Q1 2024 Playstudios Inc Earnings Call - Q&A

Speaker Change: [music].

Operator: Good afternoon, everyone, and welcome to the Play Studios first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. Q&A, Q&A, and instructions will be given at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to Samir Jain, Head of Investor Relations and Treasury. Mr. Jain, you may begin.

Good afternoon, everyone and welcome to the place Studios first quarter 2024 earnings call.

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

A question and answer session.

And instructions will be given at that time.

As a reminder, this conference is being recorded.

I would now like to turn the call over to Samir Jain head of Investor Relations and Treasury. Mr. James You may begin.

Samir Jain: Thank you, Operator. Good afternoon, and thank you for joining us for Play Studios' first quarter 2024 earnings call. Joining me on the call today are our Chairman and CEO, Andrew Pascal, and our CFO, Scott Peterson. Before we begin, let me remind you that during the course of this call, we will make forward-looking statements. These statements are based on our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially.

Samir Jain: Thank you operator, good afternoon, and thank you for joining us for place studio's first quarter 2024 earnings call.

Samir Jain: Joining me on the call today are chairman and CEO, Andrew Pascal and our CFO Scott Peterson.

Samir Jain: Before we begin let me remind you that during the course of this call. We will make forward looking statements. These statements are based on our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially.

Samir Jain: Please refer to our SEC filings for a discussion of the risks and uncertainties that may affect our future results. I would like to remind everyone that we will discuss certain non-GAAP financial measures during this call. These measures should not be considered as a substitute for financial results prepared in accordance with GAAP. Our results are prepared in accordance with GAAP, and a reconciliation to comparable GAAP measures will be provided in our first quarter earnings release and in our SEC filing. With that, I'll pass the call to Andrew.

Please refer to our SEC filings for a discussion of the risks and uncertainties that may affect our future results.

I would like to remind everyone that we will discuss certain non-GAAP financial measures during this call.

Samir Jain: These measures should not be considered as a substitute for financial results prepared in accordance with GAAP are results are prepared in accordance with GAAP and a reconciliation to comparable GAAP measures will be provided in our first quarter earnings release and in our SEC filings.

Samir Jain: With that I'll pass the call to Andrew.

Andrew S. Pascal: Thank you, Samir, and welcome, everyone, to our first quarter 2024 earnings call. As always, our commentary today is in addition to the financial disclosures we made in our press release. I encourage you to take a look at the release for a summary of our more recent performance. I'll begin with a few thoughts on the quarter and the company's outlook, after which Scott will follow up with a discussion of our financials, and then we'll open the call to your questions. Revenues and adjusted EBITDA for the quarter were ahead of consensus expectations in our own internal plan, on a year-over-year basis, and, as expected, both metrics were down from year-ago levels.

Andrew S. Pascal: Thank you Mary and welcome everyone to our first quarter 'twenty 'twenty four earnings call and as always our commentary today is in addition to the financial disclosures. We made in our press release I encourage you to take a look at the release for summary of our more recent programs.

Speaker Change: I Wonder if your thoughts on the quarter and the company's outlook after which Scott will follow with a discussion of our financials and then well open the call up for your questions.

Revenues and adjusted EBITDA in the quarter were ahead of consensus expectations and our own internal plans on a year over year basis, and as expected both metrics were down from the year ago level.

Andrew S. Pascal: As I alluded to during our last call, many of our products are undergoing meaningful changes, which we expected to temper this quarter's operating performance. This was by design as we focused on building the infrastructure needed to revitalize these games and position them for growth. As a quick recap, initiatives in 2024 include a portfolio-wide adoption of our updated MyBIP loyalty program, the restoration of MyVegas and MyKonami, the generalization of play awards, the launch of at least one new Tetris title, and an expansion of monetization within the Brainium portfolio.

Speaker Change: I alluded to during our last call many of our products are undergoing meaningful changes, which we expected to temper. This quarter's operating performance. This was by design as we focused on building the infrastructure needed to revitalize these games and positioning them for growth.

Speaker Change: Quick recap initiatives in 2024 include a portfolio wide adoption of our updated by VIP loyalty program restoration of by Degas, and Mike Nally. The generalization of play awards launching at least one new textures title and an expansion of monetization with membrane in your portfolio.

Andrew S. Pascal: We're making notable progress on all these fronts, and I believe we're on our way to exiting the year on an improved runway. Now, let's delve a bit more deeply into our Play Games business division. Overall, the results in Play Games continue to benefit from momentum in our growth portfolio. Tetris was, again, the standout, as its revenue and DAU were well ahead of year-ago figures. High levels of organic traffic were amplified by the recent fascination with Willis Gibson, the 13-year-old Tetris player who became the first person to defeat the game.

Speaker Change: We're making notable progress in all these fun and I believe and want a way to exit in the yard and improve from here.

Let's delve a bit more deeply into our play games business overall.

Speaker Change: Overall the results in play games continued to benefit from momentum in alcohol portfolio.

Speaker Change: Petrus was again the standout it's robbing your NDA you were well ahead of year ago figures high levels of organic traffic why amplified by the recent fascination with Willis Gibson, the 14 year old Tetris player who became the first person to defeat the game.

Andrew S. Pascal: The global reaction that ensued reaffirmed our belief in this beloved franchise and our plans for tapping its unrealized potential on mobile platforms. With this in mind, our Tetris Prime team has been working hard on refreshing the look and feel of the existing game, elevating its creative execution to standards that are more consistent with the rest of our portfolio. Our goal is to have this new version ready for Tetris's 40th anniversary in June. We also plan to complement this core Tetris title with at least one new casual variant later this year, likely in the third quarter.

Speaker Change: The global reaction, but didn't see reaffirmed our belief in this beloved franchise and our plans for tapping its unrealized potential on mobile platforms with this in mind, our tetra spine team has been working hard on refreshing the look and feel of the existing game elevating its creative execution to the standards that are more consistent with the rest of our portfolio.

Speaker Change: Our goal is to have this new version ready for Texas, its 40th anniversary in June.

Speaker Change: We also plan to complement this core Texas title with at least one new casual variant later this year likely in the third quarter with the mobile license in place for the foreseeable future. Our long term ambition is to establish tatras as a premier mobile gaming brands.

Andrew S. Pascal: With the mobile license in place for the foreseeable future, our long-term ambition is to establish Tetris as a premier mobile gaming brand. It's also worth noting that we continue to enjoy solid momentum from our Brainium portfolio, which helped this quarter's result. We've been introducing new ad units and optimizing fill rates, which has driven an uptick in monetization. We're expecting further improvements as we introduce rewarded video and complete the integration of a MyVIP program.

Speaker Change: It's also worth noting that we continue to enjoy solid momentum from Albanian portfolio, which helped this quarter's results they've.

Speaker Change: We've been introducing new AD units and optimizing fill rates, which is stripping and uptick in monetization. We're expecting further improvement introduce rewarded video and complete the integration of our VIP program, a unified and consistent execution of our loyalty solution across all of our primary titles is a top priority for us and something we're committed to accomplishing in the coming months.

