Delivered Strong Year-Over-Year and
Sequential Performance with a Number of Quarterly Records: -
Revenue of $170.8 Million, up 17% YoY - - ARPDAU of $0.80,
up 16% YoY - - Average MPU of 0.6 Million, up 11% YoY -
- Payer Conversion of 9.7% - - Jackpot Party® and Quick
Hit® Revenue -
Outpaced the Social Casino Market While
Maintaining Elevated AMRPPU of $95.45, the 10th Consecutive Quarter
Above $90
Returned $28 Million of Capital to
Shareholders to Date Through Share Repurchases(1),
Representing 47% of Total Authorization
SciPlay Corporation (NASDAQ: SCPL) (“SciPlay” or the “Company”)
today reported results for the third quarter ended September 30,
2022.
Josh Wilson, Chief Executive Officer of SciPlay,
commented, “SciPlay achieved record revenue and strong
profitability in the third quarter. We outperformed the overall
social casino market for the second consecutive quarter. SciPlay’s
durable growth is the direct result of our long-term strategy,
strategic investments and strong execution on our operating
plan.”
“We’ve continued to enhance monetization and achieved multiple
quarterly records fueled by our evergreen social casino franchises,
demonstrating their longevity and ability to drive sustainable
growth. With our investments, we are delivering better gaming
content and experiences than ever before, deepening players’
engagement and boosting player life-time value.”
“Our strategic investments, including in the SciPlay Engine and
our upcoming direct-to-consumer platform, will enhance our ability
to drive growth and long-term margin expansion as we continue to
scale ARPDAU and take a competitive leap in the current business
environment. Given our strong performance this quarter, we are
maintaining our full year 2022 revenue growth and AEBITDA margin(2)
targets. We see an unparalleled combination of opportunities to
grow and scale our business over the long-term and drive increased
shareholder value.”
Daniel O'Quinn, Interim Chief Financial Officer of
SciPlay, added "The records we achieved this quarter were the
result of the strong execution from our teams and our continuing
focus on great content and engaging our players. We also made
significant progress advancing our capital allocation priorities,
including investing in our core capabilities to fuel long-term
growth while also buying stock under our share repurchase program.
To date, we have repurchased approximately $28 million(1) or nearly
half of the total program authorization in the first five months.
We have a strong balance sheet, with ample liquidity, and
anticipate continuing to repurchase our shares given the compelling
value."
_________________
(1) The amount as of November 4, 2022. (2) Represents a non-GAAP
financial measure. Additional information on non-GAAP financial
measures (including targets) presented herein is available at the
end of this release.
SUMMARY RESULTS
Three Months Ended
($ in millions)
September 30,
2022
2021
Revenue
$
170.8
$
146.6
Net income
33.7
37.0
Net income margin
19.7
%
25.2
%
Net cash provided by operating
activities
21.0
58.0
Capital expenditures
3.5
0.9
Non-GAAP Financial
Measures (1)
Adjusted EBITDA (“AEBITDA”)
$
42.8
$
44.7
AEBITDA margin
25.1
%
30.5
%
As of September 30,
As of December 31,
Balance Sheet
Measures
2022
2021
Cash and cash equivalents
$
299.2
$
364.4
Available liquidity(2)
449.2
514.4
(1) The financial measures “AEBITDA” and
“AEBITDA margin” are non-GAAP financial measures defined below
under “Non-GAAP Financial Measures” and are reconciled to the most
directly comparable GAAP measures in the accompanying supplemental
tables at the end of this release.
(2) Available liquidity is calculated as
cash and cash equivalents plus the undrawn capacity on our
revolver.
Key Performance Indicators
(in millions, except Average Revenue
Per Daily Active Users ("ARPDAU"), Average Monthly Revenue Per
Paying User ("AMRPPU"), and percentages; KPIs include only in-app
purchases)
Three Months Ended
September 30,
Increase /
2022
2021
(Decrease)
Mobile Penetration
90%
89%
1.0pp
Average Monthly Active Users
5.9
6.1
(0.2)
Average Daily Active Users
2.2
2.3
(0.1)
ARPDAU
$0.80
$0.69
$0.11
Average Monthly Paying Users
0.6
0.5
0.1
AMRPPU
$95.45
$93.67
$1.78
Payer Conversion Rate
9.7%
8.5%
1.2pp
pp = percentage points.
Third Quarter 2022 Financial
Highlights
- Revenue was $170.8 million, up 17% from the prior year
period, achieving a new quarterly record, reflecting strong social
casino performance and the full quarter contribution from
Alictus.
- Net income was $33.7 million compared to $37.0 million
in the prior year period due to higher operating expenses. This was
primarily driven by a $14.9 million increase in marketing spend, an
$8.6 million increase in personnel costs including stock-based
compensation, and a $4.5 million increase in depreciation and
amortization expense, partially offset by a 17% revenue growth and
lower legal expense. Net income margin was 19.7% for the
quarter.
- AEBITDA, a non-GAAP financial measure defined at the end
of this release, was $42.8 million compared to $44.7 million in the
prior year period, primarily reflecting higher revenues more than
offset by the increased expense for marketing innovation
initiatives, investments in our SciPlay Engine, and investments to
build out a direct to consumer platform, which is expected to
support future growth and margin expansion. AEBITDA margin, a
non-GAAP financial measure defined at the end of this release, was
25.1% for the quarter.
- Net cash provided by operating activities was $21.0
million, a $37.0 million decrease over the prior year period,
primarily driven by the payment of the $24.5 million legal
settlement (previously accrued), and an unfavorable change in
working capital due to the timing of platform collections.
