MYPS 10-K & 10-Q changes, risk factors and insider trading

Our business faces significant risks and uncertainties. In evaluating our business, in addition to the risks and uncertaintiesmatters discussed above under “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider the specific risks set forth herein. If any of these risks actually occur, it may materially harm our business, financial condition, liquidity and results of operations. These risks may occur individually or in combination, and the occurrence of one risk could exacerbate the impact of others. As a result, the market price of our securities could decline. Additionally, the risks and uncertainties described in this Annual Report on Form 10-K are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business. The risks described herein are not presented in order of importance, and we cannot assure you that our mitigation efforts will be effective in preventing or reducing the impact of any of these risks,

Our business depends on developing, publishing, and continuing to service casual, “free-to-play” games that players will download and spend time and money playing. We are currently focused on social casino, casual, and puzzle games, offering our games on mobile devices, including smartphones and tablets on Apple’s iOS and Google’s Android operating systems, on social networking platforms such as Facebook, and on our websites. We have devoted and we expect to continue to devote substantial resources to the research, development, analytics, and marketing of our games. Our development and marketing efforts are focused on both improving the experience within our existing games (frequently through new content and feature releases for our live services) and developing new games. We generate revenue primarily through the sale of in-game virtual currency. Our monetization model depends on players’ willingness to make discretionary purchases of virtual currency and other in-game items, and is subject to evolving regulatory scrutiny, platform policies, and consumer protection standards applicable to in-game purchases and virtual currency mechanics. For games distributed through third-party platforms, we are required to share a portion of our revenue from in-game sales with the platform providers. DueAs toa result of our focus on mobile gaming,gaming theseand coststhird-party distribution platforms, platform fees and revenue share arrangements are expected to remain a significant operating expense.expense and may increase over time. See “Risk Factors—We rely on third-party platforms such as the Apple App Store, Google Play Store, Amazon Appstore, and Facebook to make our games available to players and collect revenues generated on such platforms, and we rely on third-party payment service providers to collect revenues generated on our own platforms.” In order to achieve and maintain profitability, we need to generate sufficient revenue from our existing and new game offerings to offset our ongoing development, marketing, and operating costs.

Successfully monetizing “free-to-play” games is difficultdifficult, highly competitive, and requiresincreasingly thatsubject weto deliverregulatory, engagingplatform, and entertainingconsumer player experiences that a sufficient number of players will pay for or we are able to otherwise sufficiently monetize our games.scrutiny. The success of our games depends, in part, on unpredictable and volatile factors beyond our control including player preferences and spending habits, competing games, and the availability of other entertainment experiences. If our games do not meet player expectations, or if new games are not brought to market in a timely and effective manner, our ability to grow revenue and our financial performance will be negatively affected. In addition, a relatively small percentage of our players account for a disproportionate amount of our revenue, and any reduction in engagement or spending by these players could materially affect our operating results.

These and other uncertainties make it difficult to know whether we will succeed in continuing to develop successful games and live operations services and launch new games and features in accordance with our operating plan. If we doare notunable succeedto insuccessfully doingdevelop, so,launch, and operate engaging and compliant games on a sustained basis, our business, financial condition, results of operations, cash flows, and reputation willcould suffer.be materially adversely affected.

If we are able tosuccessfully develop new games and featuresfeatures, thatthey achievemay success,cannibalize itengagement isor possiblerevenue that these new games and features could divert players offrom our other existing games without growingexpanding our overall player base,base whichor couldincreasing harmtotal operating results.revenue.

We believe that our players’ level of engagement with our games is partly based on playAWARDS, our real-world rewards loyalty program. If we failare unable to maintain, expand andor diversify our playAWARDS program, or if external eventsfactors makereduce itthe difficultperceived forvalue ouror playersusability to consumeof real-world rewards, our business may suffer.

Players accumulate loyalty points by engaging with our games, and players can exchange their loyalty points for real-world rewards through our playAWARDS program. We believe that our players’ level of engagement with our games is partly based on the perceived value of earning loyalty points and exchanging those loyalty points for real-world rewards that they can redeem at our rewards partners’ establishments. We currently offer real-world rewards relating to, among other things, dining, live entertainment shows, and hotel rooms. For example, through an agreement with MGM Resorts International, or MGM, our players are able to exchange loyalty points for, among other things, free hotel rooms, meals and show tickets for various Las Vegas properties, including ARIA, Bellagio, and MGM Grand. WhileA wemeaningful offer some digital rewards, manyportion of our real-world rewards are destination based. During the COVID-19 pandemic, we observed a lower level of rewards redemption due to restrictions on the operations of rewards partners and on the ability for players to travel or attend public events, and while such restrictions have been lifted, we could experience a reduced level of rewards redemption as a result of unanticipated future circumstances that have the effect of restricting travel or the in-person attendance of public events. If we are unable to expand and diversify our playAWARDS program, the perceived value of exchanging loyalty points for the real-world rewards we offer will diminish and our players may be less likely to play our games or may reduce their level of engagement with our games. Such loss of, or reduction in, players or their level of engagement with our games would cause our business, financial condition, and results of operations to suffer. The loss of MGM or other major rewards partners, a decrease in the quantity or quality of available rewards, or a significant change in the terms of our reward partner agreements, could materially diminish the appeal of our playAWARDS program todepends players,on whicha limited number of significant rewards partners, including MGM. As a result, changes in the availability, pricing, terms, or perceived attractiveness of rewards offered by one or more key partners could indisproportionately turn reduceaffect player engagement and monetization across our portfolio. If we are unable to maintain or enhance our rewards inventory, our competitive advantage would be diminished, potentially resulting in reduced revenue and profitability.monetization.

