Q4 2024 Playtika Holding Corp Earnings Call
Welcome to the <unk> holding Corp, Q4, 2024 earnings conference 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.
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I would now like to hand, the conference over to your speaker today.
Lee: Lee SVP corporate finance and Investor Relations. Please go ahead.
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Lee: Welcome everyone and thank you for joining us today for the fourth quarter of 2024 earnings call for <unk> holding Corp.
Speaker Change: Joining me on the call today are Robert I hand, the call co founder and CEO. Thank you Scott and Greg Abrams.
Lee: And Chief Financial Officer.
I'd like to remind you that today's discussion may contain forward looking statements, including but not limited to the company's anticipated future revenue and operating performance.
Lee: These statements and other comments are not a guarantee of future performance, but rather are subject to risks and uncertainties some of which are beyond our control.
Speaker Change: Good day and thank you for standing by. Welcome to the Platika Holding Corp Q4 2024 Earnings Conference 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.
Lee: Forward looking statements apply that today and you should not rely on them and representative of the future.
Lee: We undertake no obligation to update these statements after this call.
Speaker Change: To ask a question during the session, you will need to press star 1-1 on your telephone.
Lee: We've posted on the company's buybacks or Investor Relations website, which contains information on forward looking statements and non-GAAP metrics.
Speaker Change: You will then hear an automated message advising your hand is raised.
Lee: Also post our prepared remarks immediately following the call.
To withdraw your question, please press star 1 1 again.
Lee: For a more complete discussion of the retina uncertainties. Please see our filings with the SEC with that I'll now turn the call over to Robert.
Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand the conference over to your speaker today, Tae Lee, SVP, Corporate Finance and Investor Relations. Please go ahead.
Good morning, and thank you everyone for joining our call today.
Lee: As it will reflect 20 plentiful I am pleased to share that we have made noteworthy progress in executing it.
Speaker Change: Welcome everyone, and thank you for joining us today for the fourth quarter 2024 earnings call for Platika Holding Corp. Joining me on the call today are Robert Antokol, co-founder and CEO of Platika, and Craig Abrahams, Platika's President and Chief Financial Officer.
Lee: Then to growth strategy.
Lee: And are moving in a positive direction for the company.
Lee: We achieved significant milestones in 2024.
Speaker Change: I'd like to remind you that today's discussion may contain forward-looking statements, including but not limited to, the company's anticipated future revenue and operating performance.
Lee: We started to you about outlining our capital allocation framework for investors.
Lee: Our quarterly dividend.
Speaker Change: 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: Otherwise it might be cool gum and outlined our plan to restart our M&A engine.
Lee: Which has been instrumental in generating growth and creating value for our shareholders in the past.
Speaker Change: These four-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: One of the highest lines.
Speaker Change: We've posted an accompanying slide deck to our investor relations website, which contains information on forward-looking statements and non-GAAP measures.
Lee: Both completing the largest acquisition in our history by acquiring Super place one of the most attractive independent studios in the marketplace.
Speaker Change: I will also post and prepare remarks immediately following the call.
Lee: And in the process, adding to strong game franchise to our portfolio.
Speaker Change: 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.
Lee: This acquisition is a testament to our commitment to boosting our portfolio and driving future growth.
Robert Antokol: Good morning and thank you everyone for joining our call today.
Robert Antokol: As we reflect on 2024, I am pleased to share that we have made noteworthy progress in executing our Return to Growth strategy and are moving in a positive direction for the company.
Lee: As we look ahead to this year, we remain focused on execution over the next 12 to 18 months, we plan to bring to the market three new games, including close chronicles and new slot themes games and Disney solid dose schedule for a global launch in Q2.
Robert Antokol: We achieved significant milestones in 2024. We started the year by outlining our capital allocation framework for investors.
Lee: Early metrics for this new solid though have been very promising.
Lee: And we are excited to bring this experience to all players very soon.
Robert Antokol: We initiated our quarterly dividend, authorized a buyback program, and outlined our plan to restart our M&A engine, which has been instrumental in generating growth and creating value for our shareholders in the past.
Lee: Alongside this pipeline, we will continue to explore M&A opportunities that support our goal.
Lee: Meanwhile, we are also investing in our existing portfolio with focus on title that hold leadership positions and exhibit strong growth potential.
One of the U.S. Highlines
Robert Antokol: was completing the largest acquisition in our history by acquiring Superplay, one of the most attractive independent studios in the marketplace.
Lee: We are optimistic that these initiatives will help us generate consistent top line growth once again.
Robert Antokol: and, in the process, adding two strong game franchises to our portfolio.
Lee: Thank you for your continued support and confidence in play pickup I will hand over to Greg for more detailed review of our performance this past quarter.
Robert Antokol: This acquisition is a testament to our commitment to boosting our portfolio and driving future growth.
Robert Antokol: As we look ahead to this year, we remain focused on execution. Over the next 12 to 18 months, we plan to bring to the market three new games, including Claire's Chronicles, a new slot, Team's Games, and Disney's Solitaire, scheduled for a global launch in Q2.
Greg: Thank you Robert and good morning, everyone.
Greg: Last quarter, we began discussing our portfolio management approach focusing on making targeted investments based on the scale leadership position and growth potential of our games.
Greg: This strategy is part of a broader framework, where you allocate resources to maximize returns and drive growth.
Robert Antokol: Early metrics for this insolitor have been very promising, and we are excited to bring this experience to all players very soon.
Greg: For games of both scale and growth potential we invest significantly to drive further expansion.
Robert Antokol: Alongside this pipeline, we will continue to explore M&A opportunities that support our goals. Meanwhile, we are also investing in our existing portfolio, with focus on titles that hold leadership positions and exhibit strong growth potential.
Greg: For those with scale, but limited growth potential we focus on defending market share through targeted spending.
Greg: Conversely games that lack scale, but show promising growth potential received outsized investments, including our recently acquired studios.
