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What changed in PLAYSTUDIOS, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PLAYSTUDIOS, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+459 added−393 removedSource: 10-K (2024-03-12) vs 10-K (2023-03-10)

Top changes in PLAYSTUDIOS, Inc.'s 2023 10-K

459 paragraphs added · 393 removed · 290 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

76 edited+17 added−36 removed62 unchanged
Biggest changeThe following games were added to our portfolio following the acquisition of Brainium Studios LLC in October of 2022: • Mahjong by Brainium has elevated the relaxing tile match game with clean, modern design, smooth animations, and calming sounds. • Brainium Solitaire is a modern take on the classic card game. • Sudoku by Brainium has updated the classic puzzle with a clean, modern design, calming backdrops, and intuitive controls with a user-friendly and complete mobile Sudoku learning system. • Spider Solitaire by Brainium pairs the relaxing gameplay with a fresh, modern take on a classic, clear, easy-to-read cards, subtle animations and soothing sound effects enhance the playing experience. • FreeCell by Brainium combines the fun, challenging, classic gameplay with crisp, clear, easy-to-read cards, smooth animations, tap or drag controls, and subtle sounds; a user-friendly and visually stunning FreeCell. • Pyramid by Brainium, has elevated the classic Pyramid Solitaire card game, with a focus on beautiful design, smooth animations, and fast, fun gameplay. • Blackjack by Brainium, captures what makes the original casino game exhilarating, while making the experience easy, beautiful, and fun to play. • Jumbline 2 by Brainium is an engaging word game, the object of which is to make words from jumbled lines of letter by rearranging the scrambled letters into words and underlining them with your finger to score points. • Word Search by Brainium is a fun, charming, and user-friendly word finding puzzle on mobile with dozens of categories ranging from foods to astronomy. • ilu by Brainium is a puzzle game solved with light, set in the boundless void of space with countless forgotten worlds adrift in the dark without the ability to warm their dark and frozen features, where players bring light and life to these abandoned landscapes.
Biggest changeSlots introduces our players to an entirely new, immersive world in which they roam a virtual strip, enter their favorite casinos, and spin reels alongside others with whom they were teamed-up, or pitted against, with real-time audio chat and emojis, allowing our players to connect with one another. • myVEGAS Bingo integrates real-world casino brands, innovative power-ups, group social features, collectibles, and leaderboards. • MGM Slots Live enables our players to experience genuine MGM casino games, tournaments, and live 3D shows. • Tetris® is one of the world's favorite puzzle games. 10 • Tetris® Beat offers our players a unique twist on the classic puzzle game by fusing its hit gameplay with exclusive music and rhythm mechan • Mahjong by Brainium has elevated the relaxing tile match game with clean, modern design, smooth animations, and calming sounds. • Brainium Solitaire is a modern take on the classic card game. • Sudoku by Brainium has updated the classic puzzle with a clean, modern design, calming backdrops, and intuitive controls with a user-friendly and complete mobile Sudoku learning system. • Spider Solitaire by Brainium pairs the relaxing gameplay with a fresh, modern take on a classic, clear, easy-to-read cards, subtle animations and soothing sound effects enhance the playing experience. • FreeCell by Brainium combines the fun, challenging, classic gameplay with crisp, clear, easy-to-read cards, smooth animations, tap or drag controls, and subtle sounds; a user-friendly and visually stunning FreeCell. • Pyramid by Brainium, has elevated the classic Pyramid Solitaire card game, with a focus on beautiful design, smooth animations, and fast, fun gameplay. • Blackjack by Brainium, captures what makes the original casino game exhilarating, while making the experience easy, beautiful, and fun to play. • Jumbline 2 by Brainium is an engaging word game, the object of which is to make words from jumbled lines of letter by rearranging the scrambled letters into words and underlining them with your finger to score points. • Word Search by Brainium is a fun, charming, and user-friendly word finding puzzle on mobile with dozens of categories ranging from foods to astronomy. • ilu by Brainium is a puzzle game solved with light, set in the boundless void of space with countless forgotten worlds adrift in the dark without the ability to warm their dark and frozen features, where players bring light and life to these abandoned landscapes.
Our portfolio includes both casual and casino-themed games as follows: • myVEGAS Classic provides our players with the opportunity to build their own virtual Las Vegas Strip while enjoying free-to-play slots and table games inspired by their favorite desert destination. • myVEGAS Slots offers our players a growing library of new slots, game content, daily challenges, and special offers. 11 • myVEGAS Blackjack offers our players traditional blackjack rules and game mechanics with a host of social gaming features such as collectibles, challenges, and leaderboards, along with distinct “rooms” that provide the look and feel of a familiar Las Vegas casino. • my KONAMI Slots introduces the growing popularity of real-world casino content in free-to-play mobile gaming, and provides our players with a vast collection of casino-proven slot content. • POP!
Our portfolio includes both casual and casino-themed games as follows: • myVEGAS Classic provides our players with the opportunity to build their own virtual Las Vegas Strip while enjoying free-to-play slots and table games inspired by their favorite desert destination. • myVEGAS Slots offers our players a growing library of new slots, game content, daily challenges, and special offers. • myVEGAS Blackjack offers our players traditional blackjack rules and game mechanics with a host of social gaming features such as collectibles, challenges, and leaderboards, along with distinct “rooms” that provide the look and feel of a familiar Las Vegas casino. • my KONAMI Slots introduces the growing popularity of real-world casino content in free-to-play mobile gaming, and provides our players with a vast collection of casino-proven slot content. • POP!
ITEM 1. BUSINESS Introduction Acies was incorporated on August 14, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Acies completed its initial public offering in October 2020 (the “IPO”).
ITEM 1. BUSINESS Introduction Acies was incorporated on August 14, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Acies completed its initial public offering in October 2020.
Our playAWARDS initiative, and the dedicated team that leads it, is focused on further establishing it as the gaming industry’s gold standard. As we continue to look to accelerate our growth through new product introductions and strategic acquisitions, playAWARDS will serve as a catalyst, driving deeper engagement among newly acquired audiences.
Our playAWARDS initiative, and the dedicated team that leads it, is focused on further establishing it as the gaming industry’s gold standard. As we continue to look to accelerate our growth through new product introductions and strategic acquisitions, we believe playAWARDS will serve as a catalyst, driving deeper engagement among newly acquired audiences.
The benefits, however, extend well beyond simple brand impressions, because each reward that a player acquires in our games translates to a potential customer for our awards partners. Extending these rewards to our players helps keep our awards partners top-of-mind in a way that’s entertaining and engaging, rather than transactional.
The benefits, however, extend well beyond simple brand impressions, because each reward that a player acquires in our games translates to a potential customer for our rewards partners. Extending these rewards to our players helps keep our rewards partners top-of-mind in a way that’s entertaining and engaging, rather than transactional.
We create most of the intellectual property we use in our games, but we also license or otherwise receive rights to third-party intellectual property for use in our games. For example, we use licensed intellectual property from MGM Resorts International, Konami Gaming, Tetris®, Ainsworth Gaming Technology, and Shaquille O’Neal among others, as creative assets in our games.
We create most of the intellectual property we use in our games, but we also license or otherwise receive rights to third-party intellectual property for use in our games. For example, we use licensed intellectual property from MGM Resorts International, Konami Gaming, Tetris®, Ainsworth Gaming Technology, IGT, and Shaquille O’Neal among others, as creative assets in our games.
We believe thorough effective live operations, we can drive paying player conversion, continued monetization, and long-term paying player retention. 8 We are committed to adding value to our player experience through rewards, service, and community. We believe that focusing on the player experience is the key to driving player retention and opportunities for conversion to paying players.
We believe thorough effective live operations, we can drive paying player conversion, continued monetization, and long-term paying player retention. We are committed to adding value to our player experience through rewards, service, and community. We believe that focusing on the player experience is the key to driving player retention and opportunities for conversion to paying players.
The CPRA significantly expands the CCPA, including by introducing additional obligations such as data minimization and storage limitations, granting additional rights to consumers, such as correction of personal information and additional opt-out rights, and creates a new entity, the California 14 Privacy Protection Agency, to implement and enforce the law.
The CPRA significantly expands the CCPA, including by introducing additional obligations such as data minimization and storage limitations, granting additional rights to consumers, such as correction of personal information and additional opt-out rights, and creates a new entity, the California Privacy Protection Agency, to implement and enforce the law.
We are further subject to consumer protection laws, such as general truth in advertising and unfair trade practices that prohibit making false statements about, or otherwise failing to disclose, how we use our players’ data, as well as federal and state data breach notification laws.
We are further subject to consumer 13 protection laws, such as general truth in advertising and unfair trade practices that prohibit making false statements about, or otherwise failing to disclose, how we use our players’ data, as well as federal and state data breach notification laws.
From exclusive in-game VIP events and bespoke hosting services, to tailored pricing on store bundles and premium real-world rewards, we continue to expand the value we deliver to our players, which we believe will translate to increased levels of purchases by our players.
From exclusive in-game VIP events and bespoke hosting services, to tailored pricing on store bundles and premium 9 real-world rewards, we continue to expand the value we deliver to our players, which we believe will translate to increased levels of purchases by our players.
It is also likely that as our business grows and evolves and our games are played in a greater 13 number of countries, we will become subject to laws and regulations in additional jurisdictions or other jurisdictions may claim that we are required to comply with their laws and regulations.
It is also likely that as our business grows and evolves and our games are played in a greater number of countries, we will become subject to laws and regulations in additional jurisdictions or other jurisdictions may claim that we are required to comply with their laws and regulations.
We have created a collection of tools and services that allows our network of global awards partners to make the most of their in-game promotional presence. With our platform, our awards partners can launch new rewards directly into our games and make changes to their existing rewards.
We have created a collection of tools and services that allows our network of global rewards partners to make the most of their in-game promotional presence. With our platform, our rewards partners can launch new rewards directly into our games and make changes to their existing rewards.
In 9 parallel, we will continue to diversify our business model as we scale advertising within each of our games. We also plan to introduce new playAWARDS features that will enable our players to transact directly with us, which we expect will improve our gross margins.
In parallel, we will continue to diversify our business model as we scale advertising within each of our games. We also plan to introduce new playAWARDS features that will enable our players to transact directly with us, which we expect will improve our gross margins.
Changes in current laws or regulations or the imposition of new laws and regulations in the U.S. or elsewhere regarding these activities may impede the growth of social game services and impair our business, financial condition, or results of operations.
Changes in current laws or regulations or the imposition of new laws and regulations in the U.S. or elsewhere regarding these activities may impede the growth of social game services and impair our 12 business, financial condition, or results of operations.
Games, and the teams that build and operate them, must cultivate the capacity to understand, anticipate and respond to player behaviors. This ability is often enabled by sophisticated tools and a disciplined process.
Games, and the teams that build and operate them, also must cultivate the capacity to understand, anticipate and respond to player behaviors. This ability is often enabled by sophisticated tools and a disciplined process.
Integration of Loyalty Program In the decade since launching our first game with integrated loyalty mechanics, we’ve worked to abstract the technologies, tools, and operating practices that were central to this unique value proposition. Our aim was to transform our loyalty construct into a free-standing and full-featured program that could be more efficiently integrated into future game releases.
Integration of Loyalty Program Since launching our first game with integrated loyalty mechanics, we’ve worked to abstract the technologies, tools, and operating practices that were central to this unique value proposition. Our aim was to transform our loyalty construct into a free-standing and full-featured program that could be more efficiently integrated into future game releases.
Loyalty-as-a-Service Our playAWARDS program provides value to our awards partners while increasing player engagement and retention within our games. As we introduce new games and explore potential acquisition opportunities, we will integrate our loyalty program in order to drive value and benefit from our increased scale.
Loyalty-as-a-Service Our playAWARDS program provides value to our rewards partners while increasing player engagement and retention within our games. As we introduce new games and explore potential acquisition opportunities, we will integrate our loyalty program in order to drive value and benefit from our increased scale.
We will continue to enhance our playAWARDS program by updating the platform and tools, optimizing the redemption funnel and growing our collection of awards partners. Our robust platform and knowledge can be leveraged and applied to other products and services as well.
We will continue to enhance our playAWARDS program by updating the platform and tools, optimizing the redemption funnel and growing our collection of rewards partners. Our robust platform and knowledge can be leveraged and applied to other products and services as well.
Then, in real time, they can see how players are responding to and engaging with their brands within our games. Our awards partners recognize the value of showcasing their products and services within our games.
Then, in real time, they can see how players are responding to and engaging with their brands within our games. Our rewards partners recognize the value of showcasing their products and services within our games.
We believe our differentiated playAWARDS program benefits our players, awards partners, and business for a number of reasons as described below. We believe our unique playAWARDS program provides our players with a compelling and differentiated value proposition: “Play Free Games.
We believe our differentiated playAWARDS program benefits our players, rewards partners, and business for a number of reasons as described below. We believe our unique playAWARDS program provides our players with a compelling and differentiated value proposition: “Play Free Games.
The VIP player portal is available to all VIP players at any tier level. Continued Conversion of Non-Paying Players into Paying Players We believe we can generate revenue growth by converting more non-paying players into payers.
The myVIP player portal is available to all myVIP players at any tier level. Continued Conversion of Non-Paying Players into Paying Players We believe we can generate revenue growth by converting more non-paying players into payers.
Successful execution of our strategy depends on our ability to attract and retain players, expand the market for our games, convert non-paying players into payers, attract and retain awards partners, and offer unique and compelling experiences to players.
Successful execution of our strategy depends on our ability to attract and retain players, expand the market for our games, convert non-paying players into payers, attract and retain rewards partners, and offer unique and compelling experiences to players.
Earn Real Rewards.” Each of our legacy social casino games and our Tetris®-branded mobile game incorporate loyalty points that are earned by players as they engage with our games. Like miles in a frequent-flyer program, our players accumulate more loyalty points as they demonstrate their ongoing commitment to our games.
Earn Real Rewards.” Our social casino games and our Tetris®-branded mobile game incorporate loyalty points that are earned by players as they engage with our games. Like miles in a frequent-flyer program, our players accumulate more loyalty points as they demonstrate their ongoing commitment to our games.
We believe the combination of our more than ten years of development investments, operational experience, integration of our loyalty platform within our awards partners’ marketing and operating practices, and the breadth of our corporate relationships are significant competitive advantages, and to replicate our systems would require competitors to invest substantial time and incur significant expense.
We believe the combination of our more than twelve years of development investments, operational experience, integration of our loyalty platform within our rewards partners’ marketing and operating practices, and the breadth of our corporate relationships, are significant competitive advantages, and to replicate our systems would require competitors to invest substantial time and incur significant expense.
We have built a player management infrastructure that includes customer support, social media community engagement, VIP hosting for premium players, and real-world meetups and social events with our awards partners. We focus on transparency and accountability, empowering our employees and management to drive the efficient use of capital.
We have built a player management infrastructure that includes customer support, social media community engagement, hosting for premium players, and real-world meetups and social events with our rewards partners. 7 We focus on transparency and accountability, empowering our employees and management to drive the efficient use of capital.
In some cases, we compete against gaming operators who could expand their product lines to include games that could directly compete with ours. See “Risk Factors — Our industry is very competitive.
In some cases, we compete against gaming operators who could expand their product lines to include games that could directly compete with ours. See “ Risk Factors — Our industry is very competitive.
We expect to continue to use a mix of originally created and licensed content in our games. See “Risk Factors — Our ability to acquire and maintain licenses to intellectual property may affect our revenue and profitability.
We expect to continue to use a mix of originally created and licensed content in our games. See “ Risk Factors — Our ability to acquire and maintain licenses to intellectual property may affect our revenue and profitability.
New Game Launches, Including myVEGAS Bingo and MGM Slots Live Our strategy to date has been to expand our portfolio of games and game studios through in-house development, leveraging the talent and culture of our teams to develop innovative and award-winning games. We launched our myVEGAS Bingo game in March 2021 and MGM Slots Live in October 2021.
Our primary strategy to date has been to expand our portfolio of games and game studios through in-house development, leveraging the talent and culture of our teams to develop innovative and award-winning games. We launched our myVEGAS Bingo game in March 2021 and MGM Slots Live in October 2021.
Privacy Shield Framework (a mechanism for the transfer of personal information from the EU to the U.S.) and made clear that reliance on standard contractual clauses (an alternative mechanism for the transfer of personal information outside of the EU) alone may not be sufficient in all circumstances.
Privacy Shield Framework (a mechanism for the transfer of personal information from the EU to the U.S.) and made clear that reliance on standard contractual clauses (an alternative mechanism for the transfer of personal information outside of the EU) alone may not be sufficient in all circumstances. That program was subsequently replaced by the EU-U.S.
There are certain functions or areas of responsibility that we’ve elected to centralize for every studio’s benefit. In the case of player acquisition, we leverage a centralized marketing team to achieve efficiencies across our portfolio of games. Our performance marketing capabilities focus on cost-effectively acquiring players.
We rely on data-driven performance marketing capabilities to drive return on our ad spend. There are certain functions or areas of responsibility that we’ve elected to centralize for every studio’s benefit. In the case of player acquisition, we leverage a centralized marketing team to achieve efficiencies across our portfolio of games. Our performance marketing capabilities focus on cost-effectively acquiring players.
These games represent an extension of our addressable market and growth opportunity. As we expand into these new genres and games, we expect to leverage loyalty mechanics and our player network to seed, and then grow, each new product.
These games represent an extension of our addressable market and growth opportunity. We continue to look for opportunities to 8 create new games. As we expand into new genres and games, we expect to leverage loyalty mechanics and our player network to seed, and then grow, each new product.
