Q1 2025 Playtika Holding Corp Earnings Call
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Speaker Change: Good day, and thank you for standing by. Welcome to the Playtika Q1 2025 earnings call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star 111 again. Please be advised that today's conference is being recorded. I would now like to hand your conference over to your first figure today, Tae Lee, SVP, Corporate Finance and Investor Relations. Please go ahead.
Speaker Change: Welcome everyone, and thank you for joining us today for the first quarter of 2025 Ernest Paul for Playtika Holding Court. Joining me on the call today are Robert Antikoff, co-founder and CEO of Playtika and Kragate Rooms, Playtika's president and chief financial officer.
Speaker Change: I would like to remind you that today's discussion, they contain four lucky statements, including but not limited to the companies anticipated future revenue and operating performance, and more specifically, the future performance of our individual title, just Potomania or recently launched a new sponsor.
Speaker Change: These statements and other comments are not a guarantee of future performance, but rather a subject to risk and uncertainty, some of which are beyond our control. These four-looking statements apply as it's today, and you should not rely on them at representing our views in the future. We want to take no obligation to update these statements after this call.
Speaker Change: We have posted on the company's slide deck to our Master Relations website which contains information on four Lincoln Statements and non-GAF measures, and we will also post their preferred remarks immediately following the call.
Speaker Change: For a more complete discussion of the risk of a certain disease, please see our findings with the FTC. With that, I will now turn to Colin with a Robert.
Robert Antokol: Good morning and thank you everyone for joining our call today. I'm pleased to report that Plaintika has achieved a stoic milestone in the first quarter.
Robert Antokol: Generating over $700 million in revenue, the highest quarterly revenue in our company's history.
Robert Antokol: This performance reflects the stretch of our industry leading portfolio of mobile games and our ability to acquire industry leading franchise and help support each acquired studio's growth objectives
Robert Antokol: Recently, we celebrate our 15th anniversary proof of our last date business model and industry leadership.
Robert Antokol: Over the years, Playtika has consistently demonstrated resilience and innovation, so we'll be flying our position at the leader in mobile gaming. I'm also excited to share that Disney solider had its global launch on April 17th.
Robert Antokol: While it's early, the new title is showing very promising time with some of the best lunch KPIs I have seen in years.
Robert Antokol: Our superplay studio has a remarkable track record having successfully launched and scaled two previous games and this is what it tells its point to be its third hit game.
Robert Antokol: Based on the game's impressive style, I'm confident that it will be achieved the $100 million
Robert Antokol: I'm incredibly proud of our super place studio for the outstanding work in bringing Disney solitaire to market in collaboration with Disney.
Robert Antokol: Wingo Blit has another record-breaking quarter, achieving all-time high in total revenues and revenues from our direct to consumer platforms
as the last mobile bingo game. [inaudible]
Robert Antokol: and one of the largest casual game in the industry, Bingo Blit, continues to grow the category at such a new audience.
Robert Antokol: and Benefit from the winner takes most dynamics of the genre. It is doing performance more than a decade after the acquisition. It's clear testament
Robert Antokol: to the strength of our live operation in ongoing content innovation.
Robert Antokol: Turning to Slotomania. Slotomania's results in the first quarter were disappointing, and outside the small in the European performance, it's a result of several quarters of two.
Robert Antokol: sequential decline. While we believed we had addressed the game economy issues in general, we have seen the issues resurfaced leading to weakness in the game starting at the end of March.
Robert Antokol: Automarines Revenue will continue to decline in the coming quarter before we start to see improvement.
Looking at...
Robert Antokol: We are planning to launch our new slot game in the back half of the year. In addition, we are integrating in out IGT slot titles into our platform and reaching our game offering with the high quality
Robert Antokol: Following the successful launch of Cleopatra 2 last December , we introduce Rigel Richett,
Robert Antokol: This past quarter, with several more lands planned for the rest of the year, stabilizing and launching new slot games, remains the top strategic, quality and playtaker.
Robert Antokol: In closing, I want to take our team for the hard work.
