PLAYSTUDIOS Q2 2025 Earnings Report

PLAYSTUDIOS EPS Results

• Actual EPS: -$0.02
• Consensus EPS: -$0.01
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

PLAYSTUDIOS Revenue Results

• Actual Revenue: $59.34 million
• Expected Revenue: $61.63 million
• Beat/Miss: Missed by -$2.30 million
• YoY Revenue Growth: N/A

PLAYSTUDIOS Announcement Details

• Quarter: Q2 2025
• Date: 8/4/2025
• Time: After Market Closes
• Conference Call Date: Monday, August 4, 2025
• Conference Call Time: 5:00PM ET

PLAYSTUDIOS (NASDAQ:MYPS) develops and publishes free-to-play casual games for mobile and social platforms in the United States and internationally. The company's game portfolio includes a diverse range of titles comprising social casino, card, puzzle, and adventure games. It also offers POP! Slots, myVEGAS Slots, my KONAMI Slots, MGM Slots Live, myVEGAS Blackjack, myVEGAS Bingo, Tetris, Solitaire, Spider Solitaire, Jumbline 2, Sudoku, and Mahjong games. PLAYSTUDIOS, Inc. is headquartered in Las Vegas, Nevada.

PLAYSTUDIOS Q2 2025 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Our core social casino and casual portfolios saw continued softness, with Q2 revenue down 18.3% year-over-year and DAU falling to 2.3 million, reflecting pressure from market shifts.
• Positive Sentiment: Our sweepstakes initiative is live in open beta across seven states, showing improving retention, engagement, and monetization, with plans to reach all qualified U.S. states later this year.
• Positive Sentiment: Tetris Block Party development is on track for a Q4 launch, with steady improvements in gameplay, monetization, and early marketing test results.
• Positive Sentiment: Direct-to-consumer in-app purchase revenue reached $6.7 million in Q2, up 107% year-over-year and 34% sequentially, now representing 13.9% of total IAP revenue.
• Positive Sentiment: We ended Q2 with $112.9 million in cash, no debt, and an $81 million credit facility, enabling strategic capital deployment and share repurchases.

Presentation

[Operator]

Good afternoon, everyone, and welcome the PlayStudio Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to Jason Hahn, PlayStudio's Chief Strategy Officer and Head of Investor Relations. Mr. Hahn, you may begin.

[Jason Hahn, Chief Strategy Officer & Head - IR at Playstudios]

Thank you, operator. Good afternoon and thank you for joining us for PlayStudio's Q2 twenty twenty five earnings call. Joining me on the call today are our Chairman and CEO, Andrew Pascal and our CFO, Scott Peterson. Before we begin, please note that during this call, we may make forward looking statements. These statements are based on our current expectations and are subject to risks and uncertainties that may cause actual results to differ materially.

[Jason Hahn, Chief Strategy Officer & Head - IR at Playstudios]

Please refer to our SEC filings for a more detailed discussion of these risks. We will also discuss certain non GAAP financial measures. These should not be considered a substitute for measures prepared in accordance with GAAP. Reconciliations to comparable GAAP measures can be found in our earnings release and SEC filings. With that, I'll turn it over to Andrew.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Great. Thanks, Jason. Good afternoon, everyone. The dominant theme in Q2 and across the broader market continues to be the rapid rise of social casinos leveraging sweepstakes mechanics. This structural shift is reshaping player behavior and monetization across the category with more players gravitating towards social casino products powered by sweepstakes.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

This trend is pressuring traditional offerings including our core social casino portfolio. That said, these dynamics were anticipated and are exactly why we launched our reinvention program last year. We entered Q2 knowing the headwinds would persist and we remain focused on advancing the new initiatives that will define our next chapter. While our core business continued to soften this quarter, we're encouraged by the early signals we're seeing in areas like sweepstakes, direct to consumer purchases and new game development. These signals validate our strategic direction and give us confidence in the path ahead.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Let me walk you through some of the key updates. Let's start with our sweepstakes initiative. After just nine months since formalizing this effort, we're now live and open beta across seven states and the early signals are promising. Player retention, engagement and monetization are all trending in the right direction. We're seeing clear evidence that our proposition resonates with players.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

We're taking a measured and rigorous approach to scaling focused on ensuring that when we open the product to all eligible states, the experience is fully optimized and delivers on our high standards, player expectations and return on ad spend thresholds. We expect to be live across the full footprint of qualified U. S. States later this year. I want to remind everyone on the call that our strategy consists of a phased approach.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

