What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-26 · 105 added, 154 removed, 290 unchanged (47% of the section changed)

6 unchanged sentences

We are one of the world’s leading developers of mobile games creating fun, innovative experiences that entertain and engage our users.

We have built best-in-class live game operations services and a proprietary technology platform to support our portfolio of games which enable us to drive strong user engagement and monetization.

We have built best-in-class live game operations services and proprietary technology tools to support our portfolio of games which enable us to drive strong user engagement and monetization.

Our games are free-to-play, and we are experts in providing novel, curated in-game content and offers to our users, at optimal points in their game journeys.

Our players love our games because they are fun, creative, engaging, and kept fresh through a release of new features that are customized for different player segments.

War in Israel

As a result, we have retained paying users over long periods of time.

Recent Events

On October 7, 2023, the State of Israel was attacked by Hamas, and the State of Israel subsequently declared war on Hamas.

While this war has not had a direct material financial impact on the Company as of the date of this filing, the Company employs approximately 1,100 professionals in Israel.

The Company is actively monitoring the developments in this war.

Since that time, Israel has been engaged in a multi-front armed conflict with combatants located in Gaza, the West Bank, Syria, Iran, Lebanon and Yemen.

Following a period of intense conflict, a temporary ceasefire was reached between Israel and Hamas on January 17, 2025.

A separate ceasefire between Israel and Lebanon was reached on November 27, 2024.

While this marked a step towards de-escalation, the situation in the region remains volatile and fragile.

While this war and these conflicts have not had a direct material financial impact on the Company as of the date of this filing, the Company’s headquarters are located in Israel, and the Company employs approximately 1,320 professionals in Israel, including the majority of the Company’s senior leadership team.

The Company is actively monitoring the developments in this geographic region.

Key Factors Affecting Our Business

5 unchanged sentences

• Acquisitions of games and new technology .

We have grown and expect to continue to grow our business by acquiring games and game studios that we believe can benefit from our live operations services, our Playtika Boost Platform, our design experience, and our scale.

When we acquire games and studios, we focus on providing existing audiences with proven content and applying our live operations to create a better game experience for users.

We also seek to make acquisitions in technology that enhance our marketing, artificial intelligence and research and development capabilities.

We have grown and expect to continue to grow our business by acquiring games and game studios that have broad appeal and potential for scalable leadership in our core genres, enhance our growth profile, or that we believe can benefit from our live operations services, our design experience, and our scale.

When we acquire games and studios, we focus on providing existing audiences with proven content and applying live operations to create a better game experience for users.

• Offering of new games and release of new content, offers, and features .

4 unchanged sentences

We believe that we will be able to continue to grow our user base, including through traditional marketing and advertising, informal marketing campaigns, and cross-promoting between our games, including new games we develop or acquire.

We intend to continue to seek new opportunities to enhance and refine these

marketing efforts to acquire new users, including identifying potential technologies to enhance our marketing and advertising capabilities.

We intend to continue to seek new opportunities to enhance and refine these marketing efforts to acquire new users, including identifying potential technologies to enhance our marketing and advertising capabilities.

Components of our Results of Operations

25 unchanged sentences

In addition, general and administrative expenses include outsourced professional services such as consulting, legal and accounting services, taxes and dues, insurance premiums, and costs associated with maintaining our property and infrastructure.

General and administrative expenses also include depreciation and amortization expenses associated with assets not directly attributable to any of the

expense categories above.

General and administrative expenses also include depreciation and amortization expenses associated with assets not directly attributable to any of the expense categories above.

We also record adjustments to contingent consideration payable recorded after the acquisition date, and legal settlement expenses, as components of general and administrative expense.

Impairment of intangible assets

Our impairment of intangible assets represents charges recorded for the excess of the carrying amount over estimated fair value of our identifiable intangible assets.

This occurs when it is determined the carrying value of a long-lived asset may not be recoverable based upon a comparison of aggregate undiscounted projected future cash flows to the carrying amount of the asset.

Interest expense and other, net

Our interest expense includes interest incurred under our December 2019 Credit Agreement and amortization of deferred financing costs.

Impairment charges

Impairment charges in 2024 reflect impairments related to the Redecor game title based upon lower than expected performance of that title, and related to certain investments in unconsolidated affiliates based upon poor performance of those investments leading to significant uncertainty regarding their future viability.

We hold certain equity investments in various unconsolidated entities that fall within the scope of ASC 321, Investments - Equity Securities.

As permitted within that guidance, we have elected to account for these investments at cost less impairment, adjusted for changes in fair value from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates.

Impairment charges in 2023 reflect charges recorded for the excess of the carrying amount over estimated fair value of our identifiable intangible assets.

Interest and other, net

Our interest expense includes interest incurred under our Credit Agreement and amortization of deferred financing costs.

We expect to continue to incur interest expense under our Credit Agreement, although such interest expense will fluctuate based upon the underlying variable interest rates.

We entered into multiple interest rate swap agreements in March 2021 and in January 2023, accumulating to a total notional value of $1.0 billion, reducing our overall exposure to variable interest rates.

