Playtika Holding Corp.
Playtika Holding Corp.
02/26/2026 | Press release | Distributed by Public on 02/26/2026 07:37
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this annual report on Form 10-K. This discussion and analysis contains forward-looking statements that involve certain risks and uncertainties. Our actual results could differ materially from those discussed in these statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this annual report on Form 10-K, particularly under the "Risk Factors" and "Special Note Regarding Forward-Looking Statements" sections.
Overview
We are one of the world's leading developers of mobile games creating fun, innovative experiences that entertain and engage our users. We have built best-in-class live game operations services and proprietary technology tools to support our portfolio of games which enable us to drive strong user engagement and monetization. Our games are free-to-play, and we are experts in providing novel, curated in-game content and offers to our users, at optimal points in their game journeys. Our players love our games because they are fun, creative, engaging, and kept fresh through a release of new features that are customized for different player segments. As a result, we have retained paying users over long periods of time.
Key Factors Affecting Our Business
There are a number of factors that affect the performance of our business, and the comparability of our results from period to period, including:
•Conversion of players into paying users and ongoing monetization. While our games are free-to-play, we generate substantially all of our revenues from players' purchases of in-game virtual items. Our financial performance is dependent, in part, on our ability to convert active players into paying players and sustainably grow user spend over the long term. Our players' willingness to consistently make in-app purchases is impacted by our ability to deliver engaging content and personalized user experiences.
•Acquisitions of games and new technology. We have grown and will continue to evaluate opportunities to further expand our business by acquiring games and game studios that have broad appeal and potential for scalable leadership in our core genres, enhance our growth profile, or that we believe can benefit from our live operations services, our design experience, and our scale. When we acquire games and studios, we focus on providing existing audiences with proven content and applying live operations to create a better game experience for users.
•Offering of new games and release of new content, offers, and features. Our key revenue drivers include improving the content, offers, and features in our existing games and the acquisition of new games. In order to enhance the content, offers, and features in our existing games and to develop or acquire new games, we must invest a significant amount of our technological and creative resources, ensuring that we support an effective cadence of novel content creation that drives conversion and continued monetization. These expenditures generally occur months in advance of the release of new content or the launch or acquisition of a new game.
•User acquisition. We believe that we will be able to continue to grow our user base, including through traditional marketing and advertising, informal marketing campaigns, and cross-promoting between our games, including new games we develop or acquire. We intend to continue to seek new opportunities to enhance and refine these marketing efforts to acquire new users, including identifying potential technologies to enhance our marketing and advertising capabilities.
Components of our Results of Operations
Revenues
We primarily derive revenue from the sale of virtual items associated with online games.
We distribute our games to the end customer through various web and mobile platforms, such as Apple, Google and other web and mobile platforms plus our own Direct-to-Consumer platforms. Through these platforms, users can download our free-to-play games and can purchase virtual items to enhance their game-playing experience. Players can purchase virtual items through various widely accepted payment methods offered in the games. Payments from players for virtual items are non-refundable and relate to non-cancellable contracts that specify our obligations and cannot be redeemed for cash nor exchanged for anything other than virtual items within our games.
Our games are played on various third-party platforms that allow customers to choose to make purchases through our Direct-to-Consumer platform or through the third-party platform. If paid through the third-part platform, the platform providers collect proceeds from our customers and pay us an amount after deducting platform fees. For purchases made through both the third-party and Direct-to-Consumer platforms, we are primarily responsible for fulfilling the virtual items, have the control over the content and functionality of games and have the discretion to establish the virtual items' prices. Therefore, we are the principal and, accordingly revenues are recorded on a gross basis. Payment processing fees paid to platform providers are recorded within cost of revenue.
Cost of revenue
Cost of revenue includes payment processing fees, customer support, hosting fees, royalties and depreciation and amortization expenses associated with assets directly involved in the generation of revenues, including servers and internal use software. Payment processing fees and other related expenses for in-app purchases made through our Direct-to-Consumer platforms are typically 3-4%. If our players choose to pay through a third-party platform, platform providers (such as Apple and Google) charge a transactional payment processing fee of 30% to accept payments from our players for such purchases. We generally expect cost of revenue to fluctuate proportionately with revenues.
Research and development
Research and development consists of salaries, bonuses, benefits, other compensation, including stock-based compensation and allocated overhead, related to engineering, research, and development. In addition, research and development expenses include depreciation and amortization expenses associated with assets associated with our research and development efforts. We expect that research and development expenses specifically associated with new game development will fluctuate over time.
Sales and marketing
Sales and marketing consists of costs related to advertising and user acquisition, including costs related to salaries, bonuses, benefits, and other compensation, including stock-based compensation and allocated overhead. In addition, sales and marketing expenses include depreciation and amortization expenses associated with assets related to our sales and marketing efforts. We plan to continue to invest in sales and marketing to retain and acquire users. However, sales and marketing expenses may fluctuate as a percentage of revenues depending on the timing and efficiency of our marketing efforts.