We're beginning with a standalone web based platform allowing us to build operating excellence and refine our core sweepstakes mechanics. Over time this will evolve into a fully integrated promotional engine that drives chip sales across our social casino portfolio. In parallel, we continue to actively explore complementing our own effort with strategic acquisitions that could accelerate our momentum and position us for market leadership in the category. Let's turn to our other growth opportunity Tetris Block Party. Development progressed steadily throughout Q2 with meaningful product improvements and early marketing tests that offered valuable insights into player engagement and acquisition efficiency.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

As with any new title, we're in a phase of continuous iteration, refining the gameplay, tuning the economy and sharpening the funnel. We're currently in the mid stages of that cycle and while there's still work to do, we're increasingly confident in the game's potential. We remain on track for a Q4 launch. I'd like to provide a bit more color on our overall Play Games Publishing business. As I already highlighted, the casino portfolio continues to be impacted by the broader market shift towards sweepstakes products.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

We're seeing ongoing softness in core titles with DAU declines across the board as the primary driver. This was partially offset by stronger unit level monetization particularly in Mykonami, which was a bright spot in the quarter. We also continue to scale our direct to consumer business, which remains a standout. In Q2 direct to consumer generated $6,700,000 of in app purchase revenue, up 107 year over year and 34% sequentially and represented 13.9% of total in app purchase revenue. This momentum is driven by increased adoption and deeper engagement with our MyBIP direct to consumer offerings.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

And with Apple's recent policy changes giving us more flexibility to promote the channel, we see even greater opportunity to build on this momentum. Let's talk casual. Our casual portfolio also remains under pressure due to challenging market and competitive dynamics. During the quarter, we focused on product updates aimed at improving engagement and retention. We believe these enhancements will better position us to deploy user acquisition profitably in future quarters.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

In the meantime, we've deliberately scaled back marketing spend to prioritize margin contribution from this portfolio and we'll continue to evaluate our approach going forward. On the Play Awards front, Play Awards remains still our core differentiator and we continue to invest in the platform to deepen engagement and drive long term loyalty. In Q2, Players purchased nearly 200,000 rewards with a retail value of CAD13 million. While rewards purchases were down compared to Q1, we're seeing encouraging signs as we focus on higher value partners and more curated strategic offerings that align with player preferences and our broader engagement goals. We also ran several promotions for the upcoming My VIP World Tournament of Slots across our games, which were very well received by our players.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

We're excited about the momentum building around this high impact franchise activation and we believe it will play a meaningful role in reenergizing our community in the coming quarters ahead. Lastly, I'd like to briefly touch on our balance sheet and capital allocation. Our balance sheet remains rock solid. We ended the quarter with approximately $112,900,000 in cash, up from $107,000,000 in Q1, even after deploying over $2,000,000 to repurchase shares during the quarter. We remain debt free with full access to our $81,000,000 credit facility providing us with strategic latitude to deploy capital to high returning initiatives in quarters ahead.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

So with that, I'll turn the call over to Scott for some more financial highlights.

[Scott Peterson, VP & CFO at Playstudios]

Thanks, Andrew. Good afternoon, everyone. Second quarter revenue was $59,000,000 down approximately 18.3% year over year and 5.4% sequentially. This reflects continued softness in our core casino and casual games, which as Andrew mentioned, was driven by market disruption and DAU declines across most titles. Adjusted EBITDA for the quarter was $10,700,000 down 24% year over year and 14.2% sequentially, reflecting limited flow through given revenue softness.

[Scott Peterson, VP & CFO at Playstudios]

Adjusted EBITDA margin was 18.1% compared to 19.5% in the 2024 and nineteen point nine percent in the 2025. DAU was $2,300,000 down from $2,600,000 in the first quarter and $3,200,000 in the 2024. MAU was $10,000,000 also down from $11,400,000 in the first quarter. ARPDAU was $0.28 up slightly from $0.26 last quarter and $0.25 a year ago, reflecting stronger monetization. Direct to consumer revenue for the second quarter was 6,700,000.0 representing 13.9% of total in app purchase revenue.

