What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-03-12 compared with 2023-03-10 · 314 added, 236 removed, 910 unchanged (38% of the section changed)

11 unchanged sentences

We have audited the accompanying consolidated balance sheets of PLAYSTUDIOS, Inc.

and subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

4 unchanged sentences

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

16 unchanged sentences

Receivables 30,465 27,016

Prepaid expenses 5,148 5,059

Income tax receivable 1,372 2,117

Other current assets 8,443 413

Prepaid expenses and other current assets

11,529 14,963

Total current assets 174,883 175,979

1 unchanged sentence

Operating lease right-of-use assets 9,369 15,562

Internal-use software, net 36,118 43,267

Intangibles assets and internal-use software, net

110,933 77,231

Goodwill 47,133 47,133

Intangibles, net 41,113 18,755

Deferred income taxes 2,764 13,969

7 unchanged sentences

Operating lease liabilities, current 4,236 4,571

Accrued liabilities 21,473 15,599

Accrued and other current liabilities

38,796 21,473

Total current liabilities 46,025 34,151

Minimum guarantee liability 24,000 1,500

Deferred income taxes 1,198 —

Operating lease liabilities, non-current 5,699 11,660

8 unchanged sentences

Additional paid-in capital 310,944 290,337

Retained earnings 16,756 34,539

Accumulated other comprehensive (loss) income ( 151 ) 393

(Accumulated deficit) retained earnings

( 2,637 ) 16,756

Accumulated other comprehensive income (loss) 124 ( 151 )

Treasury stock, at cost, 4,723 and 1,166 shares at December 31, 2023 and December 31, 2022, respectively

( 20,094 ) ( 4,642 )

Total stockholders’ equity 288,351 302,313

16 unchanged sentences

Total operating costs and expenses 321,373 318,390 290,409

(Loss) Income from operations ( 28,081 ) ( 2,990 ) 10,349

Loss from operations ( 10,487 ) ( 28,081 ) ( 2,990 )

Other income (expense), net:

Change in fair value of warrant liabilities 2,596 1,047 13,933

Interest expense, net 1,925 ( 235 ) ( 142 )

Interest income (loss), net 4,858 1,925 ( 235 )

Other income (expense), net 513 1,491 ( 229 )

1 unchanged sentence

(Loss) income before income taxes ( 2,520 ) ( 23,618 ) 10,479

Income tax benefit 5,835 258 1,671

Income tax (expense) benefit ( 16,873 ) 5,835 258

Net (loss) income $ ( 19,393 ) $ ( 17,783 ) $ 10,737

Net (loss) income per share attributable to Class A and Class B common stockholders:

Net (loss) income attributable to common stockholders per share:

Basic $ ( 0.15 ) $ ( 0.14 ) $ 0.10

11 unchanged sentences

Net (loss) income $ ( 19,393 ) $ ( 17,783 ) $ 10,737

Other comprehensive (loss) income:

Other comprehensive income (loss):

Change in foreign currency translation adjustment (1)

( 11 ) ( 544 ) ( 88 )

Total other comprehensive (loss) income ( 544 ) ( 88 ) 383

Unrealized gain from derivative financial instruments (1)

Realized gain from settlement of derivative financial instruments (1)

Total other comprehensive income (loss) 275 ( 544 ) ( 88 )

Comprehensive (loss) income $ ( 19,118 ) $ ( 18,327 ) $ 10,649

(1) These amounts are presented gross of the effect of income taxes.

The total change in foreign currency translation adjustment and the corresponding effect of income taxes are immaterial.

The total change and the corresponding effect of income taxes are immaterial.

The accompanying notes are an integral part of these consolidated financial statements.

9 unchanged sentences

Retroactive application of reverse recapitalization ( 162,596 ) ( 8 ) ( 238,186 ) ( 12 ) 74,421 8 18,977 2 10 — — —

Adjusted balance as of December 31, 2019 — $ — — $ — 71,463 $ 8 18,977 $ 2 $ 66,670 $ 98 $ 13,535 80,313

December 31, 2020 — $ — — $ — 74,421 $ 8 18,977 $ 2 $ 71,786 $ 481 $ 23,802 96,079