Greg: Historically, our growth strategy was based on acquiring and growing new studios.
Robert Antokol: We are optimistic that these initiatives will help us generate consistent top-line growth once again.
Greg: And this next phase, we are acquiring new studios and developing a pipeline of games.
Greg: The objective is to revitalize our portfolio rather than focusing on individual game performance.
Robert Antokol: Thank you for your continued support and confidence in Playtika. I will hand over to Craig for a more detailed review of our performance this past quarter.
Adding more games to our portfolio will become less dependent on any single game, making the portfolio approach more important and relevant.
Greg: While we continue to highlight the performance of our top three games in the quarter. We will also provide regular updates on our acquired titles to highlight their progress.
Thank you, Robert, and good morning, everyone.
Robert Antokol: Last quarter, we began discussing our portfolio management approach, focusing on making targeted investments based on the scale, leadership position, and growth potential of our games.
Greg: These titles include animals and coins Governor of poker, three dice dreams and Domino dreams.
Greg: Finally, we are changing how we present, our EBITDA metrics.
Greg: With the conclusion of the 2021 to 2020 for retention plan, we no longer need to distinguish between retention plan adjusted EBITDA and credit adjusted EBITDA.
Robert Antokol: For games with both scale and growth potential, we invest significantly to drive further expansion.
Robert Antokol: For those with scale but limited growth potential, we focus on defending market share through targeted spending.
Greg: Starting in Q1 2025, we will refer to credit adjusted EBITDA as simply adjusted EBITDA.
Robert Antokol: Conversely, games that lack scale but show promising growth potential receive outsized investments, including our recently acquired studios.
This changed simplifies our reporting without altering the definition of adjusted EBITDA.
Greg: In line with this transition we are adopting a more market based executive compensation structure.
Robert Antokol: Historically, our growth strategy was based on acquiring and growing new studios.
Greg: This shift moves away from cash centric plans emphasizing compensation that is tied not only to our business results, but also our stock price performance and total shareholder returns.
Robert Antokol: In this next phase, we are acquiring new studios and developing a pipeline of games.
Robert Antokol: The objective is to revitalize our portfolio rather than focusing on individual game performance. By adding more games to our portfolio, we'll become less dependent on any single game, making the portfolio approach more important and relevant.
Greg: By further aligning executive rewards with the company's business results and adding stock market success as a driver we aimed to foster a culture of even greater ownership and accountability, ensuring that our leadership's interests are fully aligned with those of our shareholders.
Robert Antokol: While we continue to highlight the performance of our top three games in the quarter, we will also provide regular updates on our acquired titles to highlight their progress.
Greg: Turning now to our financial results for the year.
Robert Antokol: These titles include Animals and Coins, Governor of Poker 3, Dice Dreams, and Domino Dreams.
Greg: We generated $2 $5 $49 billion of revenue down 7% year over year $162 $2 million of GAAP net income compared to $235 million of GAAP net income in 2023.
Finally, we are changing how we present our EBITDA metrics.
Robert Antokol: With the conclusion of the 2021-2024 retention plan, we no longer need to distinguish between retention plan-adjusted EBITDA and credit-adjusted EBITDA.
Greg: $757 $7 million in credit adjusted EBITDA at 9% decline year over year.
Greg: Net income margin was six 4% compared to nine 2% in 2023, our credit adjusted EBITDA margin was 29, 7% compared to 32, 4% in 2023.
Robert Antokol: Starting in Q1 2025, we will refer to credit-adjusted EBITDA as simply adjusted EBITDA.
Robert Antokol: This change simplifies our reporting without altering the definition of adjusted EBITDA.
Greg: We generated $396 $8 million of free cash flow of nine 1% decline year over year, we define free cash flow as cash flow from operating activities minus capital expenditures.
Robert Antokol: In line with this transition, we are adopting a more market-based executive compensation structure.
Robert Antokol: This shift moves away from cash-centric plans emphasizing compensation that is tied not only to our business results, but also our stock price performance and total shareholder returns.
Greg: For the quarter, we generated $653 million of revenue up four 8% sequentially and up one 9% year over year.
Robert Antokol: By further aligning executive rewards with the company's business results and adding stock market success as a driver, we aim to foster a culture of even greater ownership and accountability, ensuring that our leadership's interests are fully aligned with those of our shareholders.
Greg: GAAP net income was negative $16 $7 million compared to GAAP net income of $39 3 million in Q3, and $37 3 million in Q4 of 'twenty three.
Turning now to our financial results for the year.
Greg: Credit adjusted EBITDA was $183 9 million down six 7% sequentially and down two 6% year over year.
We generated $2.549 billion of revenue, down 0.7% year-over-year.
Robert Antokol: $162.2 million of Gap Net Income compared to $235 million of Gap Net Income in 2023.
Greg: Our net income margin was negative two 6% compared to six 3% in Q3 and five 8% in Q4 last year, our credit adjusted EBITDA margin was 28, 3% compared to 31, 8% in Q3 and 29, 6% in Q4 of last year.
Robert Antokol: and $757.7 million in credit adjusted EBITDA, a 9% decline year-over-year.
Robert Antokol: Our net income margin was 6.4% compared to 9.2% in 2023. Our credit adjusted EBITDA margin was 29.7% compared to 32.4% in 2023.
Greg: We generated $174 $6 million in revenue from our direct to consumer platforms up 1% sequentially and 8% year over year.
Robert Antokol: We generated $396.8 million of free cash flow, a 9.1% decline year-over-year. We define free cash flow as cash flow from operating activities minus capital expenditures.
Greg: Turning now to our business results for the quarter.
Greg: Bingo Blitz as revenue for the quarter was $159 1 million down 5% sequentially and up five 8% year over year.
Robert Antokol: For the quarter, we generated $650.3 million of revenue, up 4.8% sequentially, and up 1.9% year over year.
