PLAYSTUDIOS, Inc. Announces Third Quarter Results

Rhea-AI Summary

PLAYSTUDIOS, Inc. (NASDAQ: MYPS) reported a Q3 2022 revenue of $72.1 million, up from $70.6 million in Q3 2021. However, net income fell to $3.6 million from $11.2 million year-over-year. The company achieved an adjusted EBITDA of $9.8 million, slightly higher than $9.6 million in the previous year. Following the acquisition of Brainium, PLAYSTUDIOS expects full-year 2022 revenue between $275.0 million and $285.0 million, and EBITDA between $32.0 million and $35.0 million.

Positive

• Revenue increased 2.1% year-over-year in Q3 2022.
• Adjusted EBITDA grew to $9.8 million, showing resilience.
• Completed the acquisition of Brainium, enhancing AEBITDA margins.
• playAWARDS integration into Tetris and myVEGAS Bingo expected to drive future growth.

Negative

• Net income decreased 67.9% compared to Q3 2021.
• Full-year revenue guidance shows potential decline in financial performance.

Revenues and Adjusted EBITDA grew QoQ in the Third Quarter

Updating FY2022 Guidance to reflect recent acquisition of Brainium

LAS VEGAS--(BUSINESS WIRE)-- PLAYSTUDIOS, Inc. (NASDAQ: MYPS) (“PLAYSTUDIOS” or the “Company”), the developer of the playAWARDS loyalty platform and an award-winning developer of free-to-play mobile and social games, today announced financial results for the third quarter ended September 30, 2022.

Third Quarter Financial Highlights

• Revenue was $72.1 million during the third quarter of 2022, compared to $70.6 million during the third quarter of 2021.
• Net income was $3.6 million during the third quarter of 2022, compared to $11.2 million during the third quarter of 2021.
• AEBITDA, a non-GAAP financial measure defined below, was $9.8 million during the third quarter of 2022, compared to $9.6 million during the third quarter of 2021.

Andrew Pascal, Chief Executive Officer of PLAYSTUDIOS, commented, “We had a strong third quarter and I’m proud of how our team performed. Results showed both annual and quarterly momentum, with many of our recent initiatives beginning to bear fruit. Against an economic and industry backdrop that remains challenging, we believe our performance is particularly noteworthy. We were able to hold DAU and MAU largely flat versus the second quarter of 2022, while growing ARPDAU in our suite of social casino games. We made substantial progress in our two new gaming initiatives, Tetris and myVEGAS Bingo, and are encouraged about how they are positioned for 2023. Updated versions of the games will be available in the new year, with playAWARDS fully integrated on both products. Similar to its impact on our core suite of games, we expect a loyalty lift in both Tetris and myVEGAS Bingo. playAWARDS continued to grow in the quarter and currently includes nearly 600 unique awards for our millions of connected users.”

He added “Of course the big news was our acquisition of Brainium and its collection of 10 highly engaging casual games with nearly 2 million DAU. We view Brainium as an excellent complement to our existing game portfolio and significant for our playAWARDS expansion. It’s early days, but integration is going smoothly and we couldn’t be happier. Even after this impactful acquisition, we maintain a very healthy balance sheet, no borrowings, and full access to our revolving credit facility.”

Recent Business Highlights

• Completed the transformative acquisition of Brainium, which is immediately accretive to AEBITDA margins. Expect Brainium to be a significant contributor to our business and believe there are numerous opportunities for synergies with our existing business.
• Advanced playAWARDS by adding AMC and Cinemark to our network this quarter. Overall partners growth was 43% quarter-over-quarter with reward purchases reaching 553,000 units this quarter.
• Made considerable technological and design progress on our two new internal game initiatives; Tetris and myVEGAS Bingo. Both games are showing improving metrics and are primed to be positive contributors in 2023.
• playAWARDS is set to be fully integrated into Tetris and myVEGAS Bingo in 2023. Integration will also happen into Brainium’s suite of games in 2023. Through this, playAWARDS’ reach will expand significantly next year, allowing it to further establish itself as a world class rewards program.
• Continued to scale studios in Vietnam and Serbia, which now account for nearly 40% of our total development capacity.
• Added head count and continued to make progress in our Web3.0 strategy.

