H2 2023 Playtika Holding Corp Earnings Call

Okay.

Operator: Good day, and thank you for standing by. Welcome to the Playtika 4th Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by.

Welcome to <unk> fourth quarter 2023 earnings call.

At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised.

After the speaker's presentation, there will be a question and answer session.

To ask a question during the session you will need to press star one one on your telephone.

You will then hear an automated message advising your hand is raised.

Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tayli, Senior Vice President, Corporate Finance and Investor Relations. Please go ahead.

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Speaker Change: I would now like to hand, the conference over to your Speaker today Daily Senior Vice President corporate Finance and Investor Relations. Please.

Speaker Change: Please go ahead.

Tayli: Welcome everyone, and thank you for joining us today for the fourth quarter 2023 earnings call for Playtika Holding Corp. Joining me on the call today are Robert Anticoll, co-founder and CEO of Playtika, and Craig Abrams, Playtika's President and Chief Financial Officer. I'd like to remind you that today's discussion may contain forward-looking statements, including but not limited to, the company's anticipated future revenue and operating performance. These statements and other comments are not guarantees of future performance but rather are subject to risks and uncertainties, some of which are beyond our control. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call.

Speaker Change: Welcome everyone and thank you for joining us today for the fourth quarter 2023 earnings call for <unk> holding Corp. Joining me on the call today are Robert I have to call it co founder and CEO of <unk>.

Speaker Change: And Craig Abrahams play Chico's, President and Chief Financial Officer.

Speaker Change: I'd like to remind you that today's discussion may contain forward looking statements, including but not limited to the company's anticipated future revenue and operating performance.

Speaker Change: Statements and other comments are not a guarantee of future performance, but rather are subject to risks and uncertainties some of which are beyond our control. These forward looking statements apply as of today and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements. After this call we have posted an accompanying slide deck to our Investor Relations website.

Tayli: We have posted an accompanying slide deck on our investor relations website, which contains information on forward-looking statements and non-GAAP measures. And we will also post our prepared remarks immediately following the call. For a more complete discussion of the risks and uncertainties, please see our filings with the FCC. With that, I'll now turn the call over to Robert.

Speaker Change: Which contains information on forward looking statements and non-GAAP measures and we will also post our prepared remarks immediately following the call.

Speaker Change: For a more complete discussion of the risks and uncertainties. Please see our filings with the SEC.

Speaker Change: With that I'll now turn the call over to Robert.

Robert Anticoll: Good morning, and thank you everyone for joining our call today. I would like to begin by expressing my pride in how our employees and businesses have performed over the past year. While the year had many unexpected challenges for us to navigate as a company, it was a year of successful acquisitions of two studios, increasing efficiency, continuous growth into direct-to-consumer platforms, and increasing focus on our largest and growing franchises as we shifted more of our UA spending to our category's leading games. I'm pleased to announce that, despite revenue headwinds, we outperformed our guidance on revenues and credit adjusted E Our agility in adapting and optimizing operations in this challenging market has not only enabled us to navigate obstacles but also to surpass our expectations. In the face of these headwinds, 23 was the year of efficiency for Playtika.

Robert: Good morning, and thank you everyone for joining our call today I would like to begin by expressing my pride in how our employees and businesses.

Robert: Over the past year.

Robert: While <unk> had many unexpected challenges for us to navigate the company. It was a successful acquisition of two studios.

Robert: <unk>.

<unk> growth into direct to consumer platforms and increased focus to our largest and growing franchise as we shifted more of our UA spending to our category leading game.

Robert: I am pleased to announce that despite the revenue headwinds.

Robert: Pro forma our guidance on revenues and adjusted EBITDA.

Robert: Our agility in adapting and optimizing operation in this challenging market will not only enable us to navigate obstacle, but also to surpass our expectations.

Robert: In the face of these headwinds 23 was the year of efficient people play tick up.

Robert Anticoll: This transformation has empowered us to move faster and to make quicker decisions, which I believe will allow us to revamp our business and get back to sustainable growth. Our commitment to efficiency is not just about doing more with less. It is about empowering our people to sharpen our competitive edge. This approach is critical as the mobile gaming industry continues to navigate challenges due in part to privacy updates affecting the marketing and monetization of games. I want to emphasize that despite the revenue headwinds we faced, there were bright spots throughout the quarter. This success shows the strength and critical importance of our portfolio strategy, enabling us to navigate market challenges and capitalize on the opportunity for growth. As we look forward to the future, we have now positioned ourselves for the critical phase of reinvestment.

Robert: This transformation has empowered us to move faster and to make quicker decisions, which I believe will allow us to revamp our business and to get back to sustainable growth.

Robert: Our commitment to efficiency is not just about doing more with less.

Robert: It is about empowering our people to sharpen our competitive edge.

Robert: These reports was critical as the mobile gaming industry continues to navigate challenges due impart to privacy updates.

Robert: So exiting the market became more utilization of games.

Robert: So exiting the market became more utilization of games.

I want to emphasize that despite the revenue headwinds we faced there were bright spot throughout the quarter.

Robert: Our casual games grew 2% Q over Q and five 5% year over year led by growth in June journey, which grew one 8% Q over Q and 33, 3% year over year.

Robert: This expense show the strength in typical importance of our portfolio strategy.

Robert: Enabling us to navigate market challenges and capitalize on the opportunity for growth.

Robert: As we look forward to the future we have now positioned ourselves for critical phase of the reinvestment.

Robert: Okay.

Robert Anticoll: We are setting in motion our new capital allocation framework, which includes the initiation of dividends and the intention to deploy between $600 million and $1.2 billion in M&A over the next three years. Our recent acquisitions, Animal and Coins, and Governor's Poker, have demonstrated consistent month-over-month growth, reinforcing our belief in growing our game portfolio through M&A. I believe mobile gaming is at a pivotal point with several trends pushing the

Robert: We are setting in motion, our new capital allocation framework.

Robert: Which includes the initiation of dividend and intention to deploy between 600 million.

Robert: <unk> to $1 2 billion in M&A over the next three years.

Robert: Our recent acquisition anywhere in coins, the governor's focus to demonstrate consistent month over month growth reinforcing that we believe is drawing our game portfolio through M&A.

Robert: I believe mobile gaming is a pivotal point with several keybank, forcing the need for consolidation.

Robert: Okay.

Robert Anticoll: Our track record speaks for itself, with previous acquisitions driving growth and profitability since I co-founded the company over 13 years ago. In the evolving landscape of mobile gaming, I believe our commitment to M&A will return the company to growth. Finally, I would address an important decision regarding our strategic alternative process. Our current global landscape is unpredictable, especially due to ongoing geopolitical conflicts in Israel and Ukraine. These conflicts have introduced a level of uncertainty that has impacted the process, and the board has decided to pause the evaluation of strategic alternatives. I will now turn it over to Craig. Thank you, Robert.

Robert: Our track record speaks for itself.

Robert: Previous acquisition driving growth and profitability.

Robert: I Cofounded the company over 13 years ago.

In the evolving landscape of mobile gaming I believe our commitment to M&A, we will return the company to growth.

Robert: Finally, I would address an important decision regarding our strategic alternative process.

Robert: Our current global landscape is unpredictable, especially do ongoing geopolitical conflicts in.

In Ukraine.

Robert: These conflicts have introduced a level of uncertainty that has impact the poster.

Robert: And the board has decided to pause the evaluation of strategic alternatives.

Robert: Okay.

Robert: I will now turn it over to Greg.

Greg: Thank you Robert.

Craig Abrams: As Robert mentioned, 2023 was the year of efficiency for Playtika. The strategic decisions that we've made as a company over the last year have further streamlined our operations and enhanced our ability to generate free cash flow. Supported by our strong financial position, I am pleased to introduce our capital allocation framework, focusing on maximizing shareholder value and ensuring our growth is sustained. Our goal is to deploy $600 million to $1.2 billion in M&A to enhance our portfolio and leadership position, as well as return capital to shareholders. In line with this strategy, we plan to make significant investments in performance marketing for our newly acquired growth title, Animals and Coins. While this approach is expected to lead to some margin erosion in the near term, it is designed to enhance long-term revenue potential.

Greg: As Robert mentioned 2023 was the year of efficiency for Zika.

Greg: The strategic decisions that we've made as a company over the last year have further streamlined our operations and enhanced our ability to generate free cash flow.

Greg: Supported by our strong financial position I am pleased to introduce our capital allocation framework, focusing on maximizing shareholder value and ensuring our growth is sustained.

Greg: Our goal is to deploy $600 million to $1 $2 billion in M&A to enhance our portfolio and leadership position as well as return capital to shareholders.

Greg: In line with this strategy, we plan to make significant investments in performance marketing for our newly acquired growth title animals and coins.

Greg: While this approach is expected to lead to some margin erosion in the near term. It is designed to enhance long term revenue potential.

