PlayStudios(MYPS) - 2024 Q3 - Quarterly Report

Company Overview - PLAYSTUDIOS, Inc. has developed a portfolio of free-to-play social casino games, including Tetris®-branded mobile games, and acquired Brainium in late 2022[109]. Revenue Generation - The company generates revenue primarily from in-game virtual currency sales, with a significant portion concentrated in North America[112]. - In-game advertising has been expanded as a revenue source, particularly for Tetris® and Brainium games, which generate most of their revenue through this channel[114]. Key Performance Indicators - 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[123][124]. - Daily Paying Users (DPU) measures the number of individuals making purchases in a game daily, with Average DPU calculated for performance tracking[125]. - Daily Payer Conversion is defined as DPU as a percentage of DAU, providing insight into monetization effectiveness[126]. - Average Daily Revenue Per DAU (ARPDAU) is calculated as game and advertising revenue divided by Average DAU, serving as a monetization measure[127]. Player Engagement and Retention - The playAWARDS program offers real-world rewards at no cost to the company, enhancing player engagement and retention[121]. - The myVIP program is designed to drive player engagement and retention through tiered benefits and personalized experiences[111]. Financial Performance - Net revenue decreased by $4.6 million, or (6.1)$71.2 million for the three months ended September 30, 2024, compared to $75.9 million for the same period in 2023[136]. - Operating expenses totaled$76.0 million for the three months ended September 30, 2024, a decrease of $3.6 million, or (4.5)$79.6 million in the same period of 2023[138]. - The net loss for the three months ended September 30, 2024, was $3.1 million, compared to a net income of$3.8 million for the same period in 2023, representing a change of $(6.9) million or (181.5)$4.0 million, primarily driven by decreases in Daily Paying Users (DPU) for the three months ended September 30, 2024[136]. - playAWARDS segment net revenue remained flat at $3,000 for the three months ended September 30, 2024, compared to$1,000 in the same period of 2023, reflecting a 200.0% increase[137]. - Total operating loss for the nine months ended September 30, 2024, was $(10.4) million, compared to$(7.8) million for the same period in 2023, an increase of 34.3%[136]. - Advertising revenue increased by 13.1% to $47.1 million for the nine months ended September 30, 2024, compared to$41.6 million in the same period of 2023[136]. - The net revenue for the nine months ended September 30, 2024, decreased by $8.0 million, or (3.5)$221.6 million compared to $229.6 million for the same period in 2023[136]. Operating Expenses - Restructuring expenses increased by 152.4$3.2 million for the three months ended September 30, 2024, compared to $1.3 million in the same period of 2023[138]. - Total operating expenses decreased by$9.5 million to $232.1 million for the nine months ended September 30, 2024, compared to$241.5 million for the same period in 2023, representing a 3.9% decrease[139]. - Cost of revenue decreased by $3.4 million to$54.9 million for the nine months ended September 30, 2024, with a percentage of revenue decrease from 24.9% in 2023 to 24.7% in 2024[141]. - Selling and marketing expenses decreased by $4.5 million to$50.8 million for the nine months ended September 30, 2024, with a percentage of revenue decrease from 23.6% in 2023 to 22.9% in 2024[143]. - Research and development expenses decreased by $2.1 million to$51.4 million for the nine months ended September 30, 2024, with a percentage of revenue increase from 22.9% in 2023 to 23.2% in 2024[145]. - General and administrative expenses increased by $1.3 million to$35.0 million for the nine months ended September 30, 2024, with a percentage of revenue increase from 14.4% in 2023 to 15.8% in 2024[147]. EBITDA Performance - Consolidated AEBITDA increased by $1.1 million to$14.6 million for the three months ended September 30, 2024, representing an 8.1% increase compared to the same period in 2023[157]. - AEBITDA for the playGAMES segment increased by $2.8 million to$68.6 million for the nine months ended September 30, 2024, representing a 4.2% increase compared to the same period in 2023[158]. - playGAMES AEBITDA for Q3 2024 was $23.2 million, up from$21.6 million in Q3 2023, representing an increase of 7.4%[159]. - playGAMES AEBITDA margin improved to 32.6% in Q3 2024 from 28.5% in Q3 2023, driven by increased direct-to-consumer sales and reduced user acquisition costs[159]. - For the nine months ended September 30, 2024, playGAMES AEBITDA was $68.6 million, an increase of 4.3$65.8 million in the same period of 2023[159]. - playAWARDS AEBITDA for Q3 2024 was $(4.0) million, slightly improved from$(4.2) million in Q3 2023, attributed to decreased employee costs[160]. - playAWARDS AEBITDA for the nine months ended September 30, 2024 was $(11.1) million, worsening from$(6.5) million in the same period of 2023 due to lower net revenue[161]. - Consolidated AEBITDA for Q3 2024 was $14.6 million, up from$13.5 million in Q3 2023, with a margin of 20.5% compared to 17.8% in Q3 2023[166]. Cash Flow and Financial Position - Cash and cash equivalents as of September 30, 2024, totaled $105.2 million, down from$132.9 million at the end of 2023[179]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was $34.1 million, a decrease from$36.4 million in the same period of 2023[171]. - The company used $22.1 million in investing activities during the nine months ended September 30, 2024, compared to$21.9 million in the same period of 2023, influenced by the Pixode Acquisition[172]. - Financing activities used $38.6 million in net cash during the nine months ended September 30, 2024, significantly higher than$17.8 million in the same period of 2023, primarily due to increased share repurchases[173]. Internal Controls and Legal Matters - No changes in internal control over financial reporting were identified during the three months ended September 30, 2024[185]. - The company believes that ongoing litigation will not have a material adverse effect on its business[187].