Q1 2024 Playtika Holding Corp Earnings Call

May 9, 2024

Okay.

Operator: Good day, and thank you for standing by. Welcome to the Playtika Q1 2024 earnings call. At this time, all participants are in a listen-only mode. 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 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tae Lee, SVP of Corporate Finance and Investor Relations. Please go ahead.

Speaker Change: Good day and thank you for standing by welcome to the <unk> Chica Q1, 2024 earnings call.

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 you will then hear an automated message advising your hand is race.

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 first speaker today.

Speaker Change: Lee SVP of corporate finance and Investor Relations.

Lee: Go ahead.

Tae Lee: Welcome, everyone, and thank you for joining us today for the first quarter 2024 earnings call for Playtika Holding. Joining me on the call today are Robert Antokol, co-founder and CEO of Playtika, and Craig Abrahams, Playtika's president and chief financial officer.

Lee: Welcome everyone and thank you for joining us today for the first quarter of 2024 earnings call for <unk> holding Corp. Joining me on the call today are Robert ended the call co founder and CEO of <unk>, and Craig Abrahams, Chico's, President and Chief Financial Officer.

Tae Lee: I would 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 their 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.

Lee: I would 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.

Lee: The 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, which contains information on forward looking statements and non-GAAP measures and we will also post our prepared remarks immediately following the call.

Tae Lee: We've 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 SBA. With that, I'll now turn the call over to Rob.

Lee: For a more complete discussion of the risks and uncertainties. Please see our filings with the SEC with that I'll now turn the call over to Robert.

Robert Antokol: Good morning, and thank you everyone for joining our call today. Last year, I said that 2023 would be our year of efficiency. And I'm pleased to report that we have made steps in optimizing our operation and our resource allocation. Our efforts last year have established a solid foundation, and I am pleased to note that 2024 is our year of execution. As a part of this new phase, we have made some changes to our executive leadership team to better align with our strategic goals.

Robert: Good morning, and thank you everyone for joining our call today.

Robert: Lastly, you said the 'twenty to 'twenty, three with that will yield efficiencies.

Robert: And I am pleased to report that we have made in optimizing our operation and our resource allocation.

Robert: Our efforts have established a solid foundation and I am pleased to note that 2024.

Robert: Our year of execution.

Robert: As a part of this new phase we have made some changes to our executive leadership team.

Robert: Aligned with our goal.

Robert: Gold.

Robert Antokol: We recognize the evolving landscape of our industry and the importance of acting swiftly, and we have decided to reorganize our leadership team. Our goal with this RE-ORG is to better align our management structure with our strategic priority of growing our leadership position in mobile gaming. We have decided to streamline our executive leadership team by eliminating the roles of Chief Revenue Officer and Chief Operating Officer. This adjustment is designed to flatten our leadership and bring studios under my direct oversight.

Robert: We recognize the evolving landscape of our industry and the importance to act swiftly and we have decided to reorganize our leadership team.

Robert: Our goal with <unk> is to better aligned our management structure with our strategic priority of growing our leadership position in mobile gaming.

Robert Antokol: In addition, all shared services operations will now report directly to me, which includes our talented technology and HR team. This change simplifies our reporting structure but also enhances my direct involvement in both our revenue generation strategies and operational management. This ensures we are as agile and effective as possible. Additionally, Nir Korczak, our Chief Marketing Officer, who previously reported to our CRO, will now report directly to me. We are pushing to enhance the synergy between our marketing efforts and studio operations by more closely integrating marketing directly within our studio.

Robert: We have decided to streamline our executive leadership team.

Robert: Eliminating the roles of Chief revenue Officer, and Chief operating Officer.

Robert: This adjustment is designed to flatten our leadership and bring studios under might be direct oversight.

Robert: In addition.

Speaker Change: Also it services operation will now report directly to me.

Speaker Change: Which includes our talented technology and HR teams.

Speaker Change: This change simplifies our reporting structure, but also enhances my direct involvement in both our revenue generation strategy.

Speaker Change: Operational management.

Speaker Change: This is true well angel and effective as possible.

Speaker Change: And recently, new Kozak, our Chief marketing Officer, who previously reporting to our CLO, We now reported directly to me.

Speaker Change: We are enforcing to enhance the synergy between our marketing efforts and studio operation by more closely integrating marketing directly within our studios.

Robert Antokol: We are paving the way for more tactical and cohesive campaigns. I also want to extend my heartfelt gratitude to our departing executives, who have played critical roles in our journey. The contribution has been invaluable, and they leave behind a strong legacy of having helped build Playtika into an industry-leading mobile gaming company. As we move forward, we're excited about the opportunities that these changes bring. Our streamlined and flatter structure will enhance decision-making and accelerate our plans, allowing us to better serve our community of players and create value for our shareholders.

Speaker Change: We are paving the way for more tactical and cohesive campaign.

Speaker Change: I also want to extend my heartfelt gratitude to our departing executives.

Speaker Change: Who have played critical roles in our journeys.

Speaker Change: The contribution has been invaluable.

Speaker Change: And they leave behind it so long legacy of having helped build <unk> into an industry, leading mobile gaming company.

Speaker Change: As we move forward, we're excited about it.

Speaker Change: These changes bring.

Speaker Change: Our streamlined and flat effect, so we didn't hedge decision, making and accelerates our plans, allowing to better serve our community of players.

Speaker Change: Creating value for shareholders.

Robert Antokol: I am confident in our direction and the steps we are taking, and I look forward to updating you on our continued progress throughout the year. I will now turn it over to Craig to talk in more detail about the business and the financial results.

