PLAYSTUDIOS (MYPS) 9 May 232023 Q1 Earnings call transcript

Greetings. Welcome to the PLAYSTUDIOS First Quarter 2023 Earnings Call. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Samir Jain, Head of Treasury and Investor Relations.

You may begin.

operator. you, Thank thank quarter and joining for us Good earnings you call. first XXXX PLAYSTUDIOS afternoon, for

Joining the Peterson. Andrew Pascal; me and and Chairman on our call today CFO, Scott our are CEO,

and that to Before let call, discussion uncertainties results will and our on forward-looking we make beliefs based course These are to Please risks current me refer actual you we statements begin, statements. of affect our of during that remind and a this the expectations differ for subject cause our that could and filings future risks to SEC may uncertainties the materially. results. are

for like to accordance with results would These discuss this prepared we will GAAP. call. certain substitute non-GAAP measures should I considered financial everyone measures be during remind in financial not that a as

will are a with prepared GAAP in our accordance to SEC comparable earnings and be in in results release GAAP provided filings. reconciliation Our and our quarter first measures

pass I'll the that, With Andrew. call to

quarter It's has mobile a Welcome becoming of and share business, Since PLAYSTUDIOS to progress. Thank to consistently operating eventful and year-over-year have publishing our posted developing we're we excited earnings an year been XXXX our XX-year growth. you, the start games. an to Samir. first revenue free-to-play call. history

real-world players attributed enables be to XX our diversified play games, and games to portfolio benefits. can success that creative the Our love of loyalty industry-only along quality the execution earning while program of with they our

is continue performance of operating which will to strong Our growth. believe unique a our result our strategy, drive we

substantial we growth and have our believe meaningful there's journey success, we in early achieved While are ahead. we

best were leisure our to expand quite experiences. players evaluating Results new with portfolio our We quarter opportunities and are strong. this provide possible the constantly

of capacity balance profit for the and both expansion. and our expectations line company adjusted ahead revenue as top to growth Our margin we demonstrated Street with were quarter and EBITDA

over want recent in is XXX path conjunction quarter. margins a see to have are quarters distinction that year-ago expanding I clear basis growth levels our last industry with and that from peers. in a the to in points Margins emphasize rates XXX revenue been growth, rare adjusted line basis EBITDA EBITDA points steadily with environment. we from current our grew happening achieving Adjusted and

remain our improving return gains on performance optimizing discipline focused will We efficiencies. on further are capital. our Margin by driven and invested being and cost

several to part further recently these our reduction we called a of a in XX% that initiated headcount. plan efforts global of our comprehensive studios goals, As for the restructuring and consolidation

this I'd We that expect continue to later year. see games. emphasize our portfolio like core we in changes remain to committed to further these to we'll benefits from invest these and

focus profitability. high-quality remains and on a and our we're gameplay in growth investment and key confident these content innovative drive that to revenue Our areas differentiator continue will ongoing

we remains a particular, growth and in business of perform Our driver games very portfolio of to its continues growing encouraged quarter's base key and are by user the revenues. well, our Tetris, results. very

on has seeing increased TV+, players to game. introduced the engagement of the more We Apple movie are Tetris the also which launch following

well. as also such and MGM myVEGAS growth are Bingo, our to addition In games, Brainium Tetris, collection performing other Slots

we a On at quarter. XXX,XXX In quarter-end had property platform remain business. the We our added Gateway achieve from were with us which partnership the Reward rewards retail notable differentiator topic growth million. also value purchases year-ago from Norwegian helped in has X.X% for increase Cruise a to of Line creating we and the period. new Casinos, rewards a and drivers, a playAWARDS, of best-in-class made progress over in a unique $XX committed with future playAWARDS which quarter, unique the relaunched is loyalty a believe

see to X this we portfolio as year-end, will users. We by plan game which offering. launch Loyalty-as-a-Service for provide daily integrate we casual believe springboard our of ahead, to a a exposure successful Looking average into our playAWARDS million