Our average daily conversion rate of non-payers to payers was 1.5% for the year ended December 31, 2022, down from 2.7% for the year ended 10 December 31, 2021. We continually assess the data about our players to develop insights that we can use to improve conversion.
Our average daily conversion rate of non-payers to payers was 0.8% for the year ended December 31, 2023, down from 1.5% for the year ended December 31, 2022. We continually assess the data about our players to develop insights that we can use to improve conversion.
We are experts in live operations. We have established “live operations” as a core competency throughout the company and have dedicated live operations teams within each of our game studios. Crafting great content is a necessary, but not sufficient requirement when it comes to building an enduring franchise.
We are experts in live operations. We have established “live operations” as a core competency throughout the company and have dedicated live operations teams within each of our game studios. Although crafting great content is a necessary ingredient in building an enduring franchise, content alone is not sufficient.
Our actual or perceived failure to comply with these laws and regulations could harm our business.” Human Capital We had 752 full-time and twelve part-time employees in our principal office and ten studios located in seven countries as of December 31, 2022.
Our actual or perceived failure to comply with these laws and regulations could harm our business.” Human Capital We had 697 full-time and 13 part-time employees in ten studios located in eight countries as of December 31, 2023.
If players prefer our competitors’ games over our own, our operating results could suffer.” Intellectual Property We have 92 registered U.S. trademarks, 12 pending applications for U.S. trademarks, 19 issued U.S. patents, and 20 pending U.S. patent applications as of December 31, 2022.
If players prefer our competitors’ games over our own, our operating results could suffer. ” Intellectual Property We have 87 registered U.S. trademarks, 6 pending applications for U.S. trademarks, 18 issued U.S. patents, and 16 pending U.S. patent applications as of December 31, 2023.
In 2022, the service was extended to all players, who were invited to engage with us through a customized player portal. Each portal is tailored to the player, with a curated collection of unique benefits, rewards, and real-world events.
Direct Purchase In 2020, we developed and trialed a new collection of web-based myVIP features. In 2022, the service was extended to all players, who were invited to engage with us through a customized player portal. Each portal is tailored to the player, with a curated collection of unique benefits, rewards, and real-world events.
As they consume their real-world rewards, they drive incremental business value for our awards partners, who more fully engage with our loyalty program and actively promote our games as a means of keeping their brands top-of-mind with target consumers. This drives players back to our games, where they can engage more deeply, accumulate more loyalty points, and repeat the cycle.
As our players engage with our games, they accumulate loyalty points that enrich their experience in the real world. As they consume their real-world rewards, they drive incremental business value for our rewards partners, who more fully engage with our loyalty program and actively promote our games as a means of keeping their brands top-of-mind with target consumers.
The founders of our company and the principals of our Tel Aviv and Hong Kong game studios have long histories together, and the importance of those relationships sets the tone for a company that places its highest premium on trust, mutual respect, and genuine regard for one another — even when we disagree.
The founders of our company and many of our key studio-level operating teams have long histories together, and the importance of those relationships sets the tone for a company that places its highest premium on trust, mutual respect, and genuine regard for one another — even when we disagree.
We expect to continue to demonstrate the value of our program, and in doing so, further build upon our substantial collection of awards partners and rewards. We believe that we can compete favorably in our market.
Driving demonstrable results is key to retaining our existing rewards partners and attracting new ones. We expect to continue to demonstrate the value of our program, and in doing so, further build upon our substantial collection of rewards partners and rewards. We believe that we can compete favorably in our market.
We strive to provide compensation and benefits that are competitive to market and create incentives to attract and retain employees. Our compensation package includes market-competitive base pay, health care, retirement benefits, paid time off and family leave.
We strive to provide compensation and benefits that are competitive to market and create incentives to attract and retain employees. Our compensation package includes market-competitive base pay, health care, retirement benefits, paid time off and family leave. In addition, we offer stock-based compensation and access to a variety of health and wellness resources. 14
Once they have accumulated loyalty points, they can unlock a collection of real-world rewards and other benefits, that include, but are not limited to, vacations, invitations to special events, and access to our VIP services.
Every time players engage with one of our games, they begin earning valuable loyalty points and elevating their playAWARDS status. Once they have accumulated loyalty points, they can unlock a collection of real-world rewards and other benefits that include, but are not limited to, vacations, invitations to special events, and access to our VIP services.
This model fosters our commitment to our employees and their growth, our uncompromising attention to innovation and the creative execution of our games, and our relentless focus on creating value for our players and our awards partners. We have adopted certain organizational conventions to drive collaboration and shared learning.
This model fosters our commitment to our employees and their growth, our uncompromising attention to innovation and the creative execution of our games, and our relentless focus on creating value for our players and our rewards partners.
Research and Development We believe our ability to attract new players and retain existing players depends in part on our ability to evolve and expand our content library by continually developing differentiated games, systems technology and functionality to enhance player entertainment and user profitability. 12 We have a diverse pool of talent located in game development hubs, including in Israel, Serbia, Hong Kong, Singapore, and Vietnam.
Research and Development We believe our ability to attract new players and retain existing players depends in part on our ability to evolve and expand our content library by continually developing differentiated games, systems technology and functionality to enhance player entertainment and user profitability.
Securing the exclusive license for mobile devices globally, excluding China, fully aligns with our strategic priorities and positions us to accelerate our growth, diversify our portfolio, grow our network of players, and scale our unique playAWARDS platform.
Securing the exclusive license for mobile devices globally, excluding China, fully aligns with our strategic priorities and positions us to accelerate our growth, diversify our portfolio, grow our network of players, and scale our unique playAWARDS platform. Targeted Strategic Acquisitions We continually seek, evaluate, and pursue strategic transactions which we believe will enhance our business as further described below.
By integrating branded content and promotional offerings into our games, playAWARDS converts entertaining digital impressions into real world brand engagement. In the process of earning loyalty points and redeeming rewards, players make the journey from our world into the world of our awards partners. This activity helps them acquire new customers and reactivate ones that have lapsed.
In the process of earning loyalty points and redeeming rewards, players make the journey from our world into the world of our rewards partners. This activity helps them acquire new customers and reactivate ones that have lapsed.
We believe we are well positioned as a gaming company with a robust loyalty program. It is our view that our investments in the quality of our games, coupled with the unique value proposition of playAWARDS, will continue to distinguish our products and drive our growth.
It is our view that our investments in the quality of our games, coupled with the unique value proposition of playAWARDS, will continue to distinguish our products and drive our growth. 11 We believe the value of our playAWARDS program is tied to the breadth of rewards we make available to our players.
As we continue to demonstrate the productivity and impact of our games as a user acquisition, reactivation and inventory management solution, our awards partners can increase their engagement, optimizing their rewards and the overall merchandising of the program. Driving demonstrable results is key to retaining our existing awards partners and attracting new ones.
Our ability to keep the program fresh and relevant is rooted in the value we deliver to our rewards partners. As we continue to demonstrate the productivity and impact of our games as a user acquisition, reactivation and inventory management solution, our rewards partners can increase their engagement, optimizing their rewards and the overall merchandising of the program.
This engenders an important sense of reciprocity, which is a key element in designing captivating digital experiences. Our Loyalty Program Our playAWARDS program is grounded in a proven model that provides our players with a rewarding entertainment experience and our awards partners with promotional access to a large and valuable audience.
Our Loyalty Program Our playAWARDS program is grounded in a proven model that provides our players with a rewarding entertainment experience and our rewards partners with promotional access to a large and valuable audience.
We also plan to explore additional opportunities for monetizing our technology, tools, and operating expertise by offering to other game publishers a tightly integrated, full-featured, loyalty-as-a-service solution. Our Company Values Values are not what you say. Values are who you are. At best, they are the product of self-discovery, not belabored wordsmithing.
We also plan to explore additional opportunities for monetizing our technology, tools, and operating expertise by offering to other game publishers a tightly integrated, full-featured, loyalty-as-a-service solution. Our Company Values At PLAYSTUDIOS, the essence of who we are is expressed in three simple truths: PLAY better together, PLAY to win, and the game is for the PLAYer.
In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business. Any costs incurred as a result of this potential liability could harm our business, financial condition, or results of operations.
This may require us to expend substantial resources, modify our games, or block users from a particular jurisdiction, each of which would harm our business, financial condition, and results of operations. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise impact the growth of our business.
We are dedicated to building fun and beautiful games that feature a captivating complement of graphics, sounds, and visual effects. We undertake an extensive internal creative review process and comprehensive quality assurance testing before publishing any new game. We constantly monitor the performance of our games to improve the overall gameplay experience.
We undertake an extensive internal creative review process and comprehensive quality assurance testing before publishing any new game. We constantly monitor the performance of our games to improve the overall gameplay experience. We have a proprietary loyalty platform with a global network of rewards partners.
Lastly, we’ll continue to evolve our playAWARDS platform and tools such that we can make them available to strategic partners and third parties under a SaaS model, or in our case, Loyalty-as-a-Service.
Lastly, we’ll continue to evolve our playAWARDS platform and tools such that we can make them available to strategic partners and third parties under a SaaS model, or in our case, Loyalty-as-a-Service. New Game Launches During the company's first ten years, we generally grew our business organically by assembling every team, building every product, and acquiring every player ourselves.
The more players we drive to our awards partners, the more awards partners and rewards inventory we can attract. The more rewards we attract, the more we can offer to our players, making our loyalty program more compelling to an even broader audience. Our Core Strengths We build engaging and beautifully executed games.
The more rewards we attract, the more we can offer to our players, making our loyalty program more compelling to an even broader audience. Our Core Strengths We build engaging and beautifully executed games. We are dedicated to building fun and beautiful games that feature a captivating complement of graphics, sounds, and visual effects.
The genres and related games we are currently focused on include casual (match, bubble, word, card), niche (racing, sport), midcore (Idle RPG, card battler) and casino (poker, bingo, slots).
The genres and related games we are currently focused on include casual (match, bubble, word, card), niche (racing, sport), midcore (Idle RPG, card battler) and casino (poker, bingo, slots). Ad Monetization While most of our revenue is derived from in-game purchases, we introduced ad monetization mechanics into various of our social casino games in recent years.
The Tetris® mobile game and all ten Brainium games generate most of their revenue through ad monetization. We intend to continue to qualify and scale in-game advertising as a source of revenue. Direct Purchase In 2020, we developed and trialed a new collection of web-based VIP features.
In addition, we acquired the rights to Tetris® on mobile devices in November of 2021 and Brainium Studios in October of 2022. The Tetris® mobile game and all ten Brainium games generate most of their revenue through ad monetization. We intend to continue to qualify and scale in-game advertising as a source of revenue.
Our Growth Opportunities We have a collection of growth opportunities that fall into four distinct categories — optimize, expand, acquire and diversify. We will continue to optimize the performance of our existing portfolio of games, attracting, engaging, and monetizing more players.
We will continue to optimize the performance of our existing portfolio of games, attracting, engaging, and monetizing more players.
In addition, by extending restricted offers, our awards partners are able to shift customer demand from peak to off-peak periods, allowing them to optimize the utilization of their inventory. Our awards partners are equipped with a robust toolkit to manage, monitor, and measure the performance of their rewards.
In addition, by extending restricted offers, our rewards partners are able to shift customer demand from peak to off-peak periods, allowing them to optimize the utilization of their inventory. 6 The playAWARDS platform provides a comprehensive suite of tools that enables participants in our loyalty program to optimize their participation.
All of these participants are empowered to manage their activities in real time, drawing on player insights to optimize the impact and value they derive from the playAWARDS program. We have amassed a global network of awards partners.
Our platform includes operating tools tailored to the needs of our game makers, customer service features for our support and player hosts, and a dedicated console for our rewards partners. All of these participants are empowered to manage their activities in real time, drawing on player insights to optimize the impact and value they derive from the playAWARDS program.
Slots , myVEGAS Bingo , MGM Slots Live , Tetris®, Solitaire, Spider Solitaire, Sudoku, and Mahjong, have been downloaded over 100 million times and were played by 7.9 million monthly active users for the year ended December 31, 2022. From social casino to casual games, each game has been thoughtfully crafted for the people who play it.
Our games, which include myVEGAS Slots , myVEGAS Blackjack , my KONAMI Slots , POP! Slots , myVEGAS Bingo , MGM Slots Live , Tetris®, Solitaire, Spider Solitaire, Sudoku, and Mahjong, have been downloaded over 100 million times and were played by 13.5 million monthly active users for the year ended December 31, 2023.
During the year ended December 31, 2022, our curated collection of 96 awards partners represented more than 210 unique brands including MGM Resorts International, Wolfgang Puck, Royal Caribbean Cruise Lines, Cirque du Soleil, and House of Blues. The appeal of our loyalty program speaks for itself.
Our curated collection of rewards partners represents unique brands including MGM Resorts International, Wolfgang Puck, Royal Caribbean Cruise Lines, and Cirque du Soleil. The appeal of our loyalty program speaks for itself. 5 Managing a loyalty program like playAWARDS requires a robust technology platform.
We have amassed a global, diverse collection of awards partners across entertainment, retail, technology, travel, leisure, and gaming. Our loyalty platform allows us to provide an engaging enhancement to the primary gaming experience of our 7.9 million monthly active users for the year ended December 31, 2022.
Our loyalty platform allows us to provide an engaging enhancement to the primary gaming experience of our 13.5 million monthly active users for the year ended December 31, 2023.
Loyalty points are aggregated across the games, allowing our players to accumulate loyalty points more rapidly by engaging with more of our games. This drives traffic across our entire portfolio of games. It is our view that the playAWARDS program enriches the overall value proposition of our games.
Loyalty points are aggregated across the games, allowing our players to accumulate loyalty points more rapidly by engaging with more of our games. This drives traffic across our entire portfolio of games. One of the key features of our playAWARDS loyalty platform is its tiered loyalty program. Players can progress through tiers based on their level of engagement and gameplay.
We have a proprietary loyalty platform with a global network of awards partners. During the year ended December 31, 2022, we continued to develop and scale our proprietary loyalty platform to over 96 partners who represent more than 210 brands across 105 countries and 6 continents.
During the year ended December 31, 2023, we continued to develop and scale our proprietary loyalty platform across 104 countries and 6 continents, and have amassed a global, diverse collection of rewards partners across entertainment, retail, technology, travel, leisure, and gaming.
As a group, they’ve drawn upon their vast experience to design our operating framework, implement the tools to develop our talent, clarify our strategies, measure our performance, and optimize our decision making. We rely on data-driven performance marketing capabilities to drive return on our ad spend.
In each case, they bring decades of experience, and a shared commitment to assembling teams and building products that are enduring. As a group, they’ve drawn upon their vast experience to design our operating framework, implement the tools to develop our talent, clarify our strategies, measure our performance, and optimize our decision making.
This provides us with a funnel of new, internally developed game concepts, ideas for improvements to our systems, and close relationships with those local game-development communities. Competition As a developer of mobile games, we compete with other game makers and other forms of entertainment content.
We have a diverse pool of talent located in game development hubs, including in Israel, Serbia, Hong Kong, Singapore, Vietnam, Mexico, and Chile. This provides us with a funnel of new, internally developed game concepts, ideas for improvements to our systems, and close relationships with those local game-development communities.
As we have amassed a diverse collection of awards partners, the scale of our network has become a competitive edge that delivers benefits to both our players and awards partners.
As we have amassed a diverse collection of rewards partners, the scale of our network has become a competitive edge that delivers benefits to both our players and rewards partners. As of December 31, 2023, our playAWARDS program offered rewards from 233 entertainment, retail, travel, leisure, and gaming brands from 113 reward partners located in 104 countries on 6 continents.
It sets us apart from other leading game developers and it’s our key to building deep and lasting connections with millions of players. Every time players engage with one of our games, they begin earning valuable loyalty points and elevating their playAWARDS status.
But we are not just a game company, because at the heart of every game we create is a powerful, one-of-a-kind loyalty program we call playAWARDS. It sets us apart from other leading game developers and it’s our key to building deep and lasting connections with millions of players.
Our primary competitors include Activision Blizzard (the parent company of King Digital), Electronic Arts (EA Mobile), Epic Games, Jam City, Netmarble (the parent company of Kabam), NetEase (NetEase Games), Niantic, Take-Two Interactive Software, Vivendi (the parent company of Gameloft) and others.
In addition, there are competitors that develop mobile and web games that are not currently focused on the social casino gaming category but may move into that space and that may also impede our diversification efforts, including companies such as Activision Blizzard (owned by Microsoft and the parent company of King Digital), Electronic Arts (EA Mobile), Epic Games, Netmarble (the parent company of Jam City and Kabam), NetEase (NetEase Games), Niantic, Take-Two Interactive Software, Vivendi (the parent company of Gameloft) and others.
Our Council Framework consists of a collection of forums, each comprised of experts across our studios, that self-organize, meet, and advance an agenda that serves the interests of the broader business. Today we have over 10 active councils focused on areas such as monetization, data science, technology, creative, product execution, user acquisition, player experience, and the playMAKER experience.
We have adopted certain organizational conventions to drive collaboration and shared learning including our "council" framework, which consists of a collection of topic-specific forums, each comprised of experts across our studios that self-organize, meet, and advance an agenda that serves the interests of the broader business.
These forums are designed to drive deeper connections among our key leaders, leverage the collective intelligence from subject matter experts, and provide opportunities for learning and problem solving within key disciplines of the business. Our founder-led management team includes industry-leading talent in the casino, leisure, and entertainment industries as well as seasoned game developers and operators.
