Company Overview

The company develops free-to-play casual games for mobile and web platforms. It operates through two segments:

1. playGAMES - develops free-to-play casual games that generate revenue through the sale of virtual currency and advertising
2. playAWARDS - operates a loyalty rewards platform that offers real-world rewards from over 80 rewards partners

The company generates most of its revenue from the sale of virtual currency in its games. It also generates some revenue from in-game advertising.

Financial Highlights

• Revenue for Q1 2024 was $77.8 million, down 2.9% compared to Q1 2023.
  • playGAMES revenue was flat at $77.8 million
  • playAWARDS revenue decreased by $2.5 million due to a non-renewal of a licensing deal
• Net loss was $0.6 million compared to a net loss of $2.6 million in Q1 2023
• Adjusted EBITDA was $15.3 million compared to $17.8 million in Q1 2023

Revenue

• Most revenue comes from the US, which accounted for $65.4 million (84%) of total revenue
• Revenue outside the US increased by 18% year-over-year

playGAMES

• Virtual currency revenue decreased by 6.4% due to fewer daily paying users
• Advertising revenue increased by 33.3%

playAWARDS

• Revenue decreased by $2.5 million due to a non-renewal of a licensing arrangement
• Engagement metrics improved:
  • Purchases increased by 13.9%
  • Retail value of purchases increased by 48.5%

Expenses

• Operating expenses decreased by 3.4% compared to Q1 2023
• Cost of revenue decreased due to lower virtual currency revenue
• Selling and marketing increased due to higher personnel costs and outside services
• R&D increased due to higher IT expenses
• G&A was flat
• Depreciation increased due to license renewals
• Restructuring expenses decreased significantly

Profitability

• Net loss margin improved from -3.2% to -0.7%
• playGAMES segment margin expanded from 29.1% to 30.1%
• Consolidated adjusted EBITDA margin declined from 22.2% to 19.7%

Cash Flow and Balance Sheet

• Ended Q1 2024 with $127 million in cash and no debt
• Cash from operations increased due to higher advertising revenue
• Investing activities cash outflow declined due to lower capital expenditures
• Financing cash outflow increased due to lower option exercise proceeds

Outlook

The company expects to continue investing in new games and features to drive revenue growth. Profitability is expected to remain healthy in the playGAMES segment but the playAWARDS segment will likely continue to generate losses as it scales up the loyalty platform. The balance sheet remains very strong with no debt and ample liquidity to fund future growth.