Playtika, Profitable Online Gaming Company, Reveals IPO Plans

Posted on: December 18, 2020, 10:58h. 

Last updated on: December 19, 2020, 07:12h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Mobile gaming company Playtika filed a Form S-1 with the Securities and Exchange Commission (SEC) Friday, bringing it closer to a highly anticipated initial public offering (IPO).

Playtika IPO
A Playtika sign in Israel. The company is getting closer to a US IPO. (Image: Haaretz)

In the regulatory document, the Israeli company, which is controlled by a group of Chinese investors, reveals plans for a $100 million offering. But that’s probably a standby figure that will likely be significantly higher. Previous reports indicate Playtika is eyeing a $1 billion IPO that values the company at $10 billion. The firm plans to list on the Nasdaq under the ticker “PLTK.”

Investor demand for the share sale is likely to be robust, not only because online and mobile gaming equities are currently hot, but also because Playtika has an important trait: It’s profitable. For the year ending Sept. 30, the company posted earnings before interest, taxes, depreciation and amortization (EBITDA) of $815.2 million on revenue of $2.3 billion, resulting in net income of $46.1 million.

Playtika also offers the growth potential Wall Street is accustomed to with mobile gaming names. In the prior year, the company posted EBITDA of $621 million on turnover of $1.9 billion.

Games offered by the firm include Bingo Blitz, Caesars Slots, Poker Heat and the World Series of Poker (WSOP) social platform.

Users on the Rise

Playtika was previously owned by Caesars Entertainment (NASDAQ:CZR), but the old, financially flimsy version of the casino operator was forced to sell the mobile gaming entity for $4.4 billion in 2016 after filing for Chapter 11 bankruptcy protection in 2015.

For the nine months ending Sept. 30, Playtika’s top nine titles accounted for 98 percent of revenue, while daily average users (DAUs) jumped to 11.4 million from 9.9 million a year earlier. Average revenue per daily user (ARPDAU) increased modestly to 52 cents from 51 cents.

In addition, of the games that we have operated for at least five years, we increased revenues of five of them at a compound annual growth rate of 15% or more during the five years ended September 30, 2020,” according to the S-1. “Furthermore, for two of our more recently acquired games, Solitaire Grand Harvest, which we acquired in January 2019, and June’s Journey, which we acquired in November 2018, we have increased quarterly revenue by 146.3% and 147.7%, respectively, from the first full quarter after their respective acquisitions through the quarter ended September 30, 2020.”

Playtika doesn’t say acquisitions are imminent. But it acknowledges that has been the primary avenue through which it’s boosted its user base.

Mobile Gaming Equals Growth

Investors are enamored by internet casino and sports wagering equities. But mobile and social gaming offer impressive growth trajectories of their own. There are 2.7 billion players and 10 million developers around the world in an industry that’s forecast to be worth $150 billion in 2025.

Playtika is positioned to capitalize on that growth, as it notes it has more titles in the top 100 games in the iOS App Store and Google Play Store than any of its rivals.

Playtika players are found in 100 countries. But North America and Europe combined for 89.6 percent of the company’s top line for the nine months ending Sept. 30.