What changed in this filing

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Item 1. Business

2022-03-02 compared with 2021-02-26 · 60 added, 50 removed, 201 unchanged (35% of the section changed)

Business Overview

Our mission is to entertain the world through infinite ways to play.

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In the year ended December 31, 2021, we generated $ 2,583.0 million in revenues, net income of $ 308.5 million and $982.7 million in Adjusted EBITDA, representing a net income margin of 11.9% and an Adjusted EBITDA Margin of 38.0%.

We were founded in Israel in 2010, when we released our first game, Slotomania , which currently remains the largest game in our portfolio based on revenues.

We were founded in Israel in 2010, when we released our first game, Slotomania , which remains the largest game in our portfolio based on revenues as of December 31, 2021.

On January 15, 2021, we became a publicly traded company with our common stock traded on the Nasdaq Global Select Market under the ticker symbol “PLTK .”

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By delivering content, offers, and features to users at the right times during their gameplay, we drive paying user conversion, continued monetization, and long-term paying user retention.

Our proprietary Playtika Boost Platform provides each of our game studios with the core technical functionality and live operations services infrastructure needed to run games at scale and rapidly incorporate the latest available functional enhancements.

Our proprietary Playtika Boost Platform provides our game studios with the core technical functionality and live operations services infrastructure needed to run games at scale and rapidly incorporate the latest available functional enhancements.

Our financial discipline drives our success and provides us greater flexibility to deploy capital

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We are led by our visionary co-founder, Robert Antokol, who has managed Playtika since inception, transforming the company from a small games business, through numerous acquisitions and steady organic growth, to become one of the largest mobile games platforms in the world.

Our 14 senior management team members have been working with us for a median tenure of ten years.

The tenure of our executive management team has created a chemistry that reinforces stability in our culture and strategy.

Further, most of our senior management team has been working with us for the significant majority of the Company’s history.

We believe the tenure of our executive management team has created a chemistry that reinforces stability in our culture and strategy.

Successful track record of pursuing value accretive acquisitions

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We maintain a highly disciplined approach to acquisitions, and have a proven history of making acquisitions at attractive prices and achieving meaningful synergies.

We have also acquired technology services, enhancing our marketing, artificial intelligence and R&D competencies.

Most recently, in August 2021, we acquired 80% of the issued and registered shares and options of Reworks Oy, a Finland based mobile game developer and the studio behind the design entertainment app, Redecor .

Data-driven performance marketing capabilities drive our high-ROI user acquisition

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Our user acquisition strategy is centered on a payback period methodology and we optimize spend between the acquisition of new users and the reactivation of inactive players.

Our Daily Payer Conversion increased from 2.6% in the year ended December 31, 2020 to 2.9% in the year ended December 31, 2021 , and our ARPDAU increased from $0.58 in the year ended December 31, 2020 to $0.68 in the year ended December 31, 2021 .

In addition, our average DPUs increased from 0.29 million in the year ended December 31, 2020 to 0.30 million in the year ended December 31, 2021 .

Our Live Operations Services and the Playtika Boost Platform

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We have built these core technical functions and services, and created a scalable, proprietary technology platform, the Playtika Boost Platform, that enhances our live operations services across our games.

The Playtika Boost Platform, which we make available to new games and game studios as soon as they become part of our portfolio, includes:

The Playtika Boost Platform includes:

• Meta-games and monetization events, including tournaments, challenges, and missions;

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Feature Development

We are experts at creating features and player experiences that optimize player engagement, resulting in increased conversion and monetization.

We are experts at creating features and player experiences that optimize player engagement, intended to result in increased conversion and monetization.

We are focused on continuing to implement and enhance features that keep games fresh and increase user engagement, including awarding in-game virtual items, providing engaging new game themes, motifs, challenges and in-game missions, as well as in-game chat and messaging capabilities.

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Our Acquisitions Strategy

We maintain a highly disciplined approach to acquisitions, and have a proven history of acquiring games and game studios at attractive prices and achieving meaningful synergies from each of those games by leveraging our live operations services, including the Playtika Boost Platform.

Over the past 8 years, we have successfully acquired a number of mobile games and game studios, including Seriously (2019), Supertreat (2019), Wooga (2018), Jelly Button (2017), House of Fun (2014), World Series of Poker (2013) and Bingo Blitz (2012).

Generally, our strategy involves identifying potential acquisition targets that fall into one of three categories:

We maintain a highly disciplined approach to acquisitions, and have a proven history of acquiring games and game studios at attractive prices and achieving meaningful synergies from those games by leveraging our live operations services, including the Playtika Boost Platform.

