PLAYSTUDIOS Inc

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®, 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.

Current wording

We are a developer and publisher of free-to-play casual games for mobile and social platforms. Over our 13-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.

Previous 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 with 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

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.

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 myVIP 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

We generate revenue from the sale of in-game virtual currency, which players can choose to purchase at any time to enhance their playing experience. Once purchased, our virtual currency cannot be withdrawn from the game, transferred from one game to another or from one player to another, or be redeemed for monetary value. Players who install our games receive free virtual currency upon the initial launch of the game, and they may also collect virtual currency free of charge at periodic intervals or through targeted marketing promotions. Players may exhaust the free virtual currency and may choose to purchase additional virtual currency. Additionally, players can send free “gifts” of virtual currency to their friends on Facebook. Our revenue from virtual currency has been generated world wide, but is largely concentrated in North America.

Current wording

We have primarily generated our revenue from the sale of in-game virtual currencies, which players can choose to purchase at any time to enhance their playing experience. Once purchased, our virtual currency cannot be withdrawn from the game, transferred from one game to another or from one player to another, or be redeemed for monetary value. Players who install our games receive free virtual currencies upon the initial launch of the game, and they may also collect virtual currencies free of charge at periodic intervals or through targeted marketing promotions. Players may exhaust the free virtual currencies and may choose to purchase additional virtual currencies. Additionally, players can send free “gifts” of virtual currencies to their friends on Facebook. Our revenue from virtual currencies has been generated world-wide, but is largely concentrated in North America.

Previous wording

We also generate revenue from in-game advertising. Advertisements can be in the form of an impression, click-throughs, banner ads, or offers, where players are rewarded with virtual currency or loyalty points for watching a short video. While we historically have derived most of our revenue from the sale of in-game virtual currency, we introduced in-game advertising as a limited pilot program and expanded it throughout 2021 and 2022. In addition, our Tetris®-branded mobile game and our Brainium games generate most of their revenue through in-game advertising.

Current wording

We also generate revenue from in-game advertising. Advertisements can be in the form of an impression, click-throughs, banner ads, or offers, where players are rewarded with virtual currency or loyalty points for watching a short video.

Previous wording

•Player Acquisition—Establishing and maintaining a loyal network of players and paying players is vital for our success. As such, we spend a significant amount on advertising and other forms of player acquisition, such as traditional marketing and advertising, email and push notifications, and cross promoting between our games in order to grow our player base. These expenditures are generally related to new content launches, game enhancements, and ongoing programs to drive new player acquisition and the reactivation of lapsed player engagement. Our player acquisition strategy is centered on a payback period methodology, and we strive to optimize spend between the acquisition of new players and the reactivation of inactive players.

Current wording

•User Acquisition—Establishing and maintaining a loyal network of players and paying players is vital for our success. As such, we spend a significant amount on advertising and other forms of player acquisition, such as traditional marketing and advertising, email and push notifications, and cross promoting between our games in order to grow our player base. These expenditures are generally related to new content launches, game enhancements, and ongoing programs to drive new player acquisition and the reactivation of lapsed player engagement. Our player acquisition strategy is centered on a payback period methodology, and we strive to optimize spend between the acquisition of new players and the reactivation of inactive players.

Previous wording

Comparison of the three and nine months ended September 30, 2024 versus the three and nine months ended September 30, 2023

Current wording

Comparison of the three months ended March 31, 2025 versus the three months ended March 31, 2024

Previous wording

The following table summarizes our consolidated results of operations for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages):

Current wording

The following table summarizes our consolidated results of operations for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Previous wording

Net revenue decreased $4.6 million, or (6.1)%, to $71.2 million during the three months ended September 30, 2024 compared to $75.9 million during the three months ended September 30, 2023. The decrease was due to a $4.0 million decrease in virtual currency revenue primarily driven by decreases in DPU.

Current wording

Net revenue decreased $15.3 million, or (19.6)%, to $62.6 million during the three months ended March 31, 2025 compared to $77.8 million during the three months ended March 31, 2024. The decrease was due to a $9.6 million decrease in virtual currency revenue primarily driven by decreases in DPU and a $5.6 million decrease in advertising revenue mainly driven by decreases in DAU.

Previous wording

Cost of revenue decreased by $2.0 million to $17.8 million during the three months ended September 30, 2024 compared to $19.9 million during the three months ended September 30, 2023. The decrease was primarily related to a decrease in virtual currency revenue. As a percentage of revenue, cost of revenue decreased from 26.2% for the three months ended September 30, 2023 to 25.0% for the three months ended September 30, 2024.

Current wording

Cost of revenue decreased by $3.2 million to $15.8 million during the three months ended March 31, 2025 compared to $19.0 million during the three months ended March 31, 2024. 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 March 31, 2024 to 25.2% for the three months ended March 31, 2025.

