Playtika Holding - Earnings Call - Q2 2025

Executive Summary

• Q2 revenue of $696.0M missed S&P Global consensus $705.4M* and GAAP diluted EPS of $0.09 was below the $0.127* consensus; management cut FY25 revenue guidance to $2.70–$2.75B (from $2.80–$2.85B) but maintained Adjusted EBITDA at $715–$740M, citing DTC mix shift and operating efficiencies. Consensus values from S&P Global.*
• Mix and franchise dynamics: Bingo Blitz remained resilient ($160.2M, -1.3% q/q, +2.9% y/y), while Slotomania deteriorated materially ($86.5M, -22.7% q/q, -35.4% y/y) due to game economy changes; June’s Journey was stable ($69.1M, +0.3% q/q, -7.4% y/y).
• Strategic highlights: Disney Solitaire reached a ~$100M ARR run-rate post-launch; management raised long-term DTC penetration target to 40% (from 30%) to support margins as portfolio transitions.
• Capital allocation and liquidity: $0.10 dividend declared (payable Oct 10, 2025), cash and short-term investments of $592.1M, and pro forma liquidity of ~$1.14B; revolving credit facility extension to Sept 2027 is pending regulatory approval in China.
• Near-term stock catalysts: revenue guidance cut vs. maintained EBITDA, accelerating DTC, Disney Solitaire traction, and Q4 global launch of new slots title “Jackpot Tour”.

What Went Well and What Went Wrong

What Went Well

• DTC momentum and target lift: DTC revenue was $175.9M (-1.8% q/q, +1.3% y/y), and management raised its long-term DTC target to 40% to help “balance our margins as we manage changes within our portfolio”.
• Flagship/title execution: “Bingo Blitz continues to experience strong engagement and significant growth in DTC revenue,” supporting portfolio balance; Q2 Bingo Blitz revenue was $160.2M (-1.3% q/q, +2.9% y/y).
• New game success: Disney Solitaire “has already hit the $100 million annual run-rate revenue threshold,” with CEO praising the collaboration and execution; management also highlighted a potential advertising revenue opportunity (double-digit sequential growth) in the portfolio.

What Went Wrong

• Social slots headwinds: Slotomania revenue fell sharply to $86.5M (-22.7% q/q, -35.4% y/y) as game economy fixes pressured near-term monetization; management expects softness before improvement.
• Profitability compression: Adjusted EBITDA declined to $167.0M (-0.2% q/q, -12.6% y/y) and adjusted net income dropped to $6.5M (down 82% q/q and 91.4% y/y), reflecting higher sales/marketing spend post-SuperPlay and contingent consideration revaluation dynamics.
• Guidance cut: FY25 revenue was reduced to $2.70–$2.75B from $2.80–$2.85B due to portfolio transitions and weakness in mature titles; though EBITDA was maintained, the cut signals top-line pressure.

Transcript

Speaker 5

Good day, and thank you for standing by. Welcome to the Playtika Q2 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tae Lee, SVP Corporate Finance and Investor Relations. Please go ahead.

Speaker 0

Welcome, everyone, and thank you for joining us today for the second quarter 2025 earnings call for Playtika Holding Corp. Joining me on the call today are Robert Antokol, Co-Founder and CEO of Playtika, and Craig Abrahams, Playtika's President and Chief Financial Officer. I'd like to remind you that today's discussion may contain forward-looking statements, including but not limited to the company's anticipated future revenue and operating performance, and more specifically, the future performance of our individual titles such as Spotomania or our recently launched Disney Solitaire. These statements and other comments are not a guarantee of future performance, but rather are subject to risks and uncertainties, some of which are beyond our control. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call.

We've posted an accompanying slide deck to our investor relations website, which contains information on forward-looking statements and non-GAAP measures, and we'll also post our prepared remarks immediately following the call. For a more complete discussion of the risks and uncertainties, please see our filings with the SEC. With that, I'll now turn the call over to Robert.

Speaker 3

Good morning, and thank you, everyone, for joining our call today. I want to start by acknowledging the resilience and dedication of our team. Despite the ongoing headwinds facing mobile gaming, we remain firm in our commitment to our strategic priority. For Q2 2025, we are reporting revenue of $696 million and an adjusted EBITDA of $167 million. While this number reflects some underperformance, we have several positive developments to highlight. First, I am incredibly happy to share the success of our last launch, Disney Solitaire. The game has already hit the $100 million annual run rate revenue threshold, which is a testament to the incredible work of our Super Play Studios, working in collaboration with Disney and Pixar Games. This achievement helps drive sequential growth in the Super Play portfolio, and we are optimistic about its continued performance.