fully into emphasized playAWARDS As and our to autonomous, is the in goal evolve ultimate past, we've profitable self-sufficient business. a

in noting this a guidance. Given industry worth you long-term economic With that secular the time core raising our long-term we're the challenges. in and executing our forward quarter's shareholders. coupled creating business sustain raising look our investing We We're with our underway to of strategic year for on challenges internal when sustainable that growth at collection coming outlook quarters. and in we deliver growth the that current strong results, to are our and full is progress and said, confident believe focus our It are will we with high. our momentum our despite initiatives remains ability our value our profitability, initiatives, sharing

in reaffirm encouraged want performance potential. rewarded improvement how teams first believe the and am future about excited of closing, I as leaders our we're and all I quarter advanced our studios, products, Across our about position have to play. we In seeing of and signs we our

resulted combined has strong that Our with we discipline in can in margins model, business EBITDA operating unique peers. believe with line be adjusted industry

cash product targets we us invested a additional of a return increasing capital. with stock which along investment repurchases, will initiatives, range strong balance to sheet M&A opportunities, pursue enabling Lastly, be further on position, have on all and focused of including organic

more Scott review I'll for our to hand Scott? comprehensive of now things over results. a

everyone. afternoon, Good

growth Adjusted addition of and increase of important the lower up from we the was collection is from in of driven testament the year-over-year. a still to impact reported games. year-ago $XX.X XX% Brainium, significant overall results. $XX.X experienced the This revenue spend. million that by last up adjust for quarter with was note growth the higher Brainium, we the we've million, in the to The when quarter, same even we year. $XX.X reported a primarily company-wide during revenues quarter was UA During our million, revenue momentum of particular It's EBITDA our growth

of were lower revenues ratios from the XXX Expense also lifted Adjusted EBITDA Brainium to basis Tetris up a last margins, which throughout basis and continue and points mix and were margins year. the across savings XXX were XX.X%, year from higher is expected The from points advertising board ago. quarter broad-based.

we other process We early material in still focused to games, while don't investing While advertising growth remain year. we the costs a are are working opportunities. on this impact managing expect in in increase and

During the consolidation which called studios for and a plan, net restructuring initiated comprehensive an the we quarter, our XX% of headcount. global in reduction approximately

million, gains monthly prior these and cost represented increase and expect changes We which year were daily and XX% active to respectively, X.X active over drive savings efficiency and users further time. the over $XX.X XXX% MAU, quarter. DAU, users

particularly are trends. per ARPDAU, flat broadly the to and nearly increasing the user daily given was industry average up MAU However, while down with weight levels, when XX%. negative active businesses. Brainium, adjusted revenue Brainium, DAU was advertising-driven year-ago was performance for Tetris is which This due of notable

when However, on Slots saw and XX% Tetris, gains. for ARPDAU MGM games, all basis. increased these a year-over-year in Games ARPDAU Bingo, myVEGAS adjusted healthy our portfolio, by growth

AMC playAWARDS, a with Cruises Resorts. and be to growth. rewards with Royal than continue program made million. ours Caribbean imperative the XXX the during has remains purchased pleased over key platform quarter partnered with brands, including Turning at a to to by we during Theatres, of of playAWARDS the the unique and value growing rewards. retail available progress quarter performance MGM Intercontinental XXX,XXX rewards program's year-over-year more in Hotels, were significant XXX The X.X% $XX

full of availability no of cash strong our remains revolver. position and $XXX financial million debt, million with $XX Our

program our shares our use buying repurchase capital. excellent to continued is under of have believe an We buyback and our stock

to will well opportunities We as continue evaluate repurchases. M&A share as

when As right move and will Brainium the quickly evidenced by opportunity the Tetris transactions, arises. company the

to drive ability our in confident are margins. improve continued we ahead, Looking growth and revenue

focused remain pleased quarter are also driving We margins. while with and very improving our performance and costs on strong managing growth, this

