Playstudios Inc.

05/11/2026 | Press release | Distributed by Public on 05/11/2026 14:37

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provide information which our management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to "we", "us", "our", and "the Company" are intended to mean the business and operations of PLAYSTUDIOS, Inc. and its consolidated subsidiaries.
Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a discrepancy include, but are not limited to, those discussed elsewhere in this Quarterly Report on Form 10-Q, particularly in the section titled "Risk Factors" set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q. All forward-looking statements in this report are based on information available to us as of the date hereof, and we assume no obligation to update any such forward-looking statements to reflect future events or circumstances, except as required by law.
Overview
We are a developer and publisher of free-to-play casual games for mobile and social platforms. Over our 13-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®, 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 games are powered by our proprietary playAWARDS program 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 with 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.
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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.
Smaller Reporting Company ("SRC") Accommodations
As an SRC, we have elected to use scaled disclosure accommodations permitted by the SEC, which means that this section does not include all disclosures required for larger reporting companies. Specifically, we are not required to include the contractual obligations table that larger companies must disclose.
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 currencies 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 currencies. Paying players purchase virtual currencies 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 currencies or giving away virtual currencies 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 currencies 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.
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•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. 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 for the same reasons. 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 Quarterly Report on Form 10-Q should be read together with the unaudited condensed consolidated financial statements and the respective related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. The key performance indicators and non-GAAP measures presented in this Quarterly Report on Form 10-Q 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.
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
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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 one indicator of the breadth, value proposition, and potential player appeal of our loyalty offering.
Purchases
Purchases is defined as the total number of rewards purchased during the period presented 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. We do not recognize revenue from Purchases, as players redeem loyalty points rather than making cash payments. We use Purchases as an indicator of player 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 market prices, realized redemption value, or player 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 during 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 during the period divided by the number of days in the period. For rewards with unlimited inventory, the maximum 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 solely to illustrate the scale and scope of rewards available through our loyalty program and should not be interpreted as revenue, gross merchandise value, transaction volume, or economic benefit realized by the Company.
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Results of Operations
Comparison of the three months ended March 31, 2026 versus the three months ended March 31, 2025
The following table summarizes our consolidated results of operations for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):
Three Months Ended March 31,
2026 2025 $ Change % Change
Net revenue $ 58,410 $ 62,709 $ (4,299) (6.9) %
Operating expenses 71,715 65,450 6,265 9.6 %
Operating loss (13,305) (2,741) (10,564) 385.4 %
Net loss
(10,676) (2,880) (7,796) 270.7 %
Net loss margin
(18.3) % (4.6) %
(13.7)pp
297.8 %
pp = percentage points
Net Revenue by Reportable Segment
Three Months Ended March 31,
2026 2025 Change % Change
Net revenue
playGAMES $ 57,862 $ 62,555 $ (4,693) (7.5) %
playAWARDS 548 154 394 nm
Net revenue $ 58,410 $ 62,709 $ (4,299) (6.9) %
nm = not meaningful
Revenue information by geography is summarized as follows (in thousands, except percentages):
Three Months Ended March 31,
2026 2025 Change % Change
United States $ 47,793 $ 53,060 $ (5,267) (9.9) %
All other countries
10,617 9,649 968 10.0 %
Net revenue $ 58,410 $ 62,709 $ (4,299) (6.9) %
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playGAMES
The following table shows net revenues and key performance indicators for our playGAMES division (in thousands, except percentages and ARPDAU):
Three Months Ended March 31,
2026 2025 Change % Change
Virtual currency $ 44,705 $ 50,692 $ (5,987) (11.8) %
Advertising 13,157 11,863 1,294 10.9 %
Net revenue $ 57,862 $ 62,555 $ (4,693) (7.5) %
Average DAU 2,094 2,632 (538) (20.4) %
Average MAU 9,418 11,422 (2,004) (17.5) %
Average DPU 21 21 - - %
Average Daily Payer Conversion 1.0 % 0.8 % 0.2 pp 25.0 %
ARPDAU (in dollars) $ 0.31 $ 0.26 $ 0.05 19.2 %
pp = percentage points
Net revenue decreased $4.7 million, or (7.5)%, to $57.9 million during the three months ended March 31, 2026 compared to $62.6 million during the three months ended March 31, 2025. The decrease was due to a $6.0 million decrease in virtual currency revenue primarily driven by decreases in DPU within certain games, which was partially offset by increased revenue due to our new growth initiatives and a $1.3 million increase in advertising revenue.
playAWARDS
The following table shows net revenues and key performance indicators for our playAWARDS division (in thousands, except for available rewards):
Three Months Ended March 31,
2026 2025 Change % Change
Virtual currency $ 543 $ 148 $ 395 266.9 %
Other 5 6 (1) (16.7) %
Net revenue $ 548 $ 154 $ 394 255.8 %
Available Rewards (in units) 327 367 (40) (10.9) %
Purchases (in units) 169 281 (112) (39.8) %
Retail Value of Purchases $ 14,827 $ 16,984 $ (2,157) (12.7) %
Retail Value of Daily Rewards Inventory $ 2,173 $ 2,005 $ 168 8.4 %
nm = not meaningful
Net revenue increased $0.4 million during the three months ended March 31, 2026 compared to the same period in prior year. The key performance indicators presented above are used by management to assess the playAWARDS segment's operating performance, however, are not indicative revenue metrics.
