MYPS - NASDAQ

Good afternoon, everyone, and welcome to the PLAYSTUDIOS Fourth Quarter and Year-End 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to Jason Hahn, PLAYSTUDIOS’ Chief Strategy Officer and Head of Investor Relations. Mr. Hahn, you may begin.

Thank you, operator. Good afternoon, and thank you for joining us for PLAYSTUDIOS fourth quarter and year end 2024 earnings call. Joining me on the call today are our Chairman and CEO, Andrew Pascal; and our CFO, Scott Peterson. Before we begin, let me remind you that during the course of this call, we will make forward-looking statements. These statements are based on our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings for a discussion of the risks and uncertainties that may affect our future results. I’d like to remind everyone that we will discuss certain non-GAAP financial measures during this call. These measures should not be considered as a substitute for financial results prepared in accordance with GAAP. Our results are prepared in accordance with GAAP and a reconciliation to comparable GAAP measures will be provided in our fourth quarter earnings release and in our SEC filings. With that, I’ll pass the call to Andrew.

Thanks, Jason, and welcome, everyone to our fourth quarter and year end 2024 earnings call. Earlier today, we published a press release containing our financial results along with the commentary for the recently completed fourth quarter and year end 2024. Included in the release is segment reporting and our usual financial disclosures. Scott will discuss these materials in greater detail later, but if you haven't had a chance to review the release, I'd encourage you to do so. 2024 was another eventful and challenging year for the games industry. Despite these pressures, we were able to achieve our full year guidance and make material progress on a number of strategic initiatives heading into 2025. We sharply reduced the company's cost structure and reoriented our operations for improved profitability and cash flow. A number of new initiatives were incubated and our new promotional effort, World Tournament of Slots was launched and very well received by our players. Let's dive a little deeper into some of the more noteworthy highlights. We closed the year with full year revenue and adjusted EBITDA in line with our 2024 guidance. We restructured our business to drive enhanced efficiency in economies of scale. Our reinvention plan, which we launched in October consisted of a reduction in our total workforce of over 30%, the suspension of select sub-scale games, the consolidation of key functions and a new technology strategy that included an outsourcing of some of our R&D capacity. Post changes will be leaner, have a more acute focus on growth and be positioned to deliver stronger results. We've advanced two new growth initiatives that we believe can reinvigorate our playGAMES business. We believe our new sweepstakes effort has the potential to reinvigorate the growth of our social casino portfolio. Sweepstakes features continue to grow in popularity among free to play casino players, including our own. We think adding sweepstakes to our current loyalty and promotional offerings will substantially enhance the attraction of our games and drive real value to our company. Our goal remains to introduce sweepstakes in the coming quarters. Pixode has now been fully integrated into PLAYSTUDIOS and is making solid progress with the development of a new casual Tetris title. The new game will combine the highly engaging Block Puzzle format, the Tetris brand and the proven raid and defend mechanic that's been popularized in super scaled games such as Coin Master and Monopoly Go. By leveraging a proven game design, a well-established metagame feature in the Tetris brand, we believe the game has the potential to redefine the category. Our hope is to have the game ready to be launched in the second half of 2025. Growth at playAWARDS continues with the addition of more players, a full integration of myVIP across our major games and the onboarding of key new awards partnerships. The program also launched the World Tournament of Slots, which held its inaugural event in October of this last year. With its $1 million prize and 500 players participating live, the tournament drove excitement in our games and players alike. We plan to build on the tournament's momentum in 2025. Finally, during the year, we purchased $31.2 million in stock, including the purchase of roughly 9% of our outstanding shares from Microsoft. Despite this, we remain very well capitalized with $109 million in cash at year end and the full availability of our $81 million revolving credit facility. As I've reaffirmed in the past, our strategy consists of two key pillars. The first is expanding our playGAMES division by driving more operating leverage from our mature portfolio as well as developing and acquiring new games. Our broader collection of games allows us to amplify the effect of our industry leading loyalty platform. Most recently, we've set out to accomplish this organically through the development of new sweepstakes promotional capabilities and through strategic M&A from our acquisitions of the Tetris rights, Brainium and Pixode. The second pillar is the advancement of playAWARDS, which can drive adoption and engagement of our game portfolio. I believe executing these strategic priorities will enable us to accelerate our growth, improve margins and ultimately drive substantial value. So let's touch on some of our primary initiatives starting within playGAMES. playGAMES has three primary goals in 2025: one, improving the productivity and margins of our core casino games; two, growing our casual portfolio; and three, advancing new initiatives currently in development. The focus for the casino portfolio in 2025 will be improved retention