PLAYSTUDIOS Inc
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
MYPS$4.680.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001823878-24-000017
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001823878-24-000034
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 99 previous paragraphs and 110 current paragraphs.
74 unchanged; 23 reworded; 9 added; 2 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 10 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Net revenue decreased $3.3 million, or (2.2)%, to $150.4 million during the six months ended June 30, 2024 compared to $153.7 million during the six months ended June 30, 2023. The decrease was due to a $9.3 million decrease in virtual currency revenue primarily driven by decreases in DPU. The decrease was offset by growth in advertising revenue.
Current report
Cost of revenue decreased by $1.4 million to $37.0 million during the six months ended June 30, 2024 compared to $38.4 million during the six months ended June 30, 2023. The decrease was primarily related to a decrease in virtual currency revenue. As a percentage of revenue, cost of revenue increased from 24.3% for the six months ended June 30, 2023 to 24.6% for the six months ended June 30, 2024.
Current report
Selling and marketing expenses decreased by $0.9 million to $35.6 million during the six months ended June 30, 2024 compared to $36.5 million during the six months ended June 30, 2023. The decrease was primarily due to decreases in user acquisition expense of $1.8 million. This was offset by an increases to outside service costs of $0.4 million, IT software of $0.4 million, and other selling and marketing expenses of $0.1 million. As a percentage of revenue, selling and marketing expenses increased from 23.1% for the six months ended June 30, 2023 to 23.7% for the six months ended June 30, 2024.
Current report
Research and development expenses decreased by $1.6 million to $16.7 million during the three months ended June 30, 2024 compared to $18.4 million during the three months ended June 30, 2023. The decrease was primarily due to a decrease of stock compensation of $0.6 million, employee costs of $0.4 million, outside services of $0.4 million, and facilities expenses of $0.3 million. This was offset by an increase of $0.1 million of other research and development costs.
Current report
Research and development expenses decreased by $1.4 million to $34.8 million during the six months ended June 30, 2024 compared to $36.1 million during the six months ended June 30, 2023. The decrease was primarily due to a decrease of stock compensation of $0.8 million, facilities expenses of $0.5 million, and employee costs of $0.4 million. This was offset by an increase of $0.3 million of other research and development costs.
Current report
General and administrative expenses increased by $0.5 million to $23.4 million during the six months ended June 30, 2024 compared to $22.9 million during the six months ended June 30, 2023. The increase is primarily due to an increases to employee costs of $0.6 million and IT applications of $0.5 million. This was offset by a reduction of insurance expense of $0.6 million.
Current report
Depreciation and amortization expenses increased by $1.1 million to $23.2 million during the six months ended June 30, 2024 compared to $22.1 million during the six months ended June 30, 2023. The increase was primarily due to license renewals.
Current report
Restructuring expenses decreased by $3.8 million from the six months ended June 30, 2023 to the six months ended June 30, 2024. The decrease was primarily due to decreases of $1.8 million related to management restructurings and severance, $1.2 million related to fees for various merger and acquisition opportunities, $0.9 million for a non-cash impairment charge related to certain investments, and a decrease of $0.3 million related to the Tender Offer. This was offset by an increase of $0.1 million related to other restructuring costs.
Current report
Other (Loss) Income, Net
Removed paragraphs (2)
Previous report
General and administrative expenses decreased by $0.1 million to $11.8 million during the three months ended March 31, 2024 compared to $11.9 million during the three months ended March 31, 2023.
Previous report
Other Income (Expense), Net
Reworded paragraphs (23)
Previous wording
We are a developer and publisher of free-to-play casual games for mobile and social platforms. Over our twelve-year history, we developed a portfolio of free-to-play social casino games that are considered to be among the most innovative and unique in the genre. In 2021 we added our Tetris®-branded mobile game and in late 2022 we acquired Brainium, a developer and publisher of free-to-play casual games. Our games include the award-winning POP! Slots, myVEGAS Slots, my KONAMI Slots, MGM Slots Live, myVEGAS Blackjack, myVEGAS Bingo, Tetris®, Solitaire, Spider Solitaire, Jumbline 2, Sudoku, and Mahjong. Our games are based on original content as well as third-party licensed brands and are downloadable and playable for free on multiple social and mobile-based platforms, including the Apple App Store, Google Play Store, Amazon Appstore, and Facebook.