We have been pleased with the overall performance of Disney Solitaire and the Super Play portfolio since the acquisition. Second, coming off a record quarter in Q1, Bingo Blitz continues to experience a strong engagement across the board. The studio is seeing a strong ramp-up in the D2C revenue, and we are pleased with the performance of the largest game in our portfolio. Third, we are increasing our long-term target for D2C to 40%, up from 30%. The goal is to sustain EBITDA and free cash flow as we manage changes within our portfolio and respond to the changing landscape of direct payments. During this period, our more mature titles are experiencing declines in revenue, while our more recently acquired titles are in the process of transitioning from being EBITDA negative to positive.

We believe that continuing to increase our D2C penetration will help offset margin pressure during this transitional period. Turning to Slotomania, the game continues to face challenges. Our team is working hard on various steps to stabilize the game economy. As we mentioned previously, this is a part of getting growth before it's getting better. Although players' engagement continues to be strong, monetization has not kept pace, and the team is prioritizing efforts to improve this area. Our new slot game is a critical component of our slot strategy, and we are taking a major approach to this development. We remain on track to launch it in the fourth quarter of this year, and while we do not expect a material impact on our 2025 results, we see it as an important long-term growth driver for Playtika.

In addition, Super Play's next new game has the potential to be a standout in its category, with the launch timing details to be shared at a future date. Beyond this project, we're actively exploring opportunities to develop and launch additional new games in genres that are strategically important to us. We are excited about the pipeline we are building and look forward to providing more updates as this project progresses. Thank you, and I will now turn the call over to Craig for a more detailed review of our financial performance.

Speaker 0

Thank you, Robert. It is important to highlight the portfolio dynamics that have shaped our performance. This quarter, we experienced a slight sequential decline in revenue, primarily driven by the continued decline in Spotomania. Despite this, our year-over-year performance reflects the successful execution of our M&A strategy. Our acquired portfolio of games has been a significant driver of this growth. The Super Play portfolio, the Yuta Games card portfolio, and Animals and Coins have all contributed to our year-over-year revenue growth. With that, let us get into the details of the quarter. We generated $696 million of revenue in the quarter, reflecting a 1.4% sequential decline and an 11% year-over-year increase. GAAP net income for the quarter was $33.2 million, representing an 8.5% sequential increase and a 61.7% year-over-year decrease.

Adjusted EBITDA for the quarter was $167 million, showing a slight sequential decline of 0.2% and a year-over-year decrease of 12.6%. This decline in adjusted EBITDA margins was primarily driven by increased sales and marketing expenses associated with our Super Play games, which resulted in margin dilution following the Super Play acquisition. D2C revenue for the quarter was slightly off our record high revenue last quarter, achieving $175.9 million, a 1.8% sequential decline, and a 1.3% increase year-over-year. Our year-over-year growth in D2C was driven by several titles. Our leading casual games, including Bingo Blitz, June's Journey, and Solitaire Grand Harvest, all set record D2C numbers for the quarter. However, this growth was offset by a sequential decline in Spotomania's D2C revenue. We are putting more effort into expanding our D2C business and expect to see stronger results in the second half of the year.

This incremental margin will help offset the EBITDA pressure we are experiencing from the revenue declines in some of our more mature titles, especially on the slot side of the business. Historically, we had spoken about 30% of revenues as the target for D2C, but we now believe that a more realistic long-term target for D2C is closer to 40% of total revenues. With that, let us dive into the performance of our top three titles from the quarter, beginning with Bingo Blitz. Bingo Blitz revenue was $160.2 million, down 1.3% sequentially, and up 2.9% year-over-year. We are pleased to see that Bingo held strong sequentially against its record first quarter. Additionally, Bingo Blitz recorded its own record revenues from our D2C platforms in the second quarter.

As the largest title in our portfolio, Bingo Blitz continues to execute at a high level, reinforcing its leadership position in a winner-take-most category. The game remains a strong contributor to our overall performance and a clear example of our strategy to invest in category-leading games with durable growth potential. Importantly, Bingo Blitz is also showing a meaningful upside in expanding its D2C business, which we expect will enhance our D2C mix and help preserve margins over time. Spotomania revenue was $86.5 million, down 22.7% sequentially, and 35.4% year-over-year. Spotomania faced an acceleration in its declining trend during Q2 as we began implementing changes to address the game economy challenges we discussed last quarter. These adjustments are aimed at rebalancing the game economy to support healthier long-term engagement and monetization, but they are contributing to near-term pressure on revenue performance.