Today we have numerous active councils focused on areas such as monetization, data science, technology, creative, product execution, user acquisition, player experience, and the playMAKER experience. These councils are designed to drive deeper connections among our key leaders, leverage the collective intelligence from subject matter experts, and provide opportunities for learning and problem solving within key disciplines of the business.
By complementing inherently great games with a compelling collection of rewards, we’ve been able to distinguish ourselves from our competition. Our awards partners are able to reach new audiences and optimize marketing dollars through playAWARDS. The playAWARDS program allows our awards partners to connect directly with a valuable mobile audience in a way that is engaging, entertaining, and cost effective.
The playAWARDS program allows our rewards partners to connect directly with a valuable mobile audience in a way that is engaging, entertaining, and cost effective. By integrating branded content and promotional offerings into our games, playAWARDS converts entertaining digital impressions into real world brand engagement.
This dilemma highlights the complexities of standing out among hundreds of thousands of competing games, as well as the importance of driving deeper engagement and its relationship to monetization. Whether it be early adoption, mid-term engagement, or long-term payer conversion, we believe our loyalty program enhances the trajectory and life cycle of our games.
Whether it be early adoption, mid-term engagement, or long-term payer conversion, we believe our loyalty program enhances the trajectory and life cycle of our games. By complementing inherently great games with a compelling collection of rewards, we believe we’ve been able to distinguish ourselves from our competition. Our Rewards Partners.
Overview The Power of Play We build award-winning casual games that are among the most popular games available on iTunes and Google Play. Our games, which include myVEGAS Slots , myVEGAS Blackjack , my KONAMI Slots , POP!
Through continuous innovation and the introduction of new game titles, we aim to further expand our market reach and solidify our position as a top player in the industry. The Power of Play We build award-winning casual games that are among the most popular games available on iTunes and Google Play.
As a result, we’ve been able to build a loyal and engaged community of players by virtue of our direct development efforts. But we are not just a game company, because at the heart of every game we create is a powerful, one-of-a-kind loyalty program we call playAWARDS.
From social casino to casual games, each game has been thoughtfully crafted for the people who play it. As a result, we’ve been able to build a loyal and engaged community of players by virtue of our direct development efforts.
Our player acquisition strategy is centered on a payback period methodology, and we strategically balance spend between the acquisition of new players and the reactivation of lapsed players. We demonstrate our culture of innovation through the work of playLABS. playLABS is an internal group of game designers, engineers, and artists dedicated to the creation of cutting-edge games, features, and content.
Our player acquisition strategy is centered on a payback period methodology, and we strategically balance spend between the acquisition of new players and the reactivation of lapsed players. Our Growth Opportunities We have a collection of growth opportunities that fall into four distinct categories — optimize, expand, acquire and diversify.
Our leadership team is a diverse collection of entrepreneurs, product leaders, technologists, game designers, data scientists, and loyalty marketers. In each case, they bring decades of experience, and a shared commitment to assembling teams and building products that are enduring.
Our founder-led management team includes industry-leading talent in the casino, leisure, and entertainment industries as well as seasoned game developers and operators. Our leadership team is a diverse collection of entrepreneurs, product leaders, technologists, game designers, data scientists, and loyalty marketers.
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As of December 31, 2022, players have exchanged their loyalty points for over 15 million rewards with a retail value of more than $725 million. Managing a loyalty program like playAWARDS requires a robust technology platform.
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Overview PLAYSTUDIOS is a leading developer of free-to-play casual games for mobile and social platforms.
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The Loyalty Lift Successful games, just like most forms of creative content, move through a predictable life cycle — from development and launch to maturity and late-stage contraction. At each stage, they are met with unique challenges, from driving discovery 6 and amassing a community of engaged players, to retaining players, and converting non-paying players to payers.
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With a focus on creating immersive and engaging experiences, we have built a strong reputation for combining high-quality games that resonate with players worldwide with our groundbreaking playAWARDS loyalty platform, which enables players to earn real-world rewards from a global collection of hospitality, entertainment and leisure brands.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to certify the effectiveness of our internal controls, or if our internal controls have a material weakness, we may not detect errors timely, our financial statements could be misstated, we could be subject to regulatory scrutiny and a loss of confidence by stakeholders, which could harm our business and adversely affect the trading price of our Class A common stock. 39 We are currently an “emerging growth company” within the meaning of the Securities Act and have taken advantage of certain exemptions from disclosure requirements available to emerging growth companies, which could make our securities less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.
Biggest changeIf we are unable to certify the effectiveness of our internal controls, or if our internal controls have one or more material weaknesses, we may not detect errors timely, our financial statements could be misstated, we could be subject to regulatory scrutiny and a loss of confidence by stakeholders, which could harm our business and adversely affect the trading price of our Class A common stock.
We may issue additional preferred stock or common stock, including under the 2021 Plan and 2021 Employee Stock Purchase Plan. Any such issuances would dilute the interest of our stockholders and likely present other risks.
We may issue preferred stock or additional common stock, including under the 2021 Plan and 2021 Employee Stock Purchase Plan. Any such issuances would dilute the interest of our stockholders and likely present other risks.
We may issue additional shares of preferred stock (which may be convertible into a substantial number of shares of common stock) or additional shares of common stock, including under the 2021 Plan and 2021 Employee Stock Purchase Plan.
We may issue shares of preferred stock (which may be convertible into a substantial number of shares of common stock) or additional shares of common stock, including under the 2021 Plan and 2021 Employee Stock Purchase Plan.
Any such issuances of additional shares of preferred stock or common stock: • may significantly dilute the equity interests of our stockholders; • may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; • could cause a change in control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and • may adversely affect prevailing market prices for our Class A common stock.
Any such issuances of shares of preferred stock or additional shares of common stock: • may significantly dilute the equity interests of our stockholders; • may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; • could cause a change in control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and • may adversely affect prevailing market prices for our Class A common stock.
Among other things, the organizational documents include provisions regarding: • the ability of the Board of Directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; 47 • the Certificate of Incorporation will prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the limitation of the liability of, and the indemnification of, our directors and officers; • the ability of the Board of Directors to amend the Bylaws, which may allow the Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to the Board of Directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Board of Directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
Among other things, the organizational documents include provisions regarding: • the ability of the Board of Directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the Certificate of Incorporation will prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the limitation of the liability of, and the indemnification of, our directors and officers; • the ability of the Board of Directors to amend the Bylaws, which may allow the Board of Directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to the Board of Directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Board of Directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
In addition, changes in general market, economic and political conditions in domestic and foreign economies or financial markets, including fluctuation in stock markets resulting from, among other things, trends in the economy as a whole, inflation, unemployment, consumer debt levels, geopolitical events, and other challenges impacting the global economy, including the COVID-19 pandemic, disruption of supply chains, and armed conflict between Ukraine and Russia, may adversely affect consumer confidence or cause a reduction to our players’ disposable income or our awards partners’ budgets resulting in fewer or less desirable rewards to be offered to our players.
In addition, changes in general market, economic and political conditions in domestic and foreign economies or financial markets, including fluctuation in stock markets resulting from, among other things, trends in the economy as a whole, inflation, unemployment, consumer debt levels, geopolitical events, and other challenges impacting the global economy, including the COVID-19 pandemic, disruption of supply chains, and armed conflict between Ukraine and Russia, may adversely affect consumer confidence or cause a reduction to our players’ disposable income or our rewards partners’ budgets resulting in fewer or less desirable rewards to be offered to our players.
The GDPR and national implementing legislation in EEA member states and the UK impose a strict data protection compliance regime in relation to our collection, control, processing, sharing, disclosure, and other use of personal data, including providing detailed disclosures about how personal data is collected and processed, granting new rights for data subjects to access, delete, or object to the processing of their data, mandatory breach notification to supervisory authorities (and in certain cases, affected individuals) of certain data breaches, and significant documentary requirements to demonstrate compliance through policies, procedures, training, and audit.
The GDPR and national implementing legislation in EEA member states and the UK impose a strict data protection compliance regime in relation to our collection, 31 control, processing, sharing, disclosure, and other use of personal data, including providing detailed disclosures about how personal data is collected and processed, granting new rights for data subjects to access, delete, or object to the processing of their data, mandatory breach notification to supervisory authorities (and in certain cases, affected individuals) of certain data breaches, and significant documentary requirements to demonstrate compliance through policies, procedures, training, and audit.
As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses and other mechanisms cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints, and regulatory investigations or fines, or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in 32 which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses and other mechanisms cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints, and regulatory investigations or fines, or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
As the result of any court judgment or settlement, we may be obligated to cancel the launch of a new game, stop offering a game or certain features of a game in a particular geographic region or worldwide, pay significant royalties, settlement costs, or damages (including treble damages and attorneys’ fees if we are found to have willfully infringed intellectual property rights), obtain licenses (which may not be available on acceptable terms or at all), modify our games and features, or develop substitutes.
As the result of any court judgment or settlement, we may be obligated to cancel the launch of a new game, stop offering a game or certain features of a game in a particular geographic region or worldwide, pay significant royalties, settlement costs, or damages (including potential treble damages and attorneys’ fees if we are found to have willfully infringed intellectual property rights), obtain licenses (which may not be available on acceptable terms or at all), modify our games and features, or develop substitutes.
However, we cannot guarantee that these efforts will be successful, and thus there is a risk that the use of such open source software may ultimately result in litigation, preclude us from charging fees for the use of certain of our proprietary software, require us to replace certain code used in our games, pay damages, settlement fees, or a royalty to use some open source software, make the source code of our games publicly available, or discontinue certain games.
However, we cannot guarantee that these efforts will be successful, and thus there is a risk that the use of such open source software may ultimately result in litigation, preclude us from charging fees for the use of certain of our proprietary software, require us to replace certain code used in our games, pay damages, settlement fees, 30 or a royalty to use some open source software, make the source code of our games publicly available, or discontinue certain games.
Some of these current and potential competitors have significant resources for developing or acquiring additional games, may be able to incorporate their own strong brands and assets into their games, have a more diversified set of revenue sources than we do and may be less severely affected by changes in player preferences, regulations. or other developments that may impact our industry.
Some of these current and potential competitors have significant resources for developing or acquiring additional games, may be able to incorporate their own strong brands and assets into their games, have a more diversified set of revenue sources than we do and may be less severely affected by changes in player preferences, regulations. or other developments that may impact our 17 industry.
The Felipe Complaint alleges that the misrepresentations and omissions resulted in stock price drops of 13% on August 12, 2021, and 5% on February 25, 2022, following (i) the Company’s release of financial results for the second quarter of 2021, ended on June 30, 2021, and (ii) the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and issuance of a press release summarizing financial results for the fourth quarter and year ended December 31, 2021, respectively.
The Felipe Complaint alleges that the misrepresentations and omissions resulted in stock price drops of 13% on August 12, 2021, and 5% on February 25, 2022, 45 following (i) the Company’s release of financial results for the second quarter of 2021, ended on June 30, 2021, and (ii) the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and issuance of a press release summarizing financial results for the fourth quarter and year ended December 31, 2021, respectively.
It is possible that a resolution of one or more such proceedings could result in liability, penalties, or sanctions, as well as judgments, consent decrees, or orders preventing us from offering certain features, functionalities, products, or services, or requiring a change in our business practices, products or technologies, which could in the future materially and adversely affect our business, financial condition, or results of operations.
It is possible that a resolution of one or more such proceedings could result in liability, penalties, or sanctions, as well as judgments, consent decrees, or orders preventing 28 us from offering certain features, functionalities, products, or services, or requiring a change in our business practices, products or technologies, which could in the future materially and adversely affect our business, financial condition, or results of operations.
We cannot assure you that the measures we take to detect and prevent or hinder cyber-attacks or other security or data breaches, to protect our systems, data and player information, and to prevent outages, data loss, and fraud, including a disaster recovery strategy for server, equipment, or systems failure and the use of third parties for certain cybersecurity services, will provide sufficient security or be adequate for our operations.
We cannot assure you that the measures we take to detect and prevent or hinder cybersecurity attacks or other security or data breaches, to protect our systems, data and player information, and to prevent outages, data loss, and fraud, including a disaster recovery strategy for server, equipment, or systems failure and the use of third parties for certain cybersecurity services, will provide sufficient security or be adequate for our operations.
We believe that our players’ level of engagement with our games is partly based on the perceived value of earning loyalty points and exchanging those loyalty points for real-world rewards that they can redeem at our awards partners’ establishments. We currently offer real-world rewards relating to, among other things, dining, live entertainment shows, and hotel rooms.
We believe that our players’ level of engagement with our games is partly based on the perceived value of earning loyalty points and exchanging those loyalty points for real-world rewards that they can redeem at our rewards partners’ establishments. We currently offer real-world rewards relating to, among other things, dining, live entertainment shows, and hotel rooms.
The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Certificate of Incorporation to be inapplicable or unenforceable in such action. ITEM 1B.
The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal 49 proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Certificate of Incorporation to be inapplicable or unenforceable in such action. ITEM 1B.
In addition, if we include in-game advertising in our games that players view as excessive, such advertising may materially detract from players’ gaming experiences, thereby creating player 24 dissatisfaction, which may cause us to lose players and revenues, and negatively affect the experience for players making purchases of virtual currency in our games.
In addition, if we include in-game advertising in our games that players view as excessive, such advertising may materially detract from players’ gaming experiences, thereby creating player dissatisfaction, which may cause us to lose players and revenues, and negatively affect the experience for players making purchases of virtual currency in our games.
Any such errors, flaws, defects, and vulnerabilities may disrupt our operations, violate applicable security standards, adversely affect the game experience of our players, harm our reputation, cause our players to stop playing our games, divert our resources, and delay market acceptance of our games, any of which could result in harm to our business, financial condition, or results of operations.
Accordingly, any such errors, flaws, defects, and vulnerabilities may disrupt our operations, violate applicable security standards, adversely affect the game experience of our players, harm our reputation, cause our players to stop playing our games, divert our resources, and delay market acceptance of our games, any of which could result in harm to our business, financial condition, or results of operations.
In addition, our Tetris®-branded mobile game and all ten Brainium games generate most of their revenue through ad monetization. Since we intend to continue to qualify and scale in-game advertising to generate revenue, we will be limited in how and to whom we can present with in-game advertising, which could adversely affect our ability to generate revenues from advertising.
In addition, our Tetris®-branded mobile game and all ten Brainium games currently generate most of their revenue through ad monetization. Since we intend to continue to qualify and scale in-game advertising to generate revenue, we will be limited in how and to whom we can present with in-game advertising, which could adversely affect our ability to generate revenues from advertising.
Any such access, disclosure, or other loss of information could result in legal claims or 34 proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption of our operations and the services we provide to players, damage to our reputation, and a loss of confidence in our products and services, which could adversely affect our business.
Any such access, disclosure, or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption of our operations and the services we provide to players, damage to our reputation, and a loss of confidence in our products and services, which could adversely affect our business.
Our games may contain errors, bugs, flaws, corrupted data, defects, and other vulnerabilities, some of which may only become apparent after their launch, particularly as we launch new games and rapidly release new features to existing games under tight time constraints. Furthermore, our development and testing processes may not detect errors and vulnerabilities in our games prior to their release.
Our games may contain errors, bugs, flaws, corrupted data, defects, and other vulnerabilities, some of which may only become apparent after their launch, particularly as we launch new games and release new features to existing games under tight time constraints. Furthermore, our development and testing processes may not detect errors and vulnerabilities in our games prior to their release.
Although alternative providers could host our platform on a 22 substantially similar basis, such transition could potentially be disruptive and we could incur significant costs in connection with such transition. In particular, a significant portion of our game traffic, data storage, data processing and other computing services and systems is hosted by AWS.
Although alternative providers could host our platform on a substantially similar basis, such transition could potentially be disruptive and we could incur significant costs in connection with such transition. In particular, a significant portion of our game traffic, data storage, data processing and other computing services and systems is hosted by AWS.
Any of the foregoing would have a negative effect on our business, financial condition, or results of operations. 31 We are subject to laws and regulations concerning data privacy, information security, data protection, and consumer protection, and these laws and regulations are continually evolving. Our actual or perceived failure to comply with these laws and regulations could harm our business.
Any of the foregoing would have a negative effect on our business, financial condition, or results of operations. We are subject to laws and regulations concerning data privacy, information security, data protection, and consumer protection, and these laws and regulations are continually evolving. Our actual or perceived failure to comply with these laws and regulations could harm our business.
In addition, any cost reduction measures could negatively impact our business, financial condition, or results of operations including but not limited to, delaying the introduction of new games, features, or content, delaying introduction of new technology, impacting our ability to react nimbly to game or technology issues, or impacting employee retention and morale.
In addition, any cost reduction measures could 43 negatively impact our business, financial condition, or results of operations including but not limited to, delaying the introduction of new games, features, or content, delaying introduction of new technology, impacting our ability to react nimbly to game or technology issues, or impacting employee retention and morale.
Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry, or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities.
Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, 33 even if unrelated to our business, industry, or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities.
In addition, we 41 cannot be sure that such actions and initiatives will be as successful in reducing our overall expenses as expected or that additional costs will not offset any such reductions. If our operating costs are higher than we expect or if we do not maintain adequate control of our costs and expenses, our operating results will suffer.
In addition, we cannot be sure that such actions and initiatives will be as successful in reducing our overall expenses as expected or that additional costs will not offset any such reductions. If our operating costs are higher than we expect or if we do not maintain adequate control of our costs and expenses, our operating results will suffer.
The benefits of an acquisition, investment, or joint venture may also take considerable time to develop, and we cannot be certain that any particular transaction will produce the intended benefits, which could adversely affect our business, financial 27 condition, or results of operations.
