Playtika(US:PLTK)2025-08-07 12:38PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited) Presents unaudited consolidated financial statements and notes on accounting policies, financial instruments, debt, and equity Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $565.8 | $500.9 | | Short-term investments | — | $91.2 | | Total current assets | $916.5 | $872.8 | | Total assets | $3,636.8 | $3,639.2 | | Total current liabilities | $664.5 | $558.9 | | Long-term debt | $2,383.3 | $2,388.5 | | Contingent consideration | $354.6 | $150.0 | | Total liabilities | $3,724.6 | $3,770.3 | | Total stockholders' deficit | $(87.8) | $(131.1) | Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income Highlights (in millions, except per share data) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $696.0 | $627.0 | $1,402.0 | $1,278.2 | | Total costs and expenses | $586.3 | $486.3 | $1,224.5 | $1,039.4 | | Income from operations | $109.7 | $140.7 | $177.5 | $238.8 | | Net income | $33.2 | $86.6 | $63.8 | $139.6 | | Basic Net income per share | $0.09 | $0.23 | $0.17 | $0.38 | | Diluted Net income per share | $0.09 | $0.23 | $0.17 | $0.38 | Consolidated Statements of Stockholders' Deficit Changes in Stockholders' Deficit (Six Months Ended June 30, 2025, in millions) | Item | Amount | | :--------------------------------- | :----- | | Balances at January 1, 2025 | $(131.1) | | Net income | $63.8 | | Cash dividend declared | $(75.2) | | Repurchase of common stock | $(10.9) | | Stock-based compensation | $43.5 | | Other comprehensive income | $23.8 | | Balances at June 30, 2025 | $(87.8) | Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in millions) | Cash Flow Activity | 2025 | 2024 | | :--------------------------------------- | :----- | :----- | | Net cash provided by operating activities | $164.9 | $180.1 | | Net cash used in investing activities | $(135.2) | $(449.1) | | Net cash used in financing activities | $(97.0) | $(48.6) | | Net change in cash, cash equivalents and restricted cash | $(65.3) | $(319.9) | | Cash, cash equivalents and restricted cash at end of period | $502.4 | $711.8 | Notes to the Consolidated Financial Statements - The company completed the acquisition of SuperPlay Ltd. on November 20, 2024, for an aggregate purchase price of $700.0 million upfront, plus earnout payments of up to $1.250 billion based on future performance. The contingent consideration liability was adjusted to an estimated fair value of $310.0 million as of June 30, 2025, resulting in $44.6 million income for the six months ended June 30, 2025343536 - Apple and Google are significant distribution and payment platforms, accounting for 58% and 27% of total accounts receivable, respectively, as of June 30, 202538 - The company uses interest rate swap contracts with a total notional value of $1.0 billion to hedge against fluctuating interest rates on its variable rate debt, and foreign currency derivative contracts to reduce exposure to exchange rate fluctuations for expenses denominated in EUR, ILS, PLN, and RON, hedging approximately $175.6 million of future salary expenses4446757779 - A cash dividend of $0.10 per share ($37.6 million total) was declared on May 8, 2025, payable on July 7, 2025. The company repurchased approximately 1.2 million shares of common stock at an average cost of $4.92 per share during the three months ended June 30, 2025, with $138.3 million remaining under the stock repurchase program6869 - Total stock-based compensation costs were $43.5 million for the six months ended June 30, 2025, down from $47.7 million in the prior year period. Unrecognized stock-based compensation expenses totaled approximately $151.8 million as of June 30, 2025, expected to be recognized over weighted average periods of 1.2 to 2.7 years7374 - The company's long-term debt includes a $1.9 billion Term Loan (7.190% interest, maturing 2028) and $600.0 million Senior Notes (4.250% interest, maturing 2029). The Revolving Credit Facility was decreased from $600 million to $550 million and its maturity was conditionally extended to September 11, 20275859626566 - The company is involved in several legal proceedings, including class action lawsuits alleging violations of federal securities laws, derivative actions, and multiple state-level lawsuits and arbitration demands alleging that its social casino-themed games constitute illegal gambling. The Washington State Attorney General also sent a letter alleging gambling and consumer protection law violations888995969798100101103104105 Disaggregated Revenue (Six Months