We recognize that this is a difficult phase when results may continue to soften before we begin to see improvement. At the same time, we remain focused on executing our broader strategy in the social slots category. The development of our new slot title, which is designed to complement our existing portfolio, is progressing well. We view this title as a key pillar in our efforts to regain lost market share and expect to have our global launch in Q4 of this year. June's Journey revenue was $69.1 million, up 0.3% sequentially, and down 7.4% year-over-year. June's Journey has shown several quarters of encouraging sequential stability following a period of decline in the first half of 2024. As we look to reignite growth, the focus is shifting towards deeper monetization, supported by a refreshed leadership team at our Wooga studio.

Earlier this year, we appointed a new GM and leadership team at Wooga, bringing a renewed focus to June's Journey and its long-term roadmap. In addition, we made the decision to discontinue the development of Player's Chronicles to focus our resources on new games showing the strongest momentum. We believe these changes will allow the Wooga team to focus on the execution and lay the foundation for renewed growth in June's Journey in the second half of the year and beyond. Turning now to specific line items in our P&L for the second quarter. Cost of revenue increased 16.4% year-over-year, driven by our revenue growth and the increase in amortization expenses in our P&L resulting from the acquisition of Super Play. Operating expenses increased by 22.6% year-over-year. The increase was primarily driven by higher performance marketing spending, which was also a direct result of our Super Play acquisition.

R&D increased by 13.8% year-over-year. The growth in R&D was primarily driven by an increase in average headcount during the quarter compared to the same period last year. This was largely due to the acquisition of Super Play, which bolstered the R&D workforce. Sales and marketing increased by 52.1% year-over-year. The increase in sales and marketing was primarily driven by the incremental performance marketing spend from our acquisition of Super Play. In the last quarter, we mentioned that we anticipated a sequential step-down in sales and marketing expenses, and we observed this trend in the second quarter. We expect the sequential step-down to continue for the second half of this year. G&A expenses decreased by 62.8% year-over-year. During the quarter, we recorded a $33 million benefit in our G&A expenses related to the revaluation of contingent considerations tied to our past acquisitions.

It is important to note that this is a non-cash adjustment and reflects a change in estimated payouts rather than any operational improvement in G&A efficiency. The comparable quarter in 2024 also had an adjustment related to contingent considerations, excluding adjustments in both periods. G&A would have declined year-over-year by 20.8%. As of June 30th, we had approximately $592.1 million in cash, cash equivalents, and short-term investments. Looking at our operating metrics, average DPU declined 3.1% sequentially and increased 26.8% year-over-year to 378,000. The average DAU decreased 2.2% sequentially and increased 8.6% year-over-year to 8.8 million. ARP DAU was flat versus Q1 and increased 2.4% year-over-year to $0.87. Finally, we are revising our guidance for the year. Our updated revenue range for the year is $2.7 to $2.75 billion, down from $2.8 to $2.85 billion.

Despite the decrease in our revenue range, we are maintaining our adjusted EBITDA range of $715 million to $740 million. This demonstrates our ability to offset the EBITDA losses from Spotomania revenue weakness through increased efforts in our D2C platforms and other efficiencies we are executing throughout the organization. We'd be happy to answer your questions.

Speaker 5

As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Please stand by while we compile the Q&A roster. Our first question comes from Arthur Chu with BofA Securities. Your line is open.

Speaker 2

Hey, guys. This is Arthur on Forward More. Thanks for taking the question. You guys have been working on, you know, stabilizing some of the oldest titles like Spotomania for a while. I'm curious what, you know, what are some of the learnings you have taken away from this process, and if any of those learnings have perhaps led you to change your approach or, you know, change the way you're thinking about, like, turning around these titles?

Speaker 6

Hey, Arthur, thanks for the question. When you're dealing with game economy issues and hyperinflation within a game, these are complex issues, especially in games that are 10-plus years old and have various monetization levers within the game. I think for us, we've learned a lot within Spotomania. It is one of the biggest franchises for slots within the category. We have an engaged player base. If you look at the declines in DAU, they are better than the declines you've seen in DPU, so it's clearly a monetization issue. For us, it's taking time to peel that through, but I think we're encouraged by the changes that we've been making and seeing the impact there. It's definitely something they're highly focused on, and we're starting to see some benefits there of our efforts.

Speaker 2

Got it. Thank you very much.

Speaker 5

Thank you. Our next question comes from Colin Sebastian with Robert W. Baird & Co. Incorporated. Your line is open.

Speaker 7

Thanks. Appreciate the questions. First, congrats on Disney Solitaire. On that game, Craig, can you talk about the economics of the title, you know, the licensing costs, the customer acquisition costs, the margin profile of that game versus the broader portfolio, and then have a follow-up?

