PLAYSTUDIOS Inc (MYPS) 2022 Q1 法說會逐字稿

Ladies and gentlemen, good day. Thank you for standing by, and welcome to the PLAYSTUDIOS first-quarter 2022 earnings conference call.

At this time, all participants are in a listen-only mode, and a question-and-answer session will follow the formal presentation. (Operator Instructions)

Also, please note that this conference call is being recorded today, May 5, 2022.

To get us started, I am pleased to turn the floor over to Joel Agena. Please go ahead, sir.

Thank you, operator, and hello, everyone. By now, everyone should have access to our first-quarter 2022 earnings release, which is available on the PLAYSTUDIOS' website at www.playstudios.com in the Investors section.

Some of management's comments today will be forward-looking statements about future events, expectations, and projections. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. You should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risk factors that could impact future operating results and financial condition.

During the call, management will discuss non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

A reconciliation of these measures to the most directly comparable GAAP measure is available in our first-quarter 2022 earnings release on the www.playstudios.com website and on our Form 8-K filed with the SEC today.

Hosting the call today, we have Andrew Pascal, PLAYSTUDIOS' Chief Executive Officer; and Scott Peterson, Chief Financial Officer of the company. They will provide some opening remarks, and then we will open the call to questions.

With that, I'll turn the call over to Andrew.

Thank you, Joel, and good afternoon, everyone. Welcome to the PLAYSTUDIOS' first-quarter 2022 earnings call. Q1 of this new year was generally consistent with our performance and experience in the last quarter. We continue to focus on our execution and evolving our business in an effort to more fully capitalize on our unique play-to-earn loyalty model.

So let's start with some highlights. We enhanced the value proposition of our playAWARDS platform by adding new capabilities, new partners, new benefits to our myVIP program. We saw continued growth in reward purchases providing over $33 million of retail value and real-world benefits to our active players.

We acquired the full rights and assumed the ongoing development operations of our myVEGAS Bingo product. We continued to optimize the existing Tetris game while beginning work on an altogether new, more casual version of the franchise.

We grew our player network from 1.29 million average DAU in Q4 2021 to 1.56 million average DAU in this past quarter.

We brought some amazing new talent into the company, expanding the capacity and capabilities of our European and Asian studios. And we generated $70.5 million of revenue, and $9.1 million of adjusted EBITDA.

For those of you who may be new to our company and unfamiliar with our history, I'd like to provide a little context for the rest of our call. PLAYSTUDIOS is a uniquely positioned mobile gaming developer and publisher with a portfolio of eight games, most of which incorporate our industry-first, real-world loyalty program.

For over 10 years, we have been refining our model, entertaining our players, and converting them to new consumers for our loyalty rewards partners. We are the pioneers of rewarded play, and we are deeply committed to more fully leveraging the potential of this paradigm as we diversify into new game genres, expand our player network, and continue to enhance what's already the richest collection of real-world benefits offered in gaming.

With that as background, let's delve a bit more deeply into the overall state of the business. The overall gaming market continues to be very fluid. Proven commercial models, such as sweepstakes and peer-to-peer betting, are evolving; and new ones are emerging like NFTs and various forms of cryptocurrencies.

These trends reflect the groundswell of interest in rewarded play, or as everyone is calling it now, play-to-earn. It's something we have been doing for 10 years, and what we are seeing now sort of reaffirms the relevance of our model and elevates the importance of our experience.

In addition, the competition for players continues to intensify with targeting and sourcing them, getting ever more complicated, expensive, and far less predictable.

As I highlighted in prior calls, the industry remains all consumed with how best to attract new audiences. However, by comparison, there's considerably less innovation being applied to retaining and extending the lifespan of existing ones. While most game publishers support their products with a dense lineup of fresh content, we also leverage loyalty mechanics and real-world rewards to deepen our connection with our players.

Our experience with this model and our deep belief and how it can be applied to all game genres is what fuels our optimism and informs our strategic priorities.

On the topic of strategy, ours consists of two key pillars. The first is focused on the continued evolution of our playAWARDS platform and suite of services that we can leverage with other game partners. The second is focused on developing and acquiring new games and new genres so we can demonstrate our loyalty lift across a broader collection of products.

As we have shared, we plan to do this in a number of ways, including joint development, publishing, and strategic M&A.

