playtika-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-39896

PLAYTIKA HOLDING CORP.

(Exact Name of Registrant as Specified in its Charter)


Delaware						81-3634591
(State of other jurisdiction						(I.R.S. Employer
of incorporation or organization)						Identification No.)


c/o Playtika Ltd.
HaChoshlim St 8
Herzliya Pituach, Israel
972-73-316-3251

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	PLTK	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2024 the registrant had 371,128,120 shares of common stock, $0.01 par value per share, outstanding.

PLAYTIKA HOLDING CORP.

FORM 10-Q

INDEX


		Page
PART I.	FINANCIAL INFORMATION	1
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1
	Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	1
	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023	2
	Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2024 and 2023	3
	Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023	4
	Notes to the Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29
ITEM 4.	CONTROLS AND PROCEDURES	30
PART II.	OTHER INFORMATION	31
ITEM 1.	LEGAL PROCEEDINGS	31
ITEM 1A.	RISK FACTORS	31
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	32
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	32
ITEM 4.	MINE SAFETY DISCLOSURES	32
ITEM 5.	OTHER INFORMATION	32
ITEM 6.	EXHIBITS	33
SIGNATURES

CAUTIONARY NOTE ABOUT FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Exchange Act. All statements other than statements of historical facts contained in this quarterly report, including statements regarding our business strategy, plans and our objectives for future operations, are forward-looking statements. Further, statements that include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “future,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “present,” “preserve,” “project,” “pursue,” “should,” “will,” or “would,” or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. The achievement or success of the matters covered by such forward-looking statements involves significant risks, uncertainties and assumptions, including, but not limited to, the important factors discussed in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2024. Moreover, we operate in a very competitive and rapidly changing environment and industry. As a result, it is not possible for our management to assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated, predicted or implied in the forward-looking statements.

Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include without limitation:

•actions of our majority shareholder or other third parties that influence us;

•our reliance on third-party platforms, such as the iOS App Store, Facebook, and Google Play Store, to distribute our games and collect revenues, and the risk that such platforms may adversely change their policies;

•our reliance on a limited number of games to generate the majority of our revenue;

•our reliance on a small percentage of total users to generate a majority of our revenue;

•our free-to-play business model, and the value of virtual items sold in our games, is highly dependent on how we manage the game revenues and pricing models;

•our inability to identify acquisition targets that fit our strategy or complete acquisitions and integrate any acquired businesses successfully or realize the anticipated benefits of such acquisitions could limit our growth, disrupt our plans and operations or impact the amount of capital allocated to mergers and acquisitions;

•our ability to compete in a highly competitive industry with low barriers to entry;

•our ability to retain existing players, attract new players and increase the monetization of our player base;

•we have significant indebtedness and are subject to the obligations and restrictive covenants under our debt instruments;

•the impact of the COVID-19 pandemic or other health epidemics on our business and the economy as a whole;

•the impact of an economic recession or periods of increased inflation, and any reductions to household spending on the types of discretionary entertainment we offer;

•our controlled company status;

•legal or regulatory restrictions or proceedings could adversely impact our business and limit the growth of our operations;

•risks related to our international operations and ownership, including our significant operations in Israel, Ukraine and Belarus and the fact that our controlling stockholder is a Chinese-owned company;

•geopolitical events, such as the Wars in Israel and Ukraine;

•our reliance on key personnel;

•market conditions or other factors affecting the payment of dividends, including the decision whether or not to pay a dividend;

•uncertainties regarding the amount and timing of repurchases under our stock repurchase program;

•security breaches or other disruptions could compromise our information or our players’ information and expose us to liability; and

•our inability to protect our intellectual property and proprietary information could adversely impact our business.

Additional factors that may cause future events and actual results, financial or otherwise, to differ, potentially materially, from those discussed in or implied by the forward-looking statements include the risks and uncertainties discussed in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the SEC on February 26, 2024. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur, and reported results should not be considered as an indication of future performance. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Except as required by law, we undertake no obligation to update any forward-looking statements for any reason to conform these statements to actual results or to changes in our expectations.