Outlook

The Company is updating its expectation for full-year 2022 revenue to be in the range of $275.0 million to $285.0 million. In addition, the full-year AEBITDA is now expected to be in the range of $32.0 million to $35.0 million.

We have not provided the most directly comparable GAAP measure for our AEBITDA outlook because certain items that are part of the projected non-GAAP financial measure are outside of our control or cannot be reasonably estimated without unreasonable effort.

Conference Call Details

PLAYSTUDIOS will host a conference call at 5:00 p.m. Eastern Time today, which will include a brief discussion of the results followed by a question and answer session.

The call will be accessible via the Internet through https://ir.playstudios.com or by calling (866) 405-1203 for domestic callers and (201) 689-8432 for international callers.

A replay of the call will be archived at https://ir.playstudios.com.

About PLAYSTUDIOS, Inc.

PLAYSTUDIOS (Nasdaq: MYPS) creator of the groundbreaking playAWARDS loyalty platform is a publisher and developer of award-winning mobile games, including the iconic Tetris® mobile app, Pop! Slots, myVEGAS Slots, myVEGAS Blackjack, myKONAMI Slots, myVEGAS Bingo, MGM Slots Live, Solitaire, Spider Solitaire and Soduku. The playAWARDS loyalty platform enables players to earn real-world rewards from a global collection of iconic hospitality, entertainment, and leisure brands. playAWARDS partners include MGM Resorts International, Wolfgang Puck, Norwegian Cruise Line, Resorts World, IHG, Bowlero, Gray Line Tours, and Hippodrome Casino among others. Founded by a team of veteran gaming, hospitality, and technology entrepreneurs, PLAYSTUDIOS apps combine the best elements of popular casual games with compelling real-world benefits. To learn more about PLAYSTUDIOS, visit playstudios.com.

Performance Indicators

We manage our business by regularly reviewing several key operating metrics to track historical performance, identify trends in player activity, and set strategic goals for the future. Our key performance metrics are impacted by several factors that could cause them to fluctuate on a quarterly basis, such as platform providers’ policies, seasonality, player connectivity, and the addition of new content to games. We believe these measures are useful to investors for the same reasons. The key performance indicators may differ from similarly titled measures presented by other companies. For more information on our key performance indicators, please refer to the definitions below and the “Supplemental Data—Key Performance Indicators” section of this press release.

Daily Active Users (“DAU”): DAU is defined as the number of individuals who played a game on a particular day. We track DAU by the player ID, which is assigned for each game installed by an individual. As such, an individual who plays two different PLAYSTUDIOS games on the same day is counted as two DAU while an individual who plays the same PLAYSTUDIOS game on two different devices is counted as one DAU. Brainium tracks DAU by app instance ID, which is assigned to each installation of a game on a particular device. As such, an individual who plays two different Brainium games on the same day is counted as two DAU while an individual who plays the same game on two different devices is counted as two DAU. For both PLAYSTUDIOS and Brainium, average DAU is calculated as the average of the DAU for each day during the period presented. We use DAU as a measure of audience engagement to help us understand the size of the active player base engaged with our games on a daily basis.

Monthly Active Users (“MAU”): MAU is defined as the number of individuals who played a game in a particular month. As with DAU, an individual who plays two different PLAYSTUDIOS games in the same month is counted as two MAU while an individual who plays the same game on two different devices is counted as one MAU, and an individual who plays two different Brainium games on the same day is counted as two MAU while an individual who plays the same game on two different devices is counted as two MAU. Average MAU is calculated as the average of MAU for each calendar month during the period presented. We use MAU as a measure of audience engagement to help us understand the size of the active player base engaged with our games on a monthly basis.

Daily Paying Users (“DPU”): DPU is defined as the number of individuals who made a purchase in a mobile game during a particular day. As with DAU and MAU, we track DPU based on account activity. As such, an individual who makes a purchase on two different games in a particular day is counted as two DPU while an individual who makes purchases in the same game on two different devices is counted as one DPU. Average DPU is calculated as the average of the DPU for each day during the period presented. We use DPU to understand the size of our active player base that makes in-game purchases. This focus directs our strategic goals in setting player acquisition and pricing strategy.

Daily Payer Conversion: Daily Payer Conversion is defined as DPU as a percentage of DAU on a particular day. Average Daily Payer Conversion is calculated as the average DPU divided by average DAU for a given period. We use Daily Payer Conversion to understand the monetization of our active players.