General and administrative
General and administrative expenses consist of salaries, bonuses, benefits, and other compensation, including stock-based compensation, for all our corporate support functional areas, including our senior leadership. In addition, general and administrative expenses include outsourced professional services such as consulting, legal and accounting services, taxes and dues, insurance premiums, and costs associated with maintaining our property and infrastructure. General and administrative expenses also include depreciation and amortization expenses associated with assets not directly attributable to any of the
expense categories above. We also record adjustments to contingent consideration payable recorded after the acquisition date, and legal settlement expenses, as components of general and administrative expense.
Impairment charges
Impairment charges in 2025 reflect impairment of internal use software and an operating lease right-of-use asset, as well as the impairment of a certain investment in unconsolidated affiliate based upon poor performance of that investment leading to significant uncertainty regard its future viability.
Impairment charges in 2024 reflect impairments related to the Redecor game title based upon lower than expected performance of that title, and related to certain investments in unconsolidated affiliates based upon poor performance of those investments leading to significant uncertainty regarding their future viability. We hold certain equity investments in various unconsolidated entities that fall within the scope of ASC 321, Investments - Equity Securities. As permitted within that guidance, we have elected to account for these investments at cost less impairment, adjusted for changes in fair value from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates. Impairment charges in 2023 reflect charges recorded for the excess of the carrying amount over estimated fair value of our identifiable intangible assets.
Interest and other, net
Our interest expense includes interest incurred under our Credit Agreement and amortization of deferred financing costs. We expect to continue to incur interest expense under our Credit Agreement, although such interest expense will fluctuate based upon the underlying variable interest rates. We entered into multiple interest rate swap agreements in March 2021 and in January 2023, accumulating to a total notional value of $1.0 billion, reducing our overall exposure to variable interest rates.
Interest income consists of interest earned on cash, cash equivalents and short-term investments.
Foreign currency translation adjustments, net, include gains and losses resulting from remeasurement of certain non-USD denominated balance sheet items.
Provision for income taxes
The provision for income taxes consists of current income taxes in the various jurisdictions where we are subject to taxation, primarily the United States, the United Kingdom, Israel, Germany, and Austria, as well as deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities in each of these jurisdictions for financial reporting purposes and the amounts used for income tax purposes. Under current U.S. tax law, the federal statutory tax rate applicable to corporations is 21%. Our effective tax rate can fluctuate based on various factors, including our financial results and the geographic mix to which they relate, the applicability of special tax regimes, changes in our business or operations, examination-related developments and uncertain tax positions, and changes in tax law.
Net income
We calculate net income as revenue minus cost of revenues, research and development, sales and marketing, general and administrative expenses, interest and taxes.
Results of Operations
The tables below show the results of our key financial and operating metrics for the periods indicated.
We measure the performance of our business by using several key financial metrics, including revenue and operating income, and operating metrics, including Daily Active Users, Average Revenue per Daily Active User, Monthly Active Users, Daily Paying Users, and Average Daily Payer Conversion. These operating metrics help our management to understand and measure the engagement levels of our players, the size of our audience and our reach. See "Glossary of Terms" for additional information of these measures.
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Year ended December 31,
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| (in millions, except percentages, Average DPUs, and ARPDAU) | 2025 | 2024 | 2023 | ||||||||||||||
| Revenues | $ | 2,755.4 | $ | 2,549.3 | $ | 2,567.0 | |||||||||||
| Total cost and expenses | $ | 2,760.5 | $ | 2,157.7 | $ | 2,065.4 | |||||||||||
| Operating income (loss) | $ | (5.1) | $ | 391.6 | $ | 501.6 | |||||||||||
| Net income (loss) | $ | (206.4) | $ | 162.2 | $ | 235.0 | |||||||||||
| Adjusted EBITDA | $ | 753.2 | $ | 757.7 | $ | 832.2 | |||||||||||
| Non-financial performance metrics | |||||||||||||||||
| Average DAUs | 8.5 | 8.1 | 8.7 | ||||||||||||||
| Average DPUs (in thousands) | 370 | 312 | 310 | ||||||||||||||
| Average Daily Payer Conversion | 4.4 | % | 3.8 | % | 3.6 | % | |||||||||||
| ARPDAU | $ | 0.89 | $ | 0.86 | $ | 0.81 | |||||||||||
| Average MAUs | 28.3 | 29.0 | 29.4 | ||||||||||||||
Comparison of the year ended December 31, 2025 versus the year ended December 31, 2024
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Year ended December 31,
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| (in millions) | 2025 | 2024 | |||||||||
| Revenues earned through third-party platforms | $ | 1,940.9 | $ | 1,855.1 | |||||||
| Revenues earned through Direct-to-Consumer platforms | 814.5 | 694.2 | |||||||||
| Revenues | $ | 2,755.4 | $ | 2,549.3 | |||||||
| Cost of revenue | $ | 758.5 | $ | 692.1 | |||||||
| Research and development expenses | 426.7 | 403.0 | |||||||||
| Sales and marketing expenses | 949.8 | 705.0 | |||||||||
| General and administrative expenses | 619.1 | 288.7 | |||||||||
| Impairment charges | 6.4 | 68.9 | |||||||||
| Total costs and expenses | $ | 2,760.5 | $ | 2,157.7 | |||||||
Revenues
Revenues for the year ended December 31, 2025 increased by $206.1 million when compared with 2024, primarily due to a full year of revenues from our 2024 acquisition of SuperPlay Ltd and growth in several casual games. The increases were partially offset primarily by a decline inSlotomania.