Interest income consists of interest earned on cash and cash equivalents.

Foreign currency translation adjustments, net, include gains and losses resulting from remeasurement of certain non-USD denominated balance sheet times.

Interest income consists of interest earned on cash, cash equivalents and short-term investments.

Foreign currency translation adjustments, net, include gains and losses resulting from remeasurement of certain non-USD denominated balance sheet items.

Provision for income taxes

7 unchanged sentences

We measure the performance of our business by using several key financial metrics, including revenue and operating income, and operating metrics, including Daily Active Users, Average Revenue per Daily Active User, Paying Users, and Average Revenue per Paying User.

These operating metrics help our management to understand and measure the engagement levels of the Company’s players, the size of its audience and its reach.

These operating metrics help our management to understand and measure the engagement levels of our players, the size of our audience and our reach.

See “ Basis of Presentation ” and “ Summary Consolidated Financial and Other Data ” for additional information of these measures.

22 unchanged sentences

General and administrative expenses 288.7 303.5

Impairment of intangible assets 51.3 —

Impairment charges 68.9 51.3

Total costs and expenses $ 2,157.7 $ 2,065.4

Revenues for the year ended December 31, 2024 decreased by $17.7 million when compared with the year ended December 31, 2023.

Our acquisition of the Youda Games’ card game portfolio and InnPlay Labs contributed to revenues for the year ended December 31, 2023, without which the year-over-year decrease in our revenues would have been greater.

Revenue growth from our casual games were unable to offset the revenue declines coming from our social casino-themed

Social casino revenues decreased approximately $120 million that, along with revenue decreases in several of our casual games, were largely due to reduced monetization.

These revenue declines were partially offset by our acquisition of SuperPlay Ltd in 2024 and a full year of revenues from our 2023 acquisitions of Youda Games and InnPlay

The increase in revenues generated from Direct-to-Consumer platforms as a percentage of total revenues resulted from marketing activities for the games offered through these platforms.

1 unchanged sentence

Cost of revenue for the year ended December 31, 2024 decreased by $26.4 million when compared with the year ended December 31, 2023.

The decrease in cost of revenue includes an approximate $16.8 million decrease in platform fees associated with reduced revenues and a greater percentage of revenue generated from our Direct-to-Consumer platforms, as well as a $3.3 million decrease in depreciation and amortization expenses.

Offsetting the decrease is an increase in server hosting costs due to higher fees and the acquisitions of Youda and InnPlay.

The decrease in cost of revenue includes an approximate $23.8 million decrease in platform fees associated with reduced revenues and a greater percentage of revenue generated from our Direct-to-Consumer platforms, as well as a $2.4 million decrease in site costs.

Research and development expenses

Research and development expenses for the year ended December 31, 2024 decreased by $3.4 million when compared with the year ended December 31, 2023.

Research and development expenses were primarily impacted by an approximate $58 million decrease in headcount and associated payroll costs in our existing research and development operations, as well as costs incurred in connection with severance and retention payments incurred in 2022 with no corresponding expense in 2023.

In addition, research and development related outsourcing costs decreased from 2022 to 2023 due to a reduction in the number of ongoing projects.

Research and development expenses were primarily impacted by a net decrease of approximate $22.4 million in payroll and associated payroll costs, including stock based compensation, offset by merit increases, a shift of our workforce composition towards higher-cost locations, and an increase in the costs incurred in connection with severance.

In addition, research and development related outsourcing costs increased from 2023 to 2024 by approximately $9.3 million and the amount of expense capitalized increased by approximately $6.3 million for new and continuing projects.

Sales and marketing expenses

Sales and marketing expenses for the year ended December 31, 2023 decreased by $18.0 million when compared with the year ended December 31, 2022.

The decrease in sales and marketing expenses was primarily related to decreased offline media expenses, depreciation and amortization expense, and decreased headcount and lower associated payroll costs.

Sales and marketing expenses for the year ended December 31, 2024 increased by $119.3 million when compared with the year ended December 31, 2023.

The increase in sales and marketing expenses was primarily due to increased media expenses of approximately $112.1 million relating predominately to our 2024 acquisition of SuperPlay, a full year of expenses for our 2023 acquisition of Youda Games, and increased spend in our Bingo Blitz and Slotomania games.

Depreciation and amortization expense also increased approximately $9.4 million, which was partially offset by a net decrease in compensation and associated costs.

General and administrative expenses

General and administrative expenses for the year ended December 31, 2024 decreased by $14.8 million when compared with the year ended December 31, 2023.

Included in general and administrative expenses for the year ended December 31, 2022, with no comparable amounts for the year ended December 31, 2023, are $7.5 million of costs related to the acquisition of Reworks and to certain office closures, and reversals of $14.1 million of contingent consideration expense related to the JustPlay and Reworks acquisitions.

General and administrative expenses for the year December 31, 2023 include a $1.0 million tax assessment paid under protest.

