myps-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 001-39652

PLAYSTUDIOS, Inc.

(Exact name of registrant as specified in its charter)


Delaware						88-1802794
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

10150 Covington Cross Drive

Las Vegas, NV 89144

(725) 877-7000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A common stock

MYPS

Nasdaq Stock Market LLC

Redeemable warrants exercisable for one share of Class A common stock at an exercise price of $11.50 per share

MYPSW

Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of July 31, 2024, there were 108,203,579 shares of Class A common stock, $0.0001 par value per share, and 16,457,769 shares of Class B common stock, $0.0001 par value per share, outstanding.

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			Page
Cautionary Note Regarding Forward-Looking Statements			3
Part I - Financial Information			5
Item 1. Financial Statements (Unaudited)			5
Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023			5
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and June 30, 2023			6
Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and June 30, 2023			7
Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2024 and June 30, 2023			8
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and June 30, 2023			10
Notes to Unaudited Condensed Consolidated Financial Statements			11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3. Quantitative and Qualitative Disclosures About Market Risk			39
Item 4. Controls and Procedures			39
Part II - Other Information			41
Item 1. Legal Proceedings			41
Item 1A. Risk Factors			41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			42
Item 3. Defaults Upon Senior Securities			43
Item 4. Mine Safety Disclosures			43
Item 5. Other Information			43
Item 6. Exhibits			44
Signatures			45

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this Quarterly Report, about our future financial performance, strategy, expansion plans, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management are forward-looking statements. Any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “goal,” “project” or the negative of such terms or other similar expressions.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our business strategy and market opportunity;

•our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit, or gross margin, operating expenses (including changes in sales and marketing, research and development, and general and administrative expenses), and profitability;

•market acceptance of our games;

•our ability to raise financing in the future and the global credit and financial markets;

•factors relating to our business, operations, financial performance, and our subsidiaries, including:

◦changes in the competitive and regulated industries in which we operate, variations in operating performance across competitors, and changes in laws and regulations affecting our business,

◦our ability to implement business plans, forecasts, and other expectations, and identify and realize additional opportunities, and

◦general economic conditions and their impact on levels of spending by players, our awards partners, and our advertisers, including risks of inflation and recession and other macroeconomic conditions;

•our ability to maintain relationships with our platforms, such as the Apple App Store, Google Play Store, Amazon Appstore, and Facebook;

•the accounting for our outstanding warrants to purchase shares of Class A common stock;

•our ability to develop, maintain, and improve our internal control over financial reporting;

•our ability to maintain, protect, and enhance our intellectual property rights;

•our ability to successfully defend litigation brought against us;

•our ability to identify, close, and integrate acquisitions to contribute to our growth objectives;

•our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•the impact of geopolitical conditions, including the wars between Ukraine and Russia and between the State of Israel and Hamas, as well as evolving conflicts in surrounding areas; and

•the impact of public health epidemics or pandemics (including COVID-19) on our business.

These forward-looking statements are based on our current plans, estimates and projections in light of information currently available to us, and are subject to known and unknown risks, uncertainties and assumptions about us, including those described under the heading “Risk Factors” in this Quarterly Report on Form 10-Q, and in other filings that we make with the Securities and Exchange Commission (the “SEC”) from time to time, that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In addition, the risks described under the heading

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“Risk Factors” are not exhaustive. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any risk factor or combination of risk factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are also not guarantees of performance. You should not put undue reliance on any forward-looking statements, which speak only as of the date hereof. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q whether as a result of new information, future events or otherwise.

We intend to announce material information to the public through our Investor Relations website, ir.playstudios.com, SEC filings, press releases, public conference calls and public webcasts. We use these channels, as well as social media, to communicate with our investors, customers, and the public about our company, our offerings, and other issues. It is possible that the information we post on our website or social media could be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above, including our website and the social media channels listed on our Investor Relations website, and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.

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PART I. Financial Information

Item 1. Financial Statements

PLAYSTUDIOS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value amounts)


	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	106,304	$	132,889
Receivables	29,193		30,465
Prepaid expenses and other current assets	11,502		11,529
Total current assets	146,999		174,883
Property and equipment, net	18,256		17,549
Operating lease right-of-use assets	10,746		9,369
Intangibles assets and internal-use software, net	104,655		110,933
Goodwill	47,133		47,133
Deferred income taxes	2,666		2,764
Other long-term assets	2,992		3,690
Total non-current assets	186,448		191,438
Total assets	$	333,447	$	366,321

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	3,745		1,907
Warrant liabilities	433		1,086
Operating lease liabilities, current	3,278		4,236
Accrued and other current liabilities	28,034		38,796
Total current liabilities	35,490		46,025
Minimum guarantee liability	24,000		24,000
Deferred income taxes	1,326		1,198
Operating lease liabilities, non-current	7,865		5,699
Other long-term liabilities	1,203		1,048
Total non-current liabilities	34,394		31,945
Total liabilities	$	69,884	$	77,970
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, $0.0001 par value (100,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023)	—		—
Class A common stock, $0.0001 par value (2,000,000 shares authorized, 126,069 and 122,923 shares issued, and 108,132 and 118,200 shares outstanding as of June 30, 2024 and December 31, 2023, respectively)	11		12
Class B common stock, $0.0001 par value (25,000 shares authorized, 16,457 and 16,457 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively).	2		2
Additional paid-in capital	319,682		310,944
Accumulated deficit	(5,815)		(2,637)
Accumulated other comprehensive (loss) income	(1,554)		124
Treasury stock, at cost, 17,937 and 4,723 shares at June 30, 2024 and December 31, 2023, respectively	(48,763)		(20,094)
Total stockholders’ equity	263,563		288,351
Total liabilities and stockholders’ equity	$	333,447	$	366,321

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

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PLAYSTUDIOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenue	$	72,590	$	77,793	$	150,418	$	157,916
Operating expenses:
Cost of revenue(1)	18,068		18,887		37,019		38,414
Selling and marketing	17,064		18,431		35,640		36,497
Research and development	16,743		18,381		34,764		36,136
General and administrative	11,645		11,040		23,424		22,941
Depreciation and amortization	11,654		11,116		23,220		22,149
Restructuring and related	1,379		1,784		2,017		5,832
Total operating costs and expenses	76,553		79,639		156,084		161,969
Loss from operations	(3,963)		(1,846)		(5,666)		(4,053)
Other income (expense), net:
Change in fair value of warrant liabilities	717		(1,777)		653		(2,835)
Interest income, net	1,374		1,262		2,794		2,157
Other (loss) income, net	(264)		1,044		(370)		1,104
Total other income, net	1,827		529		3,077		426
Loss before income taxes	(2,136)		(1,317)		(2,589)		(3,627)
Income tax (expense) benefit	(475)		558		(589)		298
Net loss	$	(2,611)	$	(759)	$	(3,178)	$	(3,329)

Net loss per share attributable to Class A and Class B common stockholders:
Basic	$	(0.02)	$	(0.01)	$	(0.02)	$	(0.03)
Diluted	$	(0.02)	$	(0.01)	$	(0.02)	$	(0.03)
Weighted average shares of common stock outstanding:
Basic	132,475		132,144		134,025		132,137
Diluted	132,475		132,144		134,025		132,137

(1)Amounts exclude depreciation and amortization.