Greg: It was another record quarter for Bingo's DTC business and we are pleased to see the underlying growth in year over year average daily paying users for the largest game in our portfolio.
Robert Antokol: Gap net income was negative 16.7 million dollars compared to gap net income of 39.3 million dollars in Q3 and 37.3 million dollars in Q4 of 23.
Greg: <unk> revenue for the quarter was $118 4 million down seven 9% sequentially and 13, 5% year over year.
Greg: It was a disappointing quarter for the slot ammonia team as game economy issues negatively affected performance for much of the quarter.
Robert Antokol: Credit adjusted EBITDA was $183.9 million, down 6.7% sequentially, and down 2.6% year-over-year.
Greg: Although these challenges were addressed in January they contributed a significant underperformance in Q4 on a positive note. The studios launch of Cleopatra to successfully reengage dormant players leading to increased activity.
Robert Antokol: Our net income margin was negative 2.6% compared to 6.3% in Q3 and 5.8% in Q4 last year.
Greg: We recognize the importance to maintain our leadership in our slots category by delivering innovative content that reactivate our extensive base of inactive players.
Robert Antokol: Our credit adjusted EBITDA margin was 28.3% compared to 31.8% in Q3 and 29.6% in Q4 of last year.
Greg: And we are developing a new slots game to help regain market share in the category with further details to be announced in the future.
Robert Antokol: We generated $174.6 million in revenue from our direct-to-consumer platforms, up 0.1% sequentially and 8% year-over-year.
Greg: Salto Grant harvest revenue for the quarter was $72 $5 million, which was down eight 1% sequentially and down four 3% year over year.
Turning now to our business results for the quarter.
Robert Antokol: Bingo Blitz's revenue for the quarter was $159.1 million, down 0.5% sequentially, and up 5.8% year-over-year. It was another record quarter for Bingo's D2C business, and we are pleased to see the underlying growth in year-over-year average daily paying users for the largest game in our portfolio.
Greg: Overall solitaire underperformed our expectations in this past quarter, but we are encouraged to see the positive ramp in DTC revenues coming from the studio.
This success underscores the effectiveness of our DTC platforms and deepening engagement with our most loyal players across different genres.
Robert Antokol: Slotomania revenue for the quarter was $118.4 million, down 7.9% sequentially and 13.5% year-over-year.
Greg: In the fourth quarter, our acquired titles continue to demonstrate robust performance.
Greg: Animals and coins achieved another record quarter, showing strong sequential growth and delivering its best ever results during the Black Friday period.
Robert Antokol: It was a disappointing quarter for the Slotomania team, as game economy issues negatively affected performance for much of the quarter.
Greg: Governor of poker, three and maintained its robust momentum from Q3 into Q4 with notable contributions from its DTC revenues.
Robert Antokol: Although these challenges were addressed in January, they contributed to significant underperformance in Q4. On a positive note, the studio's launch of Cleopatra 2 successfully re-engaged dormant players, leading to increased activity.
Greg: Finally Super play contributed approximately $48 million in revenue for the quarter alongside minus $10 million and adjusted EBITDA losses.
Robert Antokol: We recognize the importance to maintain our leadership in the slots category by delivering innovative content that reactivates our extensive base of inactive players.
Greg: The Super play acquisition closed mid quarter. So these results reflect only a partial period contribution.
Robert Antokol: To this end, we are developing a new slots game to help regain market share in the category, with further details to be announced in the future.
Greg: Outcomes underscore the value of our acquisitions and their role in enhancing our portfolio's performance.
Greg: Turning now to specific line items in the P&L for the fourth quarter.
Robert Antokol: Solitaire Grand Harvest revenue for the quarter was $72.5 million, which was down 8.1% sequentially and down 4.3% year over year.
Greg: Cost of revenue decreased 1% year over year and operating expenses increased by 13, 7% year over year. The increase in operating expenses were primarily driven by our acquisition of Super play.
Robert Antokol: Overall, Solitaire underperformed our expectations this past quarter, but we are encouraged to see the positive ramp in D2C revenues coming from the studio.
Greg: R&D costs decreased five 1% year over year.
Robert Antokol: This success underscores the effectiveness of our D2C platforms in deepening engagement with our most loyal players across different genres.
Greg: The decline in R&D was largely due to savings in labor costs.
Greg: Our ongoing efforts to optimize operational efficiency, while sustaining our R&D capabilities were reflected in our results this quarter.
Robert Antokol: In the fourth quarter, our acquired titles continue to demonstrate robust performance.
Robert Antokol: Animals and Coins achieved another record quarter showing strong sequential growth and delivering its best-ever results during the Black Friday period.
Greg: Sales and marketing increased 23, 6% year over year. The increase was primarily due to higher media by expenditure coming from the acquisition of Super play and the investments behind <unk> and Domino dreams.
Robert Antokol: Governor of Poker 3 maintained its robust momentum from Q3 into Q4 with notable contributions from its D2C revenues.
Greg: G&A expenses increased 18, 3% year over year, primarily due to deal related costs associated with our Super play acquisition. These expenses include transaction fees and other onetime costs related to the completion of the deal.
Robert Antokol: Finally, Superplay contributed approximately $48 million in revenue for the quarter, alongside $-10 million in adjusted EBITDA losses.
Robert Antokol: The Superplay acquisition closed mid-quarter, so these results reflect only a partial period contribution.
Greg: As of December 31, we had approximately $565 $8 million in cash and cash equivalents.
Robert Antokol: These outcomes underscore the value of our acquisitions and their role in enhancing our portfolio's performance.
Greg: Looking at our operational metrics average GPU increased 12, 6% sequentially and 10, 8% year over year.
Robert Antokol: Turning now to specific line items in the P&L for the fourth quarter.
Robert Antokol: Cost of revenue decreased 1% year-over-year and operating expenses increased by 13.7% year-over-year. The increase in operating expenses were primarily driven by our acquisition of SuperPlay.
