PLAYSTUDIOS, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Play Studios second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, August 9, 2022. I will now turn the call over to Joel Agana, Corporate Secretary and General Counsel. Please go ahead.

Thank you, operator, and hello, everyone. By now, everyone should have access to our second quarter 2022 earnings release, which is available on the Play Studios website at www.playstudios.com in the investor section. Some of management's comments today will be forward-looking statements about future events, expectations, and projections. forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. You should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risk factors that could impact future operating results and financial condition. During the call, management will discuss non-GAAP measures, which we believe can be usable in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our second quarter 2022 earnings release on the www.playstudios.com website and on our form 8K filed with the SEC today. Hosting the call today, we have Andrew Paschal, Play Studios Chief Executive Officer, and Scott Peterson, Chief Financial Officer of the company. Bill will provide some opening remarks, and then we will open the call to questions. With that, I'll turn the call over to Andrew.

Thank you, Joel, and good afternoon, everyone. Welcome to the Play Studios second quarter 2022 earnings call. The second quarter proved to be quite challenging as the overall economic backdrop is impacting the consumer games industry generally and our business more specifically. For delving into our views of the current market, our outlook, and the strategies and plans we're advancing, I'd like to highlight some key events from the quarter. We continue to advance our Play Awards platform, adding new capabilities, new partners, and new benefits to our MyVIP program. We saw continued strength in rewards purchases as our active players shopped from benefits valued at over $125 million of inventory and bought $32.5 million of real-world rewards. We advanced our Web3 strategy, consummating key strategic agreements and seeding a variety of opportunities that align with our rewarded play vision. We completed a significant amount of the redevelopment work required to reconstitute our MyVegas Bingo product. We continued to optimize the existing Tetris game while advancing the altogether new, more casual version of the franchise. We attracted some amazing new talent into the company, expanding our capacity and capabilities in our European and Asian studios. and we generated 68.4 million of revenue and 7.3 million of adjusted EBITDA. Before sharing the specifics of our quarter, I'd like to provide a brief reminder of who we are and how we're positioned in the industry. Play Studios is a unique mobile gaming publisher with a portfolio of eight games, most of which incorporate our industry-first real-world loyalty program. For over 10 years, we've been rewarding free-to-play social and mobile players with real-world benefits from a diverse collection of partners, We are the pioneers of rewarded play, and we remain deeply committed to more fully realizing the potential of our model as we diversify into new game genres, expand our player network, and continue to enhance what is already the richest collection of real-world benefits offered to gamers. With that as context, let's delve a bit more deeply into the state of our business, starting with the overall macro environment. There are a variety of factors that have shaped the economic backdrop and which are impacting consumer behavior. More extreme market volatility, escalating inflation, unprecedented quantitative tightening, and the war in Ukraine have undermined consumer confidence. This has resulted in the second quarter of sequential declines as year-to-date consumer spending on games is down approximately 10%. Furthermore, the social casino category has been impacted to a similar degree, with the scale providers in some cases seeing more significant year-over-year and quarter-over-quarter declines across many of the key metrics. In addition, the user acquisition environment remains quite dynamic as the distribution platforms continue to adopt policies that make it ever more difficult to find, target, and accumulate new quality players. While these dynamics make for a challenging environment over the short run, they also bring focus to areas of opportunity. In our case, we see continued strength across our loyalty and rewards business as consumers look to stretch their discretionary dollars. This translates to increased levels of engagement with our loyalty program which allows us to further demonstrate our capacity to source and deliver qualified consumers for our partners, a key catalyst for our virtuous model. It's important to highlight this fundamental distinction when considering our current market position and future prospects. Unlike our peers, we combine games people love with real-world rewards they want, providing our players with an added dimension of value. It's our experience with this model and our deep belief in its extensibility that drives our optimism and informs our strategic priorities. On the topic of strategy, ours consists of two key pillars. The first is focused on evolving our Play Awards platform and suite of services so that it can be leveraged across a broader collection of games. The second consists of scaling our player network by employing our model in new games and new genres. Doing so will allow us to increase the liquidity of our rewards marketplace and deliver more value to all of our stakeholders. As we've shared, we plan to do this through a variety of approaches, including joint development, publishing, and strategic M&A. Let's touch on some of our primary initiatives, starting with our loyalty platform, Play Awards. As I mentioned at the top of the call, we've made great strides with advancing our Play Awards platform. We've continued to develop the systems, tools, and practices that will allow us to incorporate our services into new games, as well as enhance the features within our existing products. The elegance and simplicity of our in-game integrations belies the complexity and growing sophistication of our platform. Today, we enable a collection of over 100 real-world brands like Intercontinental Hotels, AEG, Royal Caribbean Cruises, and MGM Resorts to tap into the massive web and mobile consumer channels and source new customers. And we've delivered hundreds of millions of dollars of rewards benefits to millions of gamers, making our MyVIP loyalty program the richest in all of gaming. More specifically, over the past quarter, the team's been active in qualifying and onboarding new reward partners. Since our last call, we've added 35 new outlets, including a number of new local and affordable options, such as Sonic, Famous Dave's, and Papagino's. These new partners are among over 100 award partners offering more than 500 distinct rewards. Lastly, given the importance of consumer engagement with our program, it's worth highlighting that reward purchases were up 6% versus last year and nearly in line with last quarter's record performance. This translated to over 567,000 in-game reward purchases, which is among the highest to date. With that said, our program is about to get even richer. Over the past several quarters, we've been advancing our plan for leveraging Web3 solutions in our platform. We've watched as other upstarts and established game makers rush to take advantage of the growing interest in NFTs and newly minted digital assets. In most cases, we felt the offerings lacked substance, and anticipated the correction we've observed over the more recent weeks and months. However, observations