Playtika Holding Corp. Q4 FY2025 earnings call

• Q4 delivered $678.8 million of revenue and $201.4 million of adjusted EBITDA. - D2C keeps growing, was 36.8% of Q4 revenues and ended the year at ~$1 billion in annual D2C revenue. - Casual revenues in Q4 were about 74% of total revenue. - Super Play's growth is amazing, with Disney Solitaire up 21.4% QoQ and Superplay's full-year revenue up 67.5%. - Manage Playtika as a portfolio, protect and strengthen leadership positions in key casual franchises, scale D2C, maximize lifetime value of social casino themed titles, and streamline parts of the organization.

In Q4, D2C was 36.8% of revenues, and ended the year at about $1 billion in annual D2C revenue. Casual revenues in Q4 were about 74% of total revenue. Super Play delivered record revenues in Q4, with Disney Solitaire up 21.4% quarter over quarter and now the second largest game in the portfolio. For the full year, Superplay generated about $573 million of revenue, a 67.5% increase from the $342 million baseline.

Full year 2026 guidance: revenue of $2.7 to $2.8 billion, adjusted EBITDA of $730 to $770 million, capital expenditures of $80 million, effective tax rate of 30%. Marketing spend weighted toward first half of 2026, suspending quarterly dividend, keeping buybacks available within capital allocation framework.

Policy changes and mobile industry evolution pose risks. Social casino themed games operate in a tough crowded market.

Q: Hey, guys. Good morning. Thanks for taking the question, and congrats on the quarter. I just wanted to talk on a general level about AI. I know you guys mentioned this in the letter around workforce reduction. Just curious if you could expand on how you view the role of AI within your business. How are you using it today, and what have been the early learnings? And looking forward, where do you see the greatest opportunities?

A: Thanks for the question. So as we spoke in the last few years, we started investing in AI, I think, six, seven years ago. We opened a few labs in Platica, and we always understood that this will be part of the future growth. Right now, what we see, we see revolution happening. And we have, for us, this is an amazing opportunity because when you look at Platica today, our asset is the community and the content. This is our asset. We see the AI opportunity as a new platform. We see something that can grow our business. We are very excited. We are following every trend that's happening in the market. And I'm sure that for us, it's going to be one of our growth engines in the future.

Q: And then on capital allocation, appreciate all the comments there. How should we be thinking about your appetite for M&A at this point? Does that fall under the category of investing behind high return growth?

A: Thanks for the question, Aaron. M&A has always been a core part of our growth strategy. Super Play has been a tremendous transaction for us. And given the growth and strong growth that we've seen through the year, We plan to continue to invest aggressively in growing that within the constraints of the earn out. As we look at overall capital allocation, we want to continue to invest in the best ROI opportunities possible and investing in the Super Play earn out and the Super Play platform is definitely the highest priority capital use for us. As we look at other M&A opportunities, obviously we're always going to try and be opportunistic, but obviously cognizant of the fact that we want to maximize liquidity and balance sheet flexibility as we move forward.

Q: Good morning. Thanks for the question. I'm curious, you know, as you look to transition more people to the DTC platform, What type of incentives are you giving people to move off of iOS or the Google or Android platform, you know, in terms of, I assume, some percentage higher of incremental virtual currency or items? So just trying to get a sense of how that's working.

A: Thanks for the question. So first, to say again, the D2C become one of our biggest part of growth. cash flow growth in the last few years. We are on a run with $1 billion. I think we are leading the industry. I don't think even somebody is close to us. At the end of the day, we're giving a better experience to the users. We are closer to him. We can provide more support to him. I think the advantage of having such a huge DTC platform is the connection, the right connection to the players. It will help with retention. It will help with long-time play game. So for us, this is one of the most important stuff. And as we started the D2C, we always knew that it's going to be one of Platica straight, one of Platica engine growth for cash. And this is what we're doing.

Q: Great. Thank you. Just to follow up on the 2026 guidance, can you frame or quantify what this assumes for slotomania and the social casino performance as you seek to ramp newer IP in that category? And as you think about performance coming in at the higher or lower end of those ranges, what are some of the biggest variables in your mind?

A: Sure. Thanks for the question. As you've seen, we've been undergoing a mix shift. I'm proud to say that our business is now 74% casual, and that continues to be the fastest growth part of the business driven by Super Play. As we look and give forward guidance, obviously, you know, continued overperformance from the Super Play titles is definitely there on the upside case. And on the downside case, you'd see, you know, probably continued declines on the social casino portfolio. And so that's, you know, that mix shift obviously impacts margins. But I think as we look at the guidance and our consistency over the past three years, either meeting or beating expectations on the EBITDA side, we have confidence in our ability to execute there and continue to focus on that transition towards a more casual, healthier mix going forward.

Q: And then if I can fit in one more, the D2C mix was, clearly well ahead at 37% versus the 40% mix I think you've previously talked about reaching in two years. Any updated thoughts on that longer term target and where is the natural limit as we try to gauge how high this could ultimately reach?

