PLAYSTUDIOS (MYPS) 7 May 222022 Q1 Earnings call transcript

Ladies and gentlemen, good day. Thank you for standing by and welcome to the PLAYSTUDIOS First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode and a question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference call is being recorded today, May 5, 2022. To get started, I’m pleased to turn the floor over to Joel Agena. sir. ahead, go Please

the and our By release, first the www.playstudios.com available operator, have which everyone access on in at website to quarter PLAYSTUDIOS’ section. hello, you, now, everyone. should is Investors Thank XXXX earnings

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website will Form Executive Officer; call release call Financial During earnings substitute the Andrew to over and provide the Chief the PLAYSTUDIOS’ the some today. in believe They X-K Pascal, the company’s company. first With today, Scott turn discuss measure our in prepared call for isolation not GAAP. we we measures, evaluating can These GAAP is performance. opening available which on Peterson, in the measures I’ll the SEC the should financial www.playstudios.com reconciliation then Officer and Chief Hosting on to open results call, will we measures with management with of the will these operating have be XXXX most accordance in a be filed A our comparable as and useful of questions. directly remarks, considered our that, Andrew. non-GAAP or to quarter

generally our and last QX PLAYSTUDIOS quarter and Thank the XXXX afternoon the with quarter. earnings good call. performance was this Year you, of first in everyone. to Welcome experience New Joel consistent

fully loyalty our and on focus to an execution unique model. play-to-earn We our effort on continue evolving business capitalize in to our more

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pillars. the of strategic our to Turning second

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of execution. last reinforced On the Let’s in and I call, turn challenges attention our scaling environment. a our to operations our post-COVID and executing complexities

costs teams to to to markets, in XX% of to train in development to tech we’ll time of make capacity, share spoke aggressively and continue offices. our these pleased total each integrate in expansion hubs great onboard, these the that the I strides in and now of talent in it markets. in for have our accounting XXX alternative team need our we to escalating our top recall, you recruit new takes If members. playmakers I’m of All studios primary continue each understanding that over the grow our

don’t or until we output expect see development year. such, the later As this increased to improve margins

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first our into to We’ll of on quarter, off believe touch our that of million our varying we front, make active qualities strategic On our we remain Before business opportunities we briefly in of repurchase I of again, of scale. Scott, to use will plan. best believe that the stock elected With acquisitions that, that reinforce our capital to to drive stock growth. long-term capital $XX continue the number pursuing decisions handing mid and not and enduring are authorized allocation. growth We things to previously we want a remain consistent. it deploy any Accordingly, under this is feel the purchase and we opportunities. model during pursuit

consideration, careful warrants. did private a offer after outstanding public for of all to we However, elect and tender our launch placement

shared Given won’t what process, with say be tender documents filed a to beyond it already public public in our much offer the SEC. is able we we’ve

the under beneficial call is be believe what open strategy. our our stock continuing we’ve fair and today purchase to that should highlight to tender as our financials. of through for view continue about in It’s to reason view my to my I’m reflect current I Accordingly, prove conviction the of the the optimistic in share our expressed to investors concerning capital the primary we will purchasing to price offer with not I investors the actions certainty now plan execute on our the XXbX-X As tender our more warrants the filings we in provide potential to I’ll for of value. our the that opportunities provide we does shareholders over specifics Scott structure. greater offer remain my on And us. front market. shares turn and also

