Q1 2024 Earnings Summary
- Playtika is expanding its Direct-to-Consumer (D2C) platform, aiming to increase D2C revenue to 30% of total revenue, which can improve margins and cash flow. The company plans to add two more games to their D2C platform over the next 12 to 14 months, enhancing their independence and financial performance.
- The company is reorganizing its marketing strategy to give more independence to individual game studios, which is expected to enhance decision-making and drive growth in key franchises like Slotomania and Bingo Blitz. This strategic shift allows studios to tailor marketing efforts, conduct better market tests, and leverage their unique strengths to grow the business.
- Playtika is utilizing advanced AI tools to optimize marketing efforts across its portfolio, leveraging both in-house and third-party solutions, which can enhance efficiency and marketing return on investment. The ongoing use of AI aids employees in making better decisions, and the company continues to navigate and execute in a rapidly changing ad tech ecosystem.
- The company is undergoing significant leadership restructuring, including the elimination of the Chief Revenue Officer and Chief Operating Officer roles, which may introduce operational challenges and management instability during a critical growth period.
- Management is changing its marketing strategy by giving more independence to studios, particularly for key games like Slotomania, after criticism of underinvestment. This strategic shift may introduce execution risks and suggests prior marketing strategies may have been ineffective.
- The company continues to rely heavily on M&A for growth, with management reaffirming its M&A strategy over organic growth, which may indicate difficulties in generating internal growth and potential challenges in integrating acquisitions effectively.
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M&A Strategy Confidence
Q: How are you thinking about investments in studios vs full acquisitions?
A: Craig explained that while their preference is to make acquisitions where they can leverage their live ops capabilities to help businesses grow, they also see value in making investments in studios to develop relationships within the ecosystem. This approach allows them to potentially acquire these businesses in the future or enhance collaborations. -
D2C Platform Expansion
Q: How quickly will Solitaire and June's Journey ramp up on D2C?
A: Robert stated that they plan to add these two games to their direct-to-consumer platform over the next 12 to 14 months. They aim to reach their target of 30% of revenues through D2C, leveraging better margins and cash flow. He expressed excitement about this expansion, seeing it as a significant advantage for the company. -
Marketing Strategy and Leadership
Q: How will the marketing strategy evolve under new leadership?
A: Robert discussed restructuring marketing by giving more independence to studios. They are building two teams for Bingo and Slotomania, allowing each to work differently to better test the market and grow the business. He believes this new direction will help them invest more effectively and leverage opportunities in the market. -
User Acquisition Spending
Q: Can you quantify spending on user acquisition for new vs mature games?
A: Craig noted that while they are not sharing specific metrics, a good portion of the incremental year-over-year marketing spend was dedicated to newly acquired titles as they invest for growth. They have increased marketing budgets for games like Slotomania and are also investing where they see good results, such as Bingo Blitz. -
AI-based Marketing Solutions
Q: Are AI marketing solutions deployed widely? Are you seeing leverage?
A: Craig mentioned they have been using AI tools for years to aid employees across the company. Recent advancements in third-party tools further support decision-making. However, he clarified that the adoption of AI tools is not directly related to the recent reorganization of the marketing leadership team, which was a separate decision. -
Ad Tech and Marketing Tools
Q: Any updates on ad tech and marketing tools and R&D efforts?
A: Craig explained that the ad tech ecosystem is rapidly changing, and they are using a mix of internal and third-party tools to optimize marketing. New AI tools, both in-house and third-party, are helping with attribution and budget allocation. They will continue to seek best-in-class solutions to enhance marketing efforts.
Research analysts covering Playtika Holding.