Cost of revenue
Cost of revenue for the year ended December 31, 2025 increased by $66.4 million when compared with 2024. The increase was primarily driven by a $20.5 million increase in platform fees due to higher revenues, partially offset by lower fees paid through Direct-to-Consumer platform increased sales, a $26.8 million increase in depreciation and amortization related to a full year of expense for SuperPlay, and an $18.0 million increase in royalty expense related to SuperPlay.
Research and development expenses
Research and development expenses for the year ended December 31, 2025 increased by $23.7 million when compared with the year ended December 31, 2024. Research and development expenses primarily increased due to a full year of expenses for our 2024 acquisition of SuperPlay including compensation and associated costs, outsourced services and server hosting costs, offset by decreases in compensation and associated costs due to workforce reduction and in stock-based compensation as awards became fully vested.
Sales and marketing expenses
Sales and marketing expenses for the year ended December 31, 2025 increased by $244.8 million when compared with the year ended December 31, 2024. The increase was primarily due to a net increase in media expenses of approximately $197.0 million relating to our 2024 acquisition of SuperPlay, offset by decreases in other gaming titles. Depreciation and amortization expense also increased approximately $39.4 million primarily related to a full year of expense for our 2024 acquisition of SuperPlay.
General and administrative expenses
General and administrative expenses for the year ended December 31, 2025 increased by $330.4 million when compared with the year ended December 31, 2024. The increase is primarily due to a net adjustment $398.6 million to contingent consideration related to the SuperPlay and InnPlay Labs acquisitions. The increase was offset by a decrease of approximately $74.5 million in appreciation and retention expense related to the conclusion of the Retention Plan and a decrease in transaction related professional fees primarily related to the SuperPlay acquisition.
Impairment charges
During the year ended December 31, 2025, we recorded impairment charges of $6.4 million related to certain equity investments due to poor performance leading to significant uncertainty regarding their future viability, impairment of internal use software and impairment of an operating lease right-of-use asset.
Comparison of the year ended December 31, 2024 versus the year ended December 31, 2023
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Year ended December 31,
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| (in millions) | 2024 | 2023 | |||||||||
| Revenues earned through third-party platforms | $ | 1,855.1 | $ | 1,927.6 | |||||||
| Revenues earned through Direct-to-Consumer platforms | 694.2 | 639.4 | |||||||||
| Revenues | $ | 2,549.3 | $ | 2,567.0 | |||||||
| Cost of revenue | $ | 692.1 | $ | 718.5 | |||||||
| Research and development expenses | 403.0 | 406.4 | |||||||||
| Sales and marketing expenses | 705.0 | 585.7 | |||||||||
| General and administrative expenses | 288.7 | 303.5 | |||||||||
| Impairment charges | 68.9 | 51.3 | |||||||||
| Total costs and expenses | $ | 2,157.7 | $ | 2,065.4 | |||||||
Revenues
Revenues for the year ended December 31, 2024 decreased by $17.7 million when compared with the year ended December 31, 2023. Social casino revenues decreased approximately $120 million that, along with revenue decreases in several of our casual games, were largely due to reduced monetization. These revenue declines were partially offset by our acquisition of SuperPlay Ltd in 2024 and a full year of revenues from our 2023 acquisitions of Youda Games and InnPlay Labs. The increase in revenues generated from Direct-to-Consumer platforms as a percentage of total revenues resulted from marketing activities for the games offered through these platforms.
Cost of revenue
Cost of revenue for the year ended December 31, 2024 decreased by $26.4 million when compared with the year ended December 31, 2023. The decrease in cost of revenue includes an approximate $23.8 million decrease in platform fees associated with reduced revenues and a greater percentage of revenue generated from our Direct-to-Consumer platforms, as well as a $2.4 million decrease in site costs.
Research and development expenses
Research and development expenses for the year ended December 31, 2024 decreased by $3.4 million when compared with the year ended December 31, 2023. Research and development expenses were primarily impacted by a net decrease of approximate $22.4 million in payroll and associated payroll costs, including stock based compensation, offset by merit increases, a shift of our workforce composition towards higher-cost locations, and an increase in the costs incurred in connection with severance. In addition, research and development related outsourcing costs increased from 2023 to 2024 by approximately $9.3 million and the amount of expense capitalized increased by approximately $6.3 million for new and continuing projects.
Sales and marketing expenses
Sales and marketing expenses for the year ended December 31, 2024 increased by $119.3 million when compared with the year ended December 31, 2023. The increase in sales and marketing expenses was primarily due to increased media expenses of approximately $112.1 million relating predominately to our 2024 acquisition of SuperPlay, a full year of expenses for our 2023 acquisition of Youda Games, and increased spend in our Bingo Blitzand Slotomaniagames. Depreciation and amortization expense also increased approximately $9.4 million, which was partially offset by a net decrease in compensation and associated costs.