I’d checks. last $XX.X the quarter that line first We last to advertising during market year, also primarily Andrew. stimulus prior million revenue of want to impact first during that Both year. quarter you, first to the quarter million that $XX.X in of quarter XXXX I of of overall revenue compared clarify the metrics from COVID-related remind year’s Thank with XXXX reported in purchases same everyone while increased relative expectations. these as a like to our result generally and decline did Tetris. were other of benefited

to in $X.X of first offset a by decline year the $XX.X generated million compared For million during prior quarter, was quarter. adjusted the we The decline in of EBITDA sales. revenue cost

ramp of public costs the EBITDA by the quarter. adjusted As payroll was a primarily studios difference the incremental and in increases prior costs, year UA that with foreign weren’t in our company driven associated result up in

of Looking at some KPIs. our other

our player year. XX% XXX,XXX with an activity to to a Reward are XX% by loyalty translated over the year. of units This retail period period total increase growing same $XX.X were million We during the XXX,XXX the continues purchases last platform. to same first last Program value quarter compared encouraged units engagement expand. for

inventory unique continues prior increasing expand the to $XXX rewards to XX% over Our year rewards.

continue million, million include respectively quarter was X.X up as strong average game X.X was and Average metrics year activity. XX.X% over quarter. first MAU Tetris We well. prior and These to the the XX.X% see full of DAU KPIs

users driven and exclusively contributions The are by from volume install almost meaningful. revenue ads. and organic the modest active are While resulting Tetris

a basis result, of MAU in at of impact payer ARPDAU our first increases $X.XX, dilutive down ARPDAU, quarter the As which daily from were to was XX.X% over XXXX for of the average in conversion year-over-year. current the in quarter, was approximately and X% impacted year’s our quarters’ DAU coming Tetris first was $X.XX. $X.XX Similarly for Adjusting points XX Tetris, the quarter down a average increase. ARPDAU X% last

Bingo, As we we Boss call, so, development myVEGAS In our Entertainment. we suspended last indefinitely of and Kingdom partnership game. doing with discussed ended on our development the purchased Fight the Boss we

non-cash quarter Kingdom related result restructuring first We suspending million any not the we during expect associated further a of the a of representing Boss, $X.X balance developer costs charge write-offs on write-off do Kingdom took non-cash assets sheet. the with Boss. As of or cash

associated fair a our of We also the of charge with the recorded warrant non-cash million $X.X increase value in liability.

with sheet. of ended no accordion five $XXX capacity, We We exclusive quarter All the availability, approximately to balance with under feature, of $XX revolver, additional approximately availability million cash up to liquidity and revolver have the year Turning the borrowing $XXX all of $XXX of the with provides million cash us million an in debt. and which maintained our or the accordion. the credit. secured million the for million of $XX of representing we

outstanding. of As close of million stock the have quarter, the shares total XXX.X of we common

believe our we our platform to our diversifying execute loyalty game advancing multi-year plan remain portfolio sheet, very strong balance the and we positioned model. Given well

at mentioned, $X our during under note the company authorization. the of a tender any the and did end and As continues of maintain warrants private full cash. repurchase per convinced $XX to and public to April a for placement shares we On in Andrew outstanding on all X, quarter quarter public availability purchase warrant related somewhat million subsequent offer not

XX, there warrants on As and X.X end were The expire period of private placement approximately scheduled warrants public to of million approximately offer is quarter, tender the XXXX. the X.X outstanding. May million

unchanged Regarding from last call. guidance, remain our our expectations

$XXX $XXX full million. year We to range continue and XXXX revenue million between to expect

$XX for expect pass to $XX that, million With continue and also EBITDA to back remarks. to it year closing adjusted range will Andrew million. some I XXXX between full We

Scott. you, Thank

the close for covered. we Before I’d remarks questions, points call our like prepared and of to the open some we reinforce key

million XXX,XXX Our redemption over users pre-COVID to retail to engagement levels. nearly first by our purchases We’ve playAWARDS active line million. Tetris our network reward portfolio, XX% generally grow with and daily year-over-year expectations. in quarter seen player top integrated our value our pace as X.X was Having $XX player grown we’ve into exceeded average returning

We’re teams and productivity. our view internationally demonstrating of remain of expanding scaling strategic a intensely number development advancing toward the on further platform our a we focused and our we’re M&A initiatives capacity And value business. with

teams to the want for and dedicated I today. all thank partners you world, our around Lastly, with along our investors. joining Thank us

call happy We’re to now the Please questions. line the for open open operator.