Speaker Change: I am confident in our direction and the steps, we're taking and I look forward to updating you on that well continued progress throughout the year I will now turn it over to Craig to talk in more detail about the business and the financial results.

Craig J. Abrahams: Thank you, Robert. I'd like to start by emphasizing the importance of our capital allocation principles, which we introduced last quarter. Our strategy focuses on balancing capital returns to shareholders and capital deployment for M&A. This approach helps ensure that every dollar invested is maximized for shareholder value.

Craig J. Abrahams: Thank you Robert I'd like to start by emphasizing the importance of our capital allocation principles, which we introduced last quarter.

Craig J. Abrahams: Our strategy focuses on balancing capital returns to shareholders and capital deployment for M&A.

Craig J. Abrahams: This approach helps ensure that every dollar invested is maximized for shareholder value.

Craig J. Abrahams: I'm pleased to announce that our Board of Directors has authorized a new share purchase program of $150 million. This initiative highlights our financial stability and our ongoing commitment to delivering long-term value to our shareholders. Together with our quarterly dividends, this share repurchase program is a key component of our strategy to systematically return capital to our shareholders. Additionally, I want to update you on the performance of our recently acquired studios. Over the past two quarters, we have successfully added these new games to our overall operations, and I'm pleased to report that they've continued to demonstrate strong performance.

Craig J. Abrahams: I am pleased to announce that our board of directors has authorized a new share purchase program of $150 million.

Craig J. Abrahams: This initiative highlights our financial stability and our ongoing commitment to delivering long term value to our shareholders.

Craig J. Abrahams: Together with our quarterly dividends. This share repurchase program is a key component of our strategy to systematically return capital to our shareholders.

Craig J. Abrahams: Additionally, I want to update you on the performance of our recently acquired studios.

Craig J. Abrahams: Over the past few quarters, we have successfully added these new games to our overall operations.

Craig J. Abrahams: I am pleased to report that they've continued to demonstrate strong performance.

Craig J. Abrahams: This performance reaffirms our confidence in the value creation potential of our M&A strategy and our capability to replicate this success in future acquisitions. Turning to our financial results, For the quarter, we generated $651.2 million of revenue, up 2.1% sequentially and down 0.8% year over year. Our increased investment in performance marketing had an impact on our credit adjusted EBITDA margins this past quarter, as we generated credit adjusted EBITDA of $185.6 million, down 1.7% sequentially and down 16.7% year over year. The net income was $53 million.

Craig J. Abrahams: This performance reaffirms our confidence in the value creation potential of our M&A strategy and our capability to replicate this success and future acquisitions.

Craig J. Abrahams: We saw strong results from our direct-to-consumer platforms as we generated $171.5 million, up 6.1% sequentially and 13.2% year-over-year. The strength in D2C was led by existing games on our platforms as we experienced sequential growth in our D2C business across Bingle Blitz, Slotomania, Caesars Casino, House of Fun, and World Series of Poker. We're in the early endings of our D2C business and Soledad Grand Harvest in June's journey, and we expect to see incremental revenue contribution from D2C in the coming quarter.

Craig J. Abrahams: Turning to our financial results.

Craig J. Abrahams: For the quarter, we generated $651 $2 million of revenue up two 1% sequentially and down 8% year over year.

Craig J. Abrahams: Our increased investment in performance marketing had an impact in our credit adjusted EBITDA margins. This past quarter as we generated credit adjusted EBITDA of $185 6 million down.

Craig J. Abrahams: Down one 7% sequentially and down 16, 7% year over year.

Craig J. Abrahams: Net income was $53 million.

Craig J. Abrahams: We saw strong results from our direct to consumer platforms, as we generated $171 5 million up six 1% sequentially and 13, 2% year over year.

Craig J. Abrahams: The strength in DTC was led by existing games on our platforms as we experienced sequential growth in our DTC business across bingo Blitz slot ammonia Caesars Casino house of fun and World series of Poker.

Craig J. Abrahams: We're in the early innings of our DTC business installed our grain harvest in jeans journey, and we expect to see incremental revenue contribution from <unk> in the coming quarters.

Craig J. Abrahams: Turning now to our business results for the quarter, revenue across our casual games grew 2.9% sequentially and 1.3% year over year. The sequential growth in our casual games was led by Bingo Blitz, Salter Grand Harvest, and Animals and Coins.

Craig J. Abrahams: Turning now to our business results for the quarter.

Craig J. Abrahams: Revenue across our casual games grew two 9% sequentially and one 3% year over year.

Craig J. Abrahams: The sequential growth in our casual games was led by Bingo Blitz Solitaire grant harvest in animals and clients.

Craig J. Abrahams: Bingo Blitz revenue was $157.5 million, up 4.8% sequentially and down 1% year over year. Following sequential revenue stability in Q4 of last year, I'm pleased to report the strong sequential growth in Bingo, as this is a significant indicator of the resilience and growth potential of the Bingo Blitz franchise. While our revenue was down slightly year over year, the comparison is against the highest revenue quarter in Bingo's history. In addition, we're very proud of our Bingo Blitz team for their continued success in growing our GDC business.

Craig J. Abrahams: <unk> revenue was $157 5 million up four 8% sequentially and down 1% year over year.

Craig J. Abrahams: Following sequential revenue stability in Q4 of last year I am pleased to report a strong sequential growth in bingo as this is a significant indicator of the resilience and growth potential of the <unk> franchise.

