Playstudios Inc.
03/16/2026 | Press release | Distributed by Public on 03/16/2026 15:17
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 of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. This section is intended to provide information that management believes is relevant to understanding our consolidated financial condition, results of operations, and cash flows. Unless the context otherwise requires, references to "we," "us," "our," and the "Company" refer to PLAYSTUDIOS, Inc. and its consolidated subsidiaries.
This discussion contains forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties. Our actual results may differ materially from those expressed or implied by these forward-looking statements due to a number of factors, including those described in Part I, Item 1A, "Risk Factors," and elsewhere in this Annual Report on Form 10-K. All forward-looking statements are based on information available to us as of the date of this report, and except as required by law, we undertake no obligation to update such statements to reflect events or circumstances after the date of this report.
Overview
We are a developer and publisher of free-to-play casual games for mobile and social platforms. Over our 14-year history, we developed a portfolio of free-to-play social casino games that are considered to be among the most innovative and unique in the genre. In 2021, we added our Tetris®-branded mobile game and in late 2022 we acquired Brainium, a developer and publisher of free-to-play casual games. Our games include the award-winning POP! Slots, myVEGAS Slots, my KONAMI Slots, MGM Slots Live, myVEGAS Blackjack, myVEGAS Bingo, Tetris®, Tetris Block Party, Solitaire, Spider Solitaire, Jumbline 2, Sudoku, and Mahjong. Our games are based on original content as well as third-party licensed brands and are downloadable and playable for free on multiple social and mobile-based platforms, including the Apple App Store, Google Play Store, Amazon Appstore, and Facebook.
Each of our legacy social casino games and our Tetris®-branded mobile game are powered by our proprietary playAWARDSprogram and incorporates loyalty points that are earned by players as they engage with our games. The rewards are provided by our collection of rewards partners, with the majority of rewards partners providing their rewards at no cost to us, in exchange for product integration, marketing support, and participation in our loyalty program. The program is enabled by our playAWARDS platform which consists of a robust suite of tools that enable our rewards partners to manage their rewards in real time, measure the value of our players' engagement, and gain insight into the effectiveness and value they derive from the program. Through our self-service platform, rewards partners can launch new rewards, make changes to existing rewards, and in real time see how players are engaging with their brands. The platform tools also provide rewards partners the ability to measure the off-line value our players generate as consumers and patrons of their real-world establishments.
Our playAWARDS platform embodies all of the features, tools, and capabilities needed to deliver loyalty programs tailored for the games industry. Our consumer-facing brand for our loyalty program is myVIP. The myVIP program is an aspirational benefits framework, with in-game mechanics and rewards features, along with a player development and hosting program. The program dynamically ranks and assigns players to tiers based on their accumulation of tier points, which are a proxy for their overall engagement with our games. The tier points are separate from and are not interchangeable with the loyalty points earned in the playAWARDS program. Qualified players are provided access to enhanced benefits that increase with each tier. Higher tiers provide access to a myVIP player portal where players can view and purchase special chip bundles, redeem loyalty points for a curated set of rewards, and communicate directly with a dedicated personal host. The myVIP player portal, concierge, and host programs, enhance the in-game and real-world reward experience with both in-game and in-person, invitation-only special events. We believe that the myVIP program drives increased player engagement and retention, and therefore extends each game's life-cycle and revenue potential.
We have primarily generated our revenue from the sale of in-game virtual currencies, which players can choose to purchase at any time to enhance their playing experience. Once purchased, our virtual currency cannot be withdrawn from the game, transferred from one game to another or from one player to another, or be redeemed for monetary value. Players who install our games receive free virtual currencies upon the initial launch of the game, and they may also collect virtual currencies free of charge at periodic intervals or through targeted marketing promotions. Players may exhaust the free virtual currencies and may choose to purchase additional virtual currencies. Additionally, players can send free "gifts" of virtual currencies to their friends on Facebook. Our revenue from virtual currencies has been generated world-wide, but is largely concentrated in North America.
We also generate revenue from in-game advertising. Advertisements can be in the form of an impression, click-throughs, banner ads, or offers, where players are rewarded with virtual currency or loyalty points for watching a short video. While we historically have derived a majority of our revenue from the sale of in-game virtual currency, we implemented in-game advertising as an added revenue producer. Our Tetris®-branded mobile game and our Brainium games generate most of their revenue through in-game advertising.
Smaller Reporting Company ("SRC") Accommodations
As a smaller reporting company, we are permitted to provide scaled disclosure accommodations under SEC rules, and accordingly this section does not include all disclosures required of larger reporting companies. Specifically:
•We have presented only two years of audited financial statements instead of three.
•We are not required to provide certain detailed disclosures regarding contractual obligations that may be required of larger reporting companies.
•Our executive compensation disclosures are reduced under Item 402 of Regulation S-K.
Key Factors Affecting Our Performance
There are a number of factors that affect the performance of our business, and the comparability of our results from period to period, including:
•Third-Party Platform Agreements-Historically we derived substantially all of our revenue from in-game purchases of virtual currency that are processed by platform providers such as the Apple App Store, Google Store, Amazon Appstore, and on Facebook. The platform providers charge us a transaction fee to process payments from our players for their purchase of in-game virtual currency. These platform fees are generally set at 30% of the in-game purchase. Each platform provider has broad discretion to set its platform fees and to change and interpret its terms of service and other policies with respect to us and other developers in its sole discretion, and those changes may be unfavorable to us.