Craig-Hallum. first at hear We’ll Instructions] [Operator Sigdahl from Ryan

our questions. Thanks Good for taking afternoon, guys.

Hey, Ryan.

guidance, Curious to were gives curious internal your expectations a to also four starting of we relative least does to and expecting. bit a to to through a when steep QX what start, be you imply what relative year. this reaffirm slower little Q confidence on at off ramp fairly it But guidance seems

we up I expected the the mean, the back as call, we shared and in year. would I towards things that Yes. generally last ramping think be half of accelerating

So more that time we that product we in going of it with meaningfully. started was before and terms to absorbing knew franchise. contribute Same a supports it take really to Bingo that were new Tetris developing

So, going previously. looked and at of in I provided like forward think pace the we’ve the generally range kind coming up the quarter, that look we out as end we of to still we’re feel first

that too Or is still things on game. you done mentioned and any already Bingo, Have that there then you’ve in now to it change you you early? seen And come still control performance?

being like the terms I to it assume pace operated. because content, too of for and and It’s in the didn’t that still wanted is we was the cadence, needed mean, product just we the it getting way feel support of one responsibility early. the reasons it generally was

were months work have, we was of least do knew to that so foundational. several And to going at that we

order of could of I stability greater app a more the being we that effectively production to wanted much monetization perspective, we we own file terms for the so on really then audience. way We game on as we just tools then download the could the density tools size in of And were with knew the on alluded pace to more the content employ segment focusing and and product. optimize our to rudimentary. monetization. get that start overall needed us introducing that a from activate operate that we pretty in used just more and it And previously audience segmentation to the where So features were

are we’re able on things in really and now, exercise won’t here those that actively drive that couple all to foundational the So growth another we order working product for really months. be to of the

flat One more you for I and to if payer core Do able those you conversion ARPDAU or metric are at the turn helpful have games, But to metrics. break what directionally, it’d be were guess least it been up me, over excluding out two down the then I’ll Tetris? on others. they in legacy would’ve the

were They generally flat.

Thank luck. Good Helpful. you.

again. Ryan. All right, Thanks

Stanley. today Cost Our next Matthew go question ahead. from comes at Please Morgan

I Hi, if everyone. can. I guess Thanks taking the two, questions. for

on lot the just M&A priority how you choppiness of that’s for market. gaming capital highlighted a your broader allocation. one There’s environment, So number mobile obviously, in the

I private I broadly So And have you in the pocket valuations an disruption the is public perhaps of markets? that. are air one And there? not market more What still of some kind we’re after opportunity? the seeing we an create guess, that seeing with where general of state pace are are keeping then market a in

a scale Look, from that my we’re a alluded I general to feeling valuations that active. and that the our in With we’re Also spectrum terms there’s to said, hear you. as advancing kind is range remarks, in of actively Nice really Well, broad yet have adjusted. size. not opportunities private fully thanks, market of of across Matt.

that gotten of obviously lot WebX kind competitive, the with a is intensely – models. need games obviously it the or and enhanced people with bit, It’s WebX of so, feels, And activity up can they’re be fundamentally, competitive. be to blockchain it’s changed that crypto models great market recognizing games based a

we opportunities we that seeing the for a up cycle with. one studios more seems being remain there met proposals one think are we’re line, across I carefully just the actively stepped So assets are the of and we advance take the we bit. the as are that But smaller time. But being some across And of significant we considered get feel in competition And have really ones that can those certainly and engaging opportunities like our favorably really feel, that interesting the some these obviously on and we’re focused people with to line. us. if that

belief so, active. it’s we And of done, these one ultimately get the so just we’ll kind us that given remain of really

how super ago? the we cause versus that’s And target impact I No, mentioned that users might then And in anxiety, think and Thank secondly, ability to the market helpful. where like could guess this of potential broader target acquire marketing you. so, normalizing are to Great. where you about And in focused new acquire then, happening your was any incremental year the if frankly, and year out process that you just have? of ability go a those the new about of are possibility the we kind changes and further privacy disruption on the should ecosystem? to users.

