UPDATE: Playtika Raises $1.9B With IPO On NASDAQ

? Public Offering

• Israel-based mobile social games developer and publisher Playtika (NASDAQ: PLTK) raised $1.88B through the IPO on NASDAQ at a price of $27 per share, above its target range of $22-24

• On the first day of trading, prices went up to $31.62 per share (+30%), which eventually led to the market cap of $13.5B. Trading multiples based on LTM ended Sep’2020 are ~7x EV/Revenue and ~19x EV/EBITDA, assuming a current EV of $15B

• Of the total 69.5m shares, 51m ($1.4B) shares were offered by the actual majority shareholder, and 18.5m ($0.5B) shares were offered by Playtika

• After the completion of the public offering, Playtika will continue to be a ‘’controlled company with about” 80% of voting power belonging to a Chinese investor, Yuzhu Shi

? Financial Highlights

• Playtika is a profitable and rapidly growing business demonstrating ~$2.3B LTM Revenue, ~$0.8B adj. EBITDA (~36% margin) with revenue CAGR of 21% over 2015—LTM 2020 period

• Playtika’s top nine game collectively represent over 95% of total revenue

• ~80% of the company’s revenue belongs to mobile platform vs. 20% coming from web

• Playtika heavily relies on in-app purchases, which account for over 95% of total revenue

• Over 75% of revenue is generated in North America, and 13% — in Europe

• Playtika is a highly leveraged business with $2.2B long-term debt (as of Sep-30, 2020), which primarily is the result of huge dividend distribution to stockholders of $0.4B for 2018 and $2.4B for 2019 that was fully financed by the bridge loan facility

? Business Highlights

• 57% of revenues generated by casino-themed games and 43% by casual games

• 35.2 million average MAUs and 11.4 million average DAUs

• 80% of revenue generated by mobile platform and 20% by web

• 98% of revenue generated by the company’s top nine games

• 97% of revenue generated by in-app purchases

* for the nine months ended Sep’2020

? Previous Acquisitions

• Playtika has strong inorganic growth strategy, primarily expanding its game portfolio through acquisitions, which has been the key driver of revenue ($1.4B out of $2.3B) and profitability. So far, Playtika has acquired 7 game studios and 7 of the top-nine company’s games are owned by the acquired studios

  • The company explains such success by Playtika Boost Platform, which provides live-ops services and technologies to newly acquired studios increasing their profitability and revenue scale

  • In fact, Playtika’s operating cash flow during 2017-2019 accounted for $1.3B, meaning that Playtika has no need to use external financing to perform its M&As, fully financing all its deals from existing operating cash

• In August 2019, Playtika acquired a Finland-based studio Seriously, a mobile game developer behind a puzzle game Best Fiends, for up to $351.2m: including:

  • an up-front consideration of $281.2m

  • up to $70m of an earn-out consideration, based on studio’s performance during 2020.

• In January 2019, the company acquired Austria-based mobile solitaire games developer Supertreat, for up to $200m, including:

  • an up-front consideration of $90m;

  • up to $110m of an earn-out consideration, based on studio’s performance during the twelve-month period after the acquisition.

• In November 2018, Playtika acquired Germany-based mobile puzzle games developer Wooga, for $204.1m

• In October 2017, the company acquired Israel-based social games developer Jelly Button, for an undisclosed sum, that is said to be “tens of millions of dollars”

• Also, the company has expanded its game portfolio by acquiring games, such as House of Fun (2014), World Series of Poker (2013), and Bingo Blitz (2012), during the last several years

? Product

• Playtika is known for developing and publishing of social casino, puzzle, poker, and solitaire mobile and web games. The top nine company’s games include:

  • Launched in 2010, Slotomania is #1 worldwide social slots game , which has attracted over 1.5 million DAU in Q3’20

  • Launched in 2010 and acquired by Playtika in 2012, Bingo Blitz is #1 worldwide mobile bingo game with 0.9 million DAU in Q3’20

  • Launched in 2014 and acquired in 2019, Best Fiends is a match-3 mobile game with RPG elements having +1.3 million DAU in Q3’20

  • Launched in 2017 and acquired in 2019, Solitaire Grand Harvest is #1 worldwide mobile solitaire game

  • Launched in 2017 and acquired in 2018, June’s Journey is #1 worldwide mobile hidden objects game

• Other games of the company include Board Kings, World Series of Poker (#1 poker game), Caesars Slots, and House of Fun

• During the nine-month period ended on September 30, 2020, Playtika had over 11 million DAUs