•User Acquisition-Establishing and maintaining a loyal network of players and paying players is vital for our success. As such, we spend a significant amount on advertising and other forms of player acquisition, such as traditional marketing and advertising, email and push notifications, and cross promoting between our games in order to grow our player base. These expenditures are generally related to new content launches, game enhancements, and ongoing programs to drive new player acquisition and the reactivation of lapsed player engagement. Our player acquisition strategy is centered on a payback period methodology, and we strive to optimize spend between the acquisition of new players and the reactivation of inactive players.
•Player Monetization-Our revenue to date has been primarily driven through the sale of virtual currency. Paying players purchase virtual currency in our games because of the perceived value, which is dependent on the relative ease of obtaining equivalent virtual currency by simply playing our game. The perceived value of our virtual currency can be impacted by various actions that we take in our games including offering discounts for virtual currency or giving away virtual currency in promotions. Managing game economies is difficult and relies on our assumptions and judgment. If we fail to manage our virtual economies properly or fail to promptly and successfully respond to any such disruption, our reputation may suffer and our players may be less likely to play our games and to purchase virtual currency from us in the future, which would cause our business, financial condition, and results of operations to suffer.
•Investment in Game Development-In order to maintain interest from existing players and add new players and achieve our desired revenue growth, we must continually improve the content, offers, and features in our existing games and the release of new games. As a result, we invest a significant amount of our technological and creative resources to ensure that we support an appropriate cadence of innovative content that our players will find appealing. These expenditures generally occur in advance of the release of new content or the launch of a new game, and the resulting revenue may not exceed the development costs, or the game or feature may be abandoned in its entirety.
•Investment in our playAWARDS and myVIP programs-In order to drive player engagement and retention we invest a significant amount of resources to enhance the playAWARDS and myVIP programs. We continually evaluate these programs through an iterative feedback process with our players and rewards partners and update them so that both our players and rewards partners are able to optimize their personalized experience. As a result, we continuously incur expenses to enhance and update these programs. However, the results may not generate revenue and the enhancements may require additional significant modifications or be abandoned in their entirety.
•Real-World Rewards-We currently offer real-world rewards relating to, among other things, dining, live entertainment shows, and hotel rooms, and we plan to continue to expand and diversify our rewards loyalty program in order to maintain and enhance the perceived value offering to our players. Our players' willingness to make in-game purchases is directly impacted by our ability to provide desirable rewards. The real-world rewards we offer to our players are provided at no cost to us by our rewards partners, and there is no obligation for us to pay or otherwise compensate either our rewards partners or players for any player redemptions under our rewards partner agreements.
Key Performance Indicators
We manage our business by regularly reviewing several key operating metrics to track historical performance, identify trends in player activity, and set strategic goals for the future. These metrics are operational measures that are not prepared in accordance with U.S. GAAP and should be considered as supplemental to, and not a substitute for, our GAAP results. Our key performance metrics are impacted by several factors that could cause them to fluctuate on a quarterly basis, such as platform providers' policies, seasonality, player connectivity, and the addition of new content to games. We believe these measures are useful to investors as they provide additional insight into player engagement and monetization trends. In addition, we also present certain non-GAAP performance measures. These performance measures are presented as supplemental disclosure and should not be considered superior to or as a substitute for the consolidated financial statements prepared under U.S. GAAP. The non-GAAP measures presented in this Annual Report on Form 10-K should be read together with the consolidated financial statements and the respective related notes thereto included elsewhere in this Annual Report on Form 10-K. The key performance indicators and non-GAAP measures presented in this Annual Report on Form 10-K may differ from similarly titled measures presented by other companies and are not a substitute for financial statements prepared in accordance with U.S. GAAP. The calculation of these metrics requires certain judgments and assumptions, and our methodology may differ from that used by other companies, which may limit comparability.
Key Performance Indicators - playGAMES
Average Daily Active Users ("Average DAU")
Daily Active Users ("DAU") is defined as the number of individuals who played a game on a particular day. For Tetris and our free-to-play social casino games, we track DAU by the player ID, which is assigned for each game installed by an individual. As such, an individual who plays two of these games on the same day is counted as two DAU while an individual who plays the same game on two different devices is counted as one DAU. For our Brainium suite of casual games, we track DAU by app instance ID, which is assigned to each installation of a game on a particular device. As such, an individual who plays two different Brainium games on the same day is counted as two DAU and an individual who plays the same Brainium game on two different devices is also counted as two DAU. The term "Average DAU" is defined as the average of the DAU, determined as described above, for each day during the period presented. We use DAU and Average DAU as measures of audience engagement to help us understand the size of the active player base engaged with our games on a daily basis.
Average Monthly Active Users ("Average MAU")
Monthly Active Users ("MAU") is defined as the number of individuals who played a game in a particular month. As with DAU, an individual who plays two different non-Brainium games in the same month is counted as two MAU while an individual who plays the same non-Brainium game on two different devices is counted as one MAU, and an individual who plays two different Brainium games on the same month is counted as two MAU while an individual who plays the same Brainium game on two different devices is also counted as two MAU. The term "Average MAU" is defined as the average of the MAU, determined as described above, for each calendar month during the period presented. We use MAU and Average MAU as measures of audience engagement to help us understand the size of the active player base engaged with our games on a monthly basis.
Because DAU and MAU are calculated at the game or app-instance level, they reflect engagement at the title level rather than unique individuals across our entire portfolio, and a single individual may be counted multiple times if they engage with multiple games. In addition, these metrics are derived from a combination of internal tracking systems and third-party platform data, which may be subject to technical limitations, data discrepancies, or changes in platform reporting methodologies.