Further, the Company incurred $6.6 million and $24.7 million in costs related to strategic alternatives, for the years ended December 31, 2023 and 2022, respectively.

Adjusting for these items, the remaining decrease of general and administrative expenses of approximately $19.8 million is primarily due to decreased compensation costs and, to a lesser degree, a decrease in costs associated with relocation and support provided to employees due to the war in Ukraine.

Impairment of intangible assets

During the year ended December 31, 2023, the Company recorded an impairment charge of $41.6 million related to the Redecor game title based upon lower than expected performance of that title based upon lower than expected performance of that title.

The Company has recently released certain changes to the game operations and mechanics in an effort to improve the performance of this title.

Given the recent nature of the game updates, it is too early to determine if such changes will have a positive impact on the game.

To the extent these recent changes to the game do not boost the performance of the Redecor title, the remaining balance of the Redecor game title of approximately $41 million may be impaired in future periods.

Also included in the year ended December 31, 2023 is a $9.7 million write-off of JustPlay.LOL Ltd’s game title.

The decrease is primarily due to a net $11.1 million adjustment to contingent consideration related to the SuperPlay, InnPlay Labs, and Youda Games acquisitions, as well as a decrease of approximately $14.2 million in compensation and associated costs.

These decreases were offset by an increase of approximately $13.4 million of transaction costs primarily related to the SuperPlay acquisition.

Impairment charges

During the year ended December 31, 2024, we recorded an impairment charge of $29.9 million related to the Redecor game title based upon continued lower than expected performance of that title, and an impairment charge of $36.3 million related to certain investments in unconsolidated affiliates based upon poor performance of those investments leading to significant uncertainty regarding their future viability.

Comparison of the year ended December 31, 2023 versus the year ended December 31, 2022

8 unchanged sentences

General and administrative expenses 303.5 332.4

Impairment charges 51.3 —

Total costs and expenses $ 2,065.4 $ 2,144.1

Revenues for the year ended December 31, 2022 increased by $32.5 million when compared to the year ended December 31, 2021.

This year-over-year comparison includes incremental revenues of $34.3 million generated from the Company’s August 2021 acquisition Reworks.

Absent this acquisition, revenues in 2022 declined when compared with 2021 as improved monetization and increased revenues from new content and product features across our broader portfolio of games were unable to offset the incremental revenues recognized in 2022 due to the Covid pandemic.

The combination of unusually high DAUs in early 2021, combined with the continued focus of the Company’s marketing efforts on player conversion rather than increasing player traffic lead to a decrease in DAUs for 2022 when compared with 2021.

The same focus on player conversion, combined with improvements to monetization, new content and new product features drove an increase in DPUs in 2022 compared to 2021.

Revenues for the year ended December 31, 2023 decreased by $48.5 million when compared to the year ended December 31, 2022.

Revenue growth from our casual games were unable to offset the revenue declines coming from our social casino-themed games.

The increase in revenues generated from Direct-to-Consumer platforms as a percentage of total revenues resulted from marketing activities for the games offered through these platforms.

Cost of revenue

Cost of revenue for the year ended December 31, 2022 increased by $6.7 million when compared with the year ended December 31, 2021.

The increase in cost of revenue includes approximately $10.0 million in incremental platform fees associated with the August 2021 acquisition of Reworks.

Absent this acquisition, cost of revenues for 2022 would have declined when compared to 2021, primarily as a result of the increase in revenues generated through our Direct-to-Consumer platforms, partially offset by increased depreciation and amortization expenses.

Cost of revenue for the year ended December 31, 2023 decreased by $17.2 million when compared with the year ended December 31, 2022.

Offsetting the decrease is an increase in server hosting costs due to higher fees and the acquisitions of Youda and InnPlay.

Research and development expenses

Research and development expenses for the year ended December 31, 2022 increased by $85.6 million when compared with the year ended December 31, 2021.

Research and development expenses were adversely impacted by increased headcount and associated payroll costs in our existing research and development operations, including costs incurred in connection with severance payments incurred during the fourth quarter 2022 in connection with our workforce reduction.

In addition, stock-based compensation costs, net of amounts capitalized, included in research and development expenses increased by $15.7 million for the year ended December 31, 2022 when compared with the year ended December 31, 2021.

Research and development expenses for the year ended December 31, 2023 decreased by $65.9 million when compared with the year ended December 31, 2022.

In addition, research and development related outsourcing costs decreased from 2022 to 2023 due to a reduction in the number of ongoing projects.

Sales and marketing expenses

Sales and marketing expenses for the year ended December 31, 2022 increased by $22.0 million when compared with the year ended December 31, 2021.

The increase in sales and marketing expenses was primarily related to increased amortization expense, increased media buy expenses, increased stock-based compensation costs, and increased headcount and higher associated payroll costs.

Sales and marketing expenses for the year ended December 31, 2023 decreased by $18.0 million when compared with the year ended December 31, 2022.

General and administrative expenses

General and administrative expenses for the year ended December 31, 2022 increased by $9.0 million when compared with the year ended December 31, 2021.