A: Sure, good question. Our previous long term target was 40% of revenue. We'll continue to keep that just given all of the various policy changes in the background. Our target does not assume one outcome or the other as it relates to things outside of our control. It's really focused on what we can control in our own execution.

Q: Good morning. Thanks for taking the questions. Just first on Disney Solitaire, obviously that game's on a really great trajectory for Just looking at some of the third-party data out there, it looks like it's kind of shifted upward again year-to-date in 2026. I guess, is that a function of live services in the game? Is it because you've kind of hit a seasonal bump in marketing, which you typically see in the first quarter, and you're kind of allocating a lot of it towards that game, I guess? How should we think about the trajectory as you move through 2026 from here? That's question one. Question two for Craig, obviously, a lot of shift towards BTC in the quarter. It seemed to impact gross margins a little bit less than I would have expected, just given the magnitude of impact, you know, to revenue mix on DTC. So, I guess, are there any cross-currents in gross margins that we should be cognizant of that prevent, you know, like a sudden increase in gross margin as you see the dollars flowing through DTC?

A: Thanks, Matt. I'll take the first one on Disney Solitaire, and Tay will take the second piece on gross margins. So Disney Solitaire is off to a great start to 2026. As we referenced in the prepared materials, there's a meaningful investment in marketing dollars in the first quarter. And so anticipate EBITDA will be impacted in Q1, but then moderate throughout the year. And so I think you're going to see that larger investment drive real growth. It's one of the best ROIs we have within the portfolio in terms of deploying marketing dollars. And, Matt, on the gross margin point, you're right to call out some of the cross-currency you're seeing. You're seeing the benefit in lower platform fees in terms of revenue from an increased DTC mix, but that is offset by increased amortization coming from past acquisition that's flowing through our P&L.

Q: Thanks so much. I was just wondering, Craig, if you could just unpack that $400 million roughly change in the contingent consideration. Is that composed of like 225 on the 25 payout that hasn't gone out the door plus a 180 or so on the 2026 payout? And if that's true... What, if anything, can you share about the EBITDA margins at Super Clay to sort of trigger that 180 on the 26th payout?

A: The contingent consideration amount in total takes into consideration future earn out payments as part of, uh, the Monte Carlo simulation and coming up with the present value of that payment. But in terms of what's actually payable, it's in our payables in the balance sheet. For 2025, it was doing better than minus 10 in EBITDA. For 2026, it's not prospective.

Q: Thanks for taking the question, Craig. I have two on DTC, if I may. You mentioned that you're relatively earlier on with the transition for June's journey. Could you just remind us if there are titles across the portfolio that don't have a meaningful DTC presence or similar to June's, maybe a more nascent one at this stage? And then maybe a naive question on DTC. When we think about that sort of revenue stream for you guys right now, is that spend that's solely captured from your players in a browser environment, or have you also set up link outs for the app store version or app version of your games for players that might prefer to engage with the titles in that format?

A: Thanks, Clark. So at this point, We have broad penetration of D2C across the portfolio. So those casual titles that we had flagged previously years ago are now well penetrated in terms of their D2C base and growing. We had pretty good broad growth across the portfolio. Based on platform changes, we've seen increases across the platforms on mobile with link outs as a new means of growing D2C. And so there's a variety of channels there that we deploy, and each game has its own roadmap and is out there executing.

Q: if I may very quickly, just sort of a quick follow-up on marketing. Relative to the sort of 761 million that we saw called out in the K, can you give us, is it possible to give us a sense of sort of what's budgeted for 2026 or maybe even a more directional indicator of I guess sort of within this question, I'm curious if you see in Q1 that the returns are really healthy for Disney Solitaire. Do you have the flexibility over the balance of the year to invest behind that title or new ones if you believe that the returns justify it?

A: Yeah, unfortunately we don't break out the guidance on marketing dollars for next year. What I can say is that there are constraints around and that they're under an earn-out. And so, you know, given the previous question, you know, they're targeting between, you know, 5% or greater margins. So while, you know, the foot's on the gas from a marketing perspective there and driving growth, at some point that will have to moderate to ensure that they're able to drive margins into that 5% or 10% or greater from an EBITDA perspective. And so that's really the only commentary there.

Q: Thank you. Just wondering if you'd give an update on the status of Jackpot Tour. Is that a game you intend to be putting significant marketing dollars behind in Q1 in the first half? And how does that game factor into your guidance?

A: So as we said, we launched the game. We are still checking the KPIs. I can say that we are not sure 100% we're going to open it strongly in the coming few weeks. We need still to see the numbers that we are used to. So it's in progress. And it's part of our strategy around the slots game. And we see, I want to take this opportunity to say that Slotomania After many, many quarters going to room, queue over queue this quarter, this is big news for us. This is big news for the industry of the social casino. And as I said in the beginning, the jackpot tool is part of our strategy there.