playtika-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 March 31, 2022


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

For the transition period from _____ to _____

Commission File Number: 001-39896

PLAYTIKA HOLDING CORP.

(Exact Name of Registrant as Specified in its Charter)


Delaware						81-3634591
(State of other jurisdiction						(I.R.S. Employer
of incorporation or organization)						Identification No.)


c/o Playtika Ltd.
HaChoshlim St 8
Herzliya Pituach, Israel
972-73-316-3251

(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(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	PLTK	The 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 13(a) of the Exchange 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 May 5, 2022, the registrant had 412,397,599 shares of common stock, $0.01 par value per share, outstanding.

PLAYTIKA HOLDING CORP.

FORM 10-Q

INDEX


		Page
PART I.	FINANCIAL INFORMATION	1
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1
	Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	1
	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021	2
	Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2022 and 2021	3
	Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	4
	Notes to the Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	31
ITEM 4.	CONTROLS AND PROCEDURES	32
PART II.	OTHER INFORMATION	3 4
ITEM 1.	LEGAL PROCEEDINGS	3 4
ITEM 1A.	RISK FACTORS	3 4
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	36
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	36
ITEM 4.	MINE SAFETY DISCLOSURES	36
ITEM 5.	OTHER INFORMATION	37
ITEM 6.	EXHIBITS	38
SIGNATURES

CAUTIONARY NOTE ABOUT FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Exchange Act. All statements other than statements of historical facts contained in this quarterly report, including statements regarding our business strategy, plans and our objectives for future operations, are forward-looking statements. Further, statements that include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “present,” “preserve,” “project,” “pursue,” “will,” or “would,” or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. The achievement or success of the matters covered by such forward-looking statements involves significant risks, uncertainties and assumptions, including, but not limited to, the important factors discussed in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment and industry. As a result, it is not possible for our management to assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated, predicted or implied in the forward-looking statements.

Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include without limitation:

•our reliance on third-party platforms, such as the iOS App Store, Facebook, and Google Play Store, to distribute our games and collect revenues, and the risk that such platforms may adversely change their policies;

•our reliance on a limited number of games to generate the majority of our revenue;

•our reliance on a small percentage of total users to generate a majority of our revenue;

•our free-to-play business model, and the value of virtual items sold in our games, is highly dependent on how we manage the game revenues and pricing models;

•our inability to make acquisitions and integrate any acquired businesses successfully could limit our growth or disrupt our plans and operations;

•we may be unable to successfully develop new games;

•our ability to compete in a highly competitive industry with low barriers to entry;

•we have significant indebtedness and are subject to the obligations and restrictive covenants under our debt instruments;

•the impact of the COVID-19 pandemic on our business and the economy as a whole;

•our controlled company status;

•legal or regulatory restrictions or proceedings could adversely impact our business and limit the growth of our operations;

•risks related to our international operations and ownership, including our significant operations in Israel, the Ukraine and Belarus and the fact that our controlling stockholder is a Chinese-owned company;

•our reliance on key personnel;

•security breaches or other disruptions could compromise our information or our players’ information and expose us to liability; and

•our inability to protect our intellectual property and proprietary information could adversely impact our business.

Additional factors that may cause future events and actual results, financial or otherwise, to differ, potentially materially, from those discussed in or implied by the forward-looking statements include the risks and uncertainties discussed in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of

Operations” in this Quarterly Report on Form 10-Q and our Annual Report of Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 2, 2022. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur, and reported results should not be considered as an indication of future performance. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Except as required by law, we undertake no obligation to update any forward-looking statements for any reason to conform these statements to actual results or to changes in our expectations.

