What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-27 · 90 added, 100 removed, 295 unchanged (39% of the section changed)

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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.

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

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• Acquisitions of games and new technology .

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.

We have grown and will continue to evaluate opportunities to further expand 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.

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We primarily derive revenue from the sale of virtual items associated with online games.

We distribute our games to the end customer through various web and mobile platforms, such as Apple, Facebook, Google and other web and mobile platforms plus our own Direct-to-Consumer platforms.

We distribute our games to the end customer through various web and mobile platforms, such as Apple, Google and other web and mobile platforms plus our own Direct-to-Consumer platforms.

Through these platforms, users can download our free-to-play games and can purchase virtual items to enhance their game-playing experience.

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Payments from players for virtual items are non-refundable and relate to non-cancellable contracts that specify our obligations and cannot be redeemed for cash nor exchanged for anything other than virtual items within our games.

Our games are played on various third-party platforms for which the platform providers collect proceeds from our customers and pay us an amount after deducting platform fees.

Our games are played on various third-party platforms that allow customers to choose to make purchases through our Direct-to-Consumer platform or through the third-party platform.

If paid through the third-part platform, the platform providers collect proceeds from our customers and pay us an amount after deducting platform fees.

For purchases made through both the third-party and Direct-to-Consumer platforms, we are primarily responsible for fulfilling the virtual items, have the control over the content and functionality of games and have the discretion to establish the virtual items’ prices.

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Cost of revenue

Cost of revenue includes payment processing fees, customer support, hosting fees and depreciation and amortization expenses associated with assets directly involved in the generation of revenues, including servers and internal use software.

Platform providers (such as Apple, Facebook and Google) charge a transactional payment processing fee to accept payments from our players for the purchase of in-app virtual goods.

Payment processing fees and other related expenses for in-app purchases made through our Direct-to-Consumer platforms are typically 3-4%, compared to a 30% platform fee for third party platforms.

Cost of revenue includes payment processing fees, customer support, hosting fees, royalties and depreciation and amortization expenses associated with assets directly involved in the generation of revenues, including servers and internal use software.

Payment processing fees and other related expenses for in-app purchases made through our Direct-to-Consumer platforms are typically 3-4%.

If our players choose to pay through a third-party platform, platform providers (such as Apple and Google) charge a transactional payment processing fee of 30% to accept payments from our players for such purchases.

We generally expect cost of revenue to fluctuate proportionately with revenues.

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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 charges

Impairment charges in 2025 reflect impairment of internal use software and an operating lease right-of-use asset, as well as the impairment of a certain investment in unconsolidated affiliate based upon poor performance of that investment leading to significant uncertainty regard its future viability.

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.

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The tables below show the results of our key financial and operating metrics for the periods indicated.

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 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.

See “ Glossary of Terms ” for additional information of these measures.

Year ended December 31,

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Total cost and expenses $ 2,760.5 $ 2,157.7 $ 2,065.4

Operating income $ 391.6 $ 501.6 $ 471.4

Net income $ 162.2 $ 235.0 $ 275.3

Credit Adjusted EBITDA $ 757.7 $ 832.2 $ 805.1

Operating income (loss) $ (5.1) $ 391.6 $ 501.6

Net income (loss) $ (206.4) $ 162.2 $ 235.0

Adjusted EBITDA $ 753.2 $ 757.7 $ 832.2

Non-financial performance metrics

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Total costs and expenses $ 2,760.5 $ 2,157.7

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

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.

Revenues for the year ended December 31, 2025 increased by $206.1 million when compared with 2024, primarily due to a full year of revenues from our 2024 acquisition of SuperPlay Ltd and growth in several casual games.

The increases were partially offset primarily by a decline in Slotomania .

Cost of revenue

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 $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.

Cost of revenue for the year ended December 31, 2025 increased by $66.4 million when compared with 2024.

