myps-20240930

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 September 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 October 31, 2024, there were 108,226,661 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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Table of Contents


			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 September 30, 2024 and December 31, 2023			5
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and September 30, 2023			6
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2024 and September 30, 2023			7
Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2024 and September 30, 2023			8
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and September 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			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			41
Item 4. Controls and Procedures			42
Part II - Other Information			43
Item 1. Legal Proceedings			43
Item 1A. Risk Factors			43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 3. Defaults Upon Senior Securities			45
Item 4. Mine Safety Disclosures			45
Item 5. Other Information			45
Item 6. Exhibits			45
Signatures			46

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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 “Risk Factors” are

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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)


	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	105,170	$	132,889
Receivables, net	28,775		30,465
Prepaid expenses and other current assets	10,323		11,529
Total current assets	144,268		174,883
Property and equipment, net	17,532		17,549
Operating lease right-of-use assets	10,545		9,369
Intangibles assets and internal-use software, net	99,778		110,933
Goodwill	52,222		47,133
Deferred income taxes	2,699		2,764
Other long-term assets	3,506		3,690
Total non-current assets	186,282		191,438
Total assets	$	330,550	$	366,321

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	4,190		1,907
Operating lease liabilities, current	3,486		4,236
Accrued and other current liabilities	27,010		39,882
Total current liabilities	34,686		46,025
Minimum guarantee liability	18,000		24,000
Deferred income taxes	553		1,198
Operating lease liabilities, non-current	7,513		5,699
Contingent consideration	3,255		—
Other long-term liabilities	1,362		1,048
Total non-current liabilities	30,683		31,945
Total liabilities	$	65,369	$	77,970
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $0.0001 par value (100,000 shares authorized, no shares issued and outstanding as of September 30, 2024 and December 31, 2023)	—		—
Class A common stock, $0.0001 par value (2,000,000 shares authorized, 127,007 and 122,923 shares issued, and 108,729 and 118,200 shares outstanding as of September 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 September 30, 2024 and December 31, 2023, respectively).	2		2
Additional paid-in capital	324,077		310,944
Accumulated deficit	(8,912)		(2,637)
Accumulated other comprehensive (loss) income	(695)		124
Treasury stock, at cost, 18,279 and 4,723 shares at September 30, 2024 and December 31, 2023, respectively	(49,302)		(20,094)
Total stockholders’ equity	265,181		288,351
Total liabilities and stockholders’ equity	$	330,550	$	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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net revenue	$	71,229	$	75,858	$	221,647	$	233,774
Operating expenses:
Cost of revenue(1)	17,832		19,862		54,851		58,276
Selling and marketing	15,116		18,786		50,756		55,283
Research and development	16,654		17,367		51,418		53,503
General and administrative	11,581		10,747		35,005		33,688
Depreciation and amortization	11,593		11,537		34,813		33,686
Restructuring and related	3,231		1,280		5,248		7,112
Total operating costs and expenses	76,007		79,579		232,091		241,548
Loss from operations	(4,778)		(3,721)		(10,444)		(7,774)
Other income (expense), net:
Change in fair value of warrant liabilities	276		4,216		929		1,381
Interest income, net	1,127		1,364		3,921		3,521
Other (loss) income, net	(256)		(198)		(626)		906
Total other income, net	1,147		5,382		4,224		5,808
(Loss) income before income taxes	(3,631)		1,661		(6,220)		(1,966)
Income tax benefit (expense)	534		2,139		(55)		2,437
Net (loss) income	$	(3,097)	$	3,800	$	(6,275)	$	471

Net loss per share attributable to Class A and Class B common stockholders:
Basic	$	(0.02)	$	0.03	$	(0.05)	$	0.00
Diluted	$	(0.02)	$	0.03	$	(0.05)	$	0.00
Weighted average shares of common stock outstanding:
Basic	125,007		133,351		130,997		132,546
Diluted	125,007		149,655		130,997		148,911

(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) INCOME
(unaudited, in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net (loss) income	$	(3,097)	$	3,800	$	(6,275)	$	471
Other comprehensive income (loss):
Change in foreign currency translation adjustment(1)	490		(393)		(198)		(871)
Unrealized gain (loss) from derivative financial instruments(1)	184		—		(837)		—
Reclassification of loss/(gain) from settlement of derivative financial instruments included in net (loss) income(1)	185		—		216		—
Total other comprehensive income (loss)	859		(393)		(819)		(871)
Comprehensive (loss) income	$	(2,238)	$	3,407	$	(7,094)	$	(400)

