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Playtika’s Q4 2025 results underscore a successful shift toward casual gaming and direct-to-consumer (D2C) operations. Casual titles now represent 74% of revenue, bolstered by the SuperPlay acquisition, which saw Disney Solitaire approach a $300 million run rate. D2C revenue grew to 36.8% of the total, hitting a $1 billion annual run rate. Despite these operational gains, Playtika reported a GAAP net loss of $309.3 million due to a $394.1 million non-cash adjustment for SuperPlay's contingent earn-out—a result of the studio's outperformance. To prioritize these earn-out payments and reinvest in growth, the company suspended its quarterly dividend, a move signaling a pivot toward high-ROI capital allocation. Looking ahead to 2026, the company guided for revenue between $2.7 billion and $2.8 billion. While the social casino segment remains pressured, management highlighted stabilization in Slotomania. The strategy for 2026 involves front-loading marketing investments to sustain casual growth while maintaining a disciplined cost structure. AI remains a core long-term focus for content optimization. Overall, Playtika is prioritizing balance sheet flexibility to fund its most successful growth engines over immediate capital returns.

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Playtika Holding Corp.: A Forensic Analysis of Negative Equity, Massive Contingent Liabilities, and Global Regulatory Onslaught

Full Earnings Call Transcript — Q4 • 2026-02-26

Operator: Good day, and thank you for standing by. Welcome to the Playtika Holding Corp. Q4 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tae Lee, SVP, Corporate Finance and Investor Relations. Please go ahead.
Tae Lee: Welcome, everyone, and thank you for joining us today for the fourth quarter of 2025 earnings call for Playtika Holding Corp. Joining me on the call today are Robert Antokol, Co-founder and CEO of Playtika Holding Corp., and Craig Abrahams, Playtika Holding Corp.'s President and Chief Financial Officer. I would like to remind you that today's discussion may contain forward-looking statements, including, but not limited to, the company's anticipated future revenue and operating performance. These statements and other comments are not a guarantee of future performance, but rather are subject to risks and uncertainties, some of which are beyond our control. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. We have posted an accompanying slide deck to our investor relations website, which contains information on forward-looking statements and non-GAAP measures. We will also post our prepared remarks immediately following the call. For a more complete discussion of the risks and uncertainties, please see our filings with the SEC. With that, I will now turn the call over to Robert Antokol.
Robert Antokol: Good morning, and thank you for joining us. We finished 2025 with a strong fourth quarter that shows our plan is working and the business continues to show bright spots. In Q4, we delivered $678.8 million of revenue and $201.4 million of Adjusted EBITDA, driven by D2C growth, our pivot to casual, and SuperPlay results. Here is the main point: We are building a balanced set of assets. Every year, more revenue comes from long-life casual games with broad reach, and D2C is now core to how we run the business. At the same time, our legacy game still matters. These are still meaningful sources of cash flow, and we are managing them with the focus and care as part of a portfolio, not as a one-game company. This mix is more balanced, less dependent on any single category, and better positioned to deliver durable free cash flow. First, D2C. D2C keeps growing and adds more value for Playtika Holding Corp. In Q4, D2C was 36.8% of our revenue, and we ended the year at about $1 billion in annual D2C revenue. This marks a clear shift in how we engage with players and process transactions. We are building a multi-channel D2C strategy, and we are consistently optimizing those channels to improve unit economics and strengthen our business over time. Second, our casual games. In Q4, casual revenue was about 74% of total revenue. We have evolved our portfolio over the last five years. This broadens the business and supports a steadier path. Third, SuperPlay. SuperPlay delivered record revenue in Q4, with Disney Solitaire up 21.4% quarter-over-quarter, and now our second largest game in the portfolio. We see improvements in Dice Dreams and continuous growth in Domino Dreams. SuperPlay's growth this year is nothing short of amazing. It makes them one of the fastest growing studios in the mobile gaming industry at their scale. We acquired SuperPlay to add top casual games, bring a new growth engine, and widen our base with long-life assets. The performance supports this decision and raises our confidence in SuperPlay. This acquisition highlights a core strength at Playtika Holding Corp., recognizing amazing teams and backing them with the capital and operating discipline. With SuperPlay, we invested behind a talented team with great potential and provided the financial flexibility to scale games. This reflects our disciplined approach to allocating capital when talent, product, and returns align, and the same playbook guides how we run the entire company. We act from a position of strength. We focus on returns, reallocating spend, and generating cash. With that, I will turn the call over to Craig to review our financials, outlook, and capital allocation framework.