Previous wording

Selling and marketing expenses decreased by $3.7 million to $15.1 million during the three months ended September 30, 2024 compared to $18.8 million during the three months ended September 30, 2023. The decrease was primarily due to decreases in user acquisition expense of $5.3 million. This was offset by increases of other selling and marketing expenses of $1.6 million. As a percentage of revenue, selling and marketing expenses decreased from 24.8% for the three months ended September 30, 2023 to 21.2% for the three months ended September 30, 2024.

Current wording

Selling and marketing expenses decreased by $5.4 million to $13.2 million during the three months ended March 31, 2025 compared to $18.6 million during the three months ended March 31, 2024. The decrease was primarily due to decreases in user acquisition expense of $4.6 million and other selling and marketing expense of $0.8 million.

Previous wording

General and administrative expenses increased by $0.8 million to $11.6 million during the three months ended September 30, 2024 compared to $10.7 million during the three months ended September 30, 2023. The increase is primarily due to increases of stock compensation of $0.6 million and employee costs of $0.5 million. This was offset by a reduction of $0.3 million of other general and administrative costs.

Current wording

General and administrative expenses increased by $0.1 million to $11.9 million during the three months ended March 31, 2025 compared to $11.8 million during the three months ended March 31, 2024. The increase is primarily due to increases in stock compensation of $0.3 million, facilities of $0.3 million, and other general and administrative expense of $0.1 million. This was offset by a reduction of employee costs of $0.6 million as a result of the 2024 Reorganization Plan.

Previous wording

Restructuring expenses increased by $2.0 million from the three months ended September 30, 2023 to the three months ended September 30, 2024. The increase was primarily due to an increase of $0.7 million for non-cash impairment charges, an increase of $0.7 million related to legal fees and other costs incurred in connection with litigation arising out of the Acies Merger transaction, and an increase of $0.6 million related to other restructuring costs.

Current wording

Restructuring expenses increased by $0.7 million from the three months ended March 31, 2024 to the three months ended March 31, 2025. The increase was primarily due to increases in non-recurring legal expense of $0.4 million and various merger and acquisition opportunities of $0.3 million.

Previous wording

Provision for income taxes resulted in a tax expense of $0.1 million for the nine months ended September 30, 2024, compared to a tax benefit of $2.4 million for the nine months ended September 30, 2023. Our effective tax rate was (0.9)% for the nine months ended September 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, the fair value adjustment to the warrant liability, and lower foreign tax rates in significant jurisdictions. Our effective tax rate was decreased by nondeductible stock compensation, foreign branch income, and other nondeductible expenses including officer compensation.

Current wording

Provision for income taxes resulted in a tax expense of $0.3 million for the three months ended March 31, 2025, compared to a tax expense of $0.1 million for the three months ended March 31, 2024.

Previous wording

Comparison of the three and nine months ended September 30, 2024 versus the three and nine months ended September 30, 2023

Current wording

Comparison of the three months ended March 31, 2025 versus the three months ended March 31, 2024

Previous wording

playGAMES AEBITDA was $23.2 million for the three months ended September 30, 2024 compared to $21.6 million for the three months ended September 30, 2023, an increase of $1.6 million. playGAMES AEBITDA margin was 32.6% for the three months ended September 30, 2024 compared to 28.5% for the three months ended September 30, 2023. The current period benefited from an increase in direct-to-consumer sales which incurs lower processing fees, driving a reduction in cost of sales, as well as a reduction of user acquisition costs.

Current wording

playGAMES AEBITDA was $18.3 million for the three months ended March 31, 2025 compared to $23.5 million for the three months ended March 31, 2024, a decrease of $5.1 million. playGAMES AEBITDA margin was 29.3% for the three months ended March 31, 2025 compared to 30.1% for the three months ended March 31, 2024. The decrease to playGAMES AEBITDA was a result of decreased virtual currency revenue primarily driven by decreases in DPU. This was offset by an increase in direct-to-consumer sales which incurs lower processing fees, driving a reduction in cost of sales, as well as a reduction of user acquisition costs.

Previous wording

playAWARDS AEBITDA was $(4.0) million for the three months ended September 30, 2024 compared to $(4.2) million for the three months ended September 30, 2023. The increase in AEBITDA can be attributed to a decrease in employee costs associated with the myVIP program and the further advancement of the playAWARDS platform.

Current wording

playAWARDS playAWARDS AEBITDA was $(2.3) million for the three months ended March 31, 2025 compared to $(3.6) million for the three months ended March 31, 2024. The increase in AEBITDA can be attributed to a decrease in employee costs as a result of the 2024 Reorganization Plan.

Previous wording

Consolidated Adjusted EBITDA, or Consolidated AEBITDA, as used herein, is a non-GAAP financial performance measure that is presented as a supplemental disclosure and is reconciled to net (loss) income and net (loss) income margin as the most directly comparable GAAP measures. We define Consolidated AEBITDA as net income before interest, income taxes, depreciation and amortization, restructuring and related costs (consisting primarily of severance and other restructuring related costs), stock-based compensation expense, changes in fair value of warrant liabilities, and other income and expense items (including special infrequent items, foreign currency gains and losses, and other non-cash items). We also use Consolidated AEBITDA Margin, another non-GAAP measure, which we calculate as the percentage of Consolidated AEBITDA to revenue.

Current wording

Consolidated Adjusted EBITDA, or Consolidated AEBITDA, as used herein, is a non-GAAP financial performance measure that is presented as a supplemental disclosure and is reconciled to net loss and net loss margin as the most directly comparable GAAP measures. We define Consolidated AEBITDA as net income before interest, income taxes, depreciation and amortization, restructuring and related costs (consisting primarily of severance and other restructuring related costs), stock-based compensation expense, changes in fair value of warrant liabilities, and other income and expense items (including special infrequent items, foreign currency gains and losses, and other non-cash items). We also use Consolidated AEBITDA Margin, another non-GAAP measure, which we calculate as the percentage of Consolidated AEBITDA to revenue.

Previous wording

The following table sets forth the reconciliation of Consolidated AEBITDA and Consolidated AEBITDA Margin to net (loss) income and net (loss) income margin, the most directly comparable GAAP measure (in thousands, except percentages).

Current wording

The following table sets forth the reconciliation of Consolidated AEBITDA and Consolidated AEBITDA Margin to net loss and net loss margin, the most directly comparable GAAP measure (in thousands, except percentages).

Previous wording

(1)Amounts reported during the three and nine months ended September 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 nine months ended September 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.

Current wording

(1)Amounts reported during the three months ended March 31, 2024 relate to internal reorganization costs, including severance-related costs, and fees related to evaluating various merger, acquisition and restructuring opportunities. Amounts reported during the three months ended March 31, 2025 relate to internal reorganization costs, including severance-related costs, fees related to evaluating various merger and acquisition opportunities, and non-recurring legal costs.

Previous wording

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 financing to secure additional funds or we may decide to do so opportunistically.

Current wording

As of March 31, 2025, we had cash and cash equivalents of $107.1 million, which consisted of cash on hand and money market mutual funds. As of March 31, 2025 we had restricted cash of $0.6 million. 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 financing to secure additional funds or we may decide to do so opportunistically.

Previous wording

For a description of the Credit Agreement, see Note 14—Long-Term Debtin our Condensed Consolidated Financial Statements and Liquidity and Capital Resources in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

For a description of the Credit Agreement, see Note 13—Long-Term Debtin our Condensed Consolidated Financial Statements and Liquidity and Capital Resources in our 2024 Annual Report on Form 10-K filed on March 14, 2025 and amended on Form 10-K/A filed on April 4, 2025.

Previous wording

During the nine months ended September 30, 2024, operating activities provided $34.1 million of net cash as compared to $36.4 million during the nine months ended September 30, 2023. The decrease in cash provided from operating activities was primarily due to a decrease in net revenue.

Current wording

During the three months ended March 31, 2025, operating activities provided $3.3 million of net cash as compared to $5.0 million during the three months ended March 31, 2024. The decrease in cash provided from operating activities was primarily due to a decrease in net revenue, which was offset by a reduction in cost of sales, less employee costs due to a reduced headcount, and favorable change in operating assets and liabilities due to timing fluctuations in receivables being collected.

Previous wording

During the nine months ended September 30, 2024, investing activities used $22.1 million of net cash as compared to $21.9 million during the nine months ended September 30, 2023. The change in cash used in investing activities was due to the cash payment of $3.4 million for the Pixode Acquisition, offset by lower purchases of property and equipment during the nine months ended September 30, 2024.

Current wording

During the three months ended March 31, 2025, investing activities used $3.6 million of net cash as compared to $6.5 million during the three months ended March 31, 2024. The change in cash used in investing activities was due to less additions to internal-use software and property and equipment during the three months ended March 31, 2025.

Previous wording

During the nine months ended September 30, 2024, financing activities used $38.6 million of net cash as compared to $17.8 million during the nine months ended September 30, 2023. The change in cash used in financing activities was due to an additional $13.7 million of share repurchases, $4.8 million in increased minimum guarantee payments made, and $2.7 million of less proceeds received from stock option exercises. This was offset by $0.4 million less of payments for tax withholding of stock-based compensation.

Current wording

During the three months ended March 31, 2025, financing activities used $2.5 million of net cash as compared to $4.3 million during the three months ended March 31, 2024. The change in cash used in financing activities was due to $1.3 million less in share repurchases and $0.3 million less in payments made for minimum guarantees.

Previous wording

As of September 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 13—Leases.

Current wording

As of March 31, 2025, 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, 2024.

Previous wording

Except as described in Note 2—Summary Of Significant Accounting Policies, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our 2023 Annual Report on Form 10-K, filed with the SEC on March 12, 2024.

Current wording

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our 2024 Annual Report on Form 10-K filed on March 14, 2025 and amended on Form 10-K/A filed on April 4, 2025.