General and administrative expenses includes stock-based compensation expenses of $69.5 million for the year ended December 31, 2022, compared with $64.4 million for the year ended December 31, 2021.

Included in general and administrative expenses for the year ended December 31, 2021, with no comparable amount for the year ended December 31, 2022, are bonus expenses of approximately $35.4 million paid as a result of the successful initial public offering of the Company’s stock in January 2021.

Adjusting for these items, general and administrative expenses increased by approximately $39.3 million, primarily due to increased compensation costs associated with the long-term incentive plan and costs associated with exploring strategic alternatives, which were partially offset by reduced expense attributable to adjusting contingent consideration to fair value.

General and administrative expenses for the year ended December 31, 2023 decreased by $28.9 million when compared with the year ended December 31, 2022.

Included in general and administrative expenses for the year ended December 31, 2022,

with no comparable amounts for the year ended December 31, 2023, are $7.5 million of costs related to the acquisition of Reworks and to certain office closures, and reversals of $14.1 million of contingent consideration expense related to the JustPlay and Reworks acquisitions.

General and administrative expenses for the year December 31, 2023 include a $1.0 million tax assessment paid under protest.

Further, we incurred $6.6 million and $24.7 million in costs related to strategic alternatives, for the years ended December 31, 2023 and 2022, respectively.

Impairment charges

During the year ended December 31, 2023, we recorded an impairment charge of $41.6 million related to the Redecor game title based upon lower than expected performance of that title.

Also included in the year ended December 31, 2023 is a $9.7 million write-off of JustPlay.LOL Ltd’s game title.

Other Factors Affecting Net Income

7 unchanged sentences

Interest expense

Interest expense in 2023, 2022 and 2021 is primarily related to amounts borrowed under the December 2019 Credit Facilities.

Interest expense in 2024, 2023 and 2022 is primarily related to amounts borrowed under the Credit Facilities and senior notes.

The increase in interest expense in 2024 when compared to 2023 is primarily due to slightly higher average interest rates.

The increase in interest expense in 2023 when compared with 2022 is primarily related to higher average interest rates.

The decrease in interest expense in 2022 when compared with 2021 is driven primarily by the refinancing of our Term Loan with a new facility bearing a lower interest rate spread.

On March 11, 2021, the Company amended the Credit Agreement which, among other things, effected a refinancing of the Old Term Loan with a new $1.9 billion senior secured first lien term loan borrowed under the Credit Agreement.

Also on March 11, 2021, the Company issued $600.0 million aggregate principal amount of its 4.250% senior notes due 2029 under an indenture, dated March 11, 2021.

The combination of these two March 2021 transactions significantly reduced our average interest rates on our outstanding indebtedness.

Interest income

Interest income in 2023, 2022 and 2021 is primarily related to interest earned on cash, cash equivalents and short term bank deposits.

The increase in interest income in 2023 when compared with previous years is driven primarily by higher interest rates and from more active investment of excess cash in income-bearing investments.

Interest income in 2024, 2023 and 2022 is primarily related to interest earned on cash, cash equivalents and short-term investments.

The increase in interest income for 2024 when compared to 2023 is primarily due to higher interest rates, more active investments of excess cash in income-bearing investments, and from interset earned on excess taxes paid in Israel in prior years.

The increase in interest income for 2023 when compared to 2022 is driven primarily by higher interest rates and from more active investment of excess cash in income-bearing investments.

Taxes on income

1 unchanged sentence

The difference between the effective income tax rate and the U.S.

statutory tax rate is primarily due to adverse impacts of certain recurring items including tax rates in foreign jurisdictions and the relative amounts of income earned in those jurisdictions, unrecognized tax benefits, and GILTI inclusion.

These adverse impacts are partially offset by the favorable impact of the Israeli Preferred Technology Enterprise regime.

These adverse impacts are partially

offset by the favorable impact of the Israeli Preferred Technology Enterprise regime.

The full rate reconciliation is available in Note 21, Income Taxes.

2 unchanged sentences

statutory tax rate was primarily due to adverse impacts of certain recurring items such as tax rates in foreign jurisdictions and the relative amounts of income earned in those jurisdictions, unrecognized tax benefits, and GILTI inclusion.

These adverse impacts are partially offset by the recurring favorable impact of the Israeli Preferred Technology Enterprises regime.

It is also favorably affected by items that are not consistent from year to year.

Of these items, the primary differences related to the reversal of a valuation allowance relating to foreign net operating losses and return-to-provision adjustments.

These adverse impacts are partially offset by the the favorable impact of the Israeli Preferred Technology Enterprise regime.

The provision for income tax was $85.5 million for the year ended December 31, 2022, and the effective income tax rate was 23.7%.

3 unchanged sentences

It is also favorably affected by items that are not consistent from year to year.

Of these items, the primary difference related to the reversal of deferred tax liabilities due to the change in reinvestment assertion related to undistributed earnings of certain of our non-U.S.

subsidiaries during the year.

