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 revenue from the sale of virtual currency in its games. It has recently introduced in-game advertising as a new revenue stream.

Financial Highlights

• Revenue decreased 2.9% to $77.8 million in Q1 2024 compared to $80.1 million in Q1 2023
  • Decline due to ending of a licensing deal in the playAWARDS segment
• Net loss narrowed from $2.6 million in Q1 2023 to $0.6 million in Q1 2024
• Cash and cash equivalents were $127 million as of March 31, 2024

Revenue Analysis

playGAMES

• Revenue increased 0.3% to $77.8 million
  • Growth in advertising revenue offset decline in virtual currency revenue
• Decline in virtual currency revenue driven by decreases in Daily Paying Users
• Advertising revenue increased 33.3%

playAWARDS

• Revenue decreased 100% to $0 due to non-renewal of a licensing arrangement
• Key metrics on rewards platform increased despite revenue decline
  • Available Rewards decreased only 2.4%
  • Purchases increased 13.9%
  • Retail Value of Purchases increased 48.5%

Expense Analysis

• Cost of revenue decreased 2.9%, driven by decline in virtual currency revenue
• Selling and marketing increased 2.8%, due to increases in personnel and advertising costs
• Research and development increased 1.5%, due to IT infrastructure investments
• General and administrative decreased 1.0%
• Depreciation and amortization increased 4.8% due to license renewals
• Restructuring expenses decreased 84.2% year-over-year

Profitability Analysis

• playGAMES segment profitability increased, with AEBITDA margin expanding from 29.1% to 30.1%
• Increase driven by high-margin advertising revenue growth
• playAWARDS segment AEBITDA loss widened, due to revenue decline

Liquidity and Capital Resources

• Strong cash position, with $127 million of cash and cash equivalents
• Cash from operations increased year-over-year
• Company expects existing cash resources will fund operations and investments for at least the next 12 months
• May raise additional capital opportunistically to fund growth

Outlook

• playGAMES segment performing well, showing ability to drive advertising revenue to offset declines in virtual currency
• playAWARDS platform continues to expand, though near-term monetization challenging
• Company making investments in personnel, infrastructure, and game development to position itself for long-term growth