Craig J. Abrahams: While our revenue was down slightly year over year. The comparison is against the highest revenue quarter in <unk> history.

Craig J. Abrahams: In addition, we're very proud of our being able to his team for their continued success in growing our D to C business I'm happy to report that bingo Blitz as DTC revenues grew double digits year over year.

Craig J. Abrahams: I'm happy to report that Bingo Blitz's DDC revenues grew double digits year over year. Salter Grant Harvest revenue was $77.8 million, up 2.7% sequentially, and down 8.9% year-over-year. Salter Grant Harvest saw its revenue decrease over several quarters last year, following an exceptionally strong Q1.

Craig J. Abrahams: Solgel Grant harvest revenue was $77 8 million up two 7% sequentially and down eight 9% year over year.

Craig J. Abrahams: Sales of our grain harvest saw its revenue decrease over several quarters last year. Following an exceptionally strong Q1. However, we are now seeing signs of positive momentum in the studio and we remain optimistic about our roadmap this year.

Craig J. Abrahams: However, we are now seeing signs of positive momentum in the studio, and we remain optimistic about our roadmap this year. Our social casino-themed games grew 1.4% sequentially and declined 3.5% year-over-year. The sequential growth in social casino-themed games was led by World Series of Poker, Governor of Poker III, and Caesars Casino.

Craig J. Abrahams: Our social casino themed games grew one 4% sequentially and declined three 5% year over year.

Craig J. Abrahams: The sequential growth in social casino themed games was led by World series of Poker Governor Poker, three and Caesars casino.

Craig J. Abrahams: Squatamania revenue was $135.4 million, down 1.1% sequentially and 7.6% year-over-year. In response to the competitive landscape for Slotomania, we have increased our performance marketing investments. Our efforts are aimed at increasing installations and engagement in solidifying our position in a competitive market. In addition, we're making other strategic and tactical adjustments as we prioritize this franchise. We remain optimistic about our ability to stabilize and grow Slotomania over time and believe that our ongoing efforts will gradually reflect improved revenue performance.

Craig J. Abrahams: <unk> revenue was $135 4 million down one, 1% sequentially and seven 6% year over year.

Craig J. Abrahams: In response to the competitive landscape for <unk>, we have increased our performance marketing investments.

Craig J. Abrahams: Our efforts are aimed at increasing installs and engagement and solidifying our position in a competitive market.

Craig J. Abrahams: In addition, we're making other strategic and tactical adjustments as we prioritize this franchise.

Craig J. Abrahams: We remain optimistic about our ability to stabilize and grow slot ammonia over time and believe that our ongoing efforts will gradually reflect an improved revenue performance.

Craig J. Abrahams: Turning now to specific line items in our P&L for the first quarter, cost of revenue decreased 4.7% year over year, driven primarily by growth in our D2C business, and operating expenses increased by 16%, driven primarily by increased performance marketing spending. R&D increased by 4.4% year-over-year. Higher R&D expenses were primarily due to a shift in our workforce composition towards higher cost locations combined with merit-based compensation increases. These factors contributed to the rise in expenses despite a decrease in overall ad count.

Craig J. Abrahams: Turning now to specific line items in our P&L for the first quarter.

Craig J. Abrahams: Cost of revenue decreased four 7% year over year, driven primarily by growth in our DTC business and operating expenses increased by 16% driven primarily by increased performance marketing spending.

Craig J. Abrahams: R&D increased by four 4% year over year.

Craig J. Abrahams: Higher R&D expenses were primarily due to a shift in our workforce composition towards higher cost locations combined with merit based compensation increases. These factors contributed to the rise in expenses. Despite a decrease in overall head count.

Craig J. Abrahams: Sales and marketing increased by 32.5% year over year. Growth in sales and marketing expenses was the result of the increase in performance marketing spend that we guided to on our last earnings call. The majority of the growth and performance marketing spend year over year was related to our newly acquired studios. We typically spend more in the first quarter than any other quarter. And so we expect the year-over-year growth in spending to taper off in the coming quarter.

Craig J. Abrahams: Sales and marketing increased by 32, 5% year over year growth in sales and marketing expenses were the result of the increase in performance marketing spend that we guided to on our last earnings call.

Craig J. Abrahams: The majority of the growth and performance marketing spend year over year was related to our newly acquired studios.

Craig J. Abrahams: We spend more in the first quarter than any other quarter and so we expect the year over year growth in spending to taper off in the coming quarters.

Craig J. Abrahams: G&A expenses declined slightly by 0.3% year over year. As of March 31st, we had approximately $1 billion in cash and cash equivalents. Looking at our operating metrics, average CPU increased 1% sequentially and decreased 5.2% year-over-year to 309,000. Average DAU increased 2.3% sequentially and decreased 3.3% year-over-year to $8.8 million. ARPDAU increased 1.3% sequentially and year-over-year to $0.81. Finally, we expect revenue to be within the previously provided range of $2.52 to $2.62 billion and credit adjusted EBITDA in the range of $730 to $770 million. Our outlook on CapEx remains unchanged. With that said, we'd be happy to take your questions.

Craig J. Abrahams: G&A expenses declined slightly by <unk>, 3% year over year.

Craig J. Abrahams: As of March 31, we had approximately $1 billion in cash and cash equivalents.

Craig J. Abrahams: Looking at our operating metrics average GPU increased 1% sequentially and decreased five 2% year over year to 309000.

Craig J. Abrahams: Average <unk> increased two 3% sequentially and decreased three 3% year over year to $8 8 million.

Craig J. Abrahams: Arb DAU increased one 3% sequentially and year over year to 81.