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Operating Expenses
The following table summarizes our consolidated operating expenses for each applicable period (in thousands, except percentages):
Three Months Ended March 31, % of Revenue
2026 2025 $ Change % Change 2026 2025
Operating expenses:
Cost of revenue $ 12,045 $ 15,779 $ (3,734) (23.7) % 20.6 % 25.2 %
Selling and marketing 21,025 13,169 7,856 59.7 % 36.0 % 21.0 %
Research and development 14,724 13,674 1,050 7.7 % 25.2 % 21.8 %
General and administrative 9,436 11,861 (2,425) (20.4) % 16.2 % 18.9 %
Depreciation and amortization 9,833 9,632 201 2.1 % 16.8 % 15.4 %
Restructuring expenses 4,652 1,335 3,317 248.5 % 8.0 % 2.1 %
Total operating expenses $ 71,715 $ 65,450 $ 6,265 9.6 % 122.8 % 104.4 %
Cost of Revenue
Cost of revenue decreased by $3.7 million to $12.0 million during the three months ended March 31, 2026 compared to $15.8 million during the three months ended March 31, 2025. The decrease was primarily related to a decrease in virtual currency revenue. As a percentage of revenue, cost of revenue decreased from 25.2% for the three months ended March 31, 2025 to 20.6% for the three months ended March 31, 2026 due to an increase in direct to consumer revenue, which incur lower processing fees.
Selling and Marketing
Selling and marketing expenses increased by $7.9 million to $21.0 million during the three months ended March 31, 2026 compared to $13.2 million during the three months ended March 31, 2025. The increase was primarily due to increases in user acquisition expense of $6.5 million which is attributable to the Company's investment in our growth initiatives, employee costs of $0.5 million, and brand and other marketing expense of $0.9 million.
Research and Development
Research and development expenses increased by $1.1 million to $14.7 million during the three months ended March 31, 2026 compared to $13.7 million during the three months ended March 31, 2025. The increase was primarily due to increases in employee costs of $1.1 million and other research and development expense of $0.7 million. This was offset by a decrease of stock compensation of $0.7 million.
General and Administrative
General and administrative expenses decreased by $2.4 million to $9.4 million during the three months ended March 31, 2026 compared to $11.9 million during the three months ended March 31, 2025. The decrease is primarily due to decreases in stock compensation of $1.3 million, a charitable donation of $0.3 million, and other general and administrative cost of $0.8 million.
Depreciation and Amortization
Depreciation and amortization expenses increased by $0.2 million to $9.8 million during the three months ended March 31, 2026 compared to $9.6 million during the three months ended March 31, 2025.
Restructuring Expenses
Restructuring expenses increased by $3.3 million to $4.7 million during the three months ended March 31, 2026 compared to $1.3 million during the three months ended March 31, 2025. The increase was primarily due to increases in internal reorganization costs of $2.3 million, costs related to various merger and acquisition opportunities of $1.2 million, and other restructuring costs of $0.2 million. This was offset by a decrease in non-recurring legal expense of $0.4 million.
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Other Income, Net
The following table summarizes our consolidated non-operating expense for each applicable period (in thousands, except percentages):
Three Months Ended March 31,
2026 2025 $ Change % Change
Change in fair value of warrant liabilities $ 18 $ 101 $ (83) (82.2) %
Change in fair value of contingent consideration
2,780 (325) 3,105 (955.4) %
Interest income, net 722 906 (184) (20.3) %
Other expense, net (281) (473) 192 (40.6) %
Total other income, net $ 3,239 $ 209 $ 3,030 1,449.8 %
The change in fair value of warrant liabilities is related to the warrants discussed in Note 10-Accrued and Other Current Liabilities to our condensed consolidated financial statements herein. The change in fair value of contingent consideration is related to the Pixode Acquisition discussed in Note 7-Fair Value Measurement. 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 12-Long-Term Debt to our condensed consolidated financial statements herein. Other income 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
Provision for income taxes resulted in a tax expense of $0.6 million for the three months ended March 31, 2026, compared to a tax expense of $0.3 million for the three months ended March 31, 2025.
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 Reporting in the accompanying condensed consolidated financial statements for additional information. Consolidated AEBITDA is a non-GAAP measure, discussed within "Non-GAAP Measures" below.