Now I'd like to go a little deeper on some of our primary initiatives, starting with our loyalty platform, playAWARDS. As I highlighted at the top of the call, we'd make great strides here. We have continued to develop the systems, tools, and practices that will allow us to offer playAWARDS as a standalone loyalty solution to third parties.

The central aspect of that work is extending the functionality of our playLINK SDK, adding a more expansive collection of digital to real-world tie-ins. In addition, the team has been active in qualifying and onboarding reward partners.

Since the first of the year, we've added several new partners, including a number of affordable national and international options, such as select Subway and Sonic restaurant locations. This brings us to over 100 active reward partners, representing more than 500 unique rewards.

Lastly, given the importance of consumer engagement with our program, it's worth highlighting that reward purchases were up 54% versus last year, and 23% versus the fourth quarter. This translated to over 592,000 in-game reward purchases with a retail value of over $33 million.

Turning to the second of our strategic pillars, we continue to advance the development of our newer initiatives, as well as focus on the execution of our core games. We have two relatively new efforts here. Last November, we acquired the mobile rights to Tetris, one of the most widely played and beloved franchises in the history of consumer gaming. The acquisition included the classic Tetris game, an existing free-to-play mobile app; as well as Tetris Beat, an Apple Arcade game.

Q1 was the first quarter where we enjoyed the full impact of their additional users. This is reflected in our overall network-wide average DAU and MAU growth quarter over quarter. We also experienced the modest contribution in revenues as the game currently operates primarily on an ad-driven model.

In addition, we acquired the rights to develop new games that incorporate the Tetris brand-related IP and game mechanics. As I previously shared, it's our belief that the Tetris game format has the potential to become its own casual game category alongside Match 3, Solitaire, and Bingo.

Each of these categories demonstrates what's possible when a universally appealing game format is complimented with progression mechanics, richer features, and more sophisticated live operations. Our plan is to optimize the existing games we have inherited, while we craft an altogether new Tetris app that employs the playbook proven by most of the leading casual games.

To this end, we're working on incorporating our playAWARDS program into the existing Tetris game, and in doing so, we hope to improve player retention, player engagement, network-wide value. And in parallel, we are actively advancing the altogether new Tetris app, which we intend to launch by the end of this year.

The second initiative is myVEGAS Bingo, which we just recently assumed full responsibility for in late February. We elected to do so to afford us more influence and control over the stability, operations, and evolution of the game.

Since completing the transition, we focused on technical stability and performance refines. We are now turning our attention to some of the other foundational features and tools that will enable us to operate the product with more sophistication and point far more refined segmentation practices that allow us to better tailor the experience for our players.

We continue to believe in the potential of this game and anticipate stepping up the pace in new content, introducing more proven monetization practices, and eventually ramping up our investments in user acquisition later this summer and into the fall.

As for our core products, we continue to invest meaningfully in the evolution and performance of our more mature games. These include myVEGAS Slots, myKONAMI Slots, and our POP! Slots franchise, which includes the MGM Slots Live game. Each of these products is supported with ongoing feature, content, and live event releases as we work to keep the games fresh and always interesting for our long tenured players.

As I mentioned during our last call, we introduced MGM Slots Live as a way for us to better optimize our UA investments. The game was originally conceived of as a sub-brand within the POP! family. And with the creative recasting of the iconic MGM Resorts brands, we were able to leverage the existing POP! Slots systems, tech, tools, and teams in order to quickly bring an entirely new app to market.

We're still learning from and optimizing the POP! MGM app, and as we continue to work towards validating the specific UA strategy. Based on our learnings, we may elect to utilize other brands in our portfolio, such as Bellagio, Mirage, Luxor, and Excalibur in a similar way.

Before wrapping up my update on our strategic priorities, I think it's worth touching on the growing interest to momentum we are seeing in all things related to Web3 gaming. The amount of resources flowing into these early-stage opportunities is quite staggering, and the effects will undoubtedly be felt by traditional publishers, as well as the new entrants into this space.

In our case, we view the movement towards blockchain models that enhance agency and reward players for their time as validation of our core strategic thesis, which is if you offer games that people love, coupled with the opportunity to earn real-world value, it makes for more compelling value proposition and a longer lasting relationship. Already, there's a flood of blockchain solutions, all in search of the tangible product market fit.

In our case, we see a world where NFTs and cryptocurrencies enable us to more fully realize our vision for a robust loyalty platform that provides a simple and elegant framework for partners and players to benefit from their commitment to us and to our games. I look forward to sharing more of our thinking and plans here in the coming quarters.

