Good day and thank you for standing by. Welcome to Playtika Fourth Quarter 2023 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. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tae Lee, Senior Vice President, Corporate Finance and Investor Relations. Please go ahead.

Welcome, everyone, and thank you for joining us today for the fourth quarter 2023 earnings call for Playtika Holding Corp. Joining me on the call today are Robert Antokol, Co-Founder and CEO of Playtika; and Craig Abrahams, Playtika's President and Chief Financial Officer. I'd like to remind you that today's discussion may contain forward-looking statements, including, but not limited to, the company's anticipated future revenue and operating performance. These statements and other comments are not a guarantee of future performance, but rather are subject to risks and uncertainties, 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 risks and uncertainties, please see our filings with the SEC. With that, I'll now turn the call over to Robert.

Good morning, and thank you, everyone, for joining our call today. I would like to begin by expressing my pride in how our employees and businesses have performed over the past year. While the year had many unexpected challenges for us to navigate as a company, it was a year of successful acquisition of two studios, increasing efficiency, continued growth into direct-to-consumer platforms, and an increasing focus on our largest and growing franchise as we shifted more of our user acquisition spending to our category-leading games. I'm pleased to announce that despite revenue headwinds, we outperformed our guidance on revenues and credit adjusted EBITDA. Our agility in adapting and optimizing operations in this challenging market has not only enabled us to navigate obstacles but also to surpass our expectations. In the face of these headwinds, 2023 was the year of efficiency for Playtika. This transformation has empowered us to move faster and to make quicker decisions, which I believe will allow us to revamp our business and to get back to sustainable growth. Our commitment to efficiency is not just about doing more with less; it is about empowering our people to sharpen our competitive edge. This approach was critical as the mobile gaming industry continues to navigate challenges due in part to privacy updates affecting the marketing and monetization of games. I want to emphasize that despite the revenue headwinds we faced, there were bright spots throughout the quarter. Our casual games grew 2% quarter-over-quarter and 5.5% year-over-year, led by growth in June's Journey, which grew 1.8% quarter-over-quarter and 33.3% year-over-year. This success shows the strength and critical importance of our portfolio strategy, enabling us to navigate market challenges and capitalize on the opportunity for growth. As we look forward to the future, we have now positioned ourselves for a critical phase of reinvestment. We are setting in motion our new capital allocation framework, which includes an initiation of a dividend and intention to deploy between $600 million to $1.2 billion in M&A over the next three years. Our recent acquisitions, Animals & Coins and Governor of Poker, have demonstrated consistent month-over-month growth, reinforcing our belief in growing our game portfolio through M&A. I believe mobile gaming is at a pivotal point, with server trends pushing the need for consolidation. Our track record speaks for itself, with previous acquisitions driving growth and profitability since I co-founded the company over 13 years ago. In the evolving landscape of mobile gaming, I believe our commitment to M&A will return the company to growth. Finally, I would address an important decision regarding our strategic alternative process. Our current global landscape is unpredictable, especially due to ongoing geopolitical conflicts in Israel and Ukraine. These conflicts have introduced a level of uncertainty that has impacted the process, and the Board has decided to pass the evaluation of strategic alternatives.