Andrew S. Pascal: A unified and consistent execution of our loyalty solution across all of our primary titles is a top priority for us and something we're committed to accomplishing in the coming months. Our core portfolio is generally trending in line with the broader social casino industry, which continues to be challenged. We expect this to be the case throughout 2024, so we don't anticipate the industry rebounding this year.

Speaker Change: Our core portfolio is generally trending in line with the broader social casino industry, which continues to be challenged we expect this to be the case throughout 2024. So we don't anticipate the industry's rebounded this year.

Andrew S. Pascal: As a result, our focus remains on refining our technology tools and operating capabilities, which should position us well when the market dynamics improve. With that said, our top priority is to better leverage our learnings across our collection of social casino titles. In support of this, we transitioned our MyVegas and MyEconomic games to Tel Aviv and are deep into the process of updating the games and improving our operations. This has been an ambitious undertaking, which has been further complicated by the conflict in Israel.

Speaker Change: As a result of our focus remains on refining our technology tools, and operating capability, which should position us well when the market dynamics improve.

Speaker Change: With that said our top priority is to better leverage all nothing's crossed our collection of social casino titles and supported as we transition to our my Vegas, My economic games to Tel Aviv and are deep into the process of updating the games and improving our operations.

Been an ambitious undertaking which was further complicated by the conflict in Israel.

Andrew S. Pascal: But we're making good progress, which is reflected in the more recent pickup in daily conversion rates. We're also working on increasing our direct-to-consumer business, which is largely nascent today. The primary focus is to more effectively leverage our MyBASP.co player portals with our active monetizers. The use of our loyalty program as a primary driver of direct business presents us with a differentiated strategy. Over time, I believe this will allow us to grow our direct sales and further improve our margins. Turning to Play Awards, we continue to focus on two key themes.

Speaker Change: Making good progress, which is reflected in the more recent pick up in daily conversion rates were also working on increasing our direct to consumer business, which is large and nascent today.

Speaker Change: Primary focus tomorrow effectively language I'm IV P dot co player portals.

Speaker Change: Monetize the use of our loyalty program is a primary driver of direct business presents us with a differentiated strategy overtime I believe this will allow us to grow our direct sales and further improve our margins.

Speaker Change: Turning to play awards, we continue to focus on two key themes, one fortifying our industry, leading platform by advancing its technologies and adding new players in rewards partners and to generalize them a platform for extent external use.

Andrew S. Pascal: One, fortifying our industry-leading platform by advancing its technologies and adding new players and rewards partners. And two, generalizing the platform for external use; third-party game publishers remain interested in our unique offering, and we continue to qualify our best to structure a partnership. We expect these conversations to continue throughout the coming quarters with the goal of formalizing a pilot relationship before the end of the year.

Speaker Change: Third party game publishers remain interested in our unique offering and we continue to qualify how best to structural partnership.

Speaker Change: These conversations to continue throughout the coming quarters with the goal of formalizing pilot relationship before the end of the year.

Andrew S. Pascal: As these partnerships mature, we believe we can evolve Play Awards from a cost center to a revenue-generating loyalty-as-a-service business. Before turning the call to Scott, I want to discuss our capital position and plans for investing our available cash. We restarted our share repurchase program in the first quarter and have bought an additional $4 million of stock through today.

Speaker Change: These partnerships mature we believe we can have all play a walk from a cost center to a revenue generating loyalty as a service business.

Speaker Change: Before turning the call to Scott I want to discuss our capital position and plans for investing Aussie honorable cash.

Scott Peterson: We restarted our share repurchase program in the first quarter and have bought an additional $4 million of stocks today.

Andrew S. Pascal: We view our share prices deeply discounted and believe that buy and hold our own stock trades provide value for all shares. At the same time, we remain committed to identifying and completing transformative M&A transactions. We continue to actively search for compelling opportunities that are in keeping with our overall strategy and expansion plans. Our goal remains to use our capital to enhance our strategic position, drive incremental growth, and increase the value of our company. I'll now turn the call over to Scott to make some additional comments. Thanks, Andrew. Good afternoon, everyone.

Scott Peterson: Our share price is deeply discounted and believe buying back our own stock creates value for all shareholders. At the same time, we remain committed to identifying completing transformative M&A transactions.

Scott Peterson: We continue to actively search for compelling opportunities are in keeping with our overall strategy and expansion plans. Our goal remains to use our capital to enhance our strategic position driving incremental growth and increase the value of our company.

Scott Peterson: I'll turn the call over to Scott to provide some additional comments Scott.

Scott Peterson: In addition to today's press release, our Form 10-Q will be filed shortly. Please look to those filings for a comprehensive summary of our first quarter results. We started the year strong with quarterly net revenues and consolidated adjusted EBITDA ahead of consensus expectations. First quarter consolidated adjusted EBITDA of $15.3 million was 14% lower than a year ago, while net revenues of $77.8 million were 3% lower.

Scott Peterson: Thanks, Andrew Good afternoon, everyone.

Scott Peterson: In addition to today's press release, our Form 10-Q will be filed shortly please look to those filings for a comprehensive summary of our first quarter results.

Scott Peterson: We started the year strong with quarterly net revenues and consolidated adjusted EBITDA ahead of consensus expectations first quarter consolidated adjusted EBITDA of $15 3 million was 14% lower than a year ago, while net revenues of $77 8 million were 3% lower.

Scott Peterson: As a reminder, the first half of 2023 results include the benefit of a licensing agreement that ended later in the year. Adjusting for the impact of this agreement, first quarter consolidated adjusted EBITDA and net revenues would have been roughly flat with last year's amount. As mentioned on our last call, we are anticipating building strength throughout the year. This is due to the numerous initiatives underway that will layer into our results sequentially.

Scott Peterson: As a reminder, the first half of 'twenty 'twenty. Three results include the benefit of a licensing agreement that ended later in the year.

Scott Peterson: Adjusting for the impact of disagreement first quarter consolidated adjusted EBITDA and net revenues would have been roughly flat with last year's an ounce.

Scott Peterson: As mentioned on our last call we are anticipating building strength throughout the year.

Scott Peterson: You did have numerous initiatives underway that will layer into our results sequentially.

Scott Peterson: DAU was $3.5 million, and MAU was $14.8 million, down 2% and up 13%, respectively, from last year. MAU increased due to the Tetris activity related to the Willis-Gibson exposure for beating the game. However, Tetris DAU increased over the quarter at a more modest rate. DAU declined in total, primarily due to the core portfolio of our social casino games, partially offset by the Tetris increase. ARPDAU for the quarter was $0.24, flat with year-ago results.

Scott Peterson: P O U S $3 5 million and Miu was $14 8 million down, 2% and up 13% respectively from last year.

Scott Peterson: I know you increased due do the Texas activity related to the Willis Gibson exposure of beating the game.

Tetra steel you increased over the quarter at a more modest rate.

Scott Peterson: Do you you have declined in total primarily through the core portfolio of our social casino games, partially offset by the Tetris increase.

Scott Peterson: Popped out for the quarter was 24 cents.

Scott Peterson: With year ago results noble here with a double digit gains in my Vegas, my economic and bringing him.