Upon aggregating all of the components of our results of operations above, net income for the year ended December 31, 2023 decreased by $40.3 million when compared with 2022.

Of these items, the primary differences related to the reversal of a valuation allowance relating to foreign net operating losses and return-to-provision adjustments.

Upon aggregating the components of our results of operations above, net income for the year ended December 31, 2024 decreased by $72.8 million when compared with 2023.

Net income for the year ended December 31, 2023 decreased by $40.3 million when compared to 2022.

2 unchanged sentences

Below is a reconciliation of Credit Adjusted EBITDA to net income, the closest GAAP financial measure.

Our Credit Agreement defines Adjusted EBITDA (which we call “Credit Adjusted EBITDA”) as net income before (i) interest expense, (ii) interest income, (iii) provision for income taxes, (iv) depreciation and amortization expense, (v) impairment of intangible assets, (vi) stock-based compensation, (vii) contingent consideration, (viii) acquisition and related expenses, and (ix) certain other items.

Our Credit Agreement defines Adjusted EBITDA (which we call “Credit Adjusted EBITDA”) as net income before (i) interest expense, (ii) interest income, (iii) provision for income taxes, (iv) depreciation and amortization expense, (v) impairment charges, (vi) stock-based compensation, (vii) contingent consideration, (viii) acquisition and related expenses, and (ix) certain other items.

We calculate Credit Adjusted EBITDA Margin as Credit Adjusted EBITDA divided by revenues.

5 unchanged sentences

Provision for income taxes 118.3 157.1 85.5

Interest expense and other, net 109.5 110.6 153.8

Interest and other, net 111.1 109.5 110.6

Depreciation and amortization 165.7 158.0 162.0

2 unchanged sentences

99.2 110.0 123.5

Impairment of intangible assets 51.3 — —

Contingent consideration 1.4 (14.3) (6.6)

Impairment charges 68.9 51.3 —

Changes in estimated value of contingent consideration (9.8) 1.4 (14.3)

Acquisition and related expenses (2)

1 unchanged sentence

Other items (3)

22.4 3.4 37.8

Credit Adjusted EBITDA $ 757.7 $ 832.2 $ 805.1

1 unchanged sentence

Credit Adjusted EBITDA margin 29.7 % 32.4 % 30.8 %

(1) Reflects, for all years, stock-based compensation expense related to the issuance of equity awards to our employees.

(2) The amounts for the years ended December 31, 2023 and 2022 primarily relate to expenses incurred by the Company in connection with the evaluation of strategic alternatives for the Company.

The amount for the year ended December 31, 2021 primarily relates to bonus expenses paid as a result of the successful initial public offering of the Company’s stock in January 2021.

(3) The amount for the year ended December 31, 2023 consists primarily of $1.8 million incurred by the Company for severance and $1.0 million for tax assessment paid under protest.

The amount for the year ended December 31, 2022 consists of $13.2 million incurred by the Company for severance, $4.1 million incurred by the Company for relocation and support provided to employees due to the war in Ukraine and $16.4 million incurred related to the announced restructuring activities.

The amount for the year ended December 31, 2021 includes business optimization expenses.

(1) Reflects stock-based compensation expense related to the issuance of equity awards to our employees and Directors.

(2) Includes costs incurred to evaluate and pursue acquisition activities as well as costs incurred by the Company in connection with the evaluation of strategic alternatives.

(3) The amount for the year ended December 31, 2024 consists primarily of $14.5 million and $6.9 million incurred by the Company related to severance and restructuring activities, respectively.

The amount for the year ended December 31, 2023 consists primarily of $1.8 million incurred by the Company for severance and $1.0 million for a tax assessment paid under protest.

The amount for the year ended December 31, 2022 includes $13.2 million incurred by the Company for severance, $4.1 million incurred by the Company for relocation and support provided to employees due to the war in Ukraine and $16.4 million incurred related to the announced restructuring activities.

Liquidity and Capital Resources

7 unchanged sentences

As of December 31, 2024 and 2023, we had $600 million in additional borrowing capacity pursuant to our Revolving Credit Facility.

Recognizing that our Revolving Credit Facility matures in 2026, we are evaluating our financing alternatives and debt maturities in the near-term.

Payments of short-term debt obligations, dividends to shareholders and other commitments are expected to be made from cash on the balance sheet and operating cash flows.

4 unchanged sentences

The classification of restricted cash as current and long-term is dependent upon the intended use of each particular reserve.

In February 2024, our Board of Directors elected to declare a cash dividend of $0.10 per share of the Company’s outstanding common stock.

In 2024, our Board of Directors elected to declare quarterly cash dividends of $0.10 per share of the Company’s outstanding common stock.

We will maintain a focus on financial discipline through a balanced approach of evaluation of M&A opportunities and stockholder dividends while maintaining adequate capital requirements for ongoing operations.

The Board will continue to evaluate the economic environment, our cash needs, optimal uses of cash, and other applicable factors, and may elect to make additional changes to dividends (if any) in future periods.