Thank you, Robert. As Robert mentioned, 2023 was the year of efficiency for Playtika. The strategic decisions that we've made as a company over the last year have further streamlined our operations and enhanced our ability to generate free cash flow. Supported by our strong financial position, I am pleased to introduce our capital allocation framework, focusing on maximizing shareholder value and ensuring our growth is sustained. Our goal is to deploy $600 million to $1.2 billion in M&A to enhance our portfolio and leadership position as well as return capital to shareholders. In line with this strategy, we plan to make significant investments in performance marketing for our newly acquired growth title, Animals & Coins. While this approach is expected to lead to some margin erosion in the near term, it is designed to enhance long-term revenue potential. Furthermore, we remain committed to strategically deploying incremental investments in performance marketing across selected titles within our core portfolio. Our aim here is to seize opportunities to gain market share and drive profitable growth. Our approach is grounded in a long-term vision for success, and we are confident in the strength and potential of our game portfolio. Alongside our focus on M&A to drive growth and diversification, we are pleased to announce the initiation of a quarterly dividend starting in the first quarter of 2024, subject to quarterly Board approval, with a target of $150 million per year in dividends, representing an annualized yield of just over 5% based on our last four-week average share price. Beyond our dividend program, we are looking at other opportunities to enhance shareholder returns, including a share repurchase program in the future. We are committed to a balanced approach in our capital allocation strategy, aiming to invest in growth opportunities, maintain a strong and healthy balance sheet and return capital to shareholders. Turning to our financial results. For the year, we achieved financial results above our guidance range. We generated $2.567 billion of revenue, down 1.9% year-over-year, $235 million of GAAP net income compared to $275.3 million of GAAP net income in 2022 and $832.2 million of credit adjusted EBITDA, an increase of 3.4% year-over-year. Our credit adjusted EBITDA margin was 32.4% compared to 30.8% in 2022. We generated $436.4 million of free cash flow, an increase of 13.7% year-over-year. We define free cash flow as cash flow from operating activities minus capital expenditures. We spent $79.2 million in capital expenditures, which includes purchase of property and equipment, capitalization of internal use software costs and purchase of software for internal use. In addition, we accrued for an additional $17 million of purchases of property and equipment in Q4 2023 that will be paid in Q1 of 2024. For the quarter, we generated $637.9 million of revenue, up 1.2% sequentially and up 1.1% year-over-year. Net income was $37.3 million, down 1.6% sequentially and down 57.4% year-over-year. Credit adjusted EBITDA was $188.9 million, down 8.1% sequentially and down 6.8% year-over-year. Our credit adjusted EBITDA margin was 29.6% in the quarter, compared to 32.6% in Q3 and 32.1% in Q4 last year. We generated $161.6 million in revenue from our direct-to-consumer platforms, up 0.4% sequentially and up 7.6% year-over-year. Our direct-to-consumer business now makes up 25.3% of our overall revenues. Last year, we added Solitaire Grand Harvest and June's Journey to our web store. And this year, we'll be adding both titles to additional D2C platforms starting in the second quarter. Turning now to our business results for the quarter. Revenue across our casual themed games grew 2% sequentially and 5.5% year-over-year. Year-over-year growth in June's Journey, Solitaire Grand Harvest, and Redecor was offset by weakness in other casual titles, such as Best Fiends and Board Kings. We also benefited from a full quarter's contribution of Animals & Coins, but we are pleased to see consecutive months of sequential growth in the quarter. Bingo Blitz revenue was $150.3 million, up 0.4% sequentially and down 3.1% year-over-year. We are pleased to see a positive shift in financial performance for Bingo as the studio improved sequentially quarter-over-quarter, following a few quarters of sequential decline. The team launched several new projects in the quarter that contributed to the positive performance, such as a new daily layer chase, addition of rolling purchase offers and a redesign of the core collection experience in the game, which helps strengthen the social experience. June's Journey revenue was $77.6 million, up 1.8% sequentially and up 33.3% year-over-year. June's Journey became our third highest grossing game by revenue in the past quarter. June's Journey is the highest grossing hidden object game worldwide and recently surpassed the $1 billion lifetime revenue mark. Our dedication to a player-focused philosophy has elevated June's Journey to the forefront of the story-driven casual gaming genre. By providing a deeply engaging narrative within the expansion universe of June, the game offers a captivating experience for our