Let's turn our attention to execution. On our last call, I reinforced the complexities and challenges of scaling our operations and executing in a post-COVID environment. If you recall, I spoke to the escalating costs in each of our primary tech hubs, and our need to grow our teams in alternative markets.

I am pleased to share that we continue to make great strides in the expansion of each of our new offices. All in, these studios now have over 200 playmakers, accounting for 35% of our total development capacity.

We'll continue to aggressively recruit top talent in these markets, understanding that it takes time to onboard, train, and integrate new team members. As such, we don't expect to see the increased development output or improved margins until later this year.

I think it's also worth reinforcing the challenges we are still facing as a result of persistent COVID concerns. Most of our studios are open within office time being largely voluntary and most employees selecting to work remotely.

These conditions make our execution more difficult, which in turn, impacts our solutions, impairs our ability to share, learn, and grow, and generally affects our pace of progress. That said, we are adapting to new ways of working across time and distance as we remain focused on achieving our business goals.

Before handing things off to Scott, I want to briefly touch on our capital allocation. On this front, we had remained consistent. We make decisions that we feel reinforce the enduring qualities of our business model and that we believe will drive mid- and long-term growth.

With that, we continue to believe that the best use of our capital is to deploy it into strategic growth opportunities. We'll remain active in our pursuit of acquisitions and are pursuing a number of opportunities of varying scale.

Accordingly, during the first quarter, we again elected to not purchase any stock under our previously authorized $50 million stock repurchase plan. However, after careful consideration, we did elect to launch a tender offer for all of our outstanding public and private placement warrants.

Given it is a public tender offer process, we won't be able to say much beyond what we've already shared in our public documents filed with the SEC. As we have expressed in our filings, the primary reason for the tender offer is to provide investors and potential investors with greater certainty concerning our capital structure. It's our view that the tender offer for the warrants will prove beneficial to our shareholders as we execute on our strategy.

I should also highlight that we remain optimistic about the opportunities in front of us. Accordingly, I continue to purchase stock under my 10b5-1 plan, and our view of the current share price does not reflect what we believe to be our fair value. And I'm continuing to convey my conviction through my actions of purchasing shares in the open market.

I'll now turn the call over to Scott to provide more specifics on the financials.

Thank you, Andrew. We reported $70.5 million of revenue during the first quarter of 2022, compared to $74.1 million during the same quarter last year. I want to remind everyone that last year's first quarter benefited from the overall market impact of COVID-related stimulus checks.

I'd also like to clarify that while in-app purchases did decline relative to prior year, advertising and other revenue increased primarily as a result of Tetris. Both of these metrics were generally in line with our first-quarter 2022 expectations.

For the first quarter, we generated $9.1 million of adjusted EBITDA, compared to $14.5 million during the prior-year quarter. The decline in revenue was offset by a decline in cost of sales.

As a result, the difference in adjusted EBITDA was primarily driven by increases in UA costs, payroll associated with the ramp-up of our foreign studios, and incremental public company costs that weren't in the prior-year quarter.

Looking at some of our other KPIs, we are encouraged by player engagement with our loyalty platform. Program activity continues to expand. Reward purchases during the first quarter were 592,000 units, growing 54% compared to 384,000 units for the same period last year.

This translated to a total retail value of $33.7 million, an 80% increase over the same period last year.

Our rewards inventory continues to expand, increasing 35% over the prior year to 521 unique rewards.

We continue to see strong game KPIs as well. Average DAU was 1.6 million and average MAU was 6.9 million, up 23.5% and 85.2% respectively over the prior-year quarter.

These metrics include the first full quarter of Tetris activity. While the organic install volume and resulting active users from Tetris are meaningful, the revenue contributions are modest and driven almost exclusively by ads.

As a result, the increases in average DAU and MAU from Tetris were dilutive to our ARPDAU, which was $0.50 in the first quarter of 2022, down 23.1% over last year's first-quarter ARPDAU of $0.65. Adjusting for the impact of Tetris, our current quarter's ARPDAU was $0.67, a 3% increase.

Similarly, average daily payer conversion was impacted, coming in at 2% for the quarter, down approximately 90 basis points year over year.

