Playstudios (MYPS) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Our business will suffer if we are unable to entertain our players, develop new games, and improve the experience within our existing games
2. 02If we are able to develop new games and features that achieve success, it is possible that these new games and features could divert players of our other existing games without growing our overall player base, which could harm operating results
3. 03We believe that our players’ level of engagement with our games is partly based on playAWARDS, our real-world rewards loyalty program. If we fail to expand and diversify our playAWARDS program, or external events make it difficult for our players to consume real-world rewards, our business may suffer
4. 04The COVID-19 pandemic and containment efforts across the globe significantly impacted our business, and the extent to which any future pandemics, health epidemics or contagious disease outbreaks will impact our future results of operations and overall financial performance remains uncertain
5. 05Our industry is very competitive. If players prefer our competitors’ games over our own, our operating results could suffer
6. 06We rely on a small portion of our total players for a substantial amount of our revenue and if we fail to grow our player base, or if player engagement declines, our revenue and operating results will be harmed
7. 07A substantial portion of our loyalty rewards and significant intellectual property are obtained from MGM, and any change in that relationship could materially and adversely affect our business and financial results
8. 08We 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
9. 09limitations, 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
10. 10attempt to access it or navigation through a game is slower than they expect, players may stop playing the game and may be less likely to return to the game as often, if at all
11. 11We have engaged, and expect to engage, third-party game development companies to develop and operate certain 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
12. 12with them, or unilaterally elected to discontinue providing services, we would have to find a substitute provider or replace the lost services internally, which could disrupt the operation of the games and result in dissatisfied players, increased expenses, lost revenues, and other adverse effects
13. 13If we do not successfully invest in, establish and maintain awareness of our brands and games, or if we incur excessive expenses promoting and maintaining our brands or our games, our business, financial condition, results of operations, or reputation could be harmed
14. 14Our ability to acquire and maintain licenses to intellectual property may affect our revenue and profitability. Competition for these licenses may make them more expensive and increase our costs
15. 15The perceived value of our virtual currency is highly dependent on how we manage the economies in our games. If we fail to manage our game economies properly, our business may suffer
16. 16Our ability to successfully attract in-game advertisers depends on our ability to design an attractive advertising model that retains players
17. 17Our success depends on the security and integrity of the games we offer, and security breaches or other disruptions could compromise our information or the information of our players and expose us to liability, which would cause our business and reputation to suffer
18. 18If the use of mobile devices as game platforms and the proliferation of mobile devices generally do not continue to increase, our business could be adversely affected
19. 19While we have achieved profitability in the past, we also have a history of net losses and our revenue and operating margins may decline. We also may incur substantial net losses in the future and may not sustain profitability
20. 20We intend to grow our business through strategic acquisitions, investments, and joint ventures that involve numerous risks and uncertainties
21. 21Our international operations are, and our strategy to expand internationally will be, subject to increased challenges and risks
22. 22Our business is subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing, and which could subject us to claims or otherwise harm our business
23. 23We may be subject to future litigation in the operation of our business. An adverse outcome in one or more proceedings could adversely affect our business
24. 24Failure to obtain, maintain, protect, or enforce our intellectual property rights could harm our business, results of operations, and financial condition
25. 25We have been in the past, and may be in the future, subject to intellectual property disputes, which are costly to defend and could require us to pay significant damages and could limit our ability to use certain technologies in the future
26. 26Our games utilize third-party open source software components, which may pose particular risks to our proprietary software, technologies, and games in a manner that could negatively affect our business
27. 27We are subject to laws and regulations concerning data privacy, information security, data protection, and consumer protection, and these laws and regulations are continually evolving. Our actual or perceived failure to comply with these laws and regulations could harm our business
28. 28regulators, the media or consumers raise any concerns about our privacy and data protection or consumer protection practices, even if unfounded, this could also result in fines or judgments against us, damage our reputation, and negatively impact our financial condition and damage our business
29. 29In addition, Brazil’s passage of the Lei Geral de Protecao de Dados Pessoais, or LGPD, became effective September 2020 and created new privacy rights for consumers residing in Brazil
30. 30Our business depends on our ability to collect and use data to deliver relevant content and marketing materials, and any limitation on the collection and use of this data could cause us to lose revenue
31. 31We rely on assumptions and estimates to calculate certain of our key metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business