Part I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(In millions, except for per share data)


	March 31, 2022		December 31, 2021
ASSETS	(Unaudited)
Current assets
Cash and cash equivalents	$	885.8	$	1,017.0
Short-term bank deposits	222.1		100.1
Restricted cash	2.0		2.0
Accounts receivable	139.7		143.7
Prepaid expenses and other current assets	97.2		72.9
Total current assets	1,346.8		1,335.7
Property and equipment, net	105.6		103.3
Operating lease right-of-use assets	98.8		89.4
Intangible assets other than goodwill, net	419.3		417.3
Goodwill	829.3		788.1
Deferred tax assets, net	40.6		38.3
Investments in unconsolidated entities	17.8		17.8
Other non-current assets	30.7		13.4
Total assets	$	2,888.9	$	2,803.3

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Current maturities of long-term debt	$	12.2	$	12.2
Accounts payable	41.9		45.7
Operating lease liabilities, current	20.0		17.2
Accrued expenses and other current liabilities	457.4		494.6
Total current liabilities	531.5		569.7
Long-term debt	2,420.3		2,422.9
Contingent consideration	30.0		28.7
Employee related benefits and other long-term liabilities	3.1		23.7
Operating lease liabilities, long-term	87.9		82.3
Deferred tax liabilities	56.1		53.7
Total liabilities	3,128.9		3,181.0
Commitments and contingencies (Note 11)
Stockholders' equity (deficit)
Common stock of $0.01 par value; 1,600.0 shares authorized; 412.2 and 411.1 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	4.1		4.1
Additional paid-in capital	1,072.0		1,032.9
Accumulated other comprehensive income	18.6		3.2
Accumulated deficit	(1,334.7)		(1,417.9)
Total stockholders' deficit	(240.0)		(377.7)
Total liabilities and stockholders’ deficit	$	2,888.9	$	2,803.3

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

-1-

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except for per share data)

(Unaudited)


	Three months ended March 31,
		2022		2021
Revenues		$	676.9	$	638.9
Costs and expenses
Cost of revenue		186.9		183.0
Research and development		112.7		85.2
Sales and marketing		179.7		140.1
General and administrative		77.2		100.3
Total costs and expenses		556.5		508.6
Income from operations		120.4		130.3
Interest expense and other, net		27.5		75.7
Income before income taxes		92.9		54.6
Provision for income taxes		9.7		18.9
Net income		83.2		35.7
Other comprehensive income (loss)
Foreign currency translation		(3.3)		(9.9)
Change in fair value of derivatives		18.7		(0.1)
Total other comprehensive income (loss)		15.4		(10.0)
Comprehensive income		$	98.6	$	25.7

Net income per share attributable to common stockholders, basic		$	0.20	$	0.09
Net income per share attributable to common stockholders, diluted		$	0.20	$	0.09
Weighted-average shares used in computing net income per share attributable to common stockholders, basic		412.0		406.5
Weighted-average shares used in computing net income per share attributable to common stockholders, diluted		412.5		409.5

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

-2-

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In millions)

(Unaudited)


	Share capital
	Shares	Amount		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings (Accumulated deficit)		Total stockholders' equity (deficit)
Balances at January 1, 2022	411.1	$	4.1	$	1,032.9	$	3.2	$	(1,417.9)	$	(377.7)
Net income	—	—		—		—		83.2		83.2
Stock-based compensation	—	—		40.5		—		—		40.5
Issuance of shares upon vesting of RSUs	1.1	*		(*)		—		—		*
Income tax withholding related to vesting of restricted stock units and other	—	—		(1.4)		—		—		(1.4)
Other comprehensive income	—	—		—		15.4		—		15.4
Balances at March 31, 2022	412.2	$	4.1	$	1,072.0	$	18.6	$	(1,334.7)	$	(240.0)


	Share capital
	Shares	Amount		Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings (Accumulated deficit)		Total stockholders' equity (deficit)
Balances at January 1, 2021	391.1	$	3.9	$	462.3	$	16.7	$	(1,726.4)	$	(1,243.5)
Net income	—	—		—		—		35.7		35.7
Issuance of common stock in the IPO, net of underwriting commission and offering costs	18.5	0.2		467.5		—		—		467.7
Stock-based compensation	—	—		24.3		—		—		24.3
Issuance of shares upon vesting of RSUs	*	*		(*)		—		—		—
Other comprehensive loss	—	—		—		(10.0)		—		(10.0)
Balances at March 31, 2021	409.6	$	4.1	$	954.1	$	6.7	$	(1,690.7)	$	(725.8)

SEC Form 10-Q filed by Playtika Holding Corp.