Part I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(In millions, except par value)


	March 31, 2024		December 31, 2023
ASSETS	(Unaudited)
Current assets
Cash and cash equivalents	$	1,015.5	$	1,029.7

Restricted cash	2.0		2.0
Accounts receivable	172.0		171.5
Prepaid expenses and other current assets	153.2		147.9
Total current assets	1,342.7		1,351.1
Property and equipment, net	120.8		119.9
Operating lease right-of-use assets	95.4		100.3
Intangible assets other than goodwill, net	295.8		311.2
Goodwill	984.9		987.2
Deferred tax assets, net	100.4		99.3
Investments in unconsolidated entities	48.4		54.4
Other non-current assets	156.3		151.6
Total assets	$	3,144.7	$	3,175.0

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Current maturities of long-term debt	$	16.2	$	16.8
Accounts payable	57.4		65.0
Operating lease liabilities, current	26.0		19.5
Accrued expenses and other current liabilities	392.5		438.3
Total current liabilities	492.1		539.6
Long-term debt	2,397.2		2,399.6
Contingent consideration	20.1		20.8
Other long-term liabilities, including employee related benefits	311.3		318.7
Operating lease liabilities, long-term	75.4		88.2
Deferred tax liabilities	29.0		29.6
Total liabilities	3,325.1		3,396.5
Commitments and contingencies (Note 7)
Stockholders' equity (deficit)
Common stock of $0.01 par value; 1,600.0 shares authorized; 371.0 and 370.0 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	4.1		4.1
Treasury stock at cost (51.8 shares at both March 31, 2024 and December 31, 2023)	(603.5)		(603.5)
Additional paid-in capital	1,288.4		1,264.9
Accumulated other comprehensive income	22.3		20.6
Accumulated deficit	(891.7)		(907.6)
Total stockholders' deficit	(180.4)		(221.5)
Total liabilities and stockholders’ deficit	$	3,144.7	$	3,175.0

The accompanying notes are an integral part of these consolidated financial statements.

-1-

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except for per share data)

(Unaudited)


	Three months ended March 31,
		2024		2023
Revenues		$	651.2	$	656.2
Costs and expenses
Cost of revenue		177.0		185.7
Research and development		106.9		102.4
Sales and marketing		190.4		143.7
General and administrative		71.8		72.0
Impairment charge		7.0		—
Total costs and expenses		553.1		503.8
Income from operations		98.1		152.4
Interest and other, net		23.2		28.6
Income before income taxes		74.9		123.8
Provision for income taxes		21.9		39.7
Net income		53.0		84.1
Other comprehensive income (loss)
Foreign currency translation		(4.0)		3.1
Change in fair value of derivatives		5.7		(7.8)
Total other comprehensive income (loss)		1.7		(4.7)
Comprehensive income		$	54.7	$	79.4

Net income per share attributable to common stockholders, basic		$	0.14	$	0.23
Net income per share attributable to common stockholders, diluted		$	0.14	$	0.23
Weighted-average shares used in computing net income per share attributable to common stockholders, basic		370.5		364.6
Weighted-average shares used in computing net income per share attributable to common stockholders, diluted		370.8		365.1

The accompanying notes are an integral part of these consolidated financial statements.

-2-

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In millions)

(Unaudited)


	Share capital
	Shares	Amount		Treasury stock		Additional paid-in capital		Accumulated other comprehensive income		Retained earnings (Accumulated deficit)		Total stockholders' equity (deficit)
Balances at January 1, 2024	370.0	$	4.1	$	(603.5)	$	1,264.9	$	20.6	$	(907.6)	$	(221.5)
Net income	—	—		—		—		—		53.0		53.0
Cash dividend declared ($0.10 per share)	—	—		—		—		—		(37.1)		(37.1)
Stock-based compensation	—	—		—		24.2		—		—		24.2
Issuance of shares upon vesting of RSUs and PSUs	1.0	*		—		(*)		—		—		—
Income tax withholding related to vesting of restricted stock units and other	—	—		—		(0.7)		—		—		(0.7)
Other comprehensive income	—	—		—		—		1.7		—		1.7
Balances at March 31, 2024	371.0	$	4.1	$	(603.5)	$	1,288.4	$	22.3	$	(891.7)	$	(180.4)