Net income — — — — — — — — — — 10,737 10,737

Acies Merger and PIPE Financing — — — — 32,969 3 ( 2,847 ) — 189,212 — — 189,215

Exercise of stock options — — — — 2,676 — — — 2,412 — — 2,412

Stock-based compensation expense — — — — — — — — 4,124 — — 4,124

Repurchase and retirement of common stock — — — — ( 843 ) — — — — — ( 2,540 ) ( 2,540 )

Other comprehensive income — — — — — — — — — 383 — 383

Stock-based compensation — — — — — — — — 5,112 — — 5,112

Other comprehensive loss — — — — — — — — — ( 88 ) — ( 88 )

Balance as of December 31, 2021 — $ — — $ — 110,066 $ 11 16,130 $ 2 $ 268,522 $ 393 $ 34,539 $ 303,467

2 unchanged sentences

(in thousands)

Preferred Stock Common Stock Class A Common Stock Class B Common Stock Additional

Class A Common Stock Class B Common Stock Additional

Capital Accumulated Other Comprehensive Income Retained

Earnings Total

Earnings Treasury Stock Total

Stockholders'

Shares Amount Shares Amount Shares Amount Shares Amount

Shares Amount Shares Amount

Balance as of December 31, 2021 110,066 $ 11 16,130 $ 2 $ 268,522 $ 393 $ 34,539 $ — 303,467

Retroactive application of reverse recapitalization ( 162,596 ) ( 8 ) ( 238,186 ) ( 12 ) 74,421 8 18,977 2 10 — — —

Adjusted balance as of December 31, 2020 — $ — — $ — 74,421 $ 8 18,977 $ 2 $ 71,786 $ 481 $ 23,802 96,079

Net income — — — — — — — — — — 10,737 10,737

Acies Merger and PIPE Financing — — — — 32,969 3 ( 2,847 ) — 189,212 — — 189,215

Net loss — — — — — — ( 17,783 ) — ( 17,783 )

Exercise of stock options 4,851 1 327 — 1,558 — — — 1,559

Issuance of shares upon vesting of restricted stock units 1,884 — — — — — — — —

Stock-based compensation — — — — 20,257 — — — 20,257

Repurchase of common stock ( 1,166 ) ( 1 ) — — — — — ( 4,642 ) ( 4,643 )

Other comprehensive loss — — — — — ( 544 ) — — ( 544 )

Balance as of December 31, 2022 115,635 $ 11 16,457 $ 2 $ 290,337 $ ( 151 ) $ 16,756 $ ( 4,642 ) $ 302,313

PLAYSTUDIOS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Common Stock Class B

7 unchanged sentences

Exercise of stock options 3,672 1 — — 3,125 — — — 3,126

Issuance of shares upon vesting of restricted stock units 1,884 — — — — — — — —

Restricted stock vesting, net of shares withheld 2,450 — — — ( 3,040 ) — — — ( 3,040 )

Stock-based compensation — — — — 20,522 — — — 20,522

Repurchase of common stock ( 3,557 ) — — — — — — ( 15,452 ) ( 15,452 )

Other comprehensive loss — — — — — ( 544 ) — — ( 544 )

Other comprehensive income — — — — — 275 — — 275

Balance as of December 31, 2023 118,200 $ 12 16,457 $ 2 $ 310,944 $ 124 $ ( 2,637 ) $ ( 20,094 ) $ 288,351

12 unchanged sentences

Change in fair value of contingent consideration ( 950 ) ( 2,411 ) —

Asset impairments 8,353 — —

Deferred income tax benefit ( 7,791 ) ( 2,286 ) ( 3,568 )

Asset impairments and write-downs

2,219 8,353 —

Deferred income tax expense (benefit)

12,217 ( 7,791 ) ( 2,286 )

Other 570 490 1,545

13 unchanged sentences

Advance payment related to license agreements — — ( 8,000 )

Proceeds from notes receivable 2,407 1,500 —

168 2,407 1,500

Net cash used in investing activities ( 32,306 ) ( 102,349 ) ( 56,936 )

4 unchanged sentences

Payment for minimum guarantee obligations ( 4,817 ) ( 5,000 ) —

Repurchases of common stock for retirement — — ( 2,540 )

Payments for tax withholding of stock-based compensation

( 3,040 ) — —

Net proceeds from Acies Merger — — 185,170

12 unchanged sentences

Capitalization of stock-based compensation $ 1,800 $ 2,530 $ 657

Additions to intangible assets related to licensing agreements $ 46,579 $ 3,000 $ 5,000