Ended June 30, in millions) | Category | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Geographic location: | | | | USA | $900.2 | $865.2 | | EMEA | $320.4 | $237.4 | | APAC | $96.6 | $86.7 | | Other | $84.8 | $88.9 | | Platform type: | | | | Third-party platforms | $1,046.9 | $933.0 | | Direct-to-consumer platforms | $355.1 | $345.2 | - The effective tax rate for the six months ended June 30, 2025, was 26.0%, compared to 28.5% for the same period in 2024, primarily influenced by Global Intangible Low-Taxed Income, foreign tax rates, state income taxes, and valuation allowance changes114 - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, and the company is currently assessing its impact, which will be reflected in the Q3 2025 Form 10-Q119 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses financial condition, operating results, key performance drivers, and Adjusted EBITDA Overview - Playtika is a leading developer of free-to-play mobile games, leveraging best-in-class live game operations and a proprietary technology platform to drive user engagement and monetization121 - The company's headquarters and a majority of its senior leadership and professionals (approximately 1,340 employees) are located in Israel, making it susceptible to the ongoing multi-front armed conflict in the region, though no direct material financial impact has been reported to date122123 Components of our Results of Operations - Revenue is primarily derived from the sale of virtual items in free-to-play online games, distributed through third-party platforms (e.g., Apple, Google) and direct-to-consumer platforms, with the company acting as the principal124125126 - Cost of revenue includes payment processing fees (30% for third-party platforms vs. 3-4% for direct-to-consumer), customer support, hosting, and depreciation/amortization126127 - General and administrative expenses include adjustments to contingent consideration payable and legal settlement expenses, in addition to corporate support costs130 - Interest and other, net, includes interest expense from the Credit Agreement, interest income from cash/investments, and foreign currency translation differences132133 Consolidated Operating Results of Playtika Holding Corp - Key operating metrics include Daily Active Users (DAUs), Daily Paying Users (DPUs), Daily Payer Conversion, Average Revenue per Daily Active User (ARPDAU), and Monthly Active Users (MAUs), used to measure user engagement, audience scale, and monetization136137138139140141 Results of Operations Key Financial and Operating Metrics (in millions, except percentages, Average DPUs and ARPDAU) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $696.0 | $627.0 | $1,402.0 | $1,278.2 | | Total costs and expenses | $586.3 | $486.3 | $1,224.5 | $1,039.4 | | Operating income | $109.7 | $140.7 | $177.5 | $238.8 | | Net income | $33.2 | $86.6 | $63.8 | $139.6 | | Adjusted EBITDA | $167.0 | $191.0 | $334.3 | $376.6 | | Average DAUs | 8.8 | 8.1 | 8.9 | 8.4 | | Average DPUs (in thousands) | 378 | 298 | 384 | 303 | | Average Daily Payer Conversion | 4.3 % | 3.7 % | 4.3 % | 3.6 % | | ARPDAU | $0.87 | $0.85 | $0.87 | $0.83 | | Average MAUs | 30.0 | 27.7 | 30.9 | 30.3 | - Revenues increased by $69.0 million (3M YoY) and $123.8 million (6M YoY), primarily due to incremental revenues from the SuperPlay acquisition, partially offset by reduced monetization in slot-themed games144145 - Sales and marketing expenses significantly increased by $88.3 million (3M YoY) and $169.7 million (6M YoY), largely driven by increased media buy and depreciation/amortization from the SuperPlay acquisition148 - General and administrative expenses decreased by $30.2 million (3M YoY) and $36.8 million (6M YoY), mainly due to a decrease in appreciation and retention expense and an adjustment to contingent consideration related to the SuperPlay earnout. Excluding these, G&A increased due to SuperPlay-related headcount149 - Net income decreased by $53.4 million (3M YoY) and $75.8 million (6M YoY) compared to the same periods in 2024155 Reconciliation of Adjusted EBITDA to Net Income Adjusted EBITDA Reconciliation (in millions) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $33.2 | $86.6 | $63.8 | $139.6 | | Provision for income taxes | $11.9 | $33.7 | $22.4 | $55.6 | | Interest expense and other, net | $64.6 | $20.4 | $91.3 | $43.6 | | Depreciation and amortization | $61.0 | $38.7 | $120.2 | $77.9 | | Stock-based compensation | $17.5 | $22.9 | $43.0 | $46.6 | | Impairment charge | $0.4 | — | $0.4 | $7.0 | | Changes in estimated