PLAYSTUDIOS, Inc. Q1 FY2025 earnings call

• Broader market conditions in traditional social casino and casual segments remain challenging.
• Progressed on sweepstakes development: launched internal alpha of sweepstakes promotional platform, expect to make service available to select players in Q2 and scale in back half of year.
• Development continues on Tetris Block Party, polished in Q1, with technical validation in select European markets, expected to launch in Q4.
• Realizing benefits of reinvention plan: cost savings program tracking to plan, improving core operations efficiency.
• In play Games casino portfolio, direct-to-consumer channel shows strong momentum. In casual segment, invested in user acquisition and product enhancements for Brainium and Tetris Prime, testing new marketing strategies for Tetris Prime.

Play Games casino portfolio

• Social casino portfolio faced category-wide headwinds but monetization improved in core titles like myVEGAS with double-digit gains. Direct-to-consumer channel generated approximately $5 million in in-app purchase revenue in Q1, representing 9.8% of total IAP revenue in the quarter, up 114% year-over-year and 6% quarter-over-quarter.
• Investing in sweepstakes promotional capabilities which are expected to drive engagement and consumption.

Casual game portfolio

• Brainium showed early monetization improvement but pressured by softer DAU and weaker eCPMs. Tetris Prime faced user acquisition challenges. Tetris Block Party is in development, polished in Q1, with technical validation in select European markets, expected to launch in Q4.

playAWARDS

• Integrated myVIP across major games, launched new reward partnerships, daily average retail value of available rewards increased by 5% to approximately $2 million per day.

• Reaffirmed full-year 2025 guidance: net revenue between $250 million and $270 million, consolidated adjusted EBITDA between $45 million and $55 million.
• Guidance excludes revenue contributions from sweepstakes and Tetris Block Party but includes related costs.
• Expect sweepstakes and Tetris Block Party to begin generating impact later this year.

• Market conditions in traditional social casino and casual segments remain challenging.
• Social casino category impacted by rising popularity of sweepstakes styles offerings, as PLAYSTUDIOS doesn't yet offer competitive sweepstakes proposition.
• Competitive market for casual games poses challenges for user acquisition and audience growth.

Q: Mike Hickey asked about confidence in executing Q2 launch of sweepstakes product and geo testing, and about DTC revenue growth and momentum.

A: Andrew Pascal said confident in Q2 launch, will be measured with several jurisdictions initially, then scale. Jason Hahn said DTC success driven by focus on direct consumption, Apple-Epic ruling will make direct purchases easier, expecting momentum to continue with double growth by next year.

Q: Will Yager asked about sweepstakes development learnings and benefits from Apple-Epic lawsuit.

A: Andrew Pascal said it's been technical validation, Jason Hahn said Apple-Epic ruling allows more aggressive direct purchases, expanding direct purchases and margin improvement.

Q: Aaron Lee asked about playAWARDS externalization and reward partners.

A: Andrew Pascal said playAWARDS and sweepstakes are complementary, rewards partners will expand to entertainment sectors like music festivals and theme parks.

Q: Martin Yang asked about Apple feature implementation timing and EBITDA target including investments.

A: Andrew Pascal said initial implementations soon, Jason Hahn said EBITDA guidance includes investments in new game launches but not revenue from them, UA costs for Block Party not specifically included yet.