(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 June 30, 2023	116,004	$	11	16,457	$	2	$	302,528	$	(629)	$	13,427	$	(20,094)	$	295,245
Net income	—	—		—	—		—		—		3,800		—		3,800
Exercise of stock options	583	—		—	—		464		—		—		—		464
Restricted stock vesting, net of shares withheld	780	1		—	—		(1,637)		—		—		—		(1,636)
Stock-based compensation	—	—		—	—		4,756		—		—		—		4,756
Repurchase of common stock	—	—		—	—		—		—		—		—		—
Other comprehensive loss	—	—		—	—		—		(393)		—		—		(393)
Balance as of September 30, 2023	117,367	$	12	16,457	$	2	$	306,111	$	(1,022)	$	17,227	$	(20,094)	$	302,236


	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 income		—	—		—	—			—			—		471			—			471
Exercise of stock options		3,234	—		—	—			2,920			—		—			—			2,920
Restricted stock vesting, net of shares withheld		2,055	1		—	—			(2,877)			—		—			—			(2,876)
Stock-based compensation		—	—		—	—			15,731			—		—			—			15,731
Repurchase of common stock		(3,557)	—		—	—			—			—		—			(15,452)			(15,452)
Other comprehensive loss		—	—		—	—			—			(871)		—			—			(871)
Balance as of September 30, 2023		117,367	$	12	16,457	$	2		$	306,111		$	(1,022)	$	17,227		$	(20,094)		$	302,236

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	Class A Common Stock	Class B Common Stock			Additional Paid-In Capital	Accumulated Other Comprehensive (Loss) Income								Total Stockholders' Equity
		Shares	Amount					Shares			Amount					Accumulated Deficit			Treasury Stock
Balance as of June 30, 2024		108,132	$	11	16,457	$	2		$	319,682		$	(1,554)	$	(5,815)		$	(48,763)		$	263,563
Net loss		—	—		—	—			—			—		(3,097)			—			(3,097)
Exercise of stock options		87	—		—	—			83			—		—			—			83
Restricted stock vesting, net of shares withheld		851	—		—	—			(630)			—		—			—			(630)
Stock-based compensation		—	—		—	—			4,942			—		—			—			4,942
Repurchase of common stock		(341)	—		—	—			—			—		—			(539)			(539)
Other comprehensive income		—	—		—	—			—			859		—			—			859
Balance as of September 30, 2024		108,729	$	11	16,457	$	2		$	324,077		$	(695)	$	(8,912)		$	(49,302)		$	265,181


	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		—	—		—	—			—			—		(6,275)			—			(6,275)
Exercise of stock options		203	—		—	—			197			—		—			—			197
Restricted stock vesting, net of shares withheld		3,882	—		—	—			(2,498)			—		—			—			(2,498)
Stock-based compensation		—	—		—	—			15,434			—		—			—			15,434
Repurchase of common stock		(13,556)	(1)		—	—			—			—		—			(29,208)			(29,209)
Other comprehensive loss		—	—		—	—			—			(819)		—			—			(819)
Balance as of September 30, 2024		108,729	$	11	16,457	$	2		$	324,077		$	(695)	$	(8,912)		$	(49,302)		$	265,181

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)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net (loss) income	$	(6,275)	$	471
Adjustments:
Depreciation and amortization	34,813		33,686
Amortization of loan costs	120		113
Stock-based compensation expense	14,308		14,391
Change in fair value of warrant liabilities	(929)		(1,381)
Change in fair value of contingent consideration	—		(950)
Asset impairments	1,937		2,042
Deferred income tax expense	(508)		(6,973)
Other	705		(57)
Changes in operating assets and liabilities
Receivables, net	1,456		(3,780)
Prepaid expenses and other current assets	791		1,348
Income tax receivable	(2,135)		(936)
Accounts payable & accrued liabilities	(10,377)		(2,269)
Other	218		691
Net cash provided by operating activities	34,124		36,396
Cash flows from investing activities:
Purchase of property and equipment	(3,825)		(5,114)
Additions to internal-use software	(14,587)		(16,516)
Assets acquired from business combination	(3,400)		—
Other	(290)		(225)
Net cash used in investing activities	(22,102)		(21,855)
Cash flows from financing activities:
Proceeds from stock option exercises	197		2,922
Payments for tax withholding of stock-based compensation	(2,498)		(2,877)
Payment of minimum guarantee liabilities	(7,168)		(2,360)
Repurchases of treasury stock	(29,154)		(15,452)
Net cash used in financing activities	(38,623)		(17,767)
Foreign currency translation	(518)		(967)
Net change in cash, cash equivalents, and restricted cash	(27,119)		(4,193)
Cash and cash equivalents at beginning of period	132,889		134,000
Cash, cash equivalents, and restricted cash at end of period	$	105,770	$	129,807

