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What changed in PLAYSTUDIOS, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PLAYSTUDIOS, Inc.'s 2023 and 2024 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 2024 report.

+296 added−308 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-12)

Top changes in PLAYSTUDIOS, Inc.'s 2024 10-K

296 paragraphs added · 308 removed · 243 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

41 edited+5 added−9 removed105 unchanged
Biggest changeWe strive to comply with our privacy policy and respond to requests from our players to exercise such rights. However, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules and regulations to which we are subject.
Biggest changeHowever, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules and regulations to which we are subject. 13 See “Risk Factors — 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.
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.
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. 8 Targeted Strategic Acquisitions We continually seek, evaluate, and pursue strategic transactions which we believe will enhance our business as further described below.
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 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, 11 IGT, and Shaquille O’Neal among others, as creative assets in our games.
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.
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 9 genuine regard for one another — even when we disagree.
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
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.
Some of these laws and regulations authorize the governing agencies to investigate companies under their jurisdiction to ensure compliance, and to impose fines and other measures against companies who are not in compliance. The applicability of these laws and regulations to us, and their scope and interpretation, are constantly evolving, often uncertain, and may conflict between jurisdictions.
Some of these laws 12 and regulations authorize the governing agencies to investigate companies under their jurisdiction to ensure compliance, and to impose fines and other measures against companies who are not in compliance. The applicability of these laws and regulations to us, and their scope and interpretation, are constantly evolving, often uncertain, and may conflict between jurisdictions.
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.
Earn Real Rewards.” Our social casino games and our Tetris®-branded mobile games 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 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.
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.
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.
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.
Our game portfolio includes a diverse range of titles, from social casino and card games to puzzle and adventure games. We generate revenue primarily through the sale of in-game virtual currency and the monetization of player engagement.
Our game portfolio includes a diverse range of titles, from social casino to card games and puzzle games. We generate revenue primarily through the sale of in-game virtual currency and the monetization of player engagement.
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.
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.
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.
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, 2024, 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.
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 believe the combination of our more than 13 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.
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.
During the year ended December 31, 2024, 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.
Here again, our playAWARDS program affords us a distinct competitive advantage. Our Games Our portfolio includes 19 games. Many of our games are classic in nature with mass appeal due to their highly engaging game mechanics.
Here again, our playAWARDS program affords us a distinct competitive advantage. Our Games Our portfolio includes 20 games. Many of our games are classic in nature with mass appeal due to their highly engaging game mechanics.
Its mission is to educate and inform the public, policy makers, and regulators on what the industry does, how it works, and the value it generates for both the digital economy and people that play social games.
The ISGA's mission is to educate and inform the public, policy makers, and regulators on what the industry does, how it works, and the value it generates for both the digital economy and people that play social games.
The CCPA and CPRA could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities. Similar laws relating to data privacy and security have been adopted in Virginia and Colorado, and proposed in other states and at the federal level, and, if passed, such laws may have potentially conflicting requirements.
The CCPA and CPRA could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities. Similar laws relating to data privacy and security have been adopted in several other states, and proposed in other states and at the federal level, and, if passed, such laws may have potentially conflicting requirements.
Slots 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.
Slots 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. • Tetris Block Puzzle is a puzzle game with a Tetris twist. • Soul Battles, a block puzzle game with friends. • 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. 10 • 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 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.
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 13.1 million monthly active users for the year ended December 31, 2024.
The ISGA’s “Best Practice Principles” offer guidance to the industry on consumer protection, accountability, and transparency, while its research program provides insight for its key stakeholders. We are a member of the ISGA and our co-founder and Executive Vice President, Paul Mathews, is the current Chairman of the ISGA.
The ISGA’s “Best Practice Principles” offer guidance to the industry on consumer protection, accountability, and transparency, while its research program provides insight for its key stakeholders. Our co-founder and Executive Vice President, Paul Mathews, is the current Chairman of the ISGA.
In November of 2021, we acquired the rights to Tetris® on mobile devices, and in October of 2022 we acquired Brainium Studios LLC. Our intention is to continue to apply the resources obtained from becoming a public company and accelerate our growth through strategic acquisitions.
In November of 2021, we acquired the rights to Tetris® on mobile devices, in October of 2022 we acquired Brainium Studios LLC, and in 2024 we acquired Pixode Games Limited. Our intention is to continue to apply the resources obtained from becoming a public company and accelerate our growth through strategic acquisitions.
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.
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 in the Apple App Store and Google Play Store.
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.
Our curated collection of rewards partners represents unique brands including MGM Resorts International, Wolfgang Puck, Royal Caribbean Cruise Lines, and Cirque du Soleil. 5 Managing a loyalty program like playAWARDS requires a robust technology platform.
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.
Our loyalty platform allows us to provide an engaging enhancement to the primary gaming experience of our 13.1 million monthly active users for the year ended December 31, 2024.
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.
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.
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.
Our actual or perceived failure to comply with these laws and regulations could harm our business.” Human Capital We had 556 full-time and 12 part-time employees in ten studios located in eight countries as of December 31, 2024.
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.
If players prefer our competitors’ games over our own, our operating results could suffer. ” Intellectual Property We have 107 registered U.S. trademarks, 8 pending applications for U.S. trademarks, 19 issued U.S. patents, and 16 pending U.S. patent applications as of December 31, 2024.
We also engage regularly with our players at community events and other occasions associated with their reward redemptions. These opportunities enable us to glean additional insights from our players that inform our ongoing product refinements.
We continually assess the data about our players to develop insights that we can use to improve conversion. We also engage regularly with our players at community events and other occasions associated with their reward redemptions. These opportunities enable us to glean additional insights from our players that inform our ongoing product refinements.
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 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.
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 genres and related games we are currently focused on include casual (puzzle, match, bubble, word, card), social casino (poker, bingo, slots),and other evolving genres that fit with our overall strategy and criteria. 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.
See " Risk Factors — Our business is subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing, and which could subject us to claims or otherwise harm our business.
See " Risk Factors — Our business is subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing, and which could subject us to claims or otherwise harm our business. " We are a member of the International Social Games Association or ISGA, a worldwide representative body of the social games industry.
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.
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. Our average daily conversion rate of non-payers to payers was 0.8% for the year ended December 31, 2024.
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.
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. Driving demonstrable results is key to retaining our existing rewards partners and attracting new ones.
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.
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.
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.
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. Our founder-led management team includes industry-leading talent in the casino, leisure, and entertainment industries as well as seasoned game developers and operators.
Exclusive Rights to Tetris® Franchise For Mobile Devices The Tetris® brand is one of the leading and most distinctive video game brands and franchises in the world.
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. Exclusive Rights to Tetris® Franchise For Mobile Devices The Tetris® brand is one of the leading and most distinctive video game brands and franchises in the world.
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.
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 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.
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.
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.
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. 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.
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.
We launched our myVEGAS Bingo game in March 2021 and MGM Slots Live in October 2021. These games represent an extension of our addressable market and growth opportunity. We continue to look for opportunities to create new games.
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.
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.
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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.
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We believe the value of our playAWARDS program is tied to the breadth of rewards we make available to our players. Our ability to keep the program fresh and relevant is rooted in the value we deliver to our rewards partners.
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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.
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We strive to comply with our privacy policy and respond to requests from our players to exercise such rights.
Removed
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.
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Website and Available Information Our principal executive offices are located at 10150 Covington Cross Drive, Las Vegas, Nevada, 89144 and our telephone number is (725) 877-7000. Our website address is www.playstudios.com.
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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.
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Through a link on the Investors section of our website, we make the following filings available free of charge and as soon as reasonably practicable after they are electronically filed or furnished with the SEC: our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, and the rules and regulations promulgated thereunder.
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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.
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These filings are also available free of charge on the SEC’s website at www.sec.gov. The information contained on, or that can be accessed through, our website is not incorporated by reference into, and is not a part of, this filing. 14
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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.
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We believe we are well positioned as a gaming company with a robust loyalty program.
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" We are a member of the ISGA, which promotes best practices in gaming The International Social Games Association or ISGA is the worldwide representative body of the social games industry, a thriving segment of the entertainment and digital economies.
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See “Risk Factors — 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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

120 edited+35 added−28 removed431 unchanged
Biggest changeA 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. We also incur operating expenses denominated in the Hong Kong Dollar, Euro, Serbian Dinar, Vietnamese Dong, Singaporean Dollar, Mexican Peso, and Chilean Peso.
Biggest changeDollar and our revenues and expenses are reported in U.S. Dollars, we regularly incur operating expenses that are denominated in currencies other than the U.S. Dollar. 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.