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

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PLAYSTUDIOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited, in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(2,611)	$	(759)	$	(3,178)	$	(3,329)
Other comprehensive loss:
Change in foreign currency translation adjustment(1)	(247)		(535)		(688)		(478)
Unrealized loss from derivative financial instruments(1)	(522)		—		(1,021)		—
Reclassification of loss/(gain) from settlement of derivative financial instruments included in net loss(1)	199		—		31		—
Total other comprehensive loss	(570)		(535)		(1,678)		(478)
Comprehensive loss	$	(3,181)	$	(1,294)	$	(4,856)	$	(3,807)

(1)These amounts are presented gross of the effect of income taxes. The corresponding effects of income taxes are immaterial.

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

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PLAYSTUDIOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited, in thousands)


	Class A Common Stock			Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss						Total Stockholders' Equity
	Shares	Amount		Shares	Amount						Retained Earnings		Treasury Stock
Balance as of March 31, 2023	116,447	$	11	16,457	$	2	$	297,662	$	(94)	$	14,186	$	(10,048)	$	301,719
Net loss	—	—		—	—		—		—		(759)		—		(759)
Exercise of stock options	1,066	—		—	—		540		—		—		—		540
Restricted stock vesting, net of shares withheld	794	—		—	—		(1,240)		—		—		—		(1,240)
Stock-based compensation	—	—		—	—		5,566		—		—		—		5,566
Repurchase of common stock	(2,303)	—		—	—		—		—		—		(10,046)		(10,046)
Other comprehensive loss	—	—		—	—		—		(535)		—		—		(535)
Balance as of June 30, 2023	116,004	$	11	16,457	$	2	$	302,528	$	(629)	$	13,427	$	(20,094)	$	295,245


	Class A Common Stock	Class B Common Stock			Additional Paid-In Capital	Accumulated Other Comprehensive Loss								Total Stockholders' Equity
		Shares	Amount					Shares			Amount					Retained Earnings			Treasury Stock
Balance as of December 31, 2022		115,635	$	11	16,457	$	2		$	290,337		$	(151)	$	16,756		$	(4,642)		$	302,313
Net loss		—	—		—	—			—			—		(3,329)			—			(3,329)
Exercise of stock options		2,651	—		—	—			2,456			—		—			—			2,456
Restricted stock vesting, net of shares withheld		1,275	—		—	—			(1,240)			—		—			—			(1,240)
Stock-based compensation		—	—		—	—			10,975			—		—			—			10,975
Repurchase of common stock		(3,557)	—		—	—			—			—		—			(15,452)			(15,452)
Other comprehensive loss		—	—		—	—			—			(478)		—			—			(478)
Balance as of June 30, 2023		116,004	$	11	16,457	$	2		$	302,528		$	(629)	$	13,427		$	(20,094)		$	295,245

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	Class A Common Stock	Class B Common Stock			Additional Paid-In Capital	Accumulated Other Comprehensive Loss								Total Stockholders' Equity
		Shares	Amount					Shares			Amount					Accumulated Deficit			Treasury Stock
Balance as of March 31, 2024		118,705	$	12	16,457	$	2		$	315,526		$	(984)	$	(3,204)		$	(22,930)		$	288,422
Net loss		—	—		—	—			—			—		(2,611)			—			(2,611)
Exercise of stock options		40	—		—	—			38			—		—			—			38
Restricted stock vesting, net of shares withheld		1,479	—		—	—			(1,183)			—		—			—			(1,183)
Stock-based compensation		—	—		—	—			5,301			—		—			—			5,301
Repurchase of common stock		(12,092)	(1)		—	—			—			—		—			(25,833)			(25,834)
Other comprehensive loss		—	—		—	—			—			(570)		—			—			(570)
Balance as of June 30, 2024		108,132	$	11	16,457	$	2		$	319,682		$	(1,554)	$	(5,815)		$	(48,763)		$	263,563


	Class A Common Stock	Class B Common Stock			Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)								Total Stockholders' Equity
		Shares	Amount					Shares			Amount					Accumulated Deficit			Treasury Stock
Balance as of December 31, 2023		118,200	$	12	16,457	$	2		$	310,944		$	124	$	(2,637)		$	(20,094)		$	288,351
Net loss		—	—		—	—			—			—		(3,178)			—			(3,178)
Exercise of stock options		117	—		—	—			115			—		—			—			115
Restricted stock vesting, net of shares withheld		3,030	—		—	—			(1,869)			—		—			—			(1,869)
Stock-based compensation		—	—		—	—			10,492			—		—			—			10,492
Repurchase of common stock		(13,215)	(1)		—	—			—			—		—			(28,669)			(28,670)
Other comprehensive loss		—	—		—	—			—			(1,678)		—			—			(1,678)
Balance as of June 30, 2024		108,132	$	11	16,457	$	2		$	319,682		$	(1,554)	$	(5,815)		$	(48,763)		$	263,563

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

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PLAYSTUDIOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(3,178)	$	(3,329)
Adjustments:
Depreciation and amortization	23,220		22,149
Amortization of loan costs	77		76
Stock-based compensation expense	9,724		10,047
Change in fair value of warrant liabilities	(653)		2,835
Change in fair value of contingent consideration	—		(950)
Asset impairments	91		935
Deferred income tax expense	246		(3,272)
Other	324		(126)
Changes in operating assets and liabilities
Receivables	1,161		(4,003)
Prepaid expenses and other current assets	(808)		1,313
Income tax receivable	(1,513)		(1,851)
Accounts payable & accrued liabilities	(9,240)		(1,020)
Other	80		1,077
Net cash provided by operating activities	19,531		23,881
Cash flows from investing activities:
Purchase of property and equipment	(3,181)		(2,825)
Additions to internal-use software	(9,875)		(11,428)
Other	(4)		65
Net cash used in investing activities	(13,060)		(14,188)
Cash flows from financing activities:
Proceeds from stock option exercises	115		2,458
Payments for tax withholding of stock-based compensation	(1,868)		(1,240)
Payment of minimum guarantee liabilities	(2,022)		(1,333)
Repurchases of treasury stock	(28,669)		(15,452)
Net cash used in financing activities	(32,444)		(15,567)
Foreign currency translation	(612)		(459)
Net change in cash and cash equivalents	(26,585)		(6,333)
Cash and cash equivalents at beginning of period	132,889		134,000
Cash and cash equivalents at end of period	$	106,304	$	127,667