value of contingent consideration | $(33.0) | $(16.3) | $(26.1) | $(13.4) | | Acquisition and related expenses | $3.6 | $0.5 | $10.1 | $2.7 | | Other items | $7.8 | $4.5 | $9.2 | $17.0 | | Adjusted EBITDA | $167.0 | $191.0 | $334.3 | $376.6 | | Net income margin | 4.8 % | 13.8 % | 4.6 % | 10.9 % | | Adjusted EBITDA margin | 24.0 % | 30.5 % | 23.8 % | 29.5 % | Liquidity and Capital Resources - Primary liquidity sources include cash flows from operations, unrestricted cash and cash equivalents, short-term investments, and a $550 million revolving credit facility. Cash and cash equivalents plus short-term investments totaled $592.1 million as of June 30, 2025162 - Net cash provided by operating activities for the six months ended June 30, 2025, was $164.9 million, a decrease from $180.1 million in the prior year period168 - Net cash used in investing activities significantly decreased to $135.2 million for the six months ended June 30, 2025, from $449.1 million in the prior year, mainly due to lower purchases of short-term investments169 - Net cash used in financing activities increased to $97.0 million for the six months ended June 30, 2025, from $48.6 million in the prior year, primarily due to higher cash dividends paid and stock repurchases170171 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Outlines exposure to interest rate, investment, and foreign currency risks, detailing mitigation strategies Interest rate risk - The company's Term Loan and Revolving Credit Facility are floating rate facilities, exposing it to interest rate fluctuations. Interest rate swap agreements with a total notional value of $1.0 billion are used to reduce this exposure by fixing interest rates175176177 - A hypothetical 100 basis point increase or decrease in weighted average interest rates would impact the company's interest expense by $8.2 million over a twelve-month period, considering the effect of interest rate swaps180 - The fair value of the company's $600.0 million Senior Notes is sensitive to interest rate movements; a 100 basis point increase would decrease their fair value by $17.8 million, while a 100 basis point decrease would increase it by $18.5 million as of June 30, 2025181 Investment risk - The company's cash, cash equivalents, restricted cash ($502.4 million) and short-term investments ($91.2 million) are primarily held in commercial papers, bank deposits, and money market funds. Due to their short-term nature, a hypothetical 100 basis point change in interest rates would have an immaterial impact on their fair value182 Foreign currency risk - The company is exposed to foreign currency risk due to operating expenses denominated in currencies such as EUR, ILS, PLN, and RON. This risk is partially mitigated by revenues recognized in the same currencies and by using derivative contracts to hedge approximately $175.6 million of future salary expenses183185 ITEM 4. CONTROLS AND PROCEDURES Details management's evaluation of disclosure controls and procedures, confirming no material internal control changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025187188 - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control during the quarter ended June 30, 2025188 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Refers to Note 9 for a comprehensive description of legal proceedings and commitments - For a detailed description of the company's legal proceedings, refer to Note 9, Commitments and Contingencies, in Part I, Item 1 of this quarterly report189 ITEM 1A. RISK FACTORS Highlights key risks: platform reliance, indebtedness, legal challenges, geopolitical instability, and Chinese investor control Reliance on Third-Party Platforms - The company relies heavily on third-party platforms like the iOS App Store, Facebook, and Google Play Store for game distribution and revenue collection, with 68.6% of its 2024 revenues generated through these platforms190 - Risks include platform providers discontinuing or limiting access, increasing fees, modifying policies, or blocking certain game genres. Recent instances include Google blocking games in 13 countries and Indonesia, and a block on the company's domain in Turkey affecting multiple games191192193 Substantial Indebtedness - The company has substantial indebtedness, including a $1.9 billion Term Loan and $600.0 million Senior Notes, which could limit its ability to borrow additional capital, dedicate cash flow to debt service, and restrict operational flexibility195196 - Restrictive covenants in debt instruments limit activities such as