Craig J. Abrahams: Finally, we expect revenue to be within the previously provided range of two five to $2 62 billion in.

Craig J. Abrahams: In credit adjusted EBITDA in the range of $730 million to $770 million our outlook on Capex remains unchanged.

Speaker Change: With that we'd be happy to take your questions.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you'll need to press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A list. Our first question comes from the line of Colin Sebastian of Baird. Your line is now open.

Speaker Change: Thank you at this time, we will conduct the question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Craig J. Abrahams: Please standby, while we compile the Q&A roster.

Craig J. Abrahams: Our first question comes from the line of Colin Sebastian of Baird. Your line is now open.

Colin Alan Sebastian: Great, thank you very much. I have a couple of questions for you. I guess, I guess, first off, maybe, Robert, on the marketing strategy change and the new leadership structure. Can you talk about maybe how the marketing strategy will evolve under your leadership of that? And then, I guess, based on what you've seen today with Slotomania, why not lean more into spend, I guess, across more of the legacy portfolio? And I have a follow-up. So,

Colin Alan Sebastian: Great. Thank you very much a couple of questions for me I guess I guess first off maybe Robert on the marketing strategy change and the new leadership structure.

Colin Alan Sebastian: Can you talk about maybe how some of the marketing strategy will evolve.

Colin Alan Sebastian: Under your leadership of that and then I guess based on what you've seen today with <unk> why not lean more into spend I guess across across more of the legacy portfolio and I have a follow up thanks.

Robert Antokol: So first, thanks for the question, a very important one. So, you know, eight years ago, Playtika was working differently than it does today. Each studio has its own marketing people, its own marketing strategy, and eight years ago, we decided to put everything under one CMO. And now, I started to feel that we need to do more new direction, and we need to give more dependency to the studio. And the changes we're doing today, actually, we're building another two teams.

Speaker Change: So first thanks for the question and very important one.

Speaker Change: No no it years ago political was working differently than today.

Speaker Change: Good deal as it is on the marketing.

Speaker Change: Clearly the oil marketing strategy.

Speaker Change: If we go we decided to do is to put.

Speaker Change: Everything under one CMO.

Speaker Change: Now I started to feel that we need to do more new direction, we need to give more.

Speaker Change: Dependency to these two deals.

Speaker Change: The changes we are doing today actually we're building another two teams.

Robert Antokol: It will give us, as a company, a better view of the market and enable us to do better tests. And by the way, for Slotomania, you know, it's... The last quarter has always been critical, why are we not investing enough if the market is not good enough, and I think we need to do things a little bit differently, and now, with the independence of the studio, I feel it can help us to grow the business because we believe in the game, we believe in the studio, and we have big hopes for the future.

Speaker Change: It will work one of them was being one of the slaughter slow demand in each of them will walk a little bit differently than the others. It will give us as a company a better view on the market.

Speaker Change: To better assist and.

Speaker Change: By the way.

Speaker Change: Latonia.

Speaker Change: No.

Speaker Change: I'm going to say in the last quarter was always been critical to why we're not investing enough.

Speaker Change: <unk> group will now flow and I think we.

Speaker Change: We need to do things a little bit differently.

Speaker Change: Now we've been independency of the studio I feel it can help us to grow the business because we believe EBITDA will believe me the studio and we have big hopes for the future.

Robert Antokol: Okay, thank you. And then on the D2C platform and Solitaire and June's journey, I guess how quickly would you expect those to ramp up on D2C? And overall, I think you're 26, 27% of revenues now through D2C. Where could we see that move up to over the next couple of years? Thank you.

Speaker Change: Okay. Thank you and then on the DTC platform and Solitaire in Jeans journey I guess, how quickly would you expect those to ramp up on DTC and overall I think your 26, 27% of revenues now through DTC, where can we see that move up to over the next couple of years.

Speaker Change: Thank you.

Speaker Change: So our target is as well.

Robert Antokol: I think we will cross the 30% mark, but I'm not changing the target. We were always the first ones doing DTC. We always felt that this was the right direction to give us independence, give us a better margin, and better cash flow. And I think this is one of the biggest advantages of Playtika as a company.

Speaker Change: Said the order was the 30% we are not chasing the <unk>.

Speaker Change: The targets.

Speaker Change: As I said as you said.

Speaker Change: I'm very excited that we are still.

Speaker Change: Again, thats not running on our platform and going to.

Speaker Change: And we're going to have another tool of them during the 12 to 14 months.

Speaker Change: I think we will cross the 30%, but im not changing any no I'm not changing the target.

Speaker Change: We were always the first one doing DTC, we always felt that this is did I say that gives us some dependency give us.

Speaker Change: Better margins better cash flow and as soon as this is one of the biggest advantage of play to guide the company.

Speaker Change: Thank you.

Operator: One moment for our next question. The next question comes from the line of Aaron Lee of Macquarie. Your line is now open.

Speaker Change: One moment for our next question.

Speaker Change: Next question comes from the line of Aaron Lee of Macquarie. Your line is now open.

Aaron Lee: Good morning. Thanks for taking my question. It's great to hear that, you know, you've reaffirmed your confidence in the M&A strategy. With regard to that, I guess, how are you thinking about investments in studios versus full acquisitions? In the past, I think you've done a few of those. Any takeaways from those, and is this something you would consider going back to?

Aaron Lee: Good morning, Thanks for taking my question.

Aaron Lee: It's great to hear that.

