PLAYSTUDIOS, Inc. Q1 FY2024 earnings call

Management Statement and Operational Highlights

• Revenues and adjusted AEBITDA in the quarter were ahead of consensus, though down year-over-year due to product changes.
• 2024 initiatives include portfolio-wide myVIP loyalty program adoption, restoration of myVEGAS and myKONSMI, generalization of playAWARDS, launch of new Tetris title, and Brainium monetization expansion.
• Tetris Prime refreshed for 40th anniversary, with two casual Tetris games in development, one expected Q3.
• Core portfolio: myVEGAS and myKONAMI games transitioned to Tel Aviv for updates; working on direct-to-consumer via myVIP.co.
• playAWARDS: Expanding platform functionality, with 521 rewards and 113 partners by quarter end.
• Capital position: Restarted share repurchase, bought $4M of stock, $46M remaining on authorization; committed to M&A.

Segment Performance

• PlayGAMES Business Division:
  • Tetris: Revenue and DAU well ahead of year-ago figures. Tetris Prime is being refreshed for the 40th anniversary in June, with a new casual variant expected in Q3.
  • Branding Portfolio: Enjoying solid momentum with new ad units and optimizing fill rates, expecting further improvements with rewarded video and myVIP integration.
  • Core Portfolio: Trending in line with the social casino industry, focusing on refining technology and operating capabilities. myVEGAS and myKONAMI games transitioned to Tel Aviv for updates.
  • playAWARDS: Focused on fortifying the platform, adding 521 available rewards and 113 reward partners in the quarter, with over 500,000 rewards purchased, a 14% increase from year-ago.

Guidance

• Financial guidance unchanged: Revenues $315M-$325M, consolidated adjusted AEBITDA $65M-$70M.
• Full year outlook: On track for earnings guidance with positive sales/growth; myVEGAS and myKONAMI expected to improve monetization; full myVIP loyalty integration by year-end; Brainium sequential strength; Tetris growing with new games in development.

Risks

• Product changes tempered operating performance; social casino industry challenging.
• Israel conflict complicated myVEGAS/myKONAMI updates, but making progress.
• Mobile marketing challenging due to privacy policy changes, complicating targeting/scaling.
• Uncertainty around playAWARDS standalone profitability; need for pilot programs and integration efforts.

Question and Answer

• Q: PlayAWARDS royalty revenue, B2B pipeline, profitability timeline A: Last year's royalty from Forte was high margin. B2B efforts have ongoing conversations, expecting pilot by end of year, no timeline for profitability provided.
• Q: Tetris game details, target audience A: Tetris Prime refreshed for 40th anniversary in June, two casual Tetris games in development, target broader casual audience.
• Q: Rewards purchases driver, mobile marketing environment A: Rewards redemptions diversified, driven by optimized rewards portfolio and events. Mobile marketing challenging due to privacy policies, but Tetris has organic traffic.
• Q: Outperformance attribution, M&A search A: Outperformance due to Tetris momentum, Willis Gibson effect, and branding suite performance. M&A search active with pipeline of opportunities, no immediate announcements.
• Q: Social casino recovery, DAU growth A: Social casino market stagnant; focus on monetizing existing audience, direct-to-consumer; DAU growth driven by new products and loyalty program retention.