Craig Abrahams: Thank you, Robert, and good morning. Q4 reflects the strength of our model and a mix shift that is now clear in the results. We came in ahead of our revenue and Adjusted EBITDA guidance, set another D2C record, and saw outstanding momentum from SuperPlay. This is now the third straight year we have met or exceeded our Adjusted EBITDA guidance, reflecting the strength and consistency of our operating model. I also want to reinforce how we run the company. We manage Playtika Holding Corp. as a portfolio. We protect and strengthen leadership positions in our key casual franchises. We scale capabilities like D2C that improve our unit economics across the business, and we maximize the lifetime value of our social casino-themed titles while staying disciplined on returns and costs. On social casino-themed games specifically, these games operate in a tough, crowded market, and the mobile industry has evolved since our IPO. That is not a reason to be defensive; it is a reason to be decisive. Our goal is clear: slow the decline and get full value from these assets. We fund where returns make sense, extend the life of older titles, and step back where the bar is not met. We were pleased to see early signs of stabilization in Slotomania in the quarter. To be clear, we remain focused on stability and value while we build the next phase. To keep resources concentrated on our more attractive opportunities, we streamlined parts of the organization and plan to redeploy investment behind the areas with the strongest returns. The mix is improving, our growth engines are working, and we are building a more resilient Playtika Holding Corp. Turning to the financial results for the year. Revenue was $2.755 billion, up 8.1% year-over-year. We generated a net loss of $206.4 million, adjusted net income of $197.5 million, and Adjusted EBITDA of $753.2 million, down 0.6% year-over-year. Our net loss margin was -7.5%, our adjusted net income margin was 7.2%, and our Adjusted EBITDA margin was 27.3%. We generated record free cash flow of $481.6 million, an increase of 21.4% year-over-year. We are managing CapEx and working capital tightly. We remain focused on delivering strong free cash flow generation over time. Now to the quarter. Revenue was $678.0 million, up 0.6% sequentially and up 4.4% year-over-year. Net loss was $309.3 million, compared to net income of $39.1 million in Q3, and a $16.7 million loss in Q4 of 2024. The net loss was primarily driven by the non-cash impact of remeasuring contingent consideration related to the SuperPlay earn-out, which flows through GAAP results but is excluded from our adjusted net income and Adjusted EBITDA. Adjusted net income was $89 million, compared to adjusted net income of $65.8 million in Q3 and $27 million in Q4 of 2024. Adjusted EBITDA was $201.4 million, down 7.4% sequentially and up 9.5% year-over-year. Our Adjusted EBITDA margin was 29.7%, compared to 32.2% in Q3 and 28.3% in Q4 of 2024. Direct-to-consumer was a key driver of both performance and mix. D2C revenue reached $250.1 million, growing 19.5% sequentially and 43.2% year-over-year, reflecting broad-based contributions across our games. Turning now to our business results for the quarter for our top three revenue games. Bingo Blitz revenue was $158.5 million, down 2.5% sequentially and essentially flat year-over-year. We drove engagement with focused in-game and out-of-game campaigns around the Bingo Blitz and Garfield collaboration, including a new themed bingo room featuring a cooperative mini-game, where players work together to progress through Garfield content. We also introduced a new gameplay mechanic that has players find Garfield within bingo cards, and we closed the quarter with an innovative experience that offers eight bingo cards per session instead of the usual four. Disney Solitaire revenue was $71.6 million, up 21.4% sequentially. By Q4, the title had scaled rapidly and was approaching a $300 million annualized run rate, reflecting its strong momentum since its global launch in April 2025. Results have been driven by product execution and steady tuning, including new feature launches, game economy updates, and continued improvement in unit economics through direct-to-consumer. We have also seen traction internationally, including Japan, which further validates the global appeal of the franchise. For the full year, SuperPlay generated about $573 million of revenue, a 67.5% increase from the $342 million baseline tied to the earn-out. The studio is doing this while staying focused on long-term fundamentals, engagement, retention, and live operations. As we shared previously, we have expanded our collaboration with Disney and Pixar Games and are developing a new title in the SuperPlay pipeline. June's Journey revenue was $70 million, up 2.5% sequentially and down 2% year-over-year. June's Journey continues to maintain its position as the highest-grossing hidden object game worldwide. In Q4, engagement benefited from a strong content cadence and seasonal