General and administrative expenses
General and administrative expenses for the year ended December 31, 2024 decreased by $14.8 million when compared with the year ended December 31, 2023. The decrease is primarily due to a net $11.1 million adjustment to contingent consideration related to the SuperPlay, InnPlay Labs, and Youda Games acquisitions, as well as a decrease of approximately $14.2 million in compensation and associated costs. These decreases were offset by an increase of approximately $13.4 million of transaction costs primarily related to the SuperPlay acquisition.
Impairment charges
During the year ended December 31, 2024, we recorded an impairment charge of $29.9 million related to the Redecor game title based upon continued lower than expected performance of that title, and an impairment charge of $36.3 million related to certain investments in unconsolidated affiliates based upon poor performance of those investments leading to significant uncertainty regarding their future viability.
Other Factors Affecting Net Income
| Year ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Interest expense | $ | 143.3 | $ | 155.2 | $ | 154.2 | |||||||||||
| Interest income | (25.3) | (56.1) | (43.9) | ||||||||||||||
| Foreign currency exchange, net | 49.5 | 11.6 | (1.3) | ||||||||||||||
| Other | 0.3 | 0.4 | 0.5 | ||||||||||||||
| Taxes on income | 33.5 | 118.3 | 157.1 | ||||||||||||||
Interest expense
Interest expense in 2025, 2024 and 2023 is primarily related to amounts borrowed under the Credit Facilities and senior notes.
The decrease in interest expense in 2025 when compared with 2024 is primarily related to lower variable rate debt balance and lower average interest rates paid on that balance. The increase in interest expense in 2024 when compared to 2023 is primarily due to slightly higher average interest rates.
Interest income
Interest income in 2025, 2024 and 2023 is primarily related to interest earned on cash, cash equivalents and short-term investments.
The decrease in interest income for 2025 when compared to 2024 is driven primarily by lower average balances held in interest bearing cash, cash equivalents and short-term investments throughout 2025, primarily reflecting the use of cash in the SuperPlay acquisition. The increase in interest income for 2024 when compared to 2023 is primarily due to higher interest rates, more active investments of excess cash in income-bearing investments, and from interest earned on excess taxes paid in Israel in prior years.
Taxes on income
The provision for income tax was $33.5 million for the year ended December 31, 2025 and the effective income tax rate was (19.3)%. The difference between the effective income tax rate and the U.S. statutory tax rate is primarily due to adverse impacts of certain items including changes in valuation of Contingent Consideration and GILTI inclusion. The full rate reconciliation is available in Note 22, Income Taxes.
The provision for income tax was $118.3 million for the year ended December 31, 2024 and the effective income tax rate was 42.2%. The difference between the effective income tax rate and the U.S. statutory tax rate was primarily due to adverse impacts of certain items including tax rates in foreign jurisdictions and the relative amounts of income earned in those jurisdictions, unrecognized tax benefits, GILTI inclusion, and valuation allowances. These adverse impacts are partially offset by the favorable impact of the Israeli Preferred Technology Enterprise regime. The full rate reconciliation is available in Note 22, Income Taxes.
The provision for income tax was $157.1 million for the year ended December 31, 2023, and the effective income tax rate was 40.1%. The difference between the effective income tax rate and the U.S. statutory tax rate was primarily due to adverse impacts of certain items such as tax rates in foreign jurisdictions and the relative amounts of income earned in those jurisdictions, unrecognized tax benefits, and GILTI inclusion. These adverse impacts are partially offset by the recurring favorable impact of the Israeli Preferred Technology Enterprises regime. The full rate reconciliation is available in Note 22, Income Taxes.
Net income
Upon aggregating the components of our results of operations above, net income for the year ended December 31, 2025 decreased by $368.6 million when compared with 2024. Net income for the year ended December 31, 2024 decreased by $72.8 million when compared to 2023.
Reconciliation of Net income (loss) to Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure and should not be construed as an alternative to net income as an indicator of operating performance, nor as an alternative to cash flow provided by operating activities as a measure of liquidity, or any other performance measure in each case as determined in accordance with GAAP.
Below is a reconciliation of Adjusted EBITDA to net income, the closest GAAP financial measure. Our Credit Agreement defines Adjusted EBITDA as net income before (i) interest expense, (ii) interest income, (iii) provision for income taxes, (iv) depreciation and amortization expense, (v) impairment charges, (vi) stock-based compensation, (vii) contingent consideration, (viii) acquisition and related expenses, and (ix) certain other items. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by revenues.
Adjusted EBITDA and Adjusted EBITDA Margin as calculated herein may not be comparable to similarly titled measures reported by other companies within the industry and are not determined in accordance with GAAP. Our presentation of Adjusted EBITDA and Adjusted EBITDA Margin should not be construed as an inference that our future results will be unaffected by unusual or unexpected items.