Current wording
We are a developer and publisher of free-to-play casual games for mobile and social platforms. Over our twelve-year history, we developed a portfolio of free-to-play social casino games that are considered to be among the most innovative and unique in the genre. In 2021 we added our Tetris®-branded mobile game and in late 2022 we acquired Brainium, a developer and publisher of free-to-play casual games. Our games include the award-winning POP! Slots, myVEGAS Slots, my KONAMI Slots, MGM Slots Live, myVEGAS Blackjack, myVEGAS Bingo, Tetris®, Tetris Block Puzzle, Solitaire, Spider Solitaire, Jumbline 2, Sudoku, and Mahjong. Our games are based on original content as well as third-party licensed brands and are downloadable and playable for free on multiple social and mobile-based platforms, including the Apple App Store, Google Play Store, Amazon Appstore, and Facebook.
Previous wording
Each of our legacy social casino games and our Tetris®-branded mobile game is powered by our proprietary playAWARDS program and incorporates loyalty points that are earned by players as they engage with our games. The rewards are provided by our collection of rewards partners, with the majority of rewards partners providing their rewards at no cost to us, in exchange for product integration, marketing support, and participation in our loyalty program. The program is enabled by our playAWARDS platform which consists of a robust suite of tools that enable our rewards partners to manage their rewards in real time, measure the value of our players’ engagement, and gain insight into the effectiveness and value they derive from the program. Through our self-service platform, rewards partners can launch new rewards, make changes to existing rewards, and in real time see how players are engaging with their brands. The platform tools also provide rewards partners the ability to measure the off-line value our players generate as consumers and patrons of their real-world establishments.
Current wording
Each of our legacy social casino games and our Tetris®-branded mobile games are powered by our proprietary playAWARDS program and incorporates loyalty points that are earned by players as they engage with our games. The rewards are provided by our collection of rewards partners, with the majority of rewards partners providing their rewards at no cost to us, in exchange for product integration, marketing support, and participation in our loyalty program. The program is enabled by our playAWARDS platform which consists of a robust suite of tools that enable our rewards partners to manage their rewards in real time, measure the value of our players’ engagement, and gain insight into the effectiveness and value they derive from the program. Through our self-service platform, rewards partners can launch new rewards, make changes to existing rewards, and in real time see how players are engaging with their brands. The platform tools also provide rewards partners the ability to measure the off-line value our players generate as consumers and patrons of their real-world establishments.
Previous wording
PLAYSTUDIOS' playAWARDS platform embodies all of the features, tools, and capabilities needed to deliver loyalty programs tailored for the games industry. Our consumer-facing brand for our loyalty program is myVIP. The myVIP program is an aspirational benefits framework, with in-game mechanics and rewards features, along with a player development and hosting program. The program dynamically ranks and assigns players to tiers based on their accumulation of tier points, which are a proxy for their overall engagement with our games. The tier points are separate from and are not interchangeable with the loyalty points earned in the playAWARDS program. Qualified players are provided access to enhanced benefits that increase with each tier. Higher tiers provide access to a myVIP player portal where players can view and purchase special chip bundles, redeem loyalty points for a curated set of rewards, and communicate directly with a dedicated personal host. The VIP player portal, concierge, and host programs, enhance the in-game and real-world reward experience with both in-game and in-person, invitation-only special events. We believe that the myVIP program drives increased player engagement and retention, and therefore extends each game's life-cycle and revenue potential.