programming, including the Wicked IP collaboration. Direct-to-consumer is relatively new for June's Journey. We have scaled it quickly across both iOS and Android. We continue to see it as a durable lever to deepen player relationships and improve unit economics over time. Turning now to specific line items in our P&L for the fourth quarter. Cost of revenue increased 4.5% year-over-year, driven by revenue growth, offset by platform mix. Operating expenses increased 100.3% year-over-year, driven primarily by the GAAP impact of contingent consideration related to the SuperPlay earn-out. Excluding the change in contingent consideration, as well as expenses associated with our long-term cash compensation program that expired in 2024, operating expenses increased by 5.4%. R&D expenses increased 13.8% year-over-year, driven primarily by higher headcount following the SuperPlay acquisition and continued investment to support the growth of the SuperPlay studio. Sales and marketing increased 9.6% year-over-year, reflecting higher user acquisition spend due to the full quarter impact of SuperPlay, as well as the sequential step-up in marketing investments that we previewed on last quarter's earnings call. G&A increased 383.5% year-over-year, driven primarily by the $394.1 million contingent consideration expense recorded in the quarter related to the SuperPlay earn-out. Excluding the impact of contingent consideration and expenses associated with our long-term cash compensation program, G&A would have declined by 22% year-over-year. To provide more clarity, a brief word on the earn-out mechanics. The SuperPlay earn-out this year is tied to revenue growth versus a $342 million revenue baseline, with a step-up in multiple above certain thresholds. Changes in fair value of the contingent consideration run through GAAP G&A, but they are excluded from adjusted net income and Adjusted EBITDA and do not change the underlying cash terms of the earn-out. We ended the year with $820.2 million in cash equivalents and short-term bank deposits, and we expect to fund the SuperPlay earn-out from cash on hand. Looking at our operational metrics, average DPU increased 0.8% sequentially and 5.3% year-over-year to 357,000. Average DAU decreased 3.7% sequentially and 1.3% year-over-year to 7.9 million. ARPDAU was $0.93 in the quarter, up 4.5% both sequentially and year-over-year. On to our outlook for 2026. Our guidance reflects a business that has been undergoing a strategic shift. Growth titles led by SuperPlay are driving material revenue. Our industry-leading casual franchises, Bingo Blitz, June's Journey, and Solitaire Grand Harvest, continue to benefit from live ops and rising direct-to-consumer contribution. In social casino, revenue is declining, and our focus is on protecting the economics of those franchises and maximizing cash flow through disciplined management and operating efficiency. We also want to be clear that direct-to-consumer is a core and growing part of our business, and we are executing to expand it. At the same time, we are taking a measured view of any incremental benefit tied to the evolving platform policy landscape, and our guidance does not assume any single policy outcome. With that context, our guidance for full year 2026 is as follows: Revenue of $2.7 billion–$2.8 billion, Adjusted EBITDA of $730 million–$770 million, capital expenditures of $80 million, and an effective tax rate of 30%. We also expect our marketing spend to be weighted toward the first half of the year, particularly the first quarter, which we expect to result in lower Adjusted EBITDA in the first quarter and higher Adjusted EBITDA in subsequent quarters. Finally, capital allocation. When we initiated our dividend, the intent was to provide an attractive return to shareholders while we executed on our strategic priorities, including restarting M&A and repositioning the portfolio. We have made real progress against those priorities. We have scaled D2C to record levels. We have successfully ramped up SuperPlay, and it is performing in line with and in certain areas ahead of the expectations we had at the time of the acquisition. We have also sharpened our operating model and reset our cost basis. At this stage, our capital allocation framework needs to reflect both the opportunities in front of us and the performance-based nature and potential size of the SuperPlay earn-out. To preserve flexibility and direct capital to the highest return uses, we are suspending our quarterly dividend. With respect to share repurchases, we intend to keep buybacks available within our capital allocation framework. We will continue to evaluate our capital structure over time, including opportunities to reduce debt where it makes sense, while maintaining balance sheet capacity to fund potential obligations and invest behind growth. As we take these steps to focus capital on the highest return opportunities, we remain fully committed to enhancing long-term shareholder value. With that, we would be happy to take your questions.
Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while I compile the Q&A roster. Our first question comes from Aaron Lee from Macquarie. Please go ahead.
Aaron Lee: Hey, guys. Good morning. Thanks for taking the question. Congrats on the quarter. I just wanted to talk on a general level about AI. I know you mentioned this in the letter around workforce reduction. Could you expand on how you view the role of AI within your business? How are you using it today, and what have been the early learnings? Looking forward, where do you see the greatest opportunities? Thanks. Gotcha. Thank you. On capital allocation, I appreciate all the comments there. How should we be thinking about your appetite for M&A at this point? Does that fall under the category of investing behind high-return growth? Thanks.
Robert Antokol: Thanks for the question. As we spoke in the last few years, we started investing in AI, I think six to seven years ago. We opened a few labs in Playtika Holding Corp., and we always understood that this will be part of the future growth. Right now, what we see is a revolution happening. For us, this is an amazing opportunity, because when you look at Playtika Holding Corp. today, our asset is the community and the content. This is our asset. We see the AI opportunity as a new platform. We see something that can grow our business. We are very excited. We are following every trend that is happening in the market. I am sure that for us, it is going to be one of our growth engines in the future.
Craig Abrahams: Thanks for the question, Aaron. M&A has always been a core part of our growth strategy. SuperPlay has been a tremendous transaction for us, and given the growth and strong growth that we have seen through the year, we plan to continue to invest aggressively in growing that within the constraints of the earn-out. As we look at overall capital allocation, we want to continue to invest in the best ROI opportunities possible, and investing in the SuperPlay earn-out and the SuperPlay platform is definitely the highest priority capital use for us. As we look at other M&A opportunities, we are always going to try to be opportunistic, but we are cognizant of the fact that we want to maximize liquidity and balance sheet flexibility as we move forward.
Aaron Lee: Got it. Appreciate the color. Great job with SuperPlay.
Craig Abrahams: Thank you.
Operator: Thank you. Our next question comes from Eric Handler from Roth Capital. Please go ahead.
Eric Handler: Good morning. Thanks for the question. As you look to transition more people to the D2C platform, what type of incentives are you giving people to move off of iOS or the Google or Android platform? I assume some percentage higher of incremental virtual currency or items. I am just trying to get a sense of how that is working.
Robert Antokol: Thanks for the question. First, to say again that D2C has become one of our biggest parts of cash flow growth in the last few years. We are on a run rate of $1 billion. I think we are leading the industry; I do not think anyone is even close to us. At the end of the day, we are giving a better experience to the users. We are closer to them; we can provide more support to them. I think the advantage of having such a huge D2C platform is the right connection to the players. It will help with retention; it will help with long-time gameplay. For us, this is one of the most important things. As we started D2C, we always knew that it was going to be one of Playtika Holding Corp.'s strengths and one of Playtika Holding Corp.'s engine growth drivers for cash. This is what we are doing.