[Scott Peterson, VP & CFO at Playstudios]

This was up from $5,000,000 in the first quarter and $3,200,000 in the 2024. For the first half of the year, direct to consumer revenue totaled $11,700,000 up 109.8% year over year. We ended the quarter with approximately $112,900,000 in cash, no debt and an outstanding share count of $125,200,000 While we're currently pacing below our full year revenue and adjusted EBITDA guidance, as revenue softness has more than offset cost savings, we are not changing guidance at this time. We will continue to evaluate how the investments we've made in recent quarters translate and see how this very dynamic market continues to evolve as we approach the back half of the year. With that, I'll turn the call back to Andrew.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Thanks, Scott. To close, we're clear eyed about the challenges in our core business, but also confident that we're taking the right steps to adapt and evolve. Our focus remains firmly on executing our core strategic priorities, those being developing our sweepstakes capabilities, expanding our direct to consumer sales, unlocking the potential of Tetris and modernizing our core games. And we're encouraged by the early traction we're seeing across these initiatives. The investments we're making today are building a stronger, more diversified foundation that we believe will drive renewed momentum in the quarters ahead.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

We appreciate your continued support as we move forward with purpose in this dynamic market. Operator, let's open it up for questions.

[Operator]

Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Ryan Sigdahl with Craig Hallum Capital Group. Please proceed with your question.

[Ryan Sigdahl, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Hey, good afternoon, Andrew, Scott.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Hey, Ryan.

[Scott Peterson, VP & CFO at Playstudios]

Hi.

[Ryan Sigdahl, Senior Research Analyst at Craig-Hallum Capital Group LLC]

I want to start with the DAU, MAU both down high 20% year over year. I get the challenges with everything going on in the environment. But can you split that out between social casino casual games? I guess, it similar between the two, one better, one worse and then anything within the game construct of either of those categories?

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Yes. Look, the DAU and MAU declines were pretty substantial in both cases. I think obviously a lot of that's a result of our having pulled back pretty materially on user acquisition investments as well. And so I would say that it's a bit more dramatic in the casual space than the social casino space, but meaningful in both portfolios.

[Ryan Sigdahl, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Got you. Then just sweepstakes, I appreciate kind of the player engagement monetization encouraging commentary, but anything can comment from whether it's a quantitative KPI or anything you're willing to share number of users, how ARPDAU compares, just anything kind of from that early launch? And then I guess given the challenges that don't seem to be abating anytime soon, why not accelerate kind of the full launch of sweepstakes?

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Yes. So we're today we're in seven different jurisdictions live with our service. And we started this whole effort about nine months ago. And so we're at a point where we completed our platform in about seven months, initiated our initial trials in the first two jurisdictions and relied upon the data, what we're seeing from those cohorts to refine the platform in the way that we're operating the service. And as we build confidence, we've opened up more jurisdictions.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

I can tell you that we continue to see positive improvement across all the key metrics. So retention continues to improve, conversion rates are improving, the yields were seeing per monetizer are improving. And we're feeling really optimistic about the evolution and the progress that we're making. And as we sit here today, nine point five, ten months into a cycle, I think we're in a pretty good place. And we're feeling like in the coming months, we're going to continue to open up more jurisdictions and we're at a place where we can start allocating more marketing capital and achieve the kind of return targets that are going to allow us to scale.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

So it's really a function of just continuing to optimize our marketing and getting comfortable with the funnel and all of its conversion metrics and seeing the retention engagement and resulting monetization that's going to allow us to get the returns so that we can then deploy meaningful capital and scaling growing that business. And I think that we're on plan. So we're feeling encouraged by what we're seeing as we continue to evolve the platform, the content and the features and just build the competency in running this business.

[Ryan Sigdahl, Senior Research Analyst at Craig-Hallum Capital Group LLC]

As someone that lives in one of those two initial states, I was a positive contributor for you guys in the quarter. And I do have to say that the experience is, albeit early and evolving, was is impressive and I guess comparable to many of the other sweepstakes out there. And that's on short timeline here. Last question for me, it's probably for Scott, but just any guideposts you can put around Q3, I guess as a starting point, I think Q3 typically from a seasonality standpoint is pretty similar to Q2. I guess would you agree with that?

