playtika-20230630

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 June 30, 2023


☐			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 August 3, 2023, the registrant had 366,495,560 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 June 30, 2023 and December 31, 2022	1
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30 , 2023 and 2022	2
	Consolidated Statements of Stockholders’ Deficit for the three and six months ended June 30, 2023 and 2022	3
	Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	4
	Notes to the Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	30
ITEM 4.	CONTROLS AND PROCEDURES	31
PART II.	OTHER INFORMATION	32
ITEM 1.	LEGAL PROCEEDINGS	32
ITEM 1A.	RISK FACTORS	32
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	32
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	32
ITEM 4.	MINE SAFETY DISCLOSURES	32
ITEM 5.	OTHER INFORMATION	32
ITEM 6.	EXHIBITS	33
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 and our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2023. 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;

•the impact of an economic recession or periods of increased inflation, and any reductions to household spending on the types of discretionary entertainment we offer;

•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 on Form 10-K filed with the SEC on February 28, 2023. 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 par value)


	June 30, 2023		December 31, 2022
ASSETS	(Unaudited)
Current assets
Cash and cash equivalents	$	955.1	$	768.7

Restricted cash	2.0		1.7
Accounts receivable	159.8		141.1
Prepaid expenses and other current assets	108.1		113.4
Total current assets	1,225.0		1,024.9
Property and equipment, net	112.9		125.7
Operating lease right-of-use assets	108.2		104.2
Intangible assets other than goodwill, net	313.6		354.0
Goodwill	813.2		811.2
Deferred tax assets, net	60.8		68.3
Investments in unconsolidated entities	54.1		52.6
Other non-current assets	157.4		156.7
Total assets	$	2,845.2	$	2,697.6

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Current maturities of long-term debt	$	11.7	$	12.4
Accounts payable	41.3		50.7
Operating lease liabilities, current	17.3		13.5
Accrued expenses and other current liabilities	340.3		385.2
Total current liabilities	410.6		461.8
Long-term debt	2,405.8		2,411.2

Other long-term liabilities, including employee related benefits	245.4		252.1
Operating lease liabilities, long-term	94.9		94.5
Deferred tax liabilities	33.4		46.6
Total liabilities	3,190.1		3,266.2
Commitments and contingencies (Note 7)
Stockholders' equity (deficit)
Common stock of $0.01 par value; 1,600.0 shares authorized; 366.3 and 363.6 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	4.1		4.1
Treasury stock at cost (51.8 shares at both June 30, 2023 and December 31, 2022)	(603.5)		(603.5)
Additional paid-in capital	1,209.8		1,155.8
Accumulated other comprehensive income	27.5		17.6
Accumulated deficit	(982.8)		(1,142.6)
Total stockholders' deficit	(344.9)		(568.6)
Total liabilities and stockholders’ deficit	$	2,845.2	$	2,697.6

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 June 30,				Six months ended June 30,
	2023		2022		2023		2022
Revenues	$	642.8	$	659.6	$	1,299.0	$	1,336.5
Costs and expenses
Cost of revenue	188.0		186.1		373.7		373.0
Research and development	100.3		125.2		202.7		237.9
Sales and marketing	141.2		151.8		284.9		331.5
General and administrative	74.1		105.2		146.1		182.4

Total costs and expenses	503.6		568.3		1,007.4		1,124.8
Income from operations	139.2		91.3		291.6		211.7
Interest and other, net	23.1		22.4		51.7		49.9
Income before income taxes	116.1		68.9		239.9		161.8
Provision for income taxes	40.4		32.5		80.1		42.2
Net income	75.7		36.4		159.8		119.6
Other comprehensive income (loss)
Foreign currency translation	(0.2)		(10.0)		2.9		(13.3)
Change in fair value of derivatives	14.8		(5.9)		7.0		12.8
Total other comprehensive income (loss)	14.6		(15.9)		9.9		(0.5)
Comprehensive income	$	90.3	$	20.5	$	169.7	$	119.1

Net income per share attributable to common stockholders, basic	$	0.21	$	0.09	$	0.44	$	0.29
Net income per share attributable to common stockholders, diluted	$	0.21	$	0.09	$	0.44	$	0.29
Weighted-average shares used in computing net income per share attributable to common stockholders, basic	365.9		412.4		365.3		412.2
Weighted-average shares used in computing net income per share attributable to common stockholders, diluted	366.4		412.8		365.8		412.8

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		Treasury stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings (Accumulated deficit)		Total stockholders' equity (deficit)
Balances at January 1, 2023	363.6	$	4.1	$	(603.5)	$	1,155.8	$	17.6	$	(1,142.6)	$	(568.6)
Net income	—	—		—		—		—		84.1		84.1
Stock-based compensation	—	—		—		29.8		—		—		29.8
Issuance of shares upon vesting of RSUs and PSUs	2.0	*		—		(*)		—		—		—
Income tax withholding related to vesting of restricted stock units and other	—	—		—		(1.3)		—		—		(1.3)
Other comprehensive loss	—	—		—		—		(4.7)		—		(4.7)
Balances at March 31, 2023	365.6	4.1		(603.5)		1,184.3		12.9		(1,058.5)		(460.7)
Net income	—	—		—		—		—		75.7		75.7
Stock-based compensation	—	—		—		26.1		—		—		26.1
Issuance of shares upon vesting of RSUs	0.7	*		—		(*)		—		—		—
Income tax withholding related to vesting of restricted stock units and other	—	—		—		(0.6)		—		—		(0.6)
Other comprehensive loss	—	—		—		—		14.6		—		14.6
Balances at June 30, 2023	366.3	$	4.1	$	(603.5)	$	1,209.8	$	27.5	$	(982.8)	$	(344.9)


	Share capital
	Shares	Amount		Additional paid-in capital		Accumulated other comprehensive income		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)
Net income	—	—		—		—		36.4		36.4
Share-based compensation	—	—		36.1		—		—		36.1
Issuance of shares upon vesting of RSUs	0.2	*		(*)		—		—		—
Income tax withholding related to vesting of restricted stock units and other	—	—		(0.7)		—		—		(0.7)
Other comprehensive income	—	—		—		(15.9)		—		(15.9)
Balances at June 30, 2022	412.4	$	4.1	$	1,107.4	$	2.7	$	(1,298.3)	$	(184.1)

_______

* Represents an amount less than 0.1 or $0.1

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

-3-

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Six months ended June 30,
	2023		2022
Cash flows from operating activities
Net income	$	159.8	$	119.6
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	22.1		22.0
Amortization and impairment of intangible assets	65.2		60.1

Stock-based compensation	54.5		75.2
Amortization of loan discount	3.4		3.9
Change in contingent consideration	—		(9.0)
Change in deferred taxes, net	(7.8)		(8.3)
Loss from foreign currency	(3.1)		9.4
Non-cash lease expenses (income)	—		(6.8)

Changes in operating assets and liabilities:
Accounts receivable	(18.4)		13.5
Prepaid expenses and other current and non-current assets	16.2		(32.6)
Accounts payable	(9.4)		4.1
Accrued expenses and other current and non-current liabilities	(55.0)		(10.0)
Net cash provided by operating activities	227.5		241.1
Cash flows from investing activities
Purchase of property and equipment	(9.2)		(29.5)
Capitalization of internal use software costs	(18.6)		(23.7)
Purchase of software for internal use	(4.1)		(4.0)
Short-term bank deposits	—		24.8
Payments for business combination, net of cash acquired	—

SEC Form 10-Q filed by Playtika Holding Corp.