Eric Handler: Thank you, Robert.
Operator: Thank you. Our next question comes from Chris Shull from UBS. Please go ahead.
Chris Shull: Great, thank you. Just to follow up on the 2026 guidance, can you frame or quantify what this assumes for Slotomania and the social casino performance as you seek to ramp newer IP in that category? As you think about performance coming in at the higher or lower end of those ranges, what are some of the biggest variables in your mind? Okay, great. Thank you. If I can fit in one more. The D2C mix was clearly well ahead at 37% versus the 40% mix I think you previously talked about reaching in two years. Any updated thoughts on that longer-term target? Where is the natural limit as we try to gauge how high this could ultimately reach? Thank you.
Craig Abrahams: Sure. Thanks for the question. As you have seen, we have been undergoing a mix shift. I am proud to say that our business is now 74% casual, and that continues to be the fastest growth part of the business, driven by SuperPlay. As we look and give forward guidance, continued overperformance from the SuperPlay titles is definitely there on the upside case. On the downside case, you would see continued declines in the social casino portfolio. That mix shift obviously impacts margins, but as we look at the guidance and our consistency over the past three years, either meeting or beating expectations on the Adjusted EBITDA side, we have confidence in our ability to execute there and continue to focus on that transition toward a more casual, healthier mix going forward. Sure. Good question. Our previous long-term target was 40% of revenue. We will continue to keep that, given all the various policy changes in the background. Our target does not assume one outcome or the other as it relates to things outside of our control. It is really focused on what we can control and our own execution.
Operator: Thank you. Our next question comes from Matthew Cost from Morgan Stanley. Please go ahead.
Matthew Cost: Good morning. Thanks for taking the questions. Just first on Disney Solitaire, obviously, that game is on a really great trajectory. Just looking at some of the third-party data out there, it looks like it has shifted upward again year-to-date in 2026. Is that a function of live services in the game? Is it because you have hit a seasonal bump in marketing, which you typically see in the first quarter, and you are allocating a lot of it towards that game? How should we think about the trajectory as you move through 2026 from here? That is question one. Question two for Craig. There was a lot of shift toward D2C in the quarter. It seemed to impact gross margins a little bit less than I would have expected, given the magnitude of impact to revenue mix on D2C. Are there any crosscurrents in gross margins that we should be cognizant of that prevent a sudden increase in gross margin as you see the dollars flowing through D2C? Thank you.
Craig Abrahams: Thanks, Matt. I will take the first one on Disney Solitaire; Tae will take the second piece on gross margins. Disney Solitaire is off to a great start to 2026. As we referenced in the prepared materials, there is a meaningful investment in marketing dollars in the first quarter. We anticipate EBITDA will be impacted in Q1 and moderate throughout the year. I think you are going to see that larger investment drive real growth. It is one of the best ROIs we have within the portfolio in terms of deploying marketing dollars.
Tae Lee: Matt, on the gross margin point, you are right to call out some of the crosscurrents that you are seeing. You are seeing the benefit in lower platform fees, in terms of revenue from an increased D2C mix, but that is offset by increased amortization coming from past acquisitions that are flowing through our P&L.
Matthew Cost: Great. Thank you.
Operator: Thank you. Our next question comes from Jason Bazinet from Citi. Please go ahead.
Jason Bazinet: Thanks so much. I was just wondering, Craig, if you could unpack that approximately $400 million change in the contingent consideration. Is that composed of, like, $225 million on the 2025 payout that has not gone out the door, plus approximately $180 million on the 2026 payout? If that is true, what, if anything, can you share about the EBITDA margins at SuperPlay to trigger that approximately $180 million on the 2026 payout? There is nothing prospective in those earn-outs for 2026. You are not positing what the earn-out will be in 2026. These are all just earn-outs, backward-looking, if that makes sense? Yep. Okay. Is the trigger—am I right—that the trigger is greater than 5% EBITDA margins? Is that confirmed? Yep. Yep. Is it fair to assume, based on the $400 million, that you are between that 5% and 10% margin on SuperPlay, or is that the wrong implication? Okay. Thank you. Thank you.