| Year ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Net income (loss) | $ | (206.4) | $ | 162.2 | $ | 235.0 | |||||||||||
| Provision for income taxes | 33.5 | 118.3 | 157.1 | ||||||||||||||
| Interest and other, net | 167.8 | 111.1 | 109.5 | ||||||||||||||
| Depreciation and amortization | 234.8 | 165.7 | 158.0 | ||||||||||||||
| EBITDA | 229.7 | 557.3 | 659.6 | ||||||||||||||
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Stock-based compensation(1)
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82.5 | 99.2 | 110.0 | ||||||||||||||
| Impairment charges | 6.4 | 68.9 | 51.3 | ||||||||||||||
| Changes in estimated value of contingent consideration | 398.8 | (9.8) | 1.4 | ||||||||||||||
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Acquisition and related expenses(2)
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25.0 | 19.7 | 6.5 | ||||||||||||||
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Other items(3)
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10.8 | 22.4 | 3.4 | ||||||||||||||
| Adjusted EBITDA | $ | 753.2 | $ | 757.7 | $ | 832.2 | |||||||||||
| Net income margin | (7.5) | % | 6.4 | % | 9.2 | % | |||||||||||
| Adjusted EBITDA margin | 27.3 | % | 29.7 | % | 32.4 | % | |||||||||||
__________
(1)Reflects stock-based compensation expense related to the issuance of equity awards to our employees and Directors.
(2)Includes costs incurred to evaluate and pursue acquisition activities as well as costs incurred by the Company in connection with the evaluation of strategic alternatives.
(3)Amounts for the year ended December 31, 2025 consists of $9.8 million and $2.0 million incurred by the Company related to restructuring activities and severance, respectively, and $1.1 million of reimbursement of a tax assessment paid under protest in 2023. The amount for the year ended December 31, 2024 consists primarily of $14.5 million and $6.9 million incurred by the Company related to severance and restructuring activities, respectively. The amount for the year ended December 31, 2023 consists primarily of $1.8 million incurred by the Company for severance and $1.0 million for a tax assessment paid under protest.
Liquidity and Capital Resources
Capital spending
We incur capital expenditures in the normal course of business and perform ongoing enhancements and updates to our social and mobile games to maintain their quality standards. Cash used for capital expenditures in the normal course of business is typically made available from cash flows generated by operating activities. We may also pursue acquisition opportunities for additional businesses or social or mobile games that meet our strategic and return on investment criteria. Capital needs are evaluated on an individual opportunity basis and may require significant capital commitments.
Liquidity
Our primary sources of liquidity are the cash flows generated from our operations, currently available unrestricted cash and cash equivalents, short-term highly liquid investments, and borrowings under our Credit Facility and Revolver. Our cash and cash equivalents and short-term investments totaled $820.2 million and $565.8 million at December 31, 2025 and December 31, 2024, respectively. On April 23, 2025, the Company entered into a Fourth Amendment (the "Fourth Amendment") to the Credit Agreement which, among other things, decreased the aggregate principal amount of the Revolving Credit Facility from $600 million to $550 million. On February 16, 2026, the Company entered into a Fifth Amendment (the "Fifth Amendment") to the Credit Agreement which, among other things, extended the maturity of the Revolving Credit Facility to March 6, 2027.
As of December 31, 2025 and 2024, we had $550 million and $600 million, respectively, in additional borrowing capacity pursuant to our Revolving Credit Facility. Payments of short-term debt obligations, dividends to shareholders and other
commitments are expected to be made from cash on the balance sheet and operating cash flows. Long-term obligations are expected to be paid through operating cash flows, refinancing of our existing credit facilities or additional debt issuances.
Our restricted cash totaled $1.5 million and $1.9 million at December 31, 2025 and December 31, 2024, respectively. Restricted cash primarily consists of deposits to secure obligations under our operating lease agreements and to secure company-issued credit cards. The classification of restricted cash as current and long-term is dependent upon the intended use of each particular reserve.
In 2024 and 2025, our Board of Directors elected to declare quarterly cash dividends of $0.10 per share of the Company's outstanding common stock. We will maintain a focus on financial discipline through a balanced approach of evaluation of M&A opportunities and stockholder dividends while maintaining adequate capital requirements for ongoing operations. The Board will continue to evaluate the economic environment, our cash needs, optimal uses of cash, and other applicable factors, and may elect to make changes to the payment of dividends (if any) in future periods.
Our ability to fund our operations, pay our debt obligations and fund planned capital expenditures depends, in part, upon economic and other factors that are beyond our control, and disruptions in capital markets could impact our ability to secure additional funds through financing activities. We believe that our cash and cash equivalents balance, short-term investments, restricted cash, and cash flows from operations will be sufficient to meet our normal operating requirements during the next 12 months and the foreseeable future and to fund capital expenditures.
Cash flows
The following tables present a summary of our cash flows for the periods indicated (in millions):
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net cash flows provided by operating activities | $ | 567.7 | $ | 490.1 | $ | 515.6 | |||||||||||
| Net cash flows used in investing activities | (221.7) | (782.1) | (240.2) | ||||||||||||||
| Net cash flows used in financing activities | (230.0) | (167.1) | (18.2) | ||||||||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | 2.0 | (4.9) | 4.1 | ||||||||||||||
| Net change in cash, cash equivalents and restricted cash | $ | 118.0 | $ | (464.0) | $ | 261.3 | |||||||||||
Operating activities
Net cash flows provided by operating activities for the year ended December 31, 2025 increased $77.6 million when compared with the year ended December 31, 2024. Net cash flows provided by operating activities for the year ended December 31, 2024 decreased $25.5 million when compared with the year ended December 31, 2023.