players. Throughout its evolution, we have regularly rolled out new features and expansions, ensuring that there is something for everyone. Fans in the narrative can explore further with additional side stories, social gamers can collaborate with their club members on solving mysteries and those in search of a challenge can test their skills in competitive events. We have an unwavering commitment to our players and the June's Journey community, and we look forward to continuing to enrich their gaming experience for years to come. Now over to our social casino themed games. Social casino themed game revenue was down 0.2% sequentially and down 4.6% year-over-year. Sequential performance benefited from a full quarter's contribution from our newly acquired Youda Studio. Slotomania revenue was $136.9 million, down 3.6% sequentially and down 8.3% year-over-year. Despite maintaining its position as the number one game in the slot genre, it's important for us to acknowledge that some of our peers have gained share at our expense. This shift can be partially attributed to our own strategic decision to reallocate some of our performance marketing dollars towards other opportunities in our portfolio. While this was a calculated move aimed at diversifying our growth avenues and enhancing our overall position in the market, it has contributed to the market share loss of Slotomania. We recognized the importance of Slotomania to our portfolio and its role in driving consistent revenue margins, and we plan to increase our user acquisition spending this year for Slotomania. This revenue mix shift from declines in a higher margin title like Slotomania, to revenue growth from our casual games, including Animals & Coins, will have an impact on our margins this year. I will reiterate that 2024 will be a year of reinvestment for Playtika, and we look forward to sharing our progress in the coming quarters. Turning to marketing. Our recent launch of several celebrity study campaigns underscores our leadership in leveraging partnerships to amplify our games' appeal. Historically, we've embraced offline campaigns as a key component of our marketing strategy, consistently demonstrating our ability to engage audiences through high-profile partnerships. In the past quarter, we introduced campaigns featuring Sarah Jessica Parker for Solitaire Grand Harvest; Jason Alexander for World Series of Poker; and continued our partnership with Drew Barrymore for Bingo Blitz and Ty Pennington for Caesars Casino. These initiatives underscore our commitment to providing our players with an engaging and immersive playing experience. Alongside our celebrity endorsements, we are also launching the New Year, New Slotomania campaign to celebrate in-game redesigns and new features within Slotomania. Turning now to specific line items in our P&L for the fourth quarter. Cost of revenue decreased 0.2% year-over-year and operating expenses increased 4.8% year-over-year. Research and development decreased 14.9% year-over-year. The decline in R&D was driven by lower headcount and savings from lower discretionary spending across the company. Sales and marketing was up 24.6% year-over-year. The increase was driven primarily by investments that we made in Animals & Coins and Governor Poker 3. We also had slightly more performance marketing spend this quarter versus the prior year in our organic portfolio, due to timing of some of our performance marketing campaigns. General and administrative expenses increased by 2.5% year-over-year. As of December 31st, we had approximately $1 billion in cash and cash equivalents. Looking at our operational metrics. Average daily payers increased 2.3% sequentially and decreased 2.2% year-over-year. Average daily active users increased 2.4% sequentially and decreased 2.3% year-over-year. Average revenue per daily active user was $0.80 in the quarter, a decrease of 1.2% sequentially and an increase of 2.6% year-over-year. Turning now to our guidance and financial outlook for 2024. We expect to deliver full year revenue between $2.52 billion and $2.62 billion. As we selectively ramp up our performance marketing spending for our portfolio, we expect credit adjusted EBITDA between $730 million and $770 million. We expect to deploy $110 million to $115 million in capital expenditures, which includes $17 million in accrued capital expenditures from Q4 2023 that we paid in fiscal year 2024. As we conclude our prepared remarks, I want to emphasize the journey we've embarked on the past few years. Our focus has been on streamlining our operations, enhancing our agility and positioning ourselves as a resilient force and acquire best-in-class assets in the mobile gaming industry. This strategic refinement has enabled us to pivot towards a period of reinvestment in our core business and execute on M&A opportunities. Simultaneously, we remain focused on generating strong free cash flows. Our financial discipline ensures that we maintain the ability to return capital to our shareholders through ongoing quarterly dividends, alongside pursuing growth opportunities for the portfolio. Thank you for your continued trust and support, and we'll now take your questions.