Average Daily Revenue Per DAU (“ARPDAU”): ARPDAU is defined for a given period as the average daily revenue per average DAU, and is calculated as game and advertising revenue for the period, divided by the number of days in the period, divided by the average DAU during the period. We use ARPDAU as a measure of overall monetization of our active players.

playAWARDS Platform Metrics

Available Rewards: Available Rewards is defined as the monthly average number of unique rewards available in our applications’ rewards stores. A reward appearing in more than one application’s reward store is counted only once. A reward is counted only once irrespective of the inventory available through that reward. For example, one reward for a free night in a hotel room with ten rooms available for such free night is counted as one reward. Available Rewards only include real-world partner rewards and exclude PLAYSTUDIOS digital rewards. We use Available Rewards as a measure of the value and potential impact of the program for an interested player. It is assumed that the greater the variety and breadth of rewards offered, the more likely players will be to ascribe value to the program.

Purchases: Purchases is defined as the total number of rewards purchased for the period identified in which a player exchanges loyalty points for a reward. Purchases are not adjusted for refunds. Purchases only include purchases of real-world partner rewards and exclude any PLAYSTUDIOS digital rewards. The Company does not receive any compensation or revenues from Purchases. We use Purchases as a measure of audience interest and engagement with our playAWARDS platform.

Retail Value of Purchases: Retail Value of Purchases is defined as the cumulative retail value of all rewards listed as Purchases for the period identified. The retail value of each reward listed as Purchases is the retail value as determined by the partner upon creation of the reward. In the case where the retail value of a reward adjusts depending on time of redemption, the average retail value is used. Retail Value of Purchases only include the retail value of real-world partner rewards and exclude the cost of any PLAYSTUDIOS branded merchandise. We use Retail Value of Purchases to help us understand the real-world value of the rewards that are purchased by our players.

Non-GAAP Financial Measures

To provide investors with information in addition to results as determined by GAAP, the Company discloses Adjusted Earnings Before Interest Taxes Depreciation and Amortization (“AEBITDA”) as a non-GAAP measure that management believes provides useful information to investors. This measure is not a financial measure calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income or any other operating performance measure calculated in accordance with GAAP.

We define AEBITDA as net income (loss) before interest, income taxes, depreciation and amortization, restructuring and related costs (consisting primarily of severance and other restructuring related costs), stock-based compensation expense, and other income and expense items (including special infrequent items, foreign currency gains and losses, and other non-cash items). We also present AEBITDA margin, a non-GAAP measure, which we calculate as AEBITDA as a percentage of net revenues.

We believe that the presentation of AEBITDA provides useful information to investors regarding the Company’s results of operations because the measure assists both investors and management in analyzing and benchmarking the performance and value of our business. AEBITDA provides an indicator of performance that is not affected by fluctuations in certain costs or other items. Accordingly, management believes that this measure is useful for comparing general operating performance from period to period, and management relies on this measure for planning and forecasting of future periods. Additionally, this measure allows management to compare results with those of other companies that have different financing and capital structures. However, other companies may define AEBITDA differently, and as a result, our measure of AEBITDA may not be directly comparable to that of other companies. For further information regarding these non-GAAP measures, including the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, please refer to the “Reconciliation of Net Income (Loss) to AEBITDA” section of this press release.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future financial and operating performance, our liquidity and capital resources, the development and release plans of our games, our plans to commercialize the playAWARDS platform as a stand-alone service for use by third parties, our increased capacity and use of personnel in European and Asian studios, and our mergers and acquisition strategy, (including our acquisition of Brainium and its expected impact and financial performance) all of which involve risks and uncertainties. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology that conveys uncertainty of future events or outcomes. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to differ materially from statements made in this press release, including our ability to develop and publish our games; risks related to defects, errors, or vulnerabilities in our games and IT infrastructure; our ability to attract new, and retain existing, players of our games; the failure to timely develop and achieve market acceptance of new games and maintain the popularity of our existing games; rapidly evolving technological developments in the gaming market; competition in the industry in which we operate; our financial performance; our ability to execute merger and acquisition transactions; legal and regulatory developments; and general market, political, economic and business conditions. Other potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2022, and in other filings we make with the SEC from time to time, including our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022, to be filed with the SEC. All information provided in this release is based on information available to us as of the date of this press release and any forward-looking statements contained herein are based on assumptions that we believe are reasonable as of this date. Undue reliance should not be placed on the forward-looking statements in this press release, which are inherently uncertain. We undertake no duty to update this information unless required by law.