Supplemental cash flow disclosures:
Interest paid	$	82	$	82
Income taxes paid, net of refunds	1,906		1,616
Non-cash investing and financing activities:
Capitalization of stock-based compensation	$	768	$	928
Increase in property and equipment included in accounts payable and other long-term liabilities	359		716
Additions to intangible assets related to licensing agreements	3,815		6,865
Right-of-use assets acquired under operating leases	3,727		—

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, in thousands, unless otherwise noted)

NOTE 1—BACKGROUND AND BASIS OF PRESENTATION

Organization and Description of Business

On June 21, 2021 (the “Closing Date”), Acies Acquisition Corp., a Cayman Islands exempted company (prior to the Closing Date, “Acies”), consummated the previously announced business combination (“Acies Merger”) with PlayStudios, Inc., a Delaware corporation (“Old PLAYSTUDIOS”) pursuant to the Agreement and Plan of Merger, dated as of February 1, 2021 (the “Merger Agreement”), by and among Acies, Old PLAYSTUDIOS, Catalyst Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of Acies, and Catalyst Merger Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Acies.

PLAYSTUDIOS, Inc., formerly known as Acies Acquisition Corp. (the "Company” or "PLAYSTUDIOS"), was incorporated on August 14, 2020 as a Cayman Islands exempted company, and domesticated into a Delaware corporation on the Closing Date. The Company's legal name became PLAYSTUDIOS, Inc. following the closing of the Acies Merger.

The Company develops and operates online and mobile social gaming applications (“games” or “game”) each of which incorporate a unique loyalty program offering “real world” rewards provided by a collection of rewards partners. The Company’s games are free-to-play and available via the Apple App Store, Google Play Store, Amazon Appstore, and Facebook (collectively, “platforms” or “platform operators”). The Company creates games based on its own original content as well as third-party licensed brands. The Company generates revenue through the in-game sale of virtual currency and through advertising.

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

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of PLAYSTUDIOS, Inc. and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Certain reclassifications in these financial statements have been made to comply with US GAAP applicable to public companies and SEC Regulation S-X.

The significant accounting policies referenced in the annual consolidated financial statements of the Company as of December 31, 2023 have been applied consistently in these unaudited interim condensed consolidated financial statements. In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of its financial position as of June 30, 2024, and its results of operations for the three and six months ended June 30, 2024, and 2023, and cash flows for the six months ended June 30, 2024, and 2023. The Condensed Consolidated Balance Sheet as of December 31, 2023 was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with US GAAP requires us to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and notes thereto. Significant estimates and assumptions reflected in the Company’s condensed consolidated financial statements include the estimated consumption rate of virtual goods that is used in the determination of revenue recognition, useful lives of property and equipment and definite-lived intangible assets, the expensing and capitalization of research and development costs for internal-use software, assumptions used in accounting for income taxes, stock-based compensation, the fair value of derivative financial instruments, the fair value of contingent consideration, and the evaluation of goodwill and long-lived assets for impairment. The Company believes the accounting estimates are appropriate and reasonably determined. Due to the inherent uncertainties in making these estimates, actual amounts could differ materially.

Emerging Growth Company ("EGC")

At June 30, 2024, the Company qualified as an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and the Company has taken and may take advantage of certain exemptions from various reporting requirements that are applicable to other public

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companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has opted to take advantage of such extended transition period available to emerging growth companies which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company can adopt the new or revised standard at the time private companies adopt the new or revised standard. The Company did not lose its emerging growth company status through December 31, 2024. As a result, the Company does not expect to adopt any accounting pronouncements currently deferred based on private company standards until a year subsequent to 2024. The Company will continue to retain its emerging growth company status until the earliest of i) the last day of the fiscal year in which its total annual gross revenues are $1.24 billion or more, ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common equity securities of the issuer under an effective Securities Act registration statement as an EGC, iii) the date on which it has issued more than $1 billion in non-convertible debt in the previous three years, or iv) the date on which it becomes a large accelerated filer.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For a discussion of our significant accounting policies and estimates, please refer to our 2023 Annual Report on Form 10-K filed on March 12, 2024.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). ASU 2023-09 requires that public business entities expand their annual disclosures related to rate reconciliation and income taxes paid, and provide a disaggregated presentation between domestic and foreign income or loss from continuing operations before income tax expense and income tax expense or benefit from continuing operations. This guidance is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-09.

NOTE 3—SEGMENT REPORTING

The Company has aggregated its operating segments into the following reportable segments: playGAMES and playAWARDS, which represent our different products and services. A detailed discussion regarding the products and services from which each reportable segment derives its revenue is included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Adjusted EBITDA ("AEBITDA") is the Company’s reportable segment GAAP measure, which management utilizes as the primary profit measure for its reportable segments and underlying operating segments. AEBITDA is a measure defined as net income (loss) before interest, income taxes, depreciation and amortization, restructuring and related costs (consisting primarily of severance and other restructuring related costs), stock-based compensation expense, and other income and expense items (including special infrequent items, foreign currency gains and losses, and other non-cash items).

Expenses include indirect costs that are allocated to operating segments based on a reasonable allocation methodology, which are generally related to sales and marketing activities, general and administrative overhead, and costs associated with administering the playAWARDS myVIP program in the playGAMES applications. Net revenue excludes

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transactions between the Company's operating segments. Certain expenses incurred by playAWARDS have been allocated to playGAMES at cost. The chief operating decision maker does not evaluate operating segments using asset information.