Average Daily Paying Users ("Average DPU")
Daily Paying Users ("DPU") is defined as the number of individuals who made a purchase of virtual currency or digital items within a game during a particular day. As with DAU and MAU, we track DPU based on account activity. As such, an individual who makes a purchase in two different games in a particular day is counted as two DPU while an individual who makes purchases in the same game on two different devices is counted as one DPU. The term "Average DPU" is defined as the average of the DPU, determined as described above, for each day during the period presented. We use DPU and Average DPU to help us understand the size of our active player base that makes in-game purchases and to assess monetization trends within our active player base. Consistent with DAU and MAU, DPU is calculated at the game level and may reflect multiple purchases by a single individual across different titles.
Average Daily Payer Conversion
Daily Payer Conversion is defined as DPU as a percentage of DAU on a particular day. Daily Payer Conversion is also sometimes referred to as "Percentage of Paying Users" or "PPU". The term "Average Daily Payer Conversion" is defined as the Average DPU divided by Average DAU for a given period. We use Daily Payer Conversion and Average Daily Payer Conversion to help us understand the monetization of our active players.
Average Daily Revenue Per DAU ("ARPDAU")
ARPDAU is defined for a given period as the average daily revenue per Average DAU, and is calculated as game-related revenue and advertising revenue attributable to the applicable period, divided by the number of days in the period, divided by the Average DAU during the period. We use ARPDAU as a measure of overall monetization of our active players. ARPDAU may fluctuate based on changes in pricing, player mix, advertising demand, and promotional activity.
Key Performance Indicators - playAWARDS
The following metrics relate specifically to our playAWARDS loyalty platform and are intended to provide insight into engagement with that program.
Available Rewards
Available Rewards is defined as the monthly average number of unique rewards available in our applications' rewards stores. A reward appearing in more than one application's reward store is counted only once. A reward is counted only once irrespective of the inventory available through that reward. For example, one reward for a free night in a hotel room with ten rooms available for such free night is counted as one reward. Available Rewards only include real-world partner rewards and exclude PLAYSTUDIOS digital rewards. We use Available Rewards as a measure of the value and potential impact of the program for an interested player. We use Available Rewards as one indicator of the breadth of our loyalty offering.
Purchases
Purchases is defined as the total number of rewards purchased for the period identified in which a player exchanges loyalty points for a reward. Purchases are net of refunds. Purchases only include purchases of real-world partner rewards and exclude any PLAYSTUDIOS digital rewards. Purchases are redeemed by the player directly with the rewards partner within the specified terms and conditions of the reward. The Company does not recognize revenue from Purchases, as players redeem loyalty points rather than making cash payments. We use Purchases as a measure of audience interest and engagement with our playAWARDS platform.
Retail Value of Purchases
Retail Value of Purchases is defined as the cumulative retail value of all rewards listed as Purchases for the period identified. The retail value of each reward listed as Purchases is the retail value as determined by the partner upon creation of the reward. In the case where the retail value of a reward adjusts depending on time of redemption, the average retail value is used. Retail Value of Purchases only include the retail value of real-world partner rewards and exclude the cost of any PLAYSTUDIOS branded merchandise. Retail values are based on partner-provided estimates and may not reflect actual transaction prices or redemption experience. Retail value also does not represent revenue recognized by the Company. We use Retail Value of Purchases to help us understand the real-world value of the rewards that are purchased by our players in a particular period.
Retail Value of Daily Rewards Inventory
Retail Value of Daily Rewards Inventory is defined as the cumulative retail value of all rewards listed as available for the period divided by the number days in the period. For rewards with unlimited inventory, the maximum of number of rewards used in the calculation is 50. The retail value of each reward listed as available is the retail value as specified by the rewards partner upon creation of the reward. Retail Value of Daily Rewards Inventory only includes the retail value of real-world partner rewards and excludes the cost of any PLAYSTUDIOS branded merchandise. We use Retail Value of Daily Rewards Inventory to help us understand the real-world value of the rewards within our playAWARDS platform.
Retail value metrics are presented to illustrate the scale and scope of rewards available through our loyalty program and should not be interpreted as revenue, gross merchandise value, or economic benefit realized by the Company.
Results of Operations
Comparison of the year ended December 31, 2025 versus the year ended December 31, 2024
The following table summarizes our consolidated results of operations for the years ended December 31, 2025 and 2024 (in thousands, except percentages):
| Years Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Net revenue | $ | 235,097 | $ | 289,429 | $ | (54,332) | (18.8) | % | |||||||||||||||
| Operating expenses | 259,019 | 322,293 | (63,274) | (19.6) | % | ||||||||||||||||||
| Operating loss | (23,922) | (32,864) | 8,942 | (27.2) | % | ||||||||||||||||||
| Net loss | $ | (28,639) | $ | (28,687) | $ | 48 | (0.2) | % | |||||||||||||||
| Net loss margin | (12.2) | % | (9.9) | % | (2.3) | pp | 23.2 | % | |||||||||||||||
| pp = percentage points | |||||||||||||||||||||||
Net Revenue by Reportable Segment
| Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | ||||||||||||||||||||
| Net revenue | |||||||||||||||||||||||
|
playGAMES
|
$ | 234,089 | $ | 289,367 | $ | (55,278) | (19.1) | % | |||||||||||||||
|
playAWARDS
|
1,008 | 62 | 946 | 1525.8 | % | ||||||||||||||||||
| Net revenue | $ | 235,097 | $ | 289,429 | $ | (54,332) | (18.8) | % | |||||||||||||||
Revenue information by geography is summarized as follows (in thousands, except percentages):
| Years Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | ||||||||||||||||||||
| United States | $ | 196,381 | $ | 244,184 | $ | (47,803) | (19.6) | % | |||||||||||||||
|
All other countries
|
38,716 | 45,245 | (6,529) | (14.4) | % | ||||||||||||||||||
| Net revenue | $ | 235,097 | $ | 289,429 | $ | (54,332) | (18.8) | % | |||||||||||||||
playGAMES
playGAMES revenue was $234.1 million for the year ended December 31, 2025 compared to $289.4 million for year ended December 31, 2024.