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.
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 the existence of any additional waves of any pandemic, epidemic, or outbreak, disease severity and transmission rates, 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.
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.
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; • 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.
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.
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 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; 27 • 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.
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.
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.
Redemption of the outstanding Public Warrants as described above could force the holders of Public Warrants to: (i) exercise the Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so; (ii) sell the Public Warrants at the then-current market price when they might otherwise wish to hold their warrants; or (iii) accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, we expect would be substantially less than the market value of the Public Warrants.
Redemption of the outstanding Public Warrants as described above could force the holders of Public Warrants to: (i) exercise the Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so; (ii) sell the Public 48 Warrants at the then-current market price when they might otherwise wish to hold their warrants; or (iii) accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, we expect would be substantially less than the market value of the Public Warrants.
In addition, these platforms may dictate rules, conduct or technical features relating to the collection, storage, use, transmission, sharing and protection of personal information and other consumer data, which may result in substantial costs and may necessitate changes to our business practices, which in turn may compromise our growth strategy, 32 adversely affect our ability to attract, monetize or retain players, and otherwise adversely affect our business, reputation, legal exposures, financial condition and results of operations.
In addition, these platforms may dictate rules, conduct or technical features relating to the collection, storage, use, transmission, sharing and protection of personal information and other consumer data, which may result in substantial costs and may necessitate changes to our business practices, which in turn may compromise our growth strategy, adversely affect our ability to attract, monetize or retain players, and otherwise adversely affect our business, reputation, legal exposures, financial condition and results of operations.
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.
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.
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.
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.
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.
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.
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 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 23 for our operations.
The CCPA and CPRA could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities. There currently are a number of additional proposals related to data privacy or security pending before federal, state, and foreign legislative and regulatory bodies, and a number of U.S. states have adopted consumer protection laws similar to the CCPA.
The CCPA and CPRA could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities. 32 There currently are a number of additional proposals related to data privacy or security pending before federal, state, and foreign legislative and regulatory bodies, and a number of U.S. states have adopted consumer protection laws similar to the CCPA.
Companies and governmental agencies could block access to any platform, our website, mobile applications, or the Internet generally, or could limit the speed of data transmissions, for a number of reasons such as security or confidentiality concerns or regulatory reasons, or they may adopt policies that prohibit employees from accessing Facebook, Apple, Google, Amazon, and our website or any other social platform.
Companies and governmental agencies could block access to any platform, our website, mobile applications, or the Internet generally, or could limit the speed of data transmissions, for a number of reasons such as security or confidentiality concerns or regulatory reasons, or they may adopt policies that prohibit employees from 35 accessing Facebook, Apple, Google, Amazon, and our website or any other social platform.
During the COVID-19 pandemic, we observed a lower level of rewards redemption due to restrictions on the operations of rewards partners and on the ability for players to travel or attend public events, and while such restrictions generally have been lifted, we could experience a reduced level of rewards redemption as a result of unanticipated future circumstances that have the effect of restricting travel or the in-person attendance of public events.
During the COVID-19 pandemic, we observed a lower level of rewards redemption due to restrictions on the operations of rewards partners and on the ability for players to travel or attend public events, and while such restrictions have been lifted, we could experience a reduced level of rewards redemption as a result of unanticipated future circumstances that have the effect of restricting travel or the in-person attendance of public events.
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.
In addition, online game developers and distributors that are primarily focused on 17 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.
Further, if the game development companies breached our agreements with them, or unilaterally elected to discontinue providing services, we would have to find a substitute provider or replace the lost services internally, which could disrupt the operation of the games and result in dissatisfied players, increased expenses, lost revenues, and other adverse effects.
Further, if the game development companies breached our agreements 21 with them, or unilaterally elected to discontinue providing services, we would have to find a substitute provider or replace the lost services internally, which could disrupt the operation of the games and result in dissatisfied players, increased expenses, lost revenues, and other adverse effects.
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.
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.
Pascal, beneficially owned more than 70% of the combined voting power of our outstanding common stock, and is able to control matters submitted to our stockholders for approval, including the election of directors, amendments to our organizational documents and any merger, consolidation, sales of all or substantially all of our assets or other major corporate transactions. Mr.
Pascal, beneficially owned or controlled more than 70% of the combined voting power of our outstanding common stock, and is able to control matters submitted to our stockholders for approval, including the election of directors, amendments to our organizational documents and any merger, consolidation, sales of all or substantially all of our assets or other major corporate transactions. Mr.
For example, at the end of August 2020, a court approved a settlement of class action litigation relating to alleged violations by Big Fish Games, Inc., the operator of an online social casino game, of a specific anti-gambling law in the State of Washington, in an aggregate amount equal to $155.0 million.
For example, at the end of August 2020, a court approved a settlement of class action litigation relating to alleged violations by Big Fish Games, Inc., the operator of an online social 28 casino game, of a specific anti-gambling law in the State of Washington, in an aggregate amount equal to $155.0 million.
Uncertainties resulting from the initiation and continuation of intellectual property proceedings could harm our ability to compete in the marketplace. In addition, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be 29 compromised by disclosure during this type of litigation.
Uncertainties resulting from the initiation and continuation of intellectual property proceedings could harm our ability to compete in the marketplace. In addition, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
We do not have employment agreements with members of our senior management team, all of whom are "at-will" employees, and we do not maintain key man insurance for members of our senior management team. The loss of any member of our senior management team could cause disruption and harm our business, financial condition, results of operations, or reputation.
We do not have employment agreements with members of our senior management team, all of whom are "at-will" employees, and we do not maintain key man insurance for members of our senior management team. The loss of any member 43 of our senior management team could cause disruption and harm our business, financial condition, results of operations, or reputation.
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.
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.
This could cause players to reduce their playing time or in-game purchases, discontinue playing our games 22 altogether, or not recommend our games to other players, which could result in further harm to our business. Such errors could also result in our games being non-compliant with applicable laws or create legal liability for us.
This could cause players to reduce their playing time or in-game purchases, discontinue playing our games altogether, or not recommend our games to other players, which could result in further harm to our business. Such errors could also result in our games being non-compliant with applicable laws or create legal liability for us.
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.
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.
Under these policies, our dual class capital structure would make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track those indices will not be investing in our stock.
Under these policies, our dual class capital structure would make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange- 45 traded funds, and other investment vehicles that attempt to passively track those indices will not be investing in our stock.
Our systems and the 35 data stored on those systems may also be vulnerable to security incidents or security attacks, acts of vandalism or theft, coordinated attacks by activist entities, misplaced or lost data, human errors, or other similar events that could negatively affect our systems and the data stored on those systems, and the data of our business partners.
Our systems and the data stored on those systems may also be vulnerable to security incidents or security attacks, acts of vandalism or theft, coordinated attacks by activist entities, misplaced or lost data, human errors, or other similar events that could negatively affect our systems and the data stored on those systems, and the data of our business partners.
If any such interruption is significant or prolonged, if a particular game is unavailable when players attempt to access it or navigation through a game is slower than they expect, players may stop playing the game and may be less likely to return to the game as often, if at all.
If any such interruption is significant or prolonged, if a particular game is unavailable when players 20 attempt to access it or navigation through a game is slower than they expect, players may stop playing the game and may be less likely to return to the game as often, if at all.
With a third-party game development company, we have limited control over the work performed by the development company and are therefore subject to risks 20 that differ from, and might be greater than, those we are subject to when our own employees are developing and operating our games.
With a third-party game development company, we have limited control over the work performed by the development company and are therefore subject to risks that differ from, and might be greater than, those we are subject to when our own employees are developing and operating our games.
Any 23 such occurrence could expose us to claims, regulatory investigations, litigation, (including class actions), fines and potential liability., negative reputational impacts that cause us to lose existing or future customers, and/or significant costs relating to incident response, system restoration or remediation, or future compliance.
Any such occurrence could expose us to claims, regulatory investigations, litigation, (including class actions), fines and potential liability., negative reputational impacts that cause us to lose existing or future customers, and/or significant costs relating to incident response, system restoration or remediation, or future compliance.
Our players may decide not to allow us to collect some or all of this data or may limit our use of this data. Any limitation on our ability to collect data about our players and game interactions would likely make it more difficult for us to deliver targeted content and marketing materials to our players.
Our players may decide not to allow us to collect some or all of this data or may limit our use of this data. Any limitation on our ability to collect data about our players and game interactions would likely make it more difficult for us to deliver targeted 34 content and marketing materials to our players.
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.