- Cash and cash equivalents decreased by $65.2 million to
$299.2 million from the fourth quarter of 2021, primarily
reflecting $107.9 million in cash consideration for the Alictus
acquisition, $26.8 million in TRA payments and related
distributions to Light & Wonder, Inc., $24.5 million legal
settlement payment, and $18.2 million in share repurchases,
partially offset by $95.2 million cash flow from operations during
the first three quarters.
Third Quarter Key Performance
Highlights
- Jackpot Party Casino® achieved a quarterly record
revenue.
- Quick Hit Slots® achieved third consecutive quarterly
revenue record.
- Payer conversion rate set a new record of 9.7%
validating our continued payer focus and live-ops strategy to drive
increased monetization.
- Average Monthly Paying Users (MPU) increased to 0.6
million compared to 0.5 million in the prior year period, a new
record.
- Average Monthly Revenue Per Paying User (AMRPPU)
maintained elevated levels with 10th consecutive quarter above
$90.
- Average Revenue Per Daily Active User (ARPDAU) was up
16% to a record $0.80 compared to $0.69 in the prior year
period.
- Mobile penetration increased 1% from the prior year
period to 90%.
About SciPlay
SciPlay Corporation (NASDAQ: SCPL) is a leading developer and
publisher of digital games on mobile and web platforms. SciPlay
currently offers social casino games Jackpot Party® Casino, Gold
Fish® Casino, Quick Hit® Slots, 88 Fortunes® Slots, MONOPOLY®
Slots, and Hot Shot Casino®, casual games Bingo Showdown®,
Solitaire Pets™ Adventure, and Backgammon Live and a variety of
hyper-casual games such as Rob Master 3D™, Deep Clean Inc.™ and Oh
God™. All of SciPlay's games are offered and played on multiple
platforms, including Apple, Google, Facebook, and Amazon. In
addition to developing original games, SciPlay has access to a
library of more than 1,500 real-world slot and table games provided
by Light & Wonder, Inc. and its Subsidiaries. For more
information, please visit SciPlay.com.
You can access our filings with the SEC through the SEC website
at www.sec.gov or through our website, and we strongly encourage
you to do so. We routinely post information that may be important
to investors on our website at investors.sciplay.com, and we use
our website as a means of disclosing material information to the
public in a broad, non-exclusionary manner for purposes of the
SEC's Regulation Fair Disclosure (Reg FD). The information
contained on, or that may be accessed through, our website is not
incorporated by reference into, and is not a part of, this or any
other document, and shall not be deemed "filed" under the
Securities Exchange Act of 1934, as amended.
All ® and © notices signify marks registered in the United
States by SciPlay Games, LLC and/or SG Gaming, Inc., and or their
respective affiliates.
© 2022 SciPlay Corporation. All Rights Reserved.
Forward-Looking Statements
Throughout this press release, we make “forward-looking
statements” within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements describe
future expectations, plans, results or strategies and can often be
identified by the use of terminology such as “may,” “will,”
“estimate,” “intend,” “plan,” “continue,” “believe,” “expect,”
“anticipate,” “target,” “should,” “could,” “potential,”
“opportunity,” “goal,” or similar terminology. These statements are
based upon management’s current expectations, assumptions and
estimates and are not guarantees of timing, future results or
performance. Therefore, you should not rely on any of these
forward-looking statements as predictions of future events. Actual
results may differ materially from those contemplated in these
statements due to a variety of risks and uncertainties and other
factors, including, among other things:
- the continuing impact of the COVID-19 pandemic and any
resulting social, political, economic and financial
complications;
- our ability to attract and retain players;
- expectations of growth in total consumer spending on social
gaming, including social casino gaming;
- our reliance on third-party platforms and our ability to track
data on those platforms;
- our ability to continue to launch and enhance games that
attract and retain a significant number of paying players;
- our ability to expand in international markets;
- our reliance on a small percentage of our players for nearly
all of our revenue;
- our ability to adapt to, and offer games that keep pace with,
changing technology and evolving industry standards;
- competition;
- our dependence on the optional purchases of coins, chips and
cards to supplement the availability of periodically offered free
coins, chips and cards;
- our ability to access additional financing and restrictions and
covenants in debt agreements, including those that could result in
acceleration of the maturity of our indebtedness;
- the discontinuation or replacement of LIBOR, which may
adversely affect interest rates;
- fluctuations in our results due to seasonality and other
factors;
- dependence on skilled employees with creative and technical
backgrounds;
- our ability to use the intellectual property rights of Light
& Wonder, Inc. ("Light & Wonder" and "Parent") and other
third parties, including the third-party intellectual property
rights licensed to Light & Wonder, under our intellectual
property license agreement with our Parent;
- protection of our proprietary information and intellectual
property, inability to license third-party intellectual property
and the intellectual property rights of others;
- security and integrity of our games and systems;
- security breaches, cyber-attacks or other privacy or data
security incidents, challenges or disruptions;
- reliance on or failures in information technology and other
systems;
- loss of revenue due to unauthorized methods of playing our
games;
- the impact of legal and regulatory restrictions on our
business, including significant opposition in some jurisdictions to
interactive social gaming, including social casino gaming, and how
such opposition could lead these jurisdictions to adopt legislation
or impose a regulatory framework to govern interactive social
gaming or social casino gaming specifically, and how this could
result in a prohibition on interactive social gaming or social
casino gaming altogether, restrict our ability to advertise our
games, or substantially increase our costs to comply with these
regulations;
- laws and government regulations, both foreign and domestic,
including those relating to our Parent and to data privacy and
security, including with respect to the collection, storage, use,
transmission, sharing and protection of personal information and
other consumer data, and those laws and regulations that affect
companies conducting business on the internet, including ours;
- the continuing evolution of the scope of data privacy and
security regulations, and our belief that the adoption of
increasingly restrictive regulations in