The following table shows net revenues and key performance indicators for our playGAMES division (in thousands, except percentages and ARPDAU):
| Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | ||||||||||||||||||||
| Virtual currency | $ | 188,381 | $ | 228,877 | $ | (40,496) | (17.7) | % | |||||||||||||||
| Advertising | 45,708 | 60,197 | (14,489) | (24.1) | % | ||||||||||||||||||
| Other revenue | - | 293 | (293) | (100.0) | % | ||||||||||||||||||
| Net revenue | $ | 234,089 | $ | 289,367 | $ | (55,278) | (19.1) | % | |||||||||||||||
| Average DAU | 2,305 | 3,100 | (795) | (25.6) | % | ||||||||||||||||||
| Average MAU | 9,865 | 13,120 | (3,255) | (24.8) | % | ||||||||||||||||||
| Average DPU | 19 | 24 | (5) | (20.8) | % | ||||||||||||||||||
| Average Daily Payer Conversion | 0.8 | % | 0.8 | % | - | pp | - | % | |||||||||||||||
| ARPDAU (in dollars) | $ | 0.28 | $ | 0.26 | $ | 0.02 | 7.7 | % | |||||||||||||||
| pp = percentage points | |||||||||||||||||||||||
Net revenue decreased $55.3 million, or 19.1%, to $234.1 million during the year ended December 31, 2025 compared to $289.4 million during the year ended December 31, 2024. The decrease was primarily due to a $40.5 million decrease in virtual currency revenue driven by decreases in Average DPU. Advertising revenue decreased $14.5 million driven by a decrease in Average DAU.
playAWARDS
The following table shows net revenues and key performance indicators for our playAWARDS division (in thousands):
| Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | ||||||||||||||||||||
|
Virtual currency revenue
|
$ | 986 | $ | 54 | $ | 932 | 1725.9 | % | |||||||||||||||
|
Other revenue
|
22 | 8 | 14 | 175.0 | % | ||||||||||||||||||
| Net revenue | $ | 1,008 | $ | 62 | $ | 946 | 1525.8 | % | |||||||||||||||
| Available Rewards (in units) | 350 | 525 | (175) | (33.3) | % | ||||||||||||||||||
| Purchases (in units) | 852 | 1,772 | (920) | (51.9) | % | ||||||||||||||||||
|
Retail Value of Purchases
|
$ | 59,372 | $ | 114,135 | $ | (54,763) | (48.0) | % | |||||||||||||||
|
Retail Value of Daily Rewards Inventory
|
$ | 2,552 | $ | 2,077 | $ | 475 | 22.9 | % | |||||||||||||||
Net revenue increased by $0.9 million due to the allocation of the transaction price to playAWARDS virtual currency included in playGAMES virtual currency sales. The key performance indicators presented above are used by management to assess the playAWARDS segment's operating performance, however there is no relationship between the key performance indicators and revenue metrics.
Operating Expenses
The following table summarizes our consolidated operating expenses for the years ended December 31, 2025 and 2024 (in thousands, except percentages):
| Years Ended December 31, | % of Net Revenue | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 57,467 | $ | 72,716 | $ | (15,249) | (21.0) | % | 24.4 | % | 25.1 | % | |||||||||||||||||||||||
| Selling and marketing | 55,475 | 64,623 | (9,148) | (14.2) | % | 23.6 | % | 22.3 | % | ||||||||||||||||||||||||||
| Research and development | 58,376 | 67,683 | (9,307) | (13.8) | % | 24.8 | % | 23.4 | % | ||||||||||||||||||||||||||
| General and administrative | 45,859 | 46,121 | (262) | (0.6) | % | 19.5 | % | 15.9 | % | ||||||||||||||||||||||||||
| Depreciation and amortization | 38,360 | 45,440 | (7,080) | (15.6) | % | 16.3 | % | 15.7 | % | ||||||||||||||||||||||||||
| Restructuring expenses | 3,482 | 25,710 | (22,228) | (86.5) | % | 1.5 | % | 8.9 | % | ||||||||||||||||||||||||||
| Total operating expenses | $ | 259,019 | $ | 322,293 | $ | (63,274) | (19.6) | % | 110.2 | % | 111.4 | % | |||||||||||||||||||||||
Cost of Revenue
Cost of revenue decreased by $15.2 million, or 21.0%, during the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was due to a decline in virtual currency revenue as well as an increase in direct to consumer revenue, which incur lower processing fees.
Selling and Marketing
Selling and marketing expenses decreased by $9.1 million, or 14.2%, during the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to decreases in user acquisition expenses of $9.8 million and stock compensation of $0.9 million. This decrease was offset by an increase to brand and other marketing expenses of $1.6 million.
Research and Development
Research and development expenses decreased by $9.3 million, or 13.8%, during the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to decreases in employee costs of $7.6 million, stock compensation of $2.8 million, and outside service expense of $0.8 million. This decrease was offset by a withholding tax assessment settlement of $1.8 million and and an increase in other research and development expense of $0.1 million.
General and Administrative
General and administrative expenses decreased by $0.3 million, or 0.6%, during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Depreciation and Amortization
Depreciation and amortization expenses decreased by $7.1 million, or 15.6%, during the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to a decrease of internal-use software amortization in connection with write-downs of certain assets in the fourth quarter of December 31, 2024 as a result of the 2024 Reorganization Plan. See Note 10-Intangible Assets and Internal-Use Software, Net.