Scott Peterson: Notable here were the double-digit gains in MyVegas, MyKonami, and Brainium. Turning to play awards, we continue to make progress expanding the functionality and scope of the platform. We closed the quarter with 521 available rewards and 113 reward partners. Over 500,000 rewards were purchased in the quarter, a 14% increase from a year ago. We remain focused on a full integration of Play Awards and MyVIP into our games and continue to seek out opportunities to externalize the platform. We ended the quarter with approximately $127 million in cash, no borrowings, and full availability of our $81 million revolver.

Scott Peterson: Turning to play of words, we continue to make progress expanding the functionality and scope of the platform.

Scott Peterson: The quarter with 521 available rewards and 113 reward partners.

Scott Peterson: Over 500000 rewards were purchased in the quarter, a 14% increase from a year ago.

Scott Peterson: We remain focused on our full integration of play of words in my VIP into our games and continue to seek out opportunities to externalized platform.

Scott Peterson: We ended the quarter with approximately 127 million in cash no borrowings and full availability of our $81 billion revolver as Andrew mentioned, we resumed repurchasing our shares during the quarter.

Scott Peterson: As Andrew mentioned, we resumed repurchasing our shares during the quarter and have bought an additional $4 million of stock through today. As such, we have $46 million remaining on our share repurchase authorization and continue to view share buybacks as an accretive and compelling use of our capital. In addition to share repurchases, our broader capital allocation goals remain the same.

Scott Peterson: Got an additional $4 million of stock through today.

Scott Peterson: As such we have $46 million remaining on our share repurchase authorization.

Scott Peterson: You can use to view share buybacks as an accretive and compelling use of our capital. In addition to repurchases our broader capital allocation goals remain the same.

Scott Peterson: Investing in our games, building and scaling play awards, and the pursuit of strategic and accretive M&A. Our 2024 financial guidance remains the same, revenues in the range of $315 and $325 million, and consolidated adjusted EBITDA between $65 and $75 million. I'll now turn the call back to Andrew for some closing remarks. Thanks, Scott.

Scott Peterson: In our games building and scaling play awards and the pursuit of strategic and accretive M&A.

Scott Peterson: Our 'twenty 'twenty four financial guidance remains the same.

Scott Peterson: He is in the range of 315 and $325 million and consolidated adjusted EBITDA between 65, and $70 million I will now turn the call back to Andrew for some closing remarks.

Andrew S. Pascal: Before we end our prepared remarks and open the call for questions, I'd like to touch on a few highlights. We had a strong quarter with revenue and adjusted EBIT above R and street expectations. We remain on track to meet our full year earnings guidance, which calls for positive sales and earnings growth this year. Changes at MyDagas and MyEconomy are in process, and we're encouraged with the progress. We believe both games have the potential to meaningfully improve monetization this year.

Andrew S. Pascal: Thanks, Scott before we end our prepared remarks and open the call for questions I'd like to touch on a few highlights.

Andrew S. Pascal: We had a strong quarter with rather you an adjusted EBITDA above the R M Street expectations.

Andrew S. Pascal: We remain on track to meet our full year earnings guidance, which calls for positive sales and earnings growth this year.

Andrew S. Pascal: Changes in my Vegas in Miami or in process and we're encouraged with the progress we believe both games have the potential to meaningfully improve monetization sphere.

Andrew S. Pascal: We remain on track for full integration of our updated loyalty solution into all of our games by year-end. In addition to better game metrics, we expect the integration of MyVIP.co to drive higher direct sales. Brainium's results are showing sequential strength on the back of expanded advertising efforts.

Andrew S. Pascal: We remain on track to a full integration of our updated loyalty solution into all of our games by year end. In addition to a better game metrics. We expect the integration of my VIP Dot code to drive higher direct sales.

Andrew S. Pascal: Premiums results, we're showing sequential strength in the back of the expanded advertising efforts. We look for continued momentum through the year Tetra.

Andrew S. Pascal: We look for continued momentum through the year. Tetris continues to grow materially and is positioned for a strong 2024. Two new Tetris games are in development, with the goal of launching one later this year.

Andrew S. Pascal: <unk> continues to grow materially and is positioned for a strong 2020 for two new Tetris games are in development with the goal of launching one later this year.

Andrew S. Pascal: We continue to explore ways to open play awards to external platforms. Conversations with third parties continue, and we remain confident the play awards can evolve into a profitable standalone business. Finally, we restarted our share repurchase program this quarter, and we continue to believe our stock is trading well below fair value and represents tremendous value.

Andrew S. Pascal: We continue to explore ways to open play awards external platforms conversations with third parties continue and remain confident play awards can evolve into a profitable standalone business.

Andrew S. Pascal: Finally, we restarted our share repurchase program this quarter.

Andrew S. Pascal: Continue to believe our stock is trading well below fair value and represents tremendous value.

Operator: With that, I'll turn it over to the operator. Operator, please open the line for questions. Thank you. And ladies and gentlemen, at this time, we will ask our questions.

With that I'll turn it over to the operator.

Speaker Change: Operator, please open the line for questions.

Operator: Thank you, and ladies and gentlemen, at this time, we will conduct our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove yourself from the question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from Ryan Sigdahl with Craig Hallam. Capital Group, please state your question.

Speaker Change: Thank you and ladies and gentlemen at this time, we will conduct a question and answer session.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate that your line is in the question queue.

Speaker Change: You May press star two if he would like to remove yourself from the question to you.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Our first question comes from Ryan Cingal with Craig Hallum Capital Group. Please state your question.

Andrew S. Pascal: Hey, good afternoon, guys. Hey Ryan, I want to start with the play awards. What was the royalty revenue last year? Just can you remind me what it exactly was and why it didn't repeat? And then talk through the pipeline of the B2B opportunities and licensing opportunities for play awards. And then, kind of lastly, along with that, when should we expect the segment to inflect to profitability and self-sustaining?

Ryan Cingal: Hey, good afternoon guys.

Speaker Change: Yeah.

Ryan Cingal: Hey, Ryan one I want to start with the play awards what was the royalty revenue last year. Just can you remind me what what it exactly wasn't why it didn't repeat and then talk to the pipeline and the B to b opportunities in licensing opportunity for play Awards, and then kind of lastly, along with that when should we expect for the segment to inflect too.

Ryan Cingal: Profitability and self sustaining.

Andrew S. Pascal: Thanks, Ryan. On the first question, if you recall, last year, we had a relationship with a technology provider related to a suite of blockchain technologies that we were going to incorporate into our platform company called Forte. So we had a licensing agreement in place with them where we were making use of their technology, and in turn, they were licensing from us some of our intellectual property and certain rights to leverage a bunch of the work that we had done in the Play Awards space.

Ryan Cingal: Thanks Wayne.

Ryan Cingal: Yeah on the first question. If you recall last year, we had a relationship with a technology provider related to.

Wayne: Our suite of blockchain technologies that we were going to incorporate into our platform company called Forte. So we had a licensing agreement in place with them where.

Wayne: Where we were making use their technology and in turn they were licensing from us.

Wayne: Our intellectual property and certain rights to leverage a bunch of the work that we had done in the play awards space So that expired.

