MYPSW

Management Statement and Operational Highlights

• Context and Operating Environment: Past 2 years challenging with category headwinds, valuation near cash position. Board and team aligned to reposition business, focusing on expense reduction, efficiency, and durable growth.
• Q4 Actions: Expense reduction and efficiency moves reduced fixed cost base but affected new content and product development. Benefits allowed disciplined investment in growth projects while preserving profitability.
• Product Reconnection: Reaffirmed commitment to quality, player value, execution. Reinvention work reaffirmed focus on core principles.
• Sweepstakes Update: Win Zone in open beta, 15 states, improving metrics. Broader rollout by year-end, addressing $3.5B-$4B addressable market.
• Tetris Block Party: Promising launch, open beta in select markets, encouraging early performance, go-to-market test ahead of broader Q1 2026 rollout.
• Casino Games: Social casino challenges, myKONAMI's growth, DTC growth, stable DAU.
• Casual Business: DAU pressure, ad monetization efficiency improvements.
• playAWARDS: Streamlined program, increased sequential rewards, myVIP World Tournament of Slots.
• AI Adoption: Use of AI in game development, creative tooling, UA modeling, player targeting.

Guidance

• Full year 2025 net revenue and consolidated adjusted EBITDA expected to fall below previously provided guidance ranges.
• Goal to balance disciplined investment, operating efficiency, and advance growth initiatives.
• Hoping to be live in all domestic sweepstakes jurisdictions by year-end and have more visibility on Tetris Block Party's contributions in 2026.

Segment Performance

• Casino Games: Social casino category challenged with year-over-year declines in DAU and ARPDAU across most portfolio, except myKONAMI (double-digit ARPDAU increase). Direct-to-consumer revenue was $7.7 million, a 48% quarter-over-quarter increase, representing 16.7% of total in-app purchase revenue (up from 9.1% in Q3 2024). DAU for the Casino segment remained stable sequentially.
• Casual Business: Experienced pressure on DAU. ARPDAU for Brainium and Tetris Prime improved meaningfully year-over-year, offsetting some DAU declines.
• Sweepstakes (Win Zone): Live in open beta across 15 states, on pace for broader rollout by year-end. Seeing steady improvements in retention, engagement, and monetization, with highest returns on ad spend. Addressable market $3.5 billion to $4 billion.
• Tetris Block Party: In open beta in select markets, early performance in UA, retention, engagement, and monetization encouraging. About to begin focused go-to-market test ahead of broader rollout in Q1 2026.
• playAWARDS Loyalty Platform: Streamlined program with decrease in retail value of rewards purchased year-over-year but 16% sequential increase in Q3. Highlight: myVIP World Tournament of Slots with 500 top players competing for $1 million in the Bahamas.

Risks

• Category headwinds continuing to pressure core markets.
• Regulatory contraction in sweepstakes market reducing total addressable market (TAM).
• Softness in player activity and monetization affecting revenue and margins.
• Uncertainty around the success of new growth initiatives like sweepstakes and Tetris Block Party.

Question and Answer

• Q: Sweepstakes feedback from World Series of Slots players, Win Zone launch scale.

A: Feedback small sample, positive metrics in 15 markets, aiming for full domestic rollout by year-end.

• Q: California sweepstakes ban impact on core social casino.

A: Ban just enacted, waiting to see if core portfolio benefits.

• Q: Organic vs M&A in business reevaluation.

A: Both, internal efficiency work and looking at inorganic opportunities like M&A.

• Q: 2026 visibility, sweepstakes contribution guidance.

A: Hoping for visibility by year-end, aiming for full domestic sweepstakes rollout and Tetris validation.

• Q: Q4 revenue sequential growth, social casino decay solutions.

A: Core business likely sequential decline, aiming to stabilize via sweepstakes alternative and California market recovery.

• Q: Sweeps as iGaming catalyst, strategic partnerships.

A: Optionality to exploit assets, potential for sweepstakes regulation, partnerships with iGaming operators.

• Q: D2C growth drivers, gross margin relationship.

A: D2C growth via better merchandising, expecting D2C revenue to continue improving, impact of sweepstakes on margins uncertain but focused on scaling.