The benefits of an acquisition, investment, or joint venture may also take considerable time to develop, and we cannot be certain that any particular transaction will produce the intended benefits, which could adversely affect our business, financial condition, or results of operations.
The COVID-19 pandemic and related containment and mitigation efforts, including social distancing, shelter-in-place, quarantine and similar policies, practices and governmental orders, have resulted in widespread disruption in global economies, productivity, and financial markets and materially altered our day-to-day business operations.
The COVID-19 pandemic and related containment and mitigation efforts, including social distancing, shelter-in-place, quarantine and similar policies, practices and governmental orders, have resulted in widespread disruption in global 16 economies, productivity, and financial markets and materially altered our day-to-day business operations.
Changes in 29 current laws or regulations or the imposition of new laws and regulations in the U.S. or elsewhere regarding these activities may lessen the growth of social game services and impair our business, financial condition, or results of operations. We may be subject to future litigation in the operation of our business.
Changes in current laws or regulations or the imposition of new laws and regulations in the U.S. or elsewhere regarding these activities may lessen the growth of social game services and impair our business, financial condition, or results of operations. We may be subject to future litigation in the operation of our business.
Monitoring unauthorized use of our intellectual property is difficult and costly, and while it is our policy to protect and defend our rights to our intellectual property, we cannot predict whether steps taken by us to enforce and protect 30 our intellectual property rights will be adequate to prevent infringement, misappropriation, dilution, or other violations of our intellectual property rights.
Monitoring unauthorized use of our intellectual property is difficult and costly, and while it is our policy to protect and defend our rights to our intellectual property, we cannot predict whether steps taken by us to enforce and protect our intellectual property rights will be adequate to prevent infringement, misappropriation, dilution, or other violations of our intellectual property rights.
In addition, many countries in the EU, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, have recently proposed or recommended changes to existing tax laws or have enacted new laws that could impact our tax obligations.
In addition, many countries in the EU, as well as a number of other countries and 36 organizations such as the Organization for Economic Cooperation and Development, have recently proposed or recommended changes to existing tax laws or have enacted new laws that could impact our tax obligations.
Increasing awareness of 23 our brands and recognition of our games is particularly important in connection with our strategic focus on developing games based on our own intellectual property and successfully cross-promoting our games. In addition, globalizing and extending our brands and recognition of our games requires significant investment and extensive management time to execute successfully.
Increasing awareness of our brands and recognition of our games is particularly important in connection with our strategic focus on developing games based on our own intellectual property and successfully cross-promoting our games. In addition, globalizing and extending our brands and recognition of our games requires significant investment and extensive management time to execute successfully.
These licenses typically limit our use of intellectual property to specific uses and for specific time periods, and include other contractual obligations, including the achievement of certain performance milestones with which we must comply in order for the license to remain in effect.
These licenses typically limit our 21 use of intellectual property to specific uses and for specific time periods, and include other contractual obligations, including the achievement of certain performance milestones with which we must comply in order for the license to remain in effect.
Various government and consumer agencies have called for new regulation and changes in industry practices and are continuing to review the need for greater regulation for the collection of information concerning consumer behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices.
In addition, various government and consumer agencies have called for new regulation and changes in industry practices and are continuing to review the need for greater regulation for the collection of information concerning consumer behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices.
A weakened global economy may impact our players’ purchasing decisions within our games, in particular given the limitations of redeeming real-world rewards due to government mandated or other restrictions on travel and other activities and limitations on our players’ discretionary spending, consumer activity during the pandemic and its impact on advertising investments, and the ability of our business partners, including our awards partners that provide the real-world rewards available in our games, to navigate this complex social, health, and economic environment, any of which could result in disruption to our business and results of our operations.
A weakened global economy may impact our players’ purchasing decisions within our games, in particular given the limitations of redeeming real-world rewards due to government mandated or other restrictions on travel and other activities and limitations on our players’ discretionary spending, consumer activity during the pandemic and its impact on advertising investments, and the ability of our business partners, including our rewards partners that provide the real-world rewards available in our games, to navigate a complex social, health, and economic environment, any of which could result in disruption to our business and results of our operations.
The GDPR also imposes conditions on obtaining valid consent, such as a prohibition on pre-checked 33 consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology.
The GDPR also imposes conditions on obtaining valid consent, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology.
While we generally are not responsible for taxes generated on games accessed and operated through third-party platforms, we are responsible for collecting and remitting applicable sales, value-added, or other similar 35 taxes for revenue generated on games accessed and operated on our own platforms.
While we generally are not responsible for taxes generated on games accessed and operated through third-party platforms, we are responsible for collecting and remitting applicable sales, value-added, or other similar taxes for revenue generated on games accessed and operated on our own platforms.
If an active market for our securities develops and continues, the trading price of our securities could be volatile and subject to 45 wide fluctuations in response to various factors, some of which are beyond our control.
If an active market for our securities develops and continues, the trading price of our securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control.
The terms of our marketing agreement with MGM requires 20 us to meet certain performance criteria for it to be automatically renewed, and if we fail to meet those performance criteria, MGM could terminate both the marketing agreement and the rewards agreement.
The terms of our marketing agreement with MGM requires us to meet certain performance criteria for it to be automatically renewed, and if we fail to meet those performance criteria, MGM could terminate both the marketing agreement and the rewards agreement.
We may have experienced, and we may in the future experience, ownership changes, either as a result of the Acies Merger or other changes in our stock ownership (some of which are not in our control).
We may have experienced, and we may in the future experience, ownership changes, either as a result of the Acies Merger or other changes in our stock ownership (some of which are not within our control).
See “Risk Factors—We rely on third-party platforms such as the Apple App Store, Google Play Store, Amazon Appstore, and Facebook to make our games available to players and collect revenues generated on such platforms, and we rely on third-party payment service providers to collect revenues generated on our own platforms.” In order to remain profitable, we need to generate sufficient revenue from our existing and new game offerings to offset our ongoing development, marketing, and operating costs.
See “ Risk Factors—We rely on third-party platforms such as the Apple App Store, Google Play Store, Amazon Appstore, and Facebook to make our games available to players and collect revenues generated on such platforms, and we rely on third-party payment service providers to collect revenues generated on our own platforms .” In order to remain profitable, we need to generate sufficient revenue from our existing and new game offerings to offset our ongoing development, marketing, and operating costs.
A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.
A change in these principles or interpretations could have a significant effect on our reported financial 39 results, and could affect the reporting of transactions completed before the announcement of a change.
Accordingly, we may amend the terms of the Public Warrants in a 46 manner adverse to a holder if holders of at least 65% of the then outstanding Public Warrants approve of such amendment.
Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding Public Warrants approve of such amendment.
There are ongoing academic, political, and regulatory discussions in the U.S., Europe, Australia, and other jurisdictions regarding whether social casino applications should be subject to a higher level or different type of regulation than other social game applications to protect consumers, in particular minors and persons susceptible to addiction to social casino games, and, if so, what this regulation should include.
There are ongoing academic, political, and regulatory discussions in the U.S., Europe, Australia, and other jurisdictions regarding whether social casino ap plications should be subject to a higher level or different type of regulation than other social game applications to protect consumers, in particular minors and persons susceptible to addiction to social casino games, and, if so, what this regulation should include.
Player engagement with our games may decline or fluctuate as a result of a number of factors, including the popularity of the underlying games, the player’s level of satisfaction with our games, our ability to improve and innovate games and to attract new awards partners, outages and disruptions of online services, the services offered by our competitors, our marketing and advertising efforts, or declines in player activity generally as a result of economic downturns, among others.
Player engagement with our games may decline or fluctuate as a result of a number of factors, including the popularity of the underlying games, the player’s level of satisfaction with our games, our ability to improve and innovate games and to attract new rewards partners, outages and disruptions of online services, the services offered by our competitors, our marketing and advertising efforts, or declines in player activity generally as a result of economic downturns, among others.
This concentrated control may have the effect of delaying, preventing, or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of our company, and may ultimately affect the market price of shares of our Class A common stock. 42 We cannot predict the impact our dual class structure may have on the stock price of our Class A common stock.
This concentrated control may have the effect of delaying, preventing, or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of our company, and may ultimately affect the market price of shares of our Class A common stock. 44 We cannot predict the impact our dual class structure may have on the stock price of our Class A common stock.
In addition, online game developers and distributors that are primarily focused on specific international markets, such as Giant Interactive and Tencent in Asia, and high-profile companies with significant online presences that to date have not actively focused on social games, such as Facebook, Apple, Google, Amazon, and Microsoft, may decide to develop social games including social casino games which may compete with our games.
In addition, online game developers and distributors that are primarily focused on specific international markets, such as Giant Interactive and Tencent in Asia, and high-profile companies with significant online presences that to date have not actively focused on social games, such as Facebook, Apple, Google, Amazon, and Netflix, may decide to develop social games including social casino games which may compete with our games.
Our operating and net income has historically fluctuated and we believe our operating margin could decrease as a result of increasing costs resulting from the risks discussed in this Annual Report on Form 10-K or in connection with any merger and acquisition activity that we may undertake.
Our operating and net income has historically fluctuated and we believe our operating margin could decrease as a result of declining revenue and/or increasing costs resulting from the risks discussed in this Annual Report on Form 10-K or in connection with any merger and acquisition activity that we may undertake.
Although we have a portfolio of entertainment, retail, technology, travel, leisure, and gaming brands across the globe providing rewards through our playAWARDS program, MGM historically has provided a substantial amount of such rewards, and the majority of the rewards redeemed through our playAWARDS program for the year ended December 31, 2022 were offered by MGM.
Although we have a portfolio of entertainment, retail, technology, travel, leisure, and gaming brands across the globe providing rewards through our playAWARDS program, MGM historically has provided a substantial amount of such rewards, and the majority of the rewards redeemed through our playAWARDS program for the year ended December 31, 2023 were offered by MGM.
Our ability to utilize our research credit carryforwards to offset potential future income taxes that would otherwise be due is dependent upon our generation of future income taxes before the expiration dates of the research credit carryforwards, and we cannot predict with certainty when, or whether, we will generate sufficient income taxes to use all of our research credit carryforwards.
Our ability to utilize our research credit carryforwards to offset potential future income taxes that would otherwise be due is dependent upon our generation of future income tax liabilities before the expiration dates of the research credit carryforwards, and we cannot predict with certainty when, or whether, we will generate sufficient income tax liabilities to use all of our research credit carryforwards.
In addition, our business may be subject to interruptions, delays or failures resulting from adverse weather conditions, other natural disasters, power loss, terrorism, cyber-attacks, public health emergencies (including the COVID-19 pandemic or other future health epidemics or contagious disease outbreaks), or other catastrophic events.
In addition, our business may be subject to interruptions, delays or failures resulting from adverse weather conditions, other natural disasters, power loss, terrorism, cybersecurity attacks, public health emergencies (including the COVID-19 pandemic or other future health epidemics or contagious disease outbreaks), or other catastrophic events.
Our ability to successfully develop games for mobile and web platforms and their ability to achieve commercial success will depend on our ability to: • effectively market our games to existing and new players; • achieve benefits from our player acquisition costs; • achieve organic growth and gain player interest in our games through free or more efficient channels; • adapt to changing player preferences and spending habits; • negotiate with third parties to provide our players with a diverse inventory of real-world loyalty rewards; • increase player engagement within our games; • expand and enhance games after their initial release; • attract, retain, and motivate talented and experienced game designers, product managers and engineers; • negotiate with third-party platforms; 17 • continue to adapt to new technologies and game feature sets for an increasingly diverse set of mobile devices, including various operating systems and specifications, limited bandwidth, and varying processing power and screen sizes; • efficiently manage the development of new games and features to increase the cadence of introductions without incurring excessive costs; • achieve and maintain successful player engagement and effectively monetize our games; • maintain a quality gaming experience and retain our players; • compete successfully against a large and growing number of existing market participants; • accurately forecast the timing and expense of our operations, including game and feature development, marketing and player acquisition, player adoption, and revenue growth; • minimize and quickly resolve bugs or outages; and • acquire and successfully integrate high quality mobile game assets, personnel, or companies.
Our ability to successfully develop games for mobile and web platforms and their ability to achieve commercial success will depend on our ability to: • effectively monetize our games; • effectively market our games to existing and new players; • achieve benefits from our player acquisition costs; • achieve organic growth and gain player interest in our games through free or more efficient channels; • adapt to changing player preferences and spending habits; • negotiate with third parties to provide our players with a diverse inventory of real-world loyalty rewards; • achieve and maintain player engagement within our games; • expand and enhance games after their initial release; • attract, retain, and motivate talented and experienced game designers, product managers, engineers, digital marketing managers, and user acquisition experts; • negotiate and manage relationships with third-party platforms; 15 • continue to adapt to new technologies and game feature sets for an increasingly diverse set of mobile devices, including various operating systems and specifications, limited bandwidth, and varying processing power and screen sizes; • efficiently manage the development of new games and features to increase the cadence of introductions without incurring excessive costs; • maintain a quality gaming experience and retain our players; • compete successfully against a large and growing number of existing market participants; • accurately forecast the timing and expense of our operations, including game and feature development, marketing and player acquisition, player adoption, and revenue growth; • minimize and quickly resolve bugs or outages; and • acquire and successfully integrate high quality mobile game assets, personnel, or companies.
Challenges and risks from such acquisitions, investments, and joint ventures include: • our ability to identify, compete effectively for, or complete suitable acquisitions and investments at prices we consider attractive; • our ability to estimate accurately the financial effect of acquisitions and investments on our business, our ability to estimate accurately any synergies or the impact on our results of operations of such acquisitions and investments; • acquired products, technologies or capabilities, particularly with respect to any that are still in development when acquired, may not perform as expected, may have defects, or may not be integrated into our business as expected; • acquired entities or joint ventures may not achieve expected business growth or operate profitably, which could adversely affect our results of operations, and we may be unable to recover investments in any such acquisitions or joint ventures; • our assumption of legal or regulatory risks, particularly with respect to smaller businesses that have immature business processes and compliance programs, or litigation we may face with respect to the acquired company, including claims from terminated employees, players, former stockholders, or other third parties; • negative effects on business initiatives and strategies from the changes and potential disruption that may follow the acquisition; 26 • diversion of our management’s attention; • declining employee morale and retention issues resulting from changes in compensation, or changes in management, reporting relationships, or future prospects; • the need to integrate the operations, systems, technologies, products, and personnel of each acquired company, the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with integration; • the difficulty in determining the appropriate purchase price of acquired companies may lead to the overpayment of certain acquisitions and the potential impairment of intangible assets and goodwill acquired in the acquisitions; • the difficulty in successfully evaluating and utilizing the acquired products, technology, or personnel; • acquisitions, investments, and joint ventures may require us to spend a significant amount of cash, to incur debt, resulting in increased fixed payment obligations and could also result in covenants or other restrictions on us, or to issue capital stock, resulting in dilution of ownership of our stockholders; • the need to implement controls, procedures, and policies appropriate for a larger, U.S.-based public company at companies that prior to acquisition may not have as robust controls, procedures, and policies, in particular, with respect to compliance with privacy and other regulations protecting the rights of users, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s operations; • the difficulty in accurately forecasting and accounting for the financial impact of an acquisition transaction, including accounting charges and integrating and reporting results for acquired companies that have not historically followed U.S.
If we are unable to obtain the anticipated benefits from these transactions, or if we encounter difficulties in integrating any acquired operations with our business, our financial condition and results of operations could be materially harmed. 24 Challenges and risks from such acquisitions, investments, and joint ventures include: • our ability to identify, compete effectively for, or complete suitable acquisitions and investments at prices we consider attractive; • our ability to estimate accurately the financial effect of acquisitions and investments on our business, our ability to estimate accurately any synergies or the impact on our results of operations of such acquisitions and investments; • acquired products, technologies or capabilities, particularly with respect to any that are still in development when acquired, may not perform as expected, may have defects, or may not be integrated into our business as expected; • acquired entities or joint ventures may not achieve expected business growth or operate profitably, which could adversely affect our results of operations, and we may be unable to recover investments in any such acquisitions or joint ventures; • our assumption of legal or regulatory risks, particularly with respect to smaller businesses that have immature business processes and compliance programs, or litigation we may face with respect to the acquired company, including claims from terminated employees, players, former stockholders, or other third parties; • negative effects on business initiatives and strategies from the changes and potential disruption that may follow the acquisition; • diversion of our management’s attention; • declining employee morale and retention issues resulting from changes in compensation, or changes in management, reporting relationships, or future prospects; • the need to integrate the operations, systems, technologies, products, and personnel of each acquired company, the inefficiencies and lack of control that may result if such integration is delayed or not implemented, and unforeseen difficulties and expenditures that may arise in connection with integration; • the difficulty in determining the appropriate purchase price of acquired companies may lead to the overpayment of certain acquisitions and the potential impairment of intangible assets and goodwill acquired in the acquisitions; • the difficulty in successfully evaluating and utilizing the acquired products, technology, or personnel; • acquisitions, investments, and joint ventures may require us to spend a significant amount of cash, to incur debt, resulting in increased fixed payment obligations and could also result in covenants or other restrictions on us, or to issue capital stock, resulting in dilution of ownership of our stockholders; • the need to implement controls, procedures, and policies appropriate for a larger, U.S.-based public company at companies that prior to acquisition may not have as robust controls, procedures, and policies, in particular, with respect to compliance with privacy and other regulations protecting the rights of users, and compliance with U.S.-based economic policies and sanctions which may not have previously been applicable to the acquired company’s operations; • the difficulty in accurately forecasting and accounting for the financial impact of an acquisition transaction, including accounting charges and integrating and reporting results for acquired companies that have not historically followed U.S.