Supplemental cash flow disclosures:
Interest paid	$	123	$	148
Income taxes paid, net of refunds	2,662		2,308
Non-cash investing and financing activities:
Capitalization of stock-based compensation	$	1,126	$	1,340

Additions to intangible assets related to licensing agreements	4,128		9,832
Right-of-use assets acquired under operating leases	4,350		—
Assets acquired from business combination	3,355		—

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”) most 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 September 30, 2024, and its results of operations for the three and nine months ended September 30, 2024, and 2023, and cash flows for the nine months ended September 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 September 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

Our significant accounting policies and estimates remained unchanged from our 2023 Annual Report on Form 10-K filed on March 12, 2024, except for restricted cash discussed below.

Restricted Cash

The Company has restricted cash of $0.6 million and zero as of September 30, 2024 and December 31, 2023. The cash is classified within “Other long-term assets.” Such amounts plus “Cash and cash equivalents” on the Condensed Consolidated Balance Sheets equal “Cash, cash equivalents, and restricted cash” on the Condensed Consolidated Statements of Cash Flows as of September 30, 2024 and September 30, 2023.

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. 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

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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 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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net revenue
playGAMES	71,226		75,857		221,642		229,602
playAWARDS	3		1		5		4,172
Reportable segment net revenue	71,229		75,858		221,647		233,774

AEBITDA
playGAMES	23,233		21,640		68,604		65,842
playAWARDS	(3,991)		(4,180)		(11,089)		(6,517)
Reportable segment AEBITDA	19,242		17,460		57,515		59,325

Other operating expense
Corporate and other	4,619		3,935		13,440		11,761
Restructuring expenses	3,231		1,280		5,248		7,112
Other reconciling items	(7)		85		150		149
Stock-based compensation	4,584		4,344		14,308		14,391
Depreciation and amortization	11,593		11,537		34,813		33,686
	24,020		21,181		67,959		67,099

Non-operating income
Change in fair value of warrant liabilities	276		4,216		929		1,381
Interest income, net	1,127		1,364		3,921		3,521
Other (expense) income, net	(256)		(198)		(626)		906
	1,147		5,382		4,224		5,808

(Loss) income before income taxes	(3,631)		1,661		(6,220)		(1,966)
Income tax benefit (expense)	534		2,139		(55)		2,437
Net (loss) income	$	(3,097)	$	3,800	$	(6,275)	$	471

NOTE 4—BUSINESS COMBINATIONS

Pixode Games Limited ("Pixode 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. Subject to meeting certain financial minimum milestones, the Company will pay the sellers of the Pixode assets

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a percentage of an adjusted net revenue for a three year period commencing on the re-launch date of the rebranded Pixode assets, payable at the end of each fiscal year.

The Company recorded the excess of the fair value of the consideration transferred in the acquisition over the fair value of net assets acquired as goodwill. The goodwill reflects our expectations of favorable future growth opportunities and anticipated synergies through the scale of our operations. The Company expects that substantially all of the goodwill will be deductible for federal income tax purposes. The following table summarizes the consideration paid for Pixode and the assets acquired as of the acquisition date:


Consideration:	July 1, 2024
Cash consideration	$	3,500
Contingent consideration	3,255
Total consideration transferred	$	6,755

Identifiable assets acquired:
Developed technology (weighted-average useful life of 5 years)	$	1,650
Property and equipment, net	16
Total identifiable net assets	$	1,666

Goodwill	$	5,089

NOTE 5—RELATED-PARTY TRANSACTIONS

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


	September 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 nine months ended September 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 September 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.