SOURCE: PLAYSTUDIOS, Inc.

PLAYSTUDIOS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited and in thousands, except per share data)
​	Three Months Ended September 30,								Nine Months Ended September 30,
​		2022				2021				2022				2021
Net revenues	$	72,127			$	70,571			$	210,931			$	215,490
Operating expenses:
Cost of revenue(1)		21,703				22,282				63,657				69,802
Selling and marketing		19,249				19,274				59,336				60,461
Research and development		15,110				14,509				46,561				46,551
General and administrative		9,864				5,789				28,763				22,390
Depreciation and amortization		8,583				7,213				25,265				20,145
Restructuring and related		796				2,303				10,968				2,379
Total operating costs and expenses		75,305				71,370				234,550				221,728
Income (loss) from operations		(3,178	)			(799	)			(23,619	)			(6,238	)
Other income (expense), net:
Change in fair value of warrant liabilities		4,676				11,876				1,139				11,986
Interest expense, net		843				(57	)			1,050				(206	)
Other income (expense), net		(475	)			(113	)			(836	)			(242	)
Total other income (expense), net		5,044				11,706				1,353				11,538
Income before income taxes		1,866				10,907				(22,266	)			5,300
Income tax benefit (expense)		1,763				329				6,186				4,819
Net income (loss)	$	3,629			$	11,236			$	(16,080	)		$	10,119
Net income (loss) per share attributable to Class A and Class B common stockholders:
Basic	$	0.03			$	0.09			$	(0.13	)		$	0.09
Diluted	$	0.02			$	0.08			$	(0.13	)		$	0.08
Weighted average shares of common stock outstanding:
Basic		129,032				125,823				127,529				106,880
Diluted		146,920				138,795				127,529				120,516

(1)

Amounts exclude depreciation and amortization.

PLAYSTUDIOS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited and in thousands, except par value amounts)
​	September 30, 2022				December 31, 2021
ASSETS	​				​
Current assets:	​				​
Cash and cash equivalents	$	212,069			$	213,502
Receivables		19,214				20,693
Prepaid expenses		2,675				5,059
Income tax receivable		1,801				2,117
Other current assets		977				413
Total current assets		236,736				241,784
Property and equipment, net		13,930				5,289
Internal-use software, net		35,418				43,267
Goodwill		6,235				5,059
Intangibles, net		16,018				18,755
Deferred income taxes		13,186				6,282
Other long-term assets		12,422				14,408
Total non-current assets		97,209				93,060
Total assets	$	333,945			$	334,844
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		5,320				7,793
Warrant liabilities		3,590				6,521
Accrued liabilities		18,442				15,599
Total current liabilities		27,352				29,913
Other long-term liabilities		3,090				1,464
Total liabilities	$	30,442			$	31,377
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value (100,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021)		—				—
Class A common stock, $0.0001 par value (2,000,000 shares authorized, 113,407 and 110,066 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively)		11				11
Class B common stock, $0.0001 par value (25,000 shares authorized, 16,457 shares issued and outstanding as of September 30, 2022 and December 31, 2021.		2				2
Additional paid-in capital		285,199				268,522
Retained earnings		18,459				34,539
Accumulated other comprehensive income		(168	)			393
Total stockholders’ equity		303,503				303,467
Total liabilities and stockholders’ equity	$	333,945			$	334,844

PLAYSTUDIOS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO AEBITDA
(Unaudited and in thousands, except percentages)

The following table sets forth the reconciliation of AEBITDA and AEBITDA margin, which we calculate as AEBITDA as a percentage of net revenues, to net income (loss) and net income (loss) margin, the most directly comparable GAAP measures.