The COVID-19 pandemic and containment efforts across the globe significantly impacted our business, and the extent to which this situation and any future health epidemics or contagious disease outbreaks will impact our future results of operations and overall financial performance remains uncertain.
The COVID-19 pandemic and containment efforts across the globe significantly impacted our business, and the extent to which any future health epidemics or contagious disease outbreaks will impact our future results of operations and overall financial performance remains uncertain.
The duration and extent of the impact on our business from the ongoing COVID-19 pandemic or any future health epidemics or contagious disease outbreaks will depend on future developments that cannot accurately be predicted at this time, such as disease severity and transmission rates, the existence of any additional waves of any pandemic, epidemic, or outbreak, the impact of new disease variants, the extent and effectiveness of mitigation and containment actions, progress 19 towards widespread rapid testing, effective treatment alternatives and the adoption and efficacy of available vaccines, and the impact of these and other factors on our employees, players, and business partners.
The duration and extent of the impact on our business from any future pandemics, health epidemics or contagious disease outbreaks will depend on future developments that cannot accurately be predicted at this time, such as disease severity and transmission rates, the existence of any additional waves of any pandemic, epidemic, or outbreak, the impact of new disease variants, the extent and effectiveness of mitigation and containment actions, progress towards widespread rapid testing, effective treatment alternatives and the adoption and efficacy of available vaccines, and the impact of these and other factors on our employees, players, and business partners.
In addition, there are competitors that develop mobile and web games that are not currently focused on the social casino gaming category but may move into that space and that may also impede our diversification efforts, including companies such as Activision Blizzard (the parent company of King Digital), Electronic Arts (EA Mobile), Epic Games, Jam City, Netmarble (the parent company of Kabam), NetEase (NetEase Games), Niantic, Take-Two Interactive Software, Vivendi (the parent company of Gameloft), and others.
In addition, there are competitors that develop mobile and web games that are not currently focused on the social casino gaming category but may move into that space and that may also impede our diversification efforts, including companies such as Activision Blizzard (owned by Microsoft Corporation and the parent company of King Digital), Electronic Arts (EA Mobile), Epic Games, Netmarble (the parent company of Jam City and Kabam), NetEase (NetEase Games), Niantic, Take-Two Interactive Software, Vivendi (the parent company of Gameloft), and others.
Our awards partners, content licensors, advertisers, and investors rely on our key metrics as a representation of our performance. We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.
Our rewards partners, content licensors, advertisers, and investors rely on our key metrics as a representation of our performance. We regularly review and may adjust our processes for calculating our internal metrics to improve their accuracy.
The price of our Class A common stock, as well as our Public Warrants, may fluctuate due to a variety of factors, including: • changes in the industries in which we and our vendors operate; • developments involving our competitors; • changes in laws and regulations affecting our business; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; • publication of research reports by securities analysts about us or our competitors or our industry; • the public’s reaction to our press releases, our other public announcements, and our filings with the SEC; • sales of shares of Class A common stock by our stockholders, including the PIPE Investors (as defined in Note 3— Business Combinations ); • the issuance and potential sales of 15,000,000 Earnout Shares and potential sale of 900,000 Sponsor Shares upon the occurrence of an Earnout Triggering Event; • additions and departures of key personnel; • commencement of, or involvement in, litigation against us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Class A common stock available for public sale; and • general economic and political conditions, such as the effects of the COVID-19 pandemic, inflation, recessions, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability, armed conflict between Ukraine and Russia, or other acts of war or terrorism.
The price of our Class A common stock, as well as our Public Warrants, may fluctuate due to a variety of factors, including: • changes in the industries in which we and our vendors operate; • developments involving our competitors; • changes in laws and regulations affecting our business; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; 46 • publication of research reports by securities analysts about us or our competitors or our industry; • the public’s reaction to our press releases, our other public announcements, and our filings with the SEC; • sales of shares of Class A common stock by our stockholders, including the PIPE Investors (as defined in Note 4— Business Combinations ); • the issuance and potential sales of 15,000,000 Earnout Shares and potential sale of 900,000 Sponsor Shares upon the occurrence of an Earnout Triggering Event; • additions and departures of key personnel; • commencement of, or involvement in, litigation against us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Class A common stock available for public sale; and • general economic and political conditions, such as the effects of the COVID-19 pandemic, inflation, recessions, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability, armed conflict between Israel and Hamas in Gaza and between Israel and Hezbollah in Jordan and the West Bank, armed conflict between Ukraine and Russia, or other acts of war or terrorism.
We believe that establishing and maintaining our brands is critical to maintaining and creating favorable relationships with players, awards partners, content licensors, and advertisers, as well as competing for key talent.
We believe that establishing and maintaining our brands is critical to maintaining and creating favorable relationships with players, rewards partners, content licensors, and advertisers, as well as competing for key talent.
In addition, up to 15,000,000 Earnout Shares may be issued and up to 900,000 Sponsor Shares may vest and become unrestricted upon the closing price of the Class A common stock exceeding $12.50 and $15.00 per share, respectively, for any 20 trading days within any 30-trading day window commencing on or after November 18, 2021 and ending no later than June 21, 2026 (the Earnout Shares will also vest based on the price targets in connection with a sale of our company).
In addition, up to 15,000,000 contingently issuable shares (the "Earnout Shares") may be issued, and up to 900,000 unvested shares previously issued to the sponsor of Acies (the " Sponsor Shares") may vest and become unrestricted, upon the closing price of the Class A common stock exceeding $12.50 and $15.00 per share, respectively, for any 20 trading days within any 30-trading day window commencing on or after November 18, 2021 and ending no later than June 21, 2026 (the Earnout Shares will also vest based on the price targets in connection with a sale of our company).
Paying players purchase virtual currency in our games because of its perceived value, which is dependent on the relative ease of obtaining equivalent virtual currency by simply playing our games.
Paying players choose to purchase virtual currency in our games because of its perceived value, which is dependent on the relative ease of obtaining equivalent virtual currency by simply playing our games.
These recent developments will require us to review and amend the legal mechanisms by which we make and/ or receive personal data transfers to in the U.S.
These recent and ongoing developments will require us to continually review and amend the legal mechanisms by which we make and/ or receive personal data transfers to in the U.S.
We also face competition for the leisure time, attention, and discretionary spending of our players from other non-gaming activities, such as social media and messaging applications, personal computer and console games, video streaming services, television, movies, sports, and the Internet.
We also face competition for the leisure time, attention, and discretionary spending of our players from other non-gaming activities, such as social media and messaging applications, personal computer and console games, virtual reality and augmented reality games, video streaming services, television, movies, sports, and the Internet.
While substantially all of our business operations can be performed remotely, many of our employees who work remotely must balance additional work-related and personal challenges, including adjusting communication, technical and work expectations, and challenges to collaborate in a hybrid environment with work colleagues and business partners.
While substantially all of our business operations can be performed remotely, many of our employees who work remotely might have to balance additional work-related and personal challenges, including adjusting communication, technical and work expectations, and challenges to collaborate in a hybrid environment with work colleagues and business partners.
Expanding our international focus may subject us to risks that we have not faced before or increase risks that we currently face, including risks associated with: • inability to offer certain games in certain foreign countries; • recruiting and retaining talented and capable management and employees in foreign countries; • challenges caused by distance, language, and cultural differences; • developing and customizing games and other offerings that appeal to the tastes and preferences of players in international markets; • competition from local game makers with intellectual property rights and significant market share in those markets and with a better understanding of player preferences; • obtaining, utilizing, protecting, defending, and enforcing our intellectual property rights; • negotiating agreements with local distribution platforms that are sufficiently economically beneficial to us and protective of our rights; • the inability to extend proprietary rights in our brand, content, or technology into new jurisdictions; • implementing alternative payment methods for virtual currency in a manner that complies with local laws and practices and protects us from fraud; • compliance with applicable foreign laws and regulations, including privacy laws and laws relating to content and consumer protection; • compliance with anti-bribery laws, including the Foreign Corrupt Practices Act; • credit risk and higher levels of payment fraud; • currency exchange rate fluctuations; 28 • protectionist laws and business practices that favor local businesses in some countries; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the U.S. or the foreign jurisdictions in which we operate; • political, economic, and social instability; • public health crises, such as the COVID-19 pandemic and other future health epidemics or contagious disease outbreaks, which can result in varying impacts to our employees, players, vendors, awards partners, and commercial partners internationally; • higher costs associated with doing business internationally; • export or import regulations; and • trade and tariff restrictions.
Expanding our international focus may subject us to risks that we have not faced before or increase risks that we currently face, including risks associated with: • inability to offer certain games in certain foreign countries; • recruiting and retaining talented and capable management and employees in foreign countries; • challenges caused by distance, language, and cultural differences; • developing and customizing games and other offerings that appeal to the tastes and preferences of players in international markets; • competition from local game makers with intellectual property rights and significant market share in those markets and with a better understanding of player preferences; • obtaining, utilizing, protecting, defending, and enforcing our intellectual property rights; 26 • negotiating agreements with local distribution platforms that are sufficiently economically beneficial to us and protective of our rights; • the inability to extend proprietary rights in our brand, content, or technology into new jurisdictions; • implementing alternative payment methods for virtual currency in a manner that complies with local laws and practices and protects us from fraud; • compliance with applicable foreign laws and regulations, including privacy laws and laws relating to content and consumer protection; • compliance with anti-bribery laws and anti-corruption laws, including the Foreign Corrupt Practices Act (the "FCPA"); • credit risk and higher levels of payment fraud; • currency exchange rate fluctuations; • protectionist laws and business practices that favor local businesses in some countries; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the U.S. or the foreign jurisdictions in which we operate; • political, economic, and social instability; • public health crises, such as the COVID-19 pandemic and other future health epidemics or contagious disease outbreaks, which can result in varying impacts to our employees, players, vendors, rewards partners, and commercial partners internationally; • higher costs associated with doing business internationally; • limitations on, and costs related to, the repatriation of funds; • compliance with applicable sanctions regimes regarding business dealings or other business relationships with or involving certain designated persons or countries; • export or import regulations; and • trade and tariff restrictions.
As of December 31, 2022, the Founder Group controlled more than 70% of the combined voting power of our outstanding capital stock.
As of December 31, 2023, the Founder Group controlled more than 70% of the combined voting power of our outstanding capital stock.
GAAP; • the fact that we may be required to pay contingent consideration in excess of the initial fair value, and contingent consideration may become payable at a time when we do not have sufficient cash available to pay such consideration; • the fees and costs of legal, accounting, and other professional advisors engaged by us for such acquisitions, which may be substantial; • under purchase accounting, we may be required to write off deferred revenue which may impair our ability to recognize revenue that would have otherwise been recognizable which may impact our financial performance or that of the acquired company; • risks associated with our expansion into new international markets and doing business internationally, including those described under the caption “ Our international operations are, and our strategy to expand internationally will be, subject to increased challenges and risk s”; • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries; • the potential loss of, or harm to, our relationships with employees, players, awards partners, content licensors, and other suppliers as a result of integration of new businesses; • our dependence on the accuracy and completeness of statements and disclosures made or actions taken by the companies we acquire or their representatives, when conducting due diligence and evaluating the results of such due diligence; • liability for activities of the acquired company before the acquisition, including intellectual property and other litigation claims or disputes, cyber and information security vulnerabilities, violations of laws, rules, and regulations, commercial disputes, tax liabilities, and other known and unknown liabilities; and • we may not be able to effectively influence the operations of our joint ventures, or we may be exposed to certain liabilities if our joint venture partners do not fulfill their obligations.
GAAP; • the fact that we may be required to pay contingent consideration in excess of the initial fair value, and contingent consideration may become payable at a time when we do not have sufficient cash available to pay such consideration; • the fees and costs of legal, accounting, and other professional advisors engaged by us for such acquisitions, which may be substantial; • under purchase accounting, we may be required to write off deferred revenue which may impair our ability to recognize revenue that would have otherwise been recognizable which may impact our financial performance or that of the acquired company; • risks associated with our expansion into new international markets and doing business internationally; 25 • in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries; • the potential loss of, or harm to, our relationships with employees, players, rewards partners, content licensors, and other suppliers as a result of integration of new businesses; • our dependence on the accuracy and completeness of statements and disclosures made or actions taken by the companies we acquire or their representatives, when conducting due diligence and evaluating the results of such due diligence; • liability for activities of the acquired company before the acquisition, including intellectual property and other litigation claims or disputes, cybersecurity and information security vulnerabilities, violations of laws, rules, and regulations, commercial disputes, tax liabilities, and other known and unknown liabilities; and • we may not be able to effectively influence the operations of our joint ventures, or we may be exposed to certain liabilities if our joint venture partners do not fulfill their obligations.
A substantial portion of our loyalty rewards are obtained from MGM, and any change in that relationship could materially and adversely affect our business and financial results.
A substantial portion of our loyalty rewards and significant intellectual property are obtained from MGM, and any change in that relationship could materially and adversely affect our business and financial results.
One or more U.S. states or countries may seek to impose incremental or new sales, value-added, use, or other tax collection obligations on us.
One or more U.S. states or foreign jurisdictions may seek to impose incremental or new sales, value-added, use, or other tax collection obligations on us.
If any such events described above occur on a short-term or long-term basis, or if these third-party platforms and online payment service providers otherwise experience issues that impact the ability of players to download or access our games, access social features, or make in-game purchases, it could materially and adversely affect our brands and reputation, as well as our business, financial condition, and results of operations.
If the platform providers took such actions in jurisdictions that are significant to our operations, it could negatively impact our business. 19 If any such events described above occur on a short-term or long-term basis, or if these third-party platforms and online payment service providers otherwise experience issues that impact the ability of players to download or access our games, access social features, or make in-game purchases, it could materially and adversely affect our brands and reputation, as well as our business, financial condition, and results of operations.
If the development companies fails to operate and maintain the co-developed game or existing game, it could adversely affect such game's performance and player satisfaction, and our business may suffer as a result.
If the development companies fails to operate and maintain the co-developed game or existing game, it could adversely affect that game's performance and player satisfaction, and our business might suffer as a result.
If the third-party game developer challenged our right to use its intellectual property or the manner in which we use such intellectual property, it could materially and adversely affect our ability to continue to publish the co-developed game.
If we are unable to obtain such a license, or if the third-party game developer challenged our right to use its intellectual property or the manner in which we use such intellectual property, it could materially and adversely affect our ability to continue to publish the co-developed game.
In addition, we do not currently offer our games on all mobile devices. If the mobile devices on which our games are available decline in popularity or become obsolete faster than anticipated, we could experience a decline in revenue and may not achieve the anticipated return on our development efforts.
If the mobile devices on which our games are available decline in popularity or become obsolete faster than anticipated, we could experience a decline in revenue and may not achieve the anticipated return on our development efforts.
The perceived value of our virtual currency can be impacted by various actions that we take in our games, including offering discounts for virtual currency or giving away virtual currency in promotions. Managing game economies is difficult, and relies on our assumptions and judgment.
The perceived value of our virtual currency can be impacted by various actions that we take in our games, including offering discounts for virtual currency, giving away virtual currency in promotions, or providing other non-paid methods of obtaining virtual currency. Managing game economies is difficult, and relies on our assumptions and judgment.
Additionally, lingering impacts of the COVID-19 pandemic and current economic and political conditions, including inflation and higher interest rates, have disrupted capital markets, and if we seek to access additional capital or increase our borrowing, there can be no assurance that debt or equity financing may be available to us on favorable terms, if at all.
Additionally, current economic and political conditions, including inflation and higher interest rates, have disrupted capital markets, and if we seek to access additional capital or increase our borrowing, there can be no assurance that debt or equity financing may be available to us on favorable terms, if at all.
Our competitors that develop mobile and web games in the social casino gaming category vary in size and offerings and include companies such as Aristocrat, DoubleU, Huuuge Games, Playtika, SciPlay, Scopely, Zynga, and others.
Our competitors that develop mobile and web games in the social casino gaming category vary in size and offerings and include companies such as Aristocrat, DoubleU, Huuuge Games, Playtika, SciPlay, Scopely, Zynga (owned by Take-Two Interactive), and others.
Our business could be harmed if: • the platform providers discontinue or limit our access to their platforms; • governments or private parties, such as internet providers, impose bandwidth restrictions, increase charges, or restrict or prohibit access to those platforms; • the platforms increase the fees they charge us or change the ways in which their fees are determined; • the platforms modify their algorithms, discovery mechanisms, communication channels available to developers, respective terms of service, or other policies; • the platforms decline in popularity; • the platforms adopt changes or updates to their technology that impede integration with other software systems or otherwise require us to modify our technology or update our games in order to ensure players can continue to access our games and content with ease; • the platforms elect or are required to change how they label free-to-play games or take payment for in-game purchases; • the platforms block or limit access to the genres of games that we provide in any jurisdiction; • the platforms impose restrictions or spending caps or make it more difficult for players to make in- game purchases of virtual items; • the platforms change how the personal information of players is made available to developers or develop or expand their own competitive offerings; or • we are unable to comply with the platform providers’ terms of service. 21 In addition, third-party platforms also impose certain file size limitations, which limits our ability to create software with additional features that would result in a larger size than the platform providers would support.