Greg: Average <unk> increased five 3% sequentially and decreased 7% year over year.
Greg: <unk> was <unk> 89 in the quarter.
Greg: Flat sequentially and an increase of 11, 3% year over year.
Robert Antokol: R&D costs decreased 5.1 percent year-over-year. The decline in R&D was largely due to savings and labor costs.
Greg: Turning now to our guidance and financial outlook for 2025.
Robert Antokol: Our ongoing efforts to optimize operational efficiency while sustaining our R&D capabilities will reflect in our results this quarter.
Greg: We expect to deliver full year revenue between $2 8 billion and $2 85 billion.
Greg: We expect adjusted EBITDA between $715 million and $740 million.
Robert Antokol: Sales and marketing increased 23.6% year-over-year. The increase was primarily due to higher media by expenditure coming from the acquisition of SuperPlay and the investments behind Dice Dreams and Domino Dreams.
Greg: We expect to deploy $95 million in capital expenditures.
Greg: We estimate that our effective tax rate for the current fiscal year to be 35%.
Greg: This projection is based on current tax laws and our expected income distribution across various jurisdictions.
Robert Antokol: G&A expenses increased 18.3% year-over-year, primarily due to deal-related costs associated with our SuperPlay acquisition. These expenses include transaction fees and other one-time costs related to the completion of the deal.
Greg: We are focused on building long term sustainable revenue growth by transitioning our portfolio away from some of our declining legacy titles and expanding the recently acquired studios.
Robert Antokol: As of December 31st, we had approximately $565.8 million in cash and cash equivalents.
Greg: While the end of the cash retention program yields cost savings, we are reinvesting a portion of these savings to support the development of our growth titles.
Robert Antokol: Looking at our operational metrics, average DPU increased 12.6% sequentially and 10.8% year-over-year.
Greg: The resulting near term pressure on EBITDA reflects both the cost of scaling our growth titles, which often face early stage losses, but are expected to become strong EBITDA contributors as they scale and the ongoing decline in our slot portfolio.
Robert Antokol: Average DAU increased 5.3% sequentially and decreased 7% year-over-year. ARPDAU was 89 cents in the quarter, flat sequentially, and an increase of 11.3% year-over-year.
Greg: At the same time, we're taking deliberate steps to stabilize our business. We are launching a new slots game to help mitigate declines in our slot portfolio, while continuing to bolster our higher margin DTC channels.
Turning now to our Guidance and Financial Outlook for 2025.
Robert Antokol: We expect to deliver full-year revenue between $2.8 billion and $2.85 billion. We expect adjusted EBITDA between $715 million and $740 million.
Greg: Looking ahead 2025 will be a transitional year as these investments and portfolio shifts unfold.
Greg: Despite the EBITDA pressure this year, our strategy will position the business for renewed momentum as new titles scale in our slot games stabilized.
We expect to deploy $95 million in capital expenditures.
Robert Antokol: We estimate that our effective tax rate for the current fiscal year to be 35%.
Greg: Beginning in 2026, we expect are in play and Super place studios to become positive EBITDA contributors further enhancing our long term financial profile.
Robert Antokol: This projection is based on current tax laws and our expected income distribution across various jurisdictions.
Greg: We remain confident that our return to growth strategy will yield meaningful financial results supported by sustainable cash flow and stronger revenue mix.
Robert Antokol: We are focused on building long-term sustainable revenue growth by transitioning our portfolio away from some of our declining legacy titles and expanding through recently acquired studios.
Greg: As we previously mentioned we are updating our capital allocation framework to reflect our ongoing commitment to disciplined fiscal management.
Robert Antokol: While the end of the cash retention program yields cost savings, we are reinvesting a portion of these savings to support the development of our growth titles.
Greg: Overall premise remains unchanged, we intend to use the free cash flow that we generate to execute our capital allocation framework.
Greg: We are proud of our attractive free cash flow profile, which demonstrates our ability to execute the business with a focus on maximizing free cash flow.
Greg: This is a competitive advantage, providing financial flexibility to invest in growth opportunities and return capital to shareholders. It is a key tool we leverage to generate shareholder returns.
Robert Antokol: At the same time, we are taking deliberate steps to stabilize our business. We are launching a new slots game to help mitigate declines in our slot portfolio while continuing to bolster our higher margin D2C channels.
Greg: We currently offer an attractive dividend yield and initiated share repurchases in Q4.
Robert Antokol: Looking ahead, 2025 will be a transitional year as these investments and portfolio shifts unfold.
Greg: The objective of our buyback program is to provide another layer of systematic capital returned to investors specifically by offsetting dilution from best employee equity.
Robert Antokol: Despite the EBITDA pressure this year, our strategy will position the business for renewed momentum as new titles scale and our slot games stabilize. Beginning in 2026, we expect our in-play and super-play studios to become positive EBITDA contributors, further enhancing our long-term financial profile.
Greg: Regarding M&A as previously discussed we expect our M&A activities, we bolt on in nature going forward.
Greg: Over the next three years, we anticipate deploying $300 million of $450 million for M&A.
Robert Antokol: We remain confident that our return to growth strategy will yield meaningful financial results supported by sustainable cash flow and stronger revenue mix.
Greg: This range does not include any potential future earn out obligations related to our past deals.
Greg: Our approach to capital allocation is both disciplined and balanced focusing on returning capital to shareholders, while investing in growth opportunities by.
Robert Antokol: As we previously mentioned, we are updating our capital allocation framework to reflect our ongoing commitment to disciplined fiscal management.
Greg: By maintaining this approach we aim to drive long term value creation for our investors.
Robert Antokol: The overall premise remains unchanged. We intend to use the free cash flow that we generate to execute our capital allocation framework.
Greg: With that we'd be happy to take your questions.
Greg: As a reminder to ask a question.
Robert Antokol: We are proud of our attractive free cash flow profile, which demonstrates our ability to execute the business with a focus on maximizing free cash flow.