Comparison of the three months ended March 31, 2026 versus the three months ended March 31, 2025
Three Months Ended March 31,
2026 2025 Change % Change
AEBITDA
playGAMES $ 8,674 $ 18,309 $ (9,635) (52.6) %
playAWARDS (1,492) (2,289) 797 (34.8) %
Corporate and other (3,611) (3,533) (78) 2.2 %
Consolidated AEBITDA
$ 3,571 $ 12,487 $ (8,916) (71.4) %
Segment AEBITDA Margin:
playGAMES
15.0 % 29.3 % (14.3) % (48.8) %
playAWARDS
nm nm nm nm
nm - not meaningful
playGAMES
playGAMES AEBITDA was $8.7 million for the three months ended March 31, 2026 compared to $18.3 million for the three months ended March 31, 2025, a decrease of $9.6 million. playGAMES AEBITDA margin was 15.0% for the three months ended March 31, 2026 compared to 29.3% for the three months ended March 31, 2025. The decrease to playGAMES AEBITDA was a result of decreased virtual currency revenue primarily driven by decreases in DPU and an increase of user
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acquisition expense. This was partially offset by an increase in direct-to-consumer sales which incurs lower processing fees, driving a reduction in cost of sales, as well as an increase of revenue related to the launch of Tetris Block Party.
playAWARDS
playAWARDS AEBITDA was $(1.5) million for the three months ended March 31, 2026 compared to $(2.3) million for the three months ended March 31, 2025. The increase in AEBITDA can be attributed to an increase in revenue and a decrease in employee costs.
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Non-GAAP Measures
Consolidated Adjusted EBITDA and Consolidated AEBITDA Margin
Consolidated Adjusted EBITDA, or Consolidated AEBITDA, as used herein, is a non-GAAP financial performance measure that is presented as a supplemental disclosure and is reconciled to net loss and net loss margin as the most directly comparable GAAP measures. We define Consolidated AEBITDA as net income before interest, income taxes, depreciation and amortization, restructuring and related costs (consisting primarily of severance 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 the percentage of Consolidated AEBITDA to 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 loss and net loss margin, the most directly comparable GAAP measure (in thousands, except percentages).
Three Months Ended March 31,
2026 2025
Revenue
$ 58,410 $ 62,709
Net loss $ (10,676) $ (2,880)
Net loss margin (18.3) % (4.6) %
Adjustments:
Depreciation & amortization 9,833 9,632
Income tax expense
610 348
Stock-based compensation expense 2,384 4,258
Change in fair value of warrant liability (18) (101)
Change in fair value of contingent consideration
(2,780) 325
Restructuring and related(1)
4,652 1,335
Other, net(2)
(434) (430)
Consolidated AEBITDA
3,571 12,487
Consolidated AEBITDA Margin
6.1 % 19.9 %
(1)Amounts reported during the three months ended March 31, 2026 and March 31, 2025 relate to internal reorganization costs, including severance-related costs, fees related to evaluating various merger and acquisition opportunities, and non-recurring legal costs.
(2)Amounts reported in "Other, net" include interest expense, interest income, gains/losses from equity investments, foreign currency gains/losses, and non-cash gains/losses on the disposal of assets.
Liquidity and Capital Resources
As of March 31, 2026, we had cash and cash equivalents of $103.7 million, which consisted of cash on hand and money market mutual funds. As of March 31, 2026 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, and cash generated from operations, 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
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businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financing to secure additional funds or we may decide to do so opportunistically.
Debt
For a description of the Credit Agreement, see Note 14 - Long-Term Debt in our Consolidated Financial Statements and Liquidity and Capital Resources in our 2025 Annual Report on Form 10-K filed on March 16, 2026 and amended on Form 10-K/A filed on April 3, 2026.
As of March 31, 2026, we do not have any outstanding amounts under the Credit Agreement.
Cash Flows
The following tables present a summary of our cash flows for the periods indicated (in thousands):
Three Months Ended March 31,
2026 2025
Net cash provided by operating activities $ 3,718 $ 3,300
Net cash used in investing activities (4,118) (3,609)
Net cash used in financing activities (725) (2,456)
Effect of exchange rate on cash and cash equivalents (130) 84
Decrease in cash and cash equivalents (1,255) (2,681)
Operating Activities
During the three months ended March 31, 2026, operating activities provided $3.7 million of net cash as compared to $3.3 million during the three months ended March 31, 2025. The increase in cash provided from operating activities was primarily due to a favorable change in operating assets and liabilities due to timing fluctuations in payables being paid.
Investing Activities
During the three months ended March 31, 2026, investing activities used $4.1 million of net cash as compared to $3.6 million during the three months ended March 31, 2025. The change in cash used in investing activities was due to increased additions to internal-use software during the three months ended March 31, 2026.
Financing Activities
During the three months ended March 31, 2026, financing activities used $0.7 million of net cash as compared to $2.5 million during the three months ended March 31, 2025. The change in cash used in financing activities was due to $1.6 million less in share repurchases and $0.4 million less in payments made for tax withholding on stock-based compensation.
Contractual Obligations, Commitments, and Contingencies
As of March 31, 2026, there had been no material changes to our aggregated indebtedness and other contractual obligations previously reported in our 2025 Annual Report on Form 10-K filed on March 16, 2026 and amended on Form 10-K/A filed on April 3, 2026.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed 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 condensed 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.
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There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our 2025 Annual Report on Form 10-K filed on March 16, 2026 and amended on Form 10-K/A filed on April 3, 2026.
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