Current wording
Our playAWARDS platform embodies all of the features, tools, and capabilities needed to deliver loyalty programs tailored for the games industry. Our consumer-facing brand for our loyalty program is myVIP. The myVIP program is an aspirational benefits framework, with in-game mechanics and rewards features, along with a player development and hosting program. The program dynamically ranks and assigns players to tiers based on their accumulation of tier points, which are a proxy for their overall engagement with our games. The tier points are separate from and are not interchangeable with the loyalty points earned in the playAWARDS program. Qualified players are provided access to enhanced benefits that increase with each tier. Higher tiers provide access to a myVIP player portal where players can view and purchase special chip bundles, redeem loyalty points for a curated set of rewards, and communicate directly with a dedicated personal host. The VIP player portal, concierge, and host programs, enhance the in-game and real-world reward experience with both in-game and in-person, invitation-only special events. We believe that the myVIP program drives increased player engagement and retention, and therefore extends each game's life-cycle and revenue potential.
Previous wording
Comparison of the three months ended March 31, 2024 versus the three months ended March 31, 2023
Current wording
Comparison of the three and six months ended June 30, 2024 versus the three and six months ended June 30, 2023
Previous wording
The following table summarizes our consolidated results of operations for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):
Current wording
The following table summarizes our consolidated results of operations for the three and six months ended June 30, 2024 and 2023 (in thousands, except percentages):
Previous wording
Net revenue increased $0.2 million, or 0.3%, to $77.8 million during the three months ended March 31, 2024 compared to $77.6 million during the three months ended March 31, 2023. The increase was due to growth in advertising revenue. The increase was offset by a $4.1 million decrease in virtual currency primarily driven by decreases in DPU.
Current wording
Net revenue decreased $3.5 million, or (4.6)%, to $72.6 million during the three months ended June 30, 2024 compared to $76.1 million during the three months ended June 30, 2023. The decrease was due to a $5.1 million decrease in virtual currency revenue primarily driven by decreases in DPU. The decrease was offset by growth in advertising revenue.
Previous wording
Net revenue decreased by $2.5 million, due to the non-renewal of a licensing arrangement with a customer. The key performance indicators presented above are used by management to assess the playAWARDS segment's operating performance, however are not indicative revenue metrics.
Current wording
Net revenue decreased by $1.7 million during the three months ended June 30, 2024, due to the non-renewal of a licensing arrangement with a customer. The key performance indicators presented above are used by management to assess the playAWARDS segment's operating performance, however are not indicative revenue metrics.
Previous wording
Cost of revenue decreased by $0.6 million to $19.0 million during the three months ended March 31, 2024 compared to $19.5 million during the three months ended March 31, 2023. The decrease was primarily related to a decrease in virtual currency revenue. As a percentage of revenue, cost of revenue decreased from 24.4% for the three months ended March 31, 2023 to 24.3% for the three months ended March 31, 2024.
Current wording
Cost of revenue decreased by $0.8 million to $18.1 million during the three months ended June 30, 2024 compared to $18.9 million during the three months ended June 30, 2023. The decrease was primarily related to a decrease in virtual currency revenue. As a percentage of revenue, cost of revenue increased from 24.3% for the three months ended June 30, 2023 to 24.9% for the three months ended June 30, 2024.
Previous wording
Selling and marketing expenses increased by $0.5 million to $18.6 million during the three months ended March 31, 2024 compared to $18.1 million during the three months ended March 31, 2023. The increase was primarily due to increases in outside services expense of $0.3 million, employee costs of $0.2 million, and other selling and marketing expenses of $0.2 million. This was offset by a decrease of user acquisition costs of $0.2 million. As a percentage of revenue, selling and marketing expenses increased from 22.5% for the three months ended March 31, 2023 to 23.9% for the three months ended March 31, 2024.