Craig Abrahams: If you look at the contingent consideration that we have payable, due at the start of Q2, you will see in short-term payables an estimate of the earn-out amount. We have the year one earn-out payable at the start of Q2. Obviously, each year thereafter, years two and three, we will have earn-out payable before. Given the strength of the performance there, you see a higher earn-out payment and therefore higher contingent consideration. The EBITDA is in line with—in order to pay the earn-out in year one, it was less than $10 million. While we cannot say the specific amount, they obviously are eligible for the earn-out and had an EBITDA loss better than -$10 million. No. The contingent consideration amount in total takes into consideration future earn-out payments as part of the Monte Carlo simulation, coming up with the present value of that payment. In terms of what is actually payable, it is in our payables in the balance sheet. In year—year two, which is 2026, it is greater than 5% margin. There is a 0.25x multiple premium on revenue if they get to a 10% margin. No, that is for 2026. For 2025, which is the first year of the performance earn-out, it is just doing better than -$10 million in Adjusted EBITDA. You can assume that. You got it.
Operator: Thank you. Our next question comes from Clark Lampen from BTIG. Please go ahead.
Clark Lampen: Thanks for taking the question. Craig, I have two on D2C, if I may. You mentioned that you are relatively earlier on with the transition for June's Journey. Could you remind us if there are titles across the portfolio that do not have a meaningful D2C presence or, similar to June's, maybe a more nascent one at this stage? Maybe a naive question on D2C. When we think about that sort of revenue stream for you right now, is that spend solely captured from your players in a browser environment, or have you also set up link-outs for the App Store version or app version of your games for players that might prefer to engage with the titles in that format? Thank you. Okay, if I may, very quickly, a quick follow-up on marketing. Relative to the approximately $761 million that we saw called out in the 10-K, is it possible to give us a sense of what is budgeted for 2026 or maybe even a more directional indicator? Within this question, I am curious if you see in Q1 that the returns are really healthy for Disney Solitaire, do you have the flexibility over the balance of the year to invest behind that title or new ones, if you believe that the returns justify it? Thanks.
Craig Abrahams: Thanks, Clark. At this point, we have broad penetration of D2C across the portfolio. Those casual titles that we had flagged previously years ago are now well penetrated in terms of their D2C base and growing. We had broad growth across the portfolio. Based on platform changes, we have seen increases across the platforms, on mobile, with link-outs as a new means of growing D2C. There is a variety of channels that we deploy, and each game has its own roadmap and is out there executing. Unfortunately, we do not break out the guidance on marketing dollars for next year. What I can say is that there are constraints around SuperPlay in that they are under an earn-out, and so, given the previous question, they are targeting a 5% or greater margin. While the foot is on the gas from a marketing perspective there and driving growth, at some point, that will have to moderate to ensure that they are able to drive margins into that 5% or 10% or greater from an EBITDA perspective. That is really the only commentary there.
Operator: Thank you. Our next question comes from Doug Creutz from TD Cowen. Please go ahead.
Doug Creutz: Thank you. Could you give an update on the status of Jackpot Tour? Is that a game you intend to be putting significant marketing dollars behind in Q1 and the first half? How does that game factor into your guidance? Thank you.
Robert Antokol: Thanks for the question. As we said, we launched the game. We are still checking the KPIs. I can say that we are not 100% sure we are going to open it strongly in the coming few weeks. We still need to see the numbers that we are used to, so it is in progress, and it is part of our strategy around the slots game. I want to take this opportunity to say that Slotomania, after many quarters, is going to grow quarter over quarter this quarter. This is big news for us, and this is big news for the social casino industry. As I said in the beginning, the Jackpot Tour is part of our strategy there. Thanks.
Doug Creutz: Thank you.
Operator: I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.