	Share capital
	Shares	Amount		Treasury stock		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings (Accumulated deficit)		Total stockholders' equity (deficit)
Balances at January 1, 2023	363.6	$	4.1	$	(603.5)	$	1,155.8	$	17.6	$	(1,142.6)	$	(568.6)
Net income	—	—		—		—		—		84.1		84.1
Stock-based compensation	—	—		—		29.8		—		—		29.8
Issuance of shares upon vesting of RSUs and PSUs	2.0	*		—		(*)		—		—		—
Income tax withholding related to vesting of restricted stock units and other	—	—		—		(1.3)		—		—		(1.3)
Other comprehensive loss	—	—		—		—		(4.7)		—		(4.7)
Balances at March 31, 2023	365.6	$	4.1	$	(603.5)	$	1,184.3	$	12.9	$	(1,058.5)	$	(460.7)

_______

* Represents an amount less than 0.1 or $0.1

The accompanying notes are an integral part of these consolidated financial statements.

-3-

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Three months ended March 31,
	2024		2023
Cash flows from operating activities
Net income	$	53.0	$	84.1
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	12.3		11.6
Amortization of intangible assets	26.9		27.5
Impairment charges	7.0		—
Stock-based compensation	23.7		29.2
Amortization of loan discount	1.8		1.7
Change in contingent consideration	2.8		—
Change in deferred taxes, net	(3.6)		(3.5)
Loss from foreign currency	1.0		0.9
Non-cash lease expenses (income)	(1.5)		1.4

Changes in operating assets and liabilities:
Accounts receivable	(1.1)		(35.0)
Prepaid expenses and other current and non-current assets	(6.3)		16.5
Accounts payable	2.5		(11.9)
Accrued expenses and other current and non-current liabilities	(88.9)		(102.0)
Net cash provided by operating activities	29.6		20.5
Cash flows from investing activities
Purchase of property and equipment	(14.0)		(5.0)
Capitalization of internal use software costs	(10.6)		(8.1)
Purchase of software for internal use	(10.3)		(2.1)


Other investing activities	(1.0)		(0.2)
Net cash used in investing activities	(35.9)		(15.4)
Cash flows from financing activities

Repayments on bank borrowings	(4.8)		(4.8)






Payment of tax withholdings on stock-based payments	(0.7)		(1.3)


Net cash used in financing activities	(5.5)		(6.1)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(2.4)		(0.4)
Net change in cash, cash equivalents and restricted cash	(14.2)		(1.4)
Cash, cash equivalents and restricted cash at the beginning of the period	1,031.7		770.4
Cash, cash equivalents and restricted cash at the end of the period	$	1,017.5	$	769.0

-4-


	Three months ended March 31,
	2024		2023
Supplemental cash flow disclosures
Cash paid for income taxes	$	33.2	$	39.9
Cash paid for interest	$	43.3	$	41.6
Cash received for interest	$	15.0	$	6.9
Non-cash financing and investing activities
Accrued dividend	$	37.1	$	—
Right-of-use assets acquired under operating leases	$	0.1	$	3.7

Accrued purchases of property and equipment and intangible assets	$	7.0	$	—
Capitalization of stock-based compensation costs	$	0.5	$	0.6

The accompanying notes are an integral part of these consolidated financial statements.

-5-

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In millions, unless specified otherwise)

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business and organization

Playtika Holding Corp. (“Playtika”) and its subsidiaries (together with Playtika, the “Company”) is one of the world’s leading developers of mobile games creating fun, innovative experiences that entertain and engage its users. It has built best-in-class live game operations services and a proprietary technology platform to support its portfolio of games which enable it to drive strong user engagement and monetization. The Company’s games are free-to-play, and the Company seeks to provide novel, curated in-game content and offers to its users, at optimal points in their game journeys to drive user engagement and monetization.

Basis of presentation and consolidation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include Playtika and all subsidiaries in which the Company has a controlling financial interest. Control generally equates to ownership percentage, whereby (i) affiliates that are more than 50% owned are consolidated; (ii) investments in affiliates of 50% or less but greater than 20% are generally accounted for using the equity method where the Company has determined that it has significant influence over the entities; and (iii) investments in affiliates of 20% or less are generally accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The significant accounting policies referenced in the annual consolidated financial statements of the Company as of December 31, 2023 have been applied consistently in these unaudited interim consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been recorded within the accompanying financial statements, consisting of normal, recurring adjustments, and all intercompany balances and transactions have been eliminated in the consolidation. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 26, 2024.

