Good day, and thank you for standing by. Welcome to the Playtika Q3 2026 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Elad Amit, SVP Corporate Finance and Investor Relations. Please go ahead.
Welcome, everyone, and thank you for joining us today for the third quarter 2026 earnings call for Playtika Holding Corp. Joining me on the call today is Robert Antokol, co-founder, president, and CEO, and Tae Lee, Chief Financial Officer. I would like to remind you that today's discussion may contain forward-looking statements, including but not limited to the company's anticipated future revenue, profitability, and operating performance, the development or launch of new games, and refinancing plans. These statements and other comments are not a guarantee of future performance, but rather are subject to risk and uncertainty, some of which are beyond our control. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call.
We have posted an accompanying slide deck to our investor relations website, which contains information on forward-looking statements and non-GAAP measures, and we will also post our prepared remarks immediately following the call. For a more complete discussion of the risk and uncertainties, please see our filings with the SEC. With that, I will now turn the call over to Robert.
Good morning, and thank you for joining us. Before I talk about the quarter, I want to share an update from our board. Earlier this year, the board formed a special committee to review strategic alternatives. The review is now completed. The board decided that the best path to a long-term value is to execute our plan, an independent company, and to strengthen our balance sheet. Last quarter, I said that trust is earned by doing what we say we will do. This quarter, we continued that work. We said we would invest early in the year and grow adjusted EBITDA in the second half, and that is exactly what happened. In this third quarter, we delivered $673.8 million in revenue and a record of $252.1 million in adjusted EBITDA. Our Adjusted EBITDA margin was 37.4%.
Our business is durable because our most loyal players stay with us, and they keep spending. Look at June's Journey. The game is nine years old, and it has grown double digits this year. Many of our players have been playing our games more than 10 years. This is the foundation of Playtika, and it is why we build games for the long term. I want to talk a little bit about SuperPlay because it is another strong example of this. When we bought SuperPlay, we said we were buying a team that knows how to build games people love and keep playing. This is exactly what we got.
This quarter, our SuperPlay revenue grew by strong double digits, and Disney Solitaire also grew 88.4% year-over-year. The studio is also becoming more profitable. When we first bought the studio, it was losing money.
Today, it is profitable, and we expect it to be profitable for the full year. The acquisition is working, and the results are showing it. People ask me if this kind of success can last. We believe it can. SuperPlay has launched three games, and all three games reached scale. Look at Dice Dreams. The game was launched six years ago, and it is still growing. This is not luck. Our SuperPlay team knows how to build games players stay with. This is also why the earnout covers more than one year. We did not want a team chasing one big quarter or one big year. We wanted a team focused on keeping players, because when players stay, they spend, and that builds profit. We said SuperPlay would grow. It did. We said it will become profitable, and it has.
With that, let me hand it to Tae to take you through the numbers. Thank you.
Thank you, Robert, and good morning. Before I walk through the quarter, I want to give you a few points to keep in mind as you interpret our results and think about the business going forward. First, the overall shape of the year has developed as planned. Our plan for the year weighted marketing spend towards the first half, particularly the first quarter, with spend stepping down through the second and third quarters and becoming more even in the fourth. SuperPlay revenue was expected to move lower sequentially in the second half while growing year-over-year. We have executed against that plan. That is why our adjusted EBITDA margin expanded from 16.8% in the first quarter to 28.2% in the second quarter to 37.4% this quarter.
As this year shows, our quarterly margins can move with the timing of our marketing investment and seasonality. We would encourage you to evaluate them on a full-year basis rather than quarter to quarter. Second, we manage our portfolio by the role each game plays. Our growth titles, led by our SuperPlay games, receive investments to scale. Our core cash generators, Bingo Blitz, June's Journey, and Slotomania, are managed to maximize their long-term value. The rest of the portfolio is managed with a focus on profitability. Our mature titles have large, loyal player bases and carry significant operating leverage. This year, Bingo Blitz declined more than we planned, although most of the year-over-year decline reflects our decision to move away from acquisition channels with weaker long-term retention and lifetime economics.
At the same time, June's Journey grew, Slotomania stabilized, and together with the rest of the portfolio, they absorbed that decline. That is the advantage of being a scaled operator with a diversified portfolio. No single title determines our results, and that gives us the ability to reallocate capital and reshape our cost base and to come out of this period with a structure built for the environment we operate in today.