[Ryan Sigdahl, Senior Research Analyst at Craig-Hallum Capital Group LLC]

And any guidepost you can give around next quarter expectation would be helpful. Thanks.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Yes. I mean I can weigh in and Scott can offer us color too. But as you highlighted, no meaningful differences that we see in Q3 relative to Q2. Our primary focus is on executing on all of these things that we think are going to restore the momentum in our business. And so there's a lot that's changing and a lot that's happening within the portfolio of initiatives that we're actively investing in.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

We're always reluctant to kind of provide guidance that's based upon all of these new initiatives until we have a clear line of sight as to their predictability, both in terms of timing when they'll be in the market and their capacity to scale and contribute to our operating performance. So for that reason, we're just going to kind of hold to where we are. And I think Q3 won't look that different from what we've seen in Q2.

[Ryan Sigdahl, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Thanks, Andrew. Good luck, guys. Turn it over to the others.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Great. Thanks Ryan.

[Operator]

Thank you. Our next question comes from the line of Aaron Lee with Macquarie. Please proceed with your question.

[Aaron Lee, Senior Research Analyst at Macquarie Group]

Hey guys, good afternoon. Thanks for taking the question. Want to stay on sweepstakes for a little bit more. Just want to make sure I have this right, but as relates to the sweepstakes launch, is it are there any more technical aspects that you still need to hammer out for the platform, or is it really just about optimizing and refining, how you operate at this point?

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Yeah. All the core functionality that's needed to actually launch the service has been in place for the last few months. So we're just continuing to refine the features, the content that we offer and all the core practices around ensuring that all the fraud detection and just the overall integrity of the service is in place. And then obviously a big part of this is also testing and stressing all the different marketing approaches and channels and campaigns so that we can see the right unit economics that allow us to deploy meaningful capital and scaling that business. So we're advancing along all of these different fronts, and it's meaningful and it's complicated.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Know where the people were and the companies were competing with, they've been in the market mostly for a couple of years. You know they've got all the core capabilities and competency in around operating their platforms well in place and evolve. And we're doing all these things at the same time. So we just want to make sure that we feel really good about the integrity of our system and our operating practices and our capacity to deploy capital and scaling and growing it. And that's why you've seen us in a measured way go from two jurisdictions to four jurisdictions to now seven jurisdictions.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

So I'd expect it in the coming months we'll start to open it up and hopefully by the end of the year as I alluded to earlier just be in all of the qualified jurisdictions. So it's just being measured in qualifying and making sure we're ready to go.

[Aaron Lee, Senior Research Analyst at Macquarie Group]

Understood. Yes, I think that's the right approach. And then for my follow-up, on sweepstakes again, you've obviously been building out the platform organically. You mentioned you're exploring strategic acquisitions. Any color on what those acquisitions could look like?

[Aaron Lee, Senior Research Analyst at Macquarie Group]

Would it be targeting tech, talent, a database? Any color you could provide there would be helpful. Thank you. Jason, do you want to take that one?

[Jason Hahn, Chief Strategy Officer & Head - IR at Playstudios]

Yes, sure. So look, I think our goal around this category, we're obviously big fans of what's happening with the sweepstakes being kind of a change in the social casino space as a catalyst for growth. Our goal is to be a market leader in this category. And there's obviously a lot of players in this category that we admire that have reached super scale, that have large businesses that are highly profitable with really interesting capital efficiency. And so obviously we're going down the route of the organic approach and we have conviction in what we're doing there.

[Jason Hahn, Chief Strategy Officer & Head - IR at Playstudios]

But that doesn't mean that we wouldn't necessarily for the right opportunities do some meaningful M and A to kind of bolster our efforts and be the kind of be in the top three. So it be to kind of get market share gains quicker and accelerate our kind of path to a leadership position in category.

[Scott Peterson, VP & CFO at Playstudios]

Got you. Perfect. That's helpful. Thank you very much. Thanks a lot, Aaron.

[Operator]

Thank you. Our next question comes from the line of Martin Yang with Oppenheimer and Company. Please proceed with your question. And Martin, are you on mute?

[Martin Yang, Senior Analyst at Oppenheimer & Co. Inc.]

It's by overall. Hey. Can you hear me?

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

We can hear you now, Martin, but we we didn't hear you. So if you could repeat the question, that would be great.

[Martin Yang, Senior Analyst at Oppenheimer & Co. Inc.]

Sure. My question is on the casual portfolio. Aside from new product launches, what's the medium or long term goal or expectation for the segment? Do you expect the rest of the portfolio to continue gradual decline? Or do you expect a turnaround at certain point, regardless of the macro impact?