Our first question comes from Aaron Lee with Macquarie. Aaron, your line is now open.

Hey, good morning. Thanks for taking my question, guys. I appreciate all the color so far. Just wanted to start by digging into guidance for a bit. So obviously, your guidance of revenues is basically flat and then lower EBITDA and margins. Can you just help us understand, is that delta in EBITDA all from the incremental marketing for your recent acquisition? And what do you have baked into those figures? In terms of marketing for the rest of the portfolio, what you're assuming returns from those investments? And any general impact from macro or geopolitical events? Thanks.

Thank you for the question, Aaron. When we look at the industry from a broader perspective, the changes in the advertising landscape have influenced how consumers buy media and invest in new games. There are two key factors for us. First, we need to increase spending on some of our existing titles as well as those we've acquired. Second, we are experiencing a shift in our product mix, with growth in casual titles and declines in casino-themed titles, which tend to have higher margins and a larger direct-to-consumer percentage. This shift impacts our overall performance and we are also increasing marketing efforts for both our organic and newly acquired titles.

Got you. Okay. And then on the M&A target you guys put out there, can you put any guardrails around that for us in terms of how you're thinking about the sizes of acquisitions and what areas we'll be targeting? And do you expect that to be more front-end loaded or back-end loaded? Thank you.

Sure. So I think for us, we've always been opportunistic. I think we've communicated in the past, the right cadence is probably one to two transactions a year, depending on what's available in the marketplace. We do see this environment as one that is a great setup for consolidation, the maturing of the market, the difficulty a lot of the smaller companies have with the advertising market. And so we think we're well positioned. We have $1 billion in cash. We have a $600 million credit facility. The target that we gave really looks at around 50% of our cash being used for M&A and the other 50% being used for capital return. And we think this is a very balanced approach to grow the portfolio as well as return capital to our shareholders.

Okay. Got it. Thank you very much.

Our next question will come from the line of Colin Sebastian with Baird.

Thanks and good morning, good evening. I think you mentioned expanding the number of D2C platforms you're utilizing this year. So first off, just curious if you could expand maybe on what those are and what you're anticipating from those platforms? And then as a follow-up on the M&A, I guess, what are you seeing in the market that gives you visibility to spend that to that level on consolidation? Are there specific trends or specific studios that you're observing that give you that visibility or something else? Thank you.

Thank you for the question. Regarding the D2C platform, we have been growing this area and have set clear targets. It's important to note that shifting our focus toward profitability has become more challenging in recent quarters. Therefore, we are placing greater emphasis on our D2C platform and plan to introduce more games there. This initiative is a key priority for us. Playtika was the pioneer in the industry with the D2C approach, which has always been a competitive advantage for us, providing significant flexibility in our operations. Again, this remains one of our primary focuses. As for M&A, our D2C platform gives us a strong upper hand in acquiring companies and games, which can enhance profitability. As Craig mentioned earlier, we are being opportunistic and actively exploring the market. We are in discussions with various players and are aware of everything occurring, from newly released small games to well-established titles that have been around for over a decade. Following our successful acquisitions last year, we aim to continue on this path and are optimistic about our prospects for this year. Thank you.

That's helpful. Thanks. Maybe one quick follow-up on D2C. Is your goal for the percent of bookings or revenues coming from D2C channels? Has that changed at all recently? Or do you have the same target out there?

No, it's not changing. As we said, it's not changed. But the market is changing. And it's not everything like it was before today. I think 30%, this is where we are looking to be. This is our target. We believe we will get to this target. And after we'll achieve 30%, we can speak about the next target.

Okay. Thanks, Robert.

Our next question will come from the line of Omar Dessouky with Bank of America.

Hi. Thanks so much for taking the question. So first of all, just a quick housekeeping question. When you said 50% of your cash to M&A, the other 50% capital return, are you referring to the cash on the balance sheet or the free cash flow? Or which metrics specifically are you referring to?

Free cash flow. In terms of ongoing free cash flow, that's our target.

Got it. Okay. And when you say capital return, obviously, a couple of ways you could do that. Just wondering why you decided to initiate a dividend rather than reduce debt or start the buyback? That's the second question. And then I have one follow-up on your M&A targets.