​	Three Months Ended September 30,								Nine Months Ended September 30,
​		2022				2021				2022				2021
Net income (loss)	$	3,629			$	11,236			$	(16,080	)		$	10,119
Depreciation & amortization		8,583				7,213				25,265				20,145
Income tax (benefit) expense		(1,763	)			(329	)			(6,186	)			(4,819	)
Stock-based compensation expense		3,554				833				13,563				3,680
Change in fair value of warrant liability		(4,676	)			(11,876	)			(1,139	)			(11,986	)
Special infrequent(1)		—				—				—				7,500
Restructuring and related(2)		796				2,303				10,969				2,379
Other		(367	)			267				(213	)			546
AEBITDA		9,757				9,647				26,179				27,564
GAAP revenue		72,127				70,571				210,931				215,490
Margin as a % of revenue	​				​				​				​
Net income (loss) margin		5.0	%			15.9	%			(7.6	)%			4.7	%
AEBITDA margin		13.5	%			13.7	%			12.4	%			12.8	%

(1)		Amounts reported during the nine months ended September 30, 2021 consist of a transaction bonus and a charitable contribution per the terms of the merger agreement related to the Acies Merger.
(2)		Amounts reported during the three and nine months ended September 30, 2021 consist of severance-related costs and fees related to evaluating various merger and acquisition opportunities. Amounts reported during the three months ended September 30, 2022 consist of fees related to potential mergers and acquisitions. Amounts reported during the nine months ended September 30, 2022 consist of (i) non-cash impairment charge related to the suspension of Kingdom Boss development, (ii) fees related to evaluating various merger and acquisition opportunities, and (iii) fees related to the Tender Offer for the Warrants.

PLAYSTUDIOS, INC. SUPPLEMENTAL DATA – KEY PERFORMANCE INDICATORS (Unaudited and in thousands, except percentages and ARPDAU)
​	Three Months Ended September 30,							​	​			​	​			Nine Months Ended September 30,
​		2022				2021		​	Change			​	% Change				2022				2021			Change				% Change
Average DAU		1,462				1,173				289			24.6	%			1,495		​		1,228				267			21.7	%
Average MAU		6,683				3,571				3,112			87.1	%			6,743		​		3,867				2,876			74.4	%
Average DPU		29				33				(4	)		(12.1	)%			30				34				(4	)		(11.8	)%
Average Daily Payer Conversion		2.0	%			2.8	%			(0.8	)%		(28.6	)%			2.0	%	​		2.8	%			(0.8	)%		(28.6	)%
ARPDAU (in dollars)	$	0.52			$	0.65			$	(0.13	)		(20.0	)%		$	0.51		​	$	0.64			$	(0.13	)		(20.3	)%

PLAYSTUDIOS, INC. SUPPLEMENTAL DATA – PLAYAWARDS PLATFORM METRICS (Unaudited and in thousands, except available rewards)
​	Three Months Ended September 30,					​	​			​	​			Nine Months Ended September 30,					​	​		​	​
​		2022			2021	​	Change			​	% Change				2022			2021	​	Change		​	% Change
Available Rewards (in units)		595			516			79			15.3	%			549			455			94		20.7	%
Purchases (in units)		553			570			(17	)		(3.0	%)			1,712			1,488			224		15.1	%
Retail Value of Purchases (in dollars)	$	31,409		$	37,389		$	(5,980	)		(16.0	%)		$	97,591		$	85,622		$	11,969		14.0	%

 

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PLAYSTUDIOS CONTACTS

Investor Relations

IR@playstudios.com

Media Relations

media@playstudios.com

Source: PLAYSTUDIOS, Inc.

FAQ

What were PLAYSTUDIOS' Q3 2022 financial results?

PLAYSTUDIOS reported Q3 2022 revenue of $72.1 million and net income of $3.6 million.

What is the new revenue guidance for PLAYSTUDIOS for FY2022?

PLAYSTUDIOS updated its revenue guidance to $275.0 million to $285.0 million for FY2022.

How did the acquisition of Brainium impact PLAYSTUDIOS?

The acquisition of Brainium is expected to be immediately accretive to AEBITDA margins and enhance the game portfolio.

What is the adjusted EBITDA for Q3 2022 for PLAYSTUDIOS?

The adjusted EBITDA for Q3 2022 was $9.8 million, up from $9.6 million in Q3 2021.

What challenges does PLAYSTUDIOS face in the current market?

PLAYSTUDIOS navigates a challenging economic backdrop, impacting its net income and overall profitability.