IDFA players where inconsistent. We for we’ve with that a say And I us generally, still are that that have are then time would into into everybody that really moments it identified off more find anticipating questionable. I with there can are great games the tap and other deprecation them choppy. lot see we at of reliable. then pretty a change it’s and traditional market And and of the rolled moved was And and were returns of returns. that Last that while sources forward of the we long that kind really this that great reasonably up. larger time the in drifted year for of Yes, budgets was and trends the acquire dealt CPIs the as some say question. time, remains we of general traffic, users and the veins around platforms a would market of great very

partners qualifying in active employing tactics. different really we’re So, new and

of And it And as we more that best the I market. broadly, introduce like else, to choppy. a so, employed everybody as, far I the think have of more bit describe some that the into conservative bit being to certainly and we’ll it’s the think a privacy could is it practices way sort stringent And turbulence then more out.

So good feel I term try long-term I generating with audience portfolio. the we’re feel scale million longer over that lot our well size leveraging the and I positioned DAU organic platform our really that think a about spend. said, of playAWARDS drive million and see amount we to of at X.X doing returns and the like so ad X.X we’re pretty in we’re across our and to on traffic can retention that better

difficult would very but and we’re constantly say it’s to predict. I it’s So, dynamic adjusting,

Great. Thanks so much.

Yes.

with Company. Hickey Benchmark Mike The

open. Your line Please is pose your question.

Hey, Nice. questions taking Scott. Thank you. guys. Andrew, my Thanks for

your though, that solid on you traveling of pandemic think their some much curious How is to sort benefits and there. out otherwise? for getting performance and the the realizing or they’ve of reward engagement, do working players the been homes to Vegas of Just of

a we it. lot Yes, think that’s of

Our they games they now that and and accumulating of spend. had are. And with you the as from could our years numbers, players to loyalty currency engaging playing get X.X see

up it. absolutely, and But time. in they and market that out broader it’s appreciate to dynamic its the people is advantage great validation of making just getting just just for its some and great value the benefits, of program them see what’s and lost the of the taking So

We’re and definitely that. feeling seeing

the on in and then decided came Nice. work Yes, Also Fight, sort to internal of scrap Boss long in I Boss. overdue. your subsequent quarter on guess and bring Boss acquired Kingdom you last curious Netflix decided And Bingo somewhere Fight. middle to

So I’m unfolded they target value sort what versus you on provide Fight you. that as think sufficient could curious in a how Boss of all Netflix just and what

that just I And and their inspired to revealed, talented and were different think of them, there’s the its were And unlock Yes. as And in sensibility Boss to in that as is those they different products are – had the of of Fight both over earliest ultimately Bingo we Look, were demands. just a – operating the executed. it think crafting stages foundational I path group. things opposed Bingo’s were felt creating mode of like the to felt the that them case into transitioned ideas they games, a very well for to and absolutely us case, and take we address to necessary potential. was we there in best us some they

I about best we’re can’t just what’s doing that then wish through speak to very with Fight. opportunities, difficult were beyond thing their it’s Boss, balance, happening felt of so but But, decision happy suspend in development us that be transition. like excited right and the the Boss And And that now. and that, to to helping we manage with a was supportive in very us really And they’re do. And we them to best. I case they future Kingdom that know while its

the Is the it me lot sort obviously of integration question in on is Last for recognized it’s Andrew. globally deal? mean, playAWARDS in that I the piece a brings a classic gaming – it brand. of what’s Thanks, this most Jews, guess, the Tetris. you game? it I players, of of sell sort Is Or content new to to success the use playAWARDS plus case guess, to of most third-party playAWARDS it excited? to of it a your that is there? like new gets partners, sort game, sort already of the some it be study and the as had of able you’ve is you sort I version opportunity important