Andrew S. Pascal: So that expired towards the end of the year, and that's why that's not a non-recurring revenue line. On the B2B efforts, I mean, as I alluded to in our remarks, I mean, we've had a bunch of conversations, I mean, these are dating back to last year, with a number of different game publishers, just to qualify the overall opportunity, and we've taken on a lot of the feedback that we received and continue to invest in evolving our platform and tools in response to some of that feedback, and we have active conversations that are still ongoing, which is why we've kind of established an expectation that before the end of the year, we'll have, we believe, our first pilot program in place, and then based upon the performance and success of that program, we'll converge on what ultimately will be our commercial model and resolve how it is that we'll scale that business, so the third question as to when it would turn profitable, we can't really provide any indication, but it's certainly not assumed to impact this year's performance, and we'll certainly provide a bit more visibility and guidance once we have it ourselves.

Wayne: Towards the end of the year and that's why that's not a nonrecurring revenue line item.

Wayne: On the B to B efforts, I mean, as I alluded to in our remarks, I mean, we've had a bunch of conversations I mean, these are dating back to last year with a number of different game publishers just to qualify the overall opportunity and.

Wayne: And we've taken on a lot of the feedback that we received and continue to invest in evolving our platform and tools in response to some of that feedback and we have active conversations that are still ongoing.

Wayne: Which is why we've kind of established an expectation that before the end of the year, we'll have a we believe our first pilot program in place.

And then based upon that performance and success of that program will converge on what ultimately will be our commercial model and resolve how it is it will scale that business. So and the third question as to when it will turn profitable we can't really provide any indication, but it's certainly not assumed impact this year's performance.

Speaker Change: Well, we'll certainly provide a bit more visibility and guidance once we have it ourselves.

Andrew S. Pascal: Helpful. Thanks, Andrew. Just a follow-up on the exchange with Forte. Was that effectively a zero margin, zero EBIT, then, since you were exchanging technology for technology, effectively?

Speaker Change: Helpful. Thanks, Andrew just a follow up on the exchange with Forte was that effectively zero Mark Chin Zero. EBITDA then since you were exchanging technology for technology effectively.

Andrew S. Pascal: No, it was a high-margin opportunity. I mean, we received compensation and consideration for licensing and for the use of select IP, and so it was a high-margin opportunity.

Speaker Change: No. It was it was a high margin opportunity I mean, we we received compensation in consideration for licensing and so they use says select the IP and.

Speaker Change: So it was high margin.

Andrew S. Pascal: Gotcha. I didn't know if you were paying them back for their technology, but it makes sense. Moving along to Tetris, it looks like one of the Tetris games is live in Canada, another one says coming soon in the US, but can you elaborate on which one of those you expect in Q3, and then any more comments on the game variants and who the targeted audience for these Tetris games will be? Sure.

Speaker Change: Got you I didn't know if you were paying back to them for their technology Ah, but it makes sense.

Speaker Change: Moving along to Tetris, it looks like one of the Tetra schemes is alive in Canada. Another one says coming soon in the U S. But can you elaborate on which one of those do you expect in Q3, and then any more comments kind of on the game variants and who the targeted audience for these tetris game Sylvia.

Andrew S. Pascal: Sure. So we're really excited, obviously, about Tetris as a franchise. You might not know that in June it will be the 40th anniversary of Tetris, and so we're obviously looking forward to the elevated kind of interest that Tetris will likely have, and we're going to take advantage of that and be a part of all the campaigns and celebrate the 40th anniversary. A big part of that will be the refresh and revamp of our existing Tetris Prime products, so that's been ongoing, and that'll be live in the June timeframe.

Sylvia: Sure well. So we're really excited obviously about Tetris is a franchise you might not know that in June and it'll be the 40th anniversary of Tetris and so.

Sylvia: We're obviously looking forward to the elevated kind of interest that Texas will likely have more going to take advantage of that and be a part of all the campaigns and celebrating before he sent sorcery a big part of that will be the refresh and revamp of our existing Texas Prime product. So that's been ongoing and that'll be live in the June time.

Andrew S. Pascal: As far as the new Tetris products are concerned, we have two casual Tetris products that have been in development for over a year now, and both are continuing to improve. As we've indicated, we fully expect one of them to launch this year. We're not quite ready to identify and start speaking to which of the two we're going to launch with, but suffice to say, we're feeling pretty comfortable about the progress the teams are making.

Sylvia: Train as far as the new Tetris products are concerned we have two casual tetris products that have been in development for <unk>.

Sylvia: Over a year now are both are continuing to advance we as we've indicated fully expect one of them will launch this year.

Sylvia: We're not quite ready to identify and start speaking to which of the two we're going to launch with but.

Sylvia: Suffice to say, we're we're feeling pretty comfortable about the progress the teams are making.

Andrew S. Pascal: As far as the target audience is concerned, it's a broader, more casual audience. A lot of the people that are finding and playing Tetris today tend to be more of the purists, and we believe that there's a very big audience out there that would love to play Tetris on a mobile device. The experience of it is a little bit different. Mobile games, obviously, have evolved quite a bit since the first introduction of Tetris as a game format, and so we think that a bit of a hybrid, games that take advantage of really proven block puzzle mechanics, along with some of the other meta features that you see in the most popular casual games, will make for a more interesting and accessible experience for a much bigger audience. So that's our focus in terms of that. The Consumer's Retargeting.

Sylvia: And as far as the target audience, it's a broader more casual audience a lot of the people that are finding and playing tetris today tend to be more of the purists and we believe that there is a very big audience out there that I would love to play Tetris on a mobile device the experience that they're just a little bit different mobile games.

Sylvia: Obviously, it involves quite a bit since the first introduction of mattresses of game format, and so we think that a bit of a hybrid games that take advantage of really proven puzzle blocks block puzzle mechanics, along with some of the other meta features are that you see in the most popular casual games will make for.

Sylvia: A more interesting and accessible game for a much bigger audience. So that's that's our focus in terms of.

Sylvia: The consumer will be targeting.

Andrew S. Pascal: Very good. Thank you. Good luck.

Speaker Change: Very good. Thank you good luck thank.

Speaker Change: Thank you so much right.

Operator: Our next question comes from Aaron Lee with Macquarie. Please state your question.

Speaker Change: Our next question comes from Aaron Lee with Macquarie. Please state your question.

Andrew S. Pascal: Hey, good afternoon guys. Thanks for taking my question. So you guys saw a nice uptick in rewards purchases this quarter, obviously, both in the number of units and the retail value. Is there anything to unpack there, just in terms of the driver of that, and anything you can comment on in terms of initiatives to move these metrics higher, you know, ahead of your loyalty platform commercialization? Thanks.

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

So you guys saw a nice uptick in rewards purchases. This quarter, obviously are both in the number of units in the retail value.

Aaron Lee: Is there anything to impact there just in terms of the driver of that and anything you can comment on in terms of initiatives to move these metrics higher you know ahead of your loyalty platform our commercialization. Thanks.

