Analyst here on the Communications and Media Research team here at UBS and today I'm pleased that we have the President and Chief Financial Officer of Playtika, Craig Abrahams, with us. Craig, thank you so much for being with us. Thanks for having us, Chris. So, given the time of year, we like to ask to kind of look back over the past 12 months, what you would say were the key accomplishments for the company. And as you look out into 2025, what are the priorities that are top of mind? Sure. So 2024 was a big year for us. The SuperPlay acquisition was definitely the key anchoring event for us. We announced a little over a year ago our capital allocation strategy. And a key part of that was M&A. And a key part of our strategy for the last 10 years has been acquiring new IP that we can better monetize and retain customers with. And if you look at our portfolio today, 11 out of the top 13 titles came through M&A. And so I think a big question from the investor community was, how do we predict M&A? What's next? We don't really have a lot of insight to your pipeline. And so I think being able to do such a large transaction with a great growth company that had two top titles in the top 100 really was a defining moment for us for the year, bringing on Domino Dreams and Dice Dreams into the portfolio. They also have two new titles in the pipeline that we're pretty excited about, one of which has just been in technical soft launch, which is Disney Solitaire. So very excited about bringing Disney IP to the market as well. And I think that was definitely the key pillar. I think as we look out for the rest of the accomplishments in 2024, it's been really executing against that capital allocation strategy of issuing dividends, buybacks, and M&A. I think if we look at our biggest franchises, where we're number one in their respective categories, it's continuing to defend and grow there. And then, obviously, building out our plans for next year, looking at new title launches, looking at continuing to bolt-on M&A, looking at continuing to invest and grow our biggest franchises. And so, I think, and grow our direct-to-consumer platform. Those are some of the key initiatives as we look out into 2025. That's great. And then maybe if we can dig into the Superplay deal, what attracted you to these assets? And why was this the best time to bring those assets underneath Playtika? Sure. So we've been tracking both Dice and Domino for some time now. I think when you look at kind of the top 500 games in the world and you're looking at growth trajectories of these titles, I think it was an interesting inflection point for us where Dice was getting to a much larger growth potential where it was starting to shift more towards profitability. And I think for us as a company, we haven't been one where we've been very focused on EBITDA and growing EBITDA. And so it was an interesting kind of case study for us of how do we buy something that's growing very quickly and investing in growth, but structure a transaction where they can transition to profitability with time. And so I think we came up with a pretty unique structure where they have to not only invest closer to break-even in 2025, but then be profitable on a go-forward basis to earn additional earnouts. So I think from a timing perspective, early in their life cycle, it didn't necessarily align with our corporate goals. So I think as that business matured, it got more interesting. I think the scale of that business, having two titles in the top 100 and the diversification of having two, and I think also their own development pipeline maturing and having a title being closer to launch in 2025 was also attractive as well. And so I think there was, for a variety of reasons, it was sort of waiting for that business to get to that right maturity perspective. I think it took a long time for us to negotiate and structure the transaction. I think everyone that saw the disclosure, it was more complicated than your typical deal. But I think for us, the timing couldn't have been better to bring on multiple growth assets into the portfolio. Given your familiarity with the management team and the nature of the games that you're acquiring, how would you say the ease of execution or the potential return profile for this deal might compare to other transactions you've done in the past? Sure, well, I think obviously two of the three founders there came from Playtika, and so there's a familiarity with the management team. They have a level of expertise probably far beyond some of the other acquisitions we've done, so I think they're operating already at a very high level. I think even when we look at the structure, as we've set it up, the bigger they get, the lower the effective EBITDA multiple for us, and so we're very well aligned in terms of rooting for each other and trying to get to the biggest outcome possible, and so I think that was very important for us when we structured the transaction. And I think when you announced the deal, you had talked about how the Coin Looter and the Board categories were two of the fastest growing within the industry. What do you think's driving that and how sustainable do you think that is? Sure, so obviously the Coin Looter is a large category with a variety of big competitors. I