Playtika(US:PLTK)2023-02-28 16:23Financial Data and Key Metrics Changes - For the full year 2022, revenue was $2.616 billion, up 1.3% year-over-year, while net income was $275.3 million, down 10.8% year-over-year [43][44] - In Q4 2022, revenue was $631.2 million, down 2.7% year-over-year, and net income was $87.5 million, down 14.5% [17][20] - Retention plan adjusted EBITDA for the year was $919 million, down 6.5% year-over-year, while credit adjusted EBITDA was $805.1 million, a decrease of 5.1% year-over-year [43][44] Business Line Data and Key Metrics Changes - Revenue from casual team games grew 2.7% year-over-year, with Bingo Blitz revenue at $155.1 million, up 18.4% year-over-year, and Solitaire Grand Harvest revenue at $72.8 million, up 18.7% year-over-year [14][15] - Social casino team games revenue for Q4 was down 8.6% year-over-year, primarily due to lower results in Slotomania, which generated $149.2 million, down 9% year-over-year [42] Market Data and Key Metrics Changes - Average Daily Active Users (DAU) declined 14.6% year-over-year to 8.8 million, while Average Revenue Per Daily Active User (ARPDAU) increased 14.7% year-over-year to $0.78 [47] Company Strategy and Development Direction - The company is focusing on cost discipline and prioritizing investments in high ROI projects while navigating a challenging macroeconomic environment for mobile gaming [22][23] - A strategic shift has been made to temporarily suspend new game development until the ROI for new games is economically viable, while investing in high-growth potential studios [13][39] - The company aims to integrate digital studio capabilities across all games to optimize monetization and enhance player experience [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the roadmap for 2023, focusing on strengthening existing franchises and building on momentum achieved [49] - The marketing environment remains challenging, with high customer acquisition costs impacting new game launches, leading to a strategic pause in new game development [51][80] - The company anticipates improvements in the macroeconomic environment for mobile gaming in 2024 and beyond [23] Other Important Information - The company generated $383.7 million in free cash flow for the year, with capital expenditures of $110 million, below the guidance of $125 million to $130 million [18] - The company executed a tender offer in Q4, returning $600 million to shareholders and retiring over 51.8 million shares [45] Q&A Session Summary Question: How should the portfolio's overall growth be viewed in relation to broader mobile growth? - Management indicated that they continue to invest in their biggest franchises, leveraging AI technology for efficient media buying despite a tough marketing environment [25] Question: What is the expectation for marketing investments in the first quarter? - Management noted that they do not provide quarter-over-quarter guidance but typically find the first quarter favorable for marketing investments [28] Question: What is the outlook for the social casino business revenue stabilization? - Management acknowledged that Slotomania showed signs of stabilization, with a slight sequential decline in Q4 [77] Question: How does the company view the current M&A environment? - Management sees fewer successful startups, which creates fewer M&A opportunities, but also better valuations for potential acquisitions [86] Question: What is the company's strategy regarding in-app advertising? - Management confirmed that they do not plan to change their policy on in-app advertising, as they believe in-app purchases provide more stable revenue [62] Question: What is the expected leverage multiple for potential acquisitions? - Management stated that their target range for net leverage is one to three times, but they would consider going above that for the right opportunity [89]