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NOTE 6—RECEIVABLES, NET

Receivables, net consist of the following:


	September 30, 2024		December 31, 2023
Trade receivables	$	28,495	$	29,952
Other receivables	422		690
Allowance for uncollectible amounts	(142)		(177)
Total receivables, net	$	28,775	$	30,465

Trade receivables generally represent amounts due to the Company from social and mobile platform operators, including Apple, Google, and direct-to-consumer ("DTC") payment processors, including Xsolla. 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:


	September 30, 2024		December 31, 2023
Apple, Inc.	44.6	%	45.6	%
Google, LLC	17.9	%	20.8	%
Xsolla (USA), Inc.	11.6	%	2.4	%

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

NOTE 7—PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:


	September 30, 2024		December 31, 2023
Prepaid expenses	$	4,842	5,291
Income tax receivable	5,048		3,426
Other current assets	433		2,812
Total prepaid expenses other current assets	$	10,323	$	11,529

NOTE 8—FAIR VALUE MEASUREMENT

The carrying values of the Company’s cash and cash equivalents, receivables, net, prepaid expenses and other current assets, 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 September 30, 2024 and December 31, 2023:


	September 30, 2024
	Level 1		Level 2		Level 3		Total
Financial liabilities:
Public Warrants	$	91	—		—		91
Private Warrants	—		65		—		65
Derivative financial instruments	335		—		—		335
Contingent consideration	—		—		3,255		3,255
Total financial liabilities	$	426	$	65	$	3,255	$	3,746

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	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

The fair value of our Level 3 contingent consideration liabilities relate to the Pixode Acquisition. This contingent consideration is primarily based on expected payments arising from a percentage of an adjusted net revenue for a three year period commencing on the re-launch date of the rebranded Pixode assets, payable at the end of each fiscal year. The value of these payments are subject to various market and operational risks. Significant unobservable inputs include a discount rate of approximately 13.5% and the probability of revenue growth over the same three year period. See Note 4—Business Combinations for more information on the Pixode Acquisition.

NOTE 9—PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following:


	September 30, 2024		December 31, 2023
Land and land improvements	$	1,680	1,680
Building and building improvements	5,890		6,046
Computer equipment	9,565		9,021
Leasehold improvements	11,248		9,811
Purchased software	1,486		2,115
Furniture and fixtures	3,872		4,331
Construction in progress	23		460
Total property and equipment	33,764		33,464
Less: accumulated depreciation	(16,232)		(15,915)
Total property and equipment, net	$	17,532	$	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 September 30, 2024 and 2023, depreciation expense was $1.2 million and $1.2 million, respectively and during the nine months ended September 30, 2024 and 2023, depreciation expense was $3.7 million and $4.2 million, respectively. There were no material impairment charges or material write-offs recorded for the three and nine months ended September 30, 2024 and 2023.

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


	September 30, 2024		December 31, 2023
United States	$	11,699	$	13,462
Europe, Middle East, and Africa	4,566		2,895
All other countries	1,267		1,192
Total property and equipment, net	$	17,532	$	17,549

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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:


	September 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	$	76,287	$	(29,874)	$	46,413	$	71,908	$	(19,457)	$	52,451
Acquired technology	16,653		(7,526)		9,127		15,003		(3,831)		11,172
Customer relationships	12,000		(4,800)		7,200		12,000		(3,000)		9,000
Trade names	2,740		(1,540)		1,200		2,740		(1,428)		1,312
Internal-use software	183,945		(149,316)		34,629		168,232		(132,375)		35,857
Other	220		(11)		209		145		(4)		141
	291,845		(193,067)		98,778		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	$	292,845	$	(193,067)	$	99,778	$	271,028	$	(160,095)	$	110,933

During the three months ended September 30, 2024 and 2023, intangible asset and internal-use software amortization was $10.4 million and $10.3 million, respectively, and during the nine months ended September 30, 2024 and 2023, intangible asset and internal-use software amortization was $31.1 million and $29.5 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.

During the three and nine months ended September 30, 2024, the Company changed the useful life of certain definite-lived intangible assets associated with its non-fungible token initiative, resulting in an accelerated amortization of $1.8 million. The amount of accelerated amortization is reported as an asset impairment and reported within "Restructuring and related" in the Condensed Consolidated Statements of Operations. The Company recorded a non-cash impairment charge within "Restructuring and related" in the Condensed Consolidated Statements of Operations of $1.1 million during the three and nine months ended September 30, 2023.