Craig Abrams: Furthermore, we remain committed to strategically deploying incremental investments in performance marketing across selected titles within our core portfolio. Our aim here is to seize opportunities to gain market share and drive profitable growth. Our approach is grounded in a long-term vision for success, and we are confident in the strength and potential of our game portfolio. Alongside our focus on M&A to drive growth and diversification, we are pleased to announce the initiation of a quarterly dividend starting in the first quarter of 2024, subject to quarterly board approval, with a target of $150 million per year in dividends, representing an annualized yield of just over 5% based on our last four-week average share price.

Greg: Furthermore, we remain committed to strategically deploying incremental investments in performance marketing across selected titles within our core portfolio.

Our aim here is to seize opportunities to gain market share and drive profitable growth.

Greg: Our approach is grounded in our long term vision for success and we are confident in the strength and potential of our game portfolio.

Greg: Alongside our focus on M&A to drive growth and diversification. We are pleased to announce the initiation of a quarterly dividend starting in the first quarter of 2024 subject to quarterly board approval with a target of $150 million per year in dividends, representing an annualized yield of just over 5% base.

Greg: On our last four week average share price.

Greg: And our dividend program, we are looking at other opportunities to enhance shareholder returns, including a share repurchase program in the future.

Greg: We are committed to a balanced approach in our capital allocation strategy aiming to invest in growth opportunities maintain a strong and healthy balance sheet and return capital to shareholders.

Craig Abrams: Beyond our dividend program, we're looking at other opportunities to enhance shareholder returns, including a share repurchase program in the future. We are committed to a balanced approach to our capital allocation strategy, aiming to invest in growth opportunities, maintain a strong and healthy balance sheet, and return capital to shareholders. Caring York Financial Results.

Greg: Turning to our financial results.

Greg: For the year, we achieved financial results above our guidance range.

Greg: We generated $2 $5 $67 billion of revenue down one 9% year over year.

Greg: $235 million of GAAP net income compared to $275 $3 million of GAAP net income in 2022, and $832 $2 million of credit adjusted EBITDA, an increase of three 4% year over year.

Craig Abrams: For the year, we achieved financial results above our guidance range. We generated $2.567 billion of revenue, down 1.9% year over year, $235 million of gap net income compared to $275.3 million of gap net income in 2022, and $832.2 million of credit adjusted EBITDA, an increase of 3.4% year over year. Our credit adjusted EBITDA margin was 32.4%, compared to 30.8% in 2022. Additionally, we generated $436.4 million of free cash flow, an increase of 13.7% year-over-year. We define free cash flow as cash flow from operating activities minus capital expenditures.

Greg: Our credit adjusted EBITDA margin was 32, 4% compared to 38% in 2022.

Greg: We generated $436 $4 million of free cash flow, an increase of 13, 7% year over year.

Greg: We define free cash flow as cash flow from operating activities minus capital expenditures.

Greg: We spent $79 2 million in capital expenditures, which includes purchase of property and equipment capitalization of internal use software costs and purchase of software for internal use.

Greg: In addition, we accrued for an additional $17 million of purchases of property and equipment. In Q4, 23 that will be paid in Q1 of 'twenty four.

Greg: For the quarter, we generated $637 $9 million of revenue up one 2% sequentially and up one 1% year over year.

Greg: Net income was $37 3 million down one 6% sequentially and down 57, 4% year over year.

Greg: Credit adjusted EBITDA was $188 9 million down eight 1% sequentially and down six 8% year over year.

Craig Abrams: We spent $79.2 million dollars in capital expenditures, which included the purchase of property and equipment, capitalization of internal use software costs, and the purchase of software for internal use. In addition, we accrued for an additional $17 million of property and equipment purchases in Q4'23 that will be paid in Q1'24. For the quarter, we generated $637.9 million of revenue, up 1.2% sequentially and up 1.1% year-over-year. Net income was $37.3 million, down 1.6% sequentially and down 57.4% year-over-year. Credit adjusted EBITDA was $188.9 million, down 8.1% sequentially and down 6.8% year-over-year.

Greg: Our credit adjusted EBITDA margin was 29, 6% in the quarter compared to 32, 6% in Q3 and 32, 1% in Q4 last year.

Greg: We generated $161 $6 million in revenue from our direct to consumer platforms up 4% sequentially and up seven 6% year over year.

Greg: Our direct to consumer business now makes up 25, 3% of our overall revenues.

Greg: Last year, we added solitaire grain harvest and June's journey to our web store and this year, we'll be adding both titles to additional DTC platforms, starting in the second quarter.

Speaker Change: Turning now to our business results for the quarter.

Speaker Change: Revenue across our casualty and games grew 2% sequentially and 5% to 5% year over year.

Speaker Change: Year over year growth engines journey.

Speaker Change: Our grant harvest and <unk> was offset by weakness in other casual titles, such as best beans and board games.

Speaker Change: We also benefited from a full quarters contribution of animals and coins, where we're pleased to see consecutive months of sequential growth in the quarter.

Speaker Change: Bingo Blitz revenue was $153 million up 4% sequentially and down three 1% year over year.

Craig Abrams: Our credit adjusted EBITDA margin was 29.6% in the quarter, compared to 32.6% in Q3 and 32.1% in Q4 last year. We generated $161.6 million in revenue from our direct-to-consumer platforms, up 0.4% sequentially and up 7.6% year-over-year. Our direct-to-consumer business now makes up 25.3% of our overall revenues. Last year, we added Solitaire Grand Harvest and June's Journey to our web store, and this year, we'll be adding both titles to additional D2C platforms starting in the second quarter, bringing out our business results for the quarter. Revenue across our casual team games grew 2% sequentially and 5.5% year over year. However, year over year growth in June's Journey, Soldier Grand Harvest, and Redecor was offset by weakness in other casual titles such as Best Fiends and Borg King. We also benefited from a full quarter's contribution of animals and coins, where we are pleased to see consecutive months of sequential growth in the quarter. Bingo Blitz revenue was $150.3 million, up 0.4% sequentially and down 3.1% year-over-year.

We are pleased to see a positive shift in financial performance for bingo as the studio improved sequentially quarter over quarter. Following a few quarters of sequential decline.

The team launched several new projects in the quarter that contributed to the positive performance such as a new daily layer Chase edition of Rolling purchase offers and a redesign of the core collection experience in the game, which helps strengthen our social experience.

Speaker Change: June's journey revenue was $77 6 million up one 8% sequentially and up 33, 3% year over year.

Speaker Change: June's journey became our third highest grossing game by revenue in the past quarter.

Speaker Change: June's journeys the highest grossing hit an object game worldwide and recently surpassed the $1 billion lifetime revenue marks.

Speaker Change: Our dedication to a player focused philosophy has elevated june's journey to the forefront of the story driven casual gaming genre.

Speaker Change: By providing a deeply engaging narrative within the expansion University in June.

Speaker Change: The game offers a captivating experience for our players.

Speaker Change: Throughout its evolution, we are regularly rolled out new features and expansions ensuring that there is something for everyone.

Speaker Change: Fans of the narrative can explore further with additional side stories, social gamers can collaborate with our club members on solving mysteries and those in search of a challenge can test their skills and competitive events.

Speaker Change: We have an unwavering commitment to our players and the June's journey community and we look forward to continuing to enrich their gaming experience for years to come.

Speaker Change: Now over to our social casino themed games.

Speaker Change: Social casino themed game revenue was down 2% sequentially and down four 6% year over year.

Speaker Change: Sequential performance benefited from a full quarter's contribution from our newly acquired <unk> studio.

Speaker Change: <unk> revenue was $136 9 million.

Speaker Change: Down three 6% sequentially and down eight 3% year over year.

Speaker Change: Despite maintaining its position as the number one game in the slides genre, it's important for us to acknowledge that some of our peers have gained share at our expense.

Craig Abrams: We are pleased to see a positive shift in financial performance for Bingo as the studio improves sequentially quarter-over-quarter following a few quarters of sequential decline. The team launched several new projects in the quarter that contributed to the positive performance, such as a new daily layer trace, the addition of rolling purchase offers, and a redesign of the core collection experience in the game, which helps strengthen the social experience. June's journey revenue was $77.6 million, up 1.8% sequentially and up 33.3% year-over-year.

Speaker Change: This shift can be partially attributed to our own strategic decision to reallocate some of our performance marketing dollars towards other opportunities in our portfolio.

Speaker Change: While this was a calculated move aimed at diversifying our growth avenues enhancing our overall position in the market. It has contributed to the market share loss in Sardinia.

Speaker Change: We recognize the importance of <unk> to our portfolio and its role in driving consistent revenue and margins and we plan to increase our user acquisition spending this year for <unk>.

Speaker Change: This revenue mix shift from declines in our higher margin titled <unk> to revenue growth from our casual games, including animals and coins will have an impact on our margins. This year I will reiterate that 2024 will be a year reinvestment for Zika and we look forward to sharing our progress in the coming quarters.

Speaker Change: Turning to marketing.

Craig Abrams: June's Journey became our third highest grossing game by revenue in the past quarter. June's Journey is the highest-grossing hidden object game worldwide and recently surpassed the $1 billion lifetime revenue mark. Our dedication to a player-focused philosophy has elevated June's journey to the forefront of the story-driven casual gaming genre. By providing a deeply engaging narrative within the expansion universe of Dune, the game offers a compelling experience for our players. Throughout its evolution, we have regularly rolled out new features and expansions, ensuring that there is something for everyone. Fans of the narrative can explore further with additional side stories. Social gamers can collaborate with their club members on solving mysteries.