We looked at a balanced approach of both investing in M&A as well as dividends and exploring buybacks. And so I think it's a balanced mix. And that's where we came out.

Understood. Got it. Great. And so the explanation of kind of how much capital you could deploy is super helpful. Could you give us some more sense of maybe what some of your investment metrics might be? For example, things like cash-on-cash return for your investments, payback period, things like that. Just so we can get a sense of as you go through these acquisitions, what we should expect for your financial performance down the road as these incremental acquisitions layer in?

We've historically focused on acquiring assets at favorable EBITDA multiples and using our operational expertise to increase that EBITDA over time. As we achieve this, the effect of the multiple decreases, and we aim for accretive transactions that generate value. Each transaction will have different goals and objectives based on the market segment and maturity stage. However, our primary goal remains the creation of equity value.

Understood. Thanks a lot. Appreciate it.

Our next question will come from the line of Brian Fitzgerald with Wells Fargo.

Thanks, guys. A couple of quick ones. Wondering if you could give us any sense for how the two recently acquired titles, Governor of Poker 3, Animals & Coins, performed in Q4? Or maybe help us size the top line contribution from those two.

Yes. So I think as we noted in the prepared remarks, we saw consecutive growth throughout the fourth quarter, which is very encouraging. We're very pleased with the initial results from both of those acquisitions. In terms of the contributions, those are in our 10-K, which has just been filed. I don't have the exact number in front of me right now.

Okay. Appreciate it. And then maybe as a follow-up to the D2C questions. Curious to hear your thoughts on Apple's recent concessions on App Store fees DMA implementation? And is that impacting or maybe accelerating your focus on D2C? Or no, we've always been focused on D2C, it's a known strategy. But any reads on, hey, what Apple and DMA are metering through your thought process?

Thank you for the question. It's still quite early to draw conclusions since this just began a few weeks ago. We are still in the process of learning and trying to understand the potential benefits and how to effectively work with this. Our strategy with the D2C platform remains unchanged and is not tied to these developments. However, Apple's move is definitely intriguing. I believe that in the coming weeks or months, we will have a clearer understanding of how this might benefit the company. Thank you.

Thanks, Robert. Thanks, Craig.

Thank you. Our next question will come from the line of Drew Crum with Stifel.

Okay, thanks. Hey, guys. Craig, just to go back to your earlier comments on credit adjusted EBITDA this year. Do you see 2024 as a trough for the business? Or is there a further downside beyond this year, given some of the puts and takes you referenced?

Yes. I think, obviously, this year is a year of reinvestment in the portfolio. I think we're hopeful that we can stabilize the casino-themed titles and continue to grow the casual titles. The incentive and compensation plan does end in 2024. And so there should be a net benefit from that ending going into 2025. But we are not giving guidance beyond 2024 at this stage.

Okay. Fair enough. And then just a housekeeping item. Anything contemplated in your revenue guidance range for 2024 in terms of M&A, that $600 million to $1.2 billion?

Yes, future M&A is not included in our guidance.

Thank you. Our next question will come from the line of Doug Creutz with TD Cowen.

Hey, thank you. Several quarters ago, you guys made the decision to pause internal game development because you just had tough market conditions, making it hard to launch new games. In the last few quarters, we've seen some of your competitors launching some very successful new games. So just wondered if you revisited that decision? What your feeling is on new game development at this point? Thank you.

Thank you for the question. We are pleased to see that even our competitors are releasing successful games, which indicates that the market remains strong. I always look for the benefits for us and the market in these developments. This shows that the market is healthy. However, we haven't historically had a strong track record of developing new games. It's no secret that it hasn't been in our nature, regardless of market conditions; it's just not what we do best. While we've made various attempts as a large company, our strength has always been in mergers and acquisitions, and we've performed well in that area over the past decade. I'm not saying we won't explore new game experiences, but our primary focus will continue to be on M&A. We are actively looking to pursue one or two deals, and I hope they will surpass the quality of the successful deals we executed last year. That's all. Thank you.