Our business could be harmed if: • the platform providers discontinue or limit our access to their platforms; • governments or private parties, such as Internet providers, impose bandwidth restrictions, increase charges, or restrict or prohibit access to those platforms; • the platforms increase the fees they charge us or change the ways in which their fees are determined; • the platforms modify their algorithms, discovery mechanisms, communication channels available to developers, respective terms of service, or other policies; • the platforms decline in popularity; • the platforms adopt changes or updates to their technology that impede integration with other software systems or otherwise require us to modify our technology or update our games in order to ensure players can continue to access our games and content with ease; • the platforms elect or are required to change how they label free-to-play games or take payment for in-game purchases; • the platforms block or limit access to the genres of games that we provide in any jurisdiction; • the platforms impose restrictions or spending caps or make it more difficult for players to make in-game purchases of virtual items; • the platforms change how the personal information of players is made available to developers or develop or expand their own competitive offerings; or • we are unable to comply with the platform providers’ terms of service.
If companies or governmental entities block or limit such access or otherwise adopt policies restricting players from playing our games, our business could be negatively impacted and could lead to the loss or slower growth of our player base.
If companies or governmental entities block or limit such access or otherwise adopt policies restricting players from playing our games, our business could be negatively impacted and could lead to the loss or slower growth of our player base. Our business depends on the growth and maintenance of wireless communications infrastructure.
Certain of our key metrics, including Daily Active Users, or DAU, Monthly Active Users, or MAU, Average Daily Revenue per DAU, or ARPDAU, Daily Paying Users, or DPU, and Daily Payer Conversion, are calculated using data tracked by our internal analytics systems based on tracking activity of player accounts.
Certain of our key metrics, including Daily Active Users, or DAU, Monthly Active Users, or MAU, Average Daily Revenue per DAU, or ARPDAU, Daily Paying Users, or DPU, and Daily Payer Conversion, as well as metrics relating to our playAWARDS loyalty program, are calculated using data tracked by our internal analytics systems based on tracking activity of player accounts.
For example, we use licensed intellectual property from certain parties such as MGM, Tetris®, and Konami Gaming as creative assets in our games.
For example, we use licensed intellectual property from certain parties such as MGM, Tetris®, and Konami Gaming in our games and for marketing and promoting our games.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal business operations are located in offices owned by us in Las Vegas, Nevada. We lease facilities in nine locations throughout the world, including San Francisco, California; Los Angeles, California; Portland, Oregon; Austin, Texas; Tel-Aviv, Israel; Hong Kong; Belgrade, Serbia; Hanoi, Vietnam; and Singapore for our game development and operation functions.
Biggest changeITEM 2. PROPERTIES Our principal business operations are located in offices owned by us in Las Vegas, Nevada. We lease facilities in eight locations throughout the world, including San Francisco, California; Santa Monica, California; Portland, Oregon; Tel-Aviv, Israel; Hong Kong; Belgrade, Serbia; Hanoi, Vietnam; and Singapore for our game development and operation functions.
We believe our existing facilities are sufficient for our current needs. We may add new facilities and expand our existing facilities as we add employees and expand into new locations. We believe suitable additional space will be available as needed to accommodate our needs.
We believe our existing facilities are sufficient for our current needs. We may add new facilities and expand our existing facilities as we add employees and expand into new locations. We believe suitable additional space will be available as needed to accommodate our needs. ITEM 3.
Added
LEGAL PROCEEDINGS See discussion of legal proceedings in Note 18— Commitments and Contingencies in the accompanying consolidated financial statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 51 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company publicly announced the extension of such time period on November 8, 2022. See Note 17 of the notes to consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information relating to share repurchases. 2. Average price paid per share includes costs associated with the repurchases. 3.
Biggest changeSee Note 19— Stockholders’ Equity of the notes to consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information relating to share repurchases. ITEM 6. [RESERVED] 54
Total return equals stock price appreciation plus reinvestment of dividends. 50 The performance graph should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Exchange Act of 1934, except to the extent the Company specifically incorporates the performance graph by reference therein.
Total return equals stock price appreciation plus reinvestment of dividends. 52 The performance graph should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Exchange Act of 1934, except to the extent the Company specifically incorporates the performance graph by reference therein.
Holders of our Common Stock As of February 28, 2023, there were 177 holders of record of our Class A common stock, five holders of record of our Class B common stock and five holders of record of our Warrants. The number of record holders does not include Depository Trust Company participants or beneficial owners holding shares through nominee names.
Holders of our Common Stock As of February 29, 2024, there were 131 holders of record of our Class A common stock, five holders of record of our Class B common stock and five holders of record of our Warrants. The number of record holders does not include Depository Trust Company participants or beneficial owners holding shares through nominee names.
Recent Sales of Unregistered Securities None Use of Proceeds None Issuer Purchases of Equity Securities The following table provides information about share repurchases made by us of our Class A common stock during the quarter ended December 31, 2022: 51 Period Total Number of Shares Purchased 1 Average Price Paid per Share 2 Total Number of Shares Purchased as Part of a Publicly Announced Program Dollar Value of Shares that May Yet be Purchased Under the Program 3 (In thousands) October 1, 2022 - October 31, 2022 — $ — — $ 50,000 November 1, 2022 - November 30, 2022 243,492 $ 4.17 243,492 $ 48,989 December 1, 2022 - December 31, 2022 922,293 $ 3.93 922,293 $ 45,381 1.
Recent Sales of Unregistered Securities None Use of Proceeds None 53 Issuer Purchases of Equity Securities The following table provides information about share repurchases made by us of our Class A common stock during the quarter ended December 31, 2023: Period Total Number of Shares Purchased 1 Average Price Paid per Share 2 Total Number of Shares Purchased as Part of a Publicly Announced Program Dollar Value of Shares that May Yet be Purchased Under the Program 3 (In thousands) October 1, 2023 - October 31, 2023 406 $ 3.12 — $ 30,000 November 1, 2023 - November 30, 2023 65,295 2.48 — 50,000 December 1, 2023 - December 31, 2023 — — — 50,000 1.
Dividend Policy We do not anticipate paying cash dividends on our shares of Class A common stock or Class B common stock on a go-forward basis.
Dividend Policy We do not anticipate paying cash dividends on our shares of Class A common stock or Class B common stock for the foreseeable future.
Removed
Subsequent to December 31, 2022, the Company acquired an additional 1.3 million shares of Class A common stock under this program at an aggregate purchase price of $5.4 million and an average purchase price of $4.29 per share. ITEM 6. [RESERVED] 52
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These amounts consist entirely of shares surrendered to satisfy tax withholding obligations upon the vesting of equity awards under our 2021 Equity Incentive Plan (as amended, the “Plan”).
Added
Under the Plan and applicable award agreements, the Company has the discretionary right to collect payment of mandatory tax withholding obligations by deducting from the shares otherwise deliverable to a participant upon vesting and settlement of an award under the Plan a number of shares having a fair market value equal or less than such participant’s tax withholding obligations.
Added
All shares so deducted from shares that otherwise would be deliverable to participants under the Plan are considered repurchased pursuant to the terms of the Plan and applicable award agreements and not pursuant to any publicly announced share repurchase program. 2. Average price paid per share includes costs associated with the repurchases. 3.
Added
On November 1, 2023, the Company's Board of Directors extended the stock repurchase program through November 10, 2024 and increased the remaining amount authorized to $50.0 million. The Company publicly announced such extension and increase on November 2, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(2) Amounts reported (i) during the year ended December 31, 2022 represent a non-cash impairment charge related to the suspension of Kingdom Boss development, fees related to evaluating various merger and acquisition opportunities, and fees related to the Tender Offer for the Warrants, (ii) during the year ended December 31, 2021 represent severance-related costs and fees related to evaluating various merger and acquisition opportunities, and (iii) during the year ended December 31, 2020 include $20.0 million resulting from the termination of the profit share provision of the MGM Marketing Agreement as further discussed in Note 4 — Related-Party Transactions to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 57 Results of Operations Comparison of the year ended December 31, 2022 versus the year ended December 31, 2021 The following table summarizes our consolidated results of operations for the years ended December 31, 2022 and 2021 (in thousands, except percentages): Years Ended December 31, 2022 2021 $ Change % Change Net revenue $ 290,309 $ 287,419 $ 2,890 1.0 % Operating expenses 318,390 290,409 27,981 9.6 % Operating loss (28,081) (2,990) (25,091) 839.2 % Net (loss) income (17,783) 10,737 (28,520) (265.6) % AEBITDA 38,253 39,546 (1,293) (3.3) % Net (loss) income margin (6.1) % 3.7 % (9.8)pp (264.9) % AEBITDA margin 13.2 % 13.8 % (0.6)pp (4.3) % pp = percentage points Revenue and Key Performance Indicators (in thousands, except percentages and ARPDAU): Years Ended December 31, 2022 2021 $ Change % Change Virtual currency $ 261,620 $ 280,087 $ (18,467) (6.6) % Advertising 21,839 6,964 14,875 213.6 % Other revenue 6,850 368 6,482 1761.4 % Net revenue $ 290,309 $ 287,419 $ 2,890 1.0 % Average DAU 1,917 1,244 673 54.1 % Average MAU 7,932 4,111 3,821 92.9 % Average DPU 29 34 (5) (14.7 %) Average Daily Payer Conversion 1.5 % 2.7 % (1.2)pp (44.4 %) ARPDAU (in dollars) $ 0.41 $ 0.63 $ (0.22) (34.9 %) pp = percentage points Revenue information by geography is summarized as follows (in thousands, except percentages): Years Ended December 31, 2022 2021 Change % Change United States $ 253,556 $ 250,252 $ 3,304 1.3 % North America (excluding United States) 14,161 15,692 (1,531) (9.8) % Other 22,592 21,475 1,117 5.2 % Net revenue $ 290,309 $ 287,419 $ 2,890 1.0 % Net revenue increased $2.9 million, or 1.0%, to $290.3 million during the year ended December 31, 2022 compared to $287.4 million during the year ended December 31, 2021.
Biggest changeThe following table shows net revenues and key performance indicators for our playGAMES division: Year Ended December 31, 2022 2021 Change % Change Virtual currency $ 261,620 $ 280,087 $ (18,467) (6.6) % Advertising 21,839 6,964 14,875 213.6 % Other revenue 1,017 368 649 176.4 % Net revenue $ 284,476 $ 287,419 $ (2,943) (1.0) % Average DAU 1,917 1,244 673 54.1 % Average MAU 7,932 4,111 3,821 92.9 % Average DPU 29 34 (5) (14.7) % Average Daily Payer Conversion 1.5 % 2.7 % (1.2)pp (44.4) % ARPDAU (in dollars) $ 0.41 $ 0.63 (0.22) (34.9) % pp = percentage points Net revenue decreased $2.9 million, or 1.0%, to $284.5 million during the year ended December 31, 2022 compared to $287.4 million during the year ended December 31, 2021.
Daily Paying Users (“DPU”) Daily Paying Users ("DPU") is defined as the number of individuals who made a purchase in a game during a particular day. As with DAU and MAU, we track DPU based on account activity.
Daily Paying Users (“DPU”) DPU is defined as the number of individuals who made a purchase in a game during a particular day. As with DAU and MAU, we track DPU based on account activity.
The term "Average DPU" is defined as as the average of the DPU, determined as described above, for each day during the period presented. We use DPU and Average DPU to help us understand the size of our active player base that makes in-game purchases. This focus directs our strategic goals in setting player acquisition and pricing strategy.
The term "Average DPU" is defined as the average of the DPU, determined as described above, for each day during the period presented. We use DPU and Average DPU to help us understand the size of our active player base that makes in-game purchases. This focus directs our strategic goals in setting player acquisition and pricing strategy.
Average Daily Revenue Per DAU (“ARPDAU”) Average Revenue Per DAU ("ARPDAU") is defined for a given period as the average daily revenue per Average DAU, and is calculated as game and advertising revenue for the period, divided by the number of days in the period, divided by the Average DAU during the period.
Average Daily Revenue Per DAU (“ARPDAU”) ARPDAU is defined for a given period as the average daily revenue per Average DAU, and is calculated as game and advertising revenue for the period, divided by the number of days in the period, divided by the Average DAU during the period.
Our key performance metrics are impacted by several factors that could cause them to fluctuate on a quarterly basis, such as platform providers’ policies, seasonality, player connectivity, and the addition of new content to games. We believe these measures are useful to investors for the same reasons. In addition, we also present certain non-GAAP performance measures.
Our key performance metrics are impacted by several factors 56 that could cause them to fluctuate on a quarterly basis, such as platform providers’ policies, seasonality, player connectivity, and the addition of new content to games. We believe these measures are useful to investors for the same reasons. In addition, we also present certain non-GAAP performance measures.
Higher tiers provide access to a VIP player portal where players can view and purchase special chip bundles, redeem loyalty points for a curated set of rewards, and communicate directly with a dedicated personal host. The VIP player portal, concierge, and host programs, enhance the in-game and real-world reward experience with both in-game and in-person, invitation-only special events.
Higher tiers provide access to a myVIP player portal where players can view and purchase special chip bundles, redeem loyalty points for a curated set of rewards, and communicate directly with a dedicated personal host. The VIP player portal, concierge, and host programs, enhance the in-game and real-world reward experience with both in-game and in-person, invitation-only special events.
Through our self-service platform, awards partners can launch new rewards, make changes to existing rewards, and in real time see how players are engaging with their brands. The platform tools also provide awards partners the ability to measure the off-line value our players generate as consumers and patrons of their real-world establishments.
Through our self-service platform, rewards partners can launch new rewards, make changes to existing rewards, and in real time see how players are engaging with their brands. The platform tools also provide rewards partners the ability to measure the off-line value our players generate as consumers and patrons of their real-world establishments.
Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our estimates are based on our 66 historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We define AEBITDA as net income before interest, income taxes, depreciation and amortization, restructuring and related costs (consisting primarily of severance and other restructuring related costs), stock-based compensation expense, changes in fair value of warrant liabilities, and other income and expense items (including special infrequent items, foreign currency gains and losses, and other non-cash items).
We define Consolidated AEBITDA as net income before interest, income taxes, depreciation and amortization, restructuring and related costs (consisting primarily of severance and other restructuring related costs), stock-based compensation expense, changes in fair value of warrant liabilities, and other income and expense items (including special infrequent items, foreign currency gains and losses, and other non-cash items).
The program is enabled by our playAWARDS platform which consists of a robust suite of tools that enable our awards partners to manage their rewards in real time, measure the value of our players’ engagement, and gain insight into the effectiveness and value they derive from the program.
The program is enabled by our playAWARDS platform which consists of a robust suite of tools that enable our rewards partners to manage their rewards in real time, measure the value of our players’ engagement, and gain insight into the effectiveness and value they derive from the program.
Players can earn loyalty points through a variety of activities, including but not limited to playing the Company’s games, engaging with in-game advertising, engaging with marketing emails, and logging into the game. The loyalty points can be redeemed for rewards offered by the Company’s awards partners.
Players can earn loyalty points through a variety of activities, including but not limited to playing the Company’s games, engaging with in-game advertising, engaging with marketing emails, and logging into the game. The loyalty points can be redeemed for rewards offered by the Company’s rewards partners.
Our player acquisition strategy is centered on a payback period methodology, and we strive to optimize spend between the acquisition of new players and the reactivation of inactive players. 54 • Player Monetization— Our revenue to date has been primarily driven through the sale of virtual currency.
Our player acquisition strategy is centered on a payback period methodology, and we strive to optimize spend between the acquisition of new players and the reactivation of inactive players. • Player Monetization— Our revenue to date has been primarily driven through the sale of virtual currency.
Business Combinations The Company applies the provisions of ASC 805, Business Combination and allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.
Business Combinations The Company applies the provisions of ASC 805, Business Combinations and allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.
Players who install our games receive free virtual currency upon the initial launch of the game, and they may also collect virtual currency free of charge at periodic intervals or through targeted marketing promotions. Players may exhaust the free virtual currency 53 and may choose to purchase additional virtual currency.
Players who install our games receive free virtual currency upon the initial launch of the game, and they may also collect virtual currency free of charge at periodic intervals or through targeted marketing promotions. Players may exhaust the free virtual currency and may choose to purchase additional virtual currency.
Additionally, players can send free “gifts” of virtual currency to their friends on Facebook. Our revenue from virtual currency has been generated world-wide, but is largely concentrated in North America. We also generate revenue from in-game advertising.
Additionally, players can send free “gifts” of virtual currency to their friends on Facebook. Our revenue from virtual currency has been generated world-wide, but is largely concentrated in North America. 55 We also generate revenue from in-game advertising.
The real-world rewards we offer to our players are provided at no cost to us by our awards partners, and there is no obligation for us to pay or otherwise compensate either our awards partners or players for any player redemptions under our awards partner agreements.
The real-world rewards we offer to our players are provided at no cost to us by our rewards partners, and there is no obligation for us to pay or otherwise compensate either our rewards partners or players for any player redemptions under our rewards partner agreements.
The preparation of these 62 consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.
Daily Payer Conversion Daily Payer Conversion is defined as DPU as a percentage of DAU on a particular day. Daily Player Conversion is also sometimes referred to as "Percentage of Paying Users" or "PPU". The term "Average Daily Payer Conversion" is defined as the the Average DPU divided by Average DAU for a given period.
Daily Payer Conversion Daily Payer Conversion is defined as DPU as a percentage of DAU on a particular day. Daily Payer Conversion is also sometimes referred to as "Percentage of Paying Users" or "PPU". The term "Average Daily Payer Conversion" is defined as the Average DPU divided by Average DAU for a given period.
Payment processing fees are recorded as a component of “Cost of revenue” in the accompanying Consolidated Statements of Operations. The Company reports its advertising revenue net of amounts retained by advertising service providers.
Payment processing 68 fees are recorded as a component of “Cost of revenue” in the accompanying Consolidated Statements of Operations. The Company reports its advertising revenue net of amounts retained by advertising service providers.