Restructuring Expenses
Restructuring expenses decreased by $22.2 million during the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to decreases of non-cash impairment of $9.2 million, non-
recurring legal expenses of $7.7 million, and management restructurings of $6.0 million. This decrease was offset by an increase of $0.7 million for various merger and acquisition opportunities.
Other Income, Net
The following table summarizes our consolidated other income, net for the years ended December 31, 2025 and 2024 (in thousands, except percentages):
| Years Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Change in fair value of warrant liabilities | $ | 156 | $ | 856 | $ | (700) | (81.8) | % | |||||||||||||||
| Change in fair value of contingent consideration | (4,968) | (85) | (4,883) | 5744.7 | % | ||||||||||||||||||
| Interest income, net | 2,943 | 4,902 | (1,959) | (40.0) | % | ||||||||||||||||||
| Other expense, net | (910) | (97) | (813) | 838.1 | % | ||||||||||||||||||
| Total other (expense) income, net | $ | (2,779) | $ | 5,576 | $ | (8,355) | (149.8) | % | |||||||||||||||
The change in fair value of warrant liabilities is related to the warrants discussed in Note 12-Accrued and Other Current Liabilitiesto our consolidated financial statements herein. The change in fair value of contingent consideration is related to the Pixode Acquisition discussed in Note 4-Business Combinations. Interest income, net is related to interest earned on cash and cash equivalents offset by fees and expenses associated with the Credit Agreement as discussed in Note 14-Long-Term Debtto our consolidated financial statements herein. Other expense, net primarily relates to gains or (losses) from equity investments and gains or (losses) from foreign currency transactions with our foreign subsidiaries.
Provision for Income Taxes
Income tax expense was approximately $1.9 million for the year ended December 31, 2025, as compared to an income tax expense of $1.4 million for the year ended December 31, 2024. The income tax expense for the year ended December 31, 2025 reflected an effective income tax rate of negative 7.3%, which was less than the statutory tax rate of 21% primarily due to the recording of a valuation allowance on deferred tax assets, impacts from short falls associated with stock-based compensation, impacts from foreign branch income, and other nondeductible expenses. The income tax expense for the year ended December 31, 2024 reflected an effective income tax rate of negative 5.1%, which was greater than the statutory federal rate of 21.0% primarily due to the recording of a valuation allowance on deferred tax assets, impacts from short falls associated with stock-based compensation, impacts from foreign branch income, and other nondeductible expenses.
Comparison of our Segment Results of Operations
The following table presents adjusted earnings before interest, taxes, depreciation, and amortization ("AEBITDA"). AEBITDA is our reportable segment GAAP measure, which we utilize as the primary profit measure for our reportable segments. See Note 3-Segment Reportingin the accompanying consolidated financial statements for additional information. Consolidated AEBITDA is a non-GAAP measure, discussed within "Non-GAAP Measures" below.
Comparison of the year ended December 31, 2025 versus the year ended December 31, 2024
| Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | ||||||||||||||||||||
| AEBITDA | |||||||||||||||||||||||
| playGAMES | $ | 58,641 | $ | 85,074 | $ | (26,433) | (31.1) | % | |||||||||||||||
| playAWARDS | (8,700) | (13,710) | 5,010 | (36.5) | % | ||||||||||||||||||
| Corporate and other | (14,346) | (14,815) | 469 | (3.2) | % | ||||||||||||||||||
|
Consolidated AEBITDA
|
$ | 35,595 | $ | 56,549 | $ | (20,954) | (37.1) | % | |||||||||||||||
|
Segment AEBITDA Margin:
|
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|
playGAMES
|
25.1 | % | 29.4 | % | (4.3) | % | (14.6) | % | |||||||||||||||
|
playAWARDS
|
nm | nm | nm | nm | |||||||||||||||||||
|
nm - not meaningful
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playGAMES
playGAMES AEBITDA was $58.6 million for the year ended December 31, 2025 compared to $85.1 million for year ended December 31, 2024, a decrease of 31.1%. playGAMES AEBITDA margin was 25.1% for the year ended December 31, 2025 compared to 29.4% for year ended December 31, 2024. The decrease to playGAMES AEBITDA was a result of decreased virtual currency revenue primarily driven by a decrease in DPU and advertising revenue primarily driven by a decrease in DAU.
playAWARDS
playAWARDS AEBITDA was $(8.7) million for the year ended December 31, 2025 compared to $(13.7) million for year ended December 31, 2024. The increase in AEBITDA can be attributed to a reduction in employee costs in connection with the 2024 Reorganization Plan and an increase in revenue.
Non-GAAP Measures
Consolidated AEBITDA and Consolidated AEBITDA Margin
Consolidated AEBITDA, as used herein, is a non-GAAP financial performance measure that is presented as a supplemental disclosure and is reconciled to net income as the most directly comparable GAAP measure. We define Consolidated AEBITDA as net income before interest, income taxes, depreciation and amortization, restructuring and related costs (consisting primarily of severance, asset impairments, and other restructuring related costs), stock-based compensation expense, changes in fair value of warrant liabilities, and other income and expense items (including special infrequent items, foreign currency gains and losses, and other non-cash items). We also use Consolidated AEBITDA Margin, another non-GAAP measure, which we calculate as Consolidated AEBITDA as a percentage of net revenue.
We use Consolidated AEBITDA and Consolidated AEBITDA Margin to monitor and evaluate the performance of our business operations, facilitate internal comparisons of our operating performance, and to analyze and evaluate decisions regarding future budgets and initiatives. We believe that both measures are useful because they provide investors with information regarding our operating performance that is used by our management in its reporting and planning processes. Consolidated AEBITDA and Consolidated AEBITDA Margin as calculated herein may not be comparable to similarly titled measures and disclosures reported by other companies.