The following table presents the Company’s segment information:


	Three months ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenue
playGAMES	72,588		76,122		150,416		153,745
playAWARDS	2		1,671		2		4,171
Reportable segment net revenue	72,590		77,793		150,418		157,916

AEBITDA
playGAMES	21,920		21,610		45,371		44,202
playAWARDS	(3,476)		(1,706)		(7,098)		(2,337)
Reportable segment AEBITDA	18,444		19,904		38,273		41,865

Other operating expense
Corporate and other	4,306		3,630		8,821		7,825
Restructuring expenses	1,379		1,784		2,017		5,832
Other reconciling items	138		26		157		65
Stock-based compensation	4,930		5,194		9,724		10,047
Depreciation and amortization	11,654		11,116		23,220		22,149
	22,407		21,750		43,939		45,918

Non-operating income (expense)
Change in fair value of warrant liabilities	717		(1,777)		653		(2,835)
Interest income, net	1,374		1,262		2,794		2,157
Other (expense) income, net	(264)		1,044		(370)		1,104
	1,827		529		3,077		426

Loss before income taxes	(2,136)		(1,317)		(2,589)		(3,627)
Income tax (expense) benefit	(475)		558		(589)		298
Net loss	$	(2,611)	$	(759)	$	(3,178)	$	(3,329)

NOTE 4—BUSINESS COMBINATIONS

Pixode Games Acquisition

On July 1, 2024, PLAYSTUDIOS US, LLC, a direct wholly-owned subsidiary of the Company entered into an asset purchase agreement to acquire certain tangible and intangible assets and assumed certain liabilities from Pixode Games Limited (“Pixode"), a mobile casual games publisher. The Company expects this acquisition to further diversify revenues into the casual genre, and with a successful relaunch of the product with the Tetris brand, the acquisition will deepen the Company's portfolio of Tetris products.

The purchase price for the Pixode assets was $3.5 million at closing, and the Company agreed to pay additional consideration, contingent upon the satisfaction of certain product and financial milestones, up to a maximum amount of $113.5 million. As of the date of this report, the Company estimates the fair value of any contingent payments to be approximately $2.6 million. The Company is currently in the process of finalizing the accounting for this transaction and the Company expects to complete the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the third quarter of 2024.

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NOTE 5—RELATED-PARTY TRANSACTIONS

The following table is a summary of balance sheet assets and liabilities from related parties:


	June 30, 2024		December 31, 2023		Financial Statement Line Item
Marketing Agreement	$	1,000	$	1,000	Intangibles, net

The Company’s revenues and expenses recognized from related parties were immaterial during the three and six months ended June 30, 2024 and 2023.

MGM Resorts International (“MGM”)

MGM is a stockholder and the President of MGM Resorts Operations also serves on the Company’s Board of Directors. MGM owned approximately 16.6 million and 16.6 million shares of the Company's outstanding Class A common stock as of June 30, 2024 and December 31, 2023, respectively.

In April 2011, the Company entered into a joint marketing agreement with MGM (as amended, the “Marketing Agreement”) in exchange for assistance with marketing campaigns and the certain rights to utilize MGM’s licensed marks and licensed copyrights for the development of certain of the Company’s social casino games. The initial term of the Marketing Agreement was for one year from the go-live date of the first such game in July 2012, with automatic renewal provisions based on the games achieving specified performance criteria. The Marketing Agreement was recorded as an indefinite-lived intangible asset.

Microsoft Corporation ("Microsoft")

On June 7, 2024, and with the approval of the Company's board of directors, the Company repurchased 11.7 million shares of Class A common stock held by Microsoft at a price of $2.11 per share. The total amount paid by the Company for the repurchase of such shares was $24.6 million and was funded with available cash. The repurchase of shares from Microsoft was supplemental to the Company’s previously announced $50.0 million stock repurchase program and did not impact the amount of permitted repurchases thereunder.

NOTE 6—RECEIVABLES

Receivables consist of the following:


	June 30, 2024		December 31, 2023
Trade receivables	$	28,790	$	29,952
Other receivables	571		690
Allowance for uncollectible amounts	(168)		(177)
Total receivables, net	$	29,193	$	30,465

Trade receivables generally represent amounts due to the Company from social and mobile platform operators, including Apple, Google, Amazon and Facebook. Trade receivables are recorded when the right to consideration becomes unconditional.

Concentration of Credit Risk

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


	June 30, 2024		December 31, 2023
Apple, Inc.	44.4	%	45.6	%
Google, Inc.	18.2	%	20.8	%

As of June 30, 2024 and December 31, 2023, the Company did not have any additional counterparties that exceeded 10% of the Company’s net accounts receivable.

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NOTE 7—PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:


	June 30, 2024		December 31, 2023
Prepaid expenses	$	6,138	5,291
Income tax receivable	4,675		3,426
Other current assets	689		2,812
Total prepaid expenses other current assets	$	11,502	$	11,529

NOTE 8—FAIR VALUE MEASUREMENT

The carrying values of the Company’s cash and cash equivalents, trade receivables and accounts payable approximate fair value due to their short maturities.

The following tables present the liabilities measured at fair value on a recurring basis, by input level, in the Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023:


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Public Warrants	$	253	—		—		253
Private Warrants	—		180		—		180
Derivative financial instruments	704		—		—		704
Total financial liabilities	$	957	$	180	$	—	$	1,137


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Public Warrants	$	635	—		—		635
Private Warrants	—		451		—		451
Total financial liabilities	$	635	$	451	$	—	$	1,086

NOTE 9—PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following:


	June 30, 2024		December 31, 2023
Land and land improvements	$	1,680	1,680
Building and building improvements	5,850		6,046
Computer equipment	9,250		9,021
Leasehold improvements	10,990		9,811
Purchased software	1,647		2,115
Furniture and fixtures	3,872		4,331
Construction in progress	16		460
Total property and equipment	33,305		33,464
Less: accumulated depreciation	(15,049)		(15,915)
Total property and equipment, net	$	18,256	$	17,549

The aggregate depreciation expense for property and equipment, net is reflected in “Depreciation and amortization” in the Condensed Consolidated Statements of Operations. During the three months ended June 30, 2024 and 2023, depreciation expense was $1.3 million and $1.4 million, respectively and during the six months ended June 30, 2024 and

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2023, depreciation expense was $2.4 million and $3.0 million, respectively. There were no material impairment charges or material write-offs recorded for the three and six months ended June 30, 2024 and 2023.