Competition in the gaming industry, especially the mobile gaming segment, is intense and subject to rapid changes, including changes from evolving player preferences and emerging technologies. Many new games are introduced in each major industry segment (mobile, web, PC, and console) each year, but only a relatively small number of titles account for a significant portion of total revenue in each segment. While we have diversified our product offering, we historically competed primarily in the social casino gaming category. Our competitors that develop mobile and web games in the social casino gaming category vary in size and offerings and include companies such as Aristocrat, DoubleU, Huuuge Games, Playtika, SciPlay, Scopely, Zynga (owned by Take-Two Interactive), and others. In addition, there are competitors that develop mobile and web games that are not currently focused on the social casino gaming category but may move into that space and that may also impede our diversification efforts, including companies such as Activision Blizzard (owned by Microsoft Corporation and the parent company of King Digital), Electronic Arts (EA Mobile), Epic Games, Netmarble (the parent company of Jam City and Kabam), NetEase (NetEase Games), Niantic, Take-Two Interactive Software, Vivendi (the parent company of Gameloft), and others. In addition, online game developers and distributors that are primarily focused on specific international markets, such as Giant Interactive and Tencent in Asia, and high-profile companies with significant online presences that to date have not actively focused on social games, such as Facebook, Apple, Google, Amazon, and Netflix, may decide to develop social games including social casino games which may compete with our games. Some of these current and potential competitors have significant resources for developing, enhancing or acquiring additional games or gaming companies, may be able to incorporate their own strong brands and assets into their games, may have a more diversified set of revenue sources than we do and may be less severely affected by changes in player preferences, regulations or other developments that may impact our industry. In addition, platform operators and app stores, including Apple and Google, control distribution, promotion, ranking algorithms, and payment processing for mobile games. Changes to platform policies, discovery algorithms, fee structures, privacy rules, or monetization restrictions may disproportionately benefit larger competitors or negatively impact our ability to attract and retain players on cost-effective terms. Furthermore, certain competitors of our social casino games may provide real-money gambling offerings, which could negatively impact demand for our social casino games.

There are relatively low barriers to entry to develop a mobile or online game and we expect new game competitors to enter the market and existing competitors to allocate more resources to develop and market competing games and applications. We also compete or will likely compete with a vast number of small companies and individuals who are able to create and launch games and other content for devices and platforms using relatively limited resources and with relatively limited start-up time or expertise. The proliferation of titles in these open developer channels makes it difficult for us to compete for players without substantially increasing our marketing expenses. In addition, increased competition for user acquisition channels, changes in digital advertising policies (including privacy-related restrictions), and the concentration of performance marketing inventory among a limited number of large technology platforms may increase our player acquisition costs and reduce the effectiveness of our marketing spend. We also face competition for the leisure time, attention, and discretionary spending of our players from other non-gaming activities, such as social media and messaging applications, personal computer and console games, virtual reality and augmented reality games, video streaming services, television, movies, sports, and the Internet. Increasing competition could result in loss of players, increasing player acquisition and retention costs, and loss of talent, all of which could harm our business, financial condition, or results of operations.

The market for our games is characterized by rapid technological developments, frequent launches of new games and enhancements to current games, changes in player needs and behavior, disruption by innovative entrants and evolving business models and industry standards. As a result, our industry is constantly changing games and business models in order to adopt and optimize new technologies, increase cost efficiency and adapt to player preferences. Our competitors may adapt to an emerging technology or business model more quickly or effectively, developing products and games or business models that are more technologically advanced, more appealing to consumers, or both. Competitors also may experiment with alternative monetization models, including hybrid real-money gaming, skill-based wagering, or reward-based structures, which could alter player expectations and reduce engagement with traditional social casino formats. The emergencecontinued growth of “sweepstakes casino” games, which aretypically similarincorporate topromotional sweepstakes mechanics and may offer cash-equivalent prizes, has intensified competition within the broader social casino category. To the extent such offerings attract players seeking alternative monetization structures or prize opportunities, demand for our traditional social casino games butcould incorporatebe sweepstakesadversely asaffected. For a primarydiscussion userof acquisitionregulatory andrisks monetizationassociated toolwith insweepstakes-style theofferings, game,see could“Risk poseFactors a— competitiveOur threat to ourtraditional social casino gamesbusiness has experienced declining performance, which we believe is attributable in significant part to increased competition from sweepstakes-based casino offerings, and harmthis ourtrend resultsmay ofcontinue operations.or accelerate."

Current and future competitors may also make strategic acquisitions or establish cooperative relationships among themselves or with others, including our current or future business partners or third-party software providers. By doing so, including through vertical integration of development, marketing, analytics, and platform capabilities, these competitors may increase their scale, their ability to meet the needs of existing or prospective players and compete for similar human resources. If we are unable to compete effectively, successfullyeffectively and at a reasonable costefficiently against our existing and future competitors, our results of operations, cash flows and financial condition would be adversely impacted.

We rely on a small portion of our total players for a substantial amountportion of our revenue and iffluctuations we fail to grow our player base, or ifin player engagement declines,or spending could materially harm our revenue and operating results will be harmed.results.

Compared to all players who play our games in any period, only a small portion are paying players. As a result, a meaningful portion of our revenue is derived from a relatively small number of highly engaged players. In order to sustain and grow our revenue levels, we must attract, retain, and increase the number of paying players or more effectively monetize our players through advertising and other strategies. Spending patterns of paying players, particularly our most highly engaged players, can fluctuate significantly from period to period and are difficult to predict, To retain players, we must devote significant resources so that the games they play retain their interest and attract them to our other games. Players can easily reduce their spending or cease playing our games altogether in favor of competing entertainment options, including other social games, mobile games, or alternative forms of digital entertainment. We also organize periodic in-person events for our players and, in addition,and provide personal hosting services to our most engaged players,players. Nevertheless,However, wethese mightinitiatives notinvolve succeedsignificant costs, and there can be no assurance that they will result in ourincreased effortsengagement toor increase the monetization rates of our players,monetization, particularly if we are unable to retain our paying players. If we fail to grow or sustain the number of our paying players, if player engagement levels decline, if the rates at which we attract and retain paying players declines, if the average amount our players pay declines, including due to changes in game mechanics, competitive dynamics, or regulatory or platform constraints, or if we fail to retain and effectively monetize the relatively small number of players that comprise our most highly engaged player tiers, our business may be negatively impacted and our financial results may suffer. Because a substantial portion of our revenue is derived from a relatively small number of highly engaged players, the loss or reduced spending of any of these players could have a disproportionate adverse effect on our business and results of operations.

A substantial portion of our loyalty rewards and significantcertain key intellectual property are obtained from MGM, and any changechanges in that relationship could materially and adversely affect our business and financial results.

Although we have a portfolio of entertainment, retail, technology, travel, leisure, and gaming brands across the globe providing rewards through our playAWARDS program, MGM historically has provided a substantial amount of such rewards, and the majority of the rewards redeemed through our playAWARDS program forin recent periods (including the year ended December 31, 20242025) werehave been offered by MGM. Under the terms of our marketing agreement and rewards agreement with MGM, MGM has discretion over the typestypes, quantities, timing and quantitiesavailability of rewards and whether to make any rewards available for a particular game, and MGM may discontinue any rewards previously made available. The terms of our marketing agreement with MGM requiresis ussubject to automatic renewal only if we meet certainspecified performance criteria for it to be automatically renewed,criteria, and if we fail to meet those performance criteria, MGM could terminate both the marketing agreement and the rewards agreement. If we fail to meet our required performance criteria under the marketing agreement, we could also lose certain licensed intellectual property rights that we license from MGM under the marketing agreement andthat whichare we useused as creative assets in certain of our games. Even absent termination or non-renewal, reductions in the scope, attractiveness, or economics of the rewards or licensed intellectual property made available by MGM could diminish the appeal of our games and loyalty offerings. We may not be able to replace MGM-provided rewards or licensed intellectual property with alternatives on comparable terms, or at all, within a reasonable timeframe. In the event that MGM offers fewer or less attractive rewards for our games or if we fail to achieve the required performance milestones and MGM decides not to renew our agreements, our businessbusiness, player engagement, and financial results could be materially and adversely affected.