Over the past 10 years, we have successfully acquired a number of mobile games and studios, including Reworks (2021), Seriously (2019), Supertreat (2019), Wooga (2018), Jelly Button (2017), House of Fun (2014), World Series of Poker (2013) and Bingo Blitz (2012).

Generally, our strategy involves identifying potential acquisition targets that fall into one of five categories:

• Newly developed or underperforming games with a proven game concept in our core genres to facilitate improvement in engagement, monetization, and retention;

• Established games in our core genres, to increase the trajectory of the games;

• Non-traditional games and gamifiable applications that expand our reach to adjacent categories;

• Businesses and applications that enable us to further leverage our existing technology and capabilities to offer live-ops and monetization solutions to game developers;

• Acquisitions to enhance our marketing or technology capabilities.

After an acquisition, we seek to integrate the acquired game or game studio into the Playtika Boost Platform, providing access to our technical infrastructure, and we deploy our live operations services.

Our ability to quickly integrate acquisitions and realize synergies enables us to compete favorably against other bidders.

Additionally, our geographic diversity allows us to integrate acquisition targets, especially studios located in Europe near our other studios and our headquarters in Israel.

After an acquisition, we deploy our live operations services and, if appropriate for the acquired game, app or studio, seek to integrate them into the Playtika Boost Platform, providing access to our technical infrastructure.

Our ability to quickly integrate acquisitions and realize synergies enables us to compete effectively against other bidders.

Additionally, our geographic diversity allows us to integrate acquisition targets, especially studios located in Europe near our other studios and

our headquarters in Israel.

We view acquisitions as an effective strategy to expand the scale and scope of our mobile games and as a complementary strategy to new game development.

Marketing and Player Lifecycle Management

Over our ten year history, we have gained significant expertise in acquiring new users, converting users to payers, retaining active users, and re-engaging inactive ones.

to mobile games, where to allocate marketing spend, how to optimize media buying budgets, and how to design ads that attract users who are likely to install and play our games.

Over our eleven year history, we have gained significant expertise in acquiring new users, converting users to payers, retaining active users, and re-engaging inactive ones.

Our success stems from a deep and nuanced understanding of the key aspects of data-based marketing strategies applicable to our industry, including how to measure successful user acquisition as it relates to mobile games, where to allocate marketing spend, how to optimize media buying budgets, and how to design ads that attract users who are likely to install and play our games.

We develop tailored monetization and retention strategies for different parts of our users’ lifecycles, including before they become paying users, after they become paying users, and for users who become inactive.

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We have also made acquisitions to bring certain marketing capabilities in house to increase our effectiveness.

Payback period-oriented approach to user acquisition Our disciplined user acquisition strategy is centered on a payback period approach, which focuses on user monetization efforts that recoups our marketing spend during a reasonable timeframe.

Payback period-oriented approach to user acquisition

Our disciplined user acquisition strategy is centered on a payback period approach, which focuses on user monetization efforts that recoups our marketing spend during a reasonable timeframe.

We focus on efficiently acquiring users that can be active for long periods of time.

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We leverage these investments to create personalized retargeting campaigns to re-engage former users.

Our attractive margin profile is driven by our ability to retain paying users over the long term, our ownership of substantially all of the intellectual property used in our mobile games, and financial discipline.

This results in a superior margin profile and cash flow that we can use to reinvest in acquisitions and our business.

Our Portfolio of Games

Our portfolio includes 15 games that we actively manage, and our top nine games collectively represented 96.6% of our revenues for the year ended December 31, 2020.

Our portfolio includes 24 games, 11 of which we actively manage and promote, and our top ten games collectively represented 98.9% of our revenues for the year ended December 31, 2021.

Many of our games are classic in nature with mass appeal due to their highly engaging game mechanics.

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• House of Fun features an inventory of over 400 uniquely-themed slot games with a standard leveling system where players earn virtual in-game items including virtual rewards, bonuses and coins progressing through various missions that are updated regularly.

• Solitaire Grand Harvest modernizes the classic solitaire game by adding new elements and challenges.

• June’s Journey is a hidden object game that is set in the 1920’s, where players step into the role of amateur detective June Parker to investigate mysterious quests.

• Caesars Slots features an inventory of over 200 slot games developed to have a look and feel similar to those played in casinos, including high roller lounges only accessible to those with a certain amount of virtual coins and a special “Golden Room” that provides players with exclusive features.