incurring additional debt, making investments, paying dividends, and repurchasing stock. Non-compliance could lead to an event of default and acceleration of indebtedness197200 - Future earnout payments of up to $1.250 billion for the SuperPlay acquisition could strain cash flows, especially if the conditional extension of the Revolving Credit Facility maturity is not satisfied198 Legal or Regulatory Restrictions - Significant opposition to social gaming, particularly social casino-themed games, could lead to new legislation or regulatory frameworks that prohibit games, restrict advertising, or substantially increase compliance costs201 - The company faces multiple lawsuits and arbitration demands in various U.S. states (e.g., Alabama, Tennessee, Kentucky, Washington) alleging that its social casino-themed games constitute illegal gambling and seeking recovery of player payments. The Washington State Attorney General has also issued allegations203207 - The expansion of illegal gambling lawsuits to include 'Match 3' puzzle games (e.g., Royal Match) could adversely impact the company's casual games. Consumer protection concerns regarding in-game purchases by children and targeting 'vulnerable' users also pose risks205206209 Geopolitical Instability in Israel - The company has significant operations and most of its senior management in Israel, making its business vulnerable to political, economic, and military instability, including the ongoing war with Hamas and escalated conflict with Iran212214 - Escalation or continuation of conflicts could result in military reserve duty call-ups, damage to infrastructure, diplomatic rifts, and economic boycotts, all of which could materially adversely affect operations and financial results213214 Chinese Investor Control - The company's control by a Chinese individual (Yuzhu Shi) and company (Giant) could subject it to new U.S. and Chinese laws, potentially restricting its ability to operate as a publicly traded company in the U.S. or impacting its financial performance due to changing U.S.-China relations215216 - China's Foreign Debt Rules require approvals from the NDRC for certain indebtedness, which could significantly impact the company's ability to incur new debt or amend existing debt on competitive terms or in a timely manner. The extension of the Revolving Credit Facility maturity is currently subject to NDRC approval217 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES Provides details on the company's stock repurchase program, including shares repurchased and remaining authorization - The Board of Directors authorized a stock repurchase program for up to $150.0 million of common stock on May 9, 2024219 Common Stock Repurchases (Quarter Ended June 30, 2025) | Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs | |---|---|---|---|---| | April 1 through April 30, 2025 | 420 | $5.01 | 420 | 142,228 | | May 1 through May 31, 2025 | 418 | $4.99 | 418 | 140,138 | | June 1 through June 30, 2025 | 395 | $4.76 | 395 | 138,253 | | Total | 1,233 | $4.92 | 1,233 | 138,253 | ITEM 3. DEFAULTS UPON SENIOR SECURITIES Confirms no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the period221 ITEM 4. MINE SAFETY DISCLOSURES States no mine safety disclosures to report - There were no mine safety disclosures222 ITEM 5. OTHER INFORMATION Reports no officers or directors adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No officers or directors adopted or terminated any 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025223 ITEM 6. EXHIBITS Lists all exhibits filed as part of the Form 10-Q, including amendments, certifications, and XBRL documents Exhibits Filed | Exhibit Number | Exhibit Description | Filed or Furnished Herewith | |---|---|---| | 2.1 | Second Amendment to Share Purchase Agreement, dated as of May 29, 2025, by and among Playtika Holding Corp., Playtika Ltd., SuperPlay Ltd., the shareholders of SuperPlay Ltd. and Gigi Levy-Weiss, as the shareholder representative | X | | 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | 101.INS | Inline XBRL Instance Document | | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | 101.DEF | Inline XBRL Taxonomy Extension Calculation Definition Document | | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | 104 | Cover Page Interactive Data File | | SIGNATURES - The Quarterly Report on Form 10-Q was signed on August 7, 2025, by Robert Antokol, Chief Executive Officer and Chairperson of the Board, and Craig Abrahams, President and Chief Financial Officer, on behalf of Playtika Holding Corp226