and monetization in Pop! Slots, myVEGAS and myKONAMI, expanding direct-to-consumer sales, leveraging a full adoption of myVIP across our portfolio and the integration of sweepstakes into each of our primary titles. We're pleased with the progress made in myVEGAS this past year and hope to build on that momentum in 2025. While Pop! Slots and myKONAMI have been more challenging, we expect recent organizational changes and operating refinance to boost performance in 2025. As all three games have a loyal following and strong user engagement, our biggest opportunity is to convert more of our users to payers. In support of this, our teams are intensely focused on refining the game economies, enhancing our segmentation and pricing practices, and introducing new sweepstakes and other features that enrich the overall game experience. We're also focused on offering compelling incentives to purchase off platform through our player specific and bespoke web solution, which is focused on generating more direct sales with our players. Our direct-to-consumer business still represents a significant untapped opportunity, accounting for $4.5 million this quarter or 8% of total in-app purchase revenues, this up from $2.5 million or 4% from the same time last year. This represents maybe 9% increase year-over-year. Our goal is to continue to increase the complement of revenues attributed to this channel with the ultimate target of over 20%, which will further improve our operating margins. Turning to our casual portfolio. The focus in 2025 will be the continued optimization of Brainium and the expansion of Tetris franchise. Brainium had a strong 2024, growing revenue and ARPDAU year-over-year is result of new advertising formats, the incorporation of our loyalty program and continued product improvements. We plan to build on that growth in 2025 following the successful implementation of a new technology stack in the fourth quarter. Results were weaker within our Tetris franchise this quarter as recent product changes did not have the positive effect we anticipated. We continue to view Tetris Prime as a compelling growth opportunity and plan to introduce several new features this year. Similarly, we continue to use our Tetris Block Puzzle game to test and assess user acquisition and product strategies in anticipation of our eventual introduction of our Pixode Tetris product. As you may recall, we acquired Pixode last year based on our belief that their flagship game could be more fully realized under the Tetris brand. Alongside the talented team at Pixode, we're hard at work to make this reality and believe we can launch a new Tetris casual game later this year. As I've said in prior calls, developing new games is more art than science and as such, the ultimate success of each is hard to predict. That said, we know the Tetris brand is incredibly popular with players and many of the games in the puzzle category today are facsimiles of the real thing. We firmly believe this creates an opportunity for us to capture players who we believe would choose an authentic Tetris game if given the option. Now, let's turn our attention to playAWARDS. Throughout 2024, our playAWARDS team has been dedicated to integrating our refreshed myVIP loyalty program into our primary titles, curating and streamlining our collection of rewards partners and rolling out our inaugural World Tournament of Slots campaign. I'm happy to say, we've been successful on all fronts. myVIP has been fully integrated into all of our major games, giving our players a consistent and seamless loyalty experience. As we've discussed in the past, loyalty is a unique value enhancer for our games and a proven driver of increased retention and engagement. Regarding the collection reward partners, this quarter, we added several new partners including brands such as Topgolf, while also streamlining our catalog to ensure a focus on our highest performing partners. In 2024, we offered approximately $2 million in retail rewards per day. Lastly, in Q4, we held the inaugural myVIP World Tournament of Slots event at the Atlantis Paradise. This exclusive tournament gave over 500 players a chance to compete for $1 million prize, generating significant excitement and raising engagement across all of our games. We intend to build on this momentum with a new or improved version of World Tournament Slots in 2025. World Tournament Slots is another example of our company's unique value proposition of connecting the digital and real worlds that's unmatched by any other game publisher. With these exciting initiatives in place and a reset cost structure and operating framework, we believe 2025 is shaping up to be a year of progress. We're intensely focused on growing our business and fully exploiting our unique rewarded play model, all while striking the balance between optimizing our core business, while continuing to invest in our future opportunities. In doing so, we'll continue to expand our audience, reinvigorate revenues, improve margins and drive higher profits. Scott will provide more details when he outlines our 2025 guidance in a moment. However, I want to quickly touch on our thinking and approach to capital allocation. The dislocation between the market's view of our stock and what we believe to be fair value continued to widen in 2024. As such, we were aggressive purchases of our stock, buying back $31 million throughout the year. We'll continue to evaluate share buybacks in 2025. We also remain committed to pursuing accretive and strategic M&A opportunities that are in keeping with our overall strategy and expansion plans. In the meantime, we expect to continue to generate positive cash flows and add to our already sizable cash balance. I'll now turn the call over to Scott to provide some additional comments and share our 2025 financial guidance. Scott?