Property and equipment, net by region consists of the following:


	June 30, 2024		December 31, 2023
United States	$	12,378	$	13,462
Europe, Middle East, and Africa	4,592		2,895
All other countries	1,286		1,192
Total property and equipment, net	$	18,256	$	17,549

NOTE 10—INTANGIBLE ASSETS AND INTERNAL-USE SOFTWARE, NET

Intangible Assets

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset other than goodwill:


	June 30, 2024						December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Licenses	$	75,723	$	(26,340)	$	49,383	$	71,908	$	(19,457)	$	52,451
Acquired technology	15,003		(5,331)		9,672		15,003		(3,831)		11,172
Customer relationships	12,000		(4,200)		7,800		12,000		(3,000)		9,000
Trade names	2,740		(1,503)		1,237		2,740		(1,428)		1,312
Internal-use software	178,875		(143,488)		35,387		168,232		(132,375)		35,857
Other	184		(8)		176		145		(4)		141
	284,525		(180,870)		103,655		270,028		(160,095)		109,933
Nonamortizable intangible assets:
Marketing Agreement with a related party	1,000		—		1,000		1,000		—		1,000
Total intangible assets	$	285,525	$	(180,870)	$	104,655	$	271,028	$	(160,095)	$	110,933

During the three months ended June 30, 2024 and 2023, intangible asset and internal-use software amortization was $10.4 million and $9.7 million, respectively, and during the six months ended June 30, 2024 and 2023, intangible asset and internal-use software amortization was $20.8 million and $19.2 million, respectively. The aggregate amortization expense for amortizable intangible assets and internal-use software is reflected in “Depreciation and amortization” in the Condensed Consolidated Statements of Operations.

There were no impairment charges for intangible assets or internal-use software for the three and six months ended June 30, 2024 and 2023.

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As of June 30, 2024, the estimated annual amortization expense is as follows:


Year Ending December 31,	Projected Amortization Expense
Remaining 2024	$	20,303
2025	30,085
2026	22,624
2027	14,717
2028	9,208
Thereafter	6,718
Total	$	103,655

NOTE 11—GOODWILL

Goodwill

The following table provides the changes in the carrying amount of goodwill for the six months ended June 30, 2024 and December 31, 2023:


	Goodwill, Gross		Accumulated Impairment		Goodwill, Net



Balance as of December 31, 2023	47,133		—		47,133
Additions from acquisitions	—		—		—
Measurement period adjustments	—		—		—
Balance as of June 30, 2024	$	47,133	$	—	$	47,133

NOTE 12—WARRANT LIABILITIES

Public Warrants and Private Warrants

Upon the closing of the Acies Merger, there were approximately 7.2 million publicly-traded redeemable warrants to purchase shares of Class A common stock (the "Public Warrants") and 3.8 million redeemable warrants to purchase shares of Class A common stock initially issued to Acies Acquisition, LLC (the "Sponsor") in a private placement (the "Private Warrants") by Acies. Each whole Public Warrant entitles the registered holder to purchase one whole share of the Company’s Class A common stock at a price of $11.50 in cash per share, subject to adjustment as discussed below, as of October 27, 2021. Pursuant to the Warrant Agreement, a holder of Public Warrants may exercise the Public Warrants only for a whole number of shares of Class A common stock. The Public Warrants will expire 5 years after the completion of the Acies Merger, or earlier upon redemption or liquidation. The Private Warrants are identical to the Public Warrants, except that the Private Warrants and the shares of Class A common stock issuable upon exercise of the Private Warrants were not transferable until after the completion of the Acies Merger, subject to certain limited exceptions. Additionally, the Private Warrants are non-redeemable so long as they are held by the initial holder or any of its permitted transferees. If the Private Warrants are held by someone other than the initial holder or its permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. The Private Warrants may be exercised on a cashless basis so long as held by the Sponsor or certain permitted transferees.

The Company may redeem the outstanding Public Warrants in whole, but not in part, at a price of $0.01 per Public Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if the last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20-trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the holders of the Public Warrants. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a cashless basis. In no event will the Company be required to net cash settle the exercise of Public Warrants.

At June 30, 2024, there were approximately 5.4 million Public Warrants and 3.8 million Private Warrants outstanding. Refer to Note 8—Fair Value Measurement for further information.

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NOTE 13—ACCRUED AND OTHER LIABILITIES

Accrued liabilities consist of the following:


	June 30, 2024		December 31, 2023
Accrued payroll and vacation	9,593		10,261
Accrued user acquisition	3,957		5,687
Income taxes payable	1,031		1,295
Minimum guarantee liability	5,411		7,760
Other licensing agreements	—		7,400
Other accruals	8,042		6,393
Total accrued liabilities	$	28,034	$	38,796

NOTE 14—LEASES

The Company's operating leases primarily consist of real estate leases such as offices. During the three months ended June 30, 2024 and 2023, operating lease expense was $1.2 million and $1.2 million, respectively, and during the six months ended June 30, 2024 and 2023, operating lease expense was $2.3 million and $2.5 million, respectively. The Company does not have any finance leases. Total variable and short-term lease payments were immaterial for all periods presented.

On June 30, 2024, the Company renewed its lease of office space located in Tel Aviv, Israel. The original lease term was set to expire on December 31, 2024. The renewed lease term extends for an additional three years through December 31, 2027. As a result of the lease renewal, the Company recognized an additional right-of-use asset and lease liability of $3.4 million.

Supplemental balance sheet information related to operating leases are as follows:


	June 30, 2024			December 31, 2023
Operating lease right-of-use assets, net	$	10,746		$	9,369
Operating lease liabilities, current	3,278			4,236
Operating lease liabilities, noncurrent	7,865			5,699
Operating lease liabilities, total	$	11,143		$	9,935

Weighted average remaining lease term, years	3.3			3.1
Weighted average discount rate	5.8		%	4.5		%

Operating lease liability maturities:


Year ending December 31,	Operating Leases
Remaining 2024	$	1,894
2025	3,769
2026	3,473
2027	2,675
2028	382
Thereafter	—
Total undiscounted cash flows	$	12,193
Less: imputed interest	$	(1,050)
Lease liabilities, total	$	11,143

As of June 30, 2024, the Company did not have material additional operating leases that have not yet commenced.

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NOTE 15—LONG-TERM DEBT

Credit Agreement

On June 24, 2021, in connection with the closing of the Acies Merger, the Company terminated and replaced its previous credit facility. The Company, a subsidiary of the Company, JPMorgan Chase Bank, N.A., as administrative agent and JPMorgan Chase Bank, N.A., Silicon Valley Bank and Wells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers entered into a credit agreement (the “Credit Agreement”) which provides for a five-year revolving credit facility in an aggregate principal amount of $75.0 million. Borrowings under the Credit Agreement may be borrowed, repaid and re-borrowed by the Company, and are available for working capital, general corporate purposes and permitted acquisitions.