Greg: Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Robert Antokol: This is a competitive advantage, providing financial flexibility to invest in growth opportunities and return capital to shareholders. It is a key tool we leverage to generate shareholder returns.
Greg: Please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from Clark Lehman with <unk>. Your line is open.
Robert Antokol: We currently offer an attractive dividend yield and initiated share repurchases in Q4.
Clark Lehman: Thanks, very much for taking the questions Craig first on the organic growth trajectory for <unk>.
Robert Antokol: The objective of our buyback program is to provide another layer of systematic capital return to investors, specifically by offsetting dilution from besting employee equity.
Speaker Change: <unk> 25, I am curious if you could help us understand sort of what's embedded I guess organically for the existing portfolio and sort of recently acquired titles. If we were to put aside.
Robert Antokol: Regarding M&A, as previously discussed, we expect our M&A activities be bolt-on in nature going forward.
Robert Antokol: Over the next three years, we anticipate deploying $300 million to $450 million for M&A.
Speaker Change: The three game launches that Robert mentioned, when we tried to strip out the Super play impact from casual it seems like that segment was trying to get around flat.
Robert Antokol: This range does not include any potential future earn out obligations related to our past deals.
Speaker Change: And also it sounds like the economy issue that you faced for slot America feels like its may be transient so.
Robert Antokol: Our approach to capital allocation is both disciplined and balanced, focusing on returning capital to shareholders while investing in growth opportunities. By maintaining this approach, we aim to drive long-term value creation for our investors.
Speaker Change: Thinking high single for the.
Speaker Change: The casino business and flattish for casual.
Speaker Change: Directionally.
With that, we'd be happy to take your questions.
Speaker Change: Consistent with where do you think you should be and then.
Robert Antokol: As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced.
Speaker Change: You mentioned bolt on activity and sort of.
Speaker Change: What you guys wanted to deploy over the next couple of years I know, it's a lot harder to sort of predict organic development, but curious if you have enough of it isn't like visibility around your development capacity or the pipeline to say whether we.
Robert Antokol: To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster.
Speaker Change: We should think about <unk>.
Speaker Change: Our first question comes from Clark Lampin with BTIG. Your line is open.
Speaker Change: Beyond 'twenty or beyond 25, being a company that sort of organically developed.
Speaker Change: A couple of new titles every year as well thank you.
Speaker Change: Sure. Thanks for the question Clarke. So it was definitely a few a few themes embedded there I'll start with with new games, obviously that is a bit of a shift.
Clark Lampin: I'm curious if you could help us understand sort of what's embedded
Speaker Change: I guess, organically for the existing portfolio and sort of recently acquired titles, if we were to put aside the three game launches that Robert mentioned.
Speaker Change: From our previous approach.
Speaker Change: The acquisitions of Super play, bringing our pipeline with World class IP as well as our second title coming after that.
Speaker Change: When we tried to strip out the superplay impact from casual it seems like that segment was trending around flat
Speaker Change: We're pretty excited about coming to market their Disney is now and for Q2.
Speaker Change: You know, it also sounds like the economy issue that you faced for Slotomatica feels like it's maybe transient. So
Speaker Change: We also have claris chronicles as well as new slots game. So we have all of the costs, they're embedded in our guidance from a top line perspective, I would say in 'twenty five.
Speaker Change: If we were thinking high singles for the casino business and flattish for casual, are we...
Speaker Change: directionally, you know consistent with where you think you should be and then
Speaker Change: It's not material, but that baked in.
Speaker Change: And as we look going forward.
Speaker Change: You mentioned bolt-on activity and sort of what you guys want to deploy over the next couple of years. I know it's a lot harder to sort of predict organic development, but curious if you.
Speaker Change: The portfolio is going through a bit of a transition as we invest in growth.
Speaker Change: And our new titles and so I think as we see studios like Super play and in play trend into 'twenty six.
Speaker Change: And go from.
Speaker Change: We should think about Playtica beyond 25 being a company that sort of organically develops a couple new titles every year as well. Thank you.
Speaker Change: Negative EBITDA to positive EBITDA contributors.
Speaker Change: We expect that to kind of see that turnaround going into 'twenty, six and going forward.
Speaker Change: And as we acquire studios, where they have new game development as part of their DNA.
Sure, thanks for the question, Clark.
Speaker Change: So there's definitely a few themes embedded there. I'll start with new games. Obviously, that is a bit of a shift from our previous approach.
Speaker Change: It will be part of our strategy that we execute on so I definitely think we're all excited about having a whole another leg of growth added to the company.
with the acquisitions of Superplay, bringing
Arthur Chen: Thank you. Our next question comes from Arthur Chen with Bank of America. Your line is open.
Speaker Change: a pipeline with world-class IP as well as a second title coming after that.
Speaker Change: We're pretty excited about coming to market there. Disney is now in for Q2.
Arthur Chen: Hey, guys sized Arthur off Omar Thanks for taking my question. So.
Arthur Chen: So theres still a lot of excitement recently around the free cash to serve non gaming.
Arthur Chen: Particularly e-commerce, App and mobile games.
Speaker Change: Curious what your view is on that and if that opportunity and capacity change your view on NAV.
Speaker Change: It's not material, but baked in, and as we look going forward...
Arthur Chen: Housing as well.
Arthur Chen: I wish I know you guys have booked.
Speaker Change: I think the portfolio is going through a bit of a transition as we invest in growth in our new titles. And so I think.
Arthur Chen: Yes.
Speaker Change: Thanks for the question I think I'll cover the first part around in App advertising versus in App purchases. We have traditionally focused on in App purchases. We believe that our expertise in live operations allows us to have better monetization and better long term retention as a result of.
you know, negative EBITDA to positive EBITDA contributors.
Speaker Change: We expect to kind of see that turnaround going into 26 and going forward.
Arthur Chen: That focus.