Thanks, Andrew. Good afternoon, everyone. In addition to today's press release, our Form 10-K will be filed shortly. Please look at those filings for a comprehensive summary of our quarterly and full year results. Revenues in the quarter declined by $9.3 million or 12% versus a year ago. Both social casino and casual games were down in the quarter with larger dollar declines in social casino and larger percentage declines in casual. Social casino weaknesses continue to reflect softness in the category and our own challenges in stemming DAU declines. On the positive side, we've been making progress in monetization and we're seeing positive results from the recent changes in our largest game, Pop! Slots. Longer term, we remain confident that our social casino titles can return to growth, particularly with the addition of our sweepstakes features later this year. Lower revenues in our casual portfolio were largely driven by Tetris, where a decline in DAU drove lower advertising revenues. Fourth quarter adjusted EBITDA of $12.5 million was 15% lower than a year ago. Adjusted EBITDA margin was 18.4%, a 70 basis point decline versus the same quarter a year ago. Revenue declines drove both adjusted EBITDA and adjusted EBITDA margin declines in the quarter. DAU was $2.7 million and MAU was $11.5 million in the fourth quarter, down 19% and 14% respectively from the same period last year. DAU declines were broad-based across our portfolio, but largely driven by Tetris and Brainium, which accounted for more than half of the overall decrease. While we expect user growth to continue to be challenged, we are hopeful that our new initiatives such as sweepstakes and our new Tetris title will serve to counter these pressures. Likewise, we believe the recent integration of myVIP across all our major games will be helpful. ARPDAU for the quarter was $0.27, up 8% from year ago results. The growth in ARPDAU was driven by our social casino portfolio. Continuing trend, we've seen since the beginning of the year, we saw double-digit year-over-year percentage gains in POP! myVEGAS and Brainium. The growth in Brainium is particularly noteworthy given the large base of players and relatively low levels of ARPDAU. Increasing player monetization was a key objective of ours, so we are pleased with the results. We continue to believe there is still significant opportunity for growth ahead. We initiated our reinvention program in the fourth quarter of 2024, which will get fully realized in 2025. As Andrew mentioned earlier, our goal was to streamline our business around key opportunities, expand operational efficiencies and reduce our overall cost. While we continue to expect the program to result in annual operating cost savings for our core business of approximately $25 million to $30 million, there will be offsetting costs associated with launching and scaling our strategic priorities that will impact our overall consolidated results. I will discuss this in greater detail when I outline our 2025 guidance. For the full year, revenues declined 7% versus 2023. Full year adjusted EBITDA was down 9% from 2023, while adjusted EBITDA margin of 19.5% was down 50 basis points versus last year. We ended the quarter with approximately $109 million in cash, no borrowings and full availability of our $81 million revolver. As Andrew mentioned, we restarted our share repurchase program and purchased $31 million, or 13% of total issued common stock during 2024. Our remaining share repurchase authorization was $44 million at year end. In 2025, our capital allocation goals will continue to be centered on maximizing shareholder value through investing in our businesses, pursuing strategic and accretive M&A and exploring other ways of returning value to our shareholders, which may include additional share buybacks. Finally, our outlook for 2025. We estimate that revenues will range between $250 million and $270 million. Consolidated adjusted EBITDA will range between $45 million and $55 million. When modeling our 2025 results, please consider the following. Our guidance does not include the impact of acquisitions or divestitures. Our new sweepstakes and Tetris initiatives are still in development and we have not included any revenue contributions from these efforts in our guidance. We will provide updates as we have them, but you should use your own judgment and analysis to project how these businesses may perform. Our current expectation is that these initiatives, once proven out, can contribute as much as $15 million to $30 million of revenue during the year, most of the benefits recognized in the fourth quarter. While we are on track to recognize the cost savings from our restructuring, we expect to redeploy some of those savings towards developing and marketing our two new initiatives as they start to show product market fit. This, in addition to the continued declines in the core business, is why 2025 adjusted EBITDA is expected to be down versus 2024. Thank you. I will now turn the call back to Andrew for some closing remarks.

