PLAYSTUDIOS, Inc. Price & Performance (MYPS)

Joining me on the call today are our Chairman and CEO, Andrew Paschal and our CFO, Scott Peterson. Before we begin, let me remind you that during the course of this call, we will make forward looking statements. These statements are based on our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings for a discussion of the risk and uncertainties that may affect our future results. I would like to remind everyone that we will discuss certain non GAAP financial measures during this call. [indiscernible] These measures should not be considered as a substitute for financial results prepared in accordance with GAAP. Our results are prepared in accordance with GAAP and a reconciliation to comparable GAAP measures will be provided in our fourth quarter earnings release and in our SEC filings. With that, I'll pass the call to Andrew. Thanks, Jason, and welcome everyone to our fourth quarter and year end 2024 earnings call.

Earlier today, we published a press release containing our results along with the commentary for the recently completed fourth quarter and year end 2024. Included in the release is segment reporting in our usual financial disclosures, Scott will discuss these materials in greater detail later, but you haven't had a chance to review the release, I'd encourage you to do so. 2024 was another eventful and challenging year for the games industry. Despite these pressures, we were able to achieve our full year guidance and make material progress on a number of strategic initiatives heading into 2025. We sharply reduced the company's cost structure and reoriented our operations for improved profitability and cash flow. A number of new initiatives were incubated in our new promotional effort World Tournament of Slots was launched and very well received by our players. Let's dive a little deeper into some of the more noteworthy highlights. We closed the year with full year revenue and adjusted EBITDA in line with our 2024 guidance.

We restructured our business to drive enhanced efficiency and economies of scale. Our Reinvention Plan, which we launched in October, consisted of a reduction in our total work force of over 30% the suspension of select subscale gains the consolidation of key functions and a new technology strategy that included now sourcing of some of our R and D capacity. Post changes will be leaner, have a more acute focus on growth and be positioned to deliver stronger results.

We advanced two new growth initiatives that we believe can reinvigorate our Playstudios business. [indiscernible] We believe our new sweepstakes effort has the potential to reinvigorate the growth of our social casino portfolio [indiscernible] Sweepstakes features continue to grow in popularity among free to play casino players including our own. We think adding sweepstakes to our current loyalty and promotional offerings will substantially enhance the attraction of our games and drive real value to our company. Our goal remains to introduce sweepstakes in the coming quarters. Pixel has now been fully integrated into Playstudios and is making solid progress with the development of a new casual Tetris title. The new game will combine the highly engaging block puzzle format, the Tetris brand and the proven raid and defend mechanic that's been popularized in super scaled games such as Coin Master and Monopoly Go. By leveraging a proven game design, a well established metagame feature in the tech [indiscernible] we believe the game has the potential to redefine the category. Our hope is to have a game ready to be launched in the second half of twenty twenty five. Growth at Play Awards continues with the addition of more players, full integration of My VIP across our major games the onboarding of key new rewards partnerships.

The program also launched the World Tournament of Slots, which held its inaugural event in October of this last year.

With its $1,000,000 prize and 500 players participating live the tournament drove excitement in our games and players alike. We plan to build on the tournaments momentum in 2025. Finally, during the year, we purchased $31,200,000 in stock.

Including the purchase of roughly 9% of our outstanding shares from Microsoft. Despite this, we remain very well capitalized with $109,000,000 in cash at year end and the full availability of our $81,000,000 revolving credit facility. As I've reaffirmed in the past, our strategy consists of two key pillars: The first, is expanding our Play Games division by driving more operating leverage from our mature portfolio as well as developing and acquiring new games. A broader collection of games allows us to amplify the Most recently, we've set out to accomplish this organically through the development of new sweepstakes promotional capabilities and through strategic M and A from our acquisitions of the Tetris rights, [indiscernible] The second pillar is the advancement of Playstudios, which can drive adoption and engagement of our game portfolio. I believe executing these strategic priorities will enable us to improve margins and ultimately drive substantial value. So let's touch on some of our primary initiatives starting within Play Games. Play Games has three primary goals in 2025, One, improving the productivity and margins of our core casino games. Two, growing our casual portfolio and three, advancing new initiatives currently in development. The focus for the casino portfolio in 2025 will be improved retention and monetization in top slots, My Vegas and My Konami expanding direct to consumer sales, leveraging a full adoption of My VIP across our portfolio the integration of sweepstakes into each of our primary titles.