Lease modification $ 1,643 $ — $ —

Increase in property and equipment included in accounts payable and other long-term liabilities $ — $ 888 $ —

Right-of-use assets acquired under operating leases $ — $ 14,638 $ —

Additions to intangible assets related to minimum guarantee obligations $ 3,000 $ 5,000 $ —

Exchange of notes receivable as consideration for business combinations $ 1,055 $ — $ —

Contingent consideration related to business combinations $ 3,361 $ — $ —

Exchange of notes receivable as consideration related to the WonderBlocks Acquisition $ — $ 1,055 $ —

Contingent consideration related to the WonderBlocks Acquisition $ — $ 3,361 $ —

Reduction of notes receivable in exchange for internal-use software $ — $ — $ 1,754

11 unchanged sentences

The prior period financial information represents the financial results and conditions of Old PLAYSTUDIOS (as defined in Note 4— Business Combinations ).

The Company develops and operates online and mobile social gaming applications (“games” or “game”), many of which incorporate a unique loyalty program offering “real world” rewards provided by a collection of awards partners.

The Company’s games are free-to-play and available via the Apple App Store, Google Play Store, Amazon Appstore, and Facebook (collectively, “platforms” or “platform operators”).

1 unchanged sentence

The Company generates revenue through the in-game sale of virtual currency and through advertising.

We have one operating segment with one business activity, developing and monetizing social games.

We have two operating segments as discussed in Note 3— Segment Reporting .

Unless the context indicates otherwise, all references herein to “PLAYSTUDIOS,” the “Company,” “we,” “us,” and “our” are used to refer collectively to PLAYSTUDIOS, Inc.

32 unchanged sentences

Although balances may exceed amounts insured by the FDIC, the Company believes that it is not exposed to any significant credit risk related to its cash or cash equivalents and has not experienced any losses in such accounts.

Receivables and Allowance for Doubtful Accounts

Receivables and Allowance for Uncollectible Amounts

The Company’s receivables consist primarily of amounts due from social and mobile game platform operators, including Apple, Google, Facebook, and Amazon.

4 unchanged sentences

The Company reserves an estimated amount for receivables that may not be collected to reduce receivables to their net carrying amount, which approximates fair value.

Methodologies for estimating the allowance for doubtful accounts range from specific reserves to various percentages applied to aged receivables.

Methodologies for estimating the allowance for uncollectible amounts range from specific reserves to various percentages applied to aged receivables.

Historical collection rates are considered in determining reserves.

The following table summarizes the major receivables of the Company as a percentage of the total receivables, net as of the dates indicated:

2023 December 31,

45.6 % 33.6 %

20.8 % 27.2 %

As of December 31, 2023 and December 31, 2022, the Company did not have any additional counterparties that exceeded 10% of the Company’s accounts receivable.

Property and Equipment, net

16 unchanged sentences

If the Company reduces the estimated useful life assumption for any asset, the remaining unamortized balance would be amortized or depreciated over the revised estimated useful life.

Internal-Use Software

The Company recognizes internal-use software development costs in accordance with Accounting Standards Codification (ASC) 350-40, Internal-Use Software .

Capitalized costs include consulting fees, payroll and payroll-related costs, and stock-based compensation for employees who devote time to the Company’s internal-use software projects.

Capitalization begins when the preliminary project stage is complete and the Company commits resources to the software project and continues during the application development stage.

Capitalization ceases when the software has been tested and is ready for its intended use.

Qualified costs incurred during the post-implementation/post-operation stage of the Company’s software applications relating to upgrades and enhancements are capitalized to the extent it is probable that they will result in added functionality.

Costs that cannot be separated between maintenance of, and minor upgrades and enhancements to, internal-use software are expensed as incurred.

Capitalized internal-use software development costs are amortized on a straight-line basis over a three-year estimated useful life.

The Company believes that a straight-line basis for amortization best represents the pattern through which the Company derives value from internal-use software.

The Company evaluates the useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Business Combinations

25 unchanged sentences

Customer relationships 5 years

Patents and trademarks 10 - 20 years

When factors indicate that a definite-lived intangible asset should be evaluated for possible impairment, the Company reviews intangible assets to assess recoverability from future operations using undiscounted cash flows.

5 unchanged sentences

The Company performs its annual impairment testing as of October 1 of each year.