Andrew S. Pascal: Thanks for the question. You know, the rewards redemptions are pretty well distributed. The team's done a great job, and we continue to optimize the portfolio of rewards that we offer. We find that our players really enjoy a lot of the events that we conduct, so the types of activities and events where people can go en masse and participate in an experience like MyVegasAtSea. And so we're looking at... stepping up our efforts around some of the proprietary things that we're doing along the events dimension.

Speaker Change: Yeah no. Thanks for the question.

Speaker Change: The rewards redemptions are pretty well distributed the team's done a great job continuing to optimize the portfolio of rewards that we offer we find that our players really enjoy a lot of events that we conduct so the types of activities and events where people can go in Nash and <unk>.

Participate in experienced like my Vegas at Sea.

And so what we're looking at step.

Speaker Change: Stepping up our efforts around some of the proprietary things that we're doing along the events dimension. So yeah that.

Andrew S. Pascal: So we have a big initiative that we're going to be launching called the World Tournament of Slots, where we're effectively going to crown the world's best slot player. And that'll be across our entire portfolio, and we have a whole series of tournaments that'll take place in-game and let people qualify for a destination-based live event that'll host a large audience number of our players. So that gives you a hint into where we're seeing a lot of opportunity. But, you know, across all the various categories, we continue to see really good momentum. So it's nice to see that the Redemptions are pretty diversified.

Our big initiatives that we're gonna be launching called the world tournament of slots, which were effectively in our crown the worlds best slot player and that'll be across our entire portfolio.

Speaker Change: We have a whole series of tournament that'll take.

Speaker Change: Take place in game and let people qualify for a destination based live event that will host large audience number of our players so.

Speaker Change: That gives you a hampton to where it is that we're seeing a lot of opportunity, but you know across all the various categories. We continue to see really good momentum. So it's nice to see that the redemptions are pretty diversified.

Scott Peterson: Great. That's interesting. And then just a quick follow-up, just with regard to your guidance, which you've maintained, just given that the quarter came in above expectations, has anything changed in terms of how you're thinking about the cadence of the quarters or the waiting to the back half of the year? Thank you.

Speaker Change: Great. That's interesting and then just a quick follow up just with regards to your guidance, which you've maintained.

Speaker Change: Just given that the quarter came in above expectations has anything changed in terms of how youre thinking about the cadence of the quarters or the weighting to the back half of the year. Thank you.

Scott Peterson: Thanks for the question. We think that the first quarter historically tends to be a stronger quarter, and in light of just some of the lack of predictability and stability in the casino category or genre, we're not in a position yet where we're going to adjust our outlook. So we feel comfortable with where we are at the moment. Okay, great.

Speaker Change: Yeah no. Thanks for the question you know, we think that good quarters. The first quarters historically tend to be a stronger quarter and in light of just still some of the lack of predictability and stability in the casino category or genre and we're not in a position.

Speaker Change: She has been working to adjust our outlook so.

Speaker Change: We're comfortable with where we are at the moment.

Operator: Okay, great, that makes sense. Thank you very much.

Speaker Change: Okay, great that makes sense. Thank you very much.

Speaker Change: Cool Thanks, a lot.

Andrew S. Pascal: And our next question comes from David Pang with Stiefel. Please state your question.

Speaker Change: And our next question comes from David Pang with Stifel. Please state your question.

Andrew S. Pascal: Thanks. So just to follow up on one of the earlier questions, but in your conversations with potential external game publishers about play awards, what is the biggest source of friction or pushback you're hearing from them?

Thanks.

David Pang: Just a follow up on one of the earlier questions but.

In your conversations with potential external game publishers for play Awards Oh, what is the biggest source of friction or pushback you're hearing from them.

Andrew S. Pascal: Okay, first of all, I think the universally positive feedback we received was that people recognized how unique the whole value proposition of our loyalty program is not only having a tiered loyalty structure with all kinds of digital rewards and benefits but also the real world tie-ins that we provide. A lot of the feedback that we received that was constructive was around the effort and time that would be required in order to integrate a program into their product or suite of products.

David Pang: Okay, I think that first of all I think.

David Pang: Universally positive feedback we received was it people recognize how unique the whole value proposition of our loyalty program is not only having a tiered royalty structure. It with all kinds of digital rewards and benefits, but also the railway tie ins that we provide.

David Pang: A lot of the feedback that we received that was constructed was around the effort and time that would be required in order to integrate our program into their product or suite of products.

Andrew S. Pascal: And as you can imagine, games that have meaningful scale and momentum have dedicated teams and roadmaps with features and new content that they plan to introduce. And so to actually find room for and make development capacity available to incorporate something as substantial as a loyalty program is a meaningful commitment. And so they pushed pretty hard and wanted to understand a lot more about our SDKs and the kind of integration approach and tools and support that we could provide, just to ensure that the amount of time and effort that's required in order to implement the program would be more predictable and, obviously, then translate to the benefits that we've enjoyed and that we believe they too can enjoy.

David Pang: And as you can imagine you know games that have meaningful scale and momentum have dedicated teams and roadmaps with features and new content.

David Pang: They plan to introduce and so to actually find room for and make development capacity available to incorporate something as substantial as the loyalty program is a meaningful commitment.

David Pang: And so they they pushed pretty hard and wanted to understand a lot more about our SDK is in kind of the integration approach and tools and.

David Pang: And support that we can provide just to ensure that the amount of time and effort that's required in order to implement the program would be more predictable.

Andrew S. Pascal: So it's really around the amount of effort and energy that's required to implement a really well executed loyalty program within their own product. And as a highlight, we've made really great progress there in terms of making the whole exercise a lot more efficient and creating lots of tools, tons of reference documentation, so all the things that would be typical of productizing something that you would otherwise just use for yourself.

David Pang: And.

David Pang: And obviously then translate to the benefits that we've enjoyed and that we believe they too can enjoy so it's really around the amount of effort and energy that's required to implement.

David Pang: Really well executed loyalty program within their own products.

David Pang: And I should highlight we've made really great strides there in terms of.

David Pang: Making the whole exercise a lot more efficient and creating lots of tools tons of reference documentation. So all the things that it would be typical of product ties and something that you would otherwise just use for yourselves.

Andrew S. Pascal: Got it. That's really helpful. And then just one on the marketing environment. Can you provide an update on the mobile marketing marketing environment? And what are the platform policy changes? How is that affecting your thoughts on new game launches?

Speaker Change: Got it that's really helpful. And then just one on the marketing environment can you provide an update on the mobile marketing marketing environment and.

Speaker Change: What what are the popcorn policy changes are how is that affecting you.

Speaker Change: Your thoughts on new game launches.

Speaker Change: Okay.

Andrew S. Pascal: Well, look, I mean, obviously, a lot has been made of all of the privacy policy changes that the platforms have instituted and how that's translated to the tools they provide and the restrictions that they've imposed, and it makes targeting consumers and scaling and building an audience more challenging than ever. And those policies continue to get, if anything, narrower.

Speaker Change: Well look I mean, obviously a lot has been made of all of the privacy policy changes that the platforms that instituted and how that's translated to the tools. They provide and the restrictions that have been posed and it makes targeting consumers in scaling and building an audience challenging more challenging than ever.

Speaker Change: And those policies continue to get if anything ever narrower.