Subsequent to September 30, 2024 and in connection with the Plan, the Company modified its future investment in certain game titles resulting in either (i) a significant reduction in user acquisition expense, (ii) significant reduction in future development expenses, or (iii) termination of game titles. The Company expects to record an estimated impairment charge of $7.1 million during the fourth quarter of 2024. Refer to Note 17—Commitments and Contingencies for more information regarding the Plan.

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


Year Ending December 31,	Projected Amortization Expense
Remaining 2024	$	11,108
2025	33,382
2026	22,324
2027	15,327
2028	9,652
Thereafter	6,985
Total	$	98,778

NOTE 11—GOODWILL

Goodwill

The following table provides the changes in the carrying amount of goodwill for the nine months ended September 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	5,089		—		5,089
Measurement period adjustments	—		—		—
Balance as of September 30, 2024	$	52,222	$	—	$	52,222

NOTE 12—ACCRUED AND OTHER LIABILITIES

Accrued liabilities consist of the following:


	September 30, 2024		December 31, 2023
Accrued payroll and vacation	9,357		10,261
Accrued user acquisition	3,301		5,687
Income taxes payable	783		1,295
Warrant liabilities	156		1,086
Minimum guarantee liability	6,284		7,760
Other licensing agreements	2,227		7,400
Other accruals	4,902		6,393
Total accrued liabilities	$	27,010	$	39,882

Warrant Liabilities

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

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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 September 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. The warrant liabilities are classified within “Accrued and other current liabilities” on the Condensed Consolidated Balance Sheets.

NOTE 13—LEASES

The Company's operating leases primarily consist of real estate leases such as offices. During the three months ended September 30, 2024 and 2023, operating lease expense was $1.1 million and $1.2 million, respectively, and during the nine months ended September 30, 2024 and 2023, operating lease expense was $3.5 million and $3.7 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:


	September 30, 2024			December 31, 2023
Operating lease right-of-use assets, net	$	10,545		$	9,369

Operating lease liabilities, current	3,486			4,236
Operating lease liabilities, noncurrent	7,513			5,699
Operating lease liabilities, total	$	10,999		$	9,935

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

Operating lease liability maturities:


Year ending December 31,	Operating Leases
Remaining 2024	$	1,028
2025	3,948
2026	3,710
2027	2,900
2028	382
Thereafter	—
Total undiscounted cash flows	$	11,968
Less: imputed interest	$	(969)
Lease liabilities, total	$	10,999

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

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NOTE 14—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 September 30, 2024, the Company does not have any balances outstanding under the Credit Agreement.

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NOTE 15—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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Virtual currency (over time)	$	57,564	$	61,558	$	174,288	$	187,565
Advertising (point in time)	13,613		14,190		47,061		41,608
Other revenue (point in time or over time)	52		110		298		4,601
Total net revenue	$	71,229	$	75,858	$	221,647	$	233,774

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
United States	$	60,088	$	64,414	$	186,946	$	200,566
All other countries	11,141		11,444		34,701		33,208
Total net revenue	$	71,229	$	75,858	$	221,647	$	233,774

Contract Balances

Contract assets represent the Company’s ability to bill customers for performance obligations completed under a contract. As of September 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 September 30, 2024 and December 31, 2023. Trade receivables are described in Note 6—Receivables, net.

NOTE 16—INCOME TAXES

The Company recorded an income tax benefit of $0.5 million and an income tax benefit of $2.1 million for the three months ended September 30, 2024 and 2023, respectively, and the Company recorded an income tax expense of $0.1 million and an income tax benefit of $2.4 million for the nine months ended September 30, 2024 and 2023, respectively. Our effective tax rate was (14.7%) for the three months ended September 30, 2024 compared to (128.8)% for the three months ended September 30, 2023. Our effective tax rate was (0.9)% for the nine months ended September 30, 2024 compared to 124.0% for the nine months ended September 30, 2023. The effective rate of 14.7% differs from the federal statutory rate of 21% primarily due to the valuation allowance recorded against US deferred tax assets, foreign branch income, nondeductible stock compensation, and discrete tax expense related to uncertain tax benefits on research and development credits.