As we discussed on our last call, we ended our development partnership with Boss Fight Entertainment. In doing so, we purchased myVEGAS Bingo, and we indefinitely suspended the development of the Kingdom Boss game.

As a result of suspending Kingdom Boss, we took a non-cash restructuring charge of $8.4 million during the first quarter, representing the write-off of developer-related assets on the balance sheet. We do not expect any further cash costs or non-cash write-offs associated with Kingdom Boss. We also recorded a non-cash charge of $2.7 million associated with the increase in the fair value of our warrant liability.

Turning to the balance sheet, we ended the quarter with approximately $220 million of cash and no debt. We maintained $75 million of borrowing capacity, representing all of the availability under our five-year secured revolver, exclusive of the accordion feature, which provides us for up to an additional $75 million of credit.

All in, with the cash and the revolver availability, we have approximately $295 million of liquidity, or $370 million with the accordion.

As of the close of the quarter, we have 126.5 million total shares of common stock outstanding. Given the strong balance sheet, we believe we remain very well positioned to execute our multiyear plan, diversifying our game portfolio, and advancing our loyalty platform model.

As Andrew mentioned, the company did not repurchase any shares during the quarter and continues to maintain the full $50 million of availability under share repurchase authorization.

On a somewhat related note and subsequent to quarter end, on April 1, we commenced a public tender offer for all of our outstanding public and private placement warrants at $1 per warrant in cash. As of the end of the quarter, there were approximately 7.2 million public warrants, and approximately 3.8 million private placement warrants outstanding. The tender offer period is scheduled to expire on May 13, 2022.

Regarding guidance, our expectations remain unchanged from our last call. We continue to expect 2022 full-year revenue to range between $305 million and $325 million. We also continue to expect 2022 full-year adjusted EBITDA to range between $40 million and $50 million.

With that, I will pass it back to Andrew for some closing remarks.

Thank you, Scott. Before we close our prepared remarks and open the call for questions, I'd like to reinforce some of the key points we covered.

Our first-quarter pace was generally in line with our expectations. Having integrated Tetris into our portfolio, we've grown our player network to nearly 1.6 million average daily active users, returning to our pre-COVID levels.

We've seen playAWARDS player engagement grow by over 50% year over year as reward purchases top 590,000, and redemption retail value exceeded $33 million. We're scaling our teams internationally, and we remain intensely focused on expanding our development capacity and productivity. And we are advancing a number of strategic M&A initiatives with a view toward further demonstrating the value of our platform business.

Lastly, I want to thank our dedicated teams around the world, along with our partners and investors. Thank you all for joining us today. We are happy to now open the call.

Operator, please open the line for questions.

Gentlemen, thank you. (Operator Instructions)

Ryan Sigdahl, Craig-Hallum.

Good afternoon, guys. Thanks for taking our questions. Curious starting on guidance, what gives you confidence to reaffirm guidance when Q1 seems to be off to a little bit of a slower start, at least relative to what we were expecting? But curious also relative to your internal expectations. And it does imply a fairly steep ramp [Q3 or 4] this year.

I mean, I think as we shared in the last call, we generally expected that things would be ramping up and accelerating towards the back half of the year. So we knew that we were absorbing Bingo, and it was going to take time before it started to really contribute more meaningfully. Same with Tetris in terms of developing a new product that supports that franchise.

So I think as we looked at the pace coming out of the first quarter, we generally kind of look forward and feel like we are still going to end up in the range that we've provided previously.

And then on Bingo, you mentioned things you've done already and still to come there now that you control that game. Have you seen any change in performance, or is it still too early?

It's still too early. I mean, one of the reasons we wanted to assume responsibility for the product is because we didn't feel like it was getting the support that it needed in terms of the content, pace and cadence, and just generally the way it was being operated. And so we knew that we were going to have at least several months of work to do that was foundational.

So focusing, as I alluded to, on just the overall file size of the game app on download and the stability of the product. And then we knew that we needed to get on a production pace where we could just start introducing more content and more features with much greater density in order for us to really activate that audience.

And then in terms of the way we operate it from a monetization perspective, the segmentation tools that were previously being used were pretty rudimentary. We wanted to employ our own tools so that we could more effectively segment the audience and optimize monetization.

So those are all really foundational things that we're actively working on now and that we won't really be able to exercise in order to drive the growth of the product here for another couple of months.

