Playtika Holding Corp (PLTK) 2025 Q2 法說會逐字稿

Good day and thank you for standing by. Welcome to the Playtika Q2 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Tae Lee, SVP Corporate Finance and Investor Relations. Please go ahead.

Welcome, everyone, and thank you for joining us today for the second quarter of 2025 earnings call for Playtika Holding Corp. Joining me on the call today are Robert Antokol, Co-Founder and CEO of Playtika; and Craig Abrams, Playtika's President 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, and more specifically, the future performance of our individual titles such as Slotomania or recently launched Disney Solitaire.

These statements and other comments are not a guarantee of future performance, but rather are subject to risk and uncertainties, some of which are beyond our control. These forward-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.

We've posted an accompanying slide deck to our investor relations website which contained information on forward leaking statements and non-gap measures and will also post the prepared remarks immediately following the call. For a more complete discussion of the risks and uncertainties, please see our filings with the SAC. With that, I'll now turn the call over to Robert.

Good morning and thank you everyone for joining our call today. I want to start by acknowledging the resilience and dedication of our team. Despite the ongoing headwinds facing mobile gaming, we remain firm in our commitment to our strategic priorities.

For Q2 '25, we are reporting revenue of $696 million and adjusted EBITDA of $167 million. While these numbers reflect some underperformance, we have several positive developments to highlight. First, I am incredibly happy to share the success of our last launch. Disney Solitaire. The game has already hit the $100 million annual run rate revenue threshold. Which is testament to the incredible work of our SuperPlay studio working in collaboration with Disney and Pixar games.

This achievement helped drive sequential growth in the SuperPlay portfolio, and we are optimistic about its continued performance. We have been pleased with the overall performance of Disney Solitaire and the SuperPlay portfolio since the acquisition.

Second, coming off record quarter in Q1, Bingo Blitz continued to experience a strong engagement across the board. The studio is seeing a strong re up in the D2C revenue. And we are pleased with the performance of the largest game in our portfolio.

Third, we're increasing our long-term target for B2C to 40%, up from 30%. The goal is to sustain EBITDA and free cash flow as we manage changes within our portfolio and respond to changing landscape of direct payments.

During this period, our more mature titles are experiencing decline in revenue. While our more recently acquired titles are in the process of transition from being EBITDA the negative to positive. We believe that continuing to increase our D2C penetration will help offset margin pressure during this transitional period.

Turning to Slotomania, the game continues to face challenges. Our team is working hard on various tests to stabilize the game economy. As we mentioned previously, this is the part of getting growth before it's getting better.

Although players engagement continues to be strong, monetization has not kept pace. And the team is prioritizing efforts to improve this area. Our new slot game is a critical component to our slot strategy. And we are taking a major approach to this development.

We remain on track to launch it in the fourth quarter of this year, and while we do not expect a material impact on our '25 results, we see it an important long-term growth driver for Playtika.

In addition, SuperPlay's next new game has the potential to be a standout in its category with the launch timing details to be shared at a future date. Beyond this project, we're actively exploring opportunities to develop and launch additional new game in [genres] that are strategically important to us.

We are excited about the pipeline we are building and look forward to providing more updates as this projects progress.

Thank you, and I will now turn the call over to Craig for more detailed review of our financial performance.

Thank you, Robert. It is important to highlight the portfolio dynamics that have shaped our performance. This quarter we experienced a slight sequential decline in revenue primarily driven by the continued decline in Slotomania.

Despite this, our year-over-year performance reflects the successful execution of our M&A strategy. Our acquired portfolio of games has been a significant driver of this growth.

The SuperPlay portfolio, the Youda Games card portfolio, and Animals & Coins have all contributed to our year-over-year revenue growth.

With that, let us get into the details of the quarter. We generated $696 million of revenue in the quarter, reflecting a 1.4% sequential decline and an 11% year-over-year increase. GAAP net income for the quarter was $33.2 million representing an 8.5% sequential increase and a 61.7% year-over-year decrease.

Adjusted EBITDA for the quarter was $167 million showing a slight sequential decline of 0.2% and a year-over-year decrease of 12.6%. This decline in the adjusted EBITDA margins was primarily driven by increased sales and marketing expenses associated with our SuperPlay games, which resulted in margin deletion following the SuperPlay acquisition.

D2C revenue for the quarter was slightly off our record high revenue last quarter, achieving $175.9 million a 1.8% sequential decline, and a 1.3% increase year-over-year. Our year-over-year growth in DC was driven by several titles. Our leading casual games, including Bingo Blitz, June's Journey, and Salazar Grand Harvest, all setting record D2C numbers for the quarter.

However, this growth was offset by a sequential decline in Slotomania's B2C revenue. We're putting more effort into expanding our G2C business and expect to see stronger results in the second half of the year.