Current wording
Selling and marketing expenses decreased by $1.4 million to $17.1 million during the three months ended June 30, 2024 compared to $18.4 million during the three months ended June 30, 2023. The decrease was primarily due to decreases in user acquisition expense of $1.6 million. This was offset by an increase of other selling and marketing expenses of $0.2 million. As a percentage of revenue, selling and marketing expenses decreased from 23.7% for the three months ended June 30, 2023 to 23.5% for the three months ended June 30, 2024.
Previous wording
Research and development expenses increased by $0.3 million to $18.0 million during the three months ended March 31, 2024 compared to $17.8 million during the three months ended March 31, 2023. The increase was primarily due to an increase of IT expenses of $0.5 million. This was offset by a reduction of $0.2 million of employee costs.
Current wording
General and administrative expenses increased by $0.6 million to $11.6 million during the three months ended June 30, 2024 compared to $11.0 million during the three months ended June 30, 2023. The increase is primarily due to an increase of employee costs of $0.7 million. This was offset by a reduction of $0.1 million of other general and administrative costs.
Previous wording
Depreciation and amortization expenses increased by $0.5 million to $11.6 million during the three months ended March 31, 2024 compared to $11.0 million during the three months ended March 31, 2023. The increase was primarily due to license renewals.
Current wording
Depreciation and amortization expenses increased by $0.5 million to $11.7 million during the three months ended June 30, 2024 compared to $11.1 million during the three months ended June 30, 2023. The increase was primarily due to license renewals.
Previous wording
Restructuring expenses decreased by $3.4 million from the three months ended March 31, 2023 to the three months ended March 31, 2024. The decrease was primarily due to a decrease of $1.7 million related to fees for various merger and acquisition opportunities and a decrease of $1.7 million related to management restructurings and severance.
Current wording
Restructuring expenses decreased by $0.4 million from the three months ended June 30, 2023 to the three months ended June 30, 2024. The decrease was primarily due to a decrease of $0.9 million for a non-cash impairment charge related to certain investments and a decrease of $0.3 million related to the Tender Offer. This was offset by an increase of $0.5 million related to fees for various merger and acquisition opportunities and an increase of $0.3 million related to other restructuring costs.
Previous wording
The change in fair value of warrant liabilities is related to the warrants discussed in Note 11—Warrant Liabilities to our consolidated financial statements herein. Interest income, net is related to interest earned on cash and cash equivalents offset by fees and expenses associated with the Credit Agreement as discussed in Note 14—Long-Term Debt to our consolidated financial statements herein. Other income (expense) primary relates to gains or (losses) from equity investments and gains or (losses) from foreign currency transactions with our foreign subsidiaries.
Current wording
The change in fair value of warrant liabilities is related to the warrants discussed in Note 12—Warrant Liabilities to our condensed consolidated financial statements herein. Interest income, net is related to interest earned on cash and cash equivalents offset by fees and expenses associated with the Credit Agreement as discussed in Note 15—Long-Term Debt to our condensed consolidated financial statements herein. Other income primarily relates to gains or (losses) from equity investments and gains or (losses) from foreign currency transactions with our foreign subsidiaries.
Previous wording
Provision for income taxes resulted in a tax expense of $0.1 million for the three months ended March 31, 2024, compared to a tax expense of $0.3 million for the three months ended March 31, 2023. Our effective tax rate was (25.2)% for the three months ended March 31, 2024 compared to our statutory tax rate of 21%. Our effective tax rate was increased by discrete tax benefits related to the valuation allowance, foreign branch income, and other nondeductible expenses including officer compensation. Our effective tax rate was decreased by nondeductible stock compensation, the fair value adjustment to the warrant liability, and deductions for foreign taxes paid.
Current wording
Provision for income taxes resulted in a tax expense of $0.6 million for the six months ended June 30, 2024, compared to a tax benefit of $0.3 million for the six months ended June 30, 2023. Our effective tax rate was (22.8)% for the six months ended June 30, 2024 compared to our statutory tax rate of 21%. Our effective tax rate was increased by the valuation allowance recorded against our US deferred tax assets, lower foreign tax rates in significant foreign jurisdictions, the fair value adjustment to the warrant liability, and discrete tax benefits related to remeasured income taxes payable in Israel at reduced tax rates. Our effective tax rate was decreased by nondeductible stock compensation, foreign branch income, and other nondeductible expenses including officer compensation.