We derive a significant portion of our revenue from the distribution of our games on the Apple App Store, Google Play Store, Amazon Appstore, and Facebook, and the virtual items we sell in our games are purchased using the payment processing systems of these third-party platform providers. Additionally, we have historically acquired a significant number of our players through Facebook. If we are unable to maintain a good relationship with such platform providers, if their terms and conditions or pricing change to our detriment, if we violate, or if a platform provider believes that we have violated, the terms and conditions of its platform, or if any of these platforms loses market share or falls out of favor, or is unavailable for a prolonged period of time, our business will suffer. Because a substantial portion of our revenue and player acquisition is dependent on a limited number of platform providers, any adverse action, policy change, technical disruption, or enforcement decision affecting one or more of these platforms could have a disproportionate adverse impact on our business, financial condition, and results of operations.

We are subject to the standard and non-negotiated policies and terms of service/publisher agreements of third-party platforms, which govern the promotion, distribution, content, and operation generally of games on the platform. Each platform provider has broad discretion to unilaterally change and interpret its terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us. Platform providers may suspend, remove, or restrict our games or features, temporarily or permanently, with little or no advance notice, including based on their unilateral interpretation of their policies. A platform provider may also change its fee structure, add fees associated with access to and use of its platform, alter how we are able to advertise on the platform, change how the personal information of its users is made available to application developers on the platform, limit the use of personal information for advertising purposes, or restrict how players can share information with their friends on the platform or across platforms. Platform providers may enforce their policies selectively, inconsistently, or retroactively, and we may have limited or no meaningful ability to challenge or appeal such enforcement decisions, Any ofplatform theselevel changes could be implemented with little or no advance notice, and we may be unable to take action avert or reduce the negative impacts such changes could impose on our business. In many cases, the terms, policies, and enforcement practices of these platform providers are non-negotiable, and we have limited ability to influence their interpretation, application, or modification. As a result, we may be required to comply with changes to platform rules, technical requirements, or business practices even if such changes adversely affect our games, monetization strategies, or operating results.

•the platforms adopt changes or updates to their technologyoperating systems, APIs, SDKs, privacy frameworks, or technical requirements that impede integration with other software systems or otherwise require us to modify our technology or update our games in order to ensure players can continue to access our games and content with ease;

•the platforms change how the personal information of players is made available to developers or develop or expand their own competitive offerings; or

In addition, third-party platforms also impose certain file size limitations, which limits our ability to create software with additional features that would result in a larger size than the platform providers would support. Aside from these file size limitations, a larger game file size could cause players to delete our games once the file size grows beyond the capacity of their devices’ storage limitations or could reduce the number of downloads of these games. Larger file sizes may also negatively affect player discovery, conversion rates, and organic installs.

Changes in the respective terms of service or policy changes of third-party platforms may decrease the visibility or availability of our games, limit our distribution capabilities, prevent access to our existing games, reduce the amount of revenue we may recognize from in-game purchases, increase our costs to operate on these platforms, or result in the exclusion or limitation of our games or certain in-game features on such platforms. Any such changes could adversely affect our business, financial condition, or results of operations. Platform providers may take action with respect to specific titles, genres, features, or jurisdictions, including blocking or restricting access in certain regions while allowing continued operation elsewhere. Even if such actions affect only a subset of our games or markets, they could materially harm player engagement, revenue, and growth prospects.

Obtaining and maintaining high ratings of our games on the platforms on which we operate are important as they help drive users to find our games. If the ratings of any of our games decline or if we receive significant negative reviews that result in a decrease in our ratings, our games could be more difficult for players to find or recommend. In addition, we may be subject to negative review campaigns or defamation campaigns intended to harm our ratings. Any such decline may lead to loss of users and revenues, additional advertising and marketing costs, and reputation harm. Platform providers may also remove, modify, or deprioritize ratings or reviews, or change how ratings are calculated or displayed, in ways that could adversely affect visibility and player acquisition.

We are also dependent on these platforms for user discovery, distribution, and ongoing access to our player base, and adverse changes to platform algorithms, promotional practices, or technical standards may materially reduce organic installs or engagement even if our games remain available on the platforms. If our platform providers do not perform their obligations in accordance with our platform agreements, we could be adversely impacted. For example, in the past, some of these platform providers have been unavailable for short periods of time, unexpectedly changed their terms or conditions or experienced issues with their features that permit our players to purchase virtual items. If any of our third-party service providers is unable to process payments, even for a short period of time, our business could be harmed. Any actions by platform providers that limit our ability to communicate with players about alternative purchasing options, impose technical or policy restrictions on direct-to-consumer offerings, or otherwise disadvantage off-platform transactions, including through technical, contractual, disclosure, or user-interface restrictions, differential fees, or enforcement actions, could reduce the effectiveness of our direct-to-consumer initiatives and adversely affect our revenue mix and margins. These platforms and our third-party online payment service providers may also experience security breaches or other issues with their functionalities. In addition, if we violate, or a platform provider believes we have violated, its terms of service, policies, or standard publisher agreements (or if there is any change or deterioration in our relationship with any of these platform providers), that platform provider could limit or discontinue our access to the platform or we may be exposed to liability or litigation. As jurisdictions in which we operate and their regulatory bodies adopt or modify laws and regulations, our platform providers may adopt restrictive policies or take other adverse action against the Company and its games in connection with their interpretation and implementation of such laws and regulations. IfSimilar theactions could be taken by platform providers took such actions in other jurisdictions or with respect to other titles, including jurisdictions or platforms that are more significant to our operations,business, itwhich could negativelyhave impacta material adverse effect on our business.business, financial condition, and results of operations.