This incremental margin will help offset the EBITDA pressure we are experiencing from the revenue declines in some of our more mature titles, especially in the slot side of the business. Historically, we had spoken about 30% of revenues as the target for D2C, but we now believe that a more realistic long-term target for D2C is closer to 40% of total revenues.

With that, let us dive into the performance of our top 3 titles from the quarter, beginning with Bingo Blitz. Bingo Blitz revenue was $160.2 million down 1.3% sequentially and up 2.9% year-over-year. We are pleased to see that bingo held strong sequentially against its record first quarter.

Additionally, Bingo recorded its own record revenues from our D2C platforms in the second quarter. As the largest title in our portfolio, Bingo Blitz continues to execute at a high level, reinforcing its leadership position in a winner take most category.

The game remains a strong contributor to our overall performance and a clear example of our strategy to invest in category leading games with durable growth potential. Importantly, Bingo Blitz is also showing a meaningful upside in expanding its D2C business, which we expect will enhance our D2C mix and help preserve margins over time.

Slotomania revenue was $86.5 million down 22.7% sequentially, and 35.4% year-over-year. Slotomania faced an acceleration in its declining trend during Q2 as we began implementing changes to address the game economy challenges we discussed last quarter.

These adjustments are aimed at rebalancing the game economy to support healthier, long-term engagement and monetization, but they are contributing to near-term pressure on revenue performance.

We recognize that this is a difficult phase one more results may continue to soften before we begin to see improvement. At the same time, we remain focused on executing our broader strategy in the social slots category.

The development of our new slat title, which is designed to complement our existing portfolio, is progressing well. We view this title as a key pillar in our efforts to regain lost market share and expect to have our global launch in Q4 of this year.

June's journey revenue was $69.1 million, up 0.3% sequentially, and down 7.4% year-over-year. June's journey has shown several quarters are encouraging sequential stability following a period of decline in the first half of 2024.

As we look to reignite growth, the focus is shifting towards deeper monetization supported by a refreshed leadership team at our Wooga studio. Earlier this year, we appointed a new GM and leadership team at Wooga, bringing a renewed focus to June's journey and its long-term roadmap.

In addition, we made the decision to discontinue the development of Claire's Chronicles to focus our resources on new games showing the strongest momentum.

We believe these changes will allow the Wooga team to focus on the execution and lay the foundation for renewed growth in June's journey in the second half of the year and beyond.

Turning now to specific line items in our P&L for the second quarter. Cost of revenue increased 16.4% year-over-year, driven by our revenue growth and the increase in amortization expenses in our P&L resulting from the acquisition of SuperPlay.

Operating expenses increased by 22.6% year-over-year. The increase was primarily driven by higher performance marketing spending, which was also a direct result of our SuperPlay acquisition. R&D increased by 13.8% year-over-year.

The growth in R&D was primarily driven by an increase in average headcount during the quarter compared to the same period last year. This was largely due to the acquisition of SuperPlay, which bolstered the R&D workforce.

Sales and marketing increased by 52.1% year-over-year. The increase in sales and marketing was primarily driven by the incremental performance marketing spend from our acquisition of SuperPlay.

In the last quarter, we mentioned that we anticipated a sequential step down in sales and marketing expenses, and we observed this trend in the second quarter. We expect the sequential step down to continue for the second half of this year.

G&A expenses decreased by 62.8% year-over-year. During the quarter, we recorded a $33 million benefit in our G&A expenses related to the revaluation of contingent considerations tied to our past acquisitions. It is important to note that this is a non-cash adjustment and reflects a change in estimated payouts rather than any operational improvement in G&A efficiency.

The comparable quarter in 2024 also had an adjustment related to contingent considerations, excluding adjustments in both periods. G&A would have declined year-over-year by 20.8%. As of June 30, we had approximately $592.1 million in cash equivalents, and short-term investments.

Looking at our operating metrics, average DPU declined 3.1% sequentially and increased 26.8% year-over-year to 378,000. The average DAU decreased 2.2% sequentially and increased 8.6% year-over-year to 8.8 million.

ARPDAU was flat versus Q1 and increased 2.4% year-over-year to $0.87. Finally, we are revising our guidance for the year. Our updated revenue range for the year is $2.7 billion to $2.75 billion down from $2.8 billion to $2.85 billion. Despite the decrease in our revenue range, we are maintaining our adjusted EBITDA range of $715 million to $740 million.

This demonstrates our ability to offset the EBITDA losses from Slotomania revenue weakness through increased efforts in our D2C platforms and other efficiencies we are executing throughout the organization.

We'd be happy to answer your questions.

(Operator Instructions) Arthur Chu, Bank of America Securities.

Hey guys, this is Arthur on [Formar]. Thanks for taking the question. So, you guys have been working on, stabilizing some of the oldest titles like Sloania for a while. Curious what are some of the learnings have taken away from this process, and if any of those learnings have perhaps, led you to change your approach or -- you may change the way you're thinking about like, turning around these titles?