Andrew S. Pascal: Um, with that said, I think that if you have a successful game and certainly a franchise brand like we have in Tetris, you generate a tremendous amount of just organic traffic and interest. Our Tetris product generates well over 22 million organic installs a year. So we believe that, while the environment is certainly very challenging, there is an opportunity for the right types of product and franchise brands to rise above the noise and overcome a lot of these restrictions and build a meaningful audience.

Speaker Change:

Speaker Change: With that said I think that if you have a successful game and certainly our franchise brands like we have in Tetris.

Speaker Change: You generate a tremendous amount of just organic traffic and interest.

Speaker Change: Or our Tetris product generates you know well over 22 million organic installs a year.

Speaker Change: So we believe that while the environment is certainly very challenging that there's an opportunity with the right types of product and in franchise brands to.

Speaker Change: To rise above the noise and overcome a lot of these restrictions and build a meaningful audience and so if you really look at our portfolio of products.

Andrew S. Pascal: And so if you really look at, you know, our portfolio of products, they're either based on really well-established and beloved brands, whether that's all of the very popular Las Vegas brands for our casino portfolio, whether it's Tetris in the casual category, or they're games that have at least 10 years of history and where they've demonstrated their durability and the resilience of their audience. So we're very keen and very clear about the complexities of UA, and so as we continue to invest in our own products, those are some of the things that we consider.

Speaker Change: They're either based on really well established and beloved brands, whether that's all of the very popular Las Vegas brands for our casino portfolio, whether it's tetris in the casual category.

Speaker Change: Or there are games that have at least 10 years of history, and where they demonstrated their durability and resilience of their audience.

Speaker Change: So where we're very keen very clear about.

Speaker Change: The complexities of UA and insights as we continue to invest in our own products and those are some of the things that we consider.

Speaker Change: Yeah.

Speaker Change: Okay. Thank you.

Operator: And our next question comes from Greg Gibas with Northland Securities. Please state your question.

Speaker Change: And our next question comes from Greg gave us with Northland Securities. Please state your question.

Andrew S. Pascal: Hey, good afternoon. Thanks for taking the questions. I'm curious if you could kind of attribute or what kind of drove the outperformance relative to your expectations in the quarter. I imagine Tetris was a key one, but just kind of curious how you'd attribute the outperformance.

Greg: Hey, good afternoon, thanks for taking the questions.

Greg: Curious if you could kind of attribute or what what kind of drove the outperformance relative to your expectations in the quarter I imagine Tetris and was a key one but just kind of curious how you'd attribute.

Our performance.

Okay.

Andrew S. Pascal: I mean, generally speaking, I think that the portfolio of products performed as expected. Tetris definitely was a bit of an outlier, and that was driven by, you know, some of the residual impact of the Willis-Gibson effect, which I alluded to earlier. So for the first time, Tetris was defeated, and it just became a bit of a social phenomenon.

I mean, I think generally speaking I think that our portfolio of products performed as expected Tetris.

Greg: He was a bit of an outlier.

Greg: That was driven by you know some of the residual impact of the Willis Gibson, a fact, which I alluded to earlier so for the first time Tetris was defeated and it just became a bit of a social phenomenon and we saw a pretty meaningful spike in installs and engagement and the level of interest in that product.

Andrew S. Pascal: We saw a pretty meaningful spike in installs and engagement and the level of interest in that product. But we've also seen pretty healthy performance momentum with our Brainium suite of casual products. And then, within the casino portfolio, we're pretty happy with some of the momentum that we're seeing with our MyVegas product, where a lot of things that we've been working on seem to be translating. So those are some of the highlights.

Greg: But we've also seen pretty healthy performance momentum with our brain its premium suite of casual products.

Greg: And then within the casino portfolio, we're pretty happy with that.

Greg: Some of the momentum that we're seeing with my Vegas product, where a lot of things that we've been working on seem to be translating so.

Speaker Change: So those are some of the highlights.

Andrew S. Pascal: Great, that's helpful. Regarding the kind of spike in Tetris, it makes a lot of sense regarding how much of this was in the news; you almost couldn't avoid it. But, you know, is that interest kind of showing momentum beyond, you know, when it occurs? Like, are you still seeing kind of elevated gameplay there or interest? Just curious if that momentum is kind of carried into the future.

Speaker Change: Great. That's helpful and you know regarding the kind of spike in Tetris makes a lot of sense regarding how much. It was in the news Jones couldn't avoid it but.

Speaker Change: That is that interest kind of showing momentum beyond you know when it occurred like are you still seeing kind of elevated gameplay their interest. The I'm just curious if that momentum has carried into Q2.

Speaker Change: Well it did.

Andrew S. Pascal: There's, I would say, if you look at the current kind of normalized state and pace of that product relative to where it was before Willis-Gibson and the resulting kind of social phenomenon, it's definitely stepped up, but it's regressed a little bit from its peak, which is to be expected.

Speaker Change: There's I would say if you look at the current kind of normalized state and pace of that product relative to where it was before well let's Gibson.

Speaker Change: And the result in kind of a social phenomenon.

Speaker Change: It has definitely stepped up but it's it's request a little bit from its peak, which is to be expected.

Speaker Change: Okay.

Andrew S. Pascal: Yes, fair enough. Great. And then, you know, I know you provided some just kind of complementary comments on it, but any, you know, more that you can provide us on the, you know, more of an update on the M&A search and how that's maybe been trending this year?

Speaker Change: Yeah fair enough.

Speaker Change: Great and then I know you provided some just kind of comment on it but any more that you can provide us on the you know more of an update on the M&A search and how that's maybe been trending this year.

Andrew S. Pascal: You know what? I think we got Jason on the call. I'll let him kind of speak to maybe provide a general update. No, it can't be too specific, but Jason, do you want to provide some highlights?

Speaker Change: Oh, you know what I think we got Jason on the call I'll, let him kind of speak to maybe provide a general update and then we can't be too specific but Jason do you want to provide some highlights.

Jason Hahn: Yeah, we remain committed to our M&A strategy. There are a lot of opportunities out there.

Jason: Yeah, we remain committed around our M&A strategy, there's a lot of opportunities out there in the market. We have an active pipeline of companies that we continue to engage with us on the M&A side as you know.

Jason Hahn: We have an active pipeline of companies that we continue to engage with on the M&A side. But, as you know, getting these M&A deals over the line is complex. We need to structure deals that are accretive to our financial profile, both growth and margin, and they also need to be strategically compelling and timed right at the right time when we're able to transact upon them.

Jason: Getting these M&A deals over the line of complex, we need to structure deals that are accretive.

Jason: So our financial profile of both growth and margin and they also need to be strategically compelling and times right at the right time, and we're able to transact upon them. So we don't have anything at the moment. That's you know closing right now that we can announce but we are engaged in deep conversations with very interesting exciting opportunities.

Jason Hahn: at the moment. That's, you know, closing right now, so we can't announce it, but we're engaged in deep conversations with very exciting opportunities.

Jason Hahn: We're engaged in deep conversations with some very exciting opportunities.

Speaker Change: Sounds good thanks, guys.

Speaker Change: Yeah. Thank you Greg.

Speaker Change: Yeah.