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, political uprisings in various countries in the Middle East in recent years have affected the political stability of those countries and have led to a decline in the regional security situation. Such instability could also lead to deterioration in the political and trade relationships that exist between Israel and these countries.
In addition, political uprisings in various countries in the Middle East in recent years have affected the political stability of those countries and have led to a decline in the regional security situation. Such instability could also lead to 38 deterioration in the political and trade relationships that exist between Israel and these countries.
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.
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.
If regulators, the media or consumers raise any concerns about our privacy and data protection or consumer protection practices, even if unfounded, this could also result in fines or judgments against us, damage our reputation, and negatively impact our financial condition and damage our business.
If 33 regulators, the media or consumers raise any concerns about our privacy and data protection or consumer protection practices, even if unfounded, this could also result in fines or judgments against us, damage our reputation, and negatively impact our financial condition and damage our business.
In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our stock price, the trading price of our Class A common stock could decline.
In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue 40 an adverse opinion regarding our stock price, the trading price of our Class A common stock could decline.
If our player base and engagement continue to grow, and the number and types of games we offer continue to grow and evolve, we will need an increasing amount of technical infrastructure, including network capacity and computing power, to continue to satisfy our players’ needs and operate our business.
If our player base and engagement continue to grow, and the number and types of games and features we offer continue to grow and evolve, we will need an increasing amount of technical infrastructure, including network capacity and computing power, to continue to satisfy our players’ needs and operate our business.
We receive, store, process, use, and share data, some of which contains personal information and other data relating to our players, employees and business contacts, and we enable our players to share their personal information with each other and with third parties, including on the Internet and mobile platforms.
We receive, store, process, use, and share data, some of which contains personal information and other data relating to our players, employees and business contacts, and we enable our players to share their personal information with each 31 other and with third parties, including on the Internet and mobile platforms.
This is also the case in respect of the EU, where value-added taxes may be imposed on non-EU companies making digital sales to consumers within the EU. In addition, the U.S. Supreme Court ruled in South Dakota v.
This is also the case in respect of the EU, where value-added taxes may be imposed on non-EU companies 37 making digital sales to consumers within the EU. In addition, the U.S. Supreme Court ruled in South Dakota v.
Moreover, we could incur additional compensation costs in the event that we decide to pay cash compensation closer to that of other publicly listed companies, which would increase our general and administrative expenses and could materially and adversely affect our profitability.
Moreover, we could incur additional compensation costs in the event that we decide to pay cash compensation closer to that of other publicly listed companies, which would increase 41 our general and administrative expenses and could materially and adversely affect our profitability.
We strive to protect our intellectual property rights by relying on a combination of federal, state, and common law trademark, copyright, patent, and trade secret protection laws, as well as contractual restrictions and business practices.
We strive to protect our intellectual property rights by 29 relying on a combination of federal, state, and common law trademark, copyright, patent, and trade secret protection laws, as well as contractual restrictions and business practices.
Our ability to grow through future acquisitions, investments, and joint ventures will depend on the availability of suitable candidates at an acceptable cost, our ability to compete effectively to attract these candidates, and the availability of financing to complete larger transactions.
Our ability to grow through future acquisitions, investments, and joint ventures will depend on the availability of suitable candidates at an acceptable cost, our ability to compete effectively to attract these 26 candidates, and the availability of financing to complete larger transactions.
Any litigation of this nature, regardless of outcome or merit, could result in substantial costs, adverse publicity, and diversion of management and technical resources, any of which could adversely affect our business, financial condition, or results of operations.
Any 30 litigation of this nature, regardless of outcome or merit, could result in substantial costs, adverse publicity, and diversion of management and technical resources, any of which could adversely affect our business, financial condition, or results of operations.
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.
The terms of our marketing agreement with MGM requires 18 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.
Aside from these file size limitations, a larger game file size could cause players to delete our games once the file size grows beyond the capacity of their devices’ storage limitations or could reduce the number of downloads of these games.
Aside from these file size 19 limitations, a larger game file size could cause players to delete our games once the file size grows beyond the capacity of their devices’ storage limitations or could reduce the number of downloads of these games.
Any failure to implement and maintain effective internal controls over financial reporting could adversely affect the results of assessments by our independent registered public accounting firm and its attestation reports.
Any failure to implement and maintain effective 42 internal controls over financial reporting could adversely affect the results of assessments by our independent registered public accounting firm and its attestation reports.
We also cannot be certain that our licensors are not infringing, misappropriating, or otherwise violating the intellectual property rights of others or that our licensors have sufficient rights to the intellectual property to grant us the applicable licenses.
We also cannot be certain that our licensors are not infringing, misappropriating, or otherwise violating the intellectual property rights of others or that our licensors have sufficient rights to the intellectual property to grant us the 22 applicable licenses.
Additionally, our ability to successfully gain market acceptance in any 27 particular market is uncertain, and the distraction of our senior management team could harm our business, financial condition, or results of operations.
Additionally, our ability to successfully gain market acceptance in any particular market is uncertain, and the distraction of our senior management team could harm our business, financial condition, or results of operations.
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.
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 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 inflation, recessions, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability, armed conflict 47 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.
As threats related to cybersecurity attacks develop and grow, we may also find it necessary to make further investments to protect our data and infrastructure, which may impact our results of operations.
As threats related to cybersecurity attacks develop and grow, we may also find it necessary to make further investments to protect our data and infrastructure, which may impact 36 our results of operations.
Each 18 platform provider has broad discretion to unilaterally change and interpret its terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us.
Each platform provider has broad discretion to unilaterally change and interpret its terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us.
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.
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.
In addition, we received four demands for arbitration in 2023 alleging that our games constitute illegal gambling under applicable state law. These demands generally attempt to recover amounts spent by third parties on the Company’s games by relying on state gambling loss recovery statutes and/or by seeking to have the applicable Terms of Service declared invalid.
In addition, we have received demands for arbitration alleging that our games constitute illegal gambling under applicable state law. These demands generally attempt to recover amounts spent by third parties on the Company’s games by relying on state gambling loss recovery statutes and/or by seeking to have the applicable Terms of Service declared invalid.
The Company completed an offer to purchase each of its Warrants in the Tender Offer (a s defined and described in Note 12— Warrant Liabilities in the accompanying consolidated financial statements) on May 13, 2022, in which holders of 1,792,463 outstanding Public Warrants tendered their Public Warrants for a purchase price of $1.00 per warrant.
The Company completed an offer to purchase each of its Warrants in the Tender Offer (a s defined and described in Note — Warrant Liabilities in the accompanying consolidated financial statements) on May 13, 2022, in which holders of 1,792,463 outstanding Public Warrants tendered their Public Warrants for a purchase 46 price of $1.00 per warrant.
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.
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, 2024 were offered by MGM.
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.
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; 25 • 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 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.
The COVID-19 pandemic and related containment and mitigation efforts, including social distancing, shelter-in-place, quarantine and similar policies, practices and governmental orders, resulted in widespread disruption in global economies, productivity, and financial markets and materially altered our day-to-day business operations.
While we have international game studios in Hong Kong, Israel, Serbia, Singapore, and Vietnam, we expect to continue to expand our international operations in the future by opening new international game studio locations and expanding our offerings in new languages.
While we have international game studios in Hong Kong, Israel, Serbia, Singapore, Vietnam, Mexico and Chile we expect to continue to expand our international operations in the future by opening new international game studio locations and expanding our offerings in new languages.
This expansion increases the complexity of our business and has placed, and will continue to place, significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. We may not be able to manage our growth effectively, which could damage our reputation and negatively affect our operating results.
This expansion increases the complexity of our business and has placed, and will continue to place, significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. We may not be able to manage our expanded business operations, which could damage our reputation and negatively affect our operating results.
We are currently focused on social casino, casual, and puzzle games, offering our games on mobile devices, including smartphones and tablets on Apple’s iOS and Google’s Android operating systems, on social networking platforms such as Facebook, and on our website.
We are currently focused on social casino, casual, and puzzle games, offering our games on mobile devices, including smartphones and tablets on Apple’s iOS and Google’s Android operating systems, on social networking platforms such as Facebook, and on our websites.
We have previously closed several such transactions, including the acquisition of Brainium and the license rights for Tetris®-branded mobile games, and are currently in, and in the future expect to continue to be in, various stages of seeking, evaluating, and pursuing additional strategic transactions both in the U.S. and in non-U.S. jurisdictions.
We have previously closed several such transactions, including the acquisitions of Brainium and Pixode, and the license rights for Tetris®-branded mobile games, and are currently in, and in the future expect to continue to be in, various stages of seeking, evaluating, and pursuing additional strategic transactions both in the U.S. and in non-U.S. jurisdictions.
