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Playtika eyes new M&A opportunities after mixed 2023

| By Robert Fletcher
Playtika has set out plans to pursue new M&A opportunities amid a “shift to reinvestment” over the next year following a mixed 2023 for the social gaming developer.
Playtika 2023

Revenue in 2023 was only down 1.9% to $2.57bn (£2.02bn/€2.37bn). However, higher costs meant a 17.9% drop in net profit at Playtika.

The results came in a year when Playtika added several assets to its portfolio. In September, Playtika completed its $300.0m acquisition of Innplay Labs. In August, its also closed its purchase of the Youda Games portfolio of content from Azerion.

Earlier in 2023, Playtika was also in the running for Rovio Entertainment, the developer behind the Angry Birds series. It lodged several bids but eventually dropped out of the running. Sega Sammy went on to acquire Rovio in August.

Reflecting on 2023 and looking to the current year, CEO Robert Antokol is looking to new M&A options. Playtika was also evaluating other strategic alternatives for the business, but this has been put on hold due to ongoing uncertainty in Israel and Ukraine.

“In the past year, we’ve honed our focus on efficiency and streamlined our operations, adapting to evolving industry dynamics in mobile gaming,” Antokol said. “Now, with a solid foundation, 2024 marks our shift towards reinvestment – pursuing M&A opportunities with a strategic intent of capital deployment.”

Reduced costs fail to stop net profit decline at Playtika

Taking a closer look at Playtika during 2023, most revenue was generated by third-party platforms. Here, revenue hit $1.93bn, down 4.0% year-on-year. 

The remaining $639.4m of revenue came from direct-to-consumer platforms, an increase of 5.4%. However, this was not enough to overcome the third-party platform decline, meaning total revenue fell.

Turning to costs, spending was lower at $2.07bn, down 3.7% from 2022. Revenue costs was the main outgoing at $718.5m, ahead of sales and marketing at $585.7m. Expenses were lower across all areas in 2023.

Playtika noted an additional $109.5m in interest income, leaving a pre-tax profit of $392.1m, up 8.7%. However, tax costs were higher at $157.1m, compared to $85.5m in the previous year.

When also including foreign currency translation and change in fair value of derivatives, net profit was $238.0m, down from $289.7m in 2022. However, adjusted EBITDA climbed 3.4% to $832.2m for the year.

Net profit drops 68.6% in Q4

Turning the final quarter of the year, revenue in Q4 was up marginally by 1.1% to $637.9m. 

Costs-wise, expenses increased by 3.0% to $517.9m. Net financial income reached $32.6m, leaving a pre-tax profit of $87.4m, a drop of 4.9% from the previous year.

Tax payments again hit Playtika, with the $50.1m paid in Q4 much higher than $4.4m in 2022. As such, after also including other net costs of $3.9m, net profit for the quarter amounted to $33.4m, down 68.6% year-on-year.

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