The Board will continue to evaluate the economic environment, our cash needs, optimal uses of cash, and other applicable factors, and may elect to make changes to the payment of dividends (if any) in future periods.

Our ability to fund our operations, pay our debt obligations and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond our control, and disruptions in capital markets could impact our ability to secure additional funds through financing activities.

9 unchanged sentences

Operating activities

Net cash flows provided by operating activities for the year ended December 31, 2023 increased $21.9 million when compared with the year ended December 31, 2022.

Net cash flows provided by operating activities for the year ended December 31, 2024 decreased $25.5 million when compared with the year ended December 31, 2023.

Net cash flows provided by operating activities for the year ended December 31, 2023 increased $21.9 million when compared with the year ended December 31, 2022.

Net cash flow provided by operating activities for each period primarily consisted of net income generated during the period, exclusive of non-cash expenses such as depreciation, amortization and stock-based compensation, and changes in the fair value of contingent consideration payable, with changes in working capital impacted by the payment of annual and incentive bonuses and payment of long-term cash compensation during the first quarter and other normal timing differences.

Investing activities

Net cash flows used in investing activities for the year ended December 31, 2024 increased $541.9 million when compared to the year ended December 31, 2023 mainly due to $686.9 million of consideration paid (net of cash acquired) for the 2024 acquisition of SuperPlay Ltd.

Net cash flows used in investing activities for the year ended December 31, 2023 increased $165.6 million when compared to the year ended December 31, 2022, mainly due to $159.6 million of consideration paid (net of cash acquired) for the 2023 acquisitions of Youda Games and G.S InnPlay Labs Ltd.

Net cash flows used in investing activities for the year ended December 31, 2022 decreased $534.8 million when compared to the year ended December 31, 2021, mainly due to $394.1 million of consideration paid (net of cash acquired) for the 2021 acquisition of Reworks and $100.0 million used for investment in short-term bank deposits in 2021, offset by $100.1 million of proceeds from short-term bank deposits in 2022.

Financing activities

Net cash flows used in financing activities for the year ended December 31, 2023, was $18.2 million primarily related to repayments on bank borrowings.

Net cash flows used in financing activities for the year ended December 31, 2024, was $167.1 million primarily related to dividends paid, earnout payments related to acquisitions, and repayments on bank borrowings.

Net cash flows used in

financing activities of $18.2 million for the year ended December 31, 2023 primarily related to repayments on bank borrowings.

Net cash flows used in financing activities of $652.0 million for the year ended December 31, 2022, primarily related to the Company’s Tender Offer in October 2022.

Net cash flows provided by financing activities of $559.7 million for the year ended December 31, 2021, primarily related to the Company’s initial public offering of its equity in January 2021, and the refinancing of its Old Term Loan (as defined below) in March 2021.

Capital resources

On December 10, 2019, we entered into $2,750 million of senior secured credit facilities (the “Credit Facilities”), consisting of a $250 million revolving credit facility (the “Revolving Credit Facility”), and a $2,500 million first lien term loan (the “Old Term Loan”).

The Credit Facilities were provided pursuant to the Credit Agreement, dated as of December 10, 2019, by and among Playtika, the lenders party thereto, and Credit Suisse, AG, Cayman Islands Branch, as administrative agent (in such capacity, the "Administrative Agent") and collateral agent (in such capacity, the "Collateral Agent").

On December 10, 2019, we entered into $2,750 million of Credit Facilities, consisting of a $250 million Revolving Credit Facility, and a $2,500 million first lien term loan (the “Old Term Loan”).

The Credit Facilities were provided pursuant to the Credit Agreement, dated as of December 10, 2019, by and among Playtika, the lenders party thereto, and UBS AG, Stamford Branch (as successor in interest to Credit Suisse, AG, Cayman Islands Branch), as administrative agent (in such capacity, the "Administrative Agent") and collateral agent (in such capacity, the "Collateral Agent").

Proceeds borrowed under the Credit Facilities on the closing date were used to pay off the outstanding balance on our prior debt facility.

26 unchanged sentences

Business combinations

We apply the provisions of ASC 805, Business Combinations and allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.

We apply the provisions of ASC 805, Business Combinations and allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed or incurred, and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.

When determining the fair values of assets acquired and liabilities assumed or incurred, management makes significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology, acquired trademarks and the acquired user base from a market participant perspective, useful lives and discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

We also apply the provisions of ASU 2021-08, Business Combinations (Topic 805) (“ASU 2021-08”) which requires that we recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) and that at the acquisition date, we account for related revenue contracts in accordance with ASC 606 as if we had originated the contracts.

When business combinations include an earnout payment or contingent consideration that embodies an unconditional obligation for us to transfer assets on a specific agreed-upon date, that liability is measured at fair value as of the acquisition date and as of each reporting date until the obligation is resolved.

When business combinations include an earnout payment or contingent consideration that embodies an unconditional obligation for us to transfer assets on a specific agreed-upon date, that liability is measured at estimated fair value as of the acquisition date and as of each reporting date until the obligation is resolved.