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.
Some of these current and potential competitors have significant resources for developing, enhancing or acquiring additional games or gaming companies, may be able to incorporate their own strong brands and assets into their games, may 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.
However, when we lose our emerging growth company status and become subject to the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, we may not be able to complete our evaluation, testing, and any required remediation in a timely fashion.
We are not currently subject to the auditor attestation requirement of Section 404(b) of the Sarbanes-Oxley Act. However, when we lose our emerging growth company status and become subject to the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, we may not be able to complete our evaluation, testing, and any required remediation in a timely fashion.
This legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, and could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
This legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, and could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. The U.S.
Our Certificate of Incorporation provides that, to the fullest extent permitted by law, and unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) will be the sole and exclusive forum for: (i) any derivative action, suit, or proceeding brought on our behalf; (ii) any action, suit, or proceeding asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or stockholders to us or our stockholders; (iii) any action, suit, or proceeding arising pursuant to any provision of the DGCL or our Bylaws or our Certificate of Incorporation (as either may be amended from time to time); (iv) any action, suit, or proceeding as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or (v) any action, suit, or proceeding asserting a claim against us or any of our current or former directors, officers, or stockholders governed by the internal affairs doctrine.
The provisions of our Certificate of Incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers. 49 Our Certificate of Incorporation provides that, to the fullest extent permitted by law, and unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) will be the sole and exclusive forum for: (i) any derivative action, suit, or proceeding brought on our behalf; (ii) any action, suit, or proceeding asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or stockholders to us or our stockholders; (iii) any action, suit, or proceeding arising pursuant to any provision of the DGCL or our Bylaws or our Certificate of Incorporation (as either may be amended from time to time); (iv) any action, suit, or proceeding as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or (v) any action, suit, or proceeding asserting a claim against us or any of our current or former directors, officers, or stockholders governed by the internal affairs doctrine.
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 achieve and maintain profitability, we need to generate sufficient revenue from our existing and new game offerings to offset our ongoing development, marketing, and operating costs.
While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances. The U.S.
While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances. That program was subsequently replaced by the EU-U.S.
As of December 31, 2023, the Founder Group controlled more than 70% of the combined voting power of our outstanding capital stock.
As of December 31, 2024, the Founder Group controlled more than 70% of the combined voting power of our outstanding capital stock.
The occurrence of a catastrophic event, such as a global pandemic like the COVID-19 pandemic or the consequences of climate change, may result in our inability to continue business operations and may result in system interruptions, reputational harm, delays in application development, lengthy interruptions in our services, breaches of data security and loss of critical data, such as player, customer and billing data, as well as intellectual property rights, software, or other relevant data regarding operations, and there can be no assurances that our insurance policies will provide coverage for any resulting losses, which could have a material adverse effect on our business, financial condition, and results of operations.
The occurrence of a catastrophic event may result in our inability to continue business operations and may result in system interruptions, reputational harm, delays in application development, lengthy interruptions in our services, breaches of data security and loss of critical data, such as player, customer and billing data, as well as intellectual property rights, software, or other relevant data regarding operations, and there can be no assurances that our insurance policies will provide coverage for any resulting losses, which could have a material adverse effect on 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 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.
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.
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 from the EEA and UK to the U.S.
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.
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.
Properly managing our growth will require us to establish consistent policies across regions and functions, and a failure to do so could harm our business. Our failure to upgrade our technology or network infrastructure effectively to support our growth could result in unanticipated disruptions.
Properly managing our workforce may require us to establish consistent policies across regions and functions, and a failure to do so could harm our business. Our failure to upgrade our technology or network infrastructure effectively to support our business operations could result in unanticipated disruptions.
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 41 securities less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.
We are currently an “emerging growth company” and a "smaller reporting company" within the meaning of the Securities Act and have taken advantage of certain exemptions from disclosure requirements, 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.
Our workforce and operations have grown substantially since our inception and we expect that they will continue to do so. If we are unable to effectively manage that growth, our financial performance and future prospects will be adversely affected. Since our inception, we have experienced growth in the U.S. and internationally.
Our workforce and operations have grown substantially since our inception. If we are unable to effectively manage our workforce, our financial performance and future prospects will be adversely affected. Since our inception, we have experienced growth in the U.S. and internationally.
Accordingly, as of December 31, 2023, the Founder Group, including Mr.
Accordingly, as of December 31, 2024, the Founder Group, including Mr.
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.
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.
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.
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 public health emergencies, disruption of supply chains, and military hostilities, 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.
Properly managing our growth will require us to continue to hire, train, and manage qualified employees and staff, including engineers, operations personnel, finance and accounting staff, and sales and marketing staff, and to improve and maintain our technology.
Properly managing our workforce requires us to continue to hire, train, and manage qualified employees and staff, including engineers, operations personnel, finance and accounting staff, and sales and marketing staff, and to improve and maintain our technology.
From time to time, we may enter into currency hedging arrangements to decrease the risk of financial exposure from fluctuations in the exchange rate of foreign currencies relative to the U.S. Dollar.
Dollars regardless of the currency in which they are incurred. From time to time, we may enter into currency hedging arrangements to decrease the risk of financial exposure from fluctuations in the exchange rate of foreign currencies relative to the U.S. Dollar.
To manage the growth of our operations and personnel and improve the technology that supports our business operations, as well as our financial and management systems, disclosure controls and procedures, and internal controls over financial reporting, we will be required to commit substantial financial, operational, and technical resources. 42 Our current and planned personnel, systems, procedures, and controls may not be adequate to support our future operations.
To manage the growth of our operations and personnel and improve the technology that supports our business operations, as well as our financial and management systems, disclosure controls and procedures, and internal controls over financial reporting, we will be required to commit substantial financial, operational, and technical resources.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+2 added−0 removed11 unchanged
Biggest changeWe have a cybersecurity leadership team comprised of our Chief Information Security Officer, our Head of Infrastructure, and other senior leaders on our Information Technology group (“Cybersecurity Leadership Team”). Our Cybersecurity Leadership Team works with third-party service providers to help identify, assess, and manage our cybersecurity threats and risks, including through the use of our cybersecurity risk assessment program.
Biggest changeOur Cybersecurity Leadership Team works with third-party service providers to help identify, assess, and manage our cybersecurity threats and risks, including through the use of our cybersecurity risk assessment program.
Our Cybersecurity Leadership Team inventories and prioritizes information security risks and evaluates material risks from cybersecurity threats, and reports those periodically to the Audit Committee of our Board of Directors, which evaluates our overall enterprise risk.
Our Cybersecurity Leadership Team inventories and prioritizes information security risks 50 and evaluates material risks from cybersecurity threats, and reports those periodically to the Audit Committee of our Board of Directors, which evaluates our overall enterprise risk.
As appropriate, the Board also may receive information regarding specific cybersecurity incidents and resulting mitigation efforts. 50
As appropriate, the Board also may receive information regarding specific cybersecurity incidents and resulting mitigation efforts.
Added
We have a cybersecurity leadership team comprised of our Chief Information Security Officer ("CISO"), our Global Head of Infrastructure, and other senior leaders on our Information Technology group (“Cybersecurity Leadership Team”).
Added
The members of our Cybersecurity Leadership Team, including our CISO, have significant experience in managing and leading cybersecurity teams and in developing and implementing cybersecurity and data privacy systems and processes.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−1 removed1 unchanged
Biggest changeWe 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.
Biggest changeWe 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.
Removed
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

7 edited+1 added−0 removed9 unchanged
Biggest changeThe repurchases are being executed from time to time, subject to general business and market conditions, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 trading plans, pursuant to a stock repurchase program.
Biggest changeAverage price paid per share includes shares surrendered to satisfy tax withholding obligations, and excludes costs associated with the repurchases. 3. The repurchases are being executed from time to time, subject to general business and market conditions, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 trading plans, pursuant to a stock repurchase program.
See 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
See Note 18— 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
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.
Holders of our Common Stock As of February 28, 2025, there were 83 holders of record of our Class A common stock, four 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.
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.
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.
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.
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. On November 1, 2024, the Company's Board of Directors extended the repurchase program through November 1, 2025.
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.
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, 2024: 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, 2024 - October 31, 2024 535,967 $ 1.49 528,659 $ 44,680 November 1, 2024 - November 30, 2024 518,010 1.71 407,787 43,981 December 1, 2024 - December 31, 2024 238,794 2.05 234,445 43,500 1.
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.
Dividend Policy We do not currently pay cash dividends on our shares of Class A common stock or Class B common stock.