Thank you.

Our next question will come from the line of Clark Lampen with BTIG.

Thanks. I got a question. I want to come back to, I guess, the plan to increase performance marketing spend next year. Craig, could you give us a little bit more color around, I guess, sort of why now? If you look at, I guess, your advertising spend for the last couple of years, it's been pretty consistent after a step-up that we saw in 2021, both in aggregate and as a percentage of revenue. And I'm curious if there's something that you saw with your spend maybe in the back half of the year where it started to perform better or you're reallocating the mix? If the budget is growing, is it shifting in a new way? Or should we imagine that this is going to be mostly sort of offline television campaigns? Or any, I guess, incremental color you could provide would be helpful.

Yes, sure. So obviously, the biggest driver is Animals & Coins, which is a title that we acquired last year, and are ramping up growth there. I think in terms of what we called out in the prepared remarks, we are looking at investing more in Slotomania. It is a competitive market where competitors are fighting for market share, and so we saw the need to invest more there. And then in terms of, strategically, we have selected other titles that we look to invest in to support growth. So I think the biggest change in terms of year-over-year is clearly to support the acquired titles.

Got it. From our perspective, we and investors are trying to assess the return on investment for that spending moving forward. If your additional allocation proves successful, will it mainly lead to stronger inorganic growth, or should we consider another method for evaluation in the future?

No, we consider that part of our organic growth and it's part of managing our organic portfolio. We make adjustments based on the marketplace where we identify opportunities, investing more where needed, and pulling back when returns don't justify the investment. Unfortunately, there's not much more specificity we can provide on this call.

Okay. That's helpful. And then just one quick one, and I'll get out of the way. As we think about, I guess, the sort of broader capital allocation framework, you guys talked about, I guess, sort of market and geopolitical factors that sort of led you to move away from your strategic review. If we assume that some of those other factors are also weighing on competitors of yours and the market doesn't end up, I guess, as fluid or you don't see the M&A opportunities that you hope for accruing, is this sort of pool of free cash flow fungible in any way? If we were thinking about that sort of previous 50-50 split, if the pipeline isn't maybe as robust and you can't execute on some of the things that you would like, would you consider from one year to the next tilting more of that cash flow allocation towards capital return? Thank you.

Yes, Clark, I will break that down for you. There are three main points to consider. The first is the choice to pause exploring strategic alternatives, which was influenced by geopolitical factors. The second point is about the mergers and acquisitions environment. While we have some targets in Israel, our search for opportunities hasn’t really been hindered by those factors. The third point is about capital allocation, which I believe is largely separate from the first two. Half of our capital allocation is focused on M&A, while the other half is intended for capital returns, including dividends and potential buybacks. I don't see a direct connection between these. Of course, companies operating in those regions have been affected and have had to adjust to ensure their operations remain stable.

Thank you.

Our next question will come from the line of Eric Sheridan with Goldman Sachs.

Thank you very much. I have a two-part question building on Clark's inquiry. First, as you reflect on the marketing environment's volatility over the past couple of years, what key insights regarding incremental ROI have you gained from the 2022 and 2023 period that will inform your marketing strategies for 2024 and beyond? Additionally, when considering 2024 and beyond, how should we think about factors that could enhance ROI, such as scaling your M&A strategy, the growing role of AI in marketing, or other aspects that might improve ROI in the medium to long term? Thank you.

Hi. It's Nir Korczak, Playtika CMO. So first and foremost, we need to understand that we have a very wide range of different games. And for each game, obviously, we build a tailor-made marketing strategy. So when we look at the market, we need to understand also the competition and also what we want to achieve for the long term. So what we are basically trying to understand is that sometimes the ecosystem is changing. As you mentioned before, the competition becomes a bit tougher and we need to spend a bit more in different strategy. So always, we adjust our strategy towards areas where we believe that, for the long term, we will provide the best ROI. So that's for the first part of the question. The second part, what we are basically doing for leveraging technology and AI? So it really depends on the different sources and, of course, what's going on in the platform. So at the end of the day, what we are trying to achieve is we are trying to create a very diverse portfolio with diverse sources so that we will not be relying on any specific source, and we are trying to push the one with the highest ROI, obviously, and see it over there, whether we can leverage technology and improve our results. So that's our strategy. And of course, we are tailor-made for each one of the games differently.