Our recent launch of several celebrity studded campaigns underscores our leadership and leveraging partnerships to amplify our games appeal.

Speaker Change: Historically, we've embraced offline campaigns is a key component of our marketing strategy consistently demonstrating our ability to engage audiences do high profile partnerships.

Speaker Change: In the past quarter, we introduced campaigns featuring Sarah Jessica Parker for solids are grant harvest, Jason Alexander for World series of Poker and continued our partnership with drew Barrymore for mingle blades and Ty Pennington procedures casino.

Speaker Change: These initiatives underscore our commitment to providing our players from an engaging and immersive cleaning experience.

Speaker Change: Alongside our celebrity endorsements. We are also launching the new year, New <unk> campaign to celebrate in game Redesigns and new features within slot ammonia.

Speaker Change: Turning now to specific line items in our P&L for the fourth quarter.

Speaker Change: Cost of revenue decreased 2% year over year, and operating expenses increased four 8% year over year.

Craig Abrams: And those in search of a challenge can test their skills in competitive events. We have an unwavering commitment to our players and the June's Journey community, and we look forward to continuing to enrich their gaming experience for years to come. Now over to our social casino theme games. Social casino game revenue was down 0.2% sequentially and down 4.6% year over year. Sequential performance benefited from a full quarter's contribution from our newly acquired Uda Studio. Slotomania revenue was $136.9 million, down 3.6% sequentially, and down 8.3% year-over-year.

Speaker Change: R&D decreased 14, 9% year over year decline in R&D was driven by lower head count and savings from lower discretionary spending across the company.

Speaker Change: Sales and marketing was up 24, 6% year over year.

Speaker Change: The increase was driven primarily by investments that we made in animals and coins and governor Folkert great.

Speaker Change: We also had slightly more performance marketing spend this quarter versus the prior year in our organic portfolio due to timing of some of our performance marketing campaigns.

Speaker Change: G&A expenses increased by two 5% year over year.

Speaker Change: As of December 31, we had approximately $1 billion in cash and cash equivalents.

Speaker Change: Looking at our operational metrics average GPU increased two 3% sequentially and decreased two 2% year over year.

Speaker Change: Average <unk> increased two 4% sequentially and decreased two 3% year over year.

Craig Abrams: Despite maintaining its position as the number one game in the slot genre, it's important for us to acknowledge that some of our peers have gained share at our expense. This shift can be partially attributed to our own strategic decision to reallocate some of our performance marketing dollars towards other opportunities in our portfolio. While this was a calculated move aimed at diversifying our growth avenues and enhancing our overall position on the market, it has contributed to the market share loss in Slotomania.

Speaker Change: Our DAU was 80 cents in the quarter.

A decrease of one 2% sequentially and an increase of two 6% year over year.

Speaker Change: Turning now to our guidance and financial outlook for 2024.

Speaker Change: We expect to deliver full year revenue between $2 $5 2 billion and $2 62 billion.

Speaker Change: As we selectively ramp up our performance marketing spending for our portfolio, we expect credit adjusted EBITDA between $730 million and $770 million.

Speaker Change: We expect to deploy $110 million to $115 million in capital expenditures, which includes $17 million in accrued capital expenditures from Q4 2003 that we played in fiscal year 2024.

Craig Abrams: We recognize the importance of Slotomania to our portfolio and its role in driving consistent revenue margins, and we plan to increase our user acquisition spending this year for Slotomania. This revenue makeshift from declines in a higher-margin title like Slotomania to revenue growth from our casual games, including animals and coins, will have an impact on our margins this year. I will reiterate that 2024 will be a year of reinvestment for Playtika, and we look forward to sharing our progress in the coming quarters. Turning to Marketing. Our recent launch of several celebrity study campaigns underscores our leadership in leveraging partnerships to amplify our games appeal. Historically, we've embraced offline campaigns as a key component of our marketing strategy, consistently demonstrating our ability to engage audiences through high-profile partnerships. In the past quarter, we introduced campaigns featuring Sarah Jessica Parker for Solitaire Grand Harvest, Jason Alexander for World Series of Poker, and continued our partnership with Drew Barrymore for Mingle Blitz and Ty Pennington for Caesars Casino.

Speaker Change: As we conclude our prepared remarks I want to emphasize that journey, we have embarked on the past few years.

Speaker Change: Our focus has been on streamlining our operations enhancing our agility and positioning ourselves as a resilient force an acquirer of best in class assets and the mobile gaming industry.

Speaker Change: This strategic refinement has enabled us to pivot towards a period of reinvestment in our core business and execute on M&A opportunities simultaneously, we remain focused on generating strong free cash flows.

Speaker Change: Our financial discipline ensures that we maintain the ability to return capital to our shareholders through ongoing quarterly dividends alongside pursuing growth opportunities for our portfolio.

Speaker Change: Thank you for your continued trust and support and we'll now take your questions.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.

Speaker Change: Withdraw your question. Please press star one again.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of Aaron Lee with Macquarie.

Speaker Change: Erinn Your line is now open.

Aaron Lee: Hey, good morning, Thanks for taking my question guys.

Aaron Lee: Appreciate all the color so far just.

Aaron Lee: Wanted to start by digging into guidance for a bit so obviously, you're going to risk are basically flat.

Aaron Lee: Then lower EBITDA margins can you just help us understand is that delta in EBITDA.

Aaron Lee: From the incremental marketing for urea because of the recent acquisition and.

Craig Abrams: These initiatives underscore our commitment to providing our players with an engaging and immersive playing experience. Alongside our celebrity endorsements, we are also launching the New Year, New Slotomania campaign to celebrate in-game redesigns and new features within Slotomania. Turning now to specific line items in our P&L for the fourth quarter, cost of revenue decreased 0.2% year-over-year, and operating expenses increased 4.8% year-over-year. R&D decreased 14.9%

Aaron Lee: What do you have baked into those figures is in terms of marketing for the rest of their portfolio <unk>.

Aaron Lee: You're assuming returns from those investments and any general impact from macro or geopolitical events.

Aaron Lee: <unk>.

Speaker Change: Sure. Thanks for the question Erin.

Speaker Change: As we take a step back and we look at the industry more broadly obviously the changes in the advertising.

Speaker Change: Rising world has affected how people.

Speaker Change: Purchase media as well as investing in new games I think for us.

Speaker Change: <unk>.

Speaker Change: Theres two things going on one.

Speaker Change: Need for us to spend more on some of our legacy titles as well as our acquired titles and two there is a mix shift going on where we've seen growth in the casual titles and declines in the casino themed titles.

Craig Abrams: The decline in R&D was driven by lower headcount and savings from lower discretionary spending across the company. However, sales and marketing were up 24.6% year over year. The increase was driven primarily by investments that we made in animals and coins in Governor Poker 3. We also had slightly more performance marketing spend this quarter versus the prior year in our organic portfolio due to the timing of some of our performance marketing campaigns. G&A expenses increased by 2.5% year-over-year.

Speaker Change: Casino themed titles have a higher margin and higher so we will have a higher percentage of direct to consumer as well and so as we look at that flow through there is impact there as well as an increase in marketing for the organic titles as well as the newly acquired titles.

Speaker Change: Got you okay.

Speaker Change: And then on the M&A target you guys put out there can you put any guardrails around that for us in terms of how youre thinking about.

Speaker Change: The sizes of acquisitions, and what areas would be targeting and do you expect that to be more front end loaded or back end loaded. Thank you.

Speaker Change: Sure. So I think for US we've always been opportunistic I think we've communicated in the past the right cadence is probably one to two transactions a year.

Craig Abrams: As of December 31st, we had approximately $1 billion in cash and cash equivalents. Looking at our operational metrics, average CPU increased 2.3% sequentially and decreased 2.2% year-over-year. Average DAU increased 2.4% sequentially and decreased 2.3% year-over-year. ARPDAU was $0.80 in the quarter, a decrease of 1.2% sequentially and an increase of 2.6% year-over-year.

Speaker Change: Depending on what's available in the marketplace, we do see this environment as one.

Speaker Change: Great setup for consolidation.

Speaker Change: The maturing of the market.

Speaker Change: Difficulty a lot of the smaller companies have with the advertising market and so we think we're well positioned we have a $1 billion in cash.

Speaker Change: We have a $600 million credit facility.

Speaker Change: The target that we gave really looks at around 50% of our cash.

Speaker Change: Being used for M&A and the other 50% being used for capital return and we think this is a very balanced approach to grow the portfolio as well as.

Speaker Change: As well as return capital to our shareholders.

Speaker Change: Okay got it thank you very much.

Speaker Change: Our next question will come from the line of Colin Sebastian with Baird.

Craig Abrams: Turning now to our guidance and financial outlook for 2024, we expect to deliver full-year revenue between $2.52 billion and $2.62 billion. As we selectively ramp up our performance marketing spending for our portfolio, we expect credit adjusted EBITDA between $730 million and $770 million. Additionally, we expect to deploy $110 to $115 million in capital expenditures, which includes $17 million in accrued capital expenditures from Q4'23 that will be paid in fiscal year 2024.