think when you see that and you see a lot of marketing dollars getting poured into the category from competitors, it raises awareness and kind of lifts all boats for the category, and the more consumers that start playing that style of game are interested in playing a variety of other games, and so I think that for us, just we saw a big category where these guys didn't necessarily have the largest market share, and so there's a big opportunity for growth. I think as we looked at Domino and Tabletop, while they're a leader there, we see it as an evergreen category with a game type that's very well known and can be expanded to a variety of new consumers as well as better monetized going forward. And so I think both were new categories for us, but very close to home in terms of the types of game categories. I know with the earnout structure, there's a few moving pieces with the deal, but anything, guidance or guardrails you can give in terms of the timeline that you expect for accretion from the deal to your bottom line or to your free cash flow? Sure. So to be eligible in 2025 for an earnout, the Adjusted EBITDA needs to be greater than -$10 million. And so I think when you look at 2026 and beyond, we expect it to be EBITDA accretive. Got it. Great, and then maybe if we can just pivot to the legacy portfolio. Obviously, you have a very strong track record within the social casino category. Slotomania has faced a lot of incremental competition, you would probably say, over the last year, but what would you ascribe the headwinds to, and how long will it take to stabilize Slotomania's performance? Sure. So the slot theme category is one of the most competitive categories in the market. We still have the number one market share within that category. I think we've seen the most success in the category over the last three years has come from the land-based slot manufacturers. They bring the real-world content, and that's obviously been a differentiator for them if you compare market share of how they've done versus others. We just announced a few months back a partnership with IGT to start to bring the real-world content into our games. And so we have access to bring content not only into Slotomania, but into House of Fun and Caesars Casino as well. So I think that for us is a big change. And as we think about the roadmap on a go-forward basis, the idea of bringing more of that real-world content should help us further differentiate and defend market share there. So it's a big strategic priority for us in turning that category around. And obviously, it's still a very large market and one that we're focused on. What does the timeline look like for introducing that real-world content into the game? I believe you already started to include some features, but when do we see it? So we've announced that Cleopatra II is coming later this month in Slotomania, and then we expect to roll out additional content as we start off in 2025. Got it. And then we often get the question as to whether growth in iGaming or real-world gambling has had any impact on the social casino category. What are your views on that? We've tracked it in states where there's regulated casino gaming, states like Pennsylvania and New Jersey. We haven't seen an impact in terms of our casino-themed games in the slot category. I think there's been much more of a rollout for sports betting than there has been for slot games. I think it's probably more of a question of whether or not there's an impact from a lot of the unregulated gaming that's taking place via sweepstakes slots. It looks a lot more like real money gaming that exists in a variety of states, but it's not necessarily legalized gaming. I think that's more of a question of, is that having an impact? I don't know. We don't have an answer on that, but it's clear they're spending a lot of marketing dollars and not paying taxes to the states. And so we'll have to see what happens there. And then maybe if we can pivot over to the casual side, Bingo Blitz is now your largest title. We saw a nice inflection there where it returned to growth last quarter. How sustainable is that, and what would you attribute that inflection to that we saw? So Bingo not only is number one in its category, but it has greater than 50% market share in the category. And it's one where liquidity matters, meaning players want to play where their friends are. When you open up a game, the speed at which that game opens and having a lot of people in that game matters. And so it's challenging for competitors to kind of gain that kind of liquidity to have a competitive offering. And so I think for us, it's been how do we expand the Bingo category, grow that game to new users, and continually launch new metagames within that. And I think that if we look at the roadmap over the last 10 years, it's been pretty unbelievable how that game has grown and continued to grow. I think that in terms of a roadmap and execution, we're expecting growth there in the foreseeable future. Then what are the growth expectations for some of the other big casual titles like Solitaire Grand Harvest, June's Journey? Any color you can give on the product roadmap there and how you're thinking about the expectations as you go into 2025? Sure. So those are all titles