Additionally, if our platform providers were to develop competitive offerings, either on their own or in cooperation with one or more competitors, our growth prospects could be negatively impacted. For example, Apple developed its own video game subscription service, Apple Arcade, which may compete further with our games. Netflix, a relatively new entrant in the gaming market, has expanded its offerings by including a growing library of mobile games as part of its subscription service. With its expansive customer base and vast resources, Netflix could pose a material competitive threat to the Company’s business. Platform providers may also use non-public data, platform insights, or preferential placement to advantage their own offerings or those of select partners. Increased competition and success of other brands, genres, business models and games could result in, among other things, a loss of players, or negatively impact our ability to acquire new players cost-effectively, which could have a material adverse effect on our business, financial condition and results of operations.

Because a substantial portion of our revenue is generated through a limited number of platform providers, any adverse change affecting one or more of these platforms could have a disproportionate impact on our business. If any such events described above occur on a short-term or long-term basis, or if these third-party platforms and online payment service providers otherwise experience issues that impact the ability of players to download or access our games, access social features, or make in-game purchases, it could materially and adversely affect our brands and reputation, as well as our business, financial condition, and results of operations.

We rely on third-party hosting and cloud computing providersproviders, to operate certain aspects of our business. In particular, a significant portion of our game traffic is hosted byincluding Amazon Web Services, or AWS, and any failure, disruptiondisruption, or significant interruption in our network or hosting and cloudthese services could adversely impact our operations and harm our business.

Our technology infrastructure is critical to the performance of our games, the satisfaction of our players, and our corporate functions. Our games and company systems run on a complex distributed system, or what is commonly known as cloud computing. We own, operate, and maintain elements of this system, but significant elements of this system are operated by third parties that we do not control and which would require significant time and expense to replace. In addition to hosting and compute services, we rely on third-party providers for data storage, content delivery, monitoring, and other infrastructure services, further increasing our dependence on external systems that we do not control. We expect this dependence on third parties to continue. WeA havesignificant experienced,portion of our game traffic and maycomputing ininfrastructure theis futurehosted experience,by a single cloud services provider, Amazon Web Services, or AWS. AWS provides us with computing and storage capacity pursuant to an agreement that continues until terminated by either party. The agreement provides access to AWS’s standard computing and storage services, subject to AWS’s then-current terms, service levels, and availability. Any disruptions, outages,delays, outages and other performance problems caused by AWS could significantly impact our business due to aour varietymany of factors, including infrastructure changes, human or software errors,services and capacitysystems constraints.relying If any such interruption is significant or prolonged, if a particular game is unavailable when players attempt to access it or navigation through a game is slower than they expect, players may stop playingon the gameAWS and may be less likely to return to the game as often, if at all.services.

We have experienced, and may in the future experience, disruptions, outages, and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, and capacity constraints. If any such interruption is significant or prolonged, if a particular game is unavailable when players attempt to access it or navigation through a game is slower than they expect, players may reduce engagement, stop playing the game, or be less likely to return, which could adversely affect monetization and retention. A failure or significant interruption in our game service would harm our reputation and operations. We expect to continue to make significant investments in our technology infrastructure to maintain and improve all aspects of player experience and game performance. To the extent that our disaster recovery systems are not adequate,adequate or do not perform as expected in the event of a major outage, or we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate increasing traffic, our business and results of operations may suffer. We do not maintain insurance policiescoverage coveringfor all losses relating to our network or information technology systems, other than losses caused bylimited cybersecurity attacks for which we have limited insurance coverage,insurance, which may increase any potential harms that the business may suffer from systems failure or resulting business interruptions.

In addition, any changes in these third parties’ service levels may adversely affect our ability to meet the requirements of our players. As our platform’s continuing and uninterrupted performance is critical to our success, sustained or repeated system failures would reduce the attractiveness of our offerings. It may become increasingly difficult to maintain and improve our performance, especiallyparticularly during peak usage times,times asor weperiods expandof andrapid thechange in player activity, demand, or game usage patterns. Cloud service providers may also be affected by regulatory actions, geopolitical events, widespread cyber incidents, or systemic outages that are outside of our offeringscontrol increases.and could impair their ability to provide services reliably. Any negative publicity arising from these interruptions, delays, outages, or other performance problems could adversely affect our business, financial condition, results of operations, or reputation. Furthermore, in the event that any of our agreements with these third-party providers are terminated, we may experience significant costs or downtime in connection with the transfer to, or the addition of, new hosting or cloud computing providers. Although alternative providers couldmay be able to host our platform on a substantially similar basis, suchwe may not be able to transition couldservices potentially be disruptive and we could incurwithout significant costsdisruption, indelay, connectionor withincreased such transition.cost.

We have engaged, and expect to engage, third-party game development companies to develop and operate certain of our mobile games, including myVEGAS Bingo, POP! Slots, MGM Slots Live, and my Konami Slots, and if they fail to perform as expected, our business may suffer.

We currently, have in the past, and expect in the future to, engage third-party game development companies to develop and operate certain mobile games on our behalf. Currently, we rely on third-party game development companies to provide operation and development services for our myVEGAS Bingo, POP! Slots, MGM Slots Live, and my KONAMI Slots games. In each instance, we have been, and in the future intend to be, the publisher of our existing games as well as third-party developed or co-developed games when they are available to players through platforms such as the Apple App Store, Google Play Store, Amazon Appstore, and Facebook. However, inIn some casescases, mucha substantial portion of the responsibility to developdevelop, operate, and operatemaintain oura gamesgame will beis undertaken by the third-party development company.company, Typically when we engage a third-party game development company, we will enter into a contract with them that defines their and our duties and responsibilities. With a third-party game development company, we have limited control over the work performed by the development company and are therefore subject to risks that differ from, and might be greater than, those we are subject to when our own employees are developing and operating our games. For example, limited control over work being performed could materially and adversely impact the timely development and completion of our games, and their publication could be delayed due to the development company’s failure to adhere to our milestones and roadmaps. We have experienced instances in the past experiencedin this risk when one of ourwhich third-party game development companies failed to complete development milestones in accordance with ouragreed game development roadmap.timelines. If our third-party game development companies do not perform in accordance with our agreements with them, it could adversely affect the development of our games that are the subject of that agreement, including delaying their availability for launch and their performance once launched, which could materially and adversely impactaffect our operating results and our ability to meetachieve ouranticipated forecasts.performance.

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our consolidatedfinancial condition and results of operations and financial condition. The discussion and analysis should be read in conjunction with theour audited consolidated financial statements and the related notes theretoincluded containedelsewhere in this Annual Report on Form 10-K. This section is intended to provide information that management believes is relevant to understanding our consolidated financial condition, results of operations, and cash flows. Unless the context otherwise requires, references to “wewe,”, “usus,”, “ourour,”, and “the “Company” are intendedrefer to mean the business and operations of PLAYSTUDIOS, Inc. and its consolidated subsidiaries.