Aaron Lee: You've reaffirmed your confidence in the M&A strategy with regard to that I guess, how are you thinking about investments in studios versus full acquisitions in the past I think you've done a few of those any takeaways from those and is this something you would consider going back to <unk>. Thanks.

Craig J. Abrahams: Sure, thanks for the question. So, as part of doing M&A due diligence on a variety of companies, I think it's important to be close to the entire ecosystem. So, having the ability to make investments is an important part of the toolkit as we develop relationships with a variety of studios. Obviously, our preference is to make acquisitions where we can leverage our LiveOps capabilities and help these businesses grow. We've done that as well, in some examples with some investments.

Speaker Change: Sure. Thanks for the question so as part of doing M&A in diligence on a variety of companies I think it's important to be close to the entire ecosystem. So having the ability to make investments as an important part of the toolkit as we developed relationships with a variety of studios.

Speaker Change: Our preference is to make.

Speaker Change: Acquisitions, where we can.

Speaker Change: Leverage our live ops capabilities and help these businesses grow.

Speaker Change: We've done that as well and some.

Speaker Change: Some examples with some investments obviously.

Craig J. Abrahams: Obviously, it's, you know, that hopefully is a longer-term path where we make a good investment to hopefully acquire that business or just develop a better relationship with that business. But I think our priority is clearly M&A, but having that investment capability in our toolkit is important as well.

Speaker Change: It's.

Speaker Change: That hopefully is a longer term path.

Speaker Change: While we made good investment to.

Speaker Change: Hopefully acquiring that business and is developing a better relationship with that business, but I think our priority is clearly M&A.

Speaker Change: But having that investment capability in our toolkit is important as well.

Aaron Lee: Understandable. That makes sense. And then, just curious to hear the latest state of the union with regard to your ad tech and marketing tools and whether it makes sense to kind of flex your R&D budget a bit to accelerate any efforts there. Thank you.

Speaker Change: Understood that makes sense.

Speaker Change: And then just curious to hear the latest state of the Union with regard to your AD Tech and marketing tools and whether it makes sense to kind of flex your R&D budget a bit to accelerate any efforts there. Thank you.

Craig J. Abrahams: Yeah, so I think the ad tech ecosystem is rapidly changing. And I think what we're finding is that it's best to, you know, look at each opportunity individually and, in some examples, use internal tools, and in some examples, use third-party tools. And it doesn't necessarily always need to be built in house.

Speaker Change: Yes.

Speaker Change: The AD tech ecosystem is rapidly changing and I think what we're finding is that.

Speaker Change: It's best to.

Speaker Change: Look at each opportunity individually and in some examples used internal tools and some examples use third party tools.

Speaker Change: And it doesn't necessarily always needs to be built in house.

Craig J. Abrahams: You know, I think as we look at certain tools, whether it's for attribution or budget allocation, there are, you know, new AI tools, either in-house or third-party, that are helping us there. And we'll continue to look at what's the best-in-class way to help us continue to optimize marketing. I think overall, our big advantage in marketing is that we have a large portfolio of games and we can reallocate budget where we see the best returns and constantly make changes over time.

Speaker Change: I think as we look at starting tools, whether its for attribution or budget allocation.

Speaker Change: There are new AI tools, either in house or third party that arent that are helping us there.

Speaker Change: And we will continue to look to.

Speaker Change: What is the best in class way to help us continue to optimize marketing I think overall, our big advantage in marketing is that we have a large portfolio of games and we can reallocate budget, where we see the best returns.

Speaker Change: And constantly make changes over time and that allows us to kind of navigate.

Craig J. Abrahams: And that allows us to kind of navigate, you know, a shifting environment. I think also the fact that we're able to do offline campaigns on television and leverage iconic celebrities into the games, as well as in the advertising, helps us with customer engagement. So, you know, we continue to explore the market and export.

Speaker Change: Shifting environment I think also the fact that we're able to do.

Speaker Change: All flying campaigns on television.

Speaker Change: And leverage.

Speaker Change: Iconix celebrities into the games as well as in the advertising.

Speaker Change: Helps us as well with the customer engagement so.

Speaker Change: We continue to navigate the market and execute.

Operator: I understand. I appreciate all the color. Thank you very much.

Speaker Change: Understood I appreciate all the color. Thank you very much.

Brian Nicholas Fitzgerald: Thank you. One moment for our next question. The next question comes from the line of Brian Fitzgerald of Wells Fargo. Your line is now open.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Next question comes from the line of Brian Fitzgerald of Wells Fargo. Your line is now open.

Craig J. Abrahams: Thanks. Maybe a follow-on to the last kind of train of thought on these AI-based marketing solutions. Can you give us a general idea of how you are deploying them? Are they permeated across your whole portfolio of games? Are they running against the newly acquired studios? And maybe secondly, are you seeing the leverage there that you want? And then the last part of the question is just, how successful are you having with these AI-based marketing solutions? Was that impactful in terms of, hey, now's the right time to streamline marketing leadership? I would not correlate that.

Brian Nicholas Fitzgerald: Thanks, maybe a follow on to the last kind of train of thought.

Brian Nicholas Fitzgerald: These AI based marketing solutions can you give us a.

Brian Nicholas Fitzgerald: General idea.

Brian Nicholas Fitzgerald: Are you deploying them or are they permanently permeated across your whole portfolio of games are they running against the newly acquired studios.

Brian Nicholas Fitzgerald: And maybe secondly are you seeing the leverage there.

Brian Nicholas Fitzgerald: You want <unk>.

Brian Nicholas Fitzgerald: And then the last part of the question is yes is the.