Thanks, and good morning, and good evening.

Colin Alan Sebastian: I think you mentioned.

Colin Alan Sebastian: Expanding the number of DTC DTC platforms Youre utilizing this year. So first off just curious if you could expand maybe on what those are and what youre anticipating from those platforms and then as a follow up on the M&A I guess what are you seeing in the market that gives you visibility.

Colin Alan Sebastian: To spend to that level on consolidation or there are there specific trends or specific studios that youre observing that gives you that visibility or something else. Thank you.

Speaker Change: Hey, Thanks for the question so regarding the digital platform as we always said there's a few other calls before we are growing this wave one target.

Speaker Change: One important thing.

Speaker Change: Engine.

Speaker Change: The focus of both stability become.

Speaker Change: In the last few quarters become holidays. So we are now going to focus more on our last call we are going.

Speaker Change: To bring more of the games and the fall off is going to be one of our main target.

Operator: As we conclude our prepared remarks, I want to emphasize the journey we've embarked on in the past few years. Our focus has been on streamlining our operations, enhancing our agility, and positioning ourselves as a resilient force and acquirer of best-in-class assets in the mobile gaming industry. This strategic refinement has enabled us to pivot towards a period of reinvestment in our core business and execute on M&A opportunities. Simultaneously, we remain focused on generating strong free cash flows. Our financial discipline ensures that we maintain the ability to return capital to our shareholders through ongoing quarterly dividends alongside pursuing growth opportunities for the portfolio. Thank you for your continued trust and support, and we'll now take your questions. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, press star 1-1 again.

Speaker Change: Political was the first company in the industry. This started with the DTC.

Speaker Change: For us it was always advantage, we see it right now is a big advantage.

Speaker Change: Give us a lot of flexibility about things that we're doing so again. This is our main focus one of our main focus and then by the way regarding your question about M&A again, having a digital platform, that's keeping us big advantage of acquiring.

Speaker Change: Acquiring a games.

Speaker Change: To make the profitability much better.

Speaker Change: D to C platform.

Speaker Change: Regarding targets as Craig said before.

Speaker Change: And we are looking at all.

Speaker Change: Around the market.

Speaker Change: With speaking to all the players we know everything that's happening from the smaller games at the starting gate two months ago that the big games, the trailing 12 years and as we did last year or two good acquisitions. This is our target for this year and we are very optimistic about it. Thank you.

Speaker Change: That's helpful. Thanks, maybe one quick follow up on DTC.

Aaron Lee: Please stand by while we compile the Q&A roster. Our first question comes from the line of Aaron Lee with Macquarie. Erin, your line is now... Hey, good morning.

Speaker Change: Is your is your.

Speaker Change: Is your goal for the percent of bookings or revenues coming from DTC channels has that changed at all recently or are do you have the same target out there.

Aaron Lee: Thanks for taking my question. We appreciate all the colors so far. Wanted to start by digging into guidance for a bit. So obviously, you're going to rest are basically flat and then lower EBITDA margins. Can you just help us understand, is that Delta EBITDA?

Speaker Change: No it's not changing.

Speaker Change: We said there's no change.

Speaker Change: But.

Speaker Change: The market is changing.

Speaker Change: It's not everything.

Speaker Change: It was there before is to date I think 30% this is where we.

Speaker Change: Looking to be this is a target we believe we would get to this target.

Speaker Change: Afterwards.

Craig Abrams: All from the incremental marketing for your recent acquisition. You know, what do you have baked into those figures just in terms of marketing for the rest of their portfolio? What are you assuming? returns from those investments. General Impact from macro or geopolitical. Thanks for the question, Aaron.

Speaker Change: <unk> 30, Porto can speak about the next target.

Speaker Change: Okay. Thanks Robert.

Speaker Change: Yeah.

Porto: Our next question will come from the line of Omar <unk> with Bank of America.

Omar: Hi, Thanks, so much for taking the question.

Omar: So first of all just a quick housekeeping question. When you said, 50% of your cash to M&A. The other 50% capital return are you referring to the cash on the balance sheet or the free cash flow or which which metrics specifically are you referring to.

Craig Abrams: So, as we take a step back and we look at the industry more broadly, obviously... how people for us, on 1, for us to spend more on some of our legacy titles as well as our acquired titles. There's a makeshift going on where growth and the Casual title, client. Title, titles have a higher margin, and some of them have a higher... As well.

Omar: Free cash flow.

Omar: In terms of ongoing free cash flow that's our target.

Speaker Change: Got it okay and.

Speaker Change: When you say capital return, obviously, a couple of ways you could do that just wondering why you decided to initiate a dividend rather than.

Speaker Change: Reduced at all.

Craig Abrams: And so as we look at that flow through, back there, as well as... March, titles, as well as... And then on the M&A target you guys put out there, can you put any guardrails around that for us in terms of how you're thinking about the sizes of acquisitions and what areas we'll be targeting, and do you expect that to be more front-end loaded or back-end loaded? I think for us, we've always been opportunistic; the right cadence is probably one to two transactions a year, depending on what is available in the marketplace. The environment as one, set up for consolidation, and Maturing Anamark, difficulty.

Speaker Change: Or start the buyback.

Speaker Change: So thats. The second question and then I have one follow up on your M&A targets.

Speaker Change: We looked at our balanced approach of both investing in M&A as well as dividends and exploring buybacks and so I think its a balanced mix.

Speaker Change: And that's where that's where we came out.

Speaker Change: Understood got it.

Speaker Change: Great and so the.

Speaker Change: The explanation of kind.

Speaker Change: Kind of how much capital you could deploy super helpful could you give us some more sense of maybe what some of your investment metrics might be for example things like.

Speaker Change: <unk> cash on cash return.

Speaker Change: Are your investments payback period.

Craig Abrams: Smaller companies have had to deal with the advertising market for a while, dollars in cash. The target that we gave really looks at around 50% of our cash. M&A, and the other, a very balanced approach. Grow the Portfolio as well. Cabinet.

Speaker Change: Yes. Thanks.

Speaker Change: That just so we can get a sense of.

Speaker Change: As you go through these acquisitions, what we should expect for your financial performance down the road.

Speaker Change: As these incremental acquisitions later in.

I think we've been focused historically on acquiring assets at attractive EBITDA multiples and leveraging our operational expertise and knowhow to help expand that EBITDA over time and as we do that the effect of multiple it comes down.

Colin Alan Sebastian: Thank you. Our next question will come from the line of Colin Sebastian with Baird, you mentioned, follow-up on the, What are you? Hey, thanks for the question. So.

Speaker Change: And look to do accretive transactions that are creating value and so I don't I think every transaction depending on the segment of the market. It operates in as well as what stage. It is in its maturity.

Robert Anticoll: Regarding the D2C platform, as we have always said on a few other calls before, we are growing this; we have a target. One important thing, changing the focus of profitability. In the last few quarters, it's become harder, so we are now going to focus more on our D2C platform, and we're going to bring more of the games, which for us is going to be one of our main targets. Playtika was the first company in the industry that started with D2C. For us, it was always an advantage. We see it right now as a big advantage. It gives us a lot of flexibility about things that we are doing. So again, this is one of our main focuses.

Speaker Change: We'll have different goals and objectives, but obviously the underlying goal is creation of equity value.

Speaker Change: Understood. Thanks, a lot I appreciate it.

Speaker Change: Our next question will come from the line of Brian Fitzgerald with Wells Fargo.

Brian Fitzgerald: Thanks, guys a couple of quick ones.

Brian Fitzgerald: I'm wondering if you could give us any sense for how the two recently acquired titles.

Brian Fitzgerald: Governor of poker, three animals and coins performed in <unk> or maybe help us size.

Robert Anticoll: And by the way, regarding your question about M&As, again, having a D2C platform is giving us a big advantage in acquiring companies, acquiring games, to make their profitability much better with the D2C platform. Regarding the target, as Craig said before, we are opportunistic, and we are looking all around the market, we're speaking to all the players, we know everything that's happening from the small games that started two months ago to the big games that have already been running for 12 years, and as we did last year, two good acquisitions. This is our target for this year, and we are very optimistic about it. Thank you. Thanks.

Brian Fitzgerald: The topline contribution from those two.

Brian Fitzgerald: Okay.

Brian Fitzgerald: Yes.

Brian Fitzgerald: As noted in the prepared remarks, we saw consecutive growth throughout the fourth quarter, which is very encouraging and we're very pleased.

Brian Fitzgerald: With the initial results from both of those acquisitions.

Brian Fitzgerald: In terms of the contributions those are in our 10-K, which has just been filed I don't have exact.

Brian Fitzgerald: Exact number in front of me right now.

Speaker Change: Okay I appreciate it and then.

Speaker Change: Maybe just a follow up to the DTC questions curious to hear your thoughts on on apples recent concessions on App store fees.

Speaker Change: DMA implementation.

Speaker Change: Is that kind of.

Speaker Change: Is that.

Speaker Change: Okay.