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• Best Fiends is a classic match-3 game with RPG-like character development featuring an expansive story set in the mystical world of Minutia.

• June’s Journey is a hidden object game that is set in the 1920’s, where players step into the role of amateur detective June Parker to investigate mysterious quests.

• Solitaire Grand Harvest modernizes the classic solitaire game by adding new elements and challenges.

• Board Kings creates a unique social experience by combining elements of city building with traditional board games.

• Redecor is a leading mobile app that combines elements of home design and mobile gaming.

Research and Development

Our research and design team has extensive expertise in creating new content and gameplay features as well as proprietary tools and systems to enable the efficient design, development and implementation of new content and features.

we have recently automated certain quality assurance procedures for many of our games, which significantly increased the frequency with which we are able to deploy new content and features for those games, allowing us to create and deploy more content quicker to enhance monetization.

For example, we have recently automated certain quality assurance procedures for many of our games, which significantly increased the frequency with which we are able to deploy new content and features for those games, allowing us to create and deploy more content quicker to enhance monetization.

We invest heavily in research and development, and approximately 40% of our employees are employed in research and development, which enables us to consistently introduce updates and enhancements to our games on a daily, sometimes hourly, basis.

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We face significant competition in all aspects of our business.

Our primary competitors include Tencent Holdings, Activision Blizzard, Electronic Arts, Take-Two, Zynga, AppLovin and Product Madness/Big Fish Games.

Our primary competitors include Tencent Holdings, Activision Blizzard, Electronic Arts, Take-Two Interaction, Zynga, AppLovin and Product Madness/Big Fish Games.

On the broadest scale, we compete for the leisure time, attention and discretionary spending of our players versus other forms of offline and online entertainment, including social media, reading and other video games on the basis of a number of factors, including quality of player experience, breadth and depth of gameplay, ability to create or license compelling content, brand awareness and reputation and access to distribution channels.

We believe these factors, among other things, enable us to compete favorably in the market.

We believe these factors, among other things, enable us to compete effectively in the market.

Our industry and the markets for our games, however, are highly competitive, rapidly evolving, fragmented and subject to changing technology, shifting needs and frequent introductions of new games, development platforms and services.

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We consider our intellectual property rights, including our trademarks, copyrights, and trade secrets, in the aggregate, material to our business.

We endeavor to protect our investment in our intellectual property by seeking protection in the jurisdictions where we do business, as appropriate.

We endeavor to protect our investment in our intellectual property by seeking protection in the

jurisdictions where we do business, as appropriate.

We generally obtain trademark protection and often seek to register trademarks for the names and designs under which we market and license our games.

As of December 31, 2020, we owned approximately 728 registered trademarks in the United States, and approximately 632 registered trademarks in jurisdictions outside of the United States.

As of February 1, 2022, we owned approximately 857 registered trademarks in the United States, and approximately 869 registered trademarks in jurisdictions outside of the United States.

Additionally, many of the feature elements of our games, including game characters, are subject to copyright protection.

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We believe the value associated with our brands and the brands licensed from CIE under which we market and license our games contributes to the appeal and success of our games, and our future ability to develop, acquire or license new brand names of similar quality is important to our continued success.

Therefore, we continue to invest in the recognition of our

brands and the brands we license.

Therefore, we continue to invest in the recognition of our brands and the brands we license.

Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology.

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Government Regulation

We are subject to various state, federal and international laws and regulations that apply to companies operating online, including over the internet and mobile platforms, such as those relating to privacy, data security, consumer protection, protection of minors, advertising and marketing, intellectual property, competition, and taxation, among others, all of which are continuously evolving and developing.

As we offer our games in more countries worldwide, foreign jurisdictions may claim we are required to comply with local laws, including in jurisdictions where we have no local presence, offices, or other equipment.

We are subject to various state, federal and international laws and regulations that apply to companies operating online, including over the internet and mobile platforms, such as those relating to privacy, data security, consumer protection, protection of minors, online safety, advertising and marketing, intellectual property, competition, and taxation, among others, all of which are continuously evolving and developing.

As we offer our games in many countries worldwide, foreign jurisdictions may claim we are required to comply with local laws, including in jurisdictions where we have no local presence, offices, or other equipment.

It is also likely that as our business grows and evolves and our games are played in a greater number of countries, we will become subject to laws and regulations in additional jurisdictions.

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For example, a bill introduced in Australia in 2020 would amend that country’s Interactive Gambling Act of 2001 to ban online social casino games.