Added
Any future determination to pay dividends will be at the discretion of the Board of Directors and will depend our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects, and such other factors as the Board of Directors deems relevant.

Item 7. Management's Discussion & Analysis

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

62 edited+10 added−26 removed85 unchanged
Biggest changeThe 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.
Biggest changeConsolidated AEBITDA and Consolidated AEBITDA Margin as calculated herein may not be comparable to similarly titled measures and disclosures reported by other companies. 62 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, 2024 2023 Net revenue $ 289,429 $ 310,886 Net loss $ (28,687) $ (19,393) Net loss margin (9.9) % (6.2) % Adjustments: Depreciation & amortization 45,440 45,259 Income tax expense 1,399 16,873 Stock-based compensation expense 18,113 18,722 Change in fair value of warrant liability (856) (2,596) Change in fair value of contingent consideration 85 (950) Restructuring and related (1) 25,710 8,584 Other (2) (4,655) (4,207) Consolidated AEBITDA $ 56,549 $ 62,292 Consolidated AEBITDA Margin 19.5 % 20.0 % (1) Amounts reported include mergers and acquisition related expenses, management restructuring and severance, asset impairments and write-downs, extraordinary expenses related to the war in Israel, and other various nonrecurring expenses.
However, the results may not generate revenue and the enhancements may require additional significant modifications or be abandoned in their entirety. • Real-World Rewards— We currently offer real-world rewards relating to, among other things, dining, live entertainment shows, and hotel rooms, and we plan to continue to expand and diversify our rewards loyalty program in order to maintain and enhance the perceived value offering to our players.
However, the results may not generate revenue and the enhancements may require additional significant modifications or be abandoned in their entirety. • Real-World Rewards— We currently offer real-world rewards relating to, among other things, dining, live entertainment shows, and hotel rooms, and we plan to continue to expand and diversify our rewards loyalty program in order to 56 maintain and enhance the perceived value offering to our players.
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.
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.
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.
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 myVIP 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.
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.
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 players are marketing offers and do not provide players with material rights.
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.
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.
PLAYSTUDIOS' playAWARDS platform embodies all of the features, tools, and capabilities needed to deliver loyalty programs tailored for the games industry. Our consumer-facing brand for our loyalty program is myVIP. The myVIP program is an aspirational benefits framework, with in-game mechanics and rewards features, along with a player development and hosting program.
Our playAWARDS platform embodies all of the features, tools, and capabilities needed to deliver loyalty programs tailored for the games industry. Our consumer-facing brand for our loyalty program is myVIP. The myVIP program is an aspirational benefits framework, with in-game mechanics and rewards features, along with a player development and hosting program.
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.
We use ARPDAU as a measure of overall monetization of our active players. 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.
The Company has the performance obligation to display and provide access to the virtual currency purchased by the Company’s player within the game whenever the player accesses the game until the virtual currency is consumed. Payment is required at the time of purchase and the transaction price is fixed.
The Company has the performance obligation to display and provide access to the virtual currency purchased by the Company’s player within the game whenever the player accesses the game until the virtual currency is consumed. Payment is 66 required at the time of purchase and the transaction price is fixed.
The Company establishes valuation allowances when necessary, based on the weight of the available positive and negative evidence, to reduce deferred tax assets to the amount that is more likely than not to be realized.
The Company 67 establishes valuation allowances when necessary, based on the weight of the available positive and negative evidence, to reduce deferred tax assets to the amount that is more likely than not to be realized.
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.
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.
The Company evaluates the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
The Company evaluates the 65 useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
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!
Over our 13-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!
We believe that the myVIP program drives increased player engagement and retention, and therefore extends each game's life-cycle and revenue potential. We have primarily generated our revenue from the sale of in-game virtual currency, which players can choose to purchase at any time to enhance their playing experience.
We believe that the myVIP program drives increased player engagement and retention, and therefore extends each game's life-cycle and revenue potential. We have primarily generated our revenue from the sale of in-game virtual currencies, which players can choose to purchase at any time to enhance their playing experience.
Each platform provider has broad discretion to set its platform fees and to change and interpret its terms of service and other policies with respect to us and other developers in its sole discretion, and those changes may be unfavorable to us. • Player Acquisition— Establishing and maintaining a loyal network of players and paying players is vital for our success.
Each platform provider has broad discretion to set its platform fees and to change and interpret its terms of service and other policies with respect to us and other developers in its sole discretion, and those changes may be unfavorable to us. • User Acquisition— Establishing and maintaining a loyal network of players and paying players is vital for our success.
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).
We define Consolidated AEBITDA as net income before interest, income taxes, depreciation and amortization, restructuring and related costs (consisting primarily of severance, asset impairments, 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).
Borrowings under the Credit Agreement may be borrowed, repaid, and re-borrowed by us, and are available for working capital, general corporate purposes, and permitted acquisitions. Commitment fees and interest rates are determined on the basis of either a Eurodollar rate or an Alternate Base Rate plus an applicable margin.
Borrowings under the Credit Agreement may be borrowed, repaid and re-borrowed by the Company, and are available for working capital, general corporate purposes, and permitted acquisitions. Commitment fees and interest rates are determined on the basis of either a Eurodollar rate or an Alternate Base Rate plus an applicable margin.
The applicable margins are initially 2.50%, in the case of Eurodollar loans, and 1.50%, in the case of Alternate Base Rate loans. The applicable margin is subject to adjustment based upon our Total Net Leverage Ratio (as defined in the Credit Agreement). Eurodollar rates and the Alternate Base Rate are subject to floors of 0.00% and 1.00%, respectively.
The applicable margins are initially 2.50%, in the case of Eurodollar loans, and 1.50%, in the case of Alternate Base Rate loans. The applicable margin is subject to adjustment based upon the Company's Total Net Leverage Ratio (as defined in the Credit Agreement). Eurodollar rates and the Alternate Base Rate are subject to floors of 0.00% and 1.00%, respectively.
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.
Additionally, players can send free “gifts” of virtual currencies to their friends on Facebook. Our revenue from virtual currencies has been generated world-wide, but is largely concentrated in North America. 55 We also generate revenue from in-game advertising.
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.
Players who install our games receive free virtual currencies upon the initial launch of the game, and they may also collect virtual currencies free of charge at periodic intervals or through targeted marketing promotions. Players may exhaust the free virtual currencies and may choose to purchase additional virtual currencies.
Each of our legacy social casino games and our Tetris®-branded mobile game is powered by our proprietary playAWARDS program and incorporates loyalty points that are earned by players as they engage with our games.
Each of our legacy social casino games and our Tetris®-branded mobile games are powered by our proprietary playAWARDS program and incorporates loyalty points that are earned by players as they engage with our games.
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.
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 $15.0 million, expended or to be expended by the Company in connection with the Tender Offer.
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.
The income tax benefit reflected an effective income tax rate of negative 669.7% for the year ended December 31, 2023, which was less than the statutory federal rate of 21.0% 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.
On August 9, 2022, the Company entered into the Amendment No. 2 to the Credit Agreement, which further amended the Credit Agreement (as amended by Amendment No. 1 to the Credit Agreement) to, among other things, (i) increase the total current available line of credit from $75 million to $81 million, (ii) change the basis for calculation of interest under the facility from LIBOR to SOFR, and (iii) exclude from the calculation of the Fixed Charge Coverage Ratio (A) up to $6 million for the acquisition of, and improvements to, the real property located at 10150 Covington Cross Drive, Las Vegas, Nevada 89144 incurred on or prior to the first anniversary of the effective date of Amendment No. 2 to the Credit Agreement, and (B) up to $20,000,000 for the repurchase or redemption of up to 10,996,631 warrants to purchase shares of Class A common stock of the Company, and shares of Class A common stock of the Company, on or before December 31, 2023, of which as of the date of Amendment No. 2 to the Credit Agreement, the Company had used $1,792,463 to redeem outstanding warrants to purchase Class A common stock in connection with the Tender Offer.
On August 9, 2022, the Company entered into the Amendment No. 2 to the Credit Agreement, which further amended the Credit Agreement (as amended by Amendment No. 1 to the Credit Agreement) to, among other things, (i) increase the total current available line of credit from $75.0 million to $81.0 million, (ii) change the basis for calculation of interest under the facility from LIBOR to SOFR, and (iii) exclude from the calculation of the Fixed Charge Coverage Ratio (A) up to $6.0 million for the acquisition of, and improvements to, the real property located at 10150 Covington Cross Drive, Las Vegas, Nevada 89144 incurred on or prior to the first anniversary of the effective date of Amendment No. 2 to the Credit Agreement, and (B) up to $20.0 million for the redemption or repurchase of up to $11.0 million warrants to purchase shares of Class A common stock of the Company, and shares of Class A common stock of the Company, on or before December 31, 2023, of which as of the date of Amendment No. 2 to the Credit Agreement the Company had used $1.8 million to redeem outstanding warrants to purchase Class A common stock in connection with the Tender Offer.