The following table sets forth the reconciliation of Consolidated AEBITDA and Consolidated AEBITDA Margin to net income and net income margin, the most directly comparable GAAP measure (in thousands, except percentages):
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
|
Net revenue
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$ | 235,097 | $ | 289,429 | ||||||||||
| Net loss | $ | (28,639) | $ | (28,687) | ||||||||||
| Net loss margin | (12.2) | % | (9.9) | % | ||||||||||
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Adjustments:
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| Depreciation & amortization | 38,360 | 45,440 | ||||||||||||
| Income tax expense | 1,938 | 1,399 | ||||||||||||
| Stock-based compensation expense | 14,143 | 18,113 | ||||||||||||
| Change in fair value of warrant liability | (156) | (856) | ||||||||||||
| Change in fair value of contingent consideration | 4,968 | 85 | ||||||||||||
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Restructuring and related(1)
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3,482 | 25,710 | ||||||||||||
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Special infrequent(2)
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3,524 | - | ||||||||||||
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Other(3)
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(2,025) | (4,655) | ||||||||||||
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Consolidated AEBITDA
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$ | 35,595 | $ | 56,549 | ||||||||||
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Consolidated AEBITDA Margin
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15.1 | % | 19.5 | % | ||||||||||
(1)Amounts reported include internal reorganization costs, including severance-related costs, fees related to evaluating various merger and acquisition opportunities, and non-recurring legal costs.
(2)Amount reported consists of a charitable contribution and a withholding tax assessment settlement.
(3)Amounts reported in "Other, net" include interest expense, interest income, gains/losses from investments, foreign currency gains/losses, and non-cash gains/losses on the disposal of assets.
Liquidity and Capital Resources
As of December 31, 2025, we had cash and cash equivalents of $104.9 million, which consisted of cash on hand and money market mutual funds. As of December 31, 2025 we had restricted cash of $0.6 million. Historically, we have funded our operations, including capital expenditures, primarily through cash flow from operating activities. We believe that our existing cash and cash equivalents, the cash generated from operations, and the borrowing capacity under our Credit Agreement as described below will be sufficient to fund our operations and capital expenditures for at least the next twelve (12) months. However, we intend to continue to make significant investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new games and features or enhance our existing games, improve our operating infrastructure, or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds or we may decide to do so opportunistically.
Debt
On June 24, 2021, the Company, a subsidiary of the Company, JPMorgan Chase Bank, N.A., as administrative agent and JPMorgan Chase Bank, N.A., Silicon Valley Bank and Wells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers entered into a credit agreement (the "Credit Agreement") which provides for a five-year revolving credit facility in an aggregate principal amount of $75.0 million. Borrowings under the Credit Agreement may be borrowed, repaid and re-borrowed by the Company, and are available for working capital, general corporate purposes, and permitted acquisitions.
Commitment fees and interest rates are determined on the basis of either a Eurodollar rate or an Alternate Base Rate plus an applicable margin. The applicable margins are initially 2.50%, in the case of Eurodollar loans, and 1.50%, in the case of Alternate Base Rate loans. The applicable margin is subject to adjustment based upon the Company's Total Net Leverage Ratio (as defined in the Credit Agreement). Eurodollar rates and the Alternate Base Rate are subject to floors of 0.00% and 1.00%, respectively. The Credit Agreement contains various affirmative and negative financial and operational covenants applicable to the Company and its subsidiaries.
The Credit Agreement includes customary reporting requirements, conditions precedent to borrowing and affirmative, negative and financial covenants. Specific financial covenants include the following, commencing with the quarter ended September 30, 2021:
•Total Net Leverage Ratio of 3.50:1.00 (subject to increase to 4.00:1.00 following consummation of certain material acquisitions)
•Fixed Charge Coverage Ratio of not less than 1.25:1.00.
On May 13, 2022, the Company entered into the Amendment No. 1 to the Credit Agreement, which amended the Credit Agreement to, among other things, exclude from the definition of Fixed Charge Coverage Ratio certain funds, up to $15.0 million, expended or to be expended by the Company in connection with the Tender Offer.
On August 9, 2022, the Company entered into the Amendment No. 2 to the Credit Agreement, which further amended the Credit Agreement (as amended by Amendment No. 1 to the Credit Agreement) to, among other things, (i) increase the total current available line of credit from $75.0 million to $81.0 million, (ii) change the basis for calculation of interest under the facility from LIBOR to SOFR, and (iii) exclude from the calculation of the Fixed Charge Coverage Ratio (A) up to $6.0 million for the acquisition of, and improvements to, the real property located at 10150 Covington Cross Drive, Las Vegas, Nevada 89144 incurred on or prior to the first anniversary of the effective date of Amendment No. 2 to the Credit Agreement, and (B) up to $20.0 million for the redemption or repurchase of up to $11.0 million warrants to purchase shares of Class A common stock of the Company, and shares of Class A common stock of the Company, on or before December 31, 2023, of which as of the date of Amendment No. 2 to the Credit Agreement the Company had used $1.8 million to redeem outstanding warrants to purchase Class A common stock in connection with the Tender Offer.
On August 16, 2023, the Company, a subsidiary of the Company, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, entered into an Amendment No. 3 to Credit Agreement (the "Amendment No. 3"), to, among other things, exclude from the Restricted Payments covenant certain repurchases of Equity Interests of the Company deemed to occur upon the exercise, settlement or vesting of stock options, warrants or other equity-based awards if and to the extent such Equity Interests represent a portion of the exercise price of, or satisfy any tax withholding obligations with respect to, such options, warrants or other equity-based awards.
