Playtika Holding Corp.

Previous 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 1,040 professionals in Israel, including the majority of the Company’s senior leadership team. The Company is actively monitoring the developments in this geographic region.

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 a multi-front armed conflict with combatants located in Gaza, the West Bank, Syria, Iran, Lebanon and Yemen. Following a period of intense conflict, a temporary ceasefire was reached between Israel and Hamas on January 17, 2025, with the agreement going into effect on January 19, 2025. The Israel-Hamas ceasefire collapsed in March 2025, leading to renewed hostilities in Gaza. A separate ceasefire between Israel and Lebanon was reached on November 27, 2024. While these developments marked steps toward de-escalation, both ceasefires have experienced significant violations and breakdowns. Similarly, the Israel-Lebanon ceasefire, initially set to last 60 days and later extended, was repeatedly breached by both sides, resulting in ongoing violence and instability along the border. As of today, the situation in the region remains volatile and fragile, with intermittent fighting and no comprehensive or lasting peace agreement in place. While this war and these 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 1,375 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

We distribute our games to the end customer through various web and mobile platforms, such as Apple, Facebook, Google and other web and mobile platforms plus our own direct-to-consumer platforms. Through these platforms, users can download our free-to-play games and can purchase virtual items to enhance their game-playing experience. Players can purchase virtual items through various widely accepted payment methods offered in the games. Payments from players for virtual items are non-refundable and relate to non-cancellable contracts that specify our obligations and cannot be redeemed for cash nor exchanged for anything other than virtual items within our games.

Current wording

We distribute our games to the end customer through various web and mobile platforms, such as Apple and Google and other web and mobile platforms plus our own direct-to-consumer platforms. Through these platforms, users can download our free-to-play games and can purchase virtual items to enhance their game-playing experience. Players can purchase virtual items through various widely accepted payment methods offered in the games. Payments from players for virtual items are non-refundable and relate to non-cancellable contracts that specify our obligations and cannot be redeemed for cash nor exchanged for anything other than virtual items within our games.

Previous wording

Cost of revenue includes payment processing fees, customer support, hosting fees and depreciation and amortization expenses associated with assets directly involved in the generation of revenues, including servers and internal use software. Platform providers (such as Apple, Facebook and Google) charge a transactional payment processing fee to accept payments from our players for the purchase of in-app virtual goods. Payment processing fees and other related expenses for in-app purchases made through our Direct-to-Consumer platforms are typically 3-4%, compared to a 30% platform fee for third party platforms. We generally expect cost of revenue to fluctuate proportionately with revenues.

Current wording

Cost of revenue includes payment processing fees, customer support, hosting fees and depreciation and amortization expenses associated with assets directly involved in the generation of revenues, including servers and internal use software. Platform providers (such as Apple and Google) charge a transactional payment processing fee to accept payments from our players for the purchase of in-app virtual goods. Payment processing fees and other related expenses for in-app purchases

Previous wording

Research and development consists of salaries, bonuses, benefits, other compensation, including stock-based compensation and allocated overhead, related to engineering, research, and development. In addition, research and development expenses include depreciation and amortization expenses associated with assets associated with our research and development efforts.

Current wording

Research and development consists of salaries, bonuses, benefits, other compensation, including stock-based compensation and allocated overhead, related to engineering, research, and development. In addition, research and development expenses include depreciation and amortization expenses associated with assets associated with our research and development efforts. We expect that research and development expenses specifically associated with new game development will fluctuate over time.

Previous wording

Impairment charges in 2024 reflect impairments related to our investments in unconsolidated entities. We hold certain equity investments in various unconsolidated entities that fall within the scope of ASC 321, Investments - Equity Securities. As permitted within that guidance, we have elected to account for these investments at cost less impairment, adjusted for changes in fair value from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates. Impairment charges in 2023 reflect charges recorded for the excess of the carrying amount over estimated fair value of our identifiable intangible assets

Current wording

Impairment charge in 2024 reflects an impairment related to one of our investments in unconsolidated entities. We hold certain equity investments in various unconsolidated entities that fall within the scope of ASC 321, Investments - Equity Securities. As permitted within that guidance, we have elected to account for these investments at cost less impairment, adjusted for changes in fair value from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates.