that get a lot of marketing support. They're number one in their respective category, both Solitaire and June's Journey. They're titles that we invest a lot behind from a product perspective in terms of the roadmap. And while we're not giving specific title-by-title guidance, I think we can say that when you look across Bingo, Solitaire, June's Journey, plus the additionally acquired titles, those are the areas we're focused on for growth in the portfolio. And then it's been a little bit over a year since you did Innplay and Youda Games. So how have those deals measured up relative to your initial expectations? So I think we've been very pleased with the top-line growth at both of those titles. Innplay definitely hit a bump in the road along the way, but I think our ability to make changes and execute and drive growth, I think as you saw in the most recent quarter, we're very pleased with the execution there. Governor of Poker is a much older franchise that's been around for a long time, but to drive double-digit growth there and continue to execute on that as well has been encouraging. And I think you guys have also talked about a new game launching in 2Q 2025. Is that still the case? And what incremental color you can give on that game in the category and what gives you confidence that that can launch successfully? Sure. So I think this year is the first year in recent history we've had a multitude of launches planned. We have Claire's Chronicles, which is coming from Wooga. That's a story-driven game in the Solitaire genre. We also have Disney Solitaire coming out through SuperPlay, getting soft launch and technical launch now, but in a more broad soft launch, hopefully in Q1. And so I think as we look out into the year, there's multiple titles that we're excited about, and we're constantly thinking about other categories and new launches as well. And then one thing that's very unique about your business is the size of your direct-to-consumer platforms. I know in the past you've talked about a 30% targeted mix. How should we be thinking about that target? You are getting close to it and the availability of games from here. I know you've been adding new titles. Any additional titles? And with SuperPlay, how do you think about bringing in those into the D2C channels as well? Sure. So just to level set, the titles that we have today on direct-to-consumer are our oldest franchises: Slotomania, Bingo Blitz, World Series of Poker, House of Fun, Caesars Casino. In the last year, we recently launched June's Journey as well as Solitaire Grand Harvest. And all of our more recently acquired titles are potential upside for the future. I think as we look at the roadmaps, we're constantly thinking about innovation and growth in terms of product features that face the consumer. But as those games start to mature, the opportunity to bring them onto our own platform and drive additional margins and have a direct relationship with consumers, that's also very interesting for us. And so it's something where it's clearly upside in the newly acquired titles. For those titles that have been available D2C for quite some time, is it fair to assume the mix for those individual games is well above the 30%? That 30% is just a function of blending across the entire portfolio? Yes, mathematically. That has to be the case just given the titles that are on D2C versus not on D2C. Have you ever said how high it is on some of those titles? We have not disclosed that publicly. No problem. And then maybe we see a lot of headlines where App Store fees conversation in the market that they might come down. To the extent we do see structural change around App Store fees, does that decrease your urgency to have these direct-to-consumer channels? Or are there still merits of having this direct-to-consumer business regardless of what you see on the App Store side? Yeah. I mean, I think it's always been about diversification around platforms from a risk mitigation perspective as well as having that direct relationship with the consumer for the long term. I think the platforms bring a lot of benefit in terms of awareness for your applications, organic traffic. And I think it's about having that steady mix. Obviously, any changes that we have is clearly upside. Will we reinvest that upside back into future growth versus harvest those cash flows? I really think it would depend title by title. Got it. And then when you think about the fees coming down, you kind of just touched on this, but would it just fall to the bottom line? Or do you think that that would be more of an opportunity to enhance the game experience, put those savings back into product development? What would the implications be if we do see those changes get put out by the app stores? Yeah, so I think if it happened, you'd have to really look at it on a product-by-product basis. Products that are in a growth mode may get additional marketing dollars. Products that were in a more mature phase, obviously, that would harvest more cash flow, so I really think it'd be title-specific. Then on the earnings call, you recently raised the full-year EBITDA guidance. Is that a function of the D2C mix coming in stronger? Or were there other areas of savings that contributed to that increase for the full-year