Net cash flow provided by operating activities for each period primarily consisted of net income generated during the period, exclusive of non-cash expenses such as depreciation, amortization and stock-based compensation, and changes in the fair value of contingent consideration payable, with changes in working capital impacted by the payment of annual and incentive bonuses during the first quarter and other normal timing differences.
Investing activities
Net cash flows used in investing activities for the year ended December 31, 2025 decreased $560.4 million when compared to the year ended December 31, 2024 mainly due to $686.9 million of consideration paid (net of cash acquired) for the 2024 acquisition of SuperPlay Ltd offset by an additional $79.6 million paid for short-term investments in 2025.
Net cash flows used in investing activities for the year ended December 31, 2024 increased $541.9 million when compared to the year ended December 31, 2023, mainly due to $686.9 million of consideration paid (net of cash acquired) for the 2024 acquisitions of SuperPlay Ltd offset by $159.6 million for the 2023 acquisitions of InnPlay Labs, and Youda Games.
Financing activities
Net cash flows used in financing activities for the year ended December 31, 2025, was $230.0 million primarily related to dividends paid, earnout payments related to acquisitions, the repurchase of shares and repayments on bank borrowings. Net cash flows used in financing activities of $167.1 million for the year ended December 31, 2024 primarily related to dividends paid, earnout payments related to acquisitions, and repayments on bank borrowings. Net cash flows used in financing activities of $18.2 million for the year ended December 31, 2023, primarily related to repayments on bank borrowings.
Capital resources
On December 10, 2019, we entered into $2,750 million of Credit Facilities, consisting of a $250 million Revolving Credit Facility, and a $2,500 million first lien term loan (the "Old Term Loan"). The Credit Facilities were provided pursuant to the Credit Agreement, dated as of December 10, 2019, by and among Playtika, the lenders party thereto, and UBS AG, Stamford Branch (as successor in interest to Credit Suisse, AG, Cayman Islands Branch), as administrative agent (in such capacity, the "Administrative Agent") and collateral agent (in such capacity, the "Collateral Agent"). Proceeds borrowed under the Credit Facilities on the closing date were used to pay off the outstanding balance on our prior debt facility. On June 15, 2020, we increased the capacity of the Revolving Credit Facility to $350 million. On January 15, 2021, we increased the borrowing capacity of the Revolving Credit Facility from $350 million to $550 million.
On March 11, 2021, the Credit Agreement was amended pursuant to an Incremental Assumption Agreement No. 3 and Second Amendment to Credit Agreement (the "Second Amendment").
The Second Amendment, among other things, effected a refinancing of Old Term Loan with a new $1.9 billion senior secured first lien term loan borrowed under the Credit Agreement (the "New Term Loan"), increased the Revolving Credit Facility to $600 million and extended the maturity of the Revolving Credit Facility to March 11, 2026. The New Term Loan matures on March 11, 2028 and requires scheduled quarterly principal payments in amounts equal to 0.25% of the original aggregate principal amount of the New Term Loan, with the balance due at maturity.
On June 19, 2023, the Company amended the Credit Agreement pursuant to a Third Amendment to Credit Agreement (the "Third Amendment"). The Third Amendment amended the Credit Agreement to bear interest or incur fees and other amounts denominated in Dollars to be based on the Adjusted Term Secured Overnight Financing Rate ("SOFR") plus an applicable spread adjustment, rather than the previously permitted Adjusted Eurocurrency Rate, starting in the third quarter of 2023. The amendment did not have an impact on the Company's consolidated financial statements or the effectiveness of the Company's interest rate swap agreements.
On April 23, 2025, the Company entered into a Fourth Amendment (the "Fourth Amendment") to the Credit Agreement defined in Note 13, Debt, which, among other things, (a) amended the Pricing Grid (as defined in the Credit Agreement) for the Company's revolving credit facility under the Credit Agreement (the "Revolving Credit Facility"), and (b) decreased the aggregate principal amount of the Revolving Credit Facility from $600 million to $550 million. The Fourth Amendment was also intended to extend the maturity of the Revolving Credit Facility to September 11, 2027, subject to the Credit Agreement being filed and registered with the National Development and Reform Commission of the People's Republic of China (the "NDRC") unless the NDRC states in writing that such registration is not required. This filing requirement with the NDRC is required of the Company's controlling shareholder due to the fact that the controlling shareholder is controlled by a citizen of the People's Republic of China. On December 9, 2025, the Company's controlling shareholder elected to withdraw its filing of the Credit Agreement with the NDRC and, as a result, the maturity of the Revolving Credit Facility was not extended under the Fourth Amendment. On February 16, 2026, the Company entered into a Fifth Amendment (the "Fifth Amendment") to the Credit Agreement which, among other things, extended the maturity of the Revolving Credit Facility to March 6, 2027.
Also on March 11, 2021, we issued $600.0 million aggregate principal amount of our 4.250% senior notes due 2029 (the "Notes"). The Notes mature on March 15, 2029. Interest on the Notes will accrue at a rate of 4.250% per annum. Interest on the Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year, commencing on September 15, 2021.