This discussion contains forward-looking statements andwithin involvesthe numerousmeaning of the federal securities laws that involve risks and uncertainties. Our actual results and the timing of certain events may differ significantlymaterially from thethose resultsexpressed discussedor inimplied theby these forward-looking statements.statements Factorsdue that might cause suchto a discrepancynumber include,of butfactors, are not limited to,including those discussed elsewhere in this Annual Report on Form 10-K, particularly in the section titled “Risk Factors” set forthdescribed in Part I, Item 1A1A, of“Risk Factors,” and elsewhere in this Annual Report on Form 10-K. All forward-looking statements in this Annual Report on Form 10-K are based on information available to us as of the date hereof,of this report, and except as required by law, we assumeundertake no obligation to update any such forward-looking statements to reflect future events or circumstances,circumstances exceptafter asthe requireddate byof law.this report.

We are a developer and publisher of free-to-play casual games for mobile and social platforms. Over our 13-year14-year history, we developed a portfolio of free-to-play social casino games that are considered to be among the most innovative and unique in the genre. In 2021, we added our Tetris®-branded mobile game and in late 2022 we acquired Brainium, a developer and publisher of free-to-play casual games. Our games include the award-winning POP! Slots, myVEGAS Slots, my KONAMI Slots, MGM Slots Live, myVEGAS Blackjack, myVEGAS Bingo, Tetris®, Tetris Block Party, Solitaire, Spider Solitaire, Jumbline 2, Sudoku, and Mahjong. Our games are based on original content as well as third-party licensed brands and are downloadable and playable for free on multiple social and mobile-based platforms, including the Apple App Store, Google Play Store, Amazon Appstore, and Facebook.

Each of our legacy social casino games and our Tetris®-branded mobile gamesgame are powered by our proprietary playAWARDS program and incorporates loyalty points that are earned by players as they engage with our games. The rewards are provided by our collection of rewards partners, with the majority of rewards partners providing their rewards at no cost to us, in exchange for product integration, marketing support, and participation in our loyalty program. The program is enabled by our playAWARDS platform which consists of a robust suite of tools that enable our rewards partners to manage their rewards in real time, measure the value of our players’ engagement, and gain insight into the effectiveness and value they derive from the program. Through our self-service platform, rewards partners can launch new rewards, make changes to existing rewards, and in real time see how players are engaging with their brands. The platform tools also provide rewards partners the ability to measure the off-line value our players generate as consumers and patrons of their real-world establishments.

We also generate revenue from in-game advertising. Advertisements can be in the form of an impression, click-throughs, banner ads, or offers, where players are rewarded with virtual currency or loyalty points for watching a short video. While we historically have derived mosta majority of our revenue from the sale of in-game virtual currency, we introducedimplemented in-game advertising as aan limitedadded pilotrevenue programproducer. and expanded it throughout 2021 and 2022. In addition, ourOur Tetris®-branded mobile game and our Brainium games generate most of their revenue through in-game advertising.

As ana SRC,smaller reporting company, we haveare electedpermitted to useprovide scaled disclosure accommodations permittedunder bySEC therules, SEC,and which means thataccordingly this section does not include all disclosures required forof larger reporting companies. Specifically:

•We are not required to includeprovide thecertain detailed disclosures regarding contractual obligations tablethat thatmay be required of larger companiesreporting must disclose.companies.

We manage our business by regularly reviewing several key operating metrics to track historical performance, identify trends in player activity, and set strategic goals for the future. These metrics are operational measures that are not prepared in accordance with U.S. GAAP and should be considered as supplemental to, and not a substitute for, our GAAP results. Our key performance metrics are impacted by several factors that could cause them to fluctuate on a quarterly basis, such as platform providers’ policies, seasonality, player connectivity, and the addition of new content to games. We believe these measures are useful to investors foras thethey sameprovide reasons.additional insight into player engagement and monetization trends. In addition, we also present certain non-GAAP performance measures. These performance measures are presented as supplemental disclosure and should not be considered superior to or as a substitute for the consolidated financial statements prepared under U.S. GAAP. The non-GAAP measures presented in this Annual Report on Form 10-K should be read together with the consolidated financial statements and the respective related notes thereto included elsewhere in this Annual Report on Form 10-K. The key performance indicators and non-GAAP measures presented in this Annual Report on Form 10-K may differ from similarly titled measures presented by other companies and are not a substitute for financial statements prepared in accordance with U.S. GAAP. The calculation of these metrics requires certain judgments and assumptions, and our methodology may differ from that used by other companies, which may limit comparability.

Average Daily Active Users (“Average DAU”)

Daily Active Users ("DAU") is defined as the number of individuals who played a game on a particular day. For Tetris and our free-to-play social casino games, we track DAU by the player ID, which is assigned for each game installed by an individual. As such, an individual who plays two of these games on the same day is counted as two DAU while an individual who plays the same game on two different devices is counted as one DAU. For our Brainium suite of casual games, we track DAU by app instance ID, which is assigned to each installation of a game on a particular device. As such, an individual who plays two different Brainium games on the same day is counted as two DAU and an individual who plays the same Brainium game on two different devices is also counted as two DAU. The term "Average DAU" is defined as the average of the DAU, determined as described above, for each day during the period presented. We use DAU and Average DAU as measures of audience engagement to help us understand the size of the active player base engaged with our games on a daily basis.

Average Monthly Active Users (“Average MAU”)

Monthly Active Users ("MAU") is defined as the number of individuals who played a game in a particular month. As with DAU, an individual who plays two different non-Brainium games in the same month is counted as two MAU while an individual who plays the same non-Brainium game on two different devices is counted as one MAU, and an individual who plays two different Brainium games on the same daymonth is counted as two MAU while an individual who plays the same Brainium game on two different devices is also counted as two MAU. The term "Average MAU" is defined as the average of the MAU, determined as described above, for each calendar month during the period presented. We use MAU and Average MAU as measures of audience engagement to help us understand the size of the active player base engaged with our games on a monthly basis.

Average Daily Paying Users (“Average DPU”)

Daily Paying Users ("DPU") is defined as the number of individuals who made a purchase inof virtual currency or digital items within a game during a particular day. As with DAU and MAU, we track DPU based on account activity. As such, an individual who makes a purchase in two different games in a particular day is counted as two DPU while an individual who makes purchases in the same game on two different devices is counted as one DPU. The term "Average DPU" is defined as the average of the DPU, determined as described above, for each day during the period presented. We use DPU and Average DPU to help us understand the size of our active player base that makes in-game purchases.purchases Thisand focusto directsassess monetization trends within our strategic goals in settingactive player acquisitionbase. Consistent with DAU and pricingMAU, strategy.DPU is calculated at the game level and may reflect multiple purchases by a single individual across different titles.

