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Playtika eyes new M&A opportunities after mixed 2023

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Playtika announced plans for new M&As in the coming year, following the mixed performance of the social game developer during 2023.

Revenue in 2023 was only down 1.9% to $2.57bn (PS2.02bn/EUR2.37bn). Playtika’s net profit dropped 17.9% due to higher costs.

Playtika’s results were evident in the year that it added new assets to its collection. Innplay Labs was acquired by Playtika for $300.0m in September. It also completed its acquisition of Azerion’s Youda Games content portfolio in August.

Playtika had also been in the race to acquire Rovio, the company behind the Angry Birds franchise, in early 2023. The company made several bids, but ultimately dropped out. Sega Sammy acquired Rovio by August.

Robert Antokol, the CEO of Playtika is currently looking at new M&A opportunities. Playtika had also been evaluating strategic options for its business but that has now been put on hold because of the ongoing insecurity in Israel and Ukraine.

Antokol stated that “in the last year we have honed in on efficiency, streamlined our operation, and adjusted to changing industry dynamics for mobile gaming.” With a strong foundation in place, we will shift our focus to reinvestment by 2024, pursuing M&A with the strategic intention of capital deployment.

Playtika’s net profits continue to decline despite reduced costs

If we look closely at Playtika in 2023, the majority of revenue will be generated by platforms from third parties. Revenues reached $1.93bn in 2023, a 4.0% decrease from the previous year.

Direct-to-consumer platforms accounted for $639.4m, or 5.4% of the remaining revenue. This was not sufficient to offset the decline in third-party platforms, so total revenue decreased.

Costs were lower, at 2,07bn dollars, a decrease of 3.7% over 2022. Sales and Marketing, with $585.7m, was the largest expense. In 2023, expenses were down across the board.

Playtika reported an extra $109.5m of interest income. This left a profit before tax of $392m, which is up by 8.7%. Tax costs increased to $157.1m compared with $85.5m the year before.

After adjusting for foreign exchange translation and changes in the fair value of derivatives (which also included foreign currency conversion), net profit fell to $238.0m from $289.7m by 2022. The adjusted EBITDA for 2018 increased by 3.4%, to $832.20m.

In Q4, net profit fell by 68.6%

The revenue for Q4 increased marginally, by just 1.1%. It was $637.9m.

Costs increased 3.0%, to $517.9m. The net financial income was $32.6m. This left a profit before tax of $87.3m.

Playtika was again hit by tax payments, as the $50.1m that Playtika paid in Q4 is much more than the $4.4m it will pay in 2022. After accounting for other net costs in the amount of $3.9m and a net profit for Q4 was $33.4m (down 68.6% on an annual basis), Playtika’s net income fell to $33.4m.

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