NOTE 17—COMMITMENTS AND CONTINGENCIES

Minimum Guarantee Liability

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


	September 30, 2024		December 31, 2023

Minimum guarantee liability - current	$	6,284	$	7,760
Minimum guarantee liability - noncurrent	18,000		24,000
Total minimum guarantee obligations	$	24,284	$	31,760
Weighted-average remaining contractual term (in years)	2.4		2.6

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


Year Ending December 31,	Minimum Guarantee Obligations
Remaining 2024	$	284
2025	6,000
2026	6,000
2027	6,000
2028	6,000
Total	$	24,284

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 September 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 $2.2 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 September 30, 2024 was approximately $6.8 million.

Pixode

In connection with the Pixode Acquisition, in addition to the $3.5 million paid at closing, and the Company agreed to pay a percentage of an adjusted net revenue for a three year period commencing on the re-launch date of the rebranded Pixode assets, payable at the end of each fiscal year, contingent upon the satisfaction of certain product and financial milestones, up to a maximum amount of $113.5 million. The fair value of the contingent consideration is reassessed at each reporting date, with changes recognized in earnings. The fair value of the contingent consideration as of September 30, 2024 was $3.3 million. Refer to Note 8—Fair Value Measurement for more information.

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 September 30, 2024, only one lawsuit in Serbia remained to be dismissed with prejudice. The Company expects to finalize the settlement before December 31, 2024, but cannot make any assurances that it will be completed by that 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.

On August 22, 2024, James Scott Tipmore, a purported citizen of Kentucky, filed a civil lawsuit against PLAYSTUDIOS US, LLC in the United States District Court for the Western District of Kentucky, alleging that PLAYSTUDIOS US, LLC makes available online games of chance that constitute illegal gambling under Kentucky law and

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seeking to recover, under Kentucky's loss recovery act, treble the sums paid by Kentucky residents to PLAYSTUDIOS US, LLC in its online gambling games during the period beginning five years before the filing of the lawsuit until the case is resolved. 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 September 30, 2024, three of the 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.

On September 27, 2024, the Company received multiple substantively identical pre-arbitration notices from a single law firm purporting to represent 2,697 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.

Other

On October 29, 2024, the Company initiated an internal reorganization plan (the “Plan”) which is intended to enhance efficiency and reduce operating expenses. The Plan includes a reduction of the Company’s current total global workforce by approximately 30 percent. The Company expects to substantially complete the personnel reduction by the end of the fourth quarter of fiscal year 2024, but the timing of certain reductions will vary based on job function and location, including local legal requirements.

The Company estimates that it will incur approximately $14.0 million to $16.0 million in charges in connection with the Plan, which will be substantially incurred in the fourth quarter of fiscal year 2024. These charges primarily relate to employee transition, severance payments, employee benefits, stock-based compensation, and impairment of capitalized software and fixed assets. The estimates of the charges and expenditures that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, the Company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur in connection with the implementation of the Plan.

NOTE 18—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

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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	(621)		—		(621)
Foreign currency translation	—		(198)		(198)
Balance as of September 30, 2024	$	(335)	$	(360)	$	(695)


	Foreign Currency Derivative Contracts		Currency Translation Adjustment		Total Accumulated Other Comprehensive Loss
Balance as of December 31, 2022	$	—	$	(151)	$	(151)
Net gains recognized in other comprehensive income before reclassifications	—		—		—
Foreign currency translation	—		(871)		(871)
Balance as of September 30, 2023	$	—	$	(1,022)	$	(1,022)

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	1,879	4,569
Class A common stock repurchased outside of the Stock Repurchase Program	11,677	24,639
Balance as of September 30, 2024	18,279	$	49,302

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. On November 1, 2024, the Company's Board of Directors extended the repurchase program through November 1, 2025. 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.

Subsequent to September 30, 2024, the Company acquired 0.5 million additional shares of its Class A common stock under this program at an aggregate value of $0.8 million and an average price of $1.51 per share. Repurchased shares were held in treasury. The remaining availability under the stock repurchase program was $44.7 million after the subsequent purchases.

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NOTE 19—STOCK-BASED COMPENSATION

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Selling and marketing	$	355	$	205	$	972	$	585
General and administrative	2,561		1,975		7,940		7,086
Research and development	1,668		2,164		5,396		6,720
Stock-based compensation expense	$	4,584	$	4,344	$	14,308	$	14,391
Capitalized stock-based compensation	$	358	$	412	$	1,126	$	1,340

As of September 30, 2024, there was approximately $31.4 million and $0.1 million in unrecognized stock-based compensation expense related to restricted stock units and performance stock units that are expected to be recognized over a weighted-average expected vesting period of 2.2 years and