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.
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 14— Long-Term Debt to our consolidated financial statements herein. Other income, net primarily relates to gains or (losses) from equity investments and gains or (losses) from foreign currency transactions with our foreign subsidiaries.
We, one of our subsidiaries, JPMorgan Chase Bank, N.A., as administrative agent and JPMorgan Chase Bank, N.A., Silicon Valley Bank and Wells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers entered into a credit agreement (the “Credit Agreement”) which provides for a five year revolving credit facility in an aggregate principal amount of $75 million.
The Company, a subsidiary of the Company, JPMorgan Chase Bank, N.A., as administrative agent and JPMorgan Chase Bank, N.A., Silicon Valley Bank and Wells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers entered into a credit agreement (the “Credit Agreement”) which provides for a five-year revolving credit facility in an aggregate principal amount of $75.0 million.
(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.
(2) 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. Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of $109.2 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. 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.
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.
Similar to loyalty points that are redeemable for real-world rewards, the tier points are not awarded as a result of a contract with a customer since both paying and non-paying players can earn these tier points.
Depending on the tier, players are granted access to special benefits at the Company’s discretion. Similar to loyalty points that are redeemable for real-world rewards, the tier points are not awarded as a result of a contract with a customer since both paying and non-paying players can earn these tier points.
Purchases Purchases is defined as the total number of rewards purchased for the period identified in which a player exchanges loyalty points for a reward. Purchases are not adjusted for refunds. Purchases only include purchases of real-world partner rewards and exclude any PLAYSTUDIOS digital rewards. The Company does not receive any compensation or revenue from Purchases.
Purchases Purchases is defined as the total number of rewards purchased for the period identified in which a player exchanges loyalty points for a reward. Purchases are net of refunds. Purchases only include purchases of real-world partner rewards and exclude any PLAYSTUDIOS digital rewards.
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.
Provision for Income Taxes Income tax expense was approximately $1.4 million for the year ended December 31, 2024, as compared to an income tax expense of $16.9 million for the year ended December 31, 2023.
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.
The decrease in AEBITDA can be attributed to the non-renewal of a licensing arrangement with a customer. 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.
The decrease in our effective tax rate was partially offset by benefits from the exercise of non-qualified stock options, changes to the fair value adjustment of the warrant liability, and the deduction of foreign taxes paid.
The decrease in our effective tax rate was partially offset by benefits from the exercise of non-qualified stock options, changes to the fair value adjustment of the warrant liability, and the deduction of foreign taxes paid. Comparison of our Segment Results of Operations The following table presents adjusted earnings before interest, taxes, depreciation, and amortization ("AEBITDA").
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.
As of December 31, 2024, we do not have any outstanding amounts under the Credit Agreement. 64 Cash Flows The following table presents a summary of our cash flows for the periods indicated (in thousands): Years Ended December 31, 2024 2023 Net cash provided by operating activities $ 45,740 $ 51,724 Net cash used in investing activities (26,294) (32,306) Net cash used in financing activities (41,913) (20,184) Effect of exchange rate on cash and cash equivalents (638) (345) Net change in cash, cash equivalents, and restricted cash $ (23,105) $ (1,111) Operating Activities During the year ended December 31, 2024, operating activities provided $45.7 million of net cash as compared to $51.7 million during the year ended December 31, 2023.
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.
We use Daily Payer Conversion and Average Daily Payer Conversion to help us understand the monetization of our active players. 57 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.
Retail Value of Purchases only include the retail value of real-world partner rewards and exclude the cost of any PLAYSTUDIOS branded merchandise. We use Retail Value of Purchases to help us understand the real-world value of the rewards that are purchased by our players.
We use Retail Value of Purchases to help us understand the real-world value of the rewards that are purchased by our players.
We are also obligated to comply with two financial maintenance covenants as of the end of each fiscal quarter, commencing with the quarter ended September 30, 2021: (i) we must maintain a Total Net Leverage Ratio not to exceed 3.50:1.00 (subject to increase to 4.00:1.00 following consummation of certain material acquisitions) and (ii) we must maintain a Fixed Charge Coverage Ratio of not less than 1.25:1.00.
Specific financial covenants include the following, commencing with the quarter ended September 30, 2021: • Total Net Leverage Ratio of 3.50:1.00 (subject to increase to 4.00:1.00 following consummation of certain material acquisitions) • Fixed Charge Coverage Ratio of not less than 1.25:1.00.
Tier points can be earned through a variety of player engagement activities, including but not limited to logging into our games, achieving multi-day log-in streaks, collecting hourly bonuses, and purchasing virtual currency bundles. Depending on the tier, players are granted access to special benefits at the Company’s discretion.
Additionally, certain of the Company’s games participate in an additional program which ranks players into different tiers based on tier points earned during a given time frame. Tier points can be earned through a variety of player engagement activities, including but not limited to logging into our games, achieving multi-day log-in streaks, collecting hourly bonuses, and purchasing virtual currency bundles.
Results of Operations Comparison of the year ended December 31, 2023 versus the year ended December 31, 2022 The following table summarizes our consolidated results of operations for the years ended December 31, 2023 and 2022 (in thousands, except percentages): Years Ended December 31, 2023 2022 $ Change % Change Net revenue $ 310,886 $ 290,309 $ 20,577 7.1 % Operating expenses 321,373 318,390 2,983 0.9 % Operating loss $ (10,487) $ (28,081) $ 17,594 (62.7) % Net loss $ (19,393) $ (17,783) $ (1,610) 9.1 % Net loss margin (6.2) % (6.1) % (0.1)pp 1.6 % pp = percentage points Net Revenue by Segment Year Ended December 31, 2023 2022 Change % Change Net revenue playGAMES $ 306,714 $ 284,476 $ 22,238 7.8 % playAWARDS 4,172 5,833 (1,661) (28.5) % Net revenue $ 310,886 $ 290,309 $ 20,577 7.1 % 58 Revenue information by geography is summarized as follows (in thousands, except percentages): Years Ended December 31, 2023 2022 Change % Change United States $ 265,660 $ 253,556 $ 12,104 4.8 % All other countries 45,226 36,753 8,473 23.1 % Net revenue $ 310,886 $ 290,309 $ 20,577 7.1 % playGAMES playGAMES revenue was $306.7 million for the year ended December 31, 2023 compared to $284.5 million for year ended December 31, 2022.
Results of Operations Comparison of the year ended December 31, 2024 versus the year ended December 31, 2023 The following table summarizes our consolidated results of operations for the years ended December 31, 2024 and 2023 (in thousands, except percentages): Years Ended December 31, 2024 2023 $ Change % Change Net revenue $ 289,429 $ 310,886 $ (21,457) (6.9) % Operating expenses 322,293 321,373 920 0.3 % Operating loss (32,864) (10,487) (22,377) 213.4 % Net loss $ (28,687) $ (19,393) $ (9,294) 47.9 % Net loss margin (9.9) % (6.2) % (3.7) pp 59.7 % pp = percentage points Net Revenue by Reportable Segment Year Ended December 31, 2024 2023 Change % Change Net revenue playGAMES $ 289,367 $ 306,714 $ (17,347) (5.7) % playAWARDS 62 4,172 (4,110) (98.5) % Net revenue $ 289,429 $ 310,886 $ (21,457) (6.9) % 58 Revenue information by geography is summarized as follows (in thousands, except percentages): Years Ended December 31, 2024 2023 Change % Change United States $ 244,184 $ 265,660 $ (21,476) (8.1) % All other countries 45,245 45,226 19 — % Net revenue $ 289,429 $ 310,886 $ (21,457) (6.9) % playGAMES playGAMES revenue was $289.4 million for the year ended December 31, 2024 compared to $306.7 million for year ended December 31, 2023.
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.
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.
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.
Other Income, Net The following table summarizes our consolidated other income, net for the years ended December 31, 2024 and 2023 (in thousands, except percentages): Years Ended December 31, 2024 2023 $ Change % Change Change in fair value of warrant liabilities $ 856 $ 2,596 $ (1,740) (67.0) % Interest income, net 4,902 4,858 44 0.9 % Other (expense) income, net (182) 513 (695) (135.5) % Total other income, net $ 5,576 $ 7,967 $ (2,391) (30.0) % The change in fair value of warrant liabilities is related to the warrants discussed in Note 12— Accrued and Other Current Liabilities to our consolidated financial statements herein.