Significant estimates in valuing such liabilities include, but are not limited to, future financial models and discount rates.

Software development costs

We review internal use software development costs associated with infrastructure and new games or updates to existing games to determine if the costs qualify for capitalizing.

The development costs incurred during the application development stage that are related to infrastructure are capitalized.

Internal use software is included in intangible assets other than goodwill, net in the accompanying consolidated balance sheets.

Capitalization of such costs begins when the preliminary project stage is completed and ceases at the point in which the project is substantially complete and is ready for its intended purpose.

With respect to new games or updates to existing games, the preliminary project stage remains ongoing until just prior to worldwide launch.

The development costs related to new games or updates to existing games are expensed as incurred to research and development in the consolidated statements of comprehensive income.

The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition.

We determine the estimated fair values of assets acquired and liabilities assumed after review and consideration of relevant information including discounted cash flows, quoted market prices, and estimates made by management.

To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is recorded as goodwill.

Under ASC 350, Intangible—Goodwill and Other , goodwill is not amortized, but rather is subject to an annual impairment test.

We test goodwill for impairment as of October 1 st of each year, or more frequently if events or changes in circumstances indicate that this asset may be impaired.

For the purposes of impairment testing, we have determined that we have one reporting unit.

When performing the annual goodwill impairment testing, we either conduct a qualitative assessment to determine whether it is more likely than not that the asset is impaired, or we elect to bypass this qualitative assessment and perform a quantitative test for impairment.

Under the qualitative assessment, we consider both positive and negative factors, including macroeconomic conditions, industry events, financial performance and other changes, and makes a determination of whether it is more likely than not that the fair value of goodwill is less than its carrying amount.

If, after assessing the qualitative factors, we determine it is more likely than not the asset is impaired, we then perform a quantitative test in which the estimated fair value of the reporting unit is compared with its carrying amount, including goodwill.

If, after assessing the qualitative factors, we determine that it is not more likely than not the asset is impaired, goodwill is considered not to be impaired and no additional steps are necessary.

If a quantitative analysis is necessary, we compare the fair value of our reporting unit to our carrying value.

We determine the estimated fair value based on a combination of market multiples and estimated future cash flows discounted at rates commensurate with the capital structure and cost of capital of comparable market participants, giving appropriate consideration to the prevailing borrowing rates within the industry in general.

Market multiples and discounted cash flows are common measures used to value businesses in our industry.

If the estimated fair value exceeds carrying value, goodwill is considered not to be impaired.

However, if the carrying amount exceeds estimated fair value, an impairment loss is recognized in an amount equal to the excess.

The annual evaluation of goodwill requires the use of estimates about future operating results, valuation multiples, and discount rates to determine its fair value.

Changes in these assumptions can materially affect these estimates.

Thus, to the extent our profitability deteriorates in the near future, discount rates increase significantly, or we do not meet our projected performance, we could have impairments to record in the next twelve months, and such impairments could be material.

Impairment of long-lived assets

4 unchanged sentences

There is inherent uncertainty in our forecasts and projections used in any impairment analysis, and different assumptions and estimates could have lead to different impairment test results, and those results could have been materially different.

The preparation of cash flow projections for use in any impairment indicators test or fair value analysis requires management to make critical estimates, judgments and assumptions with regards to estimated future cash flows, as they are, by their

nature, subjective and actual results may differ materially from such estimates.

Cash flow estimates are unpredictable and inherently uncertain, since they are based on the current regulatory, political and economic climates, recent operating information and projections.

Such estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, competition, events affecting various forms of travel and access to our properties, and other factors.

If our estimates of future cash flows are not met or if there are changes in significant assumptions and judgments used in the estimation process, we may have to record impairment charges in the future.

our estimates of future cash flows are not met or if there are changes in significant assumptions and judgments used in the estimation process, we may have to record impairment charges in the future.

Further, unless an asset is entirely impaired, future estimates, judgments and assumptions may result in additional impairments in a later period.

Revenue recognition

23 unchanged sentences

Durable virtual items represent items that are accessible to the player over an extended period of time.

We recognize revenues from the sale of durable virtual items ratably over the estimated average life of the paying player, which is estimated on a game-by-game basis and generally ranges from eight months up to fourteen months.

We estimate the average life of the paying player based on historical paying player patterns and playing behaviors within each of the specific games that offer durable virtual items.

3 unchanged sentences

We also have relationships with certain advertising service providers for advertisements within our games and revenues from these advertising providers is generated through impressions, clickthroughs, banner ads and offers.

We have determined that displaying the advertisements within the mobile games is identified as a single performance obligation.

We have determined that

displaying the advertisements within the mobile games is identified as a single performance obligation.

The transaction price in advertising arrangements is established by our advertising service providers and is generally the product of the number of advertising units delivered (e.g.

3 unchanged sentences

Therefore, we recognize revenues related to these arrangements on a net basis.

Stock-based compensation expense

We have a stock-based compensation program which provides for equity awards including time-based stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”).