Robert Antokol: Your efforts have been vital in building our industry leading portfolio of games which has helped us achieve this milestone of record revenue in the quarter.
Robert Antokol: I look forward to providing updates to our 2025 new game luncheon. I will now turn it over to Craig for a deep dive into our quarterly results.
Thank you, Robert.
Craig Abrahams: Before diving into the financials, I want to update where we are on our growth drivers.
Craig Abrahams: We're investing behind our recently acquired titles as well as our leading casual games.
Craig Abrahams: Our D to C efforts are showing strong results and we are excited about introducing new mobile game franchises to the market.
Craig Abrahams: As Robert mentioned, Disney Solitaire is off to a very strong start in April and very encouraging as we look at our future pipeline.
Craig Abrahams: Within our core portfolio, we've experienced revenue declines in our slot titles and our smaller casual games without leadership positions in the respective genres.
Craig Abrahams: We are focused on product investments and operating improvements to stabilize Slotomania and our other Slot titles, but this will take time.
Craig Abrahams: In addition, our leading casual game franchises, such as Bingo Blitz, Solterga and Harvest, and June's Journey, continue to be franchises we believe we can grow over time.
Craig Abrahams: They reflect the kind of category leading Evergreen franchises that define long-term winners in mobile gaming today.
Craig Abrahams: The mobile gaming landscape is evolving with player engagement and revenue increasingly concentrated around established and high performing titles.
Craig Abrahams: Players are dedicating more time to games that have stood the test of time drawn by ongoing updates, community engagement, and proven entertainment value.
Craig Abrahams: This favors companies like Playtika, operators with a leading, diversified portfolio of industry leading games, Best in-class live-ops capabilities, and a proven ability to generate free cash flow at scale.
Craig Abrahams: As we navigate this transition, we are making strategic capital allocation decisions aimed at enhancing our financial profile and positioning the company to capitalize on these dynamics.
Craig Abrahams: We take pride in our track record of being disciplined operators, consistently making thoughtful investment decisions to optimize our resources and drive revenue growth.
Craig Abrahams: With that, let us give them the details of the corner.
Craig Abrahams: We generated $706 million of revenue in the first quarter in 8.6% sequential increase and in 8.4% year-over-year increase.
Craig Abrahams: The increased overall investment in performance marketing had an impact on our credit adjusted EBITDA margins as we generated credit adjusted EBITDA of $167.3 million down 9% sequentially and down 9.9% year-over-year.
Gapnet income was $30.6 million down 42.3% year-over-year.
Craig Abrahams: Our Director Consumer Business achieved record revenues once again as we generated $179.2 million of 2.6% sequentially and 4.5% year-over-year.
Craig Abrahams: The growth in our D to C business was driven by bingo blitz, June's journey, and Salt River and Arvest, all set by decline from the slot titles.
Craig Abrahams: We believe that our deity business has meaningful growth potential over the next 12 months.
Craig Abrahams: Historically, we have targeted 30% of our revenue to come from D to C.
Craig Abrahams: It is important to note that many of our games are performing above this mark and the 30% represented in average.
We are combining these efforts. We'll contribute to our margins.
Craig Abrahams: To further elaborate on our performance, I want to provide some context around our Q1 results and our outlook for the remainder of the year.
Craig Abrahams: In T1, as is our typical seasonal trend, we experienced higher marketing spend, which along with the losses from the Superboy acquisition, contributed to the decline in the adjusted EBITDA year over year. We expect marketing expenses to decline sequentially in the coming quarters.
Craig Abrahams: As we evaluate our revenue forecast, we are affirming our guidance for the year as the declining terms in our slot games will be all set by growth of casual titles in the portfolio.
Turning out our business results in the quarter.
Craig Abrahams: The sequential growth in the quarter was driven by the full quarter contribution from dice dreams and domino dreams.
Craig Abrahams: and the continued impressive performance from our largest game, Bingo Blitz.
Craig Abrahams: Dice Dreams was among our top three games by revenue this past quarter.