it compelling opportunity for things, us. such Look, was it’s a which why those all is

installations. amount As organic enormous generates acquisition a user of benefit, the it

the we’re cross just from from seeing playAWARDS apart from integrate to So, we benefit our benefit as an that we we’re a going that ultimately lot players new MAU of sustained DAU we that promoting program. be

is product value. case there that There view its allows opportunity version is have the proof into And dimension that really the it game, that showing there’s the mobile of the playAWARDS not category. can a to mobile product So performance. our longer-term program that gaming existing on employing of potential bigger if an realize and impact full then to demonstrating a its and in of create a as it and

at by platforms. presence that So on historically, it and the puzzle and relative is, just scale of and it size adopted look as as of when widely audience much other a to is as have beloved bigger comparison mobile it for as a these you game the has some been the Tetris today, should it played pales and games,

we And of going way mechanics. experience and so on we’re evolve as audience. meta crafting I experience into game monetize that working allow a the features And being kind really to core us in the the thoughtful putting all to that play game and that in careful are and hooks to alluded the we’re

feel about as and experience, puzzle making of the so, with really the team then pace And respecting the I other the is intensely we and Tetris focused progress on love puzzle been that it features. experience just good people preserving core these enrich

and those all value compelling So us of there of in them. this exploiting made opportunity the process for three of three that we’re such a really dimensions really

Thank you, Andrew.

Great. Thanks Mike.

correctly. name Northland sir, I from last hope Greg It’s and pronounce Next Securities. we’ll that your hear I Gibas at do

sir. Your line open, is

Tetris, and Very Last you playAWARDS we maybe something you. Scott process apologies and that Andrew taking what working and to Thank But time that’s the missed launch I expect going? refining and worries. do close, refining game were that for know no finish I platform? questions. Great. see on follow-up we the Wanted Gibas, to version thanks spoke would how is that when existing of you if but on. incorporating this. the that

an when absorbed of the And Apple team products a existing inherited product, I the the Yes, the to, then the program. been arcade, that with deploying they And team through let to next it’s well. an of in meantime already of the the cycle in now them development game, for It’s there’s team hope there’s We that now. and and the game. playAWARDS the elected alluded arcade Tetris in process here playAWARDS and Classic has cycle work existing work and before on right we and as cycle integrating more largely rest the of program be rolled meta we going continue were we It’ll the of to framework the game new the work implementing the done. weeks. tested in out broadly being is got few we kind the

expect would we’ll weeks, will four rewards be to the six to for exciting that see offered within start I us. inside So, next app, which really

games demand great. as about I for level. their high summer thinking of this Does a from playing it’s How rewards kind maybe that? games How homes. or playing to out the increasingly I about leaving the see travel you go, wherever to earn you your want can create casino are spend of you to thinking of you traffic too consumers season ask you year-over-year? less of think whether that kind Okay, about, expect directionally guess are that more kind and do kind do did

to the world the our question, real are if people offer I or I that as because we and dining tickets cruises rewards comfortable benefit re-engaging and the plays in lot of mean, understand I think mean, experiences. leisure-based, I concert that engaging all more a feel

obviously more public and traveling in out rewards being comfortable desirable again as people get and relevant And makes it again. so, our

So of booted and that would I plays that have earlier little I highlight our that our bit we to players amassed a that, to benefit. loyalty. a this think lot

to enough to in accumulate continue that we and that to people have consuming that reinforce. the and want order knowing there’s of or kind That’s of acquire hangover need work aspirational dynamic people aspects the so to they that that spending a to So go through the play want. more currency reward to of that program, loyalty a benefit a lot we then they that that bit more currency of

we’re hope stepped that in up helpful activity super we’ll seeing is I trends these that And regard. that So, the see continue.