Thanks, Scott, and thanks to everyone for participating in today's call. Before we end our prepared remarks and open the call for questions, I'd like to reinforce some key points. First, 2024 was a transformative year that's positioned us for sustainable and profitable growth. We incubated two new businesses in high growth categories, streamlined our operations around our strongest business lines and dramatically lowered our cost basis. Our recent development of sweepstakes promotional capabilities is expected to enhance the value proposition of our social casino portfolio, which we believe can reinvigorate our business. With our recent integration of Pixode, we're more committed than ever in establishing Tetris as a world class mobile franchise. We have an exciting new game development and are working towards introducing it later this year. playAWARDS continues to expand its technology, partnerships and functionality. The World Tournament of Slots is an example of this and something we plan to build on in 2025. We continue to view playAWARDS as a key differentiating factor for our company and integral to our value proposition and growth. We're making progress in optimizing POP! and myKONAMI, and we both are on track with notable improvements in 2025. Brainium performed well this past year, growing revenues and ARPDAU and we look forward to building on this momentum in 2025 with the optimization of myVIP and a new technology stack. And our balance sheet remains strong with $109 million of cash, a fully undrawn credit facility and an operating business that generates positive cash flows. Our capital allocation strategy will continue to be focused on maximizing shareholder value through growth oriented investments in our business, strategic acquisitions and exploring other ways of returning value to our shareholders. Lastly, I continue to believe there's a large discrepancy between the core value of our business and the value ascribed to us in the public markets. While frustrating, rest assured our leadership is aligned, our teams are focused and we're all committed to strengthening our company. I want to thank you for your time today. We appreciate your support and hope you're as encouraged about the coming year as we are. I'll now turn the call over to the operator to take your questions. Operator?

Thank you. And at this time, we will conduct a question-and-answer session. [Operator Instructions] Our first question comes from Ryan Sigdahl with Craig-Hallum Capital Group. Please state your question.

Hey. Good afternoon, guys.

Hey, Ryan.

I want to start on sweepstakes initiatives. So based on the guidance, nothing assumed in there, but if there was, assume it's mostly Q4. Does that imply I guess the new Tetris game and the sweepstakes probably don't launch until Q3, Q4 later in the year? I guess my question is, sweepstakes is time is of the essence here. We see cease and desist from several states now. There's a big opportunity out there, but I don't know how long it lasts for. So I guess talk through the timing of when we should expect that? And then secondly to that, I guess, will this be integrated into as a feature of your core legacy games or are you planning to have separate games?

Yeah. Okay. Thanks, Ryan. Great question. So, first, let me just comment on sweeps overall. I mean, the market is growing at a pretty extraordinary rate. And when you look at over the past four, five years, it's grown from a $700 million market to what's forecast to be a $4.5 billion this year. And that takes into consideration some of the added regulatory oversight. Even with I think the risk of some of the jurisdictions tightening up or potentially opting out, I still think it represents a very material growth opportunity. I also want to reinforce that we view sweepstakes as just a different monetization or promotional mechanic. It is -- they are free to play social casino destinations, and they just provide players with a different value proposition, where as they play and engage in play and monetize, they can accumulate this alternative currency that they can play with and ultimately cash out for real world money. That's not all that different from the model that we've been operating for the better part of 12 to 13 years, where people play our games for free. And as they do, they accumulate a loyalty currency that they can then redeem for real world value. So we see it as an opportunity as aligning with the core of our business and our value proposition. And there's just no question in our minds that, the migration of players from just simply playing for free to engaging with and playing the free to play sweep solutions is what is impacting the overall pace and scale of the more traditional social casino market. So we're obviously keenly focused on figuring out the best way to go about exploiting this opportunity. Now we're going to do it initially with a solution that is separate and distinct from our existing social casino suite. There's a lot of complexity associated with getting into these markets, and there are certain disciplines and competency that while we have a lot of it inherent within our company because so many of us come out of the real money casino industry or world, we for that reason, we appreciate its complexities and the need to operate with absolute integrity. So we're going to launch, our initial offering in the coming months and we're going to go slow. We're going to scale up and build that competency. And then we're going to start to incorporate and make those features and capabilities available to our existing players, through our native apps through some form initially across promotion, but ultimately a deeper level of integration. And the degree to which we integrate will be a function of how we continue to feel about the overall regulatory backdrop and compliance and oversight that we want to be very mindful and respectful of. So we'll speak to that probably with a bit more depth in the coming calls, coming quarters. As far as when you can think about sweeps impacting overall operating performance, we're obviously investing in it today and the cost and investments that we're making are included in the cost structure of our business and the guidance we've provided. We have not included any top line contribution from sweeps this year because until we feel like we're clear about its potential and have a line of sight as to when it is that we'll be scaling that initiative, we thought it'd be best that we just exclude it from the top line guidance.