Brian Nicholas Fitzgerald: The success Youre, having with these AI based marketing solutions.

Brian Nicholas Fitzgerald: Impactful in terms of Hey, now is the right time to streamline the marketing leadership team.

Operator: All right. Thank you. One moment for our next question. The next question comes from the line of Omar Dessouky of Bank of America. Your line is now open.

Craig J. Abrahams: So I would not correlate the two decisions. We've been using AI tools for years to help our employees in a variety of places throughout the company solve difficult problems and aid them in making better decisions. And so that's been going on for years, and I think what's really changed in the marketplace is that there have been these great third-party tools that have been developed as well. It's able to further provide aid to the employees in terms of how they make their decisions. So I think, I'll go there. It's been kind of a status quo; things are just getting better over time. In terms of the reorganization, it was a separate decision, as Robert referenced earlier.

Brian Nicholas Fitzgerald: So I would not correlate the two decisions we've been using AI tools for years to help our employees and a variety of places throughout the company kind of solve difficult problems and aid them in making better decisions and so thats been going on for years.

Brian Nicholas Fitzgerald: And I think that's what's really changed in the marketplace.

Brian Nicholas Fitzgerald: Theres been these great third party tools that have been developed as well it's able to further.

Brian Nicholas Fitzgerald: Provide.

Brian Nicholas Fitzgerald: To the employees in terms of.

Brian Nicholas Fitzgerald: How they make their decision so I think there it is.

Brian Nicholas Fitzgerald: Ben kind of status quo things are just getting better over time in terms of the reorganization that was a separate decision as Robert referenced earlier.

Brian Nicholas Fitzgerald: Okay.

Speaker Change: Alright. Thank you one moment for our next question.

Omar Dessouky: Hey guys, this is Arthur on behalf of Omar. Thanks for taking the question. Is there any metric or a statistic you can share to help us probably quantify how much you're spending on user acquisition in some of the newly acquired games versus games that are more mature? You know, it could be like percentage of booking or any difference in terms of payback here or ROAS. I think anything at all would be super helpful. Thank you.

Speaker Change: Next question comes from the line of Omar <unk> of Bank of America. Your line is now open.

Speaker Change: Hey, guys. This is Arthur on for Omar Thanks for taking my question.

Arthur: Is there any that shake for statistically sure to.

Arthur: Can you help us properly quantified how much you're spending he was acquisitions in some of the newly acquired games versus games that are more mature.

Arthur: It could be like percentage of booking or.

Arthur: Any difference in terms of a payback period.

Arthur: Our ROE as I think any anything at all would be super helpful. Thank you.

Arthur: Okay.

Craig J. Abrahams: No, I think if you look at the incremental spend year over year, a good portion of that was dedicated to our newly acquired titles as we're investing there for growth. Budgets. Good results at Bingo Blitz and are investing there. I think, in general, there's nothing. We're going to call it out quantitatively, but... You know, we called out last quarter to invest more to help bring certain franchises to market.

Speaker Change: No I think.

Speaker Change: If you look at the incremental spend year over year, a good portion of that was dedicated towards I newly acquired titles.

Speaker Change: As we're investing there for growth.

Speaker Change: I think we've called out a lot of money in the past as well as having increased marketing budgets. We're also seeing good results had bingo Blitz and our investing there.

Speaker Change: So yes.

Speaker Change: I think in general there is nothing specific were going to call out quantitatively, but.

Speaker Change: We called out last quarter, the decision to invest more to.

Speaker Change: To help bring certain franchises.

Speaker Change: Growth opportunities.

Craig J. Abrahams: And it's super helpful. Thank you. Thank you. I am showing no further questions at this time. This does conclude the question and answer session and the program. Thank you for your participation in today's conference. You may now disconnect.

Speaker Change: Understood Super helpful. Thank you.

Speaker Change: Alright, Thank you I'm showing no further questions at this time. This does conclude the question and answer session and the program. Thank.

Operator: Alright, thank you. I am showing no further questions at this time. This concludes the question and answer session and the program. Thank you for your participation in today's conference. You may now disconnect. Oh, say, can you see, by the dawn's early light, what so proudly we hailed at the twilight's last gleaming? Oh, say, does that star-spangled banner still wave, O'er the land of the free and the home of the brave?

Speaker Change: [music].

Operator: ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Good day and thank you for standing by.

Operator: Welcome to the Playtika Q1 2024 Earnings Call. At this time, all participants are in a listen-only mode. 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 your hand is raised. 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 first speaker today, Tae Lee, SVP of Corporate Finance and Investor Relations. Please go ahead.

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 you will then hear an automated message advising your hand is race.

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 first speaker today <unk> Li.

Li: VP of corporate Finance and Investor Relations. Please go ahead.

Tae Lee: Welcome, everyone, and thank you for joining us today for the first quarter of 2024 earnings call for Pletica Holding. Joining me on the call today are Robert Antokol, co-founder and CEO of Playtika, and Craig Abrahams, Playtika's president and chief financial officer. I would 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 their control.

Li: Welcome everyone and thank you for joining us today for the first quarter of 2024 earnings call for <unk> holding Corp.

Li: Joining me on the call today are Robert ended the call co founder and CEO of <unk>, and Craig Abrahams play Chico's, President and Chief Financial Officer.

Li: I would 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.

Tae Lee: 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've 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 in the essay. With that, I'll now turn the call over to you.

Li: 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.

Li: 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.

Li: For a more complete discussion of the risks and uncertainties. Please see our filings with the SEC with that I'll now turn the call over to Robert.

