PLAYSTUDIOS, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Sweepstakes: Launched 9 months ago, live in 7 states with positive trends. Plan to scale to all qualified U.S. states by year-end, starting with a stand-alone web-based platform and exploring strategic acquisitions for momentum.
• Tetris Block Party: Steady development in Q2, with product improvements and marketing tests. On track for Q4 launch, with confidence in the game's potential.
• Core Business: Core casino and casual portfolios impacted by market shift. Casual portfolio focused on product updates; direct-to-consumer business scaling.
• Balance Sheet: Ended Q2 with $112.9 million in cash, debt-free, and 125.2 million outstanding shares.

Segment Performance

• Social Casino: Core titles affected by market shift to Sweepstakes, with DAU declines across the board. myKONAMI showed stronger unit-level monetization. Direct-to-consumer revenue in Q2 was $6.7 million, up 107% YOY and 34% sequentially, representing 13.9% of total in-app purchase revenue.
• Casual: Under pressure due to market and competitive dynamics. Focused on product updates for engagement/retention, scaled back marketing spend for margin contribution.
• Sweepstakes Initiative: Live in open beta across 7 states with promising trends in retention, engagement, and monetization. Expect full launch in all qualified U.S. states by year-end, starting with a stand-alone web-based platform and exploring strategic acquisitions.
• Tetris Block Party: Steady development in Q2, with product improvements and marketing tests. On track for Q4 launch.
• Direct-to-Consumer: Generated $6.7 million in Q2, up 107% YOY and 34% sequentially, representing 13.9% of total in-app purchase revenue.

Guidance

• Currently pacing below full-year revenue and adjusted EBITDA guidance due to revenue softness offsetting cost savings, but guidance not changed. Focus on executing strategic priorities and evaluating market evolution.

Risks

• Regulatory: Uncertainty around state regulations regarding Sweepstakes, including potential bans.
• Market Competition: Intense competition in social casino and casual games spaces, impacting DAU, MAU, and revenue.
• Execution Risks: Challenges in scaling Sweepstakes initiatives and Tetris Block Party launch, including product optimization and market fit.

Question and Answer

Q: Split DAU, MAU decline between social casino and casual games.

A: DAU and MAU declines were substantial in both, more dramatic in casual than social casino, partly due to pulled-back user acquisition investments.

Q: Sweepstakes metrics and full launch acceleration.

A: Live in 7 states, positive trends in retention, conversion, and monetization. Scaling measured to ensure optimization before full launch across qualified states.

Q: Acquisitions for Sweepstakes.

A: Exploring strategic acquisitions to gain market share and accelerate path to leadership in the Sweepstakes category, targeting opportunities to bolster efforts.

Q: Casual portfolio medium/long-term goals.

A: Focus on refining existing casual products for margin contribution, pulling back on UA, and advancing Tetris Block Party product development.

Q: Tetris Block Party D2C strategy.

A: Aim to leverage direct-to-consumer purchasing with optimized merchandising to boost D2C share, leveraging strong monetization in the product.

Q: Regulatory pressure on Sweepstakes.

A: Evaluate states on a case-by-case basis, manage spend based on regulatory risks, and work to legitimize the Sweepstakes model.

Q: Cash position for transition.

A: Strong cash position allows aggressive investment in Sweepstakes and Tetris Block Party, with enough capital to manage through transition.