Very helpful, Andrew. Appreciate that and I think smart way to do the guidance as well. For my second question, just curious if I scroll to the end of the press release, Page 11, the supplemental data and this kind of goes along with the loyalty currency. playAWARDS retail value of purchases was down 38% year-over-year in Q4. What caused such a significant decline in the usage there?

Yeah. So there were -- we did a lot, I would say, over the last six months and really revisiting and cleaning up, if you will, the overall rewards that are being offered through our playAWARDS program. And so a lot of the redemption activity in the past was for either sweepstakes style, contests that we offer up within our benefits, complement or other digital types of rewards, that really kind of bolstered or helped to contribute to those overall purchase volumes. And so, we really worked to kind of reset the core of the value proposition of our rewards business and went through an exercise where we actually eliminated a number of partners and skinnied up the nature and types of rewards that are being offered to really kind of reset and get back to the core of its value proposition. So we fully expected that there would be a decline in redemption activity initially and then it would start to reset and ramp back up over time, which we're seeing. And then of course, some of the redemption activities also just attributed to the reductions in the overall scale and volume of play that we're experiencing that I would say is attributed more to the impact of sweeps that I've already spoken to.

Thanks, Andrew. Good luck, guys.

All right. Thanks, Ryan.

Thank you. And your next question comes from Aaron Lee with Macquarie. Please state your question.

Hey, guys. Good afternoon. Thanks for taking my question. With regard to the reinvention plan, can you just talk a bit about how you're planning to balance your development requirements with the reduced workforce? Does this mean you'll be staffing up in lower cost development regions or do you think you have the right team size for the foreseeable future? Thanks.

Yeah. Thanks, Aaron. So initially, the reductions in the overall capacity of the company, really impacted just about every product and every operating function. As we alluded to, we took out just over 30% of our team members. In the course or in the exercise of doing that, we were also able to leverage some third-party development capacity relationships that we've been cultivating over the prior several years that we felt we could leverage more fully at a lower cost. And then to your point, we've also looked to transition and recompose our teams such that more of the team members are located in markets that are a bit more affordable for us. So some of the Asian markets and also our studio that's in Europe. So it's a bit of a complement of those things, both an absolute reduction in capacity, a shifting of our composition to these lower cost markets, leveraging third-party capacity. And then I would also just highlight, the fairly extensive use of artificial intelligence across both our creative marketing activities and a bunch of the work that we're doing in our slot content studios and creation.

Got you. Thank you. That's helpful. And then turning to M&A, with the new company structure and focus in place, has there been any change in terms of the parameters for M&A? Has anything changed in terms of what's available in the market or what you're looking for, whether that's size, genre, etc.?

Jason, you want to take that one?

Yeah. Sure. So we remain focused on M&A as one of the core pillars of our capital allocation strategy. M&A is a tool that has to align with our strategy and since our strategy has been rather consistent and hasn't the criteria of M&A and the types of assets we look for hasn't really changed. That being said, given the pressures -- the market pressures we've experienced and the value of our currency, it has made it a bit more challenging for us to win opportunities in the market and ease on some of those opportunities that we've competed for. But we remain active and have an active pipeline, but we'll also remain disciplined if not for opportunity. And so that's how I'd frame it there.

Got it. Thank you very much. Good luck, guys.

Great. Thanks, Aaron.

And your next question comes from Martin Yang with Oppenheimer & Company. Please state your question.

Hey, thanks for taking my question. First question is, again going back to sweepstakes, have you considered using M&A as a way to gain a quicker entry into the category?

Jason, you want to speak to that?