The increase was primarily driven by a $20.5 million increase in platform fees due to higher revenues, partially offset by lower fees paid through Direct-to-Consumer platform increased sales, a $26.8 million increase in depreciation and amortization related to a full year of expense for SuperPlay, and an $18.0 million increase in royalty expense related to SuperPlay.

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 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.

Research and development expenses for the year ended December 31, 2025 increased by $23.7 million when compared with the year ended December 31, 2024.

Research and development expenses primarily increased due to a full year of expenses for our 2024 acquisition of SuperPlay including compensation and associated costs, outsourced services and server hosting costs, offset by decreases in compensation and associated costs due to workforce reduction and in stock-based compensation as awards became fully vested.

Sales and marketing expenses

Sales and marketing expenses for the year ended December 31, 2025 increased by $244.8 million when compared with the year ended December 31, 2024.

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.

The increase was primarily due to a net increase in media expenses of approximately $197.0 million relating to our 2024 acquisition of SuperPlay, offset by decreases in other gaming titles.

Depreciation and amortization expense also increased approximately $39.4 million primarily related to a full year of expense for our 2024 acquisition of SuperPlay.

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.

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.

General and administrative expenses for the year ended December 31, 2025 increased by $330.4 million when compared with the year ended December 31, 2024.

The increase is primarily due to a net adjustment $398.6 million to contingent consideration related to the SuperPlay and InnPlay Labs acquisitions.

The increase was offset by a decrease of approximately $74.5 million in appreciation and retention expense related to the conclusion of the Retention Plan and a decrease in transaction related professional fees 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.

During the year ended December 31, 2025, we recorded impairment charges of $6.4 million related to certain equity investments due to poor performance leading to significant uncertainty regarding their future viability, impairment of internal use software and impairment of an operating lease right-of-use asset.

Comparison of the year ended December 31, 2024 versus the year ended December 31, 2023

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

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

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 games.

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

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 Labs.

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.

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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.

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.

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.

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, 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.

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.

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, 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

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Interest expense in 2025, 2024 and 2023 is primarily related to amounts borrowed under the Credit Facilities and senior notes.

The decrease in interest expense in 2025 when compared with 2024 is primarily related to lower variable rate debt balance and lower average interest rates paid on that balance.

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.

Interest income

Interest income in 2025, 2024 and 2023 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.

The decrease in interest income for 2025 when compared to 2024 is driven primarily by lower average balances held in interest bearing cash, cash equivalents and short-term investments throughout 2025, primarily reflecting the use of cash in the SuperPlay acquisition.

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 interest earned on excess taxes paid in Israel in prior years.

Taxes on income

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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, GILTI inclusion, and valuation allowances.

These adverse impacts are partially

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

statutory tax rate is primarily due to adverse impacts of certain items including changes in valuation of Contingent Consideration and GILTI inclusion.

The full rate reconciliation is available in Note 22, Income Taxes.

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

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 the favorable impact of the Israeli Preferred Technology Enterprise regime.

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

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 22, Income Taxes.

The provision for income tax was $157.1 million for the year ended December 31, 2023, and the effective income tax rate was 40.1%.

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

statutory tax rate was primarily due to adverse impacts of certain 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.

The full rate reconciliation is available in Note 22, Income Taxes.

Upon aggregating the components of our results of operations above, net income for the year ended December 31, 2025 decreased by $368.6 million when compared with 2024.

Net income for the year ended December 31, 2024 decreased by $72.8 million when compared to 2023.

Reconciliation of Credit Adjusted EBITDA to net income

Credit Adjusted EBITDA is a non-GAAP financial measure and should not be construed as an alternative to net income as an indicator of operating performance, nor as an alternative to cash flow provided by operating activities as a measure of liquidity, or any other performance measure in each case as determined in accordance with GAAP.

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 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.

Credit Adjusted EBITDA and Credit Adjusted EBITDA Margin as calculated herein may not be comparable to similarly titled measures reported by other companies within the industry and are not determined in accordance with GAAP.