Speaker Change: and as we acquire studios where they have new game development as part of their DNA, it will be part of our strategy that we execute on. So I definitely think we're all excited about having a whole nother leg of growth added to the company.
Arthur Chen: And while we do have some gains.
Arthur Chen: But do you have in App advertising, we don't see that as a driver for us.
Arthur Chen: And in terms of the trending thats been happening around ecommerce I don't think.
Arthur Chen: We're sort of fit the to comment on that.
Arthur Chen: Okay.
Speaker Change: Thank you. Our next question comes from Arthur Chu with Bank of America. Your line is open.
Speaker Change: Thank you. Our next question comes from Eric Sheridan with Goldman Sachs. Your line is open.
Thank you.
Arthur Chu: Hey guys, it's Arthur, also Omar. Thanks for taking my question. So, there's been a lot of excitement recently around the potential to serve non-gaming apps, particularly e-commerce apps and mobile games. I'm curious what your view is on that and if that opportunity could potentially change your view on ENAV advertising as a monetization strategy, which I know you guys have not particularly focused on. Thank you.
Speaker Change: Thanks, so much for taking the question.
Speaker Change: Coming back to the DTC strategy, what are the key learnings as the DTC strategy has sort of scaled in 2024, and how do you think about the mix of games and or the pathway to the higher.
Speaker Change: Levels of mix, you've talked about that will sort of transition DTC as we move through 2025, just to understand how that channel evolves. Thank you.
Thank you.
Speaker Change: Hi, Thanks for the question so.
Speaker Change: Thanks for the question. I think I'll cover the first part around in-app advertising versus in-app purchases. We traditionally focus on in-app purchases. We believe.
We've put a target for <unk>.
Speaker Change: Three years ago, we are on track for the targets of the revenues.
Speaker Change: that our expertise in live operations allows us to have better monetization and better long-term retention as a result of that focus.
Speaker Change: This view, let's see you actually last quarter, we started.
Speaker Change: With this strategy with two games joint journey. So later.
Speaker Change: and while we do have some games that do have in-app advertising, we don't see that as a driver for us. And in terms of the trending that's been happening around e-commerce, I don't think we're sort of fit to comment on that.
Speaker Change: <unk> fairly well.
Speaker Change: In our.
Speaker Change: Vision DPC is one of the most.
The growth engine for EBITDA. This is this is how we're using it is helping us to work much easier with the games and we were one of the first companies that they are focused.
Okay.
Speaker Change: And our numbers are great we grew 8% year over year.
Speaker Change: Thank you. Our next question comes from Eric Sheridan with Goldman Sachs. Your line is open.
Speaker Change: Thanks so much for taking the question. Coming back to the DTC strategy, what have been the key learnings as the DTC strategy has sort of scaled in 2024, and how do you think about the mix of games and or the pathway to the higher levels of mix you've talked about that will sort of transition DTC as we move through 2025, just to understand how that channel evolves? Thank you.
Speaker Change: Thank you. Our next question comes from Matt <unk> with Morgan Stanley. Your line is open.
Speaker Change: Great. Thanks for taking the question I guess, just thinking about the new game pipeline.
Speaker Change: You have Disney Solitaire kind of in the late stages of testing I guess, how was that game trending in testing versus what you would like to see at this stage and more broadly how should we think about the potential contribution from a revenue perspective from from these new games over the next 12 to 18 months and then I have one follow up thank you.
Speaker Change: So.
Speaker Change: This year, last year actually, last quarter, we started with this strategy with two games, June Journey and Solitaire.
Speaker Change: Is it true that we're so excited about launching this.
This game because this is actually.
Speaker Change: Your marriage between the I will be the ability to acquire a company like Super play that have the knowledge and the experience of launching new games and prove himself in the last two games, they're launching the <unk> so taking this.
Speaker Change: and we were one of the first companies that focused in this direction and our numbers are great. We grew 8% year over year.
Speaker Change: <unk> advantage together with a brand like this Lee and with our understanding of the solitaire categories. So altogether. This is going to be one of our growth engine in the coming to you. This is this is how we look at it is going to be.
Speaker Change: Thank you. Our next question comes from Matt Koss with Morgan Stanley. Your line is open.
Speaker Change: I think going to be our top three or four games in a year from now and.
Great, thanks for taking the question.
Speaker Change: We are very very again very exciting. This is a very big news for really Big news.
Speaker Change: Got it.
Speaker Change: Great. Thank you. Our next question comes from Colin Sebastian with Baird. Your line is open.
Speaker Change: versus what you would like to see at this stage, and more broadly, how should we think about the potential contribution from a revenue perspective from these new games over the next 12 to 18 months? And then I have one follow-up. Thank you.
Speaker Change: Alright.
Speaker Change: Thanks for the questions.
Speaker Change: I guess first off in terms of what's embedded into 2025 outlook from new games is is it safe to say that that that is somewhat immaterial for this year in terms of the guidance that it's organic and M&A or are you are you anticipating that some.
So
Speaker Change: To tell you the truth, we are so, so excited about launching this.
this game.
Speaker Change: because this is actually, you know, a merge between our ability to acquire a company like SuperPlay that have the knowledge and the experience of launching new games and prove themselves in the last two games that they launched in the last three years.
Speaker Change: They will contribute materially this year.
Speaker Change: Thanks for the question Colin so to be consistent with my answer.
Speaker Change: Before from a cost perspective, we have all the development cost baked in from a revenue perspective, I would call. It immaterial in terms of what's baked into the guidance.
Speaker Change: So, taking this advantage, together with a brand like Disney, and with our understanding of the Solitaire category, so all together, this is going to be one of our growth engines in the coming two years. This is how we look at it. It's going to be a...
Speaker Change: Okay, and Theres no other M&A embedded in the guidance at this point no theres not.
Speaker Change: I think it's going to be our top three or four games in a year from now and we are very, very, again, very excited. This is very big news for us, very big news.
Speaker Change: Okay, and then just on.
