PlayStudios(MYPS) - 2025 Q4 - Annual Report

Company Overview - PLAYSTUDIOS, Inc. has developed a portfolio of free-to-play social casino games, including Tetris®-branded mobile games, and acquired Brainium in late 2022[359]. Revenue Generation - The company generates revenue primarily from in-game virtual currency sales, with a significant concentration in North America, and also from in-game advertising, particularly in Tetris® and Brainium games[362][363]. - Revenue from virtual currency is recognized as it is consumed, with an average consumption period of approximately one day, based on player behavior analysis[431]. - The company recognizes advertising revenue at the point in time when advertisements are displayed or offers are completed, with payment terms typically ranging from 45 to 60 days[433][434]. Player Engagement and Metrics - The playAWARDS program incorporates loyalty points earned by players, with most rewards provided at no cost to the company, enhancing player engagement and retention[360][365]. - Average Daily Active Users (Average DAU) and Average Monthly Active Users (Average MAU) are key metrics used to measure player engagement, with DAU defined as the number of individuals playing a game on a given day[367][368]. - Average Daily Paying Users (Average DPU) measures the number of individuals making purchases within games, providing insight into monetization trends[370]. - Average Daily Payer Conversion is calculated as Average DPU divided by Average DAU, helping to understand the monetization of active players[371]. - Average Daily Revenue Per DAU (ARPDAU) is used to assess overall monetization, calculated as game-related and advertising revenue divided by Average DAU[372]. - The playAWARDS loyalty platform's Available Rewards metric indicates the breadth of the loyalty offering, measuring the average number of unique rewards available[374]. - Purchases metric tracks the total number of rewards exchanged for loyalty points, reflecting audience interest and engagement with the playAWARDS platform[375]. Financial Performance - Net revenue for the year ended December 31, 2025, was $235.1 million, a decrease of $54.3 million or 18.8% compared to $289.4 million in 2024[380]. - Operating expenses decreased by $63.3 million or 19.6% to $259.0 million in 2025 from $322.3 million in 2024[385]. - playGAMES revenue was $234.1 million in 2025, down $55.3 million or 19.1% from $289.4 million in 2024, primarily due to a $40.5 million decrease in virtual currency revenue[382]. - playAWARDS net revenue increased to $1.0 million in 2025, a significant rise of $946 thousand or 1525.8% from $62 thousand in 2024[384]. - Average Daily Active Users (DAU) for playGAMES decreased by 795 to 2,305 in 2025, a decline of 25.6% compared to 3,100 in 2024[382]. - Retail Value of Purchases in playAWARDS decreased by $54.8 million or 48.0% to $59.4 million in 2025 from $114.1 million in 2024[384]. - Total operating loss for 2025 was $23.9 million, an improvement of $8.9 million or 27.2% from a loss of $32.9 million in 2024[380]. - Cost of revenue decreased by $15.2 million or 21.0% to $57.5 million in 2025 from $72.7 million in 2024[386]. - Selling and marketing expenses decreased by $9.1 million or 14.2% to $55.5 million in 2025 from $64.6 million in 2024[387]. - Income tax expense for 2025 was approximately $1.9 million, reflecting an effective income tax rate of negative 7.3%[394]. - playGAMES AEBITDA decreased to $58.6 million in 2025 from $85.1 million in 2024, a decline of 31.1%[397]. - playGAMES AEBITDA margin was 25.1% in 2025, down from 29.4% in 2024, reflecting a 4.3% decrease[397]. - playAWARDS AEBITDA improved to $(8.7) million in 2025 from $(13.7) million in 2024, indicating a reduction in losses[398]. - Consolidated AEBITDA for 2025 was $35.6 million, down from $56.5 million in 2024, a decrease of 37.1%[402]. - Consolidated AEBITDA margin decreased to 15.1% in 2025 from 19.5% in 2024[402]. - Net revenue fell to $235.1 million in 2025 from $289.4 million in 2024, a decline of 18.7%[402]. - Net loss for 2025 was $(28.6) million, slightly improved from $(28.7) million in 2024[402]. Cash and Assets - Cash and cash equivalents as of December 31, 2025, were $104.9 million, with an additional $0.6 million in restricted cash[403]. - Net cash provided by operating activities was $26.3 million in 2025, down from $45.7 million in 2024[414]. - Total net cash used in financing activities decreased to $14.9 million in 2025 from $41.9 million in 2024, primarily due to reduced share repurchases[416]. - As of December 31, 2025, the company's goodwill totaled $52.2 million, with no impairment required following the annual assessment conducted on October 1, 2025[421][422]. - The company applies ASC 805 for business combinations, allocating fair value to tangible and intangible assets, with excess purchase consideration recorded as goodwill[423]. Risk Factors - 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[444][445]. - The company has not had any borrowings outstanding under its Credit Agreement as of December 31, 2025, indicating no interest rate risk exposure[440]. - Significant estimates in valuing intangible assets include future expected cash flows and discount rates, which are inherently uncertain[424]. - The company does not purchase or hold derivative financial instruments for trading purposes, minimizing investment risk[441]. - The company assesses player behavior continuously to refine its revenue recognition estimates and assumptions[432].