Quarterly report [Sections 13 or 15(d)]

SEGMENT REPORTING

v3.26.1
SEGMENT REPORTING
 3 Months Ended
Mar. 31, 2026
Segment Reporting [Abstract]  
SEGMENT REPORTING
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 2025 Annual Report on Form 10-K filed on March 16, 2026 and amended on Form 10-K/A filed on April 3, 2026.
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 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 March 31, 2026 Three Months Ended March 31, 2025
playGAMES playAWARDS Total playGAMES playAWARDS Total
Net revenue
Virtual currency $ 44,705  $ 543  $ 45,248  $ 50,692  $ 148  $ 50,840 
Advertising 13,157  —  13,157  11,863  —  11,863 
Other —  5  5  —  6  6 
57,862  548  58,410  62,555  154  62,709 
Segment expenses
Cost of sales 11,991  54  12,045  15,763  16  15,779 
Payroll & related 10,011  1,488  11,499  9,175  1,567  10,742 
User acquisition 16,693  —  16,693  10,157  —  10,157 
Other(1)
10,493  498  10,991  9,151  860  10,011 
49,188  2,040  51,228  44,246  2,443  46,689 
Reportable segment AEBITDA $ 8,674  $ (1,492) $ 7,182  $ 18,309  $ (2,289) $ 16,020 
Other operating expense
Corporate and other $ 3,611  $ 3,533 
Restructuring expenses 4,652  1,335 
Other reconciling items 7  3 
Stock-based compensation 2,384  4,258 
Depreciation and amortization 9,833  9,632 
20,487  18,761 
Non-operating income (expense)
Change in fair value of warrant liabilities 18  101 
Change in fair value of contingent consideration
 2,780  (325)
Interest income, net 722  906 
Other expense (281) (473)
3,239  209 
Loss before income taxes (10,066) (2,532)
Income tax expense (610) (348)
Net loss $ (10,676) $ (2,880)
(1)Consists of legal, rent, information technology, outside services, marketing, and other general and administrative expenses.
Reorganization
On March 10, 2026, the Company initiated an internal reorganization plan (the “2026 Reorganization Plan”) which is intended to enhance efficiency and reduce operating expenses. The 2026 Reorganization Plan includes a reduction of the Company’s current total global workforce by approximately 27%. The Company expects to incur aggregate charges of approximately $4.5 million to $7.0 million in connection with the 2026 Reorganization Plan, consisting primarily of employee
transition costs, severance payments, employee benefits, stock-based compensation, and lease termination and other facility-related costs, substantially all of which are expected to be recognized during 2026.
The following table presents the charges for the 2026 Reorganization Plan, which is reflected in “Restructuring and related” in the Condensed Consolidated Statements of Operations:
Three Months Ended March 31, 2026
playGAMES playAWARDS Corporate and Other Total
Employee termination benefits
 $ 1,461  $ 261  $ 565  $ 2,287 
Lease-related charges(1)
121  68  149  338 
Asset-related charges(2)
191  3  6  200 
Other
 14  7  31  52 
Total
 $ 1,787  $ 339  $ 751  $ 2,877 
(1)Lease-related charges primarily represent accelerated amortization of operating lease right of use ("ROU") assets due to a change in useful life. See Note 11—Leases for further discussion.
(2)Asset-related charges primarily represent impairment and loss on disposal of property and equipment.
The following table summarizes the activity related to the liabilities associated with the Company's reorganization plan:
playGAMES playAWARDS Corporate and Other Total
Balance as of December 31, 2025
 $ —  $ —  $ —  $ — 
Reorganization charges and adjustments 1,787  339  751  2,877 
Non-cash charges (312) (71) (155) (538)
Payments (200) (37) (31) (268)
Balance as of March 31, 2026
 $ 1,275  $ 231  $ 565  $ 2,071 
playGAMES Goodwill
The Company monitors its playGAMES reporting unit for potential indicators of impairment on an ongoing basis. During the three months ended March 31, 2026, the Company considered various qualitative and quantitative factors, including trends in operating performance and broader market conditions affecting the playGAMES segment.
As of the Company’s most recent annual impairment test performed on October 1, 2025, the estimated fair values of the reporting units exceeded their respective carrying values by a relatively narrow amount. While the Company continues to monitor the performance of these reporting units in light of recent operating trends and market conditions, management determined that no impairment charge was required as of March 31, 2026.
If actual results differ from current expectations, or if management updates its assumptions or projections for these reporting units, including those related to future cash flows, the estimated fair values of the reporting units may change, which could result in impairment charges in future periods.