Annual report [Section 13 and 15(d), not S-K Item 405]

SEGMENT REPORTING

v3.25.0.1
SEGMENT REPORTING
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
SEGMENT REPORTING
NOTE 3—SEGMENT REPORTING
The Company reports operating results based on two reportable segments: playGAMES and playAWARDS. The Company has aggregated certain operating segments into these reportable segments based on similarities in economic characteristics, customer base, service offerings, and regulatory environments. Each of the Company's games are aggregated into the playGAMES reportable segment, while the operations of its loyalty program makes up the playAWARDS reportable segment based on engagement in business activities, availability of discrete financial information, and the review of operating results by the Chief Operating Decision Maker ("CODM"). The CODM is the Company's Chairman and Chief Executive Officer. Management believes that the operating segments within each reportable segment share similar revenue models, operational risks, and long-term profitability trends. The Company's reportable segments are as follows:
playGAMES: This segment is a leading developer and publisher of digital games on mobile and web platforms. It operates primarily in the social gaming market, which is characterized by gameplay online or on mobile devices, that is social, competitive, and self-directed in pace and session length. playGAMES also operate in the casual space. playGAMES generates a substantial portion of our revenue from in-app purchases in the form of virtual currencies, which players can use
to play social casino games. Players who install our social casino games typically receive free virtual currency upon the initial launch of the game and additional virtual currencies at specific time intervals. Players may exhaust the virtual currencies that they receive for free and may choose to purchase additional virtual currencies in order to extend their time of game play. Once obtained, virtual currencies (either free or purchased) cannot be redeemed for cash nor exchanged for anything other than game play within our games. playGAMES generate additional revenue in the casual space from the receipt of advertising revenue. Players who install our casual games receive free, unlimited gameplay that requires viewing of periodic in-game advertisements.
playAWARDS: This segment consists of all of our loyalty program globally in which we are developing an end-to-end loyalty solutions to enrich, motivate and retain customers, including program design, points management and administration, and broad-based fulfillment and redemption across multiple channels. Loyalty points may be included in certain bundled purchases through certain platforms. Loyalty points are not available to be purchased separately and there is no stand alone selling price. If loyalty points are included in bundled purchases, the Company will allocate a portion of the transaction price to loyalty points using the residual approach.
The CODM evaluates the performance of each operating segment using revenue and segment Adjusted EBITDA. 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 and general and administrative overhead. Revenue and expenses exclude transactions between the Company's operating segments. The CODM does not evaluate operating segments using asset information.
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. Revenue excludes transactions between the Company's operating segments. Certain expenses incurred by playAWARDS have been allocated to playGAMES at cost.
The following tables present the Company’s segment information:
Year Ended December 31, 2024
playGAMES playAWARDS Total
Net revenue
Virtual currency $ 228,877  $ 54  $ 228,931 
Advertising 60,197  —  60,197 
Other 293  8  301 
289,367  62  289,429 
Segment expenses
Cost of sales 72,710  6  72,716 
Payroll & related 49,994  10,035  60,029 
User acquisition 46,969  —  46,969 
Other(1)
34,620  3,731  38,351 
204,293  13,772  218,065 
Reportable segment AEBITDA 85,074  (13,710) 71,364 
Other operating expense
Corporate and other 14,815 
Restructuring expenses 25,710 
Other reconciling items 150 
Stock based compensation $ 18,113 
Depreciation and amortization 45,440 
104,228 
Non-operating income (expense)
Change in fair value of warrant liabilities 856 
Interest income (expense), net 4,902 
Other (expense) income, net $ (182)
5,576 
Income (loss) before income taxes (27,288)
Income tax expense $ (1,399)
Net income (loss) $ (28,687)
Year Ended December 31, 2023
playGAMES playAWARDS Total
Net revenue
Virtual currency
 $ 247,929  $ —  $ 247,929 
Advertising 58,236  —  58,236 
Other 549  4,172  4,721 
306,714  4,172  310,886 
Segment expenses
Cost of sales
 77,800  —  77,800 
Payroll & related
 47,787  11,133  58,920 
User acquisition
 60,693  —  60,693 
Other(1)
31,758  3,418  35,176 
218,038  14,551  232,589 
Reportable segment AEBITDA
 88,676  (10,379) 78,297 
Other operating expense
Corporate and other 16,005 
Restructuring expenses 8,584 
Other reconciling items 214 
Stock based compensation $ 18,722 
Depreciation and amortization 45,259 
88,784 
Non-operating income (expense)
Change in fair value of warrant liabilities 2,596 
Interest income (expense), net 4,858 
Other (expense) income, net $ 513 
7,967 
Income (loss) before income taxes (2,520)
Income tax expense
 $ (16,873)
Net income (loss) $ (19,393)
(1)Consists of legal, rent, information technology, outside services, marketing, and other general and administrative expenses.
Reorganization
On October 29, 2024, the Company initiated an internal reorganization plan (the “2024 Reorganization Plan”) which is intended to enhance efficiency and reduce operating expenses. The 2024 Reorganization Plan included a reduction of the
Company’s total global workforce by approximately 30 percent, which was substantially completed by the end of the 2024 fiscal year. The following table presents the charges for the 2024 Reorganization Plan:
Year Ended December 31, 2024
playGAMES playAWARDS Corporate and Other Total
Severance and employee-related costs
 $ 3,956  $ 768  979  $ 5,703 
Asset impairments
 7,388  1,840  223  9,451 
Other
 568  39  468  1,075 
Total
 $ 11,912  $ 2,647  $ 1,670  $ 16,229 
On February 28, 2023, the Company initiated an internal reorganization plan (the "2023 Reorganization Plan") which is intended to enhance efficiency and reduce operating expenses. The 2023 Reorganization Plan included a reduction of the Company’s total global employee headcount by approximately 14 percent, which was substantially completed by the end of the second quarter of the 2023 fiscal year. Charges for the 2023 Reorganization Plan consisted of the following:
Year Ended December 31, 2023
playGAMES playAWARDS Corporate and Other Total
Severance and employee-related costs
 $ 2,823  $ —  —  $ 2,823 
Other
 —  —  247  247 
Total
 $ 2,823  $ —  $ 247  $ 3,070 
The following table summarizes the activity related to the liabilities associated with the Company's reorganization plans for the years ended December 31, 2024 and 2023:
playGAMES playAWARDS Corporate and Other Total
Balance as of December 31, 2022
 $ —  $ —  $ —  $ — 
Reorganization charges
 2,823  —  247  3,070 
Non-cash charges
 —  —  (223) (223)
Payments
 (2,823) —  (24) (2,847)
Balance as of December 31, 2023
 —  —  —  — 
Reorganization charges
 11,912  2,647  1,670  16,229 
Non-cash charges
 (7,388) (1,840) (443) (9,671)
Payments
 (2,317) (611) (862) (3,790)
Balance as of December 31, 2024
 $ 2,207  $ 196  $ 365  $ 2,768