Robert Antokol: Good morning, and thank you everyone for joining our call today. Last year, I said that 2023 would be our Year of Efficiency. And I'm pleased to report that we have made steps in optimizing our operation and our resource allocation. Our efforts last year have established a solid foundation, and I'm pleased to know that 2024 is our year of execution. As a part of this new phase, we have made some changes to our executive leadership team to better align with our strategic goals.

Robert: Good morning, and thank you everyone for joining our call today.

Robert: Lastly, you said the 'twenty to 'twenty, three with double yellow proficiency.

Robert: And I am pleased to report that we have made.

Robert: Optimizing our operation and our resource allocation.

Robert: Our efforts have established a solid foundation and I am pleased to note. The 'twenty 'twenty four is that our year of execution.

Robert: Is it part of this new phase we have made some changes to our executive leadership team and better aligned with our goal.

Robert: Gold.

Robert Antokol: We recognize the evolving landscape of our industry and the importance of acting swiftly, and we have decided to reorganize our leadership team. Our goal with this RE-ORG is to better align our management structure with our strategic priority of growing our leadership position in mobile gaming. We have decided to streamline our executive leadership team by eliminating the roles of chief revenue officer and chief operating officer. This adjustment is designed to flatten our leadership and bring studios under my direct oversight.

Robert: We recognize the evolving landscape of our industry and the importance to act swiftly and we have decided to reorganize our leadership team.

Robert: Our goal with this the deal is to better aligned our management vaxjo with our strategic priority of growing our leadership position in mobile gaming.

Robert: We have decided to streamline our executive leadership team by eliminating the role of Chief revenue Officer, and Chief operating Officer.

Robert: This adjustment is designed to flatten our leadership in bringing two deals under my direct oversight.

Robert Antokol: In addition, all shared services operations will now report directly to me, which includes our talented technology and HR team. This change simplifies our reporting structure but also enhances my direct involvement in both our revenue generation strategies and operational management. This ensures we are agile and as effective as possible. Additionally, Nir Korczak, our Chief Marketing Officer, who previously reported to our CRO, will now report directly to me. We are pushing to enhance the synergy between our marketing efforts and studio operations by more closely integrating marketing directly within our studio.

Robert: In addition.

Robert: Also services Operation will now report directly to me, which includes our talented technology and HR teams.

Robert: These James simplifies our reporting structure, but also enhances my direct involvement in both our revenue generation strategy.

Robert: And operational management.

Robert: This is true well agile and effective as possible.

Robert: And recently, new Kozak, our Chief marketing Officer, who previously reporting to our CLO, We now reported directly to me.

Robert: We are importing to enhance the synergy between our marketing efforts and studio operation by more closely integrating marketing directly within our studios.

Robert: We are paving the way for more tactical and cohesive campaign.

Robert: I also want to extend my heartfelt gratitude to our departing executives.

Robert: Who have played critical roles in our journey.

Robert: The contribution has been invaluable.

Robert: And they leave behind it so long legacy of having helped build <unk> into an industry, leading mobile gaming company.

Robert: As we move forward, we're excited about the opportunity.

Robert: This did these changes bring.

Robert: Our streamlined and flatter so we didn't hedge decision, making and accelerates our plans, allowing to better serve our community of players and creating value for shareholders.

Robert: I am confident in our <unk>.

Robert: Action and the steps, we are taking and I look forward to updating you on that well continued progress throughout the year I will now turn it over to Craig to talk in more detail about the business and the financial results.

Craig J. Abrahams: Thank you Robert I'd like to start by emphasizing the importance of our capital allocation principles, which we introduced last quarter.

Craig J. Abrahams: Our strategy focuses on balancing capital returns to shareholders and capital deployment for M&A.

Craig J. Abrahams: This approach helps ensure that every dollar invested is maximized our shareholder value.

Craig J. Abrahams: I am pleased to announce that our board of directors has authorized a new share purchase program of $150 million.

Craig J. Abrahams: This initiative highlights our financial stability and our ongoing commitment to delivering long term value to our shareholders.

Craig J. Abrahams: Together with our quarterly dividends. This share repurchase program is a key component of our strategy to systematically return capital to our shareholders.

Craig J. Abrahams: Additionally, I want to update you on the performance of our recently acquired studios.

Craig J. Abrahams: Over the past few quarters, we have successfully added these new games to our overall operations.

Craig J. Abrahams: I am pleased to report that they have continued to demonstrate strong performance.

Craig J. Abrahams: This performance reaffirms our confidence in the value creation potential of our M&A strategy and our capability to replicate this success in future acquisitions. Turning to Financial Results, For the quarter, we generated $651.2 million of revenue, up 2.1% sequentially and down 0.8% year over year. Our increased investment in performance marketing had an impact on our credit adjusted EBITDA margins this past quarter, as we generated credit adjusted EBITDA of $185.6 million, down 1.7% sequentially and down 16.7% year over year. Net income was $53 million.

Craig J. Abrahams: This performance reaffirms our confidence in the value creation potential of our M&A strategy and our capability to replicate this success and future acquisitions.

Craig J. Abrahams: Turning to our financial results.

Craig J. Abrahams: For the quarter, we generated $651 $2 million of revenue up two 1% sequentially and down 8% year over year.

Craig J. Abrahams: <unk>, one 7% sequentially and down 16, 7% year over year.

Craig J. Abrahams: Net income was $53 million.