As be range million, We in million from that Andrew the in year to to of EBITDA the $XXX the $XXX to million $XX will to million, from previous $XX.X million. now be of are guidance we for the mentioned of million million will outlook range and adjusted $XX raising guidance of up earlier, this revenues prior $XXX to $XX.X million up reflect enthusiasm. estimate our $XXX the

the it of progress impact growth margin year. of and The still be higher of unknown, full driver developing margins confident expansion. will but is corporate long-term both and The the reflect remain and efficiencies, the inclusion Brainium restructuring new games a we for in

economic industry have Finally, forecast. which stress, the assumes we factored guidance into our and continued

closing the I'll Andrew back turn call to some remarks. for now

Thank you, Scott.

to end we our and on a excellent EBITDA Before like well highlights. expectations. prepared touch remarks few quarter We call had an I'd above Street for open and questions, the adjusted our revenue with

Adjusted quarter way. ago. growing board a profitable Our over the expanded points XXX in doing a year across basis EBITDA more business is margins so and versus in the by

efficiencies Our cost efforts are around working. containment and

the our meaningfully performance. perform building Tetris ahead. adoption strongly plan March. of We in still platform. We be to momentum of XXXX our entire restructuring expanding the release at expect playAWARDS portfolio with track to Tetris enthusiastic integrated through games are of the and them Brainium's our to contribute continues was the of the the about of by and committed of end to reach implementation Tetris on games at We end added the remains and quarter early is growth remain remain and year-end. to playAWARDS of see movie numerous opportunities to third-party into Loyalty-as-a-Service our

industry X% are we the and midpoint back the growth despite and These respectively. raising are and our adjusted continued our revenue are the momentum, projections, EBITDA XXXX challenges. gains of be At year-over-year to On this economic of guidance. forecasted XX%,

cloning continued in this I'd call we taking finding value. how to closing, was forward-looking AI and and of PLAYSTUDIOS's repurchase one believe underpriced stock voice philosophy, our In example our to full shares and throughout advantage AI, share Generative ways just and Finally, like keeping illustrates technologies with program new to practices apply company. compiled tools. buyback represents our and progressive under tremendous It's exciting using entire is text-to-text that that we're

I'll open lines. team. the our the of turn Operator, to to it With please real that, operator introduce members over the

line David Thank question first comes Stifel. Pang And our you. with [Operator from the of Instructions]

the for Thanks question.

takeaways are And improvement drivers of And about key we should gross hoping that you to saw the here? year? hear remainder Tetris. the learnings any margin of for the what the talk margin you about gross So could playAWARDS how quarter? think separately, from the or And in to the integration

David, this is Andrew.

So end quarter. we first last the of the integration towards into this all, Tetris of did playAWARDS

our view the end being them Tetris, we the to across was the of to pretty of just a attributed different it saw of in middle growth of And playAWARDS. one meaningful number with integration So, factors, but board, quarter.

currently of momentum movie qualifying premier forward the the with out product. were exclusive teasing and its that organically actively of strong So, impact on carrying and just we the we're working that

to probably on call. So, speak it a more our next we'll bit specifically

the revenue as advertising-based composition the complement. a that's as margin far more the of in an gross function increase and of As overall improvement, revenue

And Aaron Lee the of Macquarie. our line next question comes from with

you can to lift and around give Tetris, Congrats to you expect looked from especially Tetris how us the a trends just activity around color and be? quarter. co-promotional lift on the that the the strong With regard how sustainable movie then

by support, of introduction the and don't different of the a a and that TV, typically first was back premier past can saw great. audience. grow which cross-promotion we Tetris is of the we quarter. growth did But that was lot break again which to the of out of a year, specific half it lift making we've the lot audience a Apple had last bump metrics game. on that tell and movie really and have course been saw revenue into us of grow. continued ton cool what momentum as in helped you a Look, of the definitely There the the We helped products, which We through year really result over of optimizations a the improvements I growth

continue sit we -- today, we we as growth. And to so here see

or of the that So, to as what to pretty added growth. that how lift, continue. we independent how a I like premiere should really and can't we of speak long can healthy seeing that looks the But result were movie sustainable expect added lift

near I and see should reason any relative the in So term. -- change don't why that

that? licensing can IGT and of follow-up, arrangement that the you opportunities the announced content you around just some a As discuss with recently