On June 7, 2024, the Company, a subsidiary of the Company, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, entered into an Amendment No. 4 to Credit Agreement (the "Amendment No. 4") to, among other things, (i) modify the definition of "Fixed Charge Coverage Ratio" to exclude from the calculation of Restricted Payments amounts paid for the repurchase, prior to June 30, 2024, of approximately 11.7 million shares of Class A common stock of the Company, and (ii) modify the definition of "Consolidated Fixed Charges" to take into account any tax refunds received in the applicable measurement period.
On July 1, 2024, the Company, a subsidiary of the Company, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, entered into the Amendment No. 5 to Credit Agreement (the "Amendment No. 5") to, among other things, exclude from the covenant set forth in Section 6.01 of the Credit Agreement regarding the incurrence of Indebtedness (as defined therein) the contingent consideration obligations relating to the Pixode acquisition.
As of December 31, 2025, we do not have any outstanding amounts under the Credit Agreement.
Cash Flows
The following table presents a summary of our cash flows for the periods indicated (in thousands):
| Years Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash provided by operating activities | $ | 26,340 | $ | 45,740 | |||||||
| Net cash used in investing activities | (16,902) | (26,294) | |||||||||
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Net cash used in financing activities
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(14,907) | (41,913) | |||||||||
| Effect of exchange rate on cash and cash equivalents | 1,240 | (638) | |||||||||
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Net change in cash, cash equivalents, and restricted cash
|
$ | (4,229) | $ | (23,105) | |||||||
Operating Activities
During the year ended December 31, 2025, operating activities provided $26.3 million of net cash as compared to $45.7 million during the year ended December 31, 2024. The change in cash provided from operating activities primarily related to lower net revenue.
Investing Activities
During the year ended December 31, 2025, investing activities used $16.9 million of net cash as compared to $26.3 million during the year ended December 31, 2024. The change in cash used in investing activities was primarily due to $3.4 million less cash used for assets acquired from business combinations, $3.0 million less cash used to purchase intangible assets and internal-use software, and $3.0 million less cash used to purchase property and equipment.
Financing Activities
During the year ended December 31, 2025, financing activities used $14.9 million of net cash, while financing activities used $41.9 million of net cash during the year ended December 31, 2024. The change in cash used in financing activities was due to $27.7 million less cash used for share repurchases and $0.5 million less in payments made for tax withholding on stock-based compensation. This was offset by an increase in minimum guarantees paid of $1.2 million.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Internal-Use Software
The Company recognizes internal-use software development costs in accordance with Accounting Standards Codification (ASC) 350-40, Internal-Use Software. Capitalized costs include consulting fees, payroll and payroll-related costs, and stock-based compensation for employees who devote time to the Company's internal-use software projects. Capitalization begins when the preliminary project stage is complete and the Company commits resources to the software project and continues during the application development stage. Capitalization ceases when the software has been tested and is ready for its intended use. Qualified costs incurred during the post-implementation/post-operation stage of the Company's software applications relating to upgrades and enhancements are capitalized to the extent it is probable that they will result in added functionality. Costs that cannot be separated between maintenance of, and minor upgrades and enhancements to, internal-use software are expensed as incurred. Capitalized internal-use software development costs are amortized on a straight-line basis over a three-year estimated useful life. The Company believes that a straight-line basis for amortization best represents the pattern through which the Company derives value from internal-use software. The Company evaluates the
useful lives of these assets and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
Goodwill
The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual of the purchase price recognized as goodwill.
As of December 31, 2025, our goodwill totaled $52.2 million. We assess the impairment of goodwill of our reporting unit annually, or more often if events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit's carrying value is compared to its fair value. The fair value of the reporting unit is estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach requires the use of significant estimates of expected revenues as well as discount rates to determine the estimated fair value. The market approach uses comparable company information to determine revenue and earnings multiples to value our reporting unit. Failure to achieve these expected results or market multiples may cause a future impairment of goodwill at the reporting unit.
We conducted our annual impairment test of goodwill as of October 1, 2025 and 2024. As of December 31, 2025, we determined that no impairment of the carrying value of goodwill was required. See Note 11-Goodwillto the consolidated financial statements included in this report.
Business Combinations
The Company applies the provisions of ASC 805,Business Combinationsand allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, 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, 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 customer relationships, acquired technology and acquired trademarks from a market participant perspective, useful lives 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.
Revenue Recognition
Our revenue recognition policies described in Note 2-Summary of Significant Accounting Policies requires us to make significant judgments and estimates, which include the consumption period. The amount of outstanding purchased virtual currency at each reporting date is based on player behavior because the Company is unable to distinguish between the consumption of purchased or free virtual currency.
Virtual Currency
The Company develops and operates free-to-play games which are downloaded and played on social and mobile platforms. Players may collect virtual currency free of charge through the passage of time or through targeted marketing promotions. Additionally, players can send free "gifts" of virtual currency to their friends through interactions with certain social platforms. Players may also purchase additional virtual currency through accepted payment methods offered by the respective platform. Once a purchase is completed, the virtual currency is deposited into the player's account and is not separately identifiable from previously purchased virtual currency or virtual currency obtained by the player for free. Once obtained, virtual currency (either free or purchased) cannot be redeemed for cash nor exchanged for anything other than game play. When virtual currency is consumed in our games, the player could "win" and would be awarded additional virtual currency or could "lose" and lose the future use of that virtual currency. As the player does not receive any additional benefit from our games, nor is the player entitled to any additional rights once the player's virtual currency is substantially consumed, the Company has concluded that the virtual currency represents consumable goods.