Speaker Change: Impacting or maybe accelerating your focus on D. C are no. We've always been focused on D. C. It's a known strategy but.

Speaker Change: Any reads on hey, what apples and DMA.

Omar D'souki: Maybe one quick follow-up: what is your goal for the company? Has that changed at all? No, it's not changing, as we said it was not changing, but you know the market is changing, and it's not everything like it was before; it's today. I think 30% is where we are looking to be, this is our target, we believe we will get to this target, and after we achieve 30%, we can speak about the next target, next, from the line of Omar D'souki with Bank of America. Hi, thanks so much for taking the question. So, first of all, just a quick housekeeping question. When you said 50% of your cash to M&A, the other 50% to capital return, are you referring to the cash on the balance sheet or the free cash flow? Or which metrics are you specifically referring to?

Speaker Change: Our metering through your thought process.

Speaker Change: So thanks for the question so.

Speaker Change: Really early to say, it's only started a few weeks ago, we are still.

Speaker Change: We're still trying to understand exactly the benefits how to work with this it's not changing with the strategy that we had in the past and we have right now with the C platform.

Speaker Change: No.

Speaker Change: It's not a connected to each other but again.

Speaker Change: Really interesting move over <unk>.

Speaker Change: I think in few weeks few months it will be even though we will know exactly how it's going to benefit the company.

Speaker Change: Which way.

Speaker Change: Thanks.

Speaker Change: Thanks, Robert Thanks, correct.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of drew Crum with Stifel.

Andrew Edward Crum: Okay. Thanks, Hey, guys, Craig just to go back to your earlier comments on credit adjusted EBITDA. This year do you see 2024 is the trough for the business or is there further downside beyond this year.

Andrew Edward Crum: Given some of the puts and takes you referenced.

Craig Abrahams: Yes, I think obviously this year is a year of reinvestment in the portfolio I think we're hopeful that we can stabilize the casino themed titles and continue to grow the casual titles.

Craig Abrams: Free cash for all. Terms, ongoing free cash flow that's Okay, and when you say capital return, obviously, there are a couple ways you could do that. Just wondering why you decided to initiate a dividend rather than reduce debt or start to buy back? That's the second question. And then I have one follow-up on your MSN, a balanced approach of both investing in M&A as well as... Waring, bye-bye, The Balance, should I get it?

Craig Abrahams: The <unk>.

Speaker Change: Incentive and compensation plan does end in 'twenty, four and so there should be a net benefit from that and then going into 'twenty five.

Speaker Change: But we are not giving guidance beyond 24 at this stage.

Speaker Change: Fair enough and then just a housekeeping item anything contemplated in your revenue guidance range for 2024 in terms of of M&A, that's $600 million to $1 2 billion.

Speaker Change: Yes, M&A is future M&A is not included in that is not got it okay. Thanks.

Omar D'souki: Great. And so the, um.., the explanation of kind of how much capital you could deploy is super helpful. Could you give us some more sense of maybe what some of your investment metrics might be? For example, things like that.

Speaker Change: Thank you. Our next question will come from the line of Doug <unk>.

Doug: With TD Cowen.

Doug: Hey, Thank you.

Doug: Several quarters ago, you guys made the decision to pause internal game development.

Craig Abrams: Cash on Cash Return on your investments, payback period, like that, just so we can get a sense, you know, as you go through these acquisitions, what we should expect for your financial performance down the road, as these incremental acquisitions layer in. I think we've been focused historically on acquiring assets that attract VivaDom multiples and leveraging our know how to help, over time, to add the effect down. Transactions that are creating value. Transaction depending on the www.playtika.com shirt.

Doug: Tough tough.

Doug: The tough market conditions, making it hard to launch new games in the last few quarters. We've seen some of your competitors launched some very successful new games. So just wondered if you revisit that decision.

Speaker Change: What's your feeling is on new game development at this point. Thank you.

Speaker Change: So thanks for the question first we are really happy to see even our competitors launching good again, because it's still say that the market is good.

Speaker Change: So for me.

Speaker Change: Everything Thats happening are always trying to see what is the benefit for us and what is the benefit for the market. So it's fair to say that the market is healthy second.

Speaker Change: Ever.

Speaker Change: Good is still a developing new games, let's build the securities it's not it depends if the.

No.

Speaker Change: The environment is good or bad it's never been our DNA, yes, which right. We tried many things as a company that the big company that always trying but it's never been our DNA.

Brian Fitzgerald: We'll have different goals and objectives, but obviously... understood. Thanks a lot.

Craig Abrams: I appreciate it. Our next question will come from the line of Brian Fitzgerald with Wells Fargo. Thanks, guys. A couple quick ones.

Speaker Change: I will then there was always M&A, we did very well with M&A in the last 10 years.

Speaker Change: And.

Speaker Change: Im not saying that we are not going to have any you know any.

Speaker Change: Kind of experience with you guys, but it's not.

Speaker Change: The main focus.

Speaker Change: Our main focus again is M&A. This is the way we are looking at this as a.

Craig Abrams: Wondering if you could give any sense of how the two recently acquired titles, Governor of Poker 3, Animals and Coins, performed in 4Q or maybe help us size the top line contribution from those two? As we noted in the prepared remarks, we saw consecutive growth throughout the fourth quarter, which is very encouraging. We're very pleased with the initial results from both of those activities in terms of the content. Those are in our 10-K, which has just been filed. Okay, I appreciate it.

Speaker Change: I believe we're going to do one or two deals.

Speaker Change: I hope even better than the deals that we did last year that was a really good deals.

Speaker Change: Thats it thanks.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of Clark Lampern with BTG.

Clark Lampern: Thanks again.

Clark Lampern: I got a question I want to come back to I guess the plan to increase performance marketing spend next year, Craig could you give us a little bit more color around I guess sort of why now.

Clark Lampern: Look at I guess your advertising spend for the last couple of years, it's been pretty consistent.

Clark Lampern: After a step up that we saw in 'twenty, one both in aggregate and as a percentage of revenue and I am curious if there was something that you saw with your sand maybe in the back half of the year, where it started to perform better or Youre reallocating. The mix. If the budget is growing is it shifting in a new way or should we imagine that this is going to be mostly.

Craig Abrams: And then maybe as a follow-up to the D2C questions, curious to hear your thoughts on Apple's recent concessions on App Store fees and DMA implementation, and is that kind of, is that... impacting or maybe accelerating your focus on D2C, or no, we've always been focused on D2C. It's a known strategy, but any reads on, hey, what apples and DMA are metering through Thanks for the question. So this is really early to say; it only started a few weeks ago.

Clark Lampern: Sort of offline TV campaigns.

Clark Lampern: Any I guess incremental color you could provide would be helpful.

Speaker Change: Yes sure. So so obviously the biggest driver is as animal and some volumes, which is a title that we acquired last year.

Robert Anticoll: We are still learning, we're still trying to understand exactly the benefits, and how to work with this. It's not changing the strategy that we had in the past and we have right now with the D2C platform. It's not connected to each other.

Speaker Change: And our ramping up growth there I think in terms of what we called out in the prepared remarks.

Speaker Change: We are looking at it investing more on slot ammonia is a competitive market.

Speaker Change: Where competitors are fighting for market share and so we saw the need to invest more there.

Speaker Change: And then in terms of strategically selected other titles that we look to invest and to support growth. So I think.

Speaker Change: The biggest change in terms of year over year is clearly to support the acquired titles.

Speaker Change: Got it.

Robert Anticoll: But again, it's a very interesting move by Apple. I think in a few weeks, a few months, we will know exactly how it's going to benefit the company. Thanks.

Speaker Change: From our seat, we and investors I guess as Youre trying to measure the ROI on that spend going forward should it be.

Speaker Change: If you guys are successful with the incremental allocation will it be primarily driving stronger inorganic growth or is there. Another way that we should try to evaluate that on a go forward basis.

Andrew Edward Crum: Thanks, Robert. Thanks, Craig. Thank you. Our next question will come from the line of Drew Crum with Stephen. Thanks. Hey, guys.

Speaker Change: No I mean, we can say to that part of our organic growth and it's a part of part of the.

Speaker Change: Operating our organic portfolio.

Speaker Change: I think we make changes based on the marketplace, where we see opportunity as we invest more and where we don't have the returns that justify those we pulled back. So I don't think theres more specificity that we can provide on this call accordingly.

Craig Abrams: Craig, just to go back to your earlier comments on credit adjustability, but this year, do you see 2024 as a trough for the business? Or is there further downside beyond this year, given some of the puts and takes you referenced? Yeah, I think obviously this year is a year of reinvestment in the portfolio, and I think we're hopeful that we will see Live titles and continue to grow the casual titles. The Incentive and Compensation Plan does... the Horn will benefit from that. 5, but we are not. Okay, fair enough. And then just a housekeeping item.

Speaker Change: That's helpful. And then just one quick one and I'll get out of the way, we think about I guess, the sort of broader capital allocation framework, you guys talked about I guess sort of market and geopolitical factors that.

Speaker Change: Led you to move away from year.