These opposition efforts could lead to a prohibition on social gaming or social casino gaming altogether, restrict our ability to advertise our games or substantially increase our costs to comply with regulations, all of which could have an adverse effect on our results of operations, cash flows and financial condition.

These opposition efforts could lead to a prohibition on social gaming or social casino

gaming altogether, restrict our ability to advertise our games or substantially increase our costs to comply with regulations, all of which could have an adverse effect on our results of operations, cash flows and financial condition.

We cannot predict the likelihood, timing, scope or terms of any such legislation or regulation or the extent to which they may affect our business.

Furthermore, in October 2020 and January 2021 plaintiffs in several U.S.

Furthermore, in 2020 and 2021 plaintiffs in several U.S.

states sued Apple and/or Google alleging that the platforms violated state gambling laws by allowing the plaintiffs to download and play social casino games, including certain of our social casino games.

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In August 2020, we entered into a settlement agreement to settle this matter, which was approved by the court in February 2021.

Additional legal proceedings targeting our games and claiming violations of state or federal laws, including gambling laws, could occur, based on the unique and particular laws of each jurisdiction, particularly

as litigation and regulations continue to evolve.

See “Item 3—Legal Proceedings” and “Risk Factors—Legal proceedings may materially adversely affect our business and our results of operations, cash flows and financial condition” for more information.

Additional legal proceedings targeting our games and claiming violations of state, federal or foreign laws, including gambling laws, could occur, based on the unique and particular laws of each jurisdiction, particularly as litigation and regulations continue to evolve.

See “Legal Proceedings” and “Risk Factors—Legal proceedings may materially adversely affect our business and our results of operations, cash flows and financial condition” for more information.

The widespread implementation of in-game purchases of virtual items and virtual currency in our industry has resulted in the expanded application of existing laws or regulations and has prompted calls for new laws and regulations to address the perceived problems with these virtual items and currency.

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Senate that would regulate loot boxes in games marketed to minors.

Loot boxes have been banned in Belgium and the Netherlands, and gambling regulators in 16 jurisdictions (Austria, Czech Republic, France, Gibraltar, Ireland, Isle of Man, Jersey, Latvia, Malta, Netherlands, Norway, Poland, Portugal, Spain, Washington State, United States, and the United Kingdom) signed an agreement in 2018 to investigate the role of loot boxes in digital games.

Loot boxes have been banned in Belgium and the Netherlands, and gambling regulators in at least 16 jurisdictions (Austria, Czech Republic, France, Gibraltar, Ireland, Isle of Man, Jersey, Latvia, Malta, Netherlands, Norway, Poland, Portugal, Spain, Washington State, United States, and the United Kingdom) signed an agreement in 2018 to investigate the role of loot boxes in digital games.

China has imposed stringent requirements and limitation on the offering of loot boxes including, among other things, that loot boxes cannot be acquired with real money or virtual currency, that all items available in loot boxes must be obtainable through other means, and the odds of winning must be published.

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Data Privacy and Security

As an Israeli headquartered company with users around the globe, we collect, process, store, use, and share data, some of which contains personal information, in connection with operating our business.

We are an Israeli headquartered company with users around the globe.

We collect, process, store, use, and share data, some of which contains personal information, in connection with operating our business.

Consequently, our business is subject not only to the Israeli Protection of Privacy Law, 5741-1981, or the PPL, and the Privacy Protection Regulations (Data Security), 5777-2017, but also to a number of U.S.

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Such laws and regulations may be inconsistent across jurisdictions or conflict with other rules.

The applicability of these laws and regulations to us, and their scope and interpretation, are often uncertain, particularly with respect to laws and regulations outside the United States.

applicability of these laws and regulations to us, and their scope and interpretation, are often uncertain, particularly with respect to laws and regulations outside the United States.

For example, the European Union has adopted strict data privacy and security regulations.

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The United Kingdom operates a separate but similar regime to the European Union that allows for fines of up to the greater of £17.5 million or 4% of the total worldwide annual turnover of the preceding financial year.

Further, beginning January 1, 2021, we have to comply with the GDPR and also the United Kingdom GDPR (UK GDPR), which, together with the amended United Kingdom Data Protection Act 2018, retains the GDPR in United Kingdom national law.

The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term, and

how data transfers to and from the United Kingdom will be regulated in the long term.

Currently there is a four to six-month grace period agreed to in the European Union and United Kingdom Trade and Cooperation Agreement, ending June 30, 2021 at the latest, during which period the parties are to discuss an adequacy decision.

However, it is not clear whether (and when) an adequacy decision may be granted by the European Commission enabling data transfers from European Union member states to the United Kingdom on a long term basis without additional measures.