Yes.

are We our about at our for received. excited been games gambling product. really demonstrated that relationship the proven are well new and we're with in traditional obviously, that or content playing people We've real products, the our IGT. KONAMI casinos So, money that that's real-world games in casino out least

be and to content have to can think IGT received games into by now we so to And players. we incorporate products, going of that access our library well the is really our

remotely. products excited about that real loving can that play they games content, So, our to that relationship as now get a we're are people finding the and into in world the the and

comes question next from with our Hallum. Craig the line And of Sigdahl Ryan

Will for This on is Ryan.

us Just a few for here.

partnership. guys a This overall? But think Firstly, the new curious curious content in-app you IGT maybe is about bit the mechanics versus how thoughts. game on your on

very evolve They I If we introducing the really day, are constantly. new question, and are organic. features mean our understand new products. I of our games, dynamic games every continue into to most

IGT our the that further and also content to introduce casino game allows relationship are it so into getting to players our And that allows access casino broaden the expand us real-world around with their introduce and can And content we content products. familiar casinos. to

So, benefits. both are

these the As casinos. in been as are of games, that far proven games have the real-world very certainly that mechanics popular the it's helpful traditional

design as brands. proposition and very are math the and underlying of proven the and So, is volatility experiences these

products, our So, we is to content able game think positive. into incorporate to take be proven and

of of far we, guess, for in maybe expect for goes line cadence Brainium, as throughout a then terms time playAWARDS what a And should quick integration integration? as as the follow-up, I

We're some pretty then there's are -- put a to now. And our of place portfolio order -- infrastructure program those that broad And have those products. core products we're doing so for them. deliver work there's that to in into in we us

expand of ahead And start So, of of products, see the program of then end within quarter, kind playAWARDS priorities next. introduction part we've some the our pilot early go portfolio. the out the the once of we'll to balance of and we've the group games established of we'll this it by initial proven then and into across some those

question line of next Dessouky the comes Omar of from America. Bank our with And

This on Arthur is Omar. for

Brainium. revenue portfolio, I the follow-up like of Brainium. you of year-over-year then was if you year-over-year, one that that just mentioned sequentially? I'm core have comment how just up on the So, the guys excluding contribution And wondering looks question could trend casino on

modestly. quarter-over-quarter, I mean fairly the down year-over-year they're Sequentially, trends, stable.

a markets consistent that's where you that, with you So, is our follow-on generally And for said understanding core had pretty products. the the trended casino question?

guys your think like wondering million outlook? revenue just like put run sort grow will in you I I'm in of projected that So, $XX terms are rate million assuming Brainium like [XXXX] forecast of Brainium rate for up in versus expectation, you previously run your that $XX XXXX. like

here We macroeconomic do having particularly that is the or portfolio. backdrop and in the assumption predict, its year. across are through summer there really not of the growth. light believe potential of things It's kind back going more how into the obviously with half just tough any Brainium broader to in comfort play more comfortable visibility growth We're to out the a and conservative on of Brainium

reached the for call turn session. have remarks. over back we question-and-answer And Andrew the I'll Pascal now the end closing to of

and everybody our tuning quarter. to understand performance you. appreciate Thank in We this the taking past in time

appreciate further to any us Of free course, everybody. always have feel Thanks, to if you And reach directly. we questions, out time. your

you and your concludes for may Thank today's disconnect conference at this lines you And this participation. time. your