Yes. Early on in the cycle of researching this space and really getting comfortable with all of the regulatory and operating frameworks for this space, we did consider entering through M&A. As we did that analysis of the kind of build versus buy and we looked at the company, our company, and the capabilities that we had, our experience, our -- and our technology and our platforms relative to what we would have to pay to enter through M&A, we realized that we had a lot of what you needed to really build the sweepstakes capabilities internally. And we thought it would be an overall higher return on invested capital for us to build it ourselves and quickly scale in the market. We don't see the barriers to entry being massive, especially given what we've already built over the last 12 years. And so we've opted to do that for now. That doesn't mean that we wouldn't for the right asset at the right time as we start to learn more about what it means to operate in sweeps, you can consider attractive M&A opportunities in this category. But for the time being, we still -- we intend on kind of building those capabilities internally.

Got it. Thank you. Next question is maybe get us a sense of your longer term view of how sweepstakes type games and casino games may interact in the longer term. Do you think the growth of sweepstakes games is in the longer term going to be detrimental to social casino games? Is this genre shift somewhat structural in your opinion?

Martin, first of all, I would say, I don't think it's as much a genre shift as I alluded to a bit earlier. The people that are playing free to play social casino games are no different than the consumers that are playing on these dedicated sweepstakes. And that is because the experience and the underlying model is very similar. People can access these casinos whether it's a free downloaded app or whether it's going to a dedicated website, they are given a balance of free chips that they can play with. As they deplete those chips, then they can purchase more. And when they purchase more in the sweepstakes, they're getting the added benefit or a bonus of a promotional free currency, which is the sweeps currency, where they can change the modality of the game and actually play with the sweeps currency win and lose it and then ultimately cash it out. So as I alluded to, this is a different dimension of value and a different promotional mechanic to induce more monetization. And there have been surveys conducted and published that speak to the fact that 90% of the people that are actively -- that were surveyed and actively playing free to play social casino apps were aware of, have sampled and tried the sweeps offerings and nearly half of them have seen a change in behavior where they spend part of or all of their time now playing the sweeps as sweeps enabled free to play casinos as an alternative. So is this a structural shift? I think so, only in that there's a new dimension of value that's being attached to a free to play social casino experience that is really capturing the attention of the same consumers.

Got it. Thank you, Andrew.

Yeah. Thank you, Martin.

And your next question comes from Mike Hickey with Benchmark. Please state your question.

Yeah. Hey, Andrew, Jason. Thanks for taking our questions. Just curious, Andrew, on the consumer, I think we're starting to worry about sort of our economic situation here and mobile historically has proven vulnerable to discretionary pullbacks. So just curious what you're seeing today in your player base in terms of spend, if you think there's any impact here on consumer spend and how you think about the possibilities when you put out your 2025 guidance? I've got a follow-up.

Yeah. Thank you, Mike. Look, I think that what we experienced in the back half of last year and then entering in the -- so far the first couple of months of this year, there's nothing that leaves us feeling like the market is just inherently going to firm up from a macro perspective. So is the softness that we're experiencing purely a function of some of the market dynamics that we've just been speaking to with the emergence of sweeps for sure. But I would also say that, there's probably some indication that consumers are being a bit more cautious. Although, I would say nothing that we could point to very definitively. But I would say in balance that's why we've provided the guidance we have. We basically assumed that the trajectory of the core business is going to generally continue as it has over the last several quarters, while we are actively investing in the growth opportunities that we think are going to change the slope of our top line and catalyze our growth. We've not included that in our guidance yet for the year and it's because we want a bit more visibility into all these factors that are impacting our business, consumer confidence being one of them.

The -- on the sweeps business, sort of perplexing because obviously it's a big market opportunity. It appears to be growing, but it also is sort of a market that feels like it's developing without the regulatory scrutiny, the foresight to stop it. And once it started to sort of billed itself in states, you're seeing regulations come in to ban it. And so how do you sort of balance, I guess, Andrew, putting resources and investments into an addressable market that is in fact probably contracting as states sort of put up barriers to shut it down. And I guess how do you sort of like position that to investors that are maybe excited for the growth that sweeps can offer, but also concerned that regulatory pressure is going to restrict the market may be significantly over time?