Commitment fees and interest rates are determined on the basis of either a Eurodollar rate or an Alternate Base Rate plus an applicable margin. The applicable margins are initially 2.50%, in the case of Eurodollar loans, and 1.50%, in the case of Alternate Base Rate loans. The applicable margin is subject to adjustment based upon the Company's Total Net Leverage Ratio (as defined in the Credit Agreement). Eurodollar rates and the Alternate Base Rate are subject to floors of 0.00% and 1.00%, respectively. The Credit Agreement contains various affirmative and negative financial and operational covenants applicable to the Company and its subsidiaries.

The Credit Agreement includes customary reporting requirements, conditions precedent to borrowing and affirmative, negative and financial covenants. Specific financial covenants include the following, commencing with the quarter ended September 30, 2021:

•Total Net Leverage Ratio of 3.50:1.00 (subject to increase to 4.00:1.00 following consummation of certain material acquisitions)

•Fixed Charge Coverage Ratio of 1.25:1.00.

On August 16, 2023, the Company, a subsidiary of the Company, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, entered into an Amendment No. 3 to Credit Agreement (the “Amendment No. 3”), among other things, exclude from the Restricted Payments covenant certain repurchases of Equity Interests of the Company deemed to occur upon the exercise, settlement or vesting of stock options, warrants or other equity-based awards if and to the extent such Equity Interests represent a portion of the exercise price of, or satisfy any tax withholding obligations with respect to, such options, warrants or other equity-based awards.

On June 7, 2024, the Company, a subsidiary of the Company, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, entered into an Amendment No. 4 to Credit Agreement (the “Amendment No. 4”) to, among other things, (i) modify the definition of “Fixed Charge Coverage Ratio” to exclude from the calculation of Restricted Payments amounts paid for the repurchase, prior to June 30, 2024, of approximately 11.7 million shares of Class A common stock of the Company, and (ii) modify the definition of “Consolidated Fixed Charges” to take into account any tax refunds received in the applicable measurement period.

On July 1, 2024, the Company, a subsidiary of the Company, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, entered into the Amendment No. 5 to Credit Agreement (the “Amendment No. 5”) to, among other things, exclude from the covenant set forth in Section 6.01 of the Credit Agreement regarding the incurrence of Indebtedness (as defined therein) the contingent consideration obligations payable pursuant to the Pixode acquisition.

The Company capitalized a total of $0.8 million in debt issuance costs related to the Credit Agreement and subsequent amendments. As of June 30, 2024, the Company does not have any balances outstanding under the Credit Agreement.

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NOTE 16—REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The following table summarizes the Company’s revenue disaggregated by type, and by over time or point in time recognition:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Virtual currency (over time)	$	56,477	$	61,621	$	116,724	$	126,006
Advertising (point in time)	16,006		14,333		33,448		27,418
Other revenue (point in time or over time)	107		1,839		246		4,492
Total net revenue	$	72,590	$	77,793	$	150,418	$	157,916

The following table summarizes the Company’s revenue disaggregated by geography:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
United States	$	61,494	$	66,597	$	126,858	$	136,152
All other countries	11,096		11,196		23,560		21,764
Total net revenue	$	72,590	$	77,793	$	150,418	$	157,916

Contract Balances

Contract assets represent the Company’s ability to bill customers for performance obligations completed under a contract. As of June 30, 2024 and December 31, 2023, there were no contract assets recorded in the Company’s Condensed Consolidated Balance Sheets. The deferred revenue balance related to the purchase of virtual currency was immaterial as of June 30, 2024 and December 31, 2023. Trade receivables are described in Note 6—Receivables.

NOTE 17—INCOME TAXES

The Company recorded an income tax expense of $0.5 million and an income tax benefit of $0.6 million for the three months ended June 30, 2024 and 2023, respectively, and the Company recorded an income tax expense of $0.6 million and an income tax benefit of $0.3 million for the six months ended June 30, 2024 and 2023, respectively. Our effective tax rate was (22.2)% for the three months ended June 30, 2024 compared to 42.4% for the three months ended June 30, 2023. Our effective tax rate was (22.8)% for the six months ended June 30, 2024 compared to 8.2% for the six months ended June 30, 2023. The effective rate of (22.2)% differs from the federal statutory rate of 21% primarily due to the valuation allowance recorded against US deferred tax assets, lower foreign tax rates in significant jurisdictions, and discrete tax benefits related to remeasured income taxes payable in Israel at reduced rates.

NOTE 18—COMMITMENTS AND CONTINGENCIES

Minimum Guarantee Liability

The following are the Company’s total minimum guaranteed obligations as of:


	June 30, 2024		December 31, 2023

Minimum guarantee liability - current	$	5,411	$	7,760
Minimum guarantee liability - noncurrent	24,000		24,000
Total minimum guarantee obligations	$	29,411	$	31,760
Weighted-average remaining contractual term (in years)	2.2		2.6

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The following are the Company’s remaining expected future payments of minimum guarantee obligations as of June 30, 2024:


Year Ending December 31,	Minimum Guarantee Obligations
Remaining 2024	$	5,411
2025	6,000
2026	6,000
2027	6,000
2028	6,000
Total	$	29,411

N3TWORK, Inc.

On November 22, 2021, the Company entered into agreements with N3TWORK Inc. and The Tetris Company, LLC pursuant to which the Company acquired the rights to develop and operate Tetris®-branded mobile games for an initial term through August 2024. The Company paid N3TWORK Inc. $13.0 million at closing and agreed to pay up to an additional $34.0 million subject to satisfaction of certain conditions (the "Contingent Payments").

As of June 30, 2024, the Company settled and paid $7.4 million of $17.0 million and paid $8.0 million of $17.0 million of the Contingent Payments due to certain conditions of the Contingent Payments being satisfied. The Company accrued an additional $1.7 million in "Accrued and other current liabilities" within the Condensed Consolidated Balance Sheets due to other conditions of the Contingent Payments being met. The Company recorded an increase in "Intangible assets and internal-use software, net" within the Condensed Consolidated Balance Sheets related to the partial settlement of Contingent Payments.

The remaining amount of Contingent Payments as of June 30, 2024 was approximately $7.3 million.

Pixode

In connection with the Pixode Acquisition, in addition to the $3.5 million paid at closing, and the Company agreed to pay additional consideration, contingent upon the satisfaction of certain product and financial milestones, up to a maximum amount of $113.5 million. The Company is currently in the process of finalizing the accounting for this transaction and the Company expects to complete the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the third quarter of 2024.