award Got is kind of guess hearing? are helpful. point? program. you brands no me, kind main one the it. And looking that What kind I of from That’s to the to mean, at how that someone for I be it seems brainer partners me brand aren’t relative this like maybe interest maybe new interested that was – pushbacks when like last from you’re of added just a

grow only deep free their a with drive The to we and get be network to brands can pretty be that a always they them feel novel. really not that start casino we players leverage and product. pretty our friction of compelling The That’s that about business. offerings to mean, conversation to it. of conversation hard only and a And how get, get participate help and first those all, to find universally really into our we program for is pushback into we want associated I and play deeper people platform don’t their

they’re to move diversify well, And rewards that, other to brand those is because think partners can type it the to our we the certainly games, have their telling they that games the is the benefits we are and and brands that game program enough we delivering partners onboard in to their really excited so to the happy perspective case that they feel and And then of to and sure of as commit attached we’re that amount opportunities, us I into be the offer. these they’re associated and make of our and the another with. and means casual manage of redemptions now that value would of what that portfolio Because puzzle offerings that careful partners, about the Tetris that very balanced and we program. we’re inventory market generally say also different we number want

want impact about. But that’s the careful be something too ourselves get we will and it that have partner. program to love it’ll one so we our ahead sure. to the of supply, delivering for And is to if And tend much players any diffuse

audience program But inject as grows, our the a and the inventory. way reward and manage it’s onboard we more active we’ll that’s So market, we’ll an platform. more discipline that balancing the part of our and partners the

Sure. color. That makes appreciate sense. I the

Thanks.

from we’ll Oppenheimer question Company. Yang now and And Martin at hear a coming

you would in is portfolio? how with between profile the Tetris and coming other game Good taking the afternoon. your any Andrew, core for promotional cross player you overlap games and follow-up, the much question question. there a Thank how for is characterize you as from first have run my Tetris campaigns you Hi. a your And audience?

Martin. you, Thank Yes.

take first. question I’ll the So second

earlier the cross run we question, – the with sure operations profile We to the comfortable get and wanted you engagement. of that campaigns haven’t make of promotion players yet. level of We their product first to any the understand and to

So first. the way that we of do it, we’ll bunch run tests a

prepare the playAWARDS and getting that into would now, cross be program’s And and as do across once then rest playAWARDS really the the currency goal synchronized we’re integrated program. the portfolio, start of then with that so the to our we into objective will active And really launch cycle our to promotion.

weeks next So program. over the culminating. of that’ll launch ultimately coincide in playAWARDS to very with four you’ll the see six bigger then tests some a the campaign And focused

an geographic a As a a the our where composition far in international that in today similar. than we’re bit pretty what We It the little bit more great. existing male. skews is opportunity markets than or audience more of bit, as for existing balanced, there’s players are profile demographically, us dispersion, they’re think the portfolio, have of players, more the which a skews terms it’s But little maybe we underrepresented. our female international

you. longer-term to going to genre of your medium-term And part question another overall mid-core plan? is in Thank Is maybe going Got is ambition models or other also for games. prerequisite mid-core play-to-earn. newer a back still And that weather it. like

greater different we’re games. And of no, now say placing priority would categories I not prerequisite. So, puzzle much that a on it’s the a

I well match games. and measured the all of those based revenue. games are puzzle word have as style large a games market very terms in games audience, that in as So, both and mean, card –

games. aligns it with operate expertise domain our sensibilities and to so, these how closely our And craft and more around

that to the a that more for focus mean categories. And don’t RPG casual participate isn’t the strategy we’re so going think place us games. for we casual the But on in to doesn’t moment is our there or categories focus the on

you, Thank it. Got Andrew.

Yes.

And final thank the from the does you XXXX was PLAYSTUDIOS our quarter call. question conference ladies first and gentlemen, conclude for audience your that earnings all participation. This We today.

day. disconnect now hope we you lines, may your your enjoy of that the and You rest