Previous wording

Our interest expense includes interest incurred under our December 2019 Credit Agreement, as amended, and amortization of deferred financing costs. We expect to continue to incur interest expense under our Credit Agreement, although such interest expense will fluctuate based upon the underlying variable interest rates. We entered into multiple interest rate swap agreements in March 2021 and in January 2023, accumulating to a total notional amount of $1.0 billion, reducing our overall exposure to variable interest rates.

Current wording

Our interest expense includes interest incurred under our Credit Agreement and amortization of deferred financing costs. We expect to continue to incur interest expense under our Credit Agreement, although such interest expense will fluctuate based upon the underlying variable interest rates. We entered into multiple interest rate swap agreements in March 2021 and in January 2023, accumulating to a total notional amount of $1.0 billion, reducing our overall exposure to variable interest rates.

Previous wording

The provision for income taxes consists of current income taxes in the various jurisdictions where we are subject to taxation, primarily the United States, the United Kingdom, Israel, Germany, and Austria, as well as deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities in each of these jurisdictions for financial reporting purposes and the amounts used for income tax purposes. Under current U.S. tax law, the federal statutory tax rate applicable to corporations is 21%. Our effective tax rate can fluctuate based on various factors, including our financial results and the geographic mix to which they relate, the applicability of special tax regimes, changes in our business or operations, examination-related developments and uncertain tax positions, and changes in tax law.

Current wording

-26- jurisdictions for financial reporting purposes and the amounts used for income tax purposes. Under current U.S. tax law, the federal statutory tax rate applicable to corporations is 21%. Our effective tax rate can fluctuate based on various factors, including our financial results and the geographic mix to which they relate, the applicability of special tax regimes, changes in our business or operations, examination-related developments and uncertain tax positions, and changes in tax law.

Previous wording

We calculate net income as revenue minus cost of revenues, research and development, sales and marketing and general and administrative expenses, interest and taxes.

Current wording

We calculate net income as revenue minus cost of revenues, research and development, sales and marketing and general and administrative expenses, impairment charges, interest and taxes.

Previous wording

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

Revenues for the three and nine months ended September 30, 2024 decreased by $9.3 million and $30.1 million, respectively when compared with the comparable period of 2023. Incremental revenues from the acquired studios were more than offset by the decrease in revenues due to reduced monetization.

Current wording

Revenues for the three months ended March 31, 2025 increased by $54.8 million when compared with the comparable period of 2024 primarily due to incremental revenues from the SuperPlay acquisition in November 2024 which more than offset the decrease in revenues due to reduced monetization primarily in slot-themed games.

Previous wording

Sales and marketing expenses for the three and nine months ended September 30, 2024 increased by $7.1 million and $82.0 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.

Current wording

Sales and marketing expenses for the three months ended March 31, 2025 increased by $81.4 million when compared with the comparable period of 2024. The increases in sales and marketing expenses were due largely to increased media buy, other marketing expenses and depreciation and amortization driven by the acquisition of SuperPlay.

Previous wording

During the three and nine months ended September 30, 2024, we recorded an impairment charge of $29.3 million and $36.3 million, respectively, related to our investments in unconsolidated affiliates. During the three and nine months ended September 30, 2023, we recorded an impairment charge of $41.6 million related to the Redecor game title., Also included in the nine months ended September 30, 2023 is a $9.7 million write-off of JustPlay.LOL Ltd’s game title.

Current wording

During the three months ended March 31, 2024, we recorded an impairment charge of $7.0 million related to our investments in unconsolidated affiliates. There were no impairment charges for the three months ended March 31, 2025.

Previous wording

Interest expense for the three months ended September 30, 2024 was largely consistent with the same period of 2023. Interest expense for the nine months ended September 30, 2024 increased $2.1 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 months ended March 31, 2025 decreased $2.9 million when compared with the same period of 2024 as a result of lower average interest rates on our variable rate debt.

