Annual Report on Form 10-K[171] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds PLAYSTUDIOS repurchased 1.33 million shares of Class A common stock, with $41.4 million remaining in the program Share Repurchases (Quarter Ended March 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of a Publicly Announced Program | Dollar Value of Shares that May Yet be Purchased Under the Program (in thousands) | | :-------------------------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | January 1, 2025 - January 31, 2025 | 542,877 | $1.82 | 416,884 | $42,734 | | February 1, 2025 - February 28, 2025 | 527,870 | $1.77 | 244,922 | $42,306 | | March 1, 2025 - March 31, 2025 | 258,751 | $1.37 | 248,030 | $41,964 | - The stock repurchase program was extended through November 1, 2025, with $41.4 million remaining availability after subsequent purchases post-March 31, 2025[105][106] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - No defaults upon senior securities[174] Item 4. Mine Safety Disclosures This item is not applicable to PLAYSTUDIOS - Mine Safety Disclosures are not applicable to PLAYSTUDIOS[174] Item 5. Other Information Joel Agena adopted a Rule 10b5-1 trading plan for Class A common stock sales, effective through March 16, 2026 - Joel Agena, General Counsel and Secretary, adopted a Rule 10b5-1 trading plan on March 12, 2025[174] - The plan provides for the sale of up to 225,391 shares of Class A common stock, up to 100% of shares received from vesting RSUs (125,000 gross), and up to 233,044 shares from vested stock option exercises[174] Item 6. Exhibits This section lists exhibits filed or incorporated by reference into the Quarterly Report on Form 10-Q - Exhibits include Certificate of Incorporation, Bylaws, Certifications of CEO and CFO, and Inline XBRL documents[179] Signatures The report was signed by Andrew Pascal (CEO) and Scott Peterson (CFO) on May 9, 2025 - The report was signed by Andrew Pascal (Chairman and CEO) and Scott Peterson (CFO) on May 9, 2025[182]