Legal Proceedings

The Company is party to ordinary and routine litigation incidental to its business. On a case-by-case basis, the Company engages inside and outside counsel to assess the probability of potential liability resulting from such litigation. After making such assessments, the Company makes an accrual for the estimated loss only when the loss is reasonably probable and an amount can be reasonably estimated. The Company does not expect the outcome of any pending litigation to have a material effect on the Company’s Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, or Condensed Consolidated Statements of Cash Flows.

The Company is a party to a litigation matter brought by TeamSava d.o.o. Beograd, or TeamSava, and other related parties. The plaintiffs filed a Statement of Claim in May 2021 in Tel Aviv District Court in Israel, alleging claims, among other things, that we breached the terms of a commercial contract relating to services provided by TeamSava and related parties in connection with the sourcing and administrative management of personnel in Serbia who provided game development services exclusively for us. The litigation sought damages of 27.3 million New Israeli Shekels (NIS) (or approximately $7.4 million based on prevailing exchange rates as of March 31, 2024). On November 30, 2023, we entered into a settlement agreement to resolve and settle all claims brought by the plaintiffs against the Company, its Israeli subsidiary and its employees and former employees, and all claims brought by the Company's affiliates against the plaintiffs. The settlement is contingent upon the confirmation by the respective courts in Israel and Serbia that all related lawsuits have been dismissed. As of June 30, 2024, only one lawsuit in Serbia remained to be dismissed with prejudice. The Company expects to finalize the settlement before September 30, 2024, but cannot make any assurances that it will be completed by the date or that none of the parties withdraw from the settlement.

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On April 6, 2022, a class action lawsuit was filed in the United States District Court, Northern District of California, by a purported Company shareholder in connection with alleged federal securities law violations: Christian A. Felipe et. al. v. PLAYSTUDIOS, Inc. (the “Felipe Complaint”). On July 15, 2022, the Felipe Complaint was transferred to the United States District Court for the District of Nevada, Southern Division. On October 4, 2022, the plaintiffs filed an amendment to the Felipe Complaint. The Felipe Complaint names the Company, several current and former board members of the Company, board members and officers of Acies Acquisition Corp., and Andrew Pascal, the Company’s Chairman and CEO, as defendants. The Felipe Complaint alleges misrepresentations and omissions regarding the state of the Company’s development of the Kingdom Boss game and its financial projections and future prospects in the S-4 Registration Statement filed by Acies that was declared effective on May 25, 2021, the Proxy Statement filed by Acies on May 25, 2021, and other public statements that touted Old PLAYSTUDIOS’ and the Company’s financial performance and operations, including statements made on earnings calls and the Amended S-1 Registration Statement filed by the Company that was declared effective on July 30, 2021. The Felipe Complaint alleges that the misrepresentations and omissions resulted in stock price drops of 13% on August 12, 2021, and 5% on February 25, 2022, following (i) the Company’s release of financial results for the second quarter of 2021, ended on June 30, 2021, and (ii) the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and issuance of a press release summarizing financial results for the fourth quarter and year ended December 31, 2021, respectively. The Felipe Complaint seeks an award of damages for an unspecified amount. The Company believes that the claims are without merit and the Company intends to vigorously defend against them; however, there can be no assurance that the Company will be successful in the defense of this litigation. The Company is not able to reasonably estimate the probability or amount of loss and therefore has not made any accruals.

On March 8, 2023, Angel Deann Pilati, a purported adult resident citizen of Franklin County, Alabama, filed a civil lawsuit against PLAYSTUDIOS US, LLC in the Circuit Court of Franklin County Alabama, alleging that PLAYSTUDIOS US, LLC makes available online games and applications across multiple platforms that are games of chance and thus illegal gambling under Alabama law and seeking to recover, under Alabama’s loss recovery act, all sums paid by Alabama residents to PLAYSTUDIOS US, LLC in its online gambling games during the period beginning one year before the filing of the complaint until the case is resolved. On August 23, 2023, the plaintiff amended the complaint to exclude recovery for Alabama residents who lost $75,000 or more during the statute of limitations period. The plaintiff claims to seek this recovery "to go to the benefit of the families" of players who paid money to play the games. The Company believes the claims are without merit and intends to vigorously defend against them; however, there can be no assurance that the Company will be successful in the defense of this litigation. The Company is not able to reasonably estimate the probability or amount of loss relating to this litigation and therefore has not made any accruals.

On November 13, 2023, Sandra Tucker Duckworth, a purported citizen of Tennessee, filed a civil lawsuit against PLAYSTUDIOS US, LLC in the Circuit Court for the 14th Judicial District of Tennessee alleging that PLAYSTUDIOS US, LLC makes available online games of chance that constitute illegal gambling under Tennessee law and seeking to recover, under Tennessee's loss recovery act, all sums paid by Tennessee residents to PLAYSTUDIOS US, LLC in its online gambling games during the period beginning one year before the filing of the lawsuit until the case is resolved, excluding recovery of money lost by a Tennessee resident who lost $75,000 or more during the statute of limitations period. The plaintiff claims to seek this recovery for the benefit of each individual player's spouse, or if not spouse, child or children, and if not child or children, the next of kin. The Company believes the claims are without merit and intends to vigorously defend against them; however, there can be no assurance that the Company will be successful in the defense of this litigation. The Company is not able to reasonably estimate the probability or amount of loss relating to this litigation and therefore has not made any accruals.

On February 20, 2024, Tyler Kuhk, a purported citizen of Washington, filed a class action lawsuit against PLAYSTUDIOS US, LLC in the Superior Court of the State of Washington for the County of King, alleging that PLAYSTUDIOS US, LLC makes available online games of chance that constitute illegal gambling under Washington law, that PLAYSTUDIOS US, LLC engaged in unfair and deceptive practices by advertising to and soliciting the general public in Washington state to play its unlawful online casino games of chance, and that PLAYSTUDIOS US, LLC was unjustly enriched by this conduct. The plaintiff seeks to recover all sums paid by Washington residents to PLAYSTUDIOS US, LLC in its online gambling games during an unspecified period of time under Washington’s “Recovery of money lost gambling” statute, for treble damages under Washington’s Consumer Protection Act, and for disgorgement and restitution of any money PLAYSTUDIOS US, LLC has retained through unlawful and/or wrongful conduct alleged in the lawsuit. The Company believes the claims are without merit and intends to vigorously defend against them; however, there can be no assurance that the Company will be successful in the defense of this litigation. The Company is not able to reasonably estimate the probability or amount of loss relating to this litigation and therefore has not made any accruals.