Previous wording

Interest income for the three and nine months ended September 30, 2024 increased by $6.5 million and $13.8 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, as well as the recognition of $3.5 million of income associated with a tax refund received in the third quarter of 2024.

Current wording

Interest income for the three months ended March 31, 2025 decreased by $7.2 million when compared with the same period of 2024 as a result of lower balances held in interest bearing cash, cash equivalents and short-term investments, and lower average interest rates earned on those balances.

Previous wording

The effective income tax rate for the three months ended September 30, 2024 was 38.3% compared to 41.5% for the three months ended September 30, 2023. The effective income tax rate for the nine months ended September 30, 2024 was 30.9% compared to 35.1% for the nine months ended September 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 nine months ended September 30, 2024 was primarily due to tax provisions 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, 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 nine months ended September 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.

Current wording

The effective income tax rate for the three months ended March 31, 2025 was 25.5% compared to 29.2% for the three months ended March 31, 2024. 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, 2025 was primarily due to the inclusion of Global Intangible Low-Taxed Income, tax rates in foreign jurisdictions, state income taxes, and changes in valuation allowances, partially offset by a favorable impact of tax provisions that do not meet the more likely than not standard. 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 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 and nine months ended September 30, 2024, increased $1.4 million and $18.8 million, respectively, 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 months ended March 31, 2025, decreased $22.4 million when compared with the same period of 2024.

Previous wording

Reconciliation of Credit Adjusted EBITDA to Net Income

Current wording

Reconciliation of Adjusted EBITDA to Net Income

Previous wording

Credit Adjusted EBITDA is a non-GAAP financial measure and should not be construed as an alternative to net income as an indicator of operating performance, nor as an alternative to cash flow provided by operating activities as a measure of liquidity, or any other performance measure in each case as determined in accordance with GAAP.

Current wording

Adjusted EBITDA is a non-GAAP financial measure and should not be construed as an alternative to net income as an indicator of operating performance, nor as an alternative to cash flow provided by operating activities as a measure of liquidity, or any other performance measure in each case as determined in accordance with GAAP.

Previous wording

Below is a reconciliation of Credit Adjusted EBITDA to net income, the closest GAAP financial measure. Our Credit Agreement defines Adjusted EBITDA (which we call “Credit Adjusted EBITDA”) as net income before (i) interest expense, (ii) interest income, (iii) provision for income taxes, (iv) depreciation and amortization expense, (v) impairment charges, (vi) stock-based compensation, (vii) contingent consideration, (viii) acquisition and related expenses, and (ix) certain other items. We calculate Credit Adjusted EBITDA Margin as Credit Adjusted EBITDA divided by revenues.

Current wording

Below is a reconciliation of Adjusted EBITDA to net income, the closest GAAP financial measure. Our Credit Agreement defines Adjusted EBITDA as net income before (i) interest expense, (ii) interest income, (iii) provision for income taxes, (iv) depreciation and amortization expense, (v) impairment charges, (vi) stock-based compensation, (vii) contingent consideration, (viii) acquisition and related expenses, and (ix) certain other items. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by revenues.

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

Adjusted EBITDA and 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 Adjusted EBITDA and Adjusted EBITDA Margin should not be construed as an inference that our future results will be unaffected by unusual or unexpected items.

Previous wording

(1)Reflects, for all periods, stock-based compensation expense related to the issuance of equity awards to our employees.

Current wording

(1)Reflects stock-based compensation expense related to the issuance of equity awards to our employees and Directors.

Previous wording

(3) The amounts for the three and nine months ended September 30, 2024 consists primarily of $2.0 million and $16.7 million, respectively, incurred by the Company for severance. The amount for the nine months ended September 30, 2024 also includes $6.2 million for incurred by the Company related to restructuring activities. The amounts for the three and nine months ended September 30, 2023 consists primarily of $0.8 million and $1.5 million, respectively, incurred by the Company for severance and, for the three and nine months ended September 30, 2023, $1.0 million for tax assessment paid under protest.