Our presentation of Credit Adjusted EBITDA and Credit Adjusted EBITDA Margin should not be construed as an inference that our future results will be unaffected by unusual or unexpected items.

Reconciliation of Net income (loss) to Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure and should not be construed as an alternative to net income as an indicator of operating performance, nor as an alternative to cash flow provided by operating activities as a measure of liquidity, or any other performance measure in each case as determined in accordance with GAAP.

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

Our Credit Agreement defines 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 Adjusted EBITDA Margin as Adjusted EBITDA divided by revenues.

Adjusted EBITDA and Adjusted EBITDA Margin as calculated herein may not be comparable to similarly titled measures reported by other companies within the industry and are not determined in accordance with GAAP.

Our presentation of Adjusted EBITDA and Adjusted EBITDA Margin should not be construed as an inference that our future results will be unaffected by unusual or unexpected items.

Year ended December 31,

(In millions) 2025 2024 2023

Net income $ 162.2 $ 235.0 $ 275.3

Net income (loss) $ (206.4) $ 162.2 $ 235.0

Provision for income taxes 33.5 118.3 157.1

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10.8 22.4 3.4

Credit Adjusted EBITDA $ 757.7 $ 832.2 $ 805.1

Adjusted EBITDA $ 753.2 $ 757.7 $ 832.2

Net income margin (7.5) % 6.4 % 9.2 %

Credit Adjusted EBITDA margin 29.7 % 32.4 % 30.8 %

Adjusted EBITDA margin 27.3 % 29.7 % 32.4 %

(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) Amounts for the year ended December 31, 2025 consists of $9.8 million and $2.0 million incurred by the Company related to restructuring activities and severance, respectively, and $1.1 million of reimbursement of a tax assessment paid under protest in 2023.

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

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We may also pursue acquisition opportunities for additional businesses or social or mobile games that meet our strategic and return on investment criteria.

Capital needs are evaluated on an individual investment basis and may require significant capital commitments.

Capital needs are evaluated on an individual opportunity basis and may require significant capital commitments.

Our primary sources of liquidity are the cash flows generated from our operations, currently available unrestricted cash and cash equivalents, short-term highly liquid investments, and borrowings under our Credit Facility and Revolver.

Our cash and cash equivalents totaled $565.8 million and $1,029.7 million at December 31, 2024 and December 31, 2023, respectively.

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.

Long-term obligations are expected to be paid through operating cash flows, or, if necessary, borrowings under our Revolving Credit facility or, if necessary, additional term loans or issuances of equity.

Our cash and cash equivalents and short-term investments totaled $820.2 million and $565.8 million at December 31, 2025 and December 31, 2024, respectively.

On April 23, 2025, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement which, among other things, decreased the aggregate principal amount of the Revolving Credit Facility from $ 600 million to $550 million.

On February 16, 2026, the Company entered into a Fifth Amendment (the “Fifth Amendment”) to the Credit Agreement which, among other things, extended the maturity of the Revolving Credit Facility to March 6, 2027.

As of December 31, 2025 and 2024, we had $550 million and $600 million, respectively, in additional borrowing capacity pursuant to our Revolving Credit Facility.

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.

Long-term obligations are expected to be paid through operating cash flows, refinancing of our existing credit facilities or additional debt issuances.

Our restricted cash totaled $1.5 million and $1.9 million at December 31, 2025 and December 31, 2024, respectively.

Restricted cash primarily consists of deposits to secure obligations under our operating lease agreements and to secure

company-issued credit cards.

Restricted cash primarily consists of deposits to secure obligations under our operating lease agreements and to secure company-issued credit cards.

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

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

In 2024 and 2025, 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.

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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.

We believe that our cash and cash equivalents balance, restricted cash, borrowing capacity under our Revolving Credit Facility and our cash flows from operations will be sufficient to meet our normal operating requirements during the next 12 months and the foreseeable future and to fund capital expenditures.