Further, we had to comply with the GDPR and also the United Kingdom GDPR (UK GDPR), which, together with the amended United Kingdom Data Protection Act 2018, retains the GDPR in United Kingdom national law.

These changes may lead to additional costs and increase our overall risk exposure.

In addition, the scope of data privacy regulations worldwide continues to evolve.

Further, new, increasingly restrictive regulations are coming into force all around the world, such as in Thailand and Brazil, but also within the United States.

Further, new, increasingly restrictive regulations are coming into force all around the world, such as in China, Belarus, Thailand and Brazil, but also within the United States.

For example, in 2018, California enacted the California Consumer Privacy Act, or the CCPA, which became effective on January 1, 2020.

In short, the CCPA:

• provides California consumers with new rights to access and request deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used, and shared;

• provides California consumers, and employees as of January 1, 2023, with new rights to access and request deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used, and shared;

• will affect marketing activities due to the CCPA’s broad definitions of personal information and sale, and

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The effects of the CCPA are significant and have required, and could continue to require, us to modify our data, security, and marketing practices and policies, and to incur substantial costs and expenses in an ongoing effort to comply with the CCPA and other applicable data protection laws Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent state privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.

Both Virginia and Colorado have enacted similar legislation to the CCPA, and other states are considering similar legislation.

Further, in November 2020, California voters passed the California Privacy Rights Act, or CPRA.

The CPRA, which is expected to take effect on January 1, 2023 and to create obligations with respect to certain data relating to consumers as of January 1, 2022, significantly expands the CCPA, including by introducing additional obligations such as data minimization and storage limitations, granting additional rights to consumers, such as correction of personal information and additional opt-out rights, and creates a new entity, the California Privacy Protection Agency, to implement and enforce the law.

The CPRA significantly expands the CCPA, including by introducing additional obligations such as data minimization and storage limitations, granting additional rights to consumers, such as correction of personal information and additional opt-out rights, and creates a new entity, the California Privacy Protection Agency, to implement and enforce the law.

The CCPA and CPRA could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities.

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In addition, the Protection of Privacy Regulations (Data Security), 5777-2017, that entered into force in May 2018, impose comprehensive data security requirements on the processing of personal data.

The Protection of Privacy Regulations (Transfer of Data to Overseas Databases), 5761-2001, further impose certain conditions on cross-border transfers of personal data from databases in Israel.

The Protection of Privacy Regulations (Transfer of Data to Overseas Databases), 5761-2001, further impose certain conditions on cross-border transfers of personal

data from databases in Israel.

Moreover, the European Commission is currently reevaluating its adequacy decision with respect to the flow of personal data into Israel.

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Additionally, the Israel Privacy Protection Authority, or the Privacy Protection Authority, may issue a public statement that an entity violated the PPL, and such a determination could potentially be used against such entity in civil litigation.

In July 2020, the Israeli Ministry of Justice indicated that it intends to promote amendments to the PPL designed, among other things, to enhance the Privacy Protection Authority’s investigative and enforcement powers (including powers to impose fines) and to broaden data subject rights.

The Israeli Ministry of Justice has introduced amendments to the PPL designed, among other things, to enhance the Privacy Protection Authority’s investigative and enforcement powers (including powers to impose fines) and to broaden data subject rights.

In addition, there currently are a number of other proposals related to data privacy and security pending before several legislative and regulatory bodies.

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We also offer stock-based compensation as a way to attract and retain key talent.

See Note 10 to our audited consolidated financial statements and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Stock-based compensation” for further discussion of our benefit plans and stock-based compensation.

See Note 10, Equity Transactions and Stock Incentive Plan, to our audited consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Stock-based compensation” for further discussion of our benefit plans and stock-based compensation.

We lease facilities in approximately 30 locations throughout the world, including locations in Israel, the United States, Australia, Austria, Belarus, Canada, Finland, Germany, Poland, Romania, Switzerland, Ukraine, and the United Kingdom.

We believe our existing facilities are sufficient for our current needs.

We may add new facilities and expand our existing facilities as we add employees and expand into new locations.

We believe suitable additional space will be available as needed to accommodate our needs.

Website and Available Information

Our principal executive offices are located at HaChoslim St 8 Herzliya Pituarch, Israel and our telephone number is 972-73-316-3251.

Our principal executive offices are located at HaChoslim St 8 Herzliya Pituach, Israel and our telephone number is 972-73-316-3251.

Our website address is www.playtika.com .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business