Average Daily Payer Conversion

ARPDAU is defined for a given period as the average daily revenue per Average DAU, and is calculated as gamegame-related revenue and advertising revenue forattributable to the applicable period, divided by the number of days in the period, divided by the Average DAU during the period. We use ARPDAU as a measure of overall monetization of our active players. ARPDAU may fluctuate based on changes in pricing, player mix, advertising demand, and promotional activity.

Available Rewards is defined as the monthly average number of unique rewards available in our applications’ rewards stores. A reward appearing in more than one application’s reward store is counted only once. A reward is counted only once irrespective of the inventory available through that reward. For example, one reward for a free night in a hotel room with ten rooms available for such free night is counted as one reward. Available Rewards only include real-world partner rewards and exclude PLAYSTUDIOS digital rewards. We use Available Rewards as a measure of the value and potential impact of the program for an interested player. ItWe isuse assumedAvailable thatRewards as one indicator of the greater the variety and breadth of rewardsour offered,loyalty the more likely players will be to ascribe value to the program.offering.

Purchases is defined as the total number of rewards purchased for the period identified in which a player exchanges loyalty points for a reward. Purchases are net of refunds. Purchases only include purchases of real-world partner rewards and exclude any PLAYSTUDIOS digital rewards. Purchases are redeemed by the player directly with the rewards partner within the specified terms and conditions of the reward. The Company does not receive any compensation orrecognize revenue from Purchases.Purchases, as players redeem loyalty points rather than making cash payments. We use Purchases as a measure of audience interest and engagement with our playAWARDS platform.

Retail Value of Purchases is defined as the cumulative retail value of all rewards listed as Purchases for the period identified. The retail value of each reward listed as Purchases is the retail value as determined by the partner upon creation of the reward. In the case where the retail value of a reward adjusts depending on time of redemption, the average retail value is used. Retail Value of Purchases only include the retail value of real-world partner rewards and exclude the cost of any PLAYSTUDIOS branded merchandise. Retail values are based on partner-provided estimates and may not reflect actual transaction prices or redemption experience. Retail value also does not represent revenue recognized by the Company. We use Retail Value of Purchases to help us understand the real-world value of the rewards that are purchased by our players.players in a particular period.

Net revenue decreased $17.3$55.3 million, or 5.7%,19.1%, to $234.1 million during the year ended December 31, 2025 compared to $289.4 million during the year ended December 31, 2024 compared to $306.7 million during the year ended December 31, 2023.2024. The decrease was primarily due to a $19.1$40.5 million decrease in virtual currency revenue primarily driven by decreases in Average DPU. TheAdvertising revenue decreased $14.5 million driven by a decrease was partially offset by growth in advertisingAverage revenue.DAU.

Net revenue decreasedincreased by $4.1$0.9 million, or 98.5%,million due to the non-renewalallocation of athe licensingtransaction arrangementprice withto a customer, offset by increases inplayAWARDS virtual currency revenue.included in playGAMES virtual currency sales. The key performance indicators presented above are used by management to assess the playAWARDS segment's operating performance, however there is no relationship between the key performance indicators and revenue metrics.

Cost of revenue decreased by $5.1$15.2 million, or 6.5%,21.0%, during the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. The decrease was due to a decline in virtual currency revenue partiallyas offsetwell as an increase in direct to consumer sales,revenue, which incur lower processing fees.

Selling and marketing expenses decreased by $9.7$9.1 million, or 13.1%,14.2%, during the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. The decrease was primarily due to decreasedecreases in user acquisition expenses of $13.7$9.8 million and stock compensation of $0.9 million. This decrease was offset by increasesan increase to brand and other marketing expenses of $1.3 million, IT software of $0.7 million, outside service costs of $0.6 million, stock compensation of $0.6 million, and other selling and marketing expenses of $0.8$1.6 million.

Research and development expenses decreased by $2.6$9.3 million, or 3.7%,13.8%, during the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. The decrease was primarily due to decreases toin employee costs of $7.6 million, stock compensation of $2.2 million, payroll and related costs of $0.9$2.8 million, and otheroutside researchservice and development costsexpense of $1.3$0.8 million. This decrease was offset by increasesa towithholding ITtax softwareassessment settlement of $0.9$1.8 million and outsideand servicean costsincrease in other research and development expense of $0.9$0.1 million.

Depreciation and amortization expenses increaseddecreased by $0.2$7.1 million, or 0.4%,15.6%, during the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. The increasedecrease was primarily due to the acquisition of intangible assets in connection with the business combination of Pixode, as well as increased amortization as a result of license renewals. This was offset by a decrease of internal-use software amortization in connection with write-downs of certain assets duringin the yearfourth endedquarter of December 31, 2024.2024 as a result of the 2024 Reorganization Plan. See Note 10—Intangible Assets and Internal-Use Software, Net.

Restructuring expenses increaseddecreased by $17.1$22.2 million during the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. The increasedecrease was primarily due to increasesdecreases of non-cash impairment of $7.2$9.2 million, management restructurings of $4.0 million, and non-recurring legal expenses of $7.4$7.7 million, and management restructurings of $6.0 million. This increasedecrease was offset by decreasesan increase of $0.4$0.7 million offor various merger and acquisition opportunities and $1.1 million of other restructuring expenses.opportunities.

The change in fair value of warrant liabilities is related to the warrants discussed in Note 12—Accrued and Other Current Liabilities to our consolidated financial statements herein. The change in fair value of contingent consideration is related to the Pixode Acquisition discussed in Note 4—Business Combinations. Interest income, net is related to interest earned on cash and cash equivalents offset by fees and expenses associated with the Credit Agreement as discussed in Note 14—Long-Term Debt to our consolidated financial statements herein. Other income,expense, net primarily relates to gains or (losses) from equity investments and gains or (losses) from foreign currency transactions with our foreign subsidiaries.