Third, the financial strength of the business is intact. Our DTC mix and disciplined investment approach continue to support substantial cash generation. Through the first nine months of the year, we generated approximately $288 million of free cash flow, excluding the classification of earnout-related payments in the second quarter. We expect to generate more than $400 million in free cash flow for the full year. With that framing, let us go through the financial results.
In the third quarter, we delivered revenue of $673.8 million, down 7.8% sequentially and essentially flat year-over-year. Adjusted EBITDA was $252.1 million, up 22.3% sequentially and 15.9% year-over-year, representing a margin of 37.4%. As Robert noted, this was a record quarter for adjusted EBITDA as we define it today. That definition does not add back long-term cash compensation. Net income was $40.4 million, and adjusted net income was $120.7 million. We delivered DTC revenue of $275.1 million, down 4.1% sequentially and up 31.4% year-over-year. DTC reached 40.8% of total revenue.
When we discussed DTC a year ago, we set a goal of reaching 40% on a run rate basis within two years. We reached it well ahead of that timeline. DTC remains a core part of our strategy, and we will continue to optimize across channels as the platform landscape evolves.
Now let's turn to the portfolio, starting with the performance of our top three revenue titles for the last quarter: Bingo Blitz, Disney Solitaire, and June's Journey. Bingo Blitz delivered $133 million of revenue this quarter, down 8.3% sequentially and 18.2% year-over-year. I want to explain exactly what is behind this, because it primarily reflects a decision we made. Until last year, we had been expanding into certain new player acquisition channels for Bingo Blitz.
Those channels delivered volume quickly, but the players they brought in did not stay. In the fourth quarter of last year, we redirected that investment toward the long-term players who have been the foundation of this franchise. This year's comparison includes revenue from those short-lived players in the prior year and not in the current year, and that is the primary driver of the year-over-year decline. As we lap this change in the fourth quarter, we expect its effect on year-over-year comparisons to ease. This quarter, we also launched Leagues, a new permanent tournament feature that adds a lasting layer into the core game, and the fourth quarter opened with Bingo Blitz's 16th birthday celebration. Bingo Blitz remains the number one bingo title worldwide.
Disney Solitaire generated $111.2 million of revenue this quarter, down 21.9% sequentially and up 88.4% year-over-year. As expected, Disney Solitaire revenue moved lower sequentially with the timing of our user acquisition spend, while nearly doubling from a year ago. Disney Solitaire's daily audience and paying player base are substantially larger than they were a year ago. We continue to judge this game on its full-year growth and its lifetime economics. June's Journey revenue for the quarter was $76.6 million, up 2.4% sequentially and 12.1% year-over-year.
This quarter, the game celebrated its ninth anniversary, and it is growing at double digits year-over-year. The growth we're seeing is coming from the depth of live ops and personalization at Wooga. Our recent albums have outperformed their predecessors on monetization, and the ninth anniversary drew a very strong community response. June's Journey is a clear example of what our core games can do. With a loyal player base and a strong live ops engine, the game is still growing, and that growth flows meaningfully to our adjusted EBITDA. I also want to give an update on Slotomania. A year ago, Slotomania revenue was down by nearly half year-over-year.
Today, it is close to flat. That is the result of the work our team has done on the game economy and of new features that bring players back and keep them engaged.
Slotomania has stabilized, and our focus remains on long-term value. Let's turn to specific items in our P&L. Cost of revenue was $175 million, down 1.9% year-over-year. Beginning in the fourth quarter of 2025, royalty expenses are included in cost of revenue. They were previously in sales and marketing, and prior periods were not reclassified. Excluding this change, cost of revenue declined even more, mainly because platform fees fell as our DTC business grew. R&D was $86.8 million, down 12.1% year-over-year, primarily reflecting a $10.8 million credit under Israel's Law for the Encouragement and Incentivization of Research and Development, 2026. That is recorded as a reduction of R&D expense, and we exclude this credit from adjusted EBITDA, so our adjusted EBITDA does not include any benefit from it.