Yeah, Mike. Really great question. First, I would say that the way that we're looking to approach the opportunity, ultimately is different from all of the other players that are in the industry today. Most all of the operators that are in the industry today have no prior history or experience selling virtual goods based free to play casinos, where they're leveraging a sweepstakes promotional model to help drive the growth of their core business, which is really what is intended with sweepstakes as a promotional mechanic. Sweepstakes laws have been around for decades and they are leveraged by existing businesses that want to offer up promotions where they extend and provide added value for free to their consumers that are partaking more in the primary activity. So for a company like McDonald's that runs a monopoly promotion, they're trying to sell more Big Macs. Most of the players in the sweepstakes industry today are offering up a free to play casino solution as an approach or a vehicle through which they can appeal to our consumers that have been playing free to play casinos for years and years. The difference for us is that we've been running this business for 12 years, and we're going to use sweepstakes the way it was intended to sell more of our native currencies across our portfolio of games. Now we're going to be very cautious in the way that we approach it. As I alluded to a bit earlier, we're taking a phased approach where our initial execution will be a standalone dedicated sweepstakes offering, so that we can build our competency and get ever clear about how to operate and optimize the performance of a sweep solution. And then we'll start to integrate it more fully into our existing portfolio of games in a way that we think will set a different standard in terms of how sweepstakes should be leveraged within our industry. Our intention is to be kind of the gold standard upon which everyone else will be compared or measured, where we do it the way it was intended to sell to drive the growth and the sale of more of our core products and services, which in our case are virtual chips. So, we're going to be responsible. We're going to be deliberate. We're going to make sure that we stay very close to and connected to all of the regulatory complexities and compliance questions. And what consumers have certainly signaled is that they enjoy and want to partake in this style of free to play casinos. And so I think that what will more likely happen is that there'll be some level of added oversight, if anything, because it's an activity that people want to participate in. And it can be managed and done responsibly and with integrity and for the benefit of the jurisdictions that embrace it and accommodate it. And so we would hope that there's going to be more of that that happens as it matures and is really credible legitimate entrants come into the market that have a long standing history with their core business that they're looking to bolster.

Thanks, Andrew. Last question from us. Obviously, we've been following you for a long time and loyalty program has sort of been cornerstone to your value proposition to your players. And, but it seems like maybe it hasn't driven that sort of elevated engagement and retention that we would expect from a loyalty program that we maybe see in other industries. And so curious if you think that's true and sort of how you think what needs to sort of be done maybe on the program in terms of maybe getting you to where you can get that higher level engagements retention and growth from your loyalty base or your business is evolving too with sweeps and maybe other areas, maybe it's less of an emphasis now for you than it was in the past?

Yeah. Well, first of all, I would say we firmly believe that the loyalty program does in fact add value, that if you were to look at or and we do, retention rates and engagement rates as compared to our peers when we ask the platforms to benchmark our performance, we are in and among the top of the apps certainly within our genre as far as retention engagement. And we think that that's attributed to, certainly the quality of our content, but also the impact of our loyalty program. We've done a lot over the last six months to kind of reset the core value proposition and benefits that we offer to our loyalty program. I think that is essential. If you're going to maintain the interest of your consumers and players that are participating in it, you have to continue to offer not just what they want, but at the quantities that ensure and support that the benefits are achievable. So we -- our team does a lot to ensure that benefits are right and that they're accessible and available to our players. So I think that, there's -- the contraction that we're seeing and certainly that just about everybody else within our category or genre is experiencing is this kind of structural impact of sweeps on the industry, which really speaks more to the core content that people are engaging with. And so that's a tough thing to overcome, with loyalty program in and of itself. So we think that once we’ve turned on the sweeps capabilities and we haven't thoughtfully integrated into our existing native products, coupled them also with the added benefit of our loyalty program, that will give us an advantage relative to everybody else in the space.

Nice, Andrew. Thank you. Good luck.

Thank you.

Thank you. And there are no further questions at this time. So I'll now hand the floor back to Andrew Paschal for closing remarks. Thank you.

Thank you, operator. And I just want to thank everybody for your continued interest in the company. I appreciate that we're in a moment of transition here. We've done a lot over the last six months to really reposition the company and get us prepared for a new period of growth. We've spoken to those things. We tried to be as clear and transparent about the restructuring exercise and the refinements to our overall expense and cost structure, while at the same time investing in these new opportunities that we deeply believe in. And we look forward to reporting on our progress in the coming quarters. So thank you again.