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Well, thanks. It's a great question. So there's two aspects to our casual strategy. There's the existing portfolio, which consists of a collection of pretty mature products. And as I alluded to earlier, we've been focused on margin contribution and pulled back pretty materially on the investments we're making in user acquisition in support of those of that portfolio.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

While we invest in upgrading the products with more current tech that allows us to be faster and more dynamic with the features and content that we're introducing that should drive better retention and engagement, which in advertising model is what drives revenue. So, we we've been working pretty hard over the last six to eight months on making those requirements and adjustments. As I've alluded to, we pulled back pretty materially in the UA investments across the casual portfolio, the legacy portfolio, and we'll continue to monitor our progress there until we get to a place where we can start to reinvest in new cohorts of players that ultimately command more revenue in terms of the sale of our ad products and units. I don't expect that we're going to see any meaningful growth out of the legacy casual portfolio. There's another dimension to the casual strategy, which as we talked about relates to the Tetris strategy and franchise.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

And so we have an existing Tetris product that we continue to work on refining and evolving, but we've put a lot of energy and most of our resources behind a new flavor of Tetris, our Tetris Block Party product, which has been in development for close to two years. And we're encouraged by the metrics we're seeing from that product. They're strong and they continue to improve. And, you know, the state of the market is you look to bring a new, you know, AAA quality casual game into the market. The the table stakes are just very high in terms of the feature richness and the amount of content and your capacity to really run a product with a lot of dynamism and a lot of new content constantly coming into the product.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

And so we're not only refining the product to get to the core metrics that we need, but we're also investing in our capabilities to deliver the volume of content that's going to be required once we start investing and scaling and launching it. And so we're going to achieve the kind of scale that we've imagined for that product, we need to make sure that we're ready for it. And so that's what's ongoing right now. So we'll continue to work to stabilize the core legacy casual portfolio. And once we find that it is investable, then we'll readdress the amount of UA investments we're making there.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

And we're going to continue to advance and get ourselves ready to launch and scale up our Tetris Block Party product.

[Martin Yang, Senior Analyst at Oppenheimer & Co. Inc.]

Got it. Thank you, Andrew. My other question relates to Tetris Block Party and overall, your B2C strategy. With a new game, do you think can do something unique into the game launch for Tetris Block Party so that it's B2C here can be different or can have another boost relative to your platform average?

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Yeah. I mean, that's certainly what we hope for. We have a lot more latitude today in terms of merchandising within the app, the alternative methods of more direct purchasing from our players. And so I think to your point, absolutely, we're going to do everything we can to make sure that our players are aware of the alternative and the benefits of purchasing with us directly. With that said, we don't want to introduce any friction that might limit or restrict the player from converting and starting to spend money with us.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

So we're going to actively look at and optimize how we do that. And I can tell you today that the monetization within the Tetris Block Party product is really solid. It's quite encouraging and it's going to support and allow us to go into the market, a very competitive market and buy cohorts of players at and around where they're priced today given how intense the competition is. So to your point, the more direct to consumer purchasing we can motivate, the more flow through a margin that we have to then look at, ultimately calling back and investing in scaling up and growing our audience until we achieve that critical mass and then start maturing the product and focusing on improving its margins and harvesting the value.

[Operator]

Thank you. Our next question comes from the line of Mike Hickey with Benchmark. Please proceed with your question.

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

Hey, Andrew, Jason. Thanks for taking our questions, guys. Guess, Andrew, just on the regulatory pressures here that we're seeing from states to ban sweepstakes. Just kind of curious your view on how that should, trend moving forward and how you get comfortable launching, and investing the product in states, comfortable that the regulatory, piece won't change and go against you in terms of a ban?

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Look, it is it's the big question. Right? We and our approach is probably not all that different from most everybody else in the space, which is that we look at the market overall on a state by state basis. And we go deep into really qualifying what are the regulatory and legal risks within each of those different markets and what are the ongoing or active efforts both in support and opposition of the sweepstakes model within those markets. And then we allow that to inform where it is that we're ultimately going to be deploying our capital and how aggressively we get in and across these different markets.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

To the extent a market that we think is relatively reliable ends up becoming higher risk, then of course, we immediately start to moderate our spend in that market. And so it's dynamic and it will be actively managed. So it's and what I would also say is that we intend to be very active in trying to help bring more credibility and legitimacy to this opportunity. So the way that we're approaching SleepSafety and how it's employed, we have a multi phase strategy. The first, we're going to stand up a service that we think is incredibly well executed and we'll compete with everything else that's in the market.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

But our ultimate strategy and plan is to more deeply integrate sweepstakes mechanics and opportunities within our existing native apps and do it in a way that's focused on stimulating and driving the incremental sale of virtual chips that we've always sold. So I think that there's a position that we can take as we come into the market, which is that we're employing sweepstakes mechanics as a promotional tool the way that they are intended. And so I think that there's a lot that we intend to do to try and legitimize just this opportunity overall and make the case for how and why it should be embraced and supported, as opposed to opposed?

