PLAYSTUDIOS, Inc.

Greetings and welcome to Play Studio's first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Jason Hahn. Chief Strategy Officer and Head of Investor Relations. Thank you, sir. You may begin. Thank you, Operator.

Good afternoon, and thank you for joining us for Play Studios' first quarter 2025 earnings call. Joining me on the call today are Chairman and CEO, Andrew Paschal, and our CFO, Scott Peterson. Before we begin, let me remind you that during the course of this call, we will make forward-looking statements. These statements are based on our current expectations and beliefs, and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings for discussion of the risks and uncertainties that may affect our future results. I would like to remind everyone that we will discuss certain non-GAAP financial measures during this call. These measures should not be considered as a substitute for financial results prepared in accordance with GAAP. Our results are prepared in accordance with GAAP, and a reconciliation to the comparable GAAP measures will be provided in our first quarter earnings release and in our SEC filings. With that, I'll pass the call to Andrew.

Thanks, Jason, and good afternoon, everyone. While challenges persist, we're off to a focused and productive start in 2025. Our core business is still normalizing following the reset from last year, and we're cautiously working our way through a period of transition and recalibration. Market conditions across traditional social casino and casual segments remain challenging, and this continues to weigh on our operating performance. That said, our reinvention plan is already helping us operate with more clarity, efficiency, and discipline, and we believe we're starting to see the foundation for future growth taking shape. Let me highlight a few key themes from the quarter. In addition to broader market weakness, the social casino category is being impacted by the rising popularity of sweepstakes styles offerings, which are capturing increasing mindshare and spend from players. Because we don't get all for competitive sweepstakes proposition, We believe this dynamic is the primary cause of the pressure on our player activity and monetization. As a result, we've been hard at work on the development of a sweepstakes solution and have made strong progress in this quarter. During the quarter, we launched our internal alpha of our sweepstakes promotional platform. This exercise provided valuable insight into both the technical readiness and player-facing aspects of our offering. The feedback has been constructive and is actively informing our next phase of refinement. We expect to make the service available to select players in Q2 and begin scaling in the back half of the year. We believe this new promotional mechanic can reinvigorate our social casino portfolio and spawn a return to growth. Compliance has been a central focus of our development efforts. We're committed to building the most compliant and transparent promotion mechanic in the industry. Our vision is to reclaim Sweepstakes for what it was intended to be, a fun, engaging, and trusted promotional incentive that will drive more consumption across our social consumer portfolio. Second, development continues on our new casual Tetris title, Tetris Block Party. We're applying learnings from the puzzle and rate and defend genres to create a differentiated and scalable game experience. While developing games is never deterministic, we remain focused on readying the product for a Q4 launch. Third, we're realizing the benefits of our reinvention plans. The cost savings program we initiated last year is tracking to plan and beginning to approve the efficiency of our core operations. Turning to our business segments, let's start with the Play Games casino portfolio. The social casino portfolio continues to face category-wide headwinds with softness across all key casino apps. That said, monetization improved across several core titles. ARPDAU increased year-over-year in pop slots. MyKanami, and especially in the MyVegas franchise, where MyVegas posted double-digit gains. New content cadence is a major focus across the portfolio as we work to re-engage players and drive stronger performance. Our teams also remain focused on economy design, player segmentation, and expanding our direct-to-consumer channel. Direct-to-consumer remains a bright spot in our portfolio, showing strong momentum and contributing to our broader efforts around margin optimization. In Q1, our direct-to-consumer channel generated approximately 5 million in in-app purchase revenue, representing 9.8% of total IAP revenue in the quarter. This compares to 2.3 million, or 3.9%, in Q1 of 2024, and 4.7 million, or 8.6%, in Q4 of 2024, representing growth of 114% year-over-year and 6% quarter-over-quarter. As mentioned earlier, we're also investing in the development of our sweepstakes promotional capabilities, which we believe will become a meaningful feature to drive engagement and consumption that re-energizes our social casino portfolio. Let's talk about casual game portfolio. In our casual segment, performance remains soft across both Brainium and Tetris Prime. Brainium showed early signs of monetization improvement, though overall performance was pressured by softer DAU and weaker ECPMs. We continue to invest in user acquisition and product enhancements aimed at stabilizing engagement, and capturing more value from our audience. Tetris Prime also experienced challenges, with user acquisition continuing to be the primary headwind. While monetization per user held relatively steady, growing the audience remains difficult in an increasingly competitive market. To address this, we're testing a range of new marketing and growth strategies. We're also preparing for the launch of our next casual title, Tetris Blog Party. In Q1, we polished the product, implemented a number of optimizations, and began technical validation in select European markets. The feedback from early players has been valuable and is helping us shape the next phase of iteration. Assuming all metrics align with our criteria, we expect to launch the product in Q4 and scale it thereafter. Let's now turn to Play Awards. Play Awards remain central to our broader strategy of being a leader in rewarded play. Through Play Awards, we pioneered one of the first iterations of sweepstakes-style engagement offering players real-world rewards as a loyalty and promotional strategy. As the broader landscape evolves and a second flavor of sweepstakes rises in prominence, our Play Awards platform is working closely with our games to elevate the role of our rewarded play model, and in doing so, drive deeper player engagement, amplify the value of our ecosystem, and reinforce our differentiation in the marketplace. This quarter, we made great progress in this regard. We've now executed the full integration of MyVIP across our major games to drive a more unified loyalty experience. In the quarter, we launched several new reward partnerships, including Foley Entertainment Group, a premium partner reflective of the kind of experiential rewards that align with our broader strategy. These additions further enhanced the diversity and appeal of our loyalty ecosystem. While purchases and redemptions were down double digits, this reflects our deliberate strategy to focus on premium, high-quality offerings over scale. The daily average retail value of available rewards increased by 5% to approximately $2 million per day. We also recently announced the second annual million-dollar MyVIP World Tournament of Slots hosted by Atlantis Paradise Island, Bahamas, taking place from October 22nd to the 26th of 2025. The high-profile tournament will bring together slot enthusiasts from the digital and real world who will compete for a top cash prize of a million dollars and the prestigious title of World's Greatest Law Player. We expect this new franchise to drive engagement across our games, and we look forward to sharing more as the plans get rolled out. Turning to our financial foundation, our balance sheet remains strong, ending the quarter with approximately $107 million in cash and no outstanding debt under our $81 million revolving credit facility. We continue to execute on our share repurchase program and remain active in assessing strategic M&A opportunities that align with our growth priorities. In summary, Q1 reflects disciplined execution in a challenging environment. We're investing in our future while managing our cost base and positioning Play Studios for long-term value creation. With that said, I'll now turn the call over to Scott for more detailed financial commentary.