Sales and marketing was $167.8 million, down 18.7% year-over-year and down 33.6% sequentially, reflecting the planned step-down in marketing spend in the third quarter. G&A was $123.9 million, up 35.9% year-over-year. The current quarter included an $80 million expense related to the revaluation of SuperPlay contingent consideration, compared to $30.8 million in the prior year quarter. Excluding these items, G&A was down 27.3% year-over-year. Average daily paying users was 333,000, down 9.3% sequentially and 5.9% year-over-year.
Average daily active users was 7.1 million, down 11.3% sequentially and 13.4% year-over-year. Sequentially, the change in active users is concentrated in titles where we reduced acquisition spend. Year-over-year, it reflects lower user acquisition volume in our mature titles. The players who remain are more engaged and more valuable, and that shows in our monetization. Turning to the balance sheet.
As of September 30th, we had $594.6 million in cash equivalents, and short-term investments. As Robert commented, with the strategic review behind us, our focus is on the balance sheet. We intend to refinance our upcoming maturities, and we believe our cash generation and scale position us well to do so. Our approach is straightforward. We do not intend to increase our total debt. We expect to pay the SuperPlay earnout in the second quarter of 2027 from cash on hand and cash generated by the business. We do not intend to comment further on the strategic review. Turning to our guidance for the year, we are reaffirming our full-year revenue range of $2.75 billion-$2.85 billion and adjusted EBITDA range of $750 million-$790 million, and we now expect to land around the midpoint of both ranges.
Last quarter, we took a cautious view of the second half. With the third quarter behind us, we have better visibility, and the portfolio is giving us more confidence. June's Journey is growing double digits. Slotomania remains stable. Disney Solitaire's paying player base is much larger than a year ago. We expect the fourth quarter to reflect the marketing cadence we have described throughout the year, with room to invest in more user acquisition where we see strong returns. At the midpoint, it would be the fourth consecutive year we have met or exceeded our adjusted EBITDA guidance. To close, we executed the plan we set for this year. SuperPlay is growing and profitable. The business continues to generate strong cash, and we are focused on strengthening our balance sheet. We would be happy to take your questions.
Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Colin Sebastian of Baird. Your line is now open.
Thanks for taking my questions. I guess first off, just related to the trend in marketing spend and the pullback in acquiring new players, I wonder what would need to change for you to ramp the marketing investments back up next year and sort of in the top end of the funnel set up for maybe greater monetization going forward. I guess related to that on Bingo, how much opportunity remains to grow spending among that existing long-term user base, and maybe what would prompt you to put more investment behind new player acquisition? Thanks.
Yeah, thanks for the question, Colin. I think in terms of how we think about our marketing spend for next year specifically, we will give more detail come February around our Q4 print as we give guidance for next year. You can expect similar cadence in terms of the seasonality that you saw this year, where typically we have, starting in Q1, alongside our new roadmap campaigns, you will see strong spend going into the year. Then typically, we ease off in the second half, especially in Q3, as there is some seasonality to our business.
For Q4, as we commented in the prepared remarks about this year, similar to how we thought about marketing spend last year, we will be opportunistic around which games we are ramping up spend in based on, of course, returns that we see and opportunities to generate higher return on invested capital as we think about setting the business up for success for next year. For Bingo Blitz specifically, it is a capital allocation exercise for us by portfolio, by game. So, looking at the assets, the games that we have, and the channels in which we have available to spend marketing. So, we see opportunities to continue to optimize that in Bingo Blitz as well as in other titles.
Again, the focus has been on looking for users that have higher lifetime economics. That will continue to be the focus for us. But on the marketing side, that is one where we will continue to look to optimize not only across games, but within each game as well.
Okay, thank you.
Thank you. Our next question comes from the line of Aaron Lee of Macquarie.
Hey, good morning. Thanks for taking the question. As you pointed out in your prepared remarks, SuperPlay has grown all three of its games. Is there anything you've learned about their live ops approach, their cadence of content updates or events, or just any other lessons that you think could be applicable to the broader portfolio?
Thank you for the question. For sure, as I said in the past, every acquisition that we are doing, it's important for us not only to bring a company that know how to provide revenues, to make money doing things. It's important for us to bring companies that we can learn from them, that we can do things that we never did in the past. Definitely, we are learning from SuperPlay, from approach, how they're approaching games, how they're doing things. It's a win-win situation. As you know, SuperPlay, the founders of SuperPlay came from Playtika. We are a very similar DNA, and we see today that working together with them and working with their team is making Playtika better, not only SuperPlay.