Income tax expense was approximately $1.9 million for the year ended December 31, 2025, as compared to an income tax expense of $1.4 million for the year ended December 31, 2024, as compared to an income tax expense of $16.9 million for the year ended December 31, 2023.2024. The income tax expense for the year ended December 31, 20242025 reflected an effective income tax rate of negative 5.1%,7.3%, which was less than the statutory tax rate of 21% primarily due to the recording of a valuation allowance on deferred tax assets, impacts from short falls associated with stock-based compensation, impacts from foreign branch income, and other nondeductible expenses. The income tax benefitexpense for the year ended December 31, 2024 reflected an effective income tax rate of negative 669.7% for the year ended December 31, 2023,5.1%, which was lessgreater than the statutory federal rate of 21.0% primarily due to the recording of a valuation allowance on deferred tax assets, theimpacts effectfrom ofshort additionalfalls foreign taxes paid related to a settlementassociated with thestock-based Israel Tax Authority,compensation, impacts from foreign branch income, and other nondeductible expenses. The decrease in our effective tax rate was partially offset by benefits from the exercise of non-qualified stock options, changes to the fair value adjustment of the warrant liability, and the deduction of foreign taxes paid.

playGAMES AEBITDA was $85.1$58.6 million for the year ended December 31, 20242025 compared to $88.7$85.1 million for year ended December 31, 2023,2024, a decrease of 4.1%.31.1%. playGAMES AEBITDA margin was 29.4%25.1% for the year ended December 31, 20242025 compared to 28.9%29.4% for year ended December 31, 2023.2024. The decrease to playGAMES AEBITDA was a result of decreased virtual currency revenue primarily driven by decreasesa decrease in DPU.DPU playGAMESand AEBITDAadvertising margin was 29.4% for the year ended December 31, 2024 compared to 28.9% for year ended December 31, 2023,revenue primarily asdriven by a resultdecrease ofin lower user acquisition costs.DAU.

playAWARDS AEBITDA was $(13.78.7) million for the year ended December 31, 20242025 compared to $(10.413.7) million for year ended December 31, 2023.2024. The decreaseincrease in AEBITDA can be attributed to the non-renewal of a licensingreduction arrangementin employee costs in connection with athe customer.2024 Reorganization Plan and an increase in revenue.

On June 24, 2021, in connection with the closing of the Acies Merger, the Company terminated and replaced the Revolver (as defined below). The Company, a subsidiary of the Company, JPMorgan Chase Bank, N.A., as administrative agent and JPMorgan Chase Bank, N.A., Silicon Valley Bank and Wells Fargo Securities, LLC, as joint bookrunners and joint lead arrangers entered into a credit agreement (the “Credit Agreement”) which provides for a five-year revolving credit facility in an aggregate principal amount of $75.0 million. Borrowings under the Credit Agreement may be borrowed, repaid and re-borrowed by the Company, and are available for working capital, general corporate purposes, and permitted acquisitions.

During the year ended December 31, 2024,2025, investing activities used $26.3$16.9 million of net cash as compared to $32.3$26.3 million during the year ended December 31, 2023.2024. The change in cash used in investing activities was primarily due to $7.5$3.4 million less cash used for assets acquired from business combinations, $3.0 million less cash used to purchase intangible assets and internal-use softwaresoftware, and $2.3$3.0 million less purchasescash ofused to purchase property and equipment. The decrease was offset by $3.4 million of cash paid for the Pixode acquisition and $0.4 million of other cash payments for investing activities.

During the year ended December 31, 2024,2025, financing activities used $41.9$14.9 million of net cash, while financing activities used $20.2$41.9 million of net cash during the year ended December 31, 2023.2024. The change in cash used in financing activities was due to an additional $15.7$27.7 million ofless cash used for share repurchases,repurchases $3.5and $0.5 million less in increasedpayments made for tax withholding on stock-based compensation. This was offset by an increase in minimum guaranteeguarantees payments made, and $2.8 millionpaid of less$1.2 proceeds received from stock option exercises.million.

Players can earn loyalty points through a variety of activities, including but not limited to playing the Company’s games, engaging with in-game advertising, engaging with marketing emails, and logging into the game. The loyalty points can be redeemed for rewards offered by the Company’s rewards partners. There is no obligation for the Company to pay or otherwise compensate the Company’s rewards partners for any player redemptions under the Company’s rewards partner agreements. In addition, both paying and non-paying players can earn loyalty points. Therefore, the loyalty points earned by players are marketing offers and do not provide players with material rights. Accordingly, the earned loyalty points do not require any allocation to the transaction price of virtual currency. Loyalty points or other virtual currencies may be included in certain bundled purchases through certain platforms. Loyalty points or other virtual currencies are not available to be purchased separately and there is no stand alonestandalone selling price. If loyalty points or other forms of virtual currencies are included in bundled purchases, the Company will allocate a portion of the transaction price to each of the virtual currencies using the residual approach.

We have elected to account for the impact of the global intangible low-taxed income (GILTI) inclusion and base erosion anti-avoidance tax (BEAT) based on the period cost method.method See Note 16 Income Taxes to the consolidated financial statements for further information regarding income taxes.

The following discussion and analysis provide information which our management believes is relevantintended to anassist assessmentreaders andin understanding of our condensed consolidated results of operationsoperations, financial condition and financial condition. The discussionliquidity and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes theretoincluded containedelsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements andthat involves numerousinvolve risks and uncertainties,uncertainties. including,See but"Cautionary notNote limitedRegarding to,Forward-Looking thoseStatements" describedand inPart theII, “Item 1A, "Risk Factors”Factors," sectionfor a discussion of thisimportant Quarterlyfactors Reportthat oncould Formcause 10-Q. Actualactual results mayto differ materially from those containedanticipated in anythese forward-looking statements. Unless the context otherwise requires, references to “we”,"we," “us”,"us," “our”,"our," and “"the Company”" are intendedrefer to mean the business and operations of PLAYSTUDIOS, Inc. and its consolidated subsidiaries.

Comparison of the three and six months ended MarchJune 31,30, 2026 versus the three and six months ended MarchJune 31,30, 2025

The following table summarizes our consolidated results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands, except percentages):

Net revenue decreased $4.7$4.9 million, or (7.58.3)%, to $57.9$54.2 million during the three months ended MarchJune 31,30, 2026 compared to $62.6$59.1 million during the three months ended MarchJune 31,30, 2025. The decrease was due to a $6.0$6.1 million decrease in virtual currency revenue primarily driven by decreases in DPU within certain games, which was partially offset by increased revenue due to our new growth initiatives and a $1.3$1.2 million increase in advertising revenue.

Net revenue increased $0.4$0.6 million during the three months ended MarchJune 31,30, 2026 compared to the same period in prior year. The key performance indicators presented above are used by management to assess the playAWARDS segment's operating performance, however, are not indicative revenue metrics.

Cost of revenue decreased by $3.7 million to $12.0$10.8 million during the three months ended MarchJune 31,30, 2026 compared to $15.8$14.6 million during the three months ended MarchJune 31,30, 2025. The decrease was primarily related to a decrease in virtual currency revenue. As a percentage of revenue, cost of revenue decreased from 25.2%24.5% for the three months ended MarchJune 31,30, 2025 to 20.6%19.7% for the three months ended MarchJune 31,30, 2026 due to an increase in direct to consumer revenue, which incur lower processing fees.