Stock-based compensation expense is measured at the grant date based on the estimated fair value of the award, and is recognized as expense on a straight-line basis over the requisite service period for options and RSUs and on an accelerated basis for PSUs.

The Company records forfeitures as a reduction of stock-based compensation expense as those forfeitures occur.

We used the Black-Scholes option pricing model to estimate the fair value and compensation cost associated with stock options.

As we do not have a long history of market prices for our common stock because our stock was not publicly traded prior to January 2021, we used observable data for a group of peer companies that grant options with substantially similar terms to assist in developing our volatility assumptions.

The expected volatility of the stock was determined using weighted average measures of the implied volatility and the historical volatility for our peer group of companies for a period equal to the expected life of the options.

The weighted-average risk-free interest rates were based on the interest rate for U.S.

Treasury bonds.

The expected term assumptions were derived using the simplified method, which is based on an average between each vesting date and the expiration date of an option.

This method was chosen because there was no historical option exercise experience due to us being privately held.

The fair value of options granted prior to February 2024 was determined based upon the assumption that we would not pay cash dividends on shares of our common stock.

Option grants subsequent to February 2024 will use an appropriate dividend yield in our calculation of estimated fair value.

The stock options have a contractual term of 10 years.

Except as otherwise provided in an agreement between us and the employee, if an employee is terminated (voluntarily or involuntarily), any unvested awards as of the date of termination will be forfeited.

If factors change and we employ different assumptions, stock-based compensation cost on future awards may differ significantly from what we have recorded in the past.

Higher volatility and longer expected terms result in an increase to stock-based compensation determined at the date of grant.

Future stock-based compensation cost and unrecognized stock-based compensation will increase to the extent that we grant additional equity awards to employees or assume unvested equity awards in connection with acquisitions.

If there are any modifications or cancellations of the underlying unvested equity awards, we may be required to accelerate any remaining unearned stock-based compensation cost or incur incremental cost.

We use the associated per-share value at the time of grant to determine the compensation cost to be recognized associated with RSUs and PSUs granted.

For PSUs, we periodically review the estimates of performance against the defined criteria to assess the expected payout of each outstanding grant and adjust the stock compensation expense accordingly.

For RSUs, shares are issued on the vesting dates net of the applicable statutory income tax withholding to be paid by us on behalf of our employees.

As a result, fewer shares are generally issued than the number of RSUs outstanding, and the income tax withholding is recorded as a reduction to additional paid-in capital.

Our stock-based compensation expense is recorded in the financial statement line items relevant to each of the award recipients.

See Note 13, Equity Transactions and Stock Incentive Plan, to the financial statements included elsewhere in this filing for additional discussion.

Derivative instruments

4 unchanged sentences

We monitor the effectiveness of our hedges on a quarterly basis, both qualitatively and quantitatively.

We performed a regression analysis at the inception of the hedging relationship and at period end in which we compared the change in the fair value of the swap transaction and the change in fair value of a hypothetical interest rate swap having terms that identically match the terms of the debt's interest rate payments historical swap rates.

We performed a regression analysis at inception of the hedging relationship and at period end in which we compared the change in the fair value of the swap transaction and the change in fair value of a hypothetical interest rate swap having terms that identically match the terms of the debt's interest rate payments historical swap rates.

We believe that the hedging instruments are expected to be highly effective at offsetting changes in the hedged transactions attributable to the risk being hedged.

For each future reporting period, we will continue performing retrospective and prospective assessments of hedge effectiveness in a single regression analysis by updating the regression analysis that was prepared at inception of the hedging relationship.

Foreign currency hedge agreements

We use foreign currency derivative contracts to reduce our exposure to fluctuating exchange rates between the United States dollar (as our functional currency) and certain expense lines denominated in Israeli Shekels (“ILS”), Polish Zloty (“PLN”) and Romanian Leu (“RON”).

We use foreign currency derivative contracts to reduce our exposure to fluctuating exchange rates between the United States dollar (as our functional currency) and certain expense lines denominated in Euros (“EUR”), Israeli Shekels (“ILS”), Polish Zloty (“PLN”) and Romanian Leu (“RON”).

Our derivative contracts are designated as cash flow hedges under ASC 815.

3 unchanged sentences

The fair value approximates the amount we would pay or receive if these contracts were settled at the respective valuation dates.

The inputs used to measure the fair value of our interest rate swap agreements are categorized as Level 2 in the fair value hierarchy as established by ASC 820, Fair Value Measurement (“ASC 820”).

The inputs used to measure the fair value of our foreign currency derivative contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820.

The inputs used to measure the fair value of our interest rate swap agreements and foreign currency derivative contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820, Fair Value Measurement (“ASC 820”).

See Note 15, Fair Value Measurements , for additional discussion.

Valuation allowances

1 unchanged sentence

Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the more likely than not realization threshold.

This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused and tax planning alternatives.

This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the

duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused and tax planning alternatives.

Uncertain tax positions

8 unchanged sentences

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 7. Management’s Discussion and Analysis