Speaker Change: In terms of the trends I guess quarter to date, you mentioned some improvements in Sardinia here in January or through January is that something that youre seeing that sustainable you think through the rest of Q1.
Got it.
Speaker Change: Thank you. Our next question comes from Colin Sebastian with Bayard. Your line is open.
Speaker Change: And to what extent did you see an improvement.
Speaker Change: Sure So I think.
Speaker Change: The area that we had called out specifically was.
Speaker Change: All right, thanks. Thanks for the questions. I guess first off, in terms of what's embedded in the 2025 outlook from new games,
Speaker Change: Making changes and adjustments as it relates to the game economy and seeing a near term improvement.
Speaker Change: We are also continuing to add new content to improve performance there as well.
Colin Sebastian: Is it safe to say that that is somewhat immaterial for this year in terms of the guidance that it's organic and M&A or are you anticipating that they will contribute materially this year?
Speaker Change: I think Furthermore, strategically we're investing in a new slot title as well leveraging our knowhow.
Speaker Change: 10, plus years experience.
Colin Sebastian: Thanks for the question Colin. So to be consistent with my answer before, from a cost perspective we have all the development costs baked in and from a revenue perspective I would call it immaterial in terms of what's baked in to the guidance.
Speaker Change: In the space to really build a new application that takes our best in class know how on how to how to manage a slots game and bringing it to something that's much more modern look and feel perspective, so really excited about that in more details to come.
Colin Sebastian: Okay, and there's no other M&A embedded in the guidance at this point? No, there's not.
Speaker Change: Okay, that's great.
Speaker Change: Thank you. Our next question comes from Eric Handler with Roth Capital. Your line is open.
Okay and then and just on
Colin Sebastian: In terms of the trends, I guess, quarter to date, you mentioned some improvements in thautomania here in January or through January. Is that something you're seeing that's sustainable, you think, through the rest of Q1? And to what extent did you see an improvement?
Eric Handler: Good morning, Thanks for the question two questions actually first.
Speaker Change: Another question on DTC I guess.
Speaker Change: Given how well youre doing there what goes into bringing our game to the DTC platform I guess.
Speaker Change: Think about it is like why don't you bring more of your games to DTC, particularly the recently acquired games. So I'm just trying to get a sense of.
Colin Sebastian: Sure, so I think, you know, the area that we had called out specifically was...
Colin Sebastian: making changes and adjustments as it relates to the game economy and seeing a near-term improvement.
Speaker Change: What needs to happen to bring a new game because the DTC platform.
Colin Sebastian: We are also continuing to add new content to improve performance there as well.
Speaker Change: So thanks for the question. Yes. This is the strategy to the end of the day, everyone were run on our <unk>.
Colin Sebastian: and I think furthermore strategically we're investing in a new slots title as well leveraging our know-how and you know ten plus years experience.
Speaker Change: It's taking time.
Speaker Change: They ended the maturity of the game is depend how the technology of the game.
Colin Sebastian: in the space to really build a new application that takes our best-in-class know-how on how to manage a slots game and bringing it to something that's much more modern from a look and feel perspective. So, really excited about that and more details to come.
Speaker Change: There was a lot of the things that they didn't know if it's a formula but definitely the new games that we acquire in the last few like if anybody in the coins in the.
Speaker Change: <unk> both of them already on the target to go I don't know when but this is one of the targets and of course the games are superbly. So I believe that in two years from now we'll see most of our again, if not everyone running good level platform.
Okay, thanks, Greg.
Speaker Change: Thank you. Our next question comes from Eric Handler with Roth Capital. Your line is open.
Robert: That's very helpful. Robert Thank you.
Robert: And then I guess from a big picture perspective for the social casino genre, how do you see that genre.
Eric Handler: Given how well you're doing there, what goes into bringing a game to the DTC platform?
Robert: Over the next couple of years is it.
Eric Handler: You know, when I think about it, it's like, why don't you bring more of your games to DTC, particularly the recently acquired games? So I'm just trying to get a sense of, you know, what needs to happen to bring a new game to the DTC platform.
Robert: Can it grow.
Broadly speaking not your game.
Robert: In general and how competitive is it still at this point.
Robert: Yeah.
Thank you.
Eric Handler: So, thanks for the question, yes, this is the strategy at the end of the day that everyone will run on our ODTC.
Robert: It's a really good question, it's a really good question because when we look at the history of these yano.
It's taking time.
Robert: This order was actually no desire that they thought that the.
Eric Handler: It depends on the maturity of the game, it depends on how the technology of the game is built. There are a lot of things, it's like a formula, but definitely, the new games that were acquired in the last year, like Animal and Coins.
Robert: It was the mobile the.
Robert: Mobile increasing revenues in 2010, it was leading the category of the mobile in the last few receive most ability and big players dominating this area and I think.
Robert: I don't see a huge growth coming in this area, but there's still a place even for play ticker.
Eric Handler: Governor of Poker, both of them already on the target to go, I don't know when, but this is one of the targets, and of course the games of Superplay. So I believe that in two years from now, we will see most of our games, if not everyone running on our platform.
Robert: To take market share from their competitors.
Robert: This is what we're doing this is why we are launching a new title because we know what we know about this category with experience with <unk>.
Thank you. Bye.
Speaker Change: That's very helpful, Robert. Thank you. And then, I guess, from a big picture perspective for the social casino genre, how do you see that genre over the next couple years? Is it, you know, can it grow?
Robert: The players so I believe for the company. So this is a huge opportunity.
Robert: For the industry time will tell.
Robert: Okay. Thank you.
Speaker Change: just broadly speaking, not your game, just the genre in general, and how competitive is it still at this point?
Thank you. Our next question comes from Chris Shaw with UBS. Your line is open.
Thank you. Bye-bye. Bye-bye.
Chris Shaw: Hey, Thanks for taking the question.
Speaker Change: Listen, it's a very good question, you know, it's a very good question, because when we look at the history of this genre...