One more for me, and then I'll turn it over to the others, but are you able to break out what ARPDAU in payer conversion would have been, excluding Tetris? Do you have the metric? Or at least, directionally, I guess it'd be helpful if the core legacy games, if they were up flat down on those two metrics.

They were generally flat.

Helpful. Thank you. Good luck.

All right, Ryan. Thanks again.

Matthew Cost, Morgan Stanley.

Hi, everyone. Thanks for taking the questions. I guess two, if I can. So just on the M&A environment, obviously you highlighted how that's your number one priority for capital allocation. There's a lot of choppiness in the broader mobile gaming market.

So I guess are you seeing that create an opportunity? What is the general state of the market there? And are we still in an air pocket where perhaps private market valuations are not keeping pace with some of the disruption we are seeing broadly in the public markets? And then I have one more after that.

Well, thanks, Matt. Nice to hear from you. Look, our general feeling is that the private market valuations have not yet kind of fully adjusted. With that said, we are really active.

Also, as I alluded to in my remarks, there's a range of opportunities that we are actively advancing across a broad spectrum in terms of scale and size.

And so they're competitive. The market, obviously, is intensely competitive. It's gotten -- it feels -- it's changed up a bit, obviously with a lot of the Web3 activity and people recognizing that fundamentally, Web3-based games need to be great games that can be enhanced with kind of crypto models or blockchain models.

So I think that the competition for the smaller studios and assets seems to have stepped up a bit. But we feel that there are some really interesting opportunities that we're actively in the cycle with. And we remain really focused on seeing if we can get one of those across the line, one of the more significant ones across the line. And obviously, they just take some time.

But we feel like we are certainly being carefully considered and that our proposals, as we advance these opportunities, are being met favorably and people are engaging with us. And so it's kind of given us the belief that ultimately, we'll get one of these done. So we just remain really active.

Great. No, that's super helpful. And then just secondly, you mentioned kind of like broader anxiety, frankly, in the market about the ability to target and acquire new users. I guess, where are we in the process of normalizing your ability to go out and target and acquire new users versus where that was a year ago?

And then are you focused on the possibility of any incremental privacy changes happening this year that could cause further disruption due to the marketing ecosystem? And if so, how should we think about the potential impact those might have? Thank you.

Yeah, it's a great question. Last year at this time, everybody was anticipating the deprecation of IDFA. And then as we rolled forward into the market and dealt with that change, I mean, it was pretty choppy, I would say that the general trends were that CPIs drifted up. And a lot of the budgets kind of moved around and off of some of the more traditional larger platforms that for a long time are very reliable.

And I would say that generally, while we've identified really great sources of traffic, that the market for us still remains inconsistent. We find that there are veins of players and users that we can tap into and acquire them reasonably and see really great returns.

And then we have moments in time with other games where the returns are questionable. So we are really active in qualifying new partners and employing different tactics. And so I think the best way to describe it is it's a bit choppy.

And then as far as some of the more stringent and conservative privacy practices being employed more broadly, I think that that could certainly introduce a bit more of the turbulence into the market. And we, like everybody else, will have to sort it out.

So I think with that said, I feel really good about the scale and size of our audience at over 1.5 million to 1.6 million DAU, and the amount of organic traffic that we are generating across our portfolio.

I feel like we're pretty well positioned and we're doing a lot in leveraging our playAWARDS platform to try and drive longer-term retention so that we can see better long-term returns on the ad spend. So I would say it's very dynamic and we're constantly adjusting, but it's difficult to predict.

Mike Hickey, The Benchmark Company.

Nice. Thank you. Hey, Andrew, Scott. Thanks for taking my questions, guys. Just curious on the reward engagement, solid performance there. How much of that though do you think is your players getting out of their homes, traveling to Vegas, and sort of realizing some of the benefits they have been working for through the pandemic or otherwise?

Yes, we think that's a lot of it. Our players had 2.5 years of playing and engaging with our games and accumulating loyalty currency that they now get to spend. And as you could see from the numbers, they are.

So what's great is it's just validation that they appreciate and value the program and its benefits. And it's great to just see them taking advantage of it all.

But absolutely, the broader dynamic in the market of people just getting out and making up for some of the lost time, we are definitely seeing and feeling that.

Nice. Yeah, long overdue. Also curious on Boss Fight. I guess last quarter, you've decided to bring Bingo internal and decided to scrap your work on Kingdom Boss.