The Company has determined the advertising service provider to be its customer and displaying the advertisements within its games is identified 64 as the single performance obligation.
The Company has determined the advertising service provider to be its customer and displaying the advertisements within its games is identified as the single performance obligation.
The income tax benefit for the year ended December 31, 2022 reflected an effective income tax rate of 24.6%, which was greater than the statutory tax rate of 21% primarily due to benefits from the exercise of non-qualified stock options, state taxes, and research and development credits.
The income tax benefit reflected an effective income tax rate of 24.6% for the year ended December 31, 2022, which was greater than the statutory federal rate of 21.0% primarily due to benefits from the exercise of non-qualified stock options, state taxes, and research and development credits.
We continually evaluate these programs through an iterative feedback process with our players and awards partners and update them so that both our players and awards partners are able to optimize their personalized experience. As a result, we continuously incur expenses to enhance and update these programs.
We continually evaluate these programs through an iterative feedback process with our players and rewards partners and update them so that both our players and rewards partners are able to optimize their personalized experience. As a result, we continuously incur expenses to enhance and update these programs.
There is no obligation for the Company to pay or otherwise compensate the Company’s awards partners for any player redemptions under the Company’s awards partner agreements. In addition, both paying and non-paying players can earn loyalty points. Therefore, the loyalty points earned by players are marketing offers and do not provide players with material rights.
There is no obligation for the Company to pay or otherwise compensate the Company’s rewards partners for any player redemptions under the Company’s rewards partner agreements. In addition, both paying and non-paying players can earn loyalty points. Therefore, the loyalty points earned by 67 players are marketing offers and do not provide players with material rights.
As with DAU, an individual who plays two different PLAYSTUDIOS games in the same month is counted as two MAU while an individual who plays the same game on two different devices is counted as one MAU, and an individual who plays two different Brainium games on the same day is counted as two MAU and an individual who plays the same Brainium game on two different devices is also counted as two MAU.
As with DAU, an individual who plays two different non-Brainium games in the same month is counted as two MAU while an individual who plays the same non-Brainium game on two different devices is counted as one MAU, and an individual who plays two different Brainium games on the same day is counted as two MAU while an individual who plays the same Brainium game on two different devices is also counted as two MAU.
We also use AEBITDA Margin, another non-GAAP measure, which we calculate as the percentage of AEBITDA to revenue. We use AEBITDA and AEBITDA Margin to monitor and evaluate the performance of our business operations, facilitate internal comparisons of our operating performance, and to analyze and evaluate decisions regarding future budgets and initiatives.
We also use Consolidated AEBITDA Margin, another non-GAAP measure, which we calculate as Consolidated AEBITDA as a percentage of net revenue. We use Consolidated AEBITDA and Consolidated AEBITDA Margin to monitor and evaluate the performance of our business operations, facilitate internal comparisons of our operating performance, and to analyze and evaluate decisions regarding future budgets and initiatives.
Key Performance Indicators and Non-GAAP Measures We manage our business by regularly reviewing several key operating metrics to track historical performance, identify trends in player activity, and set strategic goals for the future.
Key Performance Indicators We manage our business by regularly reviewing several key operating metrics to track historical performance, identify trends in player activity, and set strategic goals for the future.
The rewards are provided by our collection of awards partners, with the majority of whom provide their rewards at no cost to us, in exchange for product integration, marketing support, and participation in our loyalty program.
The rewards are provided by our collection of rewards partners, with the majority of rewards partners providing their rewards at no cost to us, in exchange for product integration, marketing support, and participation in our loyalty program.
The decrease was due to a decline in virtual currency revenue. As a percentage of net revenue, cost of revenue decreased from 31.9% for the year ended December 31, 2021 to 29.4% for the year ended December 31, 2022.
The decrease was due to a decline in virtual currency revenue. As a percentage of net revenue, cost of revenue decreased from 29.4% for the year ended December 31, 2022 to 25.0% for the year ended December 31, 2023.
During the year ended December 31, 2022, investing activities used $102.3 million of net cash as compared to $56.9 million during the year ended December 31, 2021.
Investing Activities Year Ended December 31, 2023 Compared to Year Ended December 31, 2022. During the year ended December 31, 2023, investing activities used $32.3 million of net cash as compared to $102.3 million during the year ended December 31, 2022.
We believe that our existing cash and cash equivalents, the cash generated from operations, and the borrowing capacity under our Credit Agreement as described below will be sufficient to fund our operations and capital expenditures for at least the next twelve (12) months.
Historically, we have funded our operations, including capital expenditures, primarily through cash flow from operating activities. We believe that our existing cash and cash equivalents, the cash generated from operations, and the borrowing capacity under our Credit Agreement as described below will be sufficient to fund our operations and capital expenditures for at least the next twelve (12) months.
The increase of cash used in investing activities was primarily due to the $70.4 million of cash paid related to the Brainium and WonderBlocks acquisitions and $10.0 million of additional property and equipment purchased in the year ended December 31, 2022 compared to the prior year.
The decrease of cash used in investing activities was primarily due to the $70.4 million of cash paid related to the Brainium and WonderBlocks acquisitions and $5.6 million of additional property and equipment purchased in the year ended December 31, 2022 compared to the current year.
On May 13, 2022, the Company entered into the Amendment No. 1 to the Credit Agreement, which amended the Credit Agreement to, among other things, exclude from the definition of Fixed Charge Coverage Ratio certain funds, up to $15,000,000, expended or to be expended by the Company in connection with the Tender Offer as defined and described in Note 10 - Warrant Liabilities in the accompanying consolidated financial statements.
On May 13, 2022, the Company entered into the Amendment No. 1 to the Credit Agreement, which amended the Credit Agreement to, among other things, exclude from the definition of Fixed Charge Coverage Ratio certain funds, up to $15,000,000, expended or to be expended by the Company in connection with the Tender Offer.
Key Performance Indicators Daily Active Users (“DAU”) Daily Active Users ("DAU") is defined as the number of individuals who played a game on a particular day. We track DAU by the player ID, which is assigned for each game installed by an individual.
Key Performance Indicators - playGAMES Daily Active Users (“DAU”) DAU is defined as the number of individuals who played a game on a particular day. For Tetris and our free-to-play social casino games, we track DAU by the player ID, which is assigned for each game installed by an individual.
As a percentage of net revenue, research and development expenses increased from 21.3% for the year ended December 31, 2021 to 21.8% for the year ended December 31, 2022. General and Administrative General and administrative expenses increased by $12.4 million, or 44.3%, during the year ended December 31, 2022 compared to the year ended December 31, 2021.
As a percentage of net revenue, research and development expenses increased from 21.8% for the year ended December 31, 2022 to 22.6% for the year ended December 31, 2023. General and Administrative General and administrative expenses increased by $4.8 million, or 11.9%, during the year ended December 31, 2023 compared to the year ended December 31, 2022.
Provision for Income Taxes Income tax benefit was approximately $5.8 million for the year ended December 31, 2022, as compared to an income tax benefit of $0.3 million for the year ended December 31, 2021.
Provision for Income Taxes Income tax expense was approximately $16.9 million for the year ended December 31, 2023, as compared to an income tax benefit of $5.8 million for the year ended December 31, 2022.
The decrease was due to an increase in advertising and other revenue which do not incur platform fees, and a reduction in royalty expenses associated with our revenue. Selling and Marketing Selling and marketing expenses increased by $1.8 million, or 2.2%, during the year ended December 31, 2022 compared to the year ended December 31, 2021.
The decrease was due to an increase in advertising revenue which does not incur platform fees, and a reduction in royalty expenses associated with our revenue. Selling and Marketing Selling and marketing expenses decreased by $6.5 million, or 8.0%, during the year ended December 31, 2023 compared to the year ended December 31, 2022.
As a percentage of net revenue, selling and marketing expenses increased from 27.5% for the year ended December 31, 2021 to 27.8% for the year ended December 31, 2022. Research and Development Research and development expenses increased by $2.0 million, or 3.2%, during the year ended December 31, 2022 compared to the year ended December 31, 2021.
As a percentage of net revenue, selling and marketing expenses decreased from 27.8% for the year ended December 31, 2022 to 23.9% for the year ended December 31, 2023. Research and Development Research and development expenses increased by $7.0 million, or 11.0%, during the year ended December 31, 2023 compared to the year ended December 31, 2022.
As of December 31, 2022, we do not have any outstanding amounts under the Credit Agreement. 61 Cash Flows The following table presents a summary of our cash flows for the periods indicated (in thousands): Years Ended December 31, 2022 2021 Net cash provided by operating activities $ 33,384 $ 33,876 Net cash used in investing activities (102,349) (56,936) Net cash (used in) provided by financing activities (9,571) 186,892 Effect of exchange rate on cash and cash equivalents (966) 743 (Decrease) increase in cash and cash equivalents $ (79,502) $ 164,575 Operating Activities Year Ended December 31, 2022 Compared to Year Ended December 31, 2021.
As of December 31, 2023, we do not have any outstanding amounts under the Credit Agreement. 65 Cash Flows The following table presents a summary of our cash flows for the periods indicated (in thousands): Years Ended December 31, 2023 2022 Net cash provided by operating activities $ 51,724 $ 33,384 Net cash used in investing activities (32,306) (102,349) Net cash used in financing activities (20,184) (9,571) Effect of exchange rate on cash and cash equivalents (345) (966) Decrease in cash and cash equivalents $ (1,111) $ (79,502) Operating Activities Year Ended December 31, 2023 Compared to Year Ended December 31, 2022.
The increase was primarily due to $1.2 million of additional payroll expenses, $0.8 million of additional outside services, $0.7 million of additional stock-based compensation, and $0.3 million of other selling and marketing expenses. This increase was partially offset by a reduction of user acquisition costs of $1.2 million.
The decrease was primarily due to a $8.4 million reduction of user acquisition costs. This increase was partially offset by a $1.1 million increase of payroll expenses and $0.8 million increase of other selling and marketing expenses.
The increase in our effective tax rate was partially offset by the reduction of our foreign tax credit carryforward and conversion to foreign tax deductions, as well as a valuation allowance on a portion of our California research credits..
The increase in our effective tax rate was partially offset by the reduction of our foreign tax credit carryforward and conversion to foreign tax deductions, as well as a valuation allowance on a portion of our California research credits. Comparison of the year ended December 31, 2022 versus the year ended December 31, 2021 See Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of the 2021 Annual Report on Form 10-K for our results of operations for the year ended December 31, 2021 as compared to the year ended December 31, 2020.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of the 2022 Annual Report on Form 10-K for our results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021, with the exception of Net Revenue by Segment , which is detailed below.
We use ARPDAU as a measure of overall monetization of our players. Non-GAAP Measures Adjusted EBITDA (“ AEBITDA ”) and AEBITDA Margin Adjusted EBITDA, or AEBITDA, as used herein, is a non-GAAP financial performance measure that is presented as a supplemental disclosure and is reconciled to net income as the most directly comparable GAAP measure.
Non-GAAP Measures Consolidated AEBITDA and Consolidated AEBITDA Margin Consolidated AEBITDA, as used herein, is a non-GAAP financial performance measure that is presented as a supplemental disclosure and is reconciled to net income as the most directly comparable GAAP measure.
AEBITDA and AEBITDA Margin as calculated herein may not be comparable to similarly titled measures and disclosures reported by other companies. 56 The following table sets forth the reconciliation of AEBITDA and AEBITDA Margin to net income and net income margin, the most directly comparable GAAP measure (in thousands, except percentages): Years Ended December 31, 2022 2021 2020 Net (loss) income $ (17,783) $ 10,737 $ 12,807 Depreciation & amortization 35,562 27,398 22,192 Income tax benefit (5,835) (258) (1,671) Stock-based compensation expense 17,727 4,455 3,519 Change in fair value of warrant liability (1,047) (13,933) — Change in fair value of contingent consideration (2,411) — — Special infrequent (1) — 7,500 1,427 Restructuring and related ( 2) 13,020 3,082 20,092 Other (980) 565 (392) AEBITDA 38,253 39,546 57,974 GAAP Revenue 290,309 287,419 269,882 Margin as a % of revenue Net (loss) income margin (6.1) % 3.7 % 4.7 % AEBITDA Margin 13.2 % 13.8 % 21.5 % (1) Amounts reported (i) during the year ended December 31, 2021 represent a transaction bonus and a charitable contribution per the terms of the merger agreement related to our business combination with Acies Acquisition Corp.
The following table sets forth the reconciliation of Consolidated AEBITDA and Consolidated AEBITDA Margin to net income and net income margin, the most directly comparable GAAP measure (in thousands, except percentages): Years Ended December 31, 2023 2022 2021 Revenue $ 310,886 $ 290,309 $ 287,419 Net (loss) income $ (19,393) $ (17,783) $ 10,737 Net (loss) income margin (6.2) % (6.1) % 3.7 % Adjustments: Depreciation & amortization 45,259 35,562 27,398 Income tax expense (benefit) 16,873 (5,835) (258) Stock-based compensation expense 18,722 17,727 4,455 Change in fair value of warrant liability (2,596) (1,047) (13,933) Change in fair value of contingent consideration (950) (2,411) — Special infrequent (1) — — 7,500 Restructuring and related ( 2) 8,584 13,020 3,082 Other (3) (4,207) (980) 565 Consolidated AEBITDA $ 62,292 $ 38,253 $ 39,546 Consolidated AEBITDA Margin 20.0 % 13.2 % 13.8 % (1) Amounts reported during the year ended December 31, 2021 represent a $5.0 million transaction bonus and a $2.5 million charitable contribution per the terms of the Merger Agreement.
Our other long-term liabilities in the consolidated balance sheet include unrecognized tax benefits and related interest and penalties. As of December 31, 2022, we had gross unrecognized tax benefits of $0.5 million and an additional $0.1 million for interest and penalties classified as long-term liabilities.
As of December 31, 2023, we had gross unrecognized tax benefits of $0.3 million and an additional $0.1 million for interest and penalties classified as long-term liabilities.
We believe that both measures are useful because they provide investors with information regarding our operating performance that is used by our management in its reporting and planning processes.
We believe that both measures are useful because they provide investors with information regarding our operating performance that is used by our management in its reporting and planning processes. Consolidated AEBITDA and Consolidated AEBITDA Margin as calculated herein may not be comparable to similarly titled measures and disclosures reported by other companies.
Other Income (Expense), Net The following table summarizes our consolidated non-operating income (expense) for the years ended December 31, 2022 and 2021 (in thousands, except percentages): Years Ended December 31, 2022 2021 $ Change % Change Change in fair value of warrant liabilities $ 1,047 $ 13,933 $ (12,886) (92.5) % Interest income (expense) 1,925 (235) 2,160 (919.1) % Other income (expense) 1,491 (229) 1,720 (751.1) % Total other income, net $ 4,463 $ 13,469 $ (9,006) (66.9) % The change in fair value of warrant liabilities is related to the warrants discussed in Note 8— Warrant Liabilities to our consolidated financial statements herein.
Other Income, Net The following table summarizes our consolidated other income, net for the years ended December 31, 2023 and 2022 (in thousands, except percentages): Years Ended December 31, 2023 2022 $ Change % Change Change in fair value of warrant liabilities $ 2,596 $ 1,047 $ 1,549 147.9 % Interest income, net 4,858 1,925 2,933 152.4 % Other income, net 513 1,491 (978) (65.6) % Total other income, net $ 7,967 $ 4,463 $ 3,504 78.5 % The change in fair value of warrant liabilities is related to the warrants discussed in Note 12— Warrant Liabilities to our consolidated financial statements herein.
Once obtained, virtual currency (either free or purchased) cannot be redeemed for cash nor exchanged for anything other than game play. When virtual currency is consumed in our games, the player could “win” and would be awarded additional virtual currency or could “lose” and lose the future use of that virtual currency.
When virtual currency is consumed in our games, the player could “win” and would be awarded additional virtual currency or could “lose” and lose the future use of that virtual currency.
Each of our legacy social casino games and our Tetris®-branded mobile game incorporate our unique playAWARDS loyalty program. Over our eleven-year history, we developed a portfolio of free-to-play social casino games that are considered to be among the most innovative and unique in the genre.
Over our twelve-year history, we developed a portfolio of free-to-play social casino games that are considered to be among the most innovative and unique in the genre. In 2021 we added our Tetris®-branded mobile game and in late 2022 we acquired Brainium, a developer and publisher of free-to-play casual games. Our games include the award-winning POP!
As such, an individual who plays two different PLAYSTUDIOS games on the same day is counted as two DAU while an individual who plays the same PLAYSTUDIOS game on two different devices is counted as one DAU. Brainium tracks DAU by app instance ID, which is assigned to each installation of a game on a particular device.
As such, an individual who plays two of these games on the same day is counted as two DAU while an individual who plays the same game on two different devices is counted as one DAU.
We use DAU and Average DAU as measures of audience engagement to help us understand the size of the active player base engaged with our games on a daily basis. 55 Monthly Active Users (“MAU”) Monthly Active Users ("MAU") is defined as the number of individuals who played a game in a particular month.
The term "Average DAU" is defined as the average of the DAU, determined as described above, for each day during the period presented. We use DAU and Average DAU as measures of audience engagement to help us understand the size of the active player base engaged with our games on a daily basis.
Virtual Currency 63 The Company develops and operates free-to-play games which are downloaded and played on social and mobile platforms. Players may collect virtual currency free of charge through the passage of time or through targeted marketing promotions. Additionally, players can send free “gifts” of virtual currency to their friends through interactions with certain social platforms.