Speaker Change: Strategic review, if we assume that some of those other factors are also weighing on competitors of yours and the market doesn't end up I guess is fluid or you don't see the M&A opportunities that you hope for accruing.

Speaker Change: Is that is the sort of pool of free cash flow fungible in any way if we're thinking about that sort of previous 50 50 split.

Andrew Edward Crum: Anything contemplated in your revenue guidance range for 2024 in terms of M&A, you know, that $600 million to $1.2 billion? M&A is, future M&A is not, is not. Got it.

Speaker Change: If the pipeline is robust and you can't execute on some of the things that you would like would you consider from one year to the next tilting more of that cash flow allocation towards capital return. Thank you.

Doug Kreutz: Okay. Thanks. Thank you. Our next question will come from the line of Doug Kreutz with TD Cowan. Hey, thanks.

Speaker Change: Yeah, so cargo try and disaggregate that I think there is three separate concepts going on there I think the first is the decision that was made to Pas strategic alternatives.

Robert Anticoll: Several quarters ago, you guys made the decision to pause internal game development because you said tough, tough, uh tough market conditions were making it hard to launch new games. In the last few quarters, we've seen some of your competitors launch some very successful new games. So, just wondered if you had revisited that decision, what your feelings are on new game development at this point. Thanks for the question.

Speaker Change: And it was cited that there was geopolitical factors tied to that decision.

Speaker Change: Separately is the M&A environment, which for US most of the acquisition targets, we look at or are there. Some in Israel, but also outside of Israel, and we have not seen that necessarily impacting our ability to go out and due diligence and explore opportunities for transactions.

Speaker Change: And a third concept is capital allocation.

Robert Anticoll: First, we are really happy to see even our competitors launching good games because it's still saying that the market is good. So for me, everything that's happening, I'm always trying to see what it benefits us and what it benefits the market. So first, it's saying that the market is healthy. But we never had a good history of developing new games. It's not a secret. It's not that it depends if the environment is good or bad. It's never been in our DNA.

Speaker Change: Which I believe is pretty independent of the first two the first one and the second 150% of capital allocation is dedicated to M&A and the other 50% is to capital returns both dividends and exploring the idea of buybacks and so I don't think that they're necessarily tie there obviously folks that operate in those regions.

Speaker Change: And back then and obviously had to make adjustments as we have.

Speaker Change: To ensure operations are not affected.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of Eric Sheridan with Goldman Sachs.

Robert Anticoll: Yes, we tried. We tried many things as a company, as a big company that's always trying, but it's never been in our DNA.

Eric Sheridan: Thanks, So much maybe a two parter following up on Clark's question first.

Clark Lampin: Our DNA was always M&A, and we did very well with M&A in the last 10 years, and I'm not saying that we're not going to have any, you know, any kind of experience with new games, but it's not the main focus, and our main focus again is M&A. This is where we are looking, and this is where I believe we're going to do one or two deals. I hope it is even better than the deal that we did last year. That was a really good deal. That's it. Thanks. Thank you. Our next question will come from the line of Clark Lampin with BTIG. Thanks. I have got a question.

Eric Sheridan: In terms of what you've learned as the marketing environment has become volatile over the last couple of years what are the key learnings in terms of driving incremental ROI that you are taking out of the 'twenty to 'twenty two 'twenty three period that informs your marketing strategies going into 'twenty, four and beyond and they are looking into 'twenty four and beyond how should we be thinking about.

Eric Sheridan: Elements that could increase ROI like scale as you execute on the M&A strategy.

Eric Sheridan: <unk> be coming out of a more a larger component of marketing overall or other elements that could sort of amplify ROI over the medium to long term. Thanks, so much.

Eric Sheridan: Hi, it's Neil culture, platelet CMO, so first and foremost we need to understand that we have a very wide range of different games and for each game. Obviously, we build a tailor made the marketing strategy. So.

Craig Abrams: I want to come back to, I guess, the plan to increase performance marketing spend next year. Craig, could you give us a little bit more color around, I guess, sort of why now? If you look at, I guess, your advertising spend for the last couple of years, it's been pretty consistent after a step up that we saw in 21, both in aggregate and as a percentage of revenue. And I'm curious if there's something that you saw with your spend maybe in the back half of the year where it started to perform better, or you're reallocating the mix. You know, if the budget is growing, is it shifting in a new way? Or should we imagine that this is going to be mostly, you know, sort of offline television campaigns? Any, I guess, incremental color you could provide would be helpful.

Neil: When we look at the market we need to understand also the competition and also what we want to achieve for the long term. So what we are basically trying to understand sometimes the ecosystem is changing as you mentioned before the competition, becoming a bit tougher and we need to spend a bit more and different strategy. So always we adjust our strategy towards area, where we believe that for the long term.

Neil: We will provide the best alloy.

Speaker Change: So that's the first part of the question the second part.

Speaker Change: We are doing for leveraging technology and AI. So it really depends on the different sources and of course, what's going on in the platform. So at the end of the day, what we're trying to achieve we are trying to create a very diverse portfolio with diverse wholesale so that we will not be rely on any specific source and we are trying to push the one with the highest LOI obviously and.

Craig Abrams: Yeah, sure, so obviously the biggest driver is Anna Mollison-Coyne, a title that we acquired last year and are ramping up growth there. Terms, called out in the prepared remarks. We are looking at investing more in Splatter Mania, which is a competitive market, fighting for market share. And so we saw all of that, www.mytrendyphone.co.uk, Selected Other Title. Crow.

Speaker Change: Whether we can leverage technology and improve our results. So that's our strategy and of course, we are.

Speaker Change: Slow made it for each one of the games differently.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of Matthew cost with Morgan Stanley.

Matthew Cost: Hi, Thanks for taking the question.

Matthew Cost: I'll start just by asking about what youre seeing in the broader mobile gaming market, because we have seen some steps up in consumer confidence over the past couple of months I'm wondering if you're seeing any change in consumer behavior, either late last year into this year, particularly because as you lean into marketing Youre also expecting revenue.

Clark Lampin: Got it. And from our seat, we and investors, I guess, as we're trying to measure the ROI on that spend going forward, should it be, If you guys are successful with the incremental allocation, will it primarily drive stronger inorganic growth? Or is there another way that we should try to evaluate that on a go-forward basis? I mean, we consider that part of our organic growth, part of the operating our Organic Portfolio, the Marketplace, where we see opportunities, we invest more. We don't have the returns that justify those, so we pull back, so I don't... by the Okay, that's helpful. And then just one quick one, and I'll get out of the way.

Matthew Cost: You roughly flat year on year. So you expect to be outperforming a down market in line with the flat market. How should we think about what that means relative to the broader backdrop and then I have one follow up thank you.

Speaker Change: Sure. So I do believe the macro economic environment has been tricky over the last few years, but I think it's we've really seen titles that are able to execute on their road maps are successful and grow and if you look at our casual portfolio was up five 5% last year and if you look at.

Speaker Change: Where we've struggled it depends on the market competitive categories, but with a slightly in games and so I think.

Craig Abrams: If we think about, I guess, this sort of broader capital allocation framework, you guys talked about, I guess, sort of market and geopolitical factors that, you know, sort of led you to move away from your strategic review. If we assume that some of those other factors are also weighing on them, and the market doesn't end up as fluid, or you don't see the M&A opportunities that you hope for accruing, is the sort of pool of free cash flow fungible? And anyway, if we were thinking about that sort of previous 50-50 split. If the pipeline isn't maybe as robust, and you can't execute on some of the things that you would like, would you consider, from one year to the next, tilting more of that cash flow allocation towards capital return? So, Clark, I would try and disaggregate that.

Speaker Change: I think some of that is not necessarily based on what's happening more broadly in the environment, but I think been more affected by changes in the advertising ecosystem.

Speaker Change: Effects, the ROI of acquired traffic and so I think that is probably been the biggest impact to the mobile game industry, rather than consumer discretionary spending we've always thought that.

Speaker Change: Mobile gaming is one of the more resilient areas within <unk>.

Speaker Change: Economic environment.

Speaker Change: And so I think it's really more based on what's happening in the AD environment than then.

Speaker Change: The macroeconomic environment at this stage.

Speaker Change: Okay. Thank you and then.

Speaker Change: There was that obviously I think you noted it very very well in the prepared remarks about a step up in marketing in the fourth quarter, you've historically seen.

Speaker Change: Kind of an opportunity in the first quarter every year to lean into marketing should we expect that same seasonality, where there's like a meaningful sequential step up in your marketing spend in the first quarter of this year.

Speaker Change: So it's and it again so obviously.

Speaker Change: We are well familiar with the seasonality around the marketing and I believe that you. So what we did at the end of the year, we launched five new campaigns basically at the end of the deal and trying to start the year strong I'll just echo not elaborate about the results of the campaign, but we are very bullish about our strategy and how we see things forward.

Craig Abrams: I think there are three separate concepts going on there. I think the first... decision was made to pause strategic alternatives, and it was cited as the factory. The M&A environment is tied to that decision. Separately, is the M&A environment, which for us, most of the acquisition targets we look at are... There's some in Israel, but also outside of it.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Jason Bazinet with Citi.