And then subsequent somewhere in the middle, Netflix came in and acquired Boss Fight. So I'm just curious how all that unfolded, and what value do you think Netflix saw in Boss Fight as an acquisition target versus what they could provide you?

Yeah, look, Boss Fight is a very talented group. And I think in the case of both of those products, they were inspired ideas that, in their earliest stages, were well executed.

And as we transitioned into the mode of operating the games, as opposed to just creating and crafting them, it revealed, I think to us and to them that there is just a different sensibility and there are different demands. And we felt like the best path for us was to, in Bingo's case, take over Bingo and address some of the foundational things that we felt ultimately were absolutely necessary to unlock its potential. And so we are happy to be doing that now, and they were very supportive with us in helping us manage through that transition.

And then in the case of Kingdom Boss, while a very difficult decision to suspend its development and balance, we just felt like that was the right and best thing to do. But we wish them best.

And I know that they're excited about their future opportunities. But beyond that, I can't really speak to what's happening with Boss Fight.

Thanks, Andrew. Last question for me. On Tetris, I guess, what's the most important piece of this deal? I mean, obviously, it brings you in a lot of players; it's a globally recognized gaming brand.

Is it the integration of playAWARDS in the classic game, is that sort of the [juice]? Is it the new version of the game, I guess, plus playAWARDS that gets you most excited? Or is it the opportunity to use it as a case study to be able to sell your playAWARDS to third-party content and new partners? Looks like you've already had some success there.

Look, it's all those things, which is why it was such a compelling opportunity for us. As a user-acquisition benefit, it generates enormous amount of organic installations.

So apart from just the sustained DAU that we benefit from, an MAU that we benefit from, we are seeing a lot of new players that we are ultimately going to be cross-promoting as we integrate our playAWARDS program.

So there's that dimension of value. There is the proof case of employing the playAWARDS program into an existing product and demonstrating and showing the impact that it can have on its performance. And then there is the longer-term and bigger opportunity, in our view, to create a version of that product that allows it to really realize its full potential as a mobile game, if not, a mobile gaming category.

So when you look at the scale and size of the Tetris audience today, relative to some of the other puzzle games, it just pales by comparison. And for a game that is as beloved as it is and as widely adopted and played as it has been historically, it should have a much bigger presence on these mobile platforms.

And so we're being really thoughtful and careful in the way that we evolve the core kind of gameplay and mechanics. And as I alluded to, we are working on crafting a metagame experience and putting all the hooks and features into the experience that are going to allow us to monetize that audience.

And so I feel good about the pace and progress the team is making. They're intensely focused on just really respecting and preserving the core of the puzzle experience, the Tetris puzzle experience that people love as we then enrich it with these other features.

So there are really those three dimensions of value that made this such a compelling opportunity for us, and we are in the process of really exploiting all three of them.

Greg Gibas, Northland Securities.

Hey, Andrew and Scott, thanks for taking the questions. Wanted to follow up on Tetris. Apologies if I missed this. But what do you expect to finish refining the existing version of the game and incorporating that playAWARDS platform? I know that's something that you were working on last time we spoke. And when would we see that launch and maybe how is that refining process going?

Yeah, it's going well. I mean, we absorbed the development team and the existing products. As I alluded to, there's an arcade -- an Apple Arcade game, and then there's the existing kind of classic Tetris game.

And when we inherited the team and the product, they were already in the cycle and process of deploying a new metaframework for the game. And we elected to let them continue to work through the rest of that cycle before we got on with the work of implementing the playAWARDS program.

That work has largely been done. It's being tested right now. It'll be rolled out more broadly, we hope, here in the next few weeks. And the team, in the meantime, is now in the cycle of integrating the playAWARDS program.

So I would expect that within the next four to six weeks, we'll start to see rewards offered inside that app, which will be really exciting for us.

Okay, great. I did want to ask, too, from a high level. How do you think about -- I guess, as consumers are increasingly thinking about travel this summer season and leaving their homes, does that kind of create more demand for playing your games to earn rewards that you can spend out wherever you go, whether it's the casino? Or do you expect to see less traffic, maybe playing the games year over year? How are you directionally thinking about that?

I mean, if I understand the question, I think as people feel a lot more comfortable engaging or re-engaging in the real world, that plays to our benefit because all of the rewards that we offer are leisure based -- cruises and concert tickets and dining experiences.