Players may collect virtual currency free of charge through the passage of time or through targeted marketing promotions. Additionally, players can send free “gifts” of virtual currency to their friends through interactions with certain social platforms. Players may also purchase additional virtual currency through accepted payment methods offered by the respective platform.
The increase was primarily due to $6.2 million of additional stock-based compensation, $1.8 million of additional payroll expenses, and $0.3 million of other research and development expenses. This increase was partially offset by a reduction of $6.3 million of outside services expenses.
The increase was primarily due to an increase in additional payroll expenses of $3.8 million, an increase of IT expenses of $2.0 million, an increase in facilities costs of $1.0 million, and an increase in other research and development expenses of $0.2 million.
Operating Expenses The following table summarizes our consolidated operating expenses for the years ended December 31, 2022 and 2021 (in thousands, except percentages): Years Ended December 31, % of Net Revenue 2022 2021 $ Change % Change 2022 2021 Operating expenses: Cost of revenue $ 85,400 $ 91,642 $ (6,242) (6.8) % 29.4 % 31.9 % Selling and marketing 80,819 79,042 1,777 2.2 % 27.8 % 27.5 % Research and development 63,315 61,343 1,972 3.2 % 21.8 % 21.3 % General and administrative 40,274 27,902 12,372 44.3 % 13.9 % 9.7 % Depreciation and amortization 35,562 27,398 8,164 29.8 % 12.2 % 9.5 % Restructuring expenses 13,020 3,082 9,938 322.5 % 4.5 % 1.1 % Total operating expenses $ 318,390 $ 290,409 27,981 9.6 % 109.7 % 101.0 % Cost of Revenue Cost of revenue decreased by $6.2 million, or 6.8%, during the year ended December 31, 2022 compared to the year ended December 31, 2021.
The key performance indicators presented above are used by management to assess the playAWARDS segment's operating performance, however are not indicative revenue metrics. 59 Operating Expenses The following table summarizes our consolidated operating expenses for the years ended December 31, 2023 and 2022 (in thousands, except percentages): Years Ended December 31, % of Net Revenue 2023 2022 $ Change % Change 2023 2022 Operating expenses: Cost of revenue $ 77,800 $ 85,400 $ (7,600) (8.9) % 25.0 % 29.4 % Selling and marketing 74,360 80,819 (6,459) (8.0) % 23.9 % 27.8 % Research and development 70,298 63,315 6,983 11.0 % 22.6 % 21.8 % General and administrative 45,072 40,274 4,798 11.9 % 14.5 % 13.9 % Depreciation and amortization 45,259 35,562 9,697 27.3 % 14.6 % 12.2 % Restructuring expenses 8,584 13,020 (4,436) (34.1) % 2.8 % 4.5 % Total operating expenses $ 321,373 $ 318,390 $ 2,983 0.9 % 103.4 % 109.7 % Cost of Revenue Cost of revenue decreased by $7.6 million, or 8.9%, during the year ended December 31, 2023 compared to the year ended December 31, 2022.
Players may also purchase additional virtual currency through accepted payment methods offered by the respective platform. Once a purchase is completed, the virtual currency is deposited into the player’s account and is not separately identifiable from previously purchased virtual currency or virtual currency obtained by the player for free.
Once a purchase is completed, the virtual currency is deposited into the player’s account and is not separately identifiable from previously purchased virtual currency or virtual currency obtained by the player for free. Once obtained, virtual currency (either free or purchased) cannot be redeemed for cash nor exchanged for anything other than game play.
Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”).
Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Revenue Recognition Our revenue recognition policies described in Note 2— Summary Of Significant Accounting Policies requires us to make significant judgments and estimates, which include the consumption period.
During the year ended December 31, 2022, financing activities used $9.6 million of net cash, while financing activities provided $186.9 million of net cash during the year ended December 31, 2021.
During the year ended December 31, 2023, financing activities used $20.2 million of net cash, while financing activities used $9.6 million of net cash during the year ended December 31, 2022. This increase is primarily due to an increase of share repurchases made during the year ended December 31, 2022.
The increase was partially offset by $21.0 million of cash paid related to licensing agreements and $8.5 million in notes receivable from third-party game developers during the year ended December 31, 2021. Financing Activities Year Ended December 31, 2022 Compared to Year Ended December 31, 2021.
The decrease was partially offset by $4.4 million of cash paid related to licensing agreements in the current year and $1.6 million of other investing activities. Financing Activities Year Ended December 31, 2023 Compared to Year Ended December 31, 2022.
As a percentage of net revenue, general and administrative expenses increased from 9.7% for the year ended December 31, 2021, to 13.9% for the year ended December 31, 2022. Depreciation and Amortization Depreciation and amortization expenses increased by $8.2 million, or 29.8%, during the year ended December 31, 2022 compared to the year ended December 31, 2021.
The increase was primarily due to $4.6 million of additional payroll expenses and $0.2 million of other general and administrative costs. As a percentage of net revenue, general and administrative expenses increased from 13.9% for the year ended December 31, 2022, to 14.5% for the year ended December 31, 2023.
This increase was partially offset by a decrease of $1.0 million of amortization of internal use software as a result of the impairment of Kingdom Boss. As a percentage of net revenue, depreciation and amortization expenses increased from 9.5% for the year ended December 31, 2021 to 12.2% for the year ended December 31, 2022.
This decrease was offset by an increase of $2.6 million related to management restructurings and severance and an increase of $0.7 million related to other restructuring expenses. As a percentage of net revenue, restructuring expenses decreased from 4.5% for the year ended December 31, 2022 to 2.8% for the year ended December 31, 2023.
Interest income (expense) is related to the unused commitment fees and debt issue costs associated with the Credit Agreement and the Revolver, respectively, as discussed in Note 13— Long-Term Debt to our consolidated financial statements herein.
Interest income, net is related to interest earned on cash and cash equivalents offset by fees and expenses associated with the Credit Agreement as discussed in Note 15— Long-Term Debt to our consolidated financial statements herein. Other income, net primarily relates to gains or (losses) from equity investments.
Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of PLAYSTUDIOS, Inc. and its consolidated subsidiaries. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements.
The discussion and analysis should be read in conjunction with the audited consolidated financial statements and notes thereto contained in this Annual Report on Form 10-K. Unless the context otherwise requires, references to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of PLAYSTUDIOS, Inc. and its consolidated subsidiaries.
During the year ended December 31, 2022, operating activities provided $33.4 million of net cash as compared to $33.9 million during the year ended December 31, 2021. The decrease in net cash provided from operating activities was slightly down, but generally flat. Investing Activities Year Ended December 31, 2022 Compared to Year Ended December 31, 2021.
During the year ended December 31, 2023, operating activities provided $51.7 million of net cash as compared to $33.4 million during the year ended December 31, 2022. The increase in net cash provided from operating activities primarily related to the full year realization of the Brainium portfolio of games as well as increased advertising revenue from the Tetris game.
As a percentage of net revenue, restructuring expenses increased from 1.1% for the year ended December 31, 2021 to 4.5% for the year ended December 31, 2022.
As a percentage of net revenue, depreciation and amortization expenses increased from 12.2% for the year 60 ended December 31, 2022 to 14.6% for the year ended December 31, 2023. See Note 10— Intangible Assets and Internal-Use Software, Net .
The increase was primarily driven by increases in advertising and other revenue. Virtual currency revenue decreased $18.5 million, or 6.6%, to $261.6 million during the year ended December 31, 2022 compared to $280.1 million during the year ended December 31, 2021, primarily driven by the decline in DPU.
The decrease was primarily driven by $18.5 million decrease in virtual currency primarily driven by decreases in DPU and ARPDAU despite overall increases in DAU and MAU. DAU and MAU increased 54.1% and 92.9%, respectively, compared to year ended December 31, 2021, driven by the addition of the Brainium portfolio of games.
Liquidity and Capital Resources As of December 31, 2022, we had cash and cash equivalents of $134.0 million, which consisted of cash on hand and money market mutual funds. Historically, we have funded our operations, including capital expenditures, primarily through cash flow from operating activities.
(3) Amounts reported in “Other, net” include interest expense, interest income, gains/losses from investments, foreign currency gains/losses, and non-cash gains/losses on the disposal of assets. 64 Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $132.9 million, which consisted of cash on hand and money market mutual funds.
The income tax benefit reflected an effective income tax rate of negative 2.5% for the year ended December 31, 2021, which was less than the statutory federal rate of 21.0% primarily due to the fair value adjustment related to warrants issued which do not have a tax impact and research and development credits that may be utilized on our federal and state tax returns.
The income tax expense for the year ended December 31, 2023 reflected an effective income tax rate of negative 669.7%, which was less than the statutory tax rate of 21% primarily due to the recording of a valuation allowance on deferred tax assets, the effect of additional foreign taxes paid related to a settlement with the Israel Tax Authority, impacts from foreign branch income, and other nondeductible expenses.
Contractual Obligations, Commitments, and Contingencies The following table summarizes our contractual obligations as of December 31, 2022 (in thousands): Total Less than 1 year Years 2 and 3 Years 4 and 5 More than 5 years Operating leases $ 17,442 $ 5,085 $ 7,693 $ 4,282 $ 382 Minimum guarantee obligations 3,000 1,500 1,500 — — Total $ 20,442 $ 6,585 $ 9,193 $ 4,282 $ 382 Our capital requirements as of December 31, 2022, in connection with the WonderBlocks acquisition, ranges between $0.0 million and $2.5 million, subject to the satisfaction of certain product and financial milestones.
Contractual Obligations, Commitments, and Contingencies The following table summarizes our contractual obligations as of December 31, 2023 (in thousands): Total Less than 1 year Years 2 and 3 Years 4 and 5 More than 5 years Operating leases $ 10,655 $ 4,580 $ 4,317 $ 1,758 $ — Minimum guarantee obligations 31,760 7,760 12,000 12,000 — Other licensing agreements 7,400 7,400 — — — Total $ 49,815 $ 19,740 $ 16,317 $ 13,758 $ — Our other long-term liabilities in the consolidated balance sheet include unrecognized tax benefits and related interest and penalties.
Removed
The discussion and analysis should be read in conjunction with the audited consolidated financial statements and notes thereto contained in this Annual Report on Form 10-K. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this Annual Report on Form 10-K.
Added
This discussion contains forward-looking statements and involves numerous risks and uncertainties. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements.
Removed
We recently acquired Brainium, a developer and publisher of free-to-play casual games with industry leading user retention and engagement. Our games include the award-winning POP! Slots , myVEGAS Slots , my KONAMI Slots, myVEGAS Blackjack, myVEGAS Bingo, Tetris®, Solitaire, Spider Solitaire, Sudoku, and Mahjong.
Added
Slots , myVEGAS Slots , my KONAMI Slots, MGM Slots Live, myVEGAS Blackjack, myVEGAS Bingo, Tetris®, Solitaire, Spider Solitaire, Jumbline 2, Sudoku, and Mahjong.
Removed
For the year ended December 31, 2022, these loyalty points could have been exchanged for real-world rewards from 96 awards partners representing more than 210 hospitality, entertainment, and leisure brands across 105 countries and six continents.
Added
For our Brainium suite of casual games, we track DAU by app instance ID, which is assigned to each installation of a game on a particular device.
Removed
Impact of COVID-19 The COVID-19 pandemic and related containment and mitigation efforts, including social distancing, shelter-in-place, quarantine, and similar policies, practices, and governmental orders, have resulted in widespread disruption in global economies, productivity, and financial markets and have materially altered our day-to-day business operations.
Added
Monthly Active Users (“MAU”) MAU is defined as the number of individuals who played a game in a particular month.
Removed
We have followed guidance by the U.S., Israel, Hong Kong, and other applicable foreign and local governments to protect our employees and operations during the pandemic.
Added
We use ARPDAU as a measure of overall monetization of our active players. 57 Key Performance Indicators - playAWARDS Available Rewards Available Rewards is defined as the monthly average number of unique rewards available in our applications’ rewards stores. A reward appearing in more than one application’s reward store is counted only once.
Removed
We cannot predict potential future impacts of the COVID-19 pandemic or other future health epidemics or contagious disease outbreaks on our business or operations, but we will continue to actively monitor the related issues and may take further precautionary actions that alter our business operations, including as may be required by federal, state, local, or foreign authorities or that we determine are in the best interests of our employees, players, partners, and stockholders.
Added
A reward is counted only once irrespective of the inventory available through that reward. For example, one reward for a free night in a hotel room with ten rooms available for such free night is counted as one reward. Available Rewards only include real-world partner rewards and exclude PLAYSTUDIOS digital rewards.
Removed
In addition to the potential direct impacts to our business, the global economy has been, and is likely to continue to be, significantly weakened as a result of the actions taken in response to the COVID-19 pandemic, and future government intervention remains uncertain.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+2 added−2 removed2 unchanged
Biggest changeOur indirect foreign currency transaction exposure results mainly from the sale of our virtual currency to players outside of the U.S. While players outside of the U.S. make purchases in currencies other than the U.S. Dollar, we are paid by platform providers and record revenue in U.S. Dollars pursuant to the terms of the relevant contracts.
Biggest changeForeign Currency Risk Our functional currency is the U.S. Dollar and our revenues and expenses are primarily denominated in U.S. Dollars. Our indirect foreign currency transaction exposure results mainly from the sale of our virtual currency to players outside of the U.S. While players outside of the U.S. make purchases in currencies other than the U.S.
We also have foreign currency risks related to our operating expenses denominated in currencies other than the U.S. Dollar, including the Hong Kong Dollar, Euro, Serbian Dinar, Vietnamese Dong, and Singaporean Dollar. Accordingly, changes in exchange rates in the future may negatively affect our future operating results as expressed in U.S. Dollars.
We also have foreign currency risks related to our operating expenses denominated in currencies other than the U.S. Dollar, including the Hong Kong Dollar, Euro, Serbian Dinar, Vietnamese Dong, Singaporean Dollar, Mexican Peso, and Chilean Peso. Accordingly, changes in exchange rates in the future may negatively affect our future operating results as expressed in U.S. Dollars.
Therefore, fluctuations in interest rates will impact the amount of interest 65 expense we incur and have to pay. We did not have any borrowings outstanding under our Credit Agreement or Revolver at December 31, 2022 and December 31, 2021, respectively. We do not purchase or hold any derivative financial instruments for trading purposes.
Therefore, fluctuations in interest rates will impact the amount of interest expense we incur and have to pay. We did not have any borrowings outstanding under our Credit Agreement at December 31, 2023 and December 31, 2022, respectively. We do not purchase or hold any derivative financial instruments for trading purposes.
We have experienced and will continue to experience fluctuations in our net income as a result of transaction gains or losses related to remeasurement of our asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. A hypothetical 5% strengthening or weakening of the U.S.
We have experienced and will continue to experience fluctuations in our net income as a result of transaction gains or losses related to remeasurement of our asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded.
Investment Risk We had cash and cash equivalents including restricted cash and cash equivalents totaling $134.0 million and $213.5 million as of December 31, 2022 and December 31, 2021, respectively. Our investment policy and strategy primarily attempt to preserve capital and meet liquidity requirements without significantly increasing risk.
Investment Risk We had cash and cash equivalents totaling $132.9 million and $134.0 million as of December 31, 2023 and December 31, 2022, respectively. Our investment policy and strategy primarily attempt to preserve capital and meet liquidity requirements without significantly increasing risk. Our cash and cash equivalents primarily consist of cash on hand and money market mutual funds.
While we have the ability to change the foreign currency pricing of our virtual currency, sudden and significant changes in the exchange rates of the Canadian and Australian Dollars and Pound Sterling to the U.S. Dollar could have a material impact on our results of operations.
Dollar, we are paid by platform providers and record revenue in U.S. Dollars pursuant to the terms of the relevant contracts. While we have the ability to change the foreign currency pricing of our virtual currency, sudden and significant changes in the exchange rates of the 69 Canadian and Australian Dollars and Pound Sterling to the U.S.
We do not hedge our foreign currency exposure but may do so in the future. However, a significant portion of our headcount related expenses, consisting principally of salaries and related personnel expenses, as well as leases and certain other operating expenses, are denominated in New Israeli Shekels, or NIS.
Dollar could have a material impact on our results of operations. However, a significant portion of our headcount related expenses, consisting principally of salaries and related personnel expenses, as well as leases and certain other operating expenses, are denominated in New Israeli Shekels, or NIS.
Our cash and cash equivalents primarily consist of cash on hand and money market mutual funds. We have not entered into investments for trading or speculative purposes. Changes in rates would primarily impact interest income due to the relatively short-term nature of our investments.
We have not entered into investments for trading or speculative purposes. Changes in rates would primarily impact interest income due to the relatively short-term nature of our investments. A hypothetical 100 basis point change in interest rates would have increased or decreased our interest income for a twelve-month period by an immaterial amount.
Removed
A hypothetical 100 basis point change in interest rates would have increased or decreased our interest income for a twelve-month period by an immaterial amount. Foreign Currency Risk Our functional currency is the U.S. Dollar and our revenues and expenses are primarily denominated in U.S. Dollars.
Added
As of December 31, 2023, we entered into derivative contracts to purchase certain foreign currencies, including the NIS, at future dates. The notional value of amounts hedged was approximately $2.5 million, and all contracts are expected to mature during the upcoming 12 months.
Removed
Dollar would have increased or decreased our foreign currency gain or loss for a twelve-month period by an immaterial amount. 66
Added
Subsequent to December 31, 2023, we entered into additional derivatives contracts to purchase certain foreign currencies, including the NIS, at future dates. The notional value of amounts hedged was approximately $30.4 million, and all contracts are expected to mature within 12 months of the purchase date. 70

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