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

Yes. Thanks Andrew. Market obviously sweepstakes market, I think you've characterized as, very competitive with a a a bunch of sort of aggressive, incumbents that have established share. When you look to launch, your app in your respective markets, significant is the UA spend? How is that going to impact your sort of near term EBITDA creation?

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

Are you, I guess, most important confident that with that spend, that the quality of of your app relative to your competition, that in fact you'll you'll achieve the retention you need, to justify that?

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Yes. Mean, that's the model, As you establish and set a certain return horizon and as long as you're achieving and meeting that horizon, then you should be able to confidently deploy more capital. And so the industry generally is working towards a four to six month return horizon on their ad spend. I think that's a reflection of some of the regulatory uncertainty you alluded to a moment ago. The four to six month horizon, return horizon on ad spend for sweeps products compares to what has been traditionally typical for the social casino industry, the more traditional social casino industry of anywhere from twelve to twenty four months.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

So wildly different to I think your question, like to what extent do we think our investing and growing our sweeps business might adversely impact EBITDA. Well, it will during its growth cycle, but that's a good thing because we're seeing the opportunity to go grab customers and market share and to scale up our service so that ultimately we can get to a place where we then start to focus on flow through and improve margins and harvest the benefits. That's how we see it playing out. Other thing I would if I could Mike, other thing that I would is this, while I've alluded to the market is very competitive, there's no question about it. And a lot of the players in the market are have integrated a lot of the core platform and its capabilities and all the content that they offer.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

And so the amount of differentiation in and across these products is pretty limited. One of the things that we're investing in is leveraging our vast library of proprietary game content that we have as well as leveraging a lot of the social mechanics and features that we know add progression and kind of a feature richness that drives deeper engagement and makes for a more compelling experience. And so we think that as we come into the market and we start to introduce more of our own proprietary content, we're going to further differentiate ourselves from our peers and make the case for how and why people should spend more of their time and money with our sweepstakes alternatives as opposed to what else is out there in the market. So that's what we hope to prove out over time.

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

Thanks, Andrew. Last question. I understand you kept the guidance the same. Obviously, your core business is facing pretty significant, pressure. And, of course, you're also on the cusp of transitioning to the sweepstakes, which, clearly is is exciting, but will also, take take some investment.

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

I'm just curious if you're comfortable here that you have enough cash on the balance sheet to sort of manage through this transition.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

For sure. I mean our cash position is very strong as I alluded to earlier. We have all the capital we need to be very aggressive in the way that we approach investing in and getting into this space. And in fact have enough capital to support both of our growth initiatives should they continue to show positive signs and we look to deploy tens of millions of capital into scaling and growing both Tetris Block Party and our sweeps business we're in a position where we can do that.

[Mike Hickey, Equity Research Analyst at The Benchmark Company LLC]

Good. All right guys. Thank you for your answers. Good luck.

[Andrew Pascal, Co-Founder, Chairman, CEO & Director at Playstudios]

Great. Thanks Mike. Appreciate it.

[Operator]

Thank you. And we have reached the end of the question and answer session. And also, this does conclude today's conference, and you may disconnect your lines at this time. We thank you for your participation.

Participants

Executives

• Andrew Pascal, Co-Founder, Chairman, CEO & Director

Analysts

• Jason Hahn, Chief Strategy Officer & Head - IR at Playstudios
• Scott Peterson, VP & CFO at Playstudios
• Ryan Sigdahl, Senior Research Analyst at Craig-Hallum Capital Group LLC
• Aaron Lee, Senior Research Analyst at Macquarie Group
• Martin Yang, Senior Analyst at Oppenheimer & Co. Inc.
• Mike Hickey, Equity Research Analyst at The Benchmark Company LLC