Jason Boisvert Bazinet: Thanks, I just had a question about these AD changes that I think that youre, referring to Android and Apple.

Jason Boisvert Bazinet: Maybe maybe you could just unpack it a bit for us because when I look at your revenues showed a flat year at out leaves or sort of flat like its not obvious that these changes if sort of diminished your financials and yet.

Craig Abrams: I'm not saying that it's not necessarily impacting our ability to go out, the third concept, cow palette, which I..., of the first one and the second one. Center for Capital Allocation is dedicated to you, and the other. Shop, buybacks. And so I don't think that they're necessarily tied there, folks that operate them, impacted. We have.

Jason Boisvert Bazinet: You guys are talking about it as if it might be sort of it has been a big change and it's going to be a big change.

Jason Boisvert Bazinet: Do you mind, just sort of flushing that out a bit.

Speaker Change: Sure. So I think we're referencing as we look at guidance for 2024, as we're making incremental investments.

Eric Sheridan: Thank you. Our next question will come from the line of Eric Sheridan with Goldman Sachs. Thanks so much.

Speaker Change: We've always been.

Speaker Change: Very transparent with the trends that we've seen in the marketplace and how it's how it's impacting us and so I think this is this is no different.

Eric Sheridan: Maybe a two-parter following up on Clark's question. First, in terms of what you've learned as the marketing environment has become volatile over the last couple of years, what are the key learnings in terms of driving incremental ROI that you're taking out of the 2022-23 period that informs your marketing strategies going into 2024 and beyond? And then, looking into 2024 and beyond, how should we be thinking about elements that could increase ROI, like scale as you execute on the M&A strategy, AI becoming a larger component of marketing overall, or other elements that could amplify ROI over the medium to long term? Thanks so much.

Speaker Change: Ramping up spend in animal and coins impacts margins and I think as for the rest of the portfolio.

Speaker Change: We saw the need for selected titles to continue to ramp up investment.

Speaker Change: And so that combined with some of the mix shift has impacted our guidance for next year, but I think in terms of.

Speaker Change: Historically, we've been very good at leveraging offline campaigns and doing a variety of different things to ensure that we're able to navigate a changing environment.

Speaker Change: Okay, and if you had to parse.

Speaker Change: Sort of.

Speaker Change: Decision on your part to sort of lean into animals and claims and spend more on marketing as opposed to the.

Speaker Change: The Android Apple changes that are happening in the ecosystem as a way to parse that out in terms of the impact on your EBITDA guidance for next year.

Speaker Change: Yes, there is not.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question will come from the line of Eric Handler with Roth and Cam.

Nir Korchak: Hi, it's Nir Korchak, Playtika's CMO. So, first and foremost, we need to understand that we have a very wide range of different games. And for each game, obviously, we build a tailor-made marketing strategy. So when we look at the market, we need to understand not only the competition but also what we want to achieve for the long term. So what we are basically trying to understand is that sometimes the ecosystem is changing. As you mentioned before, the competition has become a bit tougher.

Eric Handler: Good morning, Thanks for the question Craig Wonder if you could talk about.

Eric Handler: When you look at your fourth quarter results relative to consensus you had a nice top line beat but.

Eric Handler: EBITDA was just in line I'm curious was that a.

Eric Handler: Marketing dollars was the big reason for that but.

Eric Handler: What type of how fast are you getting a return off of your advertising do you see an instant lift or does it take one quarter two quarters, how should we think about that.

Nir Korchak: And we need to spend a bit more on different strategies. So, always, we adjust our strategy towards areas where we believe that, for the long term, we will provide the best ROI. So that's for the first part of the question. The second part, what we are basically doing to leverage technology and AI. So it really depends on the different sources, and, of course, what's going on in the platform.

Sure so.

Eric Handler: You are correct in that we leaned into marketing to invest.

Eric Handler: In the fourth quarter.

But again came out.

Eric Handler: Above consensus on both revenue and EBITDA I think as we look to make return investments in a variety of games. They have they all have different payback periods. Obviously some of the newer fresher titles can now payback periods in a matter of months or longer.

Nir Korchak: So at the end of the day, what we are trying to achieve, we are trying to create a very diverse portfolio with diverse sources so that we will not rely on any specific source. And we are trying to push the one with the highest ROI, obviously, and see whether we can leverage technology and improve our results. So that's our strategy. And, of course, we tailor make it for each one of the games differently.

Eric Handler: Legacy titles can take.

Eric Handler: Over a year, depending on the title. So I think we have our own targets, it's different by title by platform by jurisdiction.

Eric Handler: And we invest towards those targets.

Great. Thank you very much.

Eric Handler: Okay.

Speaker Change: Thank you.

Speaker Change: This concludes today's conference call. Thank you for participating.

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Matthew Kost: Thank you. Our next question will come from the line of Matthew Kost with Morgan Stanley. Hi everybody, thanks for taking the question. Maybe I'll start just by asking about what you're seeing in the broader mobile gaming market, because we have seen some steps up in consumer confidence over the past couple of months. I'm wondering if you're seeing any change in consumer behavior, either late last year or into this year, particularly because, you know, as you lean into marketing, you're also expecting revenue roughly flat year on year. So do you expect to be outperforming a down market in line with the flat market? How should we think about what that guy means relative to the broader backdrop? And then I have this.

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Craig Abrams: Sure, so I do believe the macroeconomic environment has been tricky over the last few years, but we've really seen titles that are able to execute on their roadmaps succeed and grow. And if you look at our casual portfolios, up 5.5% last year, and if you look at where we've struggled. It's been some of the more competitive categories, like with the slot-themed games. I think some of that is not necessarily based on what's happening more broadly in the environment, more affected by the Advertising Ecosystem. It affects the ROI of acquired traffic.

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Craig Abrams: And so I think that has probably been the biggest impact of the mobile game industry, rather than the other 11 million programs that are spending. We've always thought that, but we're, Resilient Areas, uh, Okay, thank you. And then, obviously, I think you noted it very, very well in the prepared remarks about a step up in marketing in the fourth quarter. You've historically seen kind of an opportunity in the first quarter every year to lean into marketing. Should we expect that same seasonality where there's a meaningful sequential step up in your marketing spend in the first quarter? Hi, it's Nir again.

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Nir Korchak: So obviously, we are well familiar with the seasonality of marketing, and I believe that you saw what we did at the end of the year. We launched five new campaigns basically at the end of the year and tried to start the year strong. Obviously, I cannot elaborate on the results of the campaign, but we are very bullish about our strategy and how we see things forward. Our next question comes from Jason Bazinet, who said, Thanks, I just had a question about these ad changes that I think that you're referring to Android and Apple. Maybe you could just unpack it a bit for us, because when I look at your revenues, they're sort of flat. Your add-on leads are sort of flat.

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Jason Boisvert Bazinet: It's not obvious that these changes have sort of diminished your financials. And yet, you guys are talking about it as if it might be sort of, it has been a big change, and it's going to be a big change. So do you mind just sort of fleshing that out a bit? Sure, so I think we're referencing it as we look at guidance for 2024, as we're making incremental investments. And I think we've always been very transparent with the trends that we've seen in the marketplace and how they're impacting us, different. Animal and Coins, and Pax Margin, the rest of the portfolio. Solving

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Craig Abrams: Title, that combined with guidance for next year. Historically, we've been very good at leveraging off variety.

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Eric Handler: Okay, and if you had to parse the sort of decision on your part to sort of lean into animals and coins and spend more on marketing as opposed to the Android and Apple changes that are happening in the ecosystem, is there a way to parse that out in terms of the impact on your EBITDA guidance, Jet? Okay. Thank you. Our next question will come from the line of Eric Handler with Roth MKR. Good morning. Thanks for the question. Craig wanted to talk about when you look at your fourth-quarter results... you had a nice top line. But Eberta was online instead.

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Craig Abrams: And I'm curious, was that a reflection of... obviously... marketing dollars were the reason for that, but... What type of return are you getting on your advertising? Do you see an instant lift, or does it take one quarter, two quarters?

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Craig Abrams: How should we think about that? Sure, so... You are correct in that we leaned into marketing to invest in the fourth quarter but again came out above, on both revenue and EBITDA, to make return investments in a variety of games; they all have different payback periods, titles can pay back. Title, the year.

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Eric Handler: We have our own target, by title, by platform, by, Great. Thank you very much. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

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Operator: Coordinated by Peter J regretfully can't sleep I know they're not worrying They can't do it, so just sign cool Now tell me Tell me Tell me beg for my mercy How can I blame them for his horrible ideas, ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Playtika Holding Playtika Holding Playtika Holding Playtika Holding Playtika Holding Playtika Holding Playtika Holding Playtika Holding Playtika Holding Playtika Holding Playtika Holding Playtika Holding, www.circlelineartschool.com PLEASE LIKE, SHARE, COMMENT & SUBSCRIBE Voiceover Mand Au, https://www.youtube.com, Good day and thank you for standing by. Welcome to the Playtika 4th Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode.

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Speaker Change: Good day, and thank you for standing by welcome.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change: Welcome to <unk> fourth quarter 2023 earnings call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one one on your telephone.