Speaker 6

Sure. The terms of our deal with Disney and Pixar Games is not publicly disclosed. I think you can imagine, as with any top-tier content provider, there's a license fee associated with licensing their content. That being said, the title is one of the most successful launches of the year in terms of a new title in any category. I think that it's scaling much faster than any previous Super Play title, and we continue to be impressed with the results. It's been a great collaboration with Disney and Pixar Games, and we look forward to continuing to execute on growing that game.

Speaker 7

Okay, great. Maybe as a follow-up to Arthur's question, are you guys thinking differently about, I guess, the legacy or mature portfolio if there's any structural shift in the market among mobile gamers in terms of their preference for, you know, older versus newer games, or is that not really something you're observing?

Speaker 6

I think the way that we differentiate it is looking at category-leading games. Where we're a category leader, we are making investments in the game. If it's an older game that doesn't have category leadership, we're not seeing that same level of investment. We also continue to invest in our recently acquired titles. That's a key area for growth for us. I think if you look across all three acquisitions, they all grew year over year. Continuing to expand our D2C business throughout all of our titles, recently acquired and existing titles, is important. I think a new growth vector for us that we'll talk about more in the future is growing our advertising business. We saw double-digit growth sequentially as well there. Lastly, developing and scaling new games as well is something that's newer for us, but something that we're focused on.

Speaker 3

One thing I would like to add is that we saw with this, what happened with Disney Solitaire, that we launched a new game in a category that was already dominating there for a long time, and the category grew. This kind of example is making us think about other categories that are leaders right now, and it's going to change the thing that we are looking at launching a new game because the example of Disney Solitaire is an unusual example. We launched a new game, we grew the category dramatically, we're still leading the category with our old game. For us, it's a win-win situation.

Speaker 7

Okay. Thanks, Robert. Thanks, Craig.

Speaker 5

Thank you. Our next question comes from Eric Handler with ROTH Capital Partners. Your line is open. Eric, please check your mute button.

Speaker 4

Sorry about that. I'm curious, with your social casino business, are you seeing any negative impact from sweepstakes?

Speaker 3

It's a good question that we cannot give you a straight answer because we are not sure about it. We see a big pressure on the social casino category in the last year. I'm sure there is a part of these activities, but I cannot give you any special numbers or tell you some special examples because I really don't know.

Speaker 4

Okay. Is that an area that you'd ever look to move into?

Speaker 3

No, definitely no. This is not where we're going. It's an area that we don't believe in, and it's not in our plans.

Speaker 4

Thank you.

Speaker 5

Thank you. Our next question comes from Aaron Lee with Macquarie. Your line is open.

Speaker 7

Hey, guys. Good morning. Thanks for taking the question. Maybe we want to start on, I guess, Disney Solitaire. Congrats on all the success there. I guess, what is your appetite for pursuing more IP or licensing-type arrangements for games, whether organically or through M&A?

Speaker 6

Sure. We are looking at a variety of new game opportunities. I think licensed IP in this environment has done very well. I think we're open to the right partnerships for the right IP in categories where it makes sense.

Speaker 7

Okay. A quick follow-up on Jackpot Tour. Any color on your development of this and how you plan to differentiate that from the competition? I guess, any early testing that you've done that you can share? Thank you.

Speaker 3

Thank you for the question. I cannot give a lot of information about this game, but I can tell you that this game is going to make a difference. This is what we're looking for. This is how we're going to launch this game. We have the most, I think, long experience in this category for 15 years, and our last casino launch was, I think, 12 years ago. We are very excited about launching this game. I'm sure it's going to close the gap of what we lost in our current organic games. It's going to be different, and when we have more details, I will be more than happy to share with you guys.

Speaker 7

Okay. Got it. Thank you.

Speaker 5

Thank you. As a reminder, please press *11 to ask a question. Again, that is *11 to ask a question. Our next question comes from Albert Kim with UBS. Your line is open.

Speaker 1

Hey, guys. Thanks for taking the question. Recently, we've been seeing some multiple headlines and greater scrutiny around kind of the mobile store markets. Any impact, if any, does the App Store fee changes have on your D2C ambitions? Any factors we should be mindful of as we think about the new longer-term post? If you could share any, like, timeline to get to the 40% goal. Thank you.

Speaker 6

Sure. The changes in the payment landscape and in the App Stores have been a positive tailwind for us. In the U.S. specifically, we're seeing upside in iOS. I think in terms of our execution now for the last few years, we've been very consistent in terms of increasing D2C penetration. We're seeing that accelerate now with those changes, and we updated our long-term target as a result from 30% to 40%.

Speaker 5

Thank you. I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.