outlook? It is due to D2C improvements as well as we've been very disciplined around managing costs throughout the year and seeing some of those additional savings come through. Got it. And then your business still skews more towards the U.S. The international is a big opportunity. I think you've talked about it in the past. Where does that stand? And which markets over the next five years do you think are the biggest opportunities for your business? So we've historically focused on tier-one markets with the highest ROI. And so I think we've been pretty agnostic as to where the customer is and thinking more so in terms of where we see opportunities to acquire traffic at attractive rates to increase marketing dollars there. Historically, our business did skew more U.S. in that the casino-themed games were predominantly 80%-90% in the U.S. historically. I think as we look going forward and the mix shift to casual, you're seeing a much more global audience. I think as we look at even some of the branded titles, I think opportunities like Asia even open up when you're looking at something like a Disney brand. So I do think that there's more opportunities for international growth going forward. And we'll have to see how that plays out as these new titles launch. And I appreciate we still have one month left in 2024. But as we start to look at 2025, there's a number of moving pieces for your business. You have SuperPlay coming in. Your long-term incentive plan, I believe, is set to expire. Any help directionally as to how we should be thinking about the trajectory of EBITDA for the business over the next several years? Sure. So I think we've been making a focused effort around growth this past year and going into next year. I think we realized that we need to make the investments in our recently acquired titles as well as in products to put ourselves in a position to be in a consistent growth position going 2026 and beyond, and so getting back to that consistent top-line growth not only was a key part of the SuperPlay acquisition, but it's a key part of our overall thesis around about how to put ourselves in a better position going forward, and so we'll give guidance updated after fourth-quarter earnings and kind of give more color in terms of 2025, but I would say is that we are focused on driving consistent top-line growth. I believe when we look at the margins for the business, historically, we've been of the view, and I think you said social casino had a higher margin structure than maybe the casual side because social casino was more mature. Is there anything structurally that would prevent these casual titles or this newly acquired IP from seeing a margin profile similar to what you accomplished in social casino? I think we've always been consistent in saying that the maturity of our IP is probably most directly correlated to the margin profile of those games. The more that you can acquire cohorts of customers year after year and retain them for long periods of time. Obviously, they're dropping into the P&L at a 70% margin on a third-party platform and 96%-97% margin on our own platform. So really finding franchises where retention numbers are high and customers play for long periods of time is important for us to have that consistent margin profile over time. And a big driver of the margins is a function of what you choose to spend on sales and marketing. So you do benefit from a very large portfolio of games. Where do you see the most compelling returns for your money right now when you choose to invest? Yeah. So I think we've been consistent in that the recently acquired titles have very strong payback periods as well as our largest game categories where we're number one in those respective categories. So whether it be June's Journey and Solitaire, this year we invested a lot in Slotomania. And so I think when we think about where we're putting dollars behind it, both on the product side and the marketing side, it's really in those categories where we have that either number one market share or recently acquired titles that we're driving growth. Maybe if we can shift to the balance sheet capital allocation. As you think through the SuperPlay deal, what is the expected impact on net leverage? Maybe what was, I know it's dependent on the earnout structure, but what was the max leverage you contemplated when you chose to enter into that deal? Sure, so as we've thought about leverage, I think historically we've made statements that we would probably look to go up to three and a half times leverage on a net basis for the right acquisitions. We haven't given commentary as it relates recently from a leverage position. I do think that we're cognizant of the fact that we're probably on the higher end of where we'd want to go from a leverage perspective and that most transactions from here on out would likely be on the bolt-on variety just given that, so we'll constantly evaluate the financing markets and opportunities to raise additional capital and refinance for M&A opportunities going forward, but we've always been very sensitive to our overall leverage. What sort of implications would the leverage have on your expectations for the buyback here in the coming years? From a buyback, we announced that we have authorization