Craig J. Abrahams: We saw strong results from our direct-to-consumer platforms as we generated $171.5 million, up 6.1% sequentially and 13.2% year-over-year. The strength in D2C was led by existing games on our platforms as we experienced sequential growth in our D2C business across Bingo Blitz, Slotomania, Caesars Casino, House of Fun, and World Series of Poker. We're in the early endings of our D2C business and Soledad Grand Harvest in June's journey, and we expect to see incremental revenue contribution from D2C in the coming quarters. Turning now to our business results for the quarter.

Craig J. Abrahams: We saw strong results from our direct to consumer platforms, as we generated $171 5 million up six 1% sequentially and 13, 2% year over year.

Craig J. Abrahams: This strength in DTC was led by existing games on our platforms as we experienced sequential growth in our DTC business across bingo Blitz slot ammonia Caesars Casino house of fun and World series of Poker.

Craig J. Abrahams: We're in the early innings of our DTC business and saw Joe Grant harvest and James journey, and we expect to see incremental revenue contribution from <unk> in the coming quarters.

Craig J. Abrahams: Revenue across our casual games grew 2.9% sequentially and 1.3% year over year. The sequential growth in our casual games was led by Bingo Blitz, Salter Grand Harvest, and Animals and Coins. Bingo Blitz revenue was $157.5 million, up 4.8% sequentially and down 1% year over year. Following sequential revenue stability in Q4 of last year, I'm pleased to report the strong sequential growth in Bingo, as this is a significant indicator of the resilience and growth potential of the Bingo Blitz franchise.

Craig J. Abrahams: Turning now to our business results for the quarter.

Craig J. Abrahams: Revenue across our casual games grew two 9% sequentially and one 3% year over year.

Craig J. Abrahams: The sequential growth in our casual games was led by Bingo Blitz Solitaire grant harvest in animals and clients.

Craig J. Abrahams: <unk> revenue was $157 5 million up four 8% sequentially and down 1% year over year.

Craig J. Abrahams: While our revenue was down slightly year over year, the comparison is against the highest revenue quarter in Bingo's history. In addition, we're very proud of our Bingo Blitz team for their continued success in growing our G2C business. I'm happy to report that Bingo Blitz's DDC revenues grew double digits year over year. Solitaire Grand Harvest revenue was $77.8 million, up 2.7% sequentially, and down 8.9% year-over-year. Salter Grand Harvest saw its revenue decrease over several quarters last year, following an exceptionally strong Q1.

Craig J. Abrahams: While our revenue was down slightly year over year. The comparison is against the highest revenue quarter in <unk> history.

Craig J. Abrahams: In addition, we're very proud of our <unk> team for their continued success in growing our D to C business I'm happy to report that bingo Blitz as DTC revenues grew double digits year over year.

Craig J. Abrahams: Solgel Grant harvest revenue was $77 8 million up two 7% sequentially and down eight 9% year over year.

Craig J. Abrahams: Our social casino themed games grew one 4% sequentially and declined three 5% year over year.

Craig J. Abrahams: The sequential growth in social casino themed games was led by World series of Poker Governor Poker, three and Caesars casino.

Craig J. Abrahams: Swatamania revenue was $135.4 million, down 1.1% sequentially and 7.6% year-over-year. In response to the competitive landscape for Slotomania, we have increased our performance marketing investments. Our efforts are aimed at increasing installations and engagement in solidifying our position in a competitive market. In addition, we're making other strategic and tactical adjustments as we prioritize this franchise. We remain optimistic about our ability to stabilize and grow Slotomania over time and believe that our ongoing efforts will gradually reflect improved revenue performance.

Craig J. Abrahams: <unk> revenue was $135 4 million down one, 1% sequentially and seven 6% year over year.

Craig J. Abrahams: In response to the competitive landscape for <unk>, we have increased our performance marketing investments.

Craig J. Abrahams: Our efforts are aimed at increasing installs and engagement and solidifying our position in a competitive market.

Craig J. Abrahams: In addition, we're making other strategic and tactical adjustments as we prioritize this franchise.

Craig J. Abrahams: We remain optimistic about our ability to stabilize and grow slot of many over time and believe that our ongoing efforts will gradually reflect an improved revenue performance.

Craig J. Abrahams: Turning now to specific line items in our P&L for the first quarter.

Craig J. Abrahams: R&D increased by four 4% year over year.

Craig J. Abrahams: Sales and marketing increased by 32.5% year over year. Growth in sales and marketing expenses was the result of the increase in performance marketing spend that we guided to on our last earnings call. The majority of the growth and performance marketing spend year over year was related to our newly acquired studios. We typically spend more in the first quarter than any other quarter, and so we expect the year-over-year growth in spending to taper off in the coming quarter.

Craig J. Abrahams: The majority of the growth and performance marketing spend year over year was related to our newly acquired studios.

Craig J. Abrahams: We spend more in the first quarter than any other quarter and so we expect the year over year growth in spending to taper off in the coming quarters.

Craig J. Abrahams: G&A expenses declined slightly by 0.3% year over year. As of March 31st, we had approximately $1 billion in cash and cash equivalents. Looking at our operating metrics, average CPU increased 1% sequentially and decreased 5.2% year over year to 309,000. Average DAU increased 2.3% sequentially and decreased 3.3% year-over-year to 8.8 million. ARPDAU increased 1.3% sequentially and year-over-year to $0.81. Finally, we expect revenue to be within the previously provided range of $2.52 to $2.62 billion and credit adjusted EBITDA in the range of $730 to $770 million. Our outlook on CapEx remains unchanged. With that said, we'd be happy to take your questions.