Q1 2022 Playstudios Inc Earnings Call
Speaker 1: No.
Speaker 1: Oh.
Operator: 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. To signal us for a question, simply press star and one on your telephone keypad. Also, please note that this conference call is being recorded today, May, 5th, 2022. To get us started, I am pleased to turn the floor over to Joel Agena. Please go ahead, sir.
Joel J. Agena: Thank you, operator, and hello everyone. By now, everyone should have access to our first quarter of 2022 earnings release, which is available on the Playstudios' website at www.playstudios.com in the investors' section.
Speaker 4: Which is available on the play studios website at W play studios Com, in the Investors section.
Joel J. Agena: Some of the management's comments today will be forward-looking statements about future events, expectations, and projections. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. You should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risk factors that could impact future operating results and financial conditions.
Speaker 4: Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.
Speaker 4: You should exercise caution in interpreting and relying on them.
Speaker 4: We refer you to our SEC filings for a more detailed discussion of the risk factors that could impact future operating results and financial condition.
Joel J. Agena: During the call, management will discuss non-GAAP measures which we believe can be useful in evaluating the company's operating performance. These measures should not be considered an isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our first quarter 2022 earnings release on the www.playstudios.com website, and on our form 8-k filed with the SEC today.
Speaker 4: These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
Speaker 4: A reconciliation of these measures to the most directly comparable GAAP measure is available in our first quarter 2022 earnings release on the wplay studios Com website.
Speaker 4: And on our Form eight-k filed with the SEC today.
Joel J. Agena: Hosting the call today, we have Andrew Pascal, Playstudio's Chief Executive Officer, and Scott Peterson, Chief Financial Officer of the company. They will provide some opening remarks and then we will open the call for questions. With that, I'll turn the call over to Andrew.
Andrew S. Pascal: Thank you, Joel, and good afternoon everyone. Welcome to Playstudios' first quarter 2022 earnings call. Q1 this new year was generally consistent with our performance and experience in the last quarter. We continue to focus on our execution and evolving our business in efforts to more fully capitalize on our unique play-to-earn loyalty model. So let's start with some highlights.
Andrew S. Pascal: We enhanced the value proposition of our play awards platform by adding new capabilities, new partners, and new benefits to our My VIP program. We saw continued growth in reward purchases, providing over $33 million of retail value and real-world benefits to our active players. We acquired the full rights and assume the ongoing development operations of our my biggest bingo product. We continue to optimize the existing tetras game while beginning work on an altogether new, more casual version of the franchise.
Speaker 5: We saw continued growth in reward purchases, providing over $33 million of retail value and real world benefits to our active players.
Speaker 6: We acquired the full rights and assume the ongoing development operations of our my biggest bingle product.
Speaker 6: We continue to optimize the existing tetras game while beginning work on an altogether new, more casual version of the franchise.
Andrew S. Pascal: We grew our player network from 1.29 million average DAU in Q4 2021 to 1.56 million average DAU in this past quarter. We brought some amazing new talent into the company, expanding the capacity and capabilities of our European and Asian studios, and we generated $70.5 million of revenue and $9.1 million of adjusted EBITDA.
Andrew S. Pascal: For those of you who may be new to our company and unfamiliar with our history, I'd like to provide a little context for the rest of our call. Playstudios is a uniquely positioned mobile gaming developer and publisher with a portfolio of eight games, most of which incorporate our industry-first real-world loyalty program. For over 10 years, we've been refining our model, entertaining our players, and converting them to new consumers for our loyalty rewards partners.
Andrew S. Pascal: We are the pioneers of awarded play and we're deeply committed to more fully leveraging the potential of this paradigm as we diversify the new game genres, expand our player network, and continue to enhance what's already the richest collection of real-world benefits offered in gaming. With that as background, let's dive a bit more deeply into the overall state of the business.
Andrew S. Pascal: The overall gaming market continues to be very fluid, proving commercial models such as sweepstakes and pure to pure betting are evolving and new ones are emerging, like NFTs and various forms of cryptocurrencies. These trends reflect the ground swell of interest in rewarded play or, as everyone is calling it now, play to earn. It's something we've been doing for 10 years and what we're seeing now further reaffirms the relevance of our model and elevates the importance of our experience. In addition, the competition for players continues to intensify, with targeting and sourcing them getting ever more complicated, expensive, and far less predictable. As I highlighted in prior calls, the industry remains all consumed with how best to attract new audiences. However, by comparison, there's considerably less innovation being applied to retaining and extending the lifespan of existing ones. While most big publishers support their products with a dense lineup of fresh content, we also leverage loyalty mechanics and real-world rewards to deepen our connection with our players. Our experience with this model and our deep belief in how it can be applied to all game genres is what fuels our optimism and informs our strategic priorities.