Significant terms of the Credit Facilities, the New Term Loan and the Notes, including balances outstanding, interest and fees, mandatory and voluntary prepayment requirements, collateral and guarantors and restrictive covenants are detailed in Note 13, Debt, to the financial statements included elsewhere in this filing.
Critical accounting policies and estimates
We prepare our financial statements in conformity with U.S. GAAP.
Certain accounting policies require that we apply significant judgment in determining the appropriate assumptions for calculating financial estimates. By their nature, these judgments will be subject to an inherent degree of uncertainty. Our judgments are based upon our management's historical experience, terms of existing contracts, observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate.
We consider accounting estimates to be critical accounting policies when:
•the estimates involve matters that are highly uncertain at the time the accounting estimates are made; and
•different estimates or changes to estimates could have a material impact on the reported financial positions, changes in financial position or results of operations.
When more than one accounting principle, or method of its application, is generally accepted, we select the principle or method that we consider to be the most appropriate when given the specific circumstances. Application of these accounting principles requires us to make estimates about the future resolution of existing uncertainties. Due to the inherent uncertainty involving estimates, actual results reported in the future may differ from such estimates. For additional information on our significant accounting policies, please refer to Note 1, Organization and Summary of Significant Accounting Policies,to the financial statements included elsewhere in this filing.
Business combinations and related fair value measurements
We apply the provisions of ASC 805, Business Combinationsand allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed or incurred, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed or incurred, management makes significant estimates and assumptions, especially with respect to intangible assets.
Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology, acquired trademarks and the acquired user base from a market participant perspective, useful lives and discount rates.
We also apply the provisions of ASU 2021-08, Business Combinations (Topic 805)("ASU 2021-08") which requires that we recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers("ASC 606") and that at the acquisition date, we account for related revenue contracts in accordance with ASC 606 as if we had originated the contracts.
When business combinations include an earnout payment or contingent consideration that embodies an unconditional obligation for us to transfer assets on a specific agreed-upon date, that liability is measured at estimated fair value as of the acquisition date and as of each reporting date until the obligation is resolved. Significant estimates in valuing such liabilities include, but are not limited to, future financial models and discount rates.
Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Impairment of long-lived assets
Our long-lived assets to be held or used, including right-of-use ("ROU") assets, and identifiable intangible assets that are subject to amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, in accordance with ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets. We recognize impairment based on the difference between the estimated fair value of the asset and its carrying value. Fair value is generally estimated based on either quoted market prices, if available, or a discounted cash flow analysis.
Upon determination that the carrying value of a long-lived asset may not be recoverable based upon a comparison of aggregate undiscounted projected future cash flows to the carrying amount of the asset, an impairment charge is recorded for the excess of the carrying amount over estimated fair value. There is inherent uncertainty in our forecasts and projections used in any impairment analysis, and different assumptions and estimates could have lead to different impairment test results, and those results could have been materially different.
The preparation of cash flow projections for use in any impairment indicators test or fair value analysis requires management to make critical estimates, judgments and assumptions with regards to estimated future cash flows, as they are, by their nature, subjective and actual results may differ materially from such estimates. Cash flow estimates are unpredictable and inherently uncertain, since they are based on the current regulatory, political and economic climates, recent operating information and projections. Such estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, competition, events affecting various forms of travel and access to our properties, and other factors. If our estimates of future cash flows are not met or if there are changes in significant assumptions and judgments used in the estimation process, we may have to record impairment charges in the future. Further, unless an asset is entirely impaired, future estimates, judgments and assumptions may result in additional impairments in a later period.
Revenue recognition
We primarily derive revenues from the sale of virtual items associated with online games. We distribute our games to the end customer through various web and mobile platforms such as Apple, Google, and other web and mobile platforms. Through these platforms, users can download our free-to-play games and can purchase virtual currency which is redeemed in the game for virtual goods, or players can purchase virtual goods directly (collectively referred to as virtual items) to enhance their game-playing experience.
The initial download of the games does not create a contract under ASC 606, Revenue from Contracts with Customers,or ASC 606; however, the separate election by the player to make an in-application purchase satisfies the ASC 606 criterion for creating a contract.
Players can pay for their virtual item purchases through various widely accepted payment methods offered in the games. Payments from players for virtual items are required at the time of purchase, are non-refundable and relate to non-cancellable contracts that specify our obligations and cannot be redeemed for cash nor exchanged for anything other than virtual items within our games. The purchase price is a fixed amount which reflects the consideration that we expect to be entitled to receive in exchange for use of virtual items by our customers. The platform providers collect proceeds from the game players and remit the proceeds to us after deducting their respective platform fees.
We are primarily responsible for providing the virtual items, have control over the content and functionality of games and have the discretion to establish the virtual items' prices. Therefore, we are the principal and, accordingly revenues are recorded on a gross basis. Payment processing fees paid to platform providers are recorded within cost of revenue. Our performance obligation is to display the virtual items within the game over the estimated life of the paying player or until the virtual item is consumed in game play based upon the nature of the virtual item.