32. 32Companies and governmental agencies may restrict access to platforms, our website, mobile applications, or the Internet generally, which could lead to the loss or slower growth of our player base
33. 33Our business depends on the growth and maintenance of wireless communications infrastructure
34. 34Changes in tax laws or tax rulings could materially affect our effective tax rates, financial position, and results of operations
35. 35We could be required to collect additional sales, value-added, or similar taxes or be subject to other tax liabilities that may increase the costs of our players to engage with our games and adversely affect our results of operations
36. 36We may have exposure to greater than anticipated tax liabilities
37. 37Our ability to utilize our research credit carryforwards and certain other tax attributes may have been limited by “ownership changes” and may be further limited

Risks Related to Managing Our Business Operations in Israel

1. 38Potential political, economic, and military instability in Israel and the surrounding region may adversely affect our results of operations
2. 39Our operations may be disrupted because of the activation of Israeli citizens for military service
3. 40We incur operating expenses that are denominated in currencies other than the US Dollar, including expenses denominated in New Israeli Shekels, and as a result our financial condition and results of operations may be harmed by currency exchange rate fluctuations
4. 41Economic downturns and political and market conditions beyond our control could adversely affect our business, financial condition, results of operations, or prospects
5. 42Our financial results and operating metrics have fluctuated in the past and we expect such results to fluctuate in the future. These fluctuations may be due to a variety of factors, some of which are outside of our control and may not fully reflect the underlying performance of our business
6. 43Our reported financial results may be affected by changes in accounting principles generally accepted in the U.S
7. 44Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline
8. 45We may require additional capital to support our growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business
9. 46Our investments may become impaired by deterioration of the financial markets
10. 47The requirements of being a public company may strain our resources and divert management’s attention, and the increases in legal, accounting and compliance expenses may be greater than we anticipate
11. 48our general and administrative expenses and could materially and adversely affect our profitability. We are evaluating these rules and regulations, and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs
12. 49internal controls over financial reporting could adversely affect the results of assessments by our independent registered public accounting firm and its attestation reports
13. 50Our workforce and operations have grown substantially since our inception. If we are unable to effectively manage our workforce, our financial performance and future prospects will be adversely affected
14. 51of our senior management team could cause disruption and harm our business, financial condition, results of operations, or reputation
15. 52Any restructuring actions and cost reduction initiatives that we have undertaken or may undertake in the future may not deliver the expected results and these actions may adversely affect our business
16. 53Our systems and operations are vulnerable to damage or interruption from natural disasters, power losses, telecommunications failures, cybersecurity attacks, terrorist attacks, acts of war, human errors, break-ins and similar events
17. 54Our insurance may not provide adequate levels of coverage against claims
18. 55Because we are a “controlled company” within the meaning of the Nasdaq rules, our stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies
19. 56If we fail to continue to meet the listing standards of Nasdaq, our common stock may be delisted, which could have a material adverse effect on the price and liquidity of our common stock
20. 57The dual class structure of our common stock has the effect of concentrating voting power with Andrew Pascal, our Chairman and Chief Executive Officer, which limits an investor’s ability to influence the outcome of important transactions, including a change in control
21. 58We cannot predict the impact our dual class structure may have on the stock price of our Class A common stock
22. 59We may issue preferred stock or additional common stock, including under the 2021 Plan and 2021 Employee Stock Purchase Plan. Any such issuances would dilute the interest of our stockholders and likely present other risks
23. 60Legal proceedings in connection with the Acies Merger, the outcomes of which are uncertain, could divert management’s attention and adversely affect our daily operations
24. 61Warrants may be exercised for our Class A common stock, and Earnout Shares and Sponsor Shares may become issuable or vest, each of which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders
25. 62Regulatory and licensing requirements may limit the ability of third parties seeking to make investments in us or acquire us
26. 63The price of our Class A common stock and Public Warrants may be volatile
27. 64These market and industry factors may materially reduce the market price of our Class A common stock and Public Warrants regardless of our operating performance
28. 65We do not currently pay dividends on our common stock, and as a result capital appreciation, if any, may be the sole source of gain for our stockholders
29. 66We are currently, and in the future may be, subject to securities litigation, which is expensive and could divert management attention
30. 67The Public Warrants may never be in the money and they may expire worthless, and the terms of the Public Warrants may be amended in a manner adverse to a holder if holders of at least 65% of the then outstanding Public Warrants approve of such amendment
31. 68We may redeem the Public Warrants prior to their exercise at a time that is disadvantageous to the holders of Public Warrants
32. 69Delaware law and our organizational documents contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
33. 70The provisions of our Certificate of Incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers