Playtika Holding Corp

Previous wording

We are one of the world’s leading developers of mobile games creating fun, innovative experiences that entertain and engage our users. We have built best-in-class live game operations services and a proprietary technology platform to support our portfolio of games which enable us to drive strong user engagement and monetization. Our games are free-to-play, and we are experts in providing novel, curated in-game content and offers to our users, at optimal points in their game journeys. Our players love our games because they are fun, creative, engaging, and kept fresh through a release of new features that are customized for different player segments. As a result, we have retained paying users over long periods of time.

Current wording

We are one of the world’s leading developers of mobile games creating fun, innovative experiences that entertain and engage our users. We have built best-in-class live game operations services and proprietary technology tools to support our portfolio of games which enable us to drive strong user engagement and monetization. Our games are free-to-play, and we are experts in providing novel, curated in-game content and offers to our users, at optimal points in their game journeys. Our players love our games because they are fun, creative, engaging, and kept fresh through a release of new features that are customized for different player segments. As a result, we have retained paying users over long periods of time.

Previous wording

On October 7, 2023, the State of Israel was attacked by Hamas, and the State of Israel subsequently declared war on Hamas. On April 14, 2024, Iran launched a missile and drone attack at Israel, and on April 19, 2024, Israel launched a response attack on Iran. While this war and conflict have not had a direct material financial impact on the Company as of the date of this filing, the Company employs approximately 1,060 professionals in Israel. The Company is actively monitoring the developments in this war.

Current wording

On October 7, 2023, the State of Israel was attacked by Hamas, and the State of Israel subsequently declared war on Hamas. Since that time, Israel has been engaged in armed conflict with combatants located in Gaza, the West Bank, Syria, Iran, Lebanon and Yemen. While these war and conflicts have not had a direct material financial impact on the Company as of the date of this filing, the Company’s headquarters are located in Israel, and the Company employs approximately 1,050 professionals in Israel, including the majority of the Company’s senior leadership team. The Company is actively monitoring the developments in this geographic region.

Previous wording

Interest income consists of interest earned on cash and cash equivalents.

Current wording

Interest income consists of interest earned on cash, cash equivalents and short-term investments.

Previous wording

Foreign currency translation adjustments, net, include gains and losses resulting from remeasurement of certain non-USD denominated balance sheet times.

Current wording

Foreign currency translation adjustments, net, include gains and losses resulting from remeasurement of certain non-USD denominated balance sheet items.

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 six months ended June 30, 2023

Previous wording

Cost of revenue for the three months ended March 31, 2024 decreased by $8.7 million when compared with the comparable period of 2023. The decrease in cost of revenue includes an approximate $7.7 million decrease in platform fees associated with reduced revenues and a greater percentage of revenue generated from our Direct-To-Consumer platforms, as well as a $2.2 million decrease in depreciation and amortization expenses.

Current wording

Cost of revenue for the three and six months ended June 30, 2024 decreased by $10.1 million and $18.8 million, respectively, when compared with the comparable periods of 2023. The decreases in cost of revenue includes an approximate $10.4 million and $18.2 million decrease in platform fees associated with reduced revenues and a greater percentage of revenue generated from our Direct-To-Consumer platforms for the three and six months ended June 30, 2024, respectively, as well as a $1.6 million and $3.8 million decrease in depreciation and amortization expenses, respectively.

Previous wording

Research and development expenses for the three months ended March 31, 2024 increased by $4.5 million when compared with the comparable period of 2023. The increase in research and development expenses were primarily due to a shift in our workforce composition towards higher-cost locations, combined with merit-based compensation increases. These factors contributed to the rise in expenses despite a decrease in overall headcount.

Current wording

Research and development expenses for the three and six months ended June 30, 2024 increased by $0.3 million and $4.8 million, respectively, when compared with the comparable periods of 2023. The increases in research and development expenses were primarily due to a shift in our workforce composition towards higher-cost locations, combined with merit-based compensation increases and an increased spend in outsourcing. These factors were offset by decreases in expenses related to a reduction in overall headcount.

Previous wording

Sales and marketing expenses for the three months ended March 31, 2024 increased by $46.7 million when compared with the comparable period of 2023. The increase in sales and marketing expenses was due almost entirely to increased media buy expenses driven by the acquisitions of InnPlay and Youda that were not present in the first quarter of 2023, and higher spending across the Company.

Current wording

Sales and marketing expenses for the three and six months ended June 30, 2024 increased by $28.2 million and $74.9 million, respectively, when compared with the comparable periods of 2023. The increases in sales and marketing expenses were due largely to increased media buy expenses driven by the acquisitions of InnPlay and Youda that were not present in the first half of 2023, accompanied by moderately higher media buy spending across the Company.

Previous wording

General and administrative expenses for the three months ended March 31, 2024, decreased $0.2 million when compared with the comparable period of 2023. The decrease in general and administrative expenses includes an approximate $11.0 million impact by recent headcount reductions that reduced employee compensation costs, including decreased stock-based compensation expense, as well as a $0.9 million decrease in depreciation and amortization. These amounts were largely offset by an increase of $7.7 million to severance expense and adjustments of $2.8 million to the fair value of contingent considerations.

Current wording

In addition, the decreases in general and administrative expenses for the three and six months ended June 30, 2024 includes an approximate $8.0 million and $19.2 million impact, respectively, of recent headcount reductions that reduced employee compensation costs, including decreased stock-based compensation expense. These amounts were largely offset by an increase of $1.8 million and $9.5 million, respectively, to severance expense.

Previous wording

During the three months ended March 31, 2024, we recorded an impairment charge of $7.0 million related to one of our investments in an unconsolidated affiliate.

Current wording

During the six months ended June 30, 2024, we recorded an impairment charge of $7.0 million related to one of our investments in an unconsolidated affiliate. During the three and six months ended June 30, 2023, we recorded a $9.7 million write-off of JustPlay.LOL Ltd’s game title.

Previous wording

Interest expense for the three months ended March 31, 2024 increased by $1.0 million when compared with the same period of 2023 as a result of higher average interest rates on our variable rate debt.

Current wording

Interest expense for the three and six months ended June 30, 2024 increased by $3.1 million and $4.1 million, respectively, when compared with the same period of 2023 as a result of higher average interest rates on our variable rate debt.

Previous wording

Interest income for the three months ended March 31, 2024 increased by $5.2 million when compared with the same period of 2023 as a result of higher average interest rates earned on our cash and cash equivalents.

Current wording

Interest income for the three and six months ended June 30, 2024 increased by $3.4 million and $8.6 million, respectively, when compared with the same period of 2023 as a result of higher balances held in interest bearing cash, cash equivalents and short-term investments, and higher average interest rates earned on those instruments.

Previous wording

The effective tax rates were determined using a worldwide estimated annual effective tax rate and took discrete items into consideration. The difference between the effective tax rate and the 21% U.S. federal statutory rate for the three months ended March 31, 2024 was primarily due to tax positions that do not meet the more likely than not standard, the inclusion of Global Intangible Low-Taxed Income, and non-deductible stock-based compensation expense. The difference between the effective tax rate and the 21% U.S. federal statutory rate for the three months ended March 31, 2023 was primarily due to tax provisions that do not meet the more likely than not standard and the inclusion of Global Intangible Low-Taxed Income.

Current wording

The effective income tax rate for the three months ended June 30, 2024 was 28.0% compared to 34.8% for the three months ended June 30, 2023. The effective income tax rate for the six months ended June 30, 2024 was 28.5% compared to 33.4% for the six months ended June 30, 2023. The effective tax rates were determined using a worldwide estimated annual effective tax rate and took discrete items into consideration. The difference between the effective tax rate and the 21% U.S. federal statutory rate for the six months ended June 30, 2024 was primarily due to the inclusion of Global Intangible Low-Taxed Income and non-deductible stock-based compensation expense, partially offset by a non-recurring favorable impact of reversal of accruals related to undistributed earnings. The difference between the effective tax rate and the 21% U.S. federal statutory rate for the six months ended June 30, 2023 was primarily due to tax provisions that do not meet the more likely than not standard and the inclusion of Global Intangible Low-Taxed Income.

Previous wording

Upon aggregating all of the components of our results of operations above, net income for the three months ended March 31, 2024, decreased $31.1 million when compared with the same periods of 2023.

Current wording

Upon aggregating all of the components of our results of operations above, net income for the three and six months ended June 30, 2024, increased $10.9 million and $20.2 million, respectively, when compared with the same periods of 2023.

Previous wording

Credit Adjusted EBITDA and Credit Adjusted EBITDA Margin as calculated herein may not be comparable to similarly titled measures reported by other companies within the industry and are not determined in accordance with GAAP. Our presentation of Credit Adjusted EBITDA and Credit Adjusted EBITDA Margin should not be construed as an inference that our future results will be unaffected by unusual or unexpected items.

Current wording

Credit Adjusted EBITDA and Credit Adjusted EBITDA Margin as calculated herein may not be comparable to similarly titled measures reported by other companies within the industry and are not determined in accordance with GAAP. Our

Previous wording

(2)Amounts for all periods primarily relate to expenses incurred by the Company in connection with the evaluation of strategic alternatives for the Company.

Current wording

(2)Amounts for all periods include costs incurred to evaluate and pursue acquisition activities as well as costs incurred by the Company in connection with the evaluation of strategic alternatives.

Previous wording

(3) The amount for the three months ended March 31, 2024 consists primarily of $12.1 million incurred by the Company for severance. The amount for the three months ended March 31, 2023 consists primarily of $0.6 million incurred by the Company for severance.

Current wording

(3) The amounts for the three and six months ended June 30, 2024 consists primarily of $2.6 million and $11.2 million, respectively, incurred by the Company for severance. The amount for the six months ended June 30, 2024 also includes $5.1 million incurred by the Company related to restructuring activities. The amounts for the three and six months ended June 30, 2023 consists primarily of $0.1 million and $0.7 million, respectively, incurred by the Company for severance and, for the three months ended June 30, 2023, $0.2 million for relocation and support provided to employees due to the war in Ukraine.

Previous wording

We incur capital expenditures in the normal course of business and perform ongoing enhancements and updates to our social and mobile games to maintain our quality standards. Cash used for capital expenditures in the normal course of business is typically made available from cash flows generated by operating activities. We may also pursue acquisition opportunities for additional businesses or social or mobile games that meet our strategic and return on investment criteria. Capital needs are evaluated on an individual opportunity basis and may require significant capital commitments.

Current wording

We incur capital expenditures in the normal course of business and perform ongoing enhancements and updates to our social and mobile games to maintain our quality standards. Cash used for capital expenditures in the normal course of business is typically made available from cash flows generated by operating activities. We may also pursue acquisition opportunities for

Previous wording

Our primary sources of liquidity are the cash flows generated from our operations, currently available unrestricted cash and cash equivalents, and borrowings under our Credit Facility and Revolver. Our cash and cash equivalents totaled $1,015.5 million and $1,029.7 million at March 31, 2024 and December 31, 2023, respectively. As of both March 31, 2024 and December 31, 2023, we had $600 million in additional borrowing capacity pursuant to our Revolving Credit Facility. Payments of short-term debt obligations and other commitments are expected to be made from cash on the balance sheet and operating cash flows. Long-term obligations are expected to be paid through operating cash flows, or, if necessary, borrowings under our Revolving Credit Facility or, if necessary, additional term loans or issuances of equity.

Current wording

Our primary sources of liquidity are the cash flows generated from our operations, currently available unrestricted cash and cash equivalents, short-term investments, and borrowings under our Credit Facility and Revolver. Our cash and cash equivalents and short-term investments totaled $1,100.4 million and $1,029.7 million at June 30, 2024 and December 31, 2023, respectively. As of both June 30, 2024 and December 31, 2023, we had $600 million in additional borrowing capacity pursuant to our Revolving Credit Facility. Payments of short-term debt obligations and other commitments are expected to be made from cash on the balance sheet and operating cash flows. Long-term obligations are expected to be paid through operating cash flows, or, if necessary, borrowings under our Revolving Credit Facility or, if necessary, additional term loans or issuances of equity.

Previous wording

Our ability to fund our operations, pay our debt obligations and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond our control, and disruptions in capital markets could impact our ability to secure additional funds through financing activities. We believe that our cash and cash equivalents balance and borrowing capacity under our Revolving Credit Facility and our cash flows from operations will be sufficient to meet our normal operating requirements during the next 12 months and the foreseeable future and to fund capital expenditures.

Current wording

Our ability to fund our operations, pay our debt obligations and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond our control, and disruptions in capital markets could impact our ability to secure additional funds through financing activities. We believe that our cash and cash equivalents balance, short-term investments and borrowing capacity under our Revolving Credit Facility and our cash flows from operations will be sufficient to meet our normal operating requirements during the next 12 months and the foreseeable future and to fund capital expenditures.

Previous wording

Net cash flows provided by operating activities for the three months ended March 31, 2024 was $29.6 million compared with cash flows provided by operating activities of $20.5 million for the same period of 2023. Net cash flows provided by operating activities for each period primarily consisted of net income generated during the period, exclusive of non-cash expenses such as depreciation, amortization, stock-based compensation and changes in the fair value of contingent

Current wording

Net cash flows provided by operating activities for the six months ended June 30, 2024 was $180.1 million compared with $227.5 million for the same period of 2023. Net cash flows provided by operating activities for each period primarily consisted of net income generated during the period, exclusive of non-cash expenses such as depreciation, amortization, stock-based compensation and changes in the fair value of contingent consideration payable, with changes in working capital impacted by the payment of annual and incentive bonuses and payment of long-term cash compensation during the first quarter and other normal working-capital timing differences.

Previous wording

Net cash flow used in investing activities for the three months ended March 31, 2024 was $35.9 million when compared with $15.4 million for the same period of 2023. Cash flows used in investing activities generally includes outflows related to the purchase and capitalization of assets.

Current wording

Net cash flow used in investing activities for the six months ended June 30, 2024 was $449.1 million when compared with $33.0 million for the same period of 2023. Cash flows used in investing activities generally includes outflows related to the purchase and capitalization of assets and, in 2024, includes $390.1 million of cash outflow for cash deposited into short-term investments.

Previous wording

Net cash flows used in financing activities for the three months ended March 31, 2024 was $5.5 million, compared with $6.1 million for the same period of 2023. Financing activity cash flows for the three months ended March 31, 2024 and 2023 primarily relate to repayments on our bank borrowings.

Current wording

Net cash flows used in financing activities for the six months ended June 30, 2024 was $48.6 million, compared with $11.4 million for the same period of 2023. Financing activity cash flows for the six months ended June 30, 2024 primarily relates to a cash dividend paid, and in both 2024 and 2023 includes repayments on our bank borrowings.