Operator: Thank you, and a reminder to the audience, if you'd like to ask a question, press star 1 on your telephone or press star 2 to remove yourself from the queue. Our next question comes from Martin Yang with Oppenheimer and Company. Please state your question.

Speaker Change: And can you remind us of your audience, if you'd like to ask a question press star one on your telephone or press star two to remove yourself from the queue.

Speaker Change: Our next question comes from Martin Yang with Oppenheimer and company. Please state your question.

Andrew S. Pascal: Hi, good afternoon. Thank you for taking my question. First question for Andrew: can you share with us your high-level thoughts on the prerequisites for social casino as a genre to recover? You know, anything could point to either, you know, internal, or external. It'll be helpful. Thank you.

Martin Yang: Hi, Good afternoon. Thank you for taking my question first question for Andrew can you share with US what's your high level thoughts on.

Martin Yang: The prerequisite.

Martin Yang: For social casino as a shuttle Roche recover.

Martin Yang: Any anything you could point to either internal or external that'll be helpful. Thank you.

Andrew S. Pascal: Hey Martin, thank you.

Andrew S. Pascal: Hey, Martin. Thank you I mean, that's a that's a good question I think that.

Andrew S. Pascal: The casino genre continues to command a lot of interest.

Andrew S. Pascal: I mean, that's a good question. I think that the casino genre continues to command a lot of interest. It's, over time, gotten increasingly more competitive, and I would say more recently, it's come under maybe not so much pressure, but the areas of growth and opportunity have shifted into different types of commercial models.

Martin Yang: It's it's overtime gotten increasingly more competitive and I would say more recently, it's come under maybe not so much pressure, but the areas of growth and opportunity of shifted into different types of commercial models.

Andrew S. Pascal: So, you know, our general feeling is that, you know, we've got a pretty large audience of engaged players that love this form of content. And as we look at some of our peers, we see that there are still opportunities to actually scale and grow the audience, although that's become more challenging. So, you know, for us, it's really about looking at different commercial opportunities, ways to monetize more of our existing audience.

Martin Yang: So you know my or our general feeling is that.

Speaker Change: You know, we've got a pretty large audience.

Speaker Change: Engage players that love this form of content.

Speaker Change: And as we look at some of our peers, we see that there's still opportunities to actually scale and grow audience, although that's become more challenging.

Speaker Change: So you know I think for us, it's really about looking at different commercial opportunities ways to monetize more of our existing audience.

Andrew S. Pascal: The Direct-to-Consumer Opportunities, which for us, we're, I would say, behind the market as far as the momentum is concerned, and yet we have some really compelling, unique assets in order to compel our existing players to purchase with us directly and off-platform. So I think the momentum that we'll continue to see as we convert more players to direct purchase and as we look to test and try different commercial models will change some of the underlying economics of our products, which will, in turn, allow us to invest more aggressively in acquiring and scaling up the audience again. So I would assume the same is true for a lot of our peers.

The direct to consumer opportunities, which for us where I would say behind the market as far as the momentum and yet we have some really compelling unique assets in order to compel or existing players to purchase with us direct in our platform. So I think the momentum that.

Speaker Change: We'll continue to see as we convert more players direct purchase and as we look to test and try different commercial models I think that will change some of the underlying economics of our products, which will then in turn allow us to invest more aggressively in acquiring and scaling up the audience again.

Speaker Change: So I would assume the same is true for a lot of our peers.

Andrew S. Pascal: Thank you. My next question is about Tetris. So around June, in time for the 40-year anniversary, is there any other external events, large market campaigns that you should, you know, maybe point us to, to watch for potential industry-wide re-engagement or, you know, events that will drive new players to all things Tetris, including your games?

Speaker Change: Thank you My next question is about Tetris.

Speaker Change: So around June in time for the 40 year.

Speaker Change: Anniversary is there any other.

Speaker Change: External events large market campaigns.

Speaker Change: That you should you know maybe point us to.

Speaker Change: Two to watch for potential Idaho industry wide.

Speaker Change: Reengagement or.

Speaker Change: That will drive new players to all things tetracyn, including okay.

Katie Bolish: Yeah, that's a great question. You know, my co-founder Katie Bolish, who is responsible for our new game development in the Tetris franchise, is also on the call. Maybe I'll let her take that question.

Speaker Change: Yeah. It's a great question and you know my co founder kidney Bowl issue is responsible for our new game development in the Tetris franchise. I believe is also on the call maybe I'll, let her take that question.

Katie Bolish: Sure, hi. Yeah, no. We've got a number of campaigns lined up to celebrate the anniversary of Tetris, starting with our Tetris rebrand. We've got, you know, we're considering it the year of Tetris, and so we're layering in activities throughout the period of the, you know, throughout the entire year. So we're pretty excited. We've got some activities with our Play Awards partners, and then on top of that, the Tetris company is doing a number of campaigns that should raise the profile of Tetris as well. So we're very excited for the Tetris anniversary, and we expect people to be talking about it.

Kidney Bowl: Sure Hi, Yeah, no. We've got a number of campaigns lined up to celebrate the anniversary of Tetra.

Speaker Change: Starting with our touch us rebrand.

Speaker Change: We've got.

Speaker Change: But considering that the Europe, tetris, and so we're layering and activities.

Speaker Change: Throughout the period throughout the entire year. So we're pretty excited we've got.

Some activities with our play a wedge partners.

Speaker Change: And then on top of it the Tetris company is doing a number of campaigns.

Speaker Change: That should raise the profile of tetra.

Speaker Change: So we're very excited for the touch with anniversary.

Speaker Change: We expect people to be talking about it.

Speaker Change: Yeah.

Operator: Thank you very much. That's all for me.

Speaker Change: Thank you rich that's all for me.

Speaker Change: Thanks, Martin Thanks Katy.

Andrew S. Pascal: Thank you. Our next question comes from Clark Lampin with BTIG. Please state your question.

Speaker Change: Thank you. Our next question comes from Clark Lampern with B T. I G. Please state your question.

Andrew S. Pascal: Thanks for taking the question. I just kind of wanted to follow up on that last, I guess, sort of topic of social casino market dynamics. And just to be clear, if we were to imagine that, I guess, the market backdrop for mobile as a whole was improving, is your view that social casino, I guess, is sort of, as a subsegment of that, more of a steadyer entity? That if the market, I guess, is sort of ebbing and flowing up and down, social casino patterns are going to be a little bit more muted, and maybe Or is that kind of the wrong, I guess, takeaway here?

Clark Lampern: For taking the question I, just kind of wanted to follow up on that last I guess sort of topic of the social casino market dynamics and just to be clear. If we're if we ever imagined that I guess the market.

Clark Lampern: Backdrop for mobile as a whole was improving.

Clark Lampern: Is your view that social casino I guess, it's sort of as a sub segment of that more of a steadier entity that if the market I guess, it's sort of adding in flowing up and down that social casino patterns are going to be a little bit more muted and and maybe there is less of a I guess potential sort of rising tide lifts all boats dynamic with that.

Clark Lampern: Piece of the market or is that kind of the wrong I guess takeaway here.