of the market and our vision for enriching our rewarded play model left us even more convinced that the principles of blockchain could bring even more utility and value to our overall ecosystem. More specifically, we're currently working on tokenizing our Play Awards loyalty program in a way that will allow our players to gift and exchange rewards as well as sell them in a new MyVIP rewards marketplace. In support of this vision, we recently revealed the strategic and practical work we've been advancing over the past several quarters. In short, we've been executing a thoughtful and integrated strategy that called for securing a key technology and thought partner, amassing a team with the requisite skills and experience, and seeding strategic relationships through early-stage investments. Our recently announced relationship with Forte, our seed investments in Wonderblocks and Cryptomon, and our acquisition of Wonderblocks are the underpinnings of Playblocks our blockchain division that will partner with our first party studios and strategic partners to support our expanded vision for our loyalty and rewards business. Turning to the second of our strategic pillars, we continue to advance the development of our newer game initiatives as well as focus on the execution of our core games. We have two relatively early stage initiatives. As a reminder, last November, we acquired the rights to Tetris, one of the most widely played and beloved franchises in the history of consumer gaming. As part of the acquisition, we inherited an existing Tetris game and its collection of active users, which is reflected in our overall network-wide DAU and MAU growth since the start of the year. It's worth noting that we rolled out several key features over this past quarter, most notably a new puzzle and progression feature focused on deepening engagement. And we're on the cusp of introducing our Play Awards program into the Tetris game, which should also improve engagement, retention, and network-wide value as we leverage our MyVIP loyalty program to incentivize multi-app play. In addition to servicing the existing classic version of Tetris, we're deep into the design and development of an altogether new Tetris app. As I previously shared, it's our belief that the Tetris game format has the potential to be its own casual game category alongside Match 3, Solitaire, and Bingo. Each of these categories demonstrates the unique power of a universally appealing game format when complemented with progression mechanics, richer features, and sophisticated live operations. We've been executing the plan that I shared back in May. It calls for us to craft a new Tetris game that employs the playbook proven by most of the leading casual games. We expect to launch the beta version of the new Tetris app later this year. The second initiative is My Vegas Bingo, which we assume full responsibility from our development partner in late February. We elected to do so to afford us more influence and control over the stability, operations, and evolution of the game. Since completing the transition, most of our development capacity has been consumed with addressing its technical stability and performance. We're now finally attending to some of the other foundational features and tools that will enable us to operate the product with more sophistication, employing far more refined segmentation practices allowing us to tailor the experience for our players. We continue to believe in the potential of this game and anticipate stepping up the pace of new content and employing more proven monetization practices with a goal to start ramping up our investments in user acquisition later this fall and into the winter season. As for our core products, we continue to invest in the evolution and performance of our more mature games. These include My Vegas slots, my Konami slots, and our Pop Slots franchise, which includes the MGM Slots live game. Each of these products is supported with ongoing features, content, and live event releases as we work to keep the games fresh and always interesting for our players. Addressing the ever-increasing demands of these franchises calls for sustained creative inspiration and consistent improvements in productivity. I'd like to highlight and acknowledge the focus and commitment of our teams from all eight studios as they apply themselves to improving our execution. As I mentioned in each of our last calls, executing in a post-COVID environment is more complex and challenging. If you recall, I spoke to the escalating costs in each of our primary tech hubs and our need to grow our teams in alternative markets. I'm pleased to share that we continue to make great strides in each of our regional development studios. All in, these studios now have approximately 260 playmakers, accounting for nearly 40% of our total development capacity. Before wrapping up my update on our strategic priorities, I think it's worth further reflecting on the overall state of the market and our opportunities. It's my experience and deeply held view that economic instability and contraction is a time for renewal. It forces a comprehensive review of every aspect of your business and brings a renewed focus to your primary opportunities, as well as clarity around how best to exploit them. In our case, it provoked a more intense level of scrutiny in which we're testing our core assumptions challenging our beliefs, and making some tough decisions, all in the interest of preparing ourselves to exploit the inevitable stability and growth that will return to the markets. As I consider our company and its unique collection of assets, our teams, our players, our partners, and our intellectual property, it's my view that now is the best time to reset, recommit, and invest in the initiatives and opportunities that will strengthen our long-term positions. Before handing things off to Scott, I want to briefly touch on our forecast for the rest of this year, given the environment, and our current thinking about capital allocation. Scott will provide more details, but given the combination of consumer headwinds created by rising inflation and the threat of recession, along with a more challenging near-term environment in general, one where IDFA continues to impact the entire mobile games market, we consider it prudent to take a more conservative outlook for the remainder of the year. At our current trajectory, We expect our full-year revenue to range between $270 million and $285 million, and full-year adjusted EBITDA to be between $30 million and $35 million. On the capital allocation front, we have remained consistent that the best use of our capital is to invest it in strategic growth opportunities. We remain active in our pursuit of acquisitions and continue to work through a pipeline of interesting opportunities. Accordingly, during the second quarter, we again elected to not purchase any stock under our previously authorized $50 million stock repurchase plan. However, we did decide to launch a tender for the outstanding public and private placement warrants. As we expressed in our filings, the primary reason for the tender was to provide investors and potential investors with greater certainty as to our capital structure. In the end, we were able to repurchase approximately 25% of the outstanding public warrants. Lastly, I want to highlight that I continue to purchase stock throughout the second quarter. As I've shared in past calls, I initiated my 10b51 purchase back in January, and I continue to accumulate shares under the program at prices that at times exceeded $6 a share. It remains my view that the current share price does not reflect what I believe to be fair value. I'll now turn the call over to Scott to provide more specifics on the financials.