Previous wording
Comparison of the three months ended March 31, 2024 versus the three months ended March 31, 2023
Current wording
Comparison of the three and six months ended June 30, 2024 versus the three and six months ended June 30, 2023
Previous wording
playGAMES AEBITDA was $23.5 million for the three months ended March 31, 2024 compared to $22.6 million for the three months ended March 31, 2023, an increase of $0.9 million. playGAMES AEBITDA margin was 30.1% for the three months ended March 31, 2024 compared to 29.1% for the three months ended March 31, 2023. The current period benefited from an increase in advertising revenue which does not incur platform fees driving a reduction in cost of sales.
Current wording
playGAMES AEBITDA was $21.9 million for the three months ended June 30, 2024 compared to $21.6 million for the three months ended June 30, 2023, an increase of $0.3 million. playGAMES AEBITDA margin was 30.2% for the three months ended June 30, 2024 compared to 28.4% for the three months ended June 30, 2023. The current period benefited from an increase in advertising revenue which does not incur platform fees, driving a reduction in cost of sales.
Previous wording
playAWARDS AEBITDA was $(3.6) million for the three months ended March 31, 2024 compared to $(0.6) million for the three months ended March 31, 2023. The decrease in AEBITDA can be attributed to lower net revenue and an increase in employee costs associated with the myVIP program and the further advancement of the playAWARDS platform.
Current wording
playAWARDS AEBITDA was $(3.5) million for the three months ended June 30, 2024 compared to $(1.7) million for the three months ended June 30, 2023. The decrease in AEBITDA can be attributed to lower net revenue and an increase in employee costs associated with the myVIP program and the further advancement of the playAWARDS platform.
Previous wording
(1)Amounts reported during the three months ended March 31, 2024 and 2023 relate to internal reorganization costs, including severance-related costs, and fees related to evaluating various merger and acquisition opportunities.
Current wording
(1)Amounts reported during the three and six months ended June 30, 2023 relate to non-cash impairment charges related to certain investments and fees related to evaluating various merger, acquisition and restructuring opportunities. Amounts reported during the three and six months ended June 30, 2024 relate to internal reorganization costs, including severance-related costs, fees related to evaluating various merger and acquisition opportunities, and legal fees and other costs incurred in connection with litigation arising out of the Acies Merger transaction.
Previous wording
As of March 31, 2024, we had cash and cash equivalents of $127.0 million, which consisted of cash on hand and money market mutual funds. Historically, we have funded our operations, including capital expenditures, primarily through cash flow from operating activities. We believe that our existing cash and cash equivalents, the cash generated from operations, and the borrowing capacity under our Credit Agreement as described below will be sufficient to fund our operations and capital expenditures for at least the next twelve (12) months. However, we intend to continue to make significant investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new games and features or enhance our existing games, improve our operating infrastructure, or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds or we may decide to do so opportunistically.
Current wording
As of June 30, 2024, we had cash and cash equivalents of $106.3 million, which consisted of cash on hand and money market mutual funds. Historically, we have funded our operations, including capital expenditures, primarily through cash flow from operating activities. We believe that our existing cash and cash equivalents, the cash generated from operations, and the borrowing capacity under our Credit Agreement as described below will be sufficient to fund our operations and capital expenditures for at least the next twelve (12) months. However, we intend to continue to make significant investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new games and features or enhance our existing games, improve our operating infrastructure, or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds or we may decide to do so opportunistically.