The Company received four demands for arbitration during 2023 claiming that the games operated by PLAYSTUDIOS US, LLC constitute illegal gambling under the laws of various states. As of June 30, 2024, three of the

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demands for arbitration remained active. These demands generally attempt to recover amounts spent by third parties on the Company’s games by relying on state gambling loss recovery statutes and/or by seeking to have the applicable Terms of Service declared invalid. The Company believes that the claims are without merit and the Company intends to vigorously defend against them; however, there can be no assurance that the Company will be successful in the arbitration proceedings. The Company is not able to reasonably estimate the probability or amount of loss and therefore has not made any accruals.

On May 24, 2024, the Company received multiple substantively identical pre-arbitration notices from a single law firm purporting to represent 5,264 players, alleging the games operated by the Company violate state gambling statutes, along with various other claims. The Company believes that the claims are without merit and the Company intends to vigorously defend against them; however, there can be no assurance that the Company will be successful in the defense of these demands. The Company is not able to reasonably estimate the probability or amount of loss and therefore has not made any accruals.

NOTE 19—STOCKHOLDERS’ EQUITY

Common Stock

Subject to the prior rights of the holders of any preferred stock, the holders of common stock are entitled to receive dividends out of the funds legally available at the times and in the amounts determined by the Company's Board of Directors. Each holder of Class A common stock is entitled to one vote for each share of Class A common stock held and each holder of Class B common stock is entitled to twenty votes for each share of Class B common stock held. After the full preferential amounts due to preferred stockholders have been paid or set aside, the remaining assets of the Company available for distribution to its stockholders, if any, are distributed to the holders of common stock ratably in proportion to the number of shares of common stock then held by each such holder. None of the Company’s common stock is entitled to preemptive rights or subject to redemption. With the exception of the conversion of the Class B common stock into Class A common stock as described below, the Company’s common stock is not convertible into any other shares of the Company’s capital stock.

The shares of Class B common stock are subject to a “sunset” provision if any member of the Founder Group transfers shares of Class B common stock outside the Founder Group (except for certain permitted transfers). In the event of such non-permitted transfers, any share transferred will automatically convert into shares of Class A common stock. In addition, the outstanding shares of Class B common stock will be subject to a “sunset” provision by which all outstanding shares of Class B common stock will automatically convert into shares of Class A common stock (i) if holders representing a majority of the Class B common stock vote to convert the Class B common stock into Class A common stock, (ii) if the Founder Group and its permitted transferees collectively no longer beneficially own at least 20% of the number of shares of Class B common stock collectively held by the Founder Group as of the closing of the Acies Merger, or (iii) on the nine-month anniversary of the Founder’s death or disability, unless such date is extended by a majority of independent directors of the Company.

Accumulated Other Comprehensive Loss

The following tables shows a summary of changes in accumulated other comprehensive loss:


	Foreign Currency Derivative Contracts		Currency Translation Adjustment		Total Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2023	$	286	$	(162)	$	124
Net losses recognized in other comprehensive income before reclassifications	(990)		—		(990)
Foreign currency translation	—		(688)		(688)
Balance as of June 30, 2024	$	(704)	$	(850)	$	(1,554)

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	Currency Translation Adjustment		Total Accumulated Other Comprehensive Loss
Balance as of December 31, 2022	$	(151)	$	(151)
Foreign currency translation	(478)		(478)
Balance as of June 30, 2023	$	(629)	$	(629)

Treasury Stock

The following table shows a summary of changes in treasury stock:


	Treasury shares	Treasury stock, at cost
Balance as of December 31, 2023	4,723	$	20,094
Class A common stock repurchased through the Stock Repurchase Program	1,537	4,030
Class A common stock repurchased outside of the Stock Repurchase Program	11,677	24,639
Balance as of June 30, 2024	17,937	$	48,763

Stock Repurchase Program

On November 10, 2021, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to purchase up to $50.0 million of the Company’s Class A common stock over a period of 12 months. On November 2, 2022, the Company's Board of Directors extended such period for an additional 12 months from November 10, 2022 to November 10, 2023. On November 1, 2023, the Company's Board of Directors extended the stock repurchase program through November 10, 2024 and increased the remaining amount authorized to $50.0 million. Subject to applicable rules and regulations, the shares may be purchased from time to time in the open market or in privately negotiated transactions. Such purchases will be at times and in amounts as the Company deems appropriate, based on factors such as market conditions, legal requirements and other business considerations.

NOTE 20—STOCK-BASED COMPENSATION

The following table summarizes stock-based compensation expense for the periods shown:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Selling and marketing	$	344	$	195	$	617	$	379
General and administrative	2,824		2,654		5,379		5,112
Research and development	1,762		2,345		3,728		4,556
Stock-based compensation expense	$	4,930	$	5,194	$	9,724	$	10,047
Capitalized stock-based compensation	$	371	$	372	$	768	$	928

As of June 30, 2024, there was approximately $0.1 million, $32.2 million, and $0.1 million in unrecognized stock-based compensation expense related to stock options, restricted stock units, and performance stock units that are expected to be recognized over a weighted-average expected vesting period of 0.3 years, 2.4 years, and 0.7 years, respectively. The Company granted 0.7 million and 4.6 million restricted stock units during the three and six months ended June 30, 2024. The Company granted zero performance stock units during the three months ended June 30, 2024 and 0.3 million performance stock units during the six months ended June 30, 2024.

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NOTE 21—NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss attributable to Class A and Class B common stockholders per share (in thousands except per share data):


	Three Months Ended June 30, 2024				Three Months Ended June 30, 2023
	Class A		Class B		Class A		Class B
Numerator

Net loss attributable to common stockholders – basic	$	(2,288)	$	(323)	$	(665)	$	(94)
Potential dilutive effect of derivative instruments	—		—		—		—
Net loss attributable to common stockholders – diluted	$	(2,288)	$	(323)	$	(665)	$	(94)
Denominator
Weighted average shares of common stock outstanding - basic	116,017		16,458		115,686		16,458
Potential dilutive effect of derivative instruments	—		—		—		—

Weighted average shares of common stock outstanding - diluted	116,017		16,458		115,686		16,458
Net loss attributable to common stockholders per share
Basic	$	(0.02)	$	(0.02)	$	(0.01)	$	(0.01)
Diluted	$	(0.02)	$	(0.02)	$	(0.01)	$	(0.01)