for $150 million of buyback. We've targeted 50% of our free cash flow to go towards dividends and buybacks, and the other 50% targeted towards M&A. And so we haven't given updated guidance on that. And I think we'll consistently execute on that strategy. I think when you announced the SuperPlay deal, you said you would come back with a capital allocation framework and touch on your M&A spending envelope. Is it fair based on what you're saying that bolt-on is much more likely from an M&A perspective, at least as you digest these SuperPlay assets? That's how we're thinking about it. Obviously, we're thinking about M&A truly as opportunistic and based on the opportunity that exists in the market. And we will come back and give guidance of how we're thinking about framing M&A spend over the next few years. But I think as we look at the market today, it feels like it's more on the bolt-on variety. Got it. And then I believe in the past you've leaned, like you said earlier, more heavily on M&A for new game titles versus internal game development. Why is that optimal for the business? And have your thoughts on that shifted at all in recent years? Yeah. So I think post-IDFA, we pulled back on new game development. We saw that the market was very crowded. It was expensive to acquire new traffic, and the math wasn't really working for us. I think as we've seen so many people pull back on new game development, there's fewer new titles in the market. So I do think the market is hungry for new IP and new game opportunities. And for the first time, as I mentioned in years, we have multiple new titles coming to the market. So I think it is a little bit of a shift in our strategy in that we're going to have new games coming to market that we're going to invest behind in addition to M&A. So I definitely think that has potential to really augment our growth profile going forward. And in recent years, there's been some perception that it's been harder to launch new IP or new titles in the gaming space given how crowded it is. What gives you conviction that as you look out into next year where you have a number of new titles coming to the market, that the market's ready to bear new titles and that consumers are willing to try new IP? Yeah. So I think consumers always want. The demand side has always been there. It's whether or not you can effectively put titles out there effectively from an ROI perspective. So I do think the fact that there's fewer new titles coming to market is an opportunity for new IP. I think bringing the Disney IP with Solitaire is a big opportunity. Having over 100 characters and storylines from both Pixar and Disney inside of a game is something we're pretty excited about and helps differentiate that game versus what else is in the marketplace. And so excited for being really the first time we've really leaned into a third-party IP before. And then I think looking at your M&A track record, you've shown a willingness to both acquire newly developed IP but also more mature games. Is there a preference? And how does the return profile for those different types of transactions compare in your mind? Is one easier than the other? No. I mean, I think we have a consistent record around going out and acquiring something like Governor of Poker via Youda, which is a much more mature franchise that's been in the market. Obviously, pay a much lower multiple for that and then grow it. That's more of a traditional acquisition path around a profitable asset that we can make even more profitable with time and growth versus something that's purely in growth mode where we're helping shepherd that growth and then help with the transition of profitability over time. And so obviously, those deals look more expensive on the upfront piece, but over time, hopefully, they come down to the same single-digit EBITDA multiples as we grow EBITDA. And so I think there are two different kind of long-term paths to get there. But I think in all those examples, we're looking to create equity value by driving cash flow over the long term. We've also seen you enter new genres altogether with M&A. Are there genres today that you're not in that would be of interest to you? We could see you announce some transactions maybe in the coming years. Absolutely. There's been a variety of genres that we've had our eyes on for years that we've wanted to get into. And we're constantly thinking about, can we get in there via M&A? Can we enter the category organically? Is there a partnership? And so there are definitely categories of games that we believe that people have been playing for 30 years. They're going to play for the next 50. And so how do we get big share in those categories and attract new gamers? For those new categories, is the level of competition a main criteria that you look at? What are some of the different factors you're evaluating when deciding to go into a new category? Yeah. I think obviously the size of the category and the potential of it, how competitive is the category. Some of these categories have one or two players dominating the category versus some are very fragmented. So I think it's really looking at the structure of the category. How can we innovate within that category? Why are we going to be successful there? And there's categories