Andrew S. Pascal: I mean, I think that's generally the prevailing view. I mean, if you look at the forecasts for social casino, well, if you look at the last several years and its trends, it's generally been flat, and it actually compressed a little bit a couple years ago, and it's just in the last year been flat to down slightly. I think the forecasts going forward are for it to generally be fairly stagnant.

Speaker Change: I mean, I think I think that's generally the prevailing view I mean, if you look at.

Speaker Change: The forecast for social casino well, if you look at the last several years and its trends.

Speaker Change: It's generally been flat and it's actually compressed a little bit a couple of years ago and its system last year been been.

Speaker Change: <unk> been flat to down slightly I think the forecast going forward are for to generally be fairly stagnant. So nobody that's kind of.

Speaker Change: Following the various companies and market trends sees in terms of catalyst for driving any real meaningful growth.

Andrew S. Pascal: So, you know, nobody that's kind of been following the various companies and market trends sees that there's a catalyst for driving any real, meaningful growth. But, you know, for us, we still look at the category as being very significant. It's a $7 billion-plus market category, and we believe that our products continue to differentiate themselves. We've got games and brands and mechanics and features within our products that we think really distinguish them from everything else.

Speaker Change: You know for US we still look at the category as being very significant.

Speaker Change: It's a 7 billion dollar plus market category, and we believe that our products continue to differentiate themselves we've got.

Gains in brands and mechanics, and and and features within our products that we think really distinguish them from everything else.

Andrew S. Pascal: And there's a lot more that we can do in order to monetize our existing audience, which will then start to change the unit economics around what we can afford to spend to acquire new users in order to start driving growth. And so that's why I maybe didn't explain all that clearly, but I think as we improve the monetization of our existing products. That's going to change the dynamics of how much we can continue to invest in both stabilizing our existing audience and starting to grow it again. And we believe that's possible, but not in the absence of improving the overall, you know, ratio between the cost of acquiring users relative to their returns.

Speaker Change: And there's a lot more that we can do in order to monetize our existing audience, which will then start to change.

Speaker Change: The unit economics around what we can afford to spend to acquire new users in order to start driving growth.

Speaker Change: And so that's why maybe it didn't explain all that clearly that I think as we improve the monetization of our existing products.

Speaker Change: That's going to change the dynamics of how much we can continue to invest in.

Speaker Change: Stabilizing our existing audience are starting to grow again.

Speaker Change: And we believe that's possible.

Speaker Change: But not in the absence of improving the overall ratio between the cost of acquiring users relative to their returns.

Andrew S. Pascal: I got it. I guess as we... That's helpful. If we think about, I guess, sort of the confluence of those factors between sort of market dynamics and a push towards monetization and, you know, some other things, I guess, kind of on top of that, what does that translate to for DAU growth? I know it's not an item that you guys explicitly sort of guide to over the balance of the year, but if we were to think about sequential patterns of growth from here, is there, you know, sort of directional commentary that you guys could provide for us?

Speaker Change: Got it I guess as we Hum.

Speaker Change: That's helpful.

Speaker Change: Think about I guess sort of a confluence of those factors between sort of market dynamics and our push towards monetization and.

Speaker Change: Some other things I guess kind of on top of that what what does that translate to for four D. Au growth I guess I know, it's not an item that you guys explicitly sort of guide to over the balance of the year, but if we were to think about sequential patterns of growth from here is there you know sort of directional commentary.

Speaker Change: But you guys could provide for us.

Andrew S. Pascal: Yeah, I mean, I'd probably invite any of my friends.

Andrew S. Pascal: Yeah, I mean, I probably would invite any of my colleagues to weigh in if they have other insights they want to share on this question. My view is that, you know, DAU growth going forward is going to be driven more by new products that we introduce into the market. We see the potential certainly within some of our existing products, like Tetris, as we've talked about, that enjoy tremendous organic growth, or interest, I should say.

Speaker Change: Yeah, I mean, I didn't write any of my colleagues to weigh in if they have other insights they want to share on this question. My view is that Oh D. A your growth going forward is it going be driven more by new products that we introduced into the market.

Speaker Change: We see the potential certainly within some of our existing products like Petrus as we've talked about that enjoy tremendous organic growth or interest I should say that.

Andrew S. Pascal: That really the bigger opportunity is around both retaining the existing audience that we have and monetizing it to a greater extent. And we believe that there are opportunities, pretty significant opportunities for us to, you know, meaningfully increase and improve the monetization across our core casino portfolio and even some of the casual products. So, and I would say that, you know, what's unique about our model in the way that we put our loyalty program is that, more than most any other company, we've got a really unique value proposition and set of features that's focused on retaining our audience.

Speaker Change: That's really the bigger opportunity is around both retaining the existing audience that we have and monetizing it to a greater extent and we believe that there are opportunities are pretty significant opportunities for us to.

Speaker Change: Thankfully increase and improve the monetization across our core casino portfolio and even some of the casual products.

Speaker Change: And I would I would say that you know what's unique about our model.

Speaker Change: Our loyalty program is that you know more than most any other company. We've got a really unique value proposition and set of features it's focused on retaining our audience.

Andrew S. Pascal: Whereas a lot of our peers have seen far more severe contraction of their audience, we believe our loyalty program allows us to hold on to that audience, affording us more time and opportunity to engage them and get them to convert and start spending money. And so that's our primary focus, you know, converting more of our existing audience and driving revenue in and among our retained and engaged players will drive the top line growth of our business, which we should start to see more flow through and margin expansion as a result.

Speaker Change: So you know where a lot of our peers have seen farm far more severe contraction of their audience. We believe our loyalty program allows us to hold onto that audience affording us more time and opportunity to engage them and get them to convert and start spending money and so that's our primary focus so.

Speaker Change: Converting more of our existing audience and driving revenue and her mom are routine and engage players who will drive the top line growth of our business, which we should start to see more flow through and margin expansion as a result, and then as we launch some of these new products that we've talked about we're going to leverage those to actually attract and acquire new players into our network.

Andrew S. Pascal: And then, as we launch some of these new products that we've talked about, we're going to leverage those to actually attract and acquire new players into our network. And of course, once we incorporate the loyalty program, we can then cross-promote from one product across the portfolio of other games and enjoy some of the network that we'd expect.

Speaker Change: And then of course once we incorporate the loyalty programs and we can then cross promote you know from one product across the portfolio of other games and enjoy some of the network effects that we would expect.

Speaker Change: Thank you Andrew.

Andrew S. Pascal: Okay. Thanks.

Operator: Thank you, and there are no further questions at this time. I'll hand the floor back to management for closing remarks.

Speaker Change: Thank you and there are no further questions at this time I'll hand, the floor back to management for closing remarks. Thank you.

Andrew S. Pascal: Well, thank you. I just want to thank everybody for your continued interest and support, and we look forward to checking in and providing further updates in another quarter.

Speaker Change: Well. Thank you I just wanted to thank everybody for your continued interest and support and we look forward to checking in and providing further updates in the quarter.

Operator: Thank you. And with that, we conclude today's call. All parties may disconnect. Have a good day.

Speaker Change: Thank you and with that we conclude today's call. All parties may disconnect have a good day.