Hey Arthur, thanks for the question. Sure, so when you're dealing with game economy issues and hyperinflation within a game, these are complex issues, especially in games that, are 10-plus years old and have various monetization levers within the game. I think for us, we've learned a lot within Slotomania. We, it is one of the biggest franchises for slots in the category. We have an engaged player base, if you look at the declines in DAU. They are better than the declines you've seen in GPU, so it's clearly a monetization issue and for us, it's taking time to peel that through, but I think we're encouraged by the changes that we've been making and seeing the impact there. So it's definitely something they're highly focused on and we're seeing, we're starting to see some some benefits there of our efforts.

Got it thank you very much.

Colin Sebastian, Baird.

Thanks, appreciate the questions. I guess first, congrats on Disney Solitaire on that game. Craig, can you talk about the economics of the title, the licensing costs, the customer acquisition costs, I guess the the margin profile of that game versus the the broader portfolio? And then have a follow up.

Sure. So, well, the terms of our deal with Disney and Pixar games is not publicly disclosed, I think, you can imagine, as with any top tier content provider, there's a license fee associated with licensing their content. That being said, the title is one of the most successful launches of the year in terms of a new title in any category.

I think that it's scaling much faster than any previous SuperPlay title, and we continue to be impressed with the results and so. It's been a great collaboration with Disney and Pixar games, and we look forward to continuing to execute on growing that game.

Okay, great. And then maybe as a follow up to Arthur's question, are you guys thinking differently about, I guess the legacy of what your portfolio if there's any structural shift in the market among mobile gamers in terms of their preference for, older versus newer games or is that not really something you're observing?

I think the way that we differentiate it is looking at category leading games and so where we're a category leader we are making investments in the game. If it's an older game that doesn't have category leadership, we're not seeing that same level of investment. We also continue to invest in our recently acquired titles. That's a key area for growth for us. I think if you look across all three acquisitions, they all grew year-over-year. And then continuing to expand our G2C business throughout all of our titles recently acquired and existing titles. I think a new growth factor for us that'll talk about more in the future is growing our advertising business. We saw double digit growth sequentially as well there.

And lastly, developing and scaling new games as well is something that's, newer for us but something that we're focused on.

One thing I would like to add that we saw with this what happened with this solitaire that we launched a new game in the category that we're already dominating there for a long time, and the category grew. So this kind of example is making us to think about other categories that we are leaders right now and it's going to change the thing that we are looking at launching a new game. Because the example of a solitaire Disney is an unusual example. We launched a new game, we good the category dramatically. We're still leading the category with our old game, so for us it's a win-win situation.

Okay, thanks Robert. Thanks, Craig.

Eric Handler, Roth Capital.

I'm curious with, your social casino business, are you seeing any negative impact, from sweepstakes?

So it's a good question. It's a good question that we cannot give you a straight answer because we are not sure about it.

We see a big pressure on the social casino category in the last year. I'm sure there is a part of these activities, but I cannot give you any special numbers or to tell you some special example because I really don't know.

Okay, and is that an area that you'd ever look to move into?

No, definitely no. This is not where we're going. It's an area that we don't believe and it's not in our plans. Thank you.

Aaron Lee, Macquarie.

Hey guys, good morning, thanks for taking the question. Maybe want to start on, I guess, Disney Solitaire, just, yeah, congrats on all the success there. I guess what is your appetite for pursuing more IP or licensing type arrangements for games, whether organically or through M&A?

Sure.

So we are looking at a variety of new game opportunities. I think licensed IP in this environment has done very well, so I think we're open to the right partnerships for the right IP in categories where it makes sense.

Okay. And a quick follow up on jackpot tour. Any color on your development of this and how you plan to differentiate that from the competition?

And I guess any early testing that you've done that you can share, thank you.

So thanks for the question. I cannot give a lot of information about this game, but I can tell you that this game is going to make a difference. This is a, this is what we're looking for. This is how we're going to launch this game.

We have the most, I think, a long experience in this category for 15 years, and then our last casino launch was, I think 12 years ago. We are very excited about the launching this game. I'm sure it's going to close the gap of what we lost in our current organic games.

It's going to be different, and when we will have more details, we'll be more than happy to share with you guys.

Okay, got it. Thank you.

(Operator Instructions) Albert Kim, UBS.

Hey guys, thanks for taking the question. So recently we've been seeing some multiple headlines and greater scrutiny around kind of the mobile store markets. Any impact, if any, does the app store fee changes have on your ambitions and any factors we should be mindful of as we think about the new longer term post and if you could share any like timeline to get to the 40% goal.

Thank you.

Sure, so The changes in the payment landscape and in the app stores has been a positive tail end for us in you know the US specifically, we're seeing upside in iOS.

I think in terms of our execution now for the last few years, we've been very consistent in terms of increasing B2C penetration.

We're seeing that accelerate now with those changes and we updated our long term target as a result from 30% to 40%.

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.