Selling and marketing expenses increased by $7.9$2.2 million to $21.0$15.3 million during the three months ended MarchJune 31,30, 2026 compared to $13.2$13.1 million during the three months ended MarchJune 31,30, 2025. The increase was primarily due to increases in user acquisition expense of $6.5$2.7 millionmillion, which is attributable to the Company's investment in our growth initiatives, employeeand costsstock compensation of $0.5$0.2 million,million. andThis was offset by a decrease of brand and other marketing expense of $0.9$0.7 million.

Research and development expenses increased by $1.1$0.9 million to $14.7$15.1 million during the three months ended MarchJune 31,30, 2026 compared to $13.7$14.2 million during the three months ended MarchJune 31,30, 2025. The increase was primarily due to increases in employee costs of $1.1$0.9 million and other research and development expense of $0.7$0.6 million. This was offset by a decrease of stock compensation of $0.7$0.6 million.

General and administrative expenses decreased by $2.4$2.6 million to $9.4$8.8 million during the three months ended MarchJune 31,30, 2026 compared to $11.9$11.3 million during the three months ended MarchJune 31,30, 2025. The decrease is primarily due to decreases in stock compensation of $1.3$1.9 million, a charitable donation of $0.3 million,million and other general and administrative cost of $0.8$0.7 million.

Depreciation and amortization expenses increased by $0.2 million to $9.8$9.7 million during the three months ended MarchJune 31,30, 2026 compared to $9.6$9.5 million during the three months ended MarchJune 31,30, 2025.

Restructuring expenses increased by $3.3$4.7 million to $4.7$4.8 million during the three months ended MarchJune 31,30, 2026 compared to $1.3$0.1 million during the three months ended MarchJune 31,30, 2025. The increase was primarily due to increases in internal reorganization costs of $2.3$3.0 million, non-recurring legal expense of $1.6 million, and costs related to various merger and acquisition opportunities of $1.2 million, and other restructuring costs of $0.2$0.1 million. This was offset by a decrease in non-recurring legal expense of $0.4 million.

Other (Loss) Income, Net

The change in fair value of warrant liabilities is related to the warrants discussed in Note 10—Accrued and Other Current Liabilities to our condensed consolidated financial statements herein. The change in fair value of contingent consideration is related to the Pixode Acquisition discussed in Note 7—Fair Value Measurement. Interest income, net is related to interest earned on cash and cash equivalents offset by fees and expenses associated with the Credit Agreement as discussed in Note 12—Long-Term Debt to our condensed consolidated financial statements herein. Other (loss) income primarily relates to gains or (losses) from equity investments andinvestments, gains or (losses) from foreign currency transactions with our foreign subsidiaries.subsidiaries, and the change in fair value of warrant liabilities is related to the warrants discussed in Note 10—Accrued and Other Current Liabilities to our condensed consolidated financial statements herein.

Provision for income taxes resulted in a tax expense of $0.6$1.5 million for the three months ended MarchJune 31,30, 2026, compared to a tax expense of $0.3$0.2 million for the three months ended MarchJune 31,30, 2025.

Comparison of the three and six months ended MarchJune 31,30, 2026 versus the three and six months ended MarchJune 31,30, 2025

playGAMES playGAMES AEBITDA was $8.7$11.5 million for the three months ended MarchJune 31,30, 2026 compared to $18.3$16.5 million for the three months ended MarchJune 31,30, 2025, a decrease of $9.6$5.0 million. playGAMES AEBITDA margin was 15.0%21.2% for the three months ended MarchJune 31,30, 2026 compared to 29.3%27.9% for the three months ended MarchJune 31,30, 2025. The decrease to playGAMES AEBITDA was a result of decreased virtual currency revenuerevenue, primarily driven by decreases in DPUDPU, and an increase of user acquisition expense. This was partially offset by an increase in direct-to-consumer sales which incurs lower processing fees, driving a reduction in cost of sales, as well as an increase of revenue related to the launch of Tetris Block Party.sales.

playAWARDS playAWARDS AEBITDA was $(1.50.9) million for the three months ended MarchJune 31,30, 2026 compared to $(2.32.4) million for the three months ended MarchJune 31,30, 2025. The increase in AEBITDA can be attributed to an increase in revenue and a decrease in employee and other costs.

(1)Amounts reported during the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025 relate to internal reorganization costs, including severance-related costs, fees related to evaluating various merger and acquisition opportunities, and non-recurring legal costs.

(2)Amounts reported in “Other, net” include the change in fair value of the Warrants, interest expense, interest income, gains/losses from equity investments, foreign currency gains/losses, and non-cash gains/losses on the disposal of assets.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $103.7$102.7 million, which consisted of cash on hand and money market mutual funds. As of MarchJune 31,30, 2026 we had restricted cash of $0.6 million. Historically, we have funded our operations, including capital expenditures, primarily through cash flow from operating activities. We believe that our existing cash and cash equivalents, and cash generated from operations, will be sufficient to fund our operations and capital expenditures for at least the next twelve (12) months. However, we intend to continue to make significant investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new games and features or enhance our existing games, improve our operating infrastructure, or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financing to secure additional funds or we may decide to do so opportunistically.

During the threesix months ended MarchJune 31,30, 2026, operating activities provided $3.7$9.4 million of net cash as compared to $3.3$16.9 million during the threesix months ended MarchJune 31,30, 2025. The increasedecrease in cash provided from operating activities was primarily due to a favorable changedecrease in operatingrevenue, assetsprimarily anddriven liabilitiesby due to timing fluctuationsdecreases in payables being paid.DPU.

During the threesix months ended MarchJune 31,30, 2026, investing activities used $4.1$8.0 million of net cash as compared to $3.6$8.0 million during the threesix months ended MarchJune 31,30, 2025. The change in cash used in investing activities was due to increased additions to internal-use software during the three months ended March 31, 2026.

During the threesix months ended MarchJune 31,30, 2026, financing activities used $0.7$3.5 million of net cash as compared to $2.5$7.0 million during the threesix months ended MarchJune 31,30, 2025. The change in cash used in financing activities was due to $1.6$1.9 million less in share repurchasesrepurchases, and $0.4$1.0 million less in payments made for tax withholding on stock-based compensation.compensation, and $0.7 million less in payments for minimum guarantee liabilities.

As of MarchJune 31,30, 2026, there had been no material changes to our aggregated indebtedness and other contractual obligations previously reported in our 2025 Annual Report on Form 10-K filed on March 16, 2026 and amended on Form 10-K/A filed on April 3, 2026.