We're pleased with the progress made in my Vegas this past year hope to build on that momentum in 2025. While Pop Slots and my economy have been more challenging we expect recent organizational changes and operating refinements to boost [indiscernible] As all three games have a loyal following and strong user engagement, our biggest opportunity is to convert more of our users to payers. In support of this, our teams are intensely focused on refining the game economies enhancing our segmentation and pricing practices and introducing new sweepstakes and other features that enrich the overall game experience. We're also focused on offering compelling incentives to purchase off platform through our player specific and bespoke web solution which is focused on generating more direct sales with our players. Our direct to consumer business still represents a significant untapped opportunity accounting for $4,500,000 this quarter or 8% of total in app purchase revenue this up from $2,500,000 or 4% from the same time last year. Represents an 89% increase year over year. Our goal is to continue to increase the the ultimate target of over 20%, which will further improve our operating margins. [indiscernible] Turning to our casual portfolio, the focus is 2025 will be the continued optimization of Brannium and the expansion of our Tetris franchise.

Brannium had a strong 2024 growing revenue and upDAU year over year as a result of new advertising formats, the incorporation of our loyalty program, and continued product improvements. We plan to build on that growth in 2025 following the successful implementation of a new technology stack in the fourth quarter. Results were weaker within our Tetris franchise this quarter as recent product changes did not have the positive effect we anticipated. Continue to view TETRIS Prime as a compelling growth opportunity and plan to introduce several new features this year. [indiscernible] Similarly, we continue to use our Tetris block puzzle game to test and assess user acquisition and product strategies anticipation of our eventual introduction of our Piktoad TETRIS product. As you may recall, we acquired Picto last year based on our belief that their flagship game could be more fully realized under the Tetris plan Alongside the talented team at Pixelode, we're hard at work to make this reality and believe we can launch a new Tetris Casual game later this year. As I've said in prior calls, developing new games is more art than science. And as such, the ultimate success of each is hard to predict.

That said, we know the Texas brand is incredibly popular with players and many of the games in the puzzle category today affect similes of the real thing. We firmly believe this creates an opportunity for us to capture players who we believe would choose an authentic Pinterest game if given the option. Now let's turn our attention to Play Awards. Throughout 2024, our Play awards team has been dedicated to integrating our refreshed My VIP loyalty program into our primary titles curating and streamlining our collection of rewards partners rolling out our inaugural World Tournament of Slots campaign I'm happy to say we've been successful on all fronts. My VIP has been fully integrated into all of our major games giving our players a consistent and seamless loyalty experience. As we've discussed in the past, loyalty is a unique value enhancer for our games and a proven driver of regarding the collection reward partners this quarter we added several new partners including brands such as Topgolf, while also streamlining our catalog to ensure a focus on our highest performing partners. In 2024, we offered approximately $2,000,000 in retail rewards per day Lastly, in Q4, we held the inaugural My VIP World Tournament slot event at the Atlantis Paradise.

This exclusive tournament gave over 500 players a chance to compete for $1,000,000 prize generating significant excitement raising engagement across all of our games. We intend to build on this momentum with a newer improved version of World Tournament Slots in 2025. [indiscernible] Tournament of Slots is another example of our company's unique value proposition of connecting the digital and real worlds that's unmatched by any other game publisher. With these exciting initiatives in place, and a reset cost structure and operating framework, we believe 2025 is shaping up to be a year of progress. We're intensely focused on growing our business and fully exploiting our need for worded play model. All while striking the balance between optimizing our core business while continuing to invest in our future opportunities. In doing so, we'll continue to expand our audience and invigorate revenues, improve margins and drive higher profits. [indiscernible] Scott will provide more details when he outlines our 2025 guidance in a moment, However, I want to quickly touch on our thinking and approach to capital allocation. The dislocation between the market's view of our stock and what we believe to be fair value continued to widen in 2024. As such, we were aggressive purchases of our stock buying back $31,000,000 throughout the year.