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.
The change in cash provided from operating activities primarily related to lower net revenue. Investing Activities During the year ended December 31, 2024, investing activities used $26.3 million of net cash as compared to $32.3 million during the year ended December 31, 2023.
Accordingly, we may need to engage in equity or debt financings to secure additional funds or we may decide to do so opportunistically. Debt On June 24, 2021, in connection with the Closing, Old PLAYSTUDIOS terminated and replaced its then existing revolving credit facility with Silicon Valley Bank (the “Revolver”).
Accordingly, we may need to engage in equity or debt financings to secure additional funds or we may decide to do so opportunistically. Debt On June 24, 2021, in connection with the closing of the Acies Merger, the Company terminated and replaced the Revolver (as defined below).
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.
The key performance indicators presented above are used by management to assess the playAWARDS segment's operating performance, however there is no relationship between the key performance indicators and revenue metrics. 59 Operating Expenses The following table summarizes our consolidated operating expenses for the years ended December 31, 2024 and 2023 (in thousands, except percentages): Years Ended December 31, % of Net Revenue 2024 2023 $ Change % Change 2024 2023 Operating expenses: Cost of revenue $ 72,716 $ 77,800 $ (5,084) (6.5) % 25.1 % 25.0 % Selling and marketing 64,623 74,360 (9,737) (13.1) % 22.3 % 23.9 % Research and development 67,683 70,298 (2,615) (3.7) % 23.4 % 22.6 % General and administrative 46,121 45,072 1,049 2.3 % 15.9 % 14.5 % Depreciation and amortization 45,440 45,259 181 0.4 % 15.7 % 14.6 % Restructuring expenses 25,710 8,584 17,126 199.5 % 8.9 % 2.8 % Total operating expenses $ 322,293 $ 321,373 $ 920 0.3 % 111.4 % 103.4 % Cost of Revenue Cost of revenue decreased by $5.1 million, or 6.5%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.
The following table shows net revenues and key performance indicators for our playGAMES division (in thousands, except percentages and ARPDAU): Year Ended December 31, 2023 2022 Change % Change Virtual currency $ 247,929 $ 261,620 $ (13,691) (5.2) % Advertising 58,236 21,839 36,397 166.7 % Other revenue 549 1,017 (468) (46.0) % Net revenue $ 306,714 $ 284,476 $ 22,238 7.8 % Average DAU 3,524 1,917 1,607 83.8 % Average MAU 13,489 7,932 5,557 70.1 % Average DPU 27 29 (2) (6.9) % Average Daily Payer Conversion 0.8 % 1.5 % (0.7) pp (46.7) % ARPDAU (in dollars) $ 0.24 $ 0.41 $ (0.17) (41.5) % pp = percentage points Net revenue increased $22.2 million, or 7.8%, to $306.7 million during the year ended December 31, 2023 compared to $284.5 million during the year ended December 31, 2022.
The following table shows net revenues and key performance indicators for our playGAMES division (in thousands, except percentages and ARPDAU): Year Ended December 31, 2024 2023 Change % Change Virtual currency $ 228,877 $ 247,929 $ (19,052) (7.7) % Advertising 60,197 58,236 1,961 3.4 % Other revenue 293 549 (256) (46.6) % Net revenue $ 289,367 $ 306,714 $ (17,347) (5.7) % Average DAU 3,100 3,524 (424) (12.0) % Average MAU 13,120 13,489 (369) (2.7) % Average DPU 24 27 (3) (11.1) % Average Daily Payer Conversion 0.8 % 0.8 % — pp — % ARPDAU (in dollars) $ 0.26 $ 0.24 $ 0.02 8.3 % pp = percentage points Net revenue decreased $17.3 million, or 5.7%, to $289.4 million during the year ended December 31, 2024 compared to $306.7 million during the year ended December 31, 2023.
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.
Financing Activities During the year ended December 31, 2024, financing activities used $41.9 million of net cash, while financing activities used $20.2 million of net cash during the year ended December 31, 2023.
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 decrease was primarily due to decrease in user acquisition expenses of $13.7 million. This decrease was offset by increases to marketing expenses of $1.3 million, IT software of $0.7 million, outside service costs of $0.6 million, stock compensation of $0.6 million, and other selling and marketing expenses of $0.8 million.
Consolidated AEBITDA is a non-GAAP measure, discussed within “Non-GAAP Measures” below. 62 Comparison of the year ended December 31, 2023 versus the year ended December 31, 2022 Year Ended December 31, 2023 2022 Change % Change AEBITDA playGAMES $ 88,676 $ 58,999 $ 29,677 50.3 % playAWARDS (10,379) (5,189) (5,190) 100.0 % Corporate and other (16,005) (15,557) (448) 2.9 % Consolidated AEBITDA $ 62,292 $ 38,253 $ 24,039 62.8 % Segment AEBITDA Margin: playGAMES 28.9 % 20.7 % 8.2 % 39.4 % playAWARDS (248.8) % (89.0) % (159.8) % 179.7 % playGAMES playGAMES AEBITDA was $88.7 million for the year ended December 31, 2023 compared to $59.0 million for year ended December 31, 2022, an increase of 50.3%. playGAMES AEBITDA margin was 28.9% for the year ended December 31, 2023 compared to 20.7% for year ended December 31, 2022.
Consolidated AEBITDA is a non-GAAP measure, discussed within “Non-GAAP Measures” below. 61 Comparison of the year ended December 31, 2024 versus the year ended December 31, 2023 Year Ended December 31, 2024 2023 Change % Change AEBITDA playGAMES $ 85,074 $ 88,676 $ (3,602) (4.1) % playAWARDS (13,710) (10,379) (3,331) 32.1 % Corporate and other (14,815) (16,005) 1,190 (7.4) % Consolidated AEBITDA $ 56,549 $ 62,292 $ (5,743) (9.2) % Segment AEBITDA Margin: playGAMES 29.4 % 28.9 % 0.5 % 1.7 % playAWARDS nm nm nm nm nm - not meaningful playGAMES playGAMES AEBITDA was $85.1 million for the year ended December 31, 2024 compared to $88.7 million for year ended December 31, 2023, a decrease of 4.1%. playGAMES AEBITDA margin was 29.4% for the year ended December 31, 2024 compared to 28.9% for year ended December 31, 2023.
The Credit Agreement contains various affirmative and negative financial and operational covenants applicable to us and our subsidiaries.
The Credit Agreement contains various affirmative and negative financial and operational covenants applicable to the Company and its subsidiaries. 63 The Credit Agreement includes customary reporting requirements, conditions precedent to borrowing and affirmative, negative and financial covenants.
The retail value of each reward listed as Purchases is the retail value as determined by the partner upon creation of the reward. In the case where the retail value of a reward adjusts depending on time of redemption, the average retail value is used.
In the case where the retail value of a reward adjusts depending on time of redemption, the average retail value is used. Retail Value of Purchases only include the retail value of real-world partner rewards and exclude the cost of any PLAYSTUDIOS branded merchandise.
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.
The decrease was due to a decline in virtual currency revenue partially offset an increase direct to consumer sales, which incur lower processing fees. Selling and Marketing Selling and marketing expenses decreased by $9.7 million, or 13.1%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Our daily conversion rate and ARPDAU both decreased compared to year ended December 31, 2022 due to addition of high-volume, low-monetizing Brainium portfolio of games and the Tetris application diluting both metrics. playAWARDS The following table shows net revenues and key performance indicators for our playAWARDS division (in thousands): Year Ended December 31, 2023 2022 Change % Change Net revenue $ 4,172 $ 5,833 $ (1,661) (28.5) % Available Rewards (in units) 578 556 22 4.0 % Purchases (in units) 1,760 2,224 (464) (20.9) % Retail Value of Purchases $ 105,847 $ 127,803 $ (21,956) (17.2) % Net revenue decreased by $1.7 million, or 28.5%, due to the non-renewal of a licensing arrangement with a customer.
The decrease was partially offset by growth in advertising revenue. playAWARDS The following table shows net revenues and key performance indicators for our playAWARDS division (in thousands): Year Ended December 31, 2024 2023 Change % Change Virtual currency revenue $ 54 $ — $ 54 nm Other revenue 8 4,172 (4,164) (99.8) % Net revenue $ 62 $ 4,172 $ (4,110) (98.5) % Available Rewards (in units) 525 578 (53) (9.2) % Purchases (in units) 1,772 1,760 12 0.7 % Retail Value of Purchases $ 114,135 $ 105,847 $ 8,288 7.8 % Net revenue decreased by $4.1 million, or 98.5%, due to the non-renewal of a licensing arrangement with a customer, offset by increases in virtual currency revenue.