Andrew S. Pascal: On the topic of strategy, ours consists of two key pillars. The first is focused on the continued evolution of our play awards platform and suite of services that we can leverage with other game partners.
Andrew S. Pascal: The second is focused on developing and acquiring new games and new genres so we can demonstrate our loyalty lift across a broader collection of products. As we've shared, we plan to do this in a number of ways, including joint development, publishing, and strategic M&A. Now I'd like to go deeper to some of our primary initiatives, starting with our loyalty platform play awards. As I highlighted at the top of the call, we've made great strides here. We've continue to develop the systems, tools and practices that will allow us to offer play awards as a stand-alone loyalty solutions of third parties.
Andrew S. Pascal: An essential aspect of that work is extending the functionality of our [inaudible], adding a more expansive collection of digital to real world tie ins. In addition, the team has been active in qualifying non-boarding reward partners. Since the first of the year, we've added several new partners, including a number of affordable national and international options, such as select Subway and Sonic restaurant locations. This brings us to over 100 active award partners, representing more than 500 unique awards. Lastly, given the importance of consumer engagement with our program, it's worth highlighting that reward purchases were up 54% versus last year and 23% versus the fourth quarter. This translated to over 592,000 in-game reward purchases with a retail value of over $33 million.
Andrew S. Pascal: Turning to the second of our strategic pillars, we continue to advance the development of our new initiatives, as well as focus on the execution of our core games.
Andrew S. Pascal: We have two relatively new efforts here. Last November, we acquired the mobile rights to Tetris, one of the most widely played and beloved franchises in the history of consumer gaming. The acquisition included the classic Tetris game, an existing free to play mobile app, as well as Tetris speeds and Apple Arcade game.
Andrew S. Pascal: Q1 was the first quarter where we enjoyed the full impact of their additional users. This is reflected in our overall network-wide average DAU and MAU growth quarter-over-quarter. We also experienced the modest contribution in revenues as the game currently operates primarily on an ad-driven model. In addition, we acquired the rights to develop new games that incorporate the Tetris brand related IP and game mechanics. As I previously shared, its our belief the Tetris game format has the potential to become its own casual game category, alongside Match 3, Solitaire, and Bingo. Each of these categories demonstrates what's possible when a universally appealing game format is complemented with progression mechanics, richer features, and more sophisticated live operations.
Speaker 6: Each of these categories demonstrates what's possible when a universally appealing game format is complemented with progression mechanics, richer features, and more sophisticated live operations.
Andrew S. Pascal: Our plan is to optimize the existing games we've inherited while we craft an altogether new Tetris app that employs the playbook proven by most of the leading casual games. To this end, we're working on incorporating our play awards program into the existing Tetris game and in doing so, we hope to improve player retention, player engagement, network-wide value, and in parallel, we're actively advancing the altogether new Tetris app, which we intend to launch by the end of this year.
Andrew S. Pascal: The second initiative is My Biggest Bingo, which we just recently assumed full responsibility for in late February. We elected to do so to afford us more influence and control over the stability, operations, and evolution of the game. Since completing the transition, we focused on technical stability and performance [inaudible]. We're now turning our attention to some of the other foundational features and tools that will enable us to operate the product with more sophistication and find far more refined segmentation practices that allow us to better tailor the experience for our players. We continue to believe in the potential of this game and anticipate stepping up the pace in new content, introducing more proven monetization practices, and eventually ramping up our investments and user acquisition later this summer and into the fall.
Speaker 9: We elected to do so to afford us more influencecing control over the stability, operations and evolution of the game. Since completed the transition, we focused on technical stability and performance orrecliings. We're Now turning our attention to some of the other foundational features and tools that will enable us to operate the product with more sophistication and pointing far more refined segmentation practices that allow us to better tailor the experience for our players. We continue to believe in the potent this game and anticipate stepping up the pace, a new content, introducing more proven monetization practices and eventually ramping up our investments and user acquisition later this summer and into the fall.
Andrew S. Pascal: As for our core products, we continue to invest meaningfully in the evolution of performance of our more mature games. These include My Vegas Slots, My [inaudible] Slots, and our Pop Slots franchise, which includes the MGM Slots Slide game. Each of these products is supported with ongoing feature, content, and live event releases as we work to keep the games fresh and always interesting for our long-tenure players.
Andrew S. Pascal: As I mentioned during our last call, we introduced MGM Slots Slide as a way for us to better optimize our UA investments. The game was originally conceived of as a sub-brand within the Pop family and with a creative recasting of the iconic MGM resorts brands, we were able to leverage the existing Pop Slots systems, tech tools, and teams in order to quickly--
Speaker 5: The game was originally concedived about as a subbrand. withfrom the pop familyand with a creative recasting of the iconic MGM resorts brands, we were able to leverage the existing pop STS systems, TTech tools and teams in order to quick.