Tayli: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tayli, Senior Vice President, Corporate Finance and Investor Relations. Please go ahead.

Speaker Change: You will then hear an automated message advising your hand is raised.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your Speaker today Daily Senior Vice President corporate Finance and Investor Relations.

Tayli: Welcome everyone, and thank you for joining us today for the fourth quarter 2023 earnings call for Playtika Holding Corp. Joining me on the call today are Robert Anticoll, co-founder and CEO of Playtika, and Craig Abrams, Playtika's President and Chief Financial Officer. I'd like to remind you that today's discussion may contain forward-looking statements, including but not limited to, the company's anticipated future revenue and operating performance. These statements and other comments are not guarantees of future performance but rather are subject to risks and uncertainties, some of which are beyond our control. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call.

Speaker Change: Please go ahead.

Speaker Change: Welcome everyone and thank you for joining us today for the fourth quarter 2023 earnings call for <unk> holding Corp. Joining me on the call today are Robert I have to call. It co founder and CEO of <unk> and Craig Abrahams play Chico's, President and Chief Financial Officer.

Speaker Change: Like to remind you that today's discussion may contain forward looking statements, including but not limited to the company's anticipated future revenue and operating performance. These statements and other comments are not a guarantee of future performance, but rather are subject to risks and uncertainties some of which are beyond our control.

Speaker Change: Forward looking statements apply as of today and you should not rely on them as representing our views in the future.

Speaker Change: Undertake no obligation to update these statements. After this call we have posted an accompanying slide deck to our Investor Relations website, which contains information on forward looking statements and non-GAAP measures and we will also post our prepared remarks immediately following the call.

Robert Anticoll: We have posted an accompanying slide deck on our investor relations website, which contains information on forward-looking statements and non-GAAP measures. And we will also post our prepared remarks immediately following the call. For a more complete discussion of the risks and uncertainties, please see our filings with the FCC. With that, I'll now turn the call over to Robert.

Speaker Change: For a more complete discussion of the risks and uncertainties. Please see our filings with the SEC.

Speaker Change: With that I'll now turn the call over to Robert.

Robert Anticoll: Good morning, and thank you everyone for joining our call today. I would like to begin by expressing my pride in how our employees and businesses have performed over the past year. While the year had many unexpected challenges for us to navigate as a company, it was a year of successful acquisitions of two studios, increasing efficiency, continuous growth into direct-to-consumer platforms, and increasing focus on our largest and growing franchises as we shifted more of our UA spending to our category's leading games. I'm pleased to announce that, despite revenue headwinds, we outperformed our guidance on revenues and credit adjusted E Our agility in adapting and optimizing operations in this challenging market has not only enabled us to navigate obstacles but also to surpass our expectations. In the face of these headwinds, 23 was the year of efficiency for Playtika.

Robert: Good morning, and thank you everyone for joining our call today I would like to begin by expressing my pride in how our employees and businesses have performed over the past year.

Robert: While <unk> had many unexpected challenges for us to navigate the company. It was a year of successful acquisition of <unk>.

Robert: Good thing increasing content.

Robert: Continuous growth into direct to consumer platforms and increased focus to our largest and growing franchise as we shifted more of our UA spending through our category leading game.

Robert: I am pleased to announce that despite the revenue headwinds, we outperformed our guidance on the revenue.

Robert: And adjusted EBITDA.

Robert: Our agility in adapting and optimizing operation in this challenging market will not only enable us to navigate obstacles, but also to surpass our expectations.

Robert: In the face of these headwinds 23 was the year.

Robert Anticoll: This transformation has empowered us to move faster and to make quicker decisions, which I believe will allow us to revamp our business and get back to sustainable growth. Our commitment to efficiency is not just about doing more with less. It is about empowering our people to sharpen our competitive edge. This approach is critical, as the mobile gaming industry continues to navigate challenges due in part to privacy updates affecting the marketing and monetization of games. I want to emphasize that despite the revenue headwinds we faced, there were bright spots throughout the quarter. Our casual games grew 2% Q over Q and 5.5% year-over-year, led by growth in June Journey, which grew 1.8% Q over Q and 33.3% year-over-year.

People play tick up.

Robert: Do you sort of formation has empowered us to move faster and to make quicker decisions, which I believe will allow us to revamp our business and to get back to sustainable growth.

Robert: Our commitment to efficiency is not just about doing more with less.

Robert: About empowering our people to sharpen our competitive edge.

Robert: These reports are what's critical is the mobile gaming industry continues to navigate challenges due impart to privacy updates.

Robert: The market began when your divisional games.

Robert: I want to emphasize that despite the revenue headwinds, we faced bill bright spot throughout the quarter.

Robert: Our casual games grew 2% Q over Q and five 5% year over year led by growth in June, Germany, which grew one 8% Q over Q and 33, 3% year over year.

Robert Anticoll: This success shows the strength and critical importance of our portfolio strategy, enabling us to navigate market challenges and capitalize on the opportunity for growth. As we look forward to the future, we have now positioned ourselves for a critical phase of reinvestment. We are setting in motion our new capital allocation framework, which includes the initiation of dividends and the intention to deploy between $600 million and $1.2 billion in M&A over the next three years. Our recent acquisitions, Animal and Coins and Governor's Poker, have demonstrated consistent month-over-month growth, reinforcing our belief in growing our game portfolio through M&A. I believe mobile gaming is at a pivotal point, with several trends pushing the need for consolidation.

Robert: This expense so the strength in capital importance of our portfolio of therapies.

Robert: Enabling us to navigate market challenges and capitalize on the opportunity for growth.

Robert: As we look forward the future we have now positioned ourselves for critical phase of the investment.

Robert: Okay.

Robert: We are setting in motion, our new capital allocation framework.

Robert: Which includes the initiation of dividend and intention to deploy between 600 million to $1 2 billion in M&A over the next three years.

Robert: Our recent acquisition anywhere and coins and governance focus to demonstrate consistent month over month growth reinforcing that we believe is drawing our game portfolio through M&A.

Robert: I believe mobile gaming is a pivotal point with several reinforcing the need for consolidation.

Robert: Yes.

Robert Anticoll: Our track record speaks for itself, with previous acquisitions driving growth and profitability since I co-founded the company over 13 years ago. In the evolving landscape of mobile gaming, I believe our commitment to M&A will retain the company for growth. Finally, I would address an important decision regarding our strategic alternative process. Our current global landscape is unpredictable, especially due to ongoing geopolitical conflicts in Israel and Ukraine. These conflicts have introduced a level of uncertainty that has impacted the process, and the board has decided to pause the evaluation of strategic alternatives. I will now turn it over to Craig. Thank you, Robert.

Robert: I will speak for itself with Gleevec acquisition, driving growth and profitability since I Cofounded the company over 13 years ago.

Robert: In the evolving landscape of mobile gaming I believe our commitment to M&A, we will return the company to growth.

Robert: Finally, I would address an important decision regarding our strategic alternative process.

Robert: Our current global landscape is unpredictable.

Robert: Actually do ongoing geopolitical conflicts in.

Robert: In Ukraine.

Robert: These conflicts have introduced a level of uncertainty.

Robert: Has impact the posters.

Robert: And the board has decided to pause the evaluation of strategic alternative.

Robert: Yeah.

Robert: I will now turn it over to Greg.

Greg: Thank you Robert.

Craig Abrams: As Robert mentioned, 2023 was the year of efficiency for Playtika. The strategic decisions that we've made as a company over the last year have further streamlined our operations and enhanced our ability to generate free cash flow. Supported by our strong financial position, I am pleased to introduce our capital allocation framework, focusing on maximizing shareholder value and ensuring our growth is sustained. Our goal is to deploy $600 million to $1.2 billion in M&A to enhance our portfolio and leadership position, as well as return capital to shareholders. In line with this strategy, we plan to make significant investments in performance marketing for our newly acquired growth title, Animals and Coins. While this approach is expected to lead to some margin erosion in the near term, it is designed to enhance long-term revenue potential. Furthermore, we remain committed to strategically deploying incremental investments in performance marketing across selected titles within our core portfolio. Our aim here is to seize opportunities to gain market share and drive profitable growth. Our approach is grounded in

Greg: As Robert mentioned 2023 was the year of efficiency for plate Vega.

Greg: The strategic decisions that we've made as a company over the last year have further streamlined our operations and enhanced our ability to generate free cash flow.

Supported by our strong financial position I am pleased to introduce our capital allocation framework, focusing on maximizing shareholder value and ensuring our growth is sustained.

Greg: Our goal is to deploy $600 million to $1 $2 billion in M&A to enhance our portfolio and leadership position as well as return capital to shareholders.

Greg: In line with this strategy, we plan to make significant investments in performance marketing for our newly acquired growth title animals and coins.

Greg: While this approach is expected to lead to some margin erosion in the near term. It is designed to enhance long term revenue potential.

Greg: Furthermore, we remain committed to strategically deploying incremental investments in performance marketing across selected titles within our core portfolio.

Greg: Our aim here is to seize opportunities to gain market share and drive profitable growth.

Greg: Our approach is grounded.