Depreciation and Amortization Depreciation and amortization expenses increased by $9.7 million, or 27.3%, during the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was primarily due to the acquisitions of Brainium and WonderBlocks, increased amortization as a result of additional licenses, and additional depreciation of property and equipment.
Depreciation and Amortization Depreciation and amortization expenses increased by $0.2 million, or 0.4%, during the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to the acquisition of intangible assets in connection with the business combination of Pixode, as well as increased amortization as a result of license renewals.
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 .
This was offset by a decrease of internal-use software amortization in connection with write-downs of certain assets during the year ended December 31, 2024. See Note 10— Intangible Assets and Internal-Use Software, Net . 60 Restructuring Expenses Restructuring expenses increased by $17.1 million during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Restructuring Expenses Restructuring expenses decreased by $4.4 million during the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to $6.3 million less of non-cash impairment charges and a decrease of $1.6 million related to fees for various merger and acquisition opportunities.
Research and Development Research and development expenses decreased by $2.6 million, or 3.7%, during the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to decreases to stock compensation of $2.2 million, payroll and related costs of $0.9 million, and other research and development costs of $1.3 million.
We use Purchases as a measure of audience interest and engagement with our playAWARDS platform. Retail Value of Purchases Retail Value of Purchases is defined as the cumulative retail value of all rewards listed as Purchases for the period identified.
Retail Value of Purchases Retail Value of Purchases is defined as the cumulative retail value of all rewards listed as Purchases for the period identified. The retail value of each reward listed as Purchases is the retail value as determined by the partner upon creation of the reward.
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.
The decrease to playGAMES AEBITDA was a result of decreased virtual currency revenue primarily driven by decreases in DPU. playGAMES AEBITDA margin was 29.4% for the year ended December 31, 2024 compared to 28.9% for year ended December 31, 2023, primarily as a result of lower user acquisition costs. playAWARDS playAWARDS AEBITDA was $(13.7) million for the year ended December 31, 2024 compared to $(10.4) million for year ended December 31, 2023.
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.
This decrease was offset by increases to IT software of $0.9 million and outside service costs of $0.9 million. General and Administrative General and administrative expenses increased by $1.0 million, or 2.3%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.
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.
The increase was primarily due to increases to employee costs of $1.5 million, IT software of $1.4 million, and stock compensation of $1.0 million. This increase was offset by decreases to insurance of $1.0 million, legal expenses of $0.6 million, outside service costs of $0.5 million, and other general and administrative expenses of $0.8 million.
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.
The income tax expense for the year ended December 31, 2024 reflected an effective income tax rate of negative 5.1%, which was less than the statutory tax rate of 21% primarily due to the recording of a valuation allowance on deferred tax assets, impacts from short falls associated with stock-based compensation, impacts from foreign branch income, and other nondeductible expenses.
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.
The increase was primarily due to increases of non-cash impairment of $7.2 million, management restructurings of $4.0 million, and non-recurring legal expenses of $7.4 million. This increase was offset by decreases of $0.4 million of various merger and acquisition opportunities and $1.1 million of other restructuring expenses.
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.
The change in cash used in investing activities was primarily due to $7.5 million less cash used to purchase intangible assets and internal-use software and $2.3 million less purchases of property and equipment. The decrease was offset by $3.4 million of cash paid for the Pixode acquisition and $0.4 million of other cash payments for investing activities.
Removed
We use Daily Payer Conversion and Average Daily Payer Conversion to help us understand the monetization of our active players.
Added
Smaller Reporting Company ("SRC") Accommodations As an SRC, we have elected to use scaled disclosure accommodations permitted by the SEC, which means that this section does not include all disclosures required for larger reporting companies.
Removed
The increase was primarily due to full year realization of the Brainium portfolio of games, which was acquired in October 2022 as well as an increase in advertising revenue from the Tetris game. The increase was offset by a $13.7 million decrease in virtual currency primarily driven by decreases in DPU and ARPDAU despite overall increases in DAU and MAU.
Added
Specifically: • We have presented only two years of audited financial statements instead of three. • We are not required to include the contractual obligations table that larger companies must disclose. • Our executive compensation disclosures are reduced under Item 402 of Regulation S-K.
Removed
DAU and MAU increased 83.8% and 70.1%, respectively, compared to year ended December 31, 2022, driven by the addition of the Brainium portfolio of games.
Added
Purchases are redeemed by the player directly with the rewards partner within the specified terms and conditions of the reward. The Company does not receive any compensation or revenue from Purchases. We use Purchases as a measure of audience interest and engagement with our playAWARDS platform.
Removed
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.
Added
The decrease was primarily due to a $19.1 million decrease in virtual currency revenue primarily driven by decreases in Average DPU.
Removed
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.
Added
As of December 31, 2024 we had restricted cash of $1.2 million. Historically, we have funded our operations, including capital expenditures, primarily through cash flow from operating activities.
Removed
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.
Added
On June 7, 2024, the Company, a subsidiary of the Company, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, entered into an Amendment No. 4 to Credit Agreement (the “Amendment No. 4”) to, among other things, (i) modify the definition of “Fixed Charge Coverage Ratio” to exclude from the calculation of Restricted Payments amounts paid for the repurchase, prior to June 30, 2024, of approximately 11.7 million shares of Class A common stock of the Company, and (ii) modify the definition of “Consolidated Fixed Charges” to take into account any tax refunds received in the applicable measurement period.
Removed
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.
Added
On July 1, 2024, the Company, a subsidiary of the Company, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, entered into the Amendment No. 5 to Credit Agreement (the “Amendment No. 5”) to, among other things, exclude from the covenant set forth in Section 6.01 of the Credit Agreement regarding the incurrence of Indebtedness (as defined therein) the contingent consideration obligations relating to the Pixode acquisition.
Removed
Net Revenue by Segment Year Ended December 31, 2022 2021 Change % Change Net revenue playGAMES $ 284,476 $ 287,419 $ (2,943) (1.0) % playAWARDS 5,833 — 5,833 100.0 % Net revenue $ 290,309 $ 287,419 $ 2,890 1.0 % 61 playGAMES playGAMES revenue was $284.5 million for the year ended December 31, 2022 compared to $287.4 million for year ended December 31, 2021.
Added
The change in cash used in financing activities was due to an additional $15.7 million of share repurchases, $3.5 million in increased minimum guarantee payments made, and $2.8 million of less proceeds received from stock option exercises.
Removed
The 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.
Added
Accordingly, the earned loyalty points do not require any allocation to the transaction price of virtual currency. Loyalty points or other virtual currencies may be included in certain bundled purchases through certain platforms. Loyalty points or other virtual currencies are not available to be purchased separately and there is no stand alone selling price.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeTherefore, 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.
Biggest changeWe did not have any borrowings outstanding under our Credit Agreement at December 31, 2024 and December 31, 2023, respectively. We do not purchase or hold any derivative financial instruments for trading purposes. Investment Risk We had cash and cash equivalents totaling $109.2 million and $132.9 million as of December 31, 2024 and December 31, 2023, respectively.
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.
As of December 31, 2024, 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. 69
Foreign 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.
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. Dollar, we are paid by platform providers and record revenue in U.S.
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.
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. Foreign Currency Risk Our functional currency is 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, 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.
Dollar, including the Hong Kong Dollar, Euro, Serbian Dinar, Vietnamese Dong, Singaporean Dollar, Mexican Peso, and Chilean 68 Peso. Accordingly, changes in exchange rates in the future may negatively affect our future operating results as expressed in U.S. Dollars.
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.
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 Canadian and Australian Dollars and Pound Sterling to the U.S. Dollar could have a material impact on our results of operations.
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.
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. We also have foreign currency risks related to our operating expenses denominated in currencies other than the U.S.
These risks primarily include interest rate risk, investment risk, and foreign currency risk as follows: Interest Rate Risk Our exposures to market risk for changes in interest rates relate primarily to our Credit Agreement. The Credit Agreement and Revolver are floating rate facilities.
These risks primarily include interest rate risk, investment risk, and foreign currency risk as follows: Interest Rate Risk Our exposures to market risk for changes in interest rates relate primarily to our Credit Agreement. The Credit Agreement is a floating rate facility. Therefore, fluctuations in interest rates will impact the amount of interest expense we incur and have to pay.
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.
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. We have not entered into investments for trading or speculative purposes.
Removed
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

Other MYPS 10-K year-over-year comparisons