Craig Abrahams: Fingerblood's revenue was $162.4 million, up 2.1% sequentially, and up 3.1% year-rear.
Craig Abrahams: In Q1, Fingle Bliss' performance was driven by several key initiatives.
Craig Abrahams: The American Idol campaign, which features an exclusive in-game collaboration with Lionel Richey, brought significant engagement and excitement to the game.
Craig Abrahams: Players enjoy the unique American Idol experience competing in bingo challenges and having the chance to win VIP tickets to the American Idol finale.
Craig Abrahams: The introduction of a new bingo room featuring a social flavors player experience inspired by American idol was received positively by our community.
Craig Abrahams: This campaign not only boosted player engagement, but also enhanced the game's visibility and appeal, driving a strong marketing effort that's exceptionally attracted new players to the game.
Craig Abrahams: More recently, we launched our Bingo Blitz branded game show on the Game Show Network.
Craig Abrahams: This new series, hosted by Valerie Bertinelli, combines Bingo Play with trivia challenges.
Craig Abrahams: The game show has been well received, bringing the dynamic and social game experience of Bingo Blitz to television screens.
Speaker Change: We anticipate this initiative will help strengthen the Bingleblitz brand by reaching a broader audience.
Speaker Change: Slotomania revenue was $111.8 million, down 5.5% sequentially, and 17.4% year-over-year.
Speaker Change: Despite these challenges, our DC business remains a cornerstone of our success.
Slotamania's D to C business demonstrates stable performance, quarter over quarter.
Speaker Change: Our strong connection with our most loyal players has been instrumental in extending the life cycle of our games far beyond industry standards.
Speaker Change: Day streams revenue with $78.6 million off $124.5% sequentially compared to a partial quarter of revenue contribution from the Superplay acquisition.
Speaker Change: This impressive growth reflects the successful integration of ice creams into our portfolio and the strong execution by our teams.
Speaker Change: In Q1, they streamed benefit from several key initiatives that contributed to its robust performance. Our other acquired titles are performing in line with our expectations.
Speaker Change: We are especially pleased with the ramp-up and revenue we have seen from Domino Dreams.
Speaker Change: The game is game attraction. We are optimistic about its roadmap as we invest in marketing and content updates to drive monetization.
Speaker Change: Turning out a specific line items in our P&L for the first quarter.
Speaker Change: Cost of revenue increased 11.5% year-over-year, driven by our revenue growth and increased in amortization expenses in our P&L, resulting from the acquisition of Superplay.
Speaker Change: Operating expenses increased 19.4 percent, driven primarily by increased performance marketing spending, also driven by our acquisition of super flat. [inaudible]
R&D Decreased by 2.9% year-a-year
Speaker Change: The savings from the expiration of our long-term cash compensation program offset increases in hosting expenses and costs associated with outsourced services.
Sales and Marketing increased 42.8% year-over-year [inaudible]
Speaker Change: The increase in sales and marketing was primarily driven by the incremental performance marketing spend from our acquisition of Superplay.
Speaker Change: We anticipate sequential declines and marketing spend for the remainder of the year.
GNA expenses decline 9.2% year-over-year [inaudible]
Speaker Change: The decline was primarily due to the expiration of a long-term cash compensation program, which resulted in lower accrued expenses offset by an increase in contingent considerations.
Speaker Change: As of March 31st, we'd approximately $514.3 million in cash, cash equivalents in short-term investments.
Speaker Change: We enter into an agreement to extend the maturity of the revolving creative facility. From March 2026 to September 2027, subject to the satisfaction of certain conditions, and decrease the aggregate principal amount of the revolving creative facility from $600 million to $550 million.
Speaker Change: Looking at our operating metrics, average DPU increased 15% sequentially and increased 26.2% year-a-year to 390,000.
Speaker Change: Average DAU increased 12.5% sequentially and increased 2.3% year-over-year to 9 million.
Speaker Change: Arped-out, decreased 2.2% sequentially, and increased 7.4% year-a-year to 87 cents.
Finally, we are reaffirming our guidance for the year.