that just for whatever reason, people haven't been able to sort of grab market share and grow within. And you've had incumbents in those categories. And so for us, it's trying to think through how can we disrupt and enter those categories. Then there was a period of time where the level of activity in that, from an M&A standpoint, slowed down. It started to pick up again a bit. How would you categorize the M&A backdrop? Are there a lot of discussions happening? What does competition look like for available assets? And any thoughts on revaluation stance? So I think for us as a company, there was a few years where we were not very active given some distractions with strategic alternatives when that was ongoing as well as some of the frothy prices in the market. I think over time in 2024, sorry, in 2023, we really started to ramp up M&A activity with Animals & Coins and with Governor of Poker. And then this year with SuperPlay. And so I think we're in a position where now we're looking at the market and looking specifically, as you mentioned, for categories we've identified for bolt-ons and attractive spaces. So I think for us, it still is a competitive space. But if you look at kind of the last three transactions that we did in the marketplace, we're very pleased with all of them. And so I think we're on the right track. Then earlier this year, the board did decide to pause the strategic review or the evaluation of strategic alternatives. Is it fair to assume that's tabled for now? What would need to happen for that process to start again? As of now, it's been tabled, and there is no update. We're just focused on execution. Got it. And alongside that, when you also announced that you were streamlining the management structure and you were putting more of the marketing strategies back into studio's hands, what sort of benefit did you see from that? And what implications has that had for the business over the past nine months since you've made that change? Sure, so I think the idea of bringing the marketing teams closer to the product teams and having much closer collaboration has been successful. We've done that for some of our biggest titles. I think as we look out going forward, it's kind of enabled us to kind of rethink the structure that we have and how to continually optimize it. I don't think there's any specific learnings that we can have, but I think the key one is that there constantly needs to be very close collaboration between the marketers and the product people and tight integration for every new product feature and product launch with the marketing side. Got it. And then in recent quarters, we've seen good momentum on the daily paying user side, and we've seen conversion rates step up. What's been driving that, and how sustainable do you think that is? So we've long said that daily paying users is sort of the barometer for the health of the business and looking to drive payers. At the end of the day, that's what drives our revenue. 98% of our revenue is from in-app purchases and only 2% from ads. And so the daily active number isn't necessarily as relevant as the DPU number. So I think it's really just an effort of, sorry, it's a result of our just efforts and focus around driving conversion. And then maybe just to finish up, one of the big debates we've had with investors in recent years for the mobile market at large is what the slowdown you could attribute to. Was it macro? Was it more due to targeting headwinds? Was it due to competition from other sources of entertainment? Maybe just taking a step back and looking at the mobile market today, what do you think was the main driver of the slowdown? And what gives you confidence that we could see the mobile market return to the types of growth that maybe we saw historically? Yeah. It's an interesting question. I think there was so much growth above the trend line with COVID, and the business has got so big that I think it was sort of, it took some time to kind of return to a sort of normalized trend line. I don't think that necessarily you can look at it in a vacuum. So you had all of these people playing at home at these elevated levels. And then kind of coming off of COVID, you also had IDFA, which made it more difficult to target customers from a marketing perspective. And so I think that brought a lot of noise into the market. I think you're now at a much more stable place where you're seeing franchises break through and grow. You're seeing the overall market kind of be at a position of growth. And so I think on a go-forward basis, the market's much more normalized now because a lot of that noise is kind of out of the comparable. When you think about your expectations for industry growth and Playtika's growth within that, do you have confidence that Playtika can grow faster than the industry? Or how do you see yourselves within the wider ecosystem in the coming years? I see us as a consolidator that will continue to acquire titles and drive growth in the portfolio. So I think we should be able to outpace the market as long as we continue to invest in new titles and make acquisitions. So that's definitely where our focus is. I think that's a great place to leave it. Thank you very much for being with us today. Thanks, Chris. Have a good day. Thanks.