PlayStudios(MYPS) - 2024 Q2 - Quarterly Report

Game Development and Offerings - The company has developed a portfolio of free-to-play social casino games, including award-winning titles like POP! Slots and myVEGAS Slots, and has expanded its offerings with the acquisition of Brainium in late 2022[88]. - The company invests significantly in game development and enhancements to maintain player interest and achieve revenue growth, with expenditures occurring prior to new content releases[97]. - The playAWARDS and myVIP programs are designed to drive player engagement and retention, with ongoing investments to enhance these loyalty programs[98]. - The company offers real-world rewards at no cost to itself, which are provided by rewards partners, and plans to expand and diversify its rewards loyalty program[99]. Revenue Generation - Revenue is primarily generated from the sale of in-game virtual currency, with a significant concentration in North America, and the company has introduced in-game advertising as a revenue stream, particularly for Tetris® and Brainium games[91][93]. - The company incurs platform fees of approximately 30% on in-game purchases processed by third-party platforms like the Apple App Store and Google Play Store, which can impact overall revenue[94]. - Advertising revenue increased by $1.7 million, or 11.7$16.0 million in Q2 2024 compared to $14.3 million in Q2 2023[113]. User Engagement Metrics - Daily Active Users (DAU) and Monthly Active Users (MAU) are key performance indicators, with DAU defined as the number of individuals playing a game on a particular day, and MAU defined as the number of individuals playing a game in a particular month[101][102]. - Daily Paying Users (DPU) is tracked to understand the size of the active player base making in-game purchases, with Average DPU calculated for each day during the reporting period[103]. - Average Daily Active Users (DAU) decreased by 431, or 11.8$5.2 million, or 6.7%, to $72.6 million compared to$77.8 million in Q2 2023[109]. - Operating loss for Q2 2024 was $4.0 million, a significant increase of 114.7$1.8 million in Q2 2023[109]. - Net loss for Q2 2024 increased to $2.6 million, up 244.0$0.8 million in Q2 2023[109]. - playAWARDS segment net revenue dropped by $1.7 million, or 99.9$2,000 in Q2 2024 due to the non-renewal of a licensing arrangement[114]. - Total operating expenses for Q2 2024 were $76.6 million, a decrease of$3.1 million, or 3.9%, from $79.6 million in Q2 2023[115]. - Consolidated AEBITDA decreased by$4.6 million to $29.5 million for the six months ended June 30, 2024, compared to$34.0 million for the same period in 2023, representing a 13.5% decrease[131]. - Consolidated AEBITDA margin for the first half of 2024 was 19.6%, compared to 21.6% in the first half of 2023[136]. Cost Management - Total operating expenses decreased by $5.9 million to$156.1 million for the six months ended June 30, 2024, compared to $161.9 million for the same period in 2023, representing a 3.6$1.4 million to $37.0 million for the six months ended June 30, 2024, with the cost as a percentage of revenue increasing from 24.3$0.9 million to $35.6 million for the six months ended June 30, 2024, with the percentage of revenue increasing from 23.1$1.4 million to $34.8 million for the six months ended June 30, 2024, primarily due to a decrease in stock compensation and employee costs[120]. - General and administrative expenses increased by$0.5 million to $23.4 million for the six months ended June 30, 2024, driven by higher employee costs and IT applications[121]. - Depreciation and amortization expenses increased by$1.1 million to $23.2 million for the six months ended June 30, 2024, primarily due to license renewals[122]. - Restructuring expenses decreased by$3.8 million to $2.0 million for the six months ended June 30, 2024, mainly due to reductions in management restructurings and severance[124]. Cash Flow and Financial Position - Cash and cash equivalents as of June 30, 2024, totaled$106.3 million, down from $132.9 million at the end of 2023[137][147]. - Net cash provided by operating activities for the first half of 2024 was$19.5 million, a decrease from $23.9 million in the same period of 2023[141]. - Net cash used in financing activities increased to$32.4 million in the first half of 2024, compared to $15.6 million in the same period of 2023, primarily due to share repurchases[143]. - The company may require additional funds for business growth, including developing new games and enhancing existing ones[138]. - As of June 30, 2024, the company held derivative contracts to purchase foreign currencies with a notional value of approximately$17.5 million[150].