Previous wording
During the three months ended March 31, 2024, operating activities provided $5.0 million of net cash as compared to $4.5 million during the three months ended March 31, 2023. The increase in cash provided from operating activities was primarily due to increased advertising revenue which does not incur platform fees driving a reduction in cost of sales. This was offset by an unfavorable change in operating assets and liabilities due to timing fluctuations in payables being paid.
Current wording
During the six months ended June 30, 2024, operating activities provided $19.5 million of net cash as compared to $23.9 million during the six months ended June 30, 2023. The decrease in cash provided from operating activities was primarily due to an unfavorable change in operating assets and liabilities due to timing fluctuations in payables being paid.
Previous wording
During the three months ended March 31, 2024, investing activities used $6.5 million of net cash as compared to $7.6 million during the three months ended March 31, 2023. The change in cash used in investing activities was due to a lower amount of additions to internal-use software during the three months ended March 31, 2024.
Current wording
During the six months ended June 30, 2024, investing activities used $13.1 million of net cash as compared to $14.2 million during the six months ended June 30, 2023. The change in cash used in investing activities was due to a lower amount of additions to internal-use software during the six months ended June 30, 2024.
Previous wording
During the three months ended March 31, 2024, financing activities used $4.3 million of net cash as compared to $3.5 million during the three months ended March 31, 2023. The change in cash used in financing activities was due to $1.8 million of less proceeds received from stock option exercises during the three months ended March 31, 2024, $0.8 million in increased minimum guarantee payments made, and $0.7 million of payments for tax withholding of stock-based compensation. This was offset by $2.6 million of less cash used for share repurchases during the three months ended March 31, 2024.
Current wording
During the six months ended June 30, 2024, financing activities used $32.4 million of net cash as compared to $15.6 million during the six months ended June 30, 2023. The change in cash used in financing activities was due to an additional $13.2 million of share repurchases, $2.3 million of less proceeds received from stock option exercises, $0.7 million in increased minimum guarantee payments made, and $0.6 million of payments for tax withholding of stock-based compensation.
Previous wording
As of March 31, 2024, there had been no material changes to our aggregated indebtedness and other contractual obligations previously reported in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
As of June 30, 2024, there had been no material changes to our aggregated indebtedness and other contractual obligations previously reported in our Annual Report on Form 10-K for the year ended December 31, 2023, except for the operating lease liability maturities described in Note 14—Leases.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Net revenue decreased by $4.2 million during the six months ended June 30, 2024, due to the non-renewal of a licensing arrangement with a customer. The key performance indicators presented above are used by management to assess the playAWARDS segment's operating performance, however are not indicative revenue metrics.
Current report — wording carried from elsewhere
Provision for income taxes resulted in a tax expense of $0.5 million for the three months ended June 30, 2024, compared to a tax benefit of $0.6 million for the three months ended June 30, 2023. Our effective tax rate was (22.2)% for the three months ended June 30, 2024 compared to our statutory tax rate of 21%. Our effective tax rate was increased by remeasured income taxes payable in Israel at reduced tax rates, the fair value adjustment to the warrant liability, and research and development credits that we can utilize on our federal and state tax returns. Our effective tax rate was decreased by nondeductible stock compensation, foreign branch income, and other nondeductible expenses including officer compensation.
Current report — wording carried from elsewhere
playGAMES AEBITDA was $45.4 million for the six months ended June 30, 2024 compared to $44.2 million for the six months ended June 30, 2023, an increase of $1.2 million. playGAMES AEBITDA margin was 30.2% for the six months ended June 30, 2024 compared to 28.8% for the six months ended June 30, 2023. The current period benefited from an increase in advertising revenue which does not incur platform fees driving a reduction in cost of sales.
Current report — wording carried from elsewhere
playAWARDS AEBITDA was $(7.1) million for the six months ended June 30, 2024 compared to $(2.3) million for the six months ended June 30, 2023. The decrease in AEBITDA can be attributed to lower net revenue and an increase in employee costs associated with the myVIP program and the further advancement of the playAWARDS platform.