Chris Shaw: It came on the line for Chris So I know the company has experienced with operating multiple absorbing some of the archetype and Texas hold and in slots and et cetera, but how are you approaching the launch of these additional solitaire games.
Speaker Change: This genre was actually, you know, the genre that started with the mobile, you know, the mobile increasing revenues in 2010 and was leading.
Speaker Change: Do you see them targeting different audiences.
Speaker Change: I know it might still be a bit early but do you see any potential competitive pressure with candy crush the altera launching just given that they have such a huge franchise recognition.
you know the categories of the mobile.
Speaker Change: In the last few years we see more stability and big players dominating this area.
Speaker Change: And I think, I don't see a huge growth coming in this area, but I still see a place, even for Platica, to take market share from their competitors.
So thank you for.
Speaker Change: For the question so classic.
Speaker Change: Our biggest advantage is the huge portfolio and Theyre now when we're looking at the new launch will fade as the solid though it's coming from the last acquisition superbly and this is the this is it.
Speaker Change: This is what we're doing, this is why we're launching a new title, because we know what we know about this category, we have the experience, we have the users, the players, so I believe for the company itself, this is a huge opportunity, and for the industry, time will tell.
Speaker Change: Silicon, they're all of them up and they have the they own their you know those activities to launch it and they are doing this the same way the launch the other games in the last few years. So on our side. This is the advantage of <unk>, we have managed to deal with many many games.
Thank you.
Okay, thank you.
Thank you very much.
Speaker Change: Thank you. Our next question comes from Chris Scholl with UBS. Your line is open.
Speaker Change: Polio and each of them is walking independently so I don't see any any issue.
Albert Kim: Hey, thanks for taking the question. This is Albert Kim on the line for Chris.
Speaker Change: Case or the other case of it can be Chris I think it's a very good opportunity today this slip because it will.
Albert Kim: So, I know the company's experienced with operating multiple apps of a similar archetype and texts that hold them in slots, etc. But how are you approaching the launch of these additional solitaire games?
Speaker Change: I will look a little bit about the <unk> games.
Speaker Change: We launched our social casino against the demand that many years ago.
Albert Kim: How do you see them targeting different audiences? And I know it might still be a bit early, but do you see any potential competitive pressure with Candy Crush's alter launching, just given that they have such a huge franchise recognition? Thanks.
Speaker Change: In the few years after.
Speaker Change: The big two or even three and be competitive came to the industry.
Speaker Change: With the amazing coated and everything and what's happened the category grow dramatically.
Thank you for the question.
Speaker Change: <unk> will become one of the biggest category. So when I look at the solid till today.
You know, our biggest advantage is the huge portfolio.
Speaker Change: And for US that we have a candy crush coming to the discussion and of course, we're coming with the business and we have run hours doing amazing and it's still leading the category. So I'm very optimistic about the future here.
Albert Kim: And now when we're looking at the new launch of Disney's Solitaire, it's coming from our last acquisition, Superplay. And this is sitting on their roadmap. And they have their own activities to launch it. And they're doing this the same way they launched the other two games in the last few years.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question comes from Aaron Lee with Macquarie. Your line is open.
Albert Kim: So, on our side, this is the advantage of Playtika. We have many studios, we have many games, huge portfolio, and each of them is working independently. So, I don't see any issue in this case. On the other case of Candy Crush...
Aaron Lee: Hey, good morning, Thanks for taking my question.
Aaron Lee: Now that you live with IGT content.
Aaron Lee: Is there anything more you can share just in terms of what youre seeing in terms of performance and engagement from your users and also what the roadmap looks like for introducing more IGT content. Thank you.
Speaker Change: I think it's a very good opportunity to the industry because, you know,
Speaker Change: I will look a little bit about the history of games. We launched our social casino game, Slotomania, many years ago. And a few years after, two big or even three big competitors came to the industry.
Erin: Sure. So thanks for the question Erin.
Erin: The IGT content for US has been limited and what's rolled out we rolled out Cleopatra too.
Erin: In our prepared remarks, we referenced how well it has performed in terms of.
Speaker Change: with the amazing content and everything. And what happened? The category grew dramatically.
Erin: Reengagement and execution I think we're excited about.
Erin: The rest of the content that we kind of coming out not only in slot ammonia, but and Caesars in house upon.
Speaker Change: The category has become one of the biggest categories, so when I look at the solitaires today
Speaker Change: It's amazing for us that we have Candy Crush coming to this category, and of course we're coming with Disney, and we have Grand Harvest that's doing amazing and still leading the category. So I'm very optimistic about the future here.
Erin: As we roll those out through the rest of the year as well so theres definitely.
Erin: Been excitement that's built as a result of the success, thus far with Cleopatra too.
Erin: Sounds good thank you.
Erin: Thank you I'm.
Speaker Change: Thank you. Our next question comes from Aaron Lee with Macquarie. Your line is open.
Speaker Change: Im showing no further questions at this time. This concludes today's conference call. Thank you for participating you may now disconnect.
Hey, good morning. Thanks for taking my question.
Speaker Change: Now that you're live with IGT content, is there anything more you can share in terms of what you're seeing, in terms of performance and engagement from your users, and also what the roadmap looks like for introducing more IGT content? Thank you.
Sure, so thanks for the question, Aaron.
Speaker Change: So the IGG content for us has been limited in what's rolled out. We rolled out Cleopatra 2 and the prepared remarks. We referenced, you know, how well it has performed in terms of
re-engagement and execution. I think we're excited about
Speaker Change: The rest of the content that we have coming out, not only in Slotomania, but in Caesars and House of Fawn, as we roll those out through the rest of the year as well. So there's definitely been excitement that's built as a result of the success thus far with Cleopatra 2.
That was good. Thank you.
Speaker Change: Thank you. I'm showing no further questions at this time. This concludes today's conference call.
Thank you for participating. You may now disconnect.
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