For us, it's, of course, everybody look at the revenues, everybody look at what they are bringing to the table, but there is other effect that you can feel at the company. Thank you.
Thanks, Robert. You guys have also talked about AI as a tailwind in the past. Are you starting to see it help drive efficiency or help with live ops or targeting? Just any color there on how you're approaching AI throughout the organization would be helpful. Thank you.
Yeah, Aaron, I think for us, as we think about overall sort of how we operate in our business, we see opportunities for AI to continue to allow us to operate better. We've called out specific things in the past, right, around content, creatives, artists, and being able to do essentially the same, if not more, with less. I think you'll continue to see that, and we'll give sort of appropriate updates as we go on. But at this point, it's certainly a key aspect of the entire sort of org structure and how we operate our business. Everything from things like campaign planning, to think about the event calendars, to A/B testing, it's essentially embedded in every aspect of the business.
Got it. Thank you.
Thank you. Our next question comes from the line of Albert Kim of UBS.
Hi. Thanks for taking the question. Just on the guidance, was the change to outlook related more to game-specific factors, or was it the better response to the marketing changes from the consumer side, or is it overall market trending better or worse than, sorry, better than you expected? How much of the change relates to SuperPlay versus performance of legacy games? Just on a title-specific question, for June's Journey, saw some strong performance through 2026. Can you help us think about what resonated the most here, what contributed to the performance, and where do you see the most opportunity going forward? You mentioned before about the franchise being able to grow into a million per day title in the past. Are there any change to expectations and anything you can potentially leverage for other franchises?
Yeah, thanks for the question. In last quarter, when we thought about the full year, we took a little bit more of a cautious view, and we noted in the prepared remarks that with Q3 behind us, the performance of the portfolio gave us more confidence to point to the midpoint of the range. I think it's both, Albert. It's looking at performance from our SuperPlay titles as by design. We pulled back the cadence of UA spend in the second half, and when you do that for a game that is as young as Disney Solitaire, which is behaving like a young game where you still have, call it less than.
Again, you don't have the multiple years of cohorts yet driving that business, so you want to see how the game reacts with the pullback, and the performance there has been strong, so we're pleased to see that. In addition, I think seeing the strong growth, and you've called out June's Journey, we'll speak to that, but the double-digit growth in June's Journey, seeing the continued stability from Slotomania, and as well as some of the month-over-month trends in Bingo in Q3 gave us confidence in the outlook as well.
I think thinking about June's Journey, we've always thought about that and spoke to June's Journey as an under-monetized game, and you're seeing some things like what we've typically done very well around live ops segmentation and personalization, really showing the fruits of some of the game economy changes that we are making throughout the game, and you're seeing the game return to growth. June's Journey was a consistently growing game. You had about, call it a year and a half, where you saw it come off that growth trajectory, and it's kind of back on that path again. So, we're pleased with the results in June's Journey. We still see it as a game that has the potential to become a million-dollar-a-day game. So, we're looking forward to seeing continued progress from that studio.
Thank you.
Our next question comes from the line of Doug Creutz of TD Cowen. Your line is now open.
Hey, thank you. You said earlier that you have confidence you will be able to refinance your upcoming debt maturities. I wondered if you could maybe give a little more color, particularly for the 2028 debt, when you expect to be able to do that, and if you expect the terms to be comparable to the terms you have on your currently outstanding debt. Thank you.
Yeah, thanks for the question, Doug. We will not put an exact date on when we intend to do the refinancing, but as we noted in the prepared remarks, with the strategic review behind us, we are focused on the balance sheet. We intend to address the upcoming maturities well ahead of when they come due, and the terms will depend on market conditions. I think it is premature to speculate on things like pricing and the like, so we will not speak to that. But we believe we are starting from a position of strength. We ended the quarter with a little less than $600 million in cash. We expect to generate over $400 million of free cash flow this year.
As we think about liquidity and our balance sheet, I think you're hearing us say very clearly that it is a focus, and we intend to work on strengthening the balance sheet going forward, and we'll share more on timing and structure at the appropriate time.
Okay, great to hear. Thank you.
Thank you. Just as a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. I am now showing no questions at this time. This concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.