Use of estimates

The preparation of the interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Concentration of credit risk and significant customers

Financial instruments, which potentially expose the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, restricted cash, accounts receivable and derivative contracts. The Company’s investment policy imposes certain maturity limits on the Company’s portfolio and restricts the permitted investments to the purchase of bank deposits and highly rated fixed income securities.

Apple, Facebook and Google are significant distribution, marketing, promotion and payment platforms for the Company's games. A significant portion of the Company’s revenues has been generated from players who accessed the Company's games through these platforms. Therefore, the Company's accounts receivable are derived mainly from sales through these three platforms. The Company performs ongoing credit evaluations of its customers.

-6-

The following table summarizes the major accounts receivable of the Company as a percentage of the total accounts receivable as of the dates indicated:


	March 31, 2024	December 31, 2023

Apple	57%	56%
Google	27%	28%
Facebook	4%	4%

Accounts receivable are recorded at their transaction amounts and do not bear interest. The Company bases its allowance for credit losses on management's best estimate of the amount of probable credit losses in the Company's existing accounts receivable based on historical collection experience and current and expected future economic and market conditions.

Employee related benefits

Appreciation and retention plan

In August 2019, the Company adopted the Playtika Holding Corp. Retention Plan (the “2021-2024 Retention Plan”) in order to retain key employees and reward them for contributing to the success of the Company. Under the 2021-2024 Retention Plan, eligible employees may be granted retention units that let them receive their pro-rata portion of a retention pool of $25 million per year for each of the plan years, and may also be granted appreciation units, which allow the employee to receive their pro-rata portion of an appreciation pool calculated as a specified percentage of Adjusted EBITDA for each of the plan years.

The value of each unit of the 2021-2024 Retention Plan has been amortized into compensation expense using the straight-line method, which will result in the recognition of compensation costs in the same years as the underlying EBITDA used in the plan measurement is earned.

The Company recognized compensation expenses in respect of retention bonus and appreciation unit awards under its appreciation and retention plans of $22.9 million and $29.8 million during the three months ended March 31, 2024 and 2023, respectively.

Derivative instruments

The Company uses interest rate swap contracts to reduce its exposure to fluctuating interest rates associated with the Company’s variable rate debt, and to effectively increase the portion of debt upon which the Company pays a fixed interest rate. The Company’s interest rate swap agreements are designated as cash flow hedges under ASC 815, Derivatives and Hedging (“ASC 815”), involving the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional amount. These hedges are highly effective in offsetting changes in the Company’s future expected cash flows due to the fluctuation of the Company’s variable rate debt.

The Company monitors the effectiveness of its hedges on a quarterly basis, both qualitatively and quantitatively. The Company performed a regression analysis at inception of the hedging relationship and at period end in which it compared the change in the fair value of the swap transaction and the change in fair value of a hypothetical interest rate swap having terms that identically match the terms of the debt's interest rate payments based on historical swap rates. The Company believes that the hedging instruments are expected to be highly effective at offsetting changes in the hedged transactions attributable to the risk being hedged. For each future reporting period, the Company will continue performing retrospective and prospective assessments of hedge effectiveness in a single regression analysis by updating the regression analysis that was prepared at inception of the hedging relationship.

The Company uses foreign currency derivative contracts to reduce its exposure to fluctuating exchange rates between the United States dollar (as the Company’s functional currency) and certain expense lines denominated in Euros (“EUR”), Israeli Shekels (“ILS”), Polish Zloty (“PLN”) and Romanian Leu (“RON”). The Company’s derivative contracts are designated as

-7-

cash flow hedges under ASC 815. The Company monitors the effectiveness of its hedges on a quarterly basis, both qualitatively and quantitatively, and expects these hedges to remain highly effective at offsetting fluctuations in exchange rates through their respective maturity dates. See Note 5, Derivative Instruments, for additional discussion.