Current wording

(3) Amounts for the three months ended March 31, 2025 and 2024 consist primarily of $0.7 million and $12.1 million, respectively, incurred by the Company for severance.

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. Payments of initial consideration for the SuperPlay transaction will be made from cash on the balance sheet. Cash for earnout consideration to be

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 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.

Previous 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 $1,201.7 million and $1,029.7 million at September 30, 2024 and December 31, 2023, respectively. As of both September 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.

Current wording

Our primary sources of liquidity are the cash flows generated from our operations, currently available unrestricted cash and cash equivalents, short-term highly liquid investments, and borrowings under our $600 million revolving credit facility (the “Revolving Credit Facility”) (together with our senior secured first lien term loan, the “Credit Agreement”). Our cash and cash equivalents and short-term investments totaled $514.3 million and $565.8 million at March 31, 2025 and December 31, 2024, respectively. As of both March 31, 2025 and December 31, 2024, we had $600 million in additional borrowing capacity pursuant to our Revolving Credit Facility. On April 23, 2025, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement which, among other things, decreased the aggregate principal amount of the Revolving Credit Facility from $600 million to $550 million and, subject to the satisfaction of certain conditions, will extend the maturity of the Revolving Credit Facility to September 11, 2027. Payments of short-term debt obligations, dividends to shareholders 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, 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.

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, restricted cash 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 nine months ended September 30, 2024 was $337.0 million compared with $336.3 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.

Current wording

Net cash flows provided by operating activities for the three months ended March 31, 2025 was $18.8 million compared with $29.6 million for the same period of 2024. 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 nine months ended September 30, 2024 was $125.5 million when compared with $215.3 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 2023, includes $160.6 million of cash outflow for a business acquisition.

Current wording

Net cash flow used in investing activities for the three months ended March 31, 2025 was $105.1 million when compared with $35.9 million for the same period of 2024. Cash flows used in investing activities generally includes outflows related to the purchase and capitalization of assets and, in 2025, includes $79.5 million of cash outflow for the purchase of short-term investments.

Previous wording

Net cash flows used in financing activities for the nine months ended September 30, 2024 was $96.1 million, compared with $12.1 million for the same period of 2023. Financing activity cash flows for the nine months ended September 30, 2024 primarily relates to a cash dividend paid, and in both 2024 and 2023 includes repayments on our bank borrowings.

Current wording

Net cash flows used in financing activities for the three months ended March 31, 2025 was $47.4 million, compared with $5.5 million for the same period of 2024. Financing activity cash flows for the three months ended March 31, 2025 primarily relates to a cash dividend paid and stock repurchases of common stock under the Company’s stock repurchase program, and in both 2025 and 2024 includes repayments on our bank borrowings.

Previous wording

We have a $1.9 billion senior secured first lien term loan (the “Term Loan”) and a $600 million revolving credit facility (the “Revolving Credit Facility”) (together, the “Credit Agreement”), maturing on March 11, 2028 and March 11, 2026, respectively. The Term Loan requires quarterly principal payments equal to 0.25% of the original aggregate principal amount of the Term Loan with balance due at maturity.

Current wording

We have a $1.9 billion senior secured first lien term loan (the “Term Loan”) and a $600 million Revolving Credit Facility (together, the “Credit Agreement”), maturing on March 11, 2028 and March 11, 2026, respectively. On April 23, 2025, the Company entered into the Fourth Amendment to the Credit Agreement which, among other things, decreased the aggregate

Previous wording

Significant terms of the Credit Facilities, the New Term Loan and the Notes, including balances outstanding, interest and fees, mandatory and voluntary prepayment requirements, collateral and guarantors and restrictive covenants are detailed in Note 4, Debt, to the accompanying consolidated financial statements and in Note 12, Debt, in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2024.

Current wording

Significant terms of the Credit Facilities, the Term Loan and the Notes, including balances outstanding, interest and fees, mandatory and voluntary prepayment requirements, collateral and guarantors and restrictive covenants are detailed in Note 5, Debt, to the accompanying consolidated financial statements and in Note 12, Debt, in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2025.