Thank you.

Our next question comes from the line of Matthew Cost with Morgan Stanley.

Hi, everybody. Thanks for taking the question. Maybe I'll start just by asking about what you're seeing in the broader mobile gaming market because we have seen some steps up in consumer confidence over the past couple of months. I'm wondering if you're seeing any change in consumer behavior either late last year or into this year, particularly because as you lean into marketing, you're also expecting revenue roughly flat year-on-year? So do you expect to be outperforming a down market in line with the flat market? How should we think about what that guidance means relative to the broader backdrop? And then I have one follow-up. Thank you.

I believe the macroeconomic environment has been challenging in recent years, but we've seen that titles effectively executing their road maps are successful and growing. For instance, our casual portfolio was up 5.5% last year. However, we’ve faced struggles in more competitive categories, such as slot-themed games. Some of this isn't necessarily tied to broader environmental changes, but rather we’ve been more impacted by shifts in the advertising ecosystem, which affect the ROI of acquired traffic. This has likely had a more significant effect on the mobile game industry than changes in consumer spending. We’ve always viewed mobile gaming as relatively resilient within the economic landscape, so the influence is more linked to the advertising environment than to the macroeconomic conditions at this time.

Thank you. You mentioned in your prepared remarks about an increase in marketing for the fourth quarter. Historically, you've taken the opportunity to increase marketing in the first quarter. Should we anticipate a similar pattern this year where you see a significant increase in marketing spending in the first quarter?

So, hi, it's Nir again. So obviously, we are well familiar with the seasonality around the marketing. And I believe that you saw what we did at the end of the year. We launched five new campaigns basically at the end of the year and trying to start the year strong. Obviously, I cannot elaborate about the results of the campaign, but we are very bullish about our strategy and how we see things forward. Thank you.

Thank you.

Our next question comes from the line of Jason Bazinet with Citi.

Thanks. I have a question about the ad changes. I believe you're talking about Android and Apple. Could you explain it a bit more for us? When I look at your revenues, they seem flat, and your ad spending is also flat. It's not clear that these changes have negatively impacted your financials, yet you discuss it as if it could lead to significant changes. Could you elaborate on that?

Sure. As we look at guidance for 2024 and make incremental investments, we've always been transparent about market trends and their impact on us. This situation is no different. Increasing spending in Animals & Coins affects our margins. Additionally, we've identified specific titles that require increased investment, and this, along with shifts in our product mix, has influenced our guidance for next year. Historically, we've been effective at leveraging offline campaigns and various strategies to successfully navigate a changing environment.

Okay. And if you had to parse the sort of decision on your part to sort of lean into Animals & Coins and spend more in marketing as opposed to the Android-Apple changes that are happening in the ecosystem. Is there a way to parse that out in terms of the impact on your EBITDA guidance for next year?

Yes, there is not.

Our next question will come from the line of Eric Handler with ROTH MKM.

Good morning. Thank you for the question. Craig, could you discuss your fourth quarter results in relation to consensus? You experienced a strong top line performance, but EBITDA was just in line with expectations. I'm curious if marketing expenses were the main factor behind that. How quickly are you seeing a return on your advertising investments? Do you notice an immediate boost, or does it typically take one or two quarters? How should we approach this?

Certainly. We did increase our marketing investment in the fourth quarter, and as a result, we exceeded expectations for both revenue and EBITDA. Our strategy involves making return investments across various games, each with different payback periods. Some of our newer titles can see returns in just a few months, while some of the legacy titles might take over a year to pay back. We set distinct targets for each title, platform, and jurisdiction, and we invest accordingly to meet those goals.

Great. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.