The fair value of derivative financial instruments is recognized as an asset or liability at each balance sheet date, with changes in fair value recorded in other comprehensive income on the consolidated statements of comprehensive income until the future underlying transactions occur. The fair value approximates the amount the Company would pay or receive if these contracts were settled at the respective valuation dates. The inputs used to measure the fair value of the Company’s interest rate swap agreements and foreign currency derivative contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820, Fair Value Measurement (“ASC 820”).

Investment in unconsolidated entities

The Company holds certain equity investments in various unconsolidated entities that, based upon the structure of the investment, are not within the scope of equity investment accounting that would lead to the consolidation conclusions above. Instead, these investments fall within the scope of ASC 321, Investments - Equity Securities. As permitted within that guidance, the Company has elected to account for these investments at cost less impairment, adjusted for changes in fair value from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates. During the three months ended March 31, 2024, the Company recorded an impairment of $7.0 million related to one of its investments in an unconsolidated entity. No change to the carrying amounts were recorded in the three month ended March 31, 2023.

Net income per share attributable to common stockholders

For all periods presented herein, basic net income per share is calculated by dividing net income by the weighted-average common shares outstanding. Diluted net income per share reflects the effect of all potentially dilutive common shares outstanding by dividing net income by the weighted-average of all common and potentially dilutive shares outstanding. Performance Stock Units (“PSUs”) are considered potentially dilutive as of the first day of the reporting period in which the underlying performance metric is achieved. In the event of a loss, diluted shares are not considered because of their anti-dilutive effect. The Company uses the treasury stock method on a grant-by-grant basis as the method for determining the dilutive effect of options, RSUs and PSUs. Under this method, it is assumed that the hypothetical proceeds received upon settlement are used to repurchase common shares at the average market price during the period.

NOTE 2. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities at March 31, 2024 and December 31, 2023 were as follows (in millions):


	March 31, 2024		December 31, 2023
Employees and related expenses	$	88.6	$	162.5
Accrued expenses	76.3		93.9
Media buy	61.7		54.5
Contingent consideration	49.5		46.0
Deferred revenues	43.9		46.0
Dividend payable	37.1		—
Tax accruals	35.4		35.4

Total accrued expenses and other current liabilities	$	392.5	$	438.3

-8-

NOTE 3. DEBT


	March 31, 2024						December 31, 2023
(in millions, except interest rates)	Maturity	Interest rate	Book value		Face value		Book value

Term Loan	2028	8.190%	$	1,819.6	$	1,847.8	$	1,822.8
Senior Notes	2029	4.250%	593.8		600.0		593.6
Revolving Credit Facility	2026	n/a	—		—		—
Total debt			2,413.4		2,447.8		2,416.4
Less: Current portion of long-term debt			(16.2)		(23.8)		(16.8)
Long-term debt			$	2,397.2	$	2,424.0	$	2,399.6

Book value of debt in the table above is reported net of deferred financing costs and original issue discount of $34.4 million and $36.1 million at March 31, 2024 and December 31, 2023, respectively.

Credit Agreement

The Company has a $1.9 billion senior secured first lien term loan (the “Term Loan”) and a $600 million revolving credit facility (the “Revolving Credit Facility”) (together, the “Credit Agreement”), maturing on March 11, 2028 and March 11, 2026, respectively. The Term Loan requires quarterly principal payments equal to 0.25% of the original aggregate principal amount of the Term Loan with balance due at maturity.

The Revolving Credit Facility includes a maximum first-priority net senior secured leverage ratio financial maintenance covenant of 6.25 to 1.0. At March 31, 2024, the Company’s first-priority net senior secured leverage ratio was 1.05 to 1.0.

The Company was in compliance with its financial and other covenants under the Credit Agreement as of March 31, 2024.

On June 19, 2023, the Company amended the Credit Agreement pursuant to a Third Amendment to Credit Agreement (the “Third Amendment”). The Third Amendment amended the Credit Agreement to bear interest or incur fees and other amounts denominated in Dollars to be based on the Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus an applicable spread adjustment, rather than the previously permitted Adjusted Eurocurrency Rate, starting in the third quarter of 2023. The amendment did not have an impact on the Company’s consolidated financial statements or the effectiveness of the Company’s interest rate swap agreements.

The other significant terms and conditions of the Credit Agreement have not changed from what was disclosed in Note 12, Debt in our Annual Report on Form 10-K filed with the SEC on February 26, 2024.

Offering of 4.250% Senior Notes due 2029

Indenture

On March 11, 2021, the Company issued $600.0 million aggregate principal amount of its 4.250% senior notes due 2029 (the “Notes”) under an indenture, dated March 11, 2021 (the “Indenture”), among the Company, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee (the “Trustee”).

Maturity and Interest

The Notes mature on March 15, 2029. Interest on the Notes will accrue at a rate of 4.250% per annum. Interest on the Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year.

The significant terms and conditions of the Notes have not changed from what was disclosed in Note 12, Debt in our Annual Report on Form 10-K filed with the SEC on February 26, 2024.

-9-

NOTE 4. EQUITY TRANSACTIONS AND STOCK INCENTIVE PLAN

Overview of Stock Incentive Plan

On May 26, 2020, the Board of Directors of the Company approved the Playtika Holding Corp. 2020 Incentive Award Plan (the “Plan”).

As of March 31, 2024, a total of 48,726,990 shares of the Company’s common stock had been allocated to awards granted under the Plan and 14,674,667 shares remained available for future grants.

Cash Dividend

The Board of Directors of the Company declared a cash dividend of $0.10 per share of the Company’s outstanding common stock, payable on April 5, 2024 to stockholders of record as of the close of business on March 22, 2024. The dividend amount of $37.1 million is recorded in accrued expenses and other current liabilities at March 31, 2024.

Stock Options

The following table summarizes the Company’s stock option activity during the three months ended March 31, 2024:


	Stock	Weighted	Weighted
	Options	Average	Average		Intrinsic
	Outstanding	Remaining	Exercise		Value
	(in millions)	Term (in years)	Price		(in millions)
Outstanding at January 1, 2024	1.7	7.6	$	17.72
Granted	—		$	—
Exercised	—
Cancelled	(0.1)		$	17.89
Expired	—		$	—
Outstanding at March 31, 2024	1.6	7.4	$	17.71	$	—
Exercisable at March 31, 2024	1.0	7.2	$	19.47	$	—

The Company used the Black-Scholes option pricing model for determining the estimated fair value of stock-based compensation related to stock options. The table below summarizes the assumptions used for the options granted in the first quarter of 2023. There were no options granted in the first quarter of 2024.


									Three months ended March 31,
									2023
Risk-free interest rate									3.79%
Expected dividend yield									—
Expected term in years									6.1
Expected volatility									52.79%

-10-

RSUs

The following table summarizes the Company’s RSU activity during the three months ended March 31, 2024:


		Weighted		Total Fair
		Average		Value of
	Shares	Grant Date		Shares Vested
	(in millions)	Fair Value		(in millions)
Outstanding at January 1, 2024	21.3	$	12.24
Granted	0.2	$	7.26
Vested	(1.1)	$	16.04	$	8.0
Cancelled	(1.0)	$	13.10
Outstanding at March 31, 2024	19.4	$	11.93

PSUs

As of March 31, 2024, the Company estimated achievement of a target less than 100% for the PSUs associated with the 2024 tranche, consistent with the Company’s current forecasted performance for 2024, and a target of 50% for the PSUs associated with the 2025 tranche.

The following table summarizes the Company’s PSU activity during the three months ended March 31, 2024:


		Weighted		Total Fair
		Average		Value of
	Shares(1)	Grant Date		Shares Vested
	(in millions)	Fair Value		(in millions)
Outstanding at January 1, 2024	2.2	$	9.72
Granted	—	$	—
Vested	*	$	9.72	*
Cancelled	(0.7)	$	9.72
Outstanding at March 31, 2024	1.5	$	9.72

________

(1) The number of PSUs outstanding represent the total number of PSUs granted to each recipient eligible to vest if the Company meets its highest specified performance goals for the applicable period.

* Represents an amount less than 0.1 or $0.1

Stock-Based Compensation

The following table summarizes stock-based compensation costs as reported by award type (in millions):


	Three months ended March 31,
		2024		2023
Stock options		$	0.8	$	0.3
RSUs		25.9		27.1
PSUs		(2.5)		2.4
Total stock-based compensation costs		$	24.2	$	29.8

-11-

The following table summarizes stock-based compensation costs, net of amounts capitalized, as reported on the Company’s consolidated statement of comprehensive income (in millions):


	Three months ended March 31,
		2024		2023
Research and development expenses		$	8.1	$	9.5
Sales and marketing expenses		1.8		2.4
General and administrative expenses		13.8		17.3
Total stock-based compensation costs, net of amounts capitalized		$	23.7	$	29.2

During the three months ended March 31, 2024 and 2023, the Company capitalized $0.5 million and $0.6 million of stock-based compensation cost, respectively.

As of March 31, 2024, the Company’s total unrecognized stock-based compensation expenses related to stock options, RSUs and PSUs was approximately $4.1 million, $209.3 million and $2.0 million, respectively. The expense related to stock options, RSUs and PSUs are expected to be recognized over a weighted average period of 1.6 years, 2.9 years and 1.8 years, respectively.

NOTE 5. DERIVATIVE INSTRUMENTS

Interest Rate Swap Agreements

In March 2021, the Company entered into two interest rate swap agreements, each with a notional value of $250 million. Each of these swap agreements is with a different financial institution as the counterparty to reduce the Company’s counterparty risk. Each swap requires the Company to pay a fixed interest rate of 0.9275% in exchange for receiving one-month LIBOR. The interest rate swap agreements settle monthly commencing in April 2021 through their termination dates on April 30, 2026. The estimated fair value of the Company’s interest rate swap agreements is derived from a discounted cash flow analysis. In June 2023 these two interest rate swap agreements were amended so that effective July 31, 2023, the Company will pay a fixed interest rate of 0.85% in exchange for receiving one-month Term SOFR. The amendment did not impact the hedge effectiveness.

In January 2023, the Company entered into two interest rate swap agreements, each with a notional value of $250 million. Each of these swap agreements is with a different financial institution, and each swap requires the Company to pay a fixed interest rate of 3.435% in exchange for receiving one-month LIBOR for six months and one-month Term SOFR afterwards. The interest rate swap agreements settle monthly commencing in February 2023 through their termination dates on February 28, 2028. The estimated fair value of the Company’s interest rate swap agreements is derived from a discounted cash flow analysis.

The aggregate fair value of the Company’s interest rate swap agreements was an asset of $47.0 million as of March 31, 2024 and was recorded in prepaid expenses and other current assets and other non-current assets in the accompanying consolidated balance sheets based upon the timing of the underlying expected cash flows.

Foreign currency hedge agreements

At March 31, 2024, the Company had outstanding derivative contracts to purchase certain foreign currencies, including EUR, ILS, RON, and PLN at future dates. The amount of future salary expenses the Company had hedged was approximately $192.9 million, and all contracts are expected to mature during the upcoming 12 months. The aggregate fair value of the Company’s derivative contracts was a net liability of $0.3 million as of March 31, 2024 and was recorded in prepaid expenses and other current assets and accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

-12-

The following table summarizes the volume of derivative instrument activity (in millions):


	Three months ended March 31,
		2024		2023
Derivative instruments - foreign currency derivative contracts		$	39.1	$	38.7
Derivative instruments - interest rate swaps		—		500.0
Derivative instruments - others (non-hedging)		—		1.9

NOTE 6. FAIR VALUE MEASUREMENTS

The Company accounts for fair value in accordance with ASC 820. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a three-tier hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying value of accounts receivable and payables and the Company's cash and cash equivalents and restricted cash approximates fair value due to the short time to expected payment or receipt of cash.

The following table summarizes the fair value measurement of the Company’s long-term debt (in millions):


	March 31, 2024
	Face Value		Fair Value		Fair Value Hierarchy
Term Loan	$	1,847.8	$	1,847.8	Level 2
Senior Notes	600.0		519.0		Level 2
Total debt	$	2,447.8	$	2,366.8


	December 31, 2023
	Face Value		Fair Value		Fair Value Hierarchy
Term Loan	$	1,852.5	$	1,847.9	Level 2
Senior Notes	600.0		525.8

SEC Form 10-Q filed by Playtika Holding Corp.