We believe that our cash and cash equivalents balance, short-term investments, restricted cash, and cash flows from operations will be sufficient to meet our normal operating requirements during the next 12 months and the foreseeable future and to fund capital expenditures.

The following tables present a summary of our cash flows for the periods indicated (in millions):

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Net cash flows used in investing activities (221.7) (782.1) (240.2)

Net cash flows provided by (used in) financing activities (167.1) (18.2) (652.0)

Net cash flows used in financing activities (230.0) (167.1) (18.2)

Effect of foreign exchange rate changes on cash and cash equivalents 2.0 (4.9) 4.1

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Operating activities

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, 2025 increased $77.6 million when compared with the year ended December 31, 2024.

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.

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 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 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, 2025 decreased $560.4 million when compared to the year ended December 31, 2024 mainly due to $686.9 million of consideration paid (net of cash acquired) for the 2024 acquisition of SuperPlay Ltd offset by an additional $79.6 million paid for short-term investments in 2025.

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 acquisitions of SuperPlay Ltd offset by $159.6 million for the 2023 acquisitions of InnPlay Labs, and Youda Games.

Financing activities

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 used in financing activities for the year ended December 31, 2025, was $230.0 million primarily related to dividends paid, earnout payments related to acquisitions, the repurchase of shares and repayments on bank borrowings.

Net cash flows used in financing activities of $167.1 million for the year ended December 31, 2024 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.

Capital resources

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The amendment did not have an impact on the Company’s consolidated financial statements or the effectiveness of the Company’s interest rate swap agreements.

On April 23, 2025, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement defined in Note 13 , Debt, which, among other things, (a) amended the Pricing Grid (as defined in the Credit Agreement) for the Company’s revolving credit facility under the Credit Agreement (the “Revolving Credit Facility”), and (b) decreased the aggregate principal amount of the Revolving Credit Facility from $600 million to $550 million.

The Fourth Amendment was also intended to extend the maturity of the Revolving Credit Facility to September 11, 2027, subject to the Credit Agreement being filed and registered with the National Development and Reform Commission of the People’s Republic of China (the “NDRC”) unless the NDRC states in writing that such registration is not required.

This filing requirement with the NDRC is required of the Company’s controlling shareholder due to the fact that the controlling shareholder is controlled by a citizen of the People’s Republic of China.

On December 9, 2025, the Company’s controlling shareholder elected to withdraw its filing of the Credit Agreement with the NDRC and, as a result, the maturity of the Revolving Credit Facility was not extended under the Fourth Amendment.

Also on March 11, 2021, we issued $600.0 million aggregate principal amount of our 4.250% senior notes due 2029 (the “Notes”).

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For additional information on our significant accounting policies, please refer to Note 1, Organization and Summary of Significant Accounting Policies, to the financial statements included elsewhere in this filing.

Business combinations

Business combinations and related fair value measurements

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.

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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.

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.

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.

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

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We primarily derive revenues from the sale of virtual items associated with online games.

We distribute our games to the end customer through various web and mobile platforms such as Apple, Facebook, Google, and other web and mobile platforms.

We distribute our games to the end customer through various web and mobile platforms such as Apple, Google, and other web and mobile platforms.

Through these platforms, users can download our free-to-play games and can purchase virtual currency which is redeemed in the game for virtual goods, or players can purchase virtual goods directly (collectively referred to as virtual items) to enhance their game-playing experience.

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over time) which is usually up to one month.

We have determined through a review of game play behavior that players generally do not purchase additional virtual currency until their existing virtual currency balances have been substantially consumed.

We have determined through a review of game play

behavior that players generally do not purchase additional virtual currency until their existing virtual currency balances have been substantially consumed.

This review, performed on a game-by-game basis, includes an analysis of game players’ historical play behavior, purchase behavior, and the amount of virtual currency outstanding.

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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.

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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

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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 7. Management’s Discussion and Analysis