We categorize our virtual items as either consumable or durable. The substantial majority of our games sell only consumable virtual items. Consumable virtual items represent items that can be consumed by a specific player action and do not provide the player any continuing benefit following consumption. For the sale of consumable virtual items, we recognize revenues as the items are consumed (i.e. over time) which is usually up to one month. We have determined through a review of game play
behavior that players generally do not purchase additional virtual currency until their existing virtual currency balances have been substantially consumed. This review, performed on a game-by-game basis, includes an analysis of game players' historical play behavior, purchase behavior, and the amount of virtual currency outstanding. Based upon this analysis, we have estimated the rate at which virtual currency is consumed during game play within each game. Accordingly, revenues are recognized using a user-based revenue model using these estimated consumption rates. We monitor our analysis of customer play behavior on a quarterly basis.
Durable virtual items represent items that are accessible to the player over an extended period of time. We recognize revenues from the sale of durable virtual items ratably over the estimated average life of the paying player, which is estimated on a game-by-game basis and generally ranges from six months up to twelve months. We estimate the average life of the paying player based on historical paying player patterns and playing behaviors within each of the specific games that offer durable virtual items. We monitor our operational data and player patterns and re-assess our estimates on a quarterly basis.
Deferred revenues, which represent a contract liability, represent mostly unrecognized fees collected for virtual items which are not consumed at the balance sheets date, or for players that are still active in the games.
Sales and other taxes collected from customers on behalf of governmental authorities are accounted for on a net basis and are not included in revenues or operating expenses.
We also have relationships with certain advertising service providers for advertisements within our games and revenues from these advertising providers is generated through impressions, clickthroughs, banner ads and offers. We have determined that displaying the advertisements within the mobile games is identified as a single performance obligation. The transaction price in advertising arrangements is established by our advertising service providers and is generally the product of the number of advertising units delivered (e.g. impressions, offers completed, etc.) and the contractually agreed upon price per unit. Revenues from advertisements and offers are recognized at a point-in-time when the advertisements are displayed in the game or the offer has been completed by the user as the customer simultaneously receives and consumes the benefits provided from these services. We have determined that we are generally acting as an agent in our advertising arrangements as the advertising service providers maintain the relationship with the customers, control the pricing of the advertising such that we do not know the total price paid by the customer to the service providers, and control the advertising product through the time the advertisements are displayed in our games. Therefore, we recognize revenues related to these arrangements on a net basis.
Derivative instruments
Interest rate swap agreements
We use interest rate swap contracts to reduce our exposure to fluctuating interest rates associated with our variable rate debt, and to effectively increase the portion of debt upon which we pay a fixed interest rate. Our interest rate swap agreements are designated as cash flow hedges under ASC 815, Derivatives and Hedging("ASC 815"), involving the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional amount. These hedges are highly effective in offsetting changes in our future expected cash flows due to the fluctuation of our variable rate debt.
We monitor the effectiveness of our hedges on a quarterly basis, both qualitatively and quantitatively. We performed a regression analysis at inception of the hedging relationship and at period end in which we compared the change in the fair value of the swap transaction and the change in fair value of a hypothetical interest rate swap having terms that identically match the terms of the debt's interest rate payments historical swap rates. We believe that the hedging instruments are expected to be highly effective at offsetting changes in the hedged transactions attributable to the risk being hedged. For each future reporting period, we will continue performing retrospective and prospective assessments of hedge effectiveness in a single regression analysis by updating the regression analysis that was prepared at the inception of the hedging relationship.
Foreign currency hedge agreements
We use foreign currency derivative contracts to reduce our exposure to fluctuating exchange rates between the United States dollar (as our functional currency) and certain expense lines denominated in Euros ("EUR"), Israeli Shekels ("ILS"), Polish Zloty ("PLN") and Romanian Leu ("RON"). Our derivative contracts are designated as cash flow hedges under ASC 815. We monitor the effectiveness of our hedges on a quarterly basis, both qualitatively and quantitatively, and expect these hedges to remain highly effective at offsetting fluctuations in exchange rates through their respective maturity dates. See Note 15, Derivative Instruments,to the financial statements included elsewhere in this filing for additional discussion.
The fair value of derivative financial instruments is recognized as an asset or liability at each balance sheet date, with changes in fair value recorded in other comprehensive income on the consolidated statements of comprehensive income until the future underlying transactions occur. The fair value approximates the amount we would pay or receive if these contracts were settled at the respective valuation dates. The inputs used to measure the fair value of our interest rate swap agreements and foreign currency derivative contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820, Fair Value Measurement("ASC 820"). See Note 16, Fair Value Measurements, for additional discussion.
Income taxes
Valuation allowances
We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the more likely than not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused and tax planning alternatives.
Uncertain tax positions
The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. The evaluation of the Company's uncertain tax positions involves significant judgment in the interpretation and application of GAAP and complex domestic and international tax laws, and matters related to the allocation of international taxation rights between countries. Although management believes the Company's reserves are reasonable, no assurance can be given that the final outcome of these uncertainties will not be different from that which is reflected in the Company's reserves. Reserves are adjusted considering changing facts and circumstances, such as the closing of a tax examination. Resolution of these uncertainties in a manner inconsistent with management's expectations could have a material impact on the Company's financial condition and operating results.
Recently issued accounting pronouncements
See Note 1, Organization and Summary of Significant Accounting Policies,to the financial statements included elsewhere in this filing for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this filing.
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