We'd be happy to take your questions.
Speaker Change: Thank you. At this time, we will conduct a question and answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from Doug Crutz of TD Cowan, the floor's yours.
Doug Krutz: Hey, thanks. I wonder if you could talk a bit more about sort of dizzy solitary and how that fits into your marketing plan for the year. Obviously, it's great to talk to a good start.
Doug Krutz: Typically, when you have a new launch, if the KPIs are good. [inaudible]
Doug Krutz: You're willing to pour more marketing revenue into the game to increase the long-term value of the game. So, how are you sort of balancing that off against your commentary that marketing expenses will be declining sequentially to the year? Thanks.
Okay, thanks.
Thank you. Thank you. Thank you.
Thank you for your question.
One moment please.
Matt Kost: Our next question comes from Matt Cost of Morgan Stanley . The line is yours.
Matt Kost: Great, good morning, thanks for taking the questions. I guess on Slotomania, it seems like you're expecting to continue to climb to that game.
Matt Kost: How should we think about the path forward to that franchise? Is the new slot game in the pipeline kind of an attempt to fill the gap from Slothomania, or maybe you've served as like a sequel or replacement for it? Or is there a plan in place to sort of stabilize Slothomania and throw a lot of investment at some point? [inaudible]
in the future into that title.
Thanks for the question. And so it...
Matt Kost: We see an issue that runs automatically in the last year and it's not that we never, we said to the market and the...
Matt Kost: We will show the last quarter we find a way to stable as the game.
Matt Kost: Our last launch of the slot game was 10 years ago. [inaudible]
Matt Kost: And in the last 10 years, we found ourselves with a lot of content, a lot of interesting content, with a lot of experience, with a lot of knowledge, and we decide to take everything and to bring back the market share that we lost in the last few quarters. This is our mission for us being in the market with a new app in this category. Thank you very much.
Matt Kost: It's a real situation. So I think to stabilize the game, to fix the issues that we have to launch a new fresh app in this market, I think this is the right step to come back and to grow again in this category. Thank you.
Craig Abrahams: Great, thanks. And then Craig, you talked about marketing, stepping down sequentially in the coming quarters. I guess are there any other puts and takes that we should think about in the phasing of costs through the rest of the years, you integrate Superfly?
Craig Abrahams: Nothing as it relates to super play but I think as we look at the year obviously there's opportunities to continue to progress on direct consumer. I think there's margin potential there and we're consistently looking at opportunities to further manage expenses. So I think that's the puts and takes between the growth and the casual part of the business as well as managing the declines we've seen in the slot portfolio. Thank you very much.
Okay, thank you.
Speaker Change: Thank you for your question. Again as a reminder to ask your question please press star 11 on your telephone. One moment, one moment please.
Speaker Change: Our next question comes from Albert Kim from UBS, The Floor's Yours.
Speaker Change: All right, thanks for taking the question. Just on the DDC front, last quarter, I believe you talked about animals and coins and governors of poker is eventually making their way into the DDC channels. Any update on timing, how should I think about the overall DDC mix evolving from here?
Speaker Change: and just to the extent that there are any answered changes along the direct link and the inclusion of their party apps, do you say changes to the ETC adoption reactivations? Thank you.
Speaker Change: So thanks for the question. Did you see for Playtika was always a big advantage?
Speaker Change: We've been living this a few years ago and we've been slowly, slowly, our inspectors and they've been ready for the situation that today
Speaker Change: Everyone is speaking about the scene, we see the changes in the market, we still learning the changes, we still try to understand how to react but one thing I can say [inaudible]
Speaker Change: We are all in, we understand, we are ready, we are going for us, it's one of the most biggest potential for a more profit to the company, more EBITDA to the company and again, you know, for everyone, everyone is speaking about the PC, for us it's all news, we are starting in a different place than everyone else and I think again for Playtika this is a huge opportunity and actually it's really out to serve opportunity because it's already here [inaudible]
Thank you
Thank you for your questions.
At this time, I'm showing no other questions.
The End
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