And so as people get obviously more comfortable traveling and being out in public, it makes our rewards relevant again and desirable again. So we think that that plays to our benefit.

I would highlight that -- and I alluded to this a little bit earlier, that our players have amassed a lot of loyalty. So there's a bit of a kind of hangover that we need to work through -- people consuming and spending more of that loyalty currency so that the aspirational aspects of the program, people knowing that they have to play a lot more in order to accumulate enough currency to then go and acquire that benefit or that reward that they want, that's the dynamic that we want to continue to reinforce.

So the stepped-up activity that we're seeing is super helpful in that regard, and I hope that we'll see these trends continue.

Got it. That's helpful. I guess last one for me was just how is relative interest from new brand partners looking at this point? And maybe when you -- does someone like me -- I mean, it seems like a no-brainer to kind of be added to the award program. What are the main pushbacks from brands that maybe aren't interested that you're hearing?

The only pushback that we get -- I mean, first of all, people pretty universally find the program to be really compelling and really novel. And we always get into a deeper conversation about how they can participate and leverage our platform and our network of players to help them drive and grow their business. That's not a hard conversation to start, and we get pretty deep into it.

The only friction that we feel is for those brands that don't want their offerings to be associated with a free-to-play casino product.

And so as we diversify our portfolio and move into puzzle games and other casual games, we think that -- well, what these perspective partners are telling us is they are very excited about those opportunities. Because it really means that they now can commit to the program and have their brands and their offerings attached to the type of game, and certainly in the case of Tetris, another brand that they're happy to be associated with.

And then I would also say that we are careful to manage the number of partners that we onboard and the amount of rewards inventory that we offer. Because we want to make sure that the market is generally balanced and that we are delivering enough redemptions and value to our different partners; they feel the benefits of the program.

And so if we get ahead of ourselves and have too much supply, our players will love it, for sure, but it'll tend to diffuse the impact that the program is delivering to any one partner. And that's something we want to be careful about.

So it's balancing a market. As our audience grows, we'll onboard more partners and we'll inject more reward inventory. But that's an active part of our discipline and the way that we manage the program and the platform.

Sure, that makes sense. Appreciate the color.

Martin Yang, Oppenheimer & Co.

Hi, good afternoon. Thank you for taking my question. Andrew, the first question for you is, how would you characterize the player profile coming from Tetris, and how much overlap there is with their co-audience?

And as a follow-up, have you run any cross-promotional campaigns between the Tetris game and your other games in the core portfolio?

Yeah, thank you, Martin. So I'll take the second question first. We haven't run any cross-promotion campaigns yet. We wanted to get comfortable with the operations of the product and make sure that we understand -- to your earlier -- to the first question -- the profile of players and their level of engagement.

So the way that we do it, we'll run a bunch of tests first. And so we are getting into that cycle now as we then prepare to launch our playAWARDS program.

And really, the goal and the objective would be once the playAWARDS program is integrated with the synchronized currency across and into the rest of our portfolio, that will then start to do really active cross-promotion.

So you'll see some very focused tests over the next four to six weeks culminating, and then ultimately, in a bigger campaign, that will coincide with the launch of the playAWARDS program.

As far as the profile of the players, demographically, they're pretty similar. It skews a little bit. It's a bit more balanced. Our existing audience skews a bit more to female than male.

But in terms of the geographic composition or dispersion, there's more international players than what we have today in our existing portfolio, which is great. We think that the international markets are an opportunity for us where maybe we're a little underrepresented.

Got it, thank you. And also another question is, your medium-term or maybe longer-term ambition in going back to mid-core games, is that still part of your overall plan, and whether going to mid-core genre is a prerequisite for other newer models like play-to-earn?

So no, it's not a prerequisite. And I would say that we are placing a much greater priority now on the different puzzle categories of games.

So the match-style games and card-based games and word puzzle games, I mean, those are all games that have a very large market in both -- and measured in terms of audience as well as revenue.

And so it more closely aligns with our domain expertise and our sensibilities around how to craft and operate these games. And so we are going to focus on the more casual categories.

That doesn't mean that we don't think there isn't a place for us to participate in the RPG or strategy games. But our focus for the moment is on the casual categories.

And ladies and gentlemen, that was our final question from the audience today.

This does conclude the PLAYSTUDIOS' first-quarter 2022 earnings conference call. We thank you all for your participation.

You may now disconnect your lines. And we hope that you enjoy the rest of your day.