Players can earn loyalty points through a variety of activities, including but not limited to playing the Company's games, engaging with in-game advertising, engaging with marketing emails, and logging into the game. The loyalty points can be redeemed for rewards offered by the Company's rewards partners. There is no obligation for the Company to pay or otherwise compensate the Company's rewards partners for any player redemptions under the Company's rewards partner
agreements. In addition, both paying and non-paying players can earn loyalty points. Therefore, the loyalty points earned by players are marketing offers and do not provide players with material rights. Accordingly, the earned loyalty points do not require any allocation to the transaction price of virtual currency. Loyalty points or other virtual currencies may be included in certain bundled purchases through certain platforms. Loyalty points or other virtual currencies are not available to be purchased separately and there is no standalone selling price. If loyalty points or other forms of virtual currencies are included in bundled purchases, the Company will allocate a portion of the transaction price to each of the virtual currencies using the residual approach.
Additionally, certain of the Company's games participate in an additional program which ranks players into different tiers based on tier points earned during a given time frame. Tier points can be earned through a variety of player engagement activities, including but not limited to logging into our games, achieving multi-day log-in streaks, collecting hourly bonuses, and purchasing virtual currency bundles. Depending on the tier, players are granted access to special benefits at the Company's discretion. Similar to loyalty points that are redeemable for real-world rewards, the tier points are not awarded as a result of a contract with a customer since both paying and non-paying players can earn these tier points. As a result, the tier points earned by players do not provide players with material rights and do not require any allocation to the transaction price of virtual currency.
The Company has the performance obligation to display and provide access to the virtual currency purchased by the Company's player within the game whenever the player accesses the game until the virtual currency is consumed. Payment is required at the time of purchase and the transaction price is fixed. The transaction price, which is the amount paid for the virtual currency by the player, is allocated entirely to this single performance obligation.
As virtual currency represents consumable goods, the Company recognizes revenue as the virtual currency is consumed over the estimated consumption period. Since the Company is unable to distinguish between the consumption of purchased or free virtual currency, the Company must estimate the amount of outstanding purchased virtual currency at each reporting date based on player behavior. The Company has determined through a review of player behavior that players who purchase virtual currency generally are not purchasing additional virtual currency if their existing virtual currency balances have not been substantially consumed. As the Company can track the duration between purchases of virtual currency for individual players, the Company is able to reliably estimate the period over which virtual currency is consumed. Based upon an analysis of players' historical play behavior, the timing difference between when virtual currency is purchased by a player and when such virtual currency is consumed in gameplay is relatively short, currently one to seven days with an average consumption period of approximately one day. The Company recognizes revenue from in-game purchases of virtual currency over this estimated average period between when the virtual currency is purchased and consumed. If applicable, the Company records the unconsumed virtual currency in "Deferred revenue" and records the prepaid payment processing fees associated with this deferred revenue in "Prepaid expenses".
The Company continues to gather detailed player behavior and assess this data in relation to its revenue recognition policy. To the extent the player behavior changes, the Company reassesses its estimates and assumptions used for revenue recognition prospectively on the basis that such changes are caused by new factors indicating a change in player behavior patterns.
Advertising Revenue
The Company has contractual relationships with various advertising service providers for advertisements within the Company's games. Advertisements can be in the form of an impression, click-throughs, banner ads, or offers. Offers are advertisements where the players are rewarded with virtual currency for watching a short video. The Company has determined the advertising service provider to be its customer and displaying the advertisements within its games is identified as the single performance obligation. Revenue from advertisements and offers are recognized at a point in time when the advertisements are displayed, or when the player has completed the offer as the advertising service provider simultaneously receives and consumes the benefits provided from these services. The price can be determined by the applicable evidence of the arrangement, which may include a master contract or a third-party statement of activity.
The transaction price is generally the product of the advertising units delivered (e.g. impressions, videos viewed) and the contractually agreed upon price per advertising unit. Further, the price per advertising unit can also be based on revenue share percentages stated in the contract. The number of advertising units delivered is determined at the end of each month so there is no uncertainty about the transaction price. Payment terms are stipulated as a specific number of days subsequent to end of the month, ranging from 45 to 60 days.
Principal Agent Considerations
The Company's games are played on various social and mobile third-party platforms for which such third parties collect monies from players and remit net proceeds after deducting payment processing fees. The Company is primarily responsible for providing access to the virtual currency, has control over the content and functionality of games before they are accessed by players, and has the discretion to establish the pricing for the virtual currency. Therefore, the Company concluded that it is the principal and as a result, revenues are reported gross of payment processing fees. Payment processing fees are recorded as a component of "Cost of revenue" in the accompanying Consolidated Statements of Operations. The Company reports its advertising revenue net of amounts retained by advertising service providers.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740,Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in its consolidated financial statements or tax returns. Under ASC 740, the Company determines deferred tax assets and liabilities based on the temporary difference between the consolidated financial statements and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which it expects the differences to be recovered or settled. The Company establishes valuation allowances when necessary, based on the weight of the available positive and negative evidence, to reduce deferred tax assets to the amount that is more likely than not to be realized.
The Company accounts for uncertain tax positions in accordance with ASC 740, which requires companies to adjust their consolidated financial statements to reflect only those tax positions that are more likely than not to be sustained upon examination by taxing authorities based on the technical merits of the issue. ASC 740 prescribes a comprehensive model for the consolidated financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes.
We have elected to account for the impact of the global intangible low-taxed income (GILTI) inclusion and base erosion anti-avoidance tax (BEAT) based on the period cost method
See Note 16 Income Taxes to the consolidated financial statements for further information regarding income taxes.
Recent Accounting Pronouncements
See Note 2-Summary of Significant Accounting Policiesto our consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
Playstudios Inc. published this content on March 16, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 16, 2026 at 21:17 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]