We'll continue to evaluate share buybacks in 2025 We also remain committed to pursuing opportunities that are in keeping with our overall strategy and expansion plans. In the meantime, we expect to continue to generate positive cash flows and add to our already sizable cash balance. I'll now turn the call over to Scott to provide some additional comments and share our 2020 Scott? Thanks, Andrew. Good afternoon, everyone. In addition to today's press release, our Form 10 ks will be filed shortly. Please look to the filings for a comprehensive summary of our quarterly and full year results. Revenues in the quarter declined by $9,300,000 or 12% versus a year ago. Both social casino and casual games were down in the quarter with larger dollar declines in social casino, larger percentage declines in casual. Social casino weaknesses continue to reflect softness in the category and our own challenges in stemming DAU declines. On the positive side, we've been making progress in monetization and we're seeing positive results from the recent changes in our largest game, Pop Slots. Longer term, we remain confident that our social casino titles can return to growth particularly with the addition of our sweepstakes features later this year.

Lower revenues in our casual portfolio were largely driven by Tetris, where a decline in DAU drove lower advertising revenue. Fourth quarter adjusted EBITDA of $12,500,000 was 15% lower than a year ago. Adjusted EBITDA margin was 18.4%, a 70 basis point decline versus the same quarter a year ago. Revenue declines drove both adjusted EBITDA and adjusted EBITDA margin declines in the quarter. DAU was 2.7 MAU was $11,500,000 in the fourth quarter, down 1914% respectively. From the same period last year. [indiscernible] TAU declines were broad based across our portfolio but largely driven by Tetris and Brannium accounted for more than half of the overall decrease. While we expect user growth to continue to be challenged, we are hopeful that our new initiatives such as sweepstakes and our new Tetris title will serve to counter these pressures. Likewise, we believe the recent integration of MyVIP across all our major games will be helpful. ARPU for the quarter was $0.27 up 8% from year ago results. The growth in ARPDA was driven by our social casino portfolio. [indiscernible] saw double digit year over year percentage gains in POP, MYBEGUS and Branium. The growth in Brainium is particularly noteworthy given the large base of players and relatively low levels of ARPDAU.

Increasing player monetization was a key objective of ours so we are pleased with the results. We continue to believe there is still significant opportunity for growth ahead. We initiated our reinvention program in the fourth quarter of twenty twenty four which will get fully realized in 2025. As Andrew mentioned earlier, our goal was to streamline our business around key opportunities expand operational efficiencies and reduce our overall cost. While we continue to expect the program to result in annual operating cost savings for our core business of approximately $25,000,000 to $30,000,000 there will be offsetting costs associated with launching and scaling our strategic priorities that will impact our overall consolidated results. I will discuss this in greater detail when I outline our 2025 guidance. For the full year, revenues declined 7% versus 2023, [indiscernible] Full year adjusted EBITDA was down 9% from 2023, while adjusted EBITDA margin of 19.5% was down 50 basis points versus last year.

We ended the quarter with approximately $109,000,000 in cash, no borrowings and full availability of our $81,000,000 revolver. As Andrew mentioned, we restarted our share repurchase program and purchased $31,000,000 dollars or 13% of total issued common stock during 2024. Our remaining share repurchase authorization was $44,000,000 at year end, In 2025, our capital allocation goals will continue to be centered on maximizing shareholder value through investing in our businesses pursuing strategic and accretive M and A and exploring other ways of returning value to our shareholders which may include additional share buybacks. Finally, our outlook for 2025. We estimate that revenues will range between $250,000,000 and $270,000,000 Consolidated adjusted EBITDA will range between $45,000,000 and $55,000,000 When modeling our 2025 results, please consider the following. Our guidance does not include the impact of acquisitions or divestitures. [indiscernible] Our new sweepstakes and Tetris initiatives are still in development and we have not included any revenue contributions from these efforts in our guidance. We will provide updates as we have them, but you should use your own judgment and analysis to project how these businesses may perform. Our current contribute as much as $15,000,000 to $30,000,000 of revenue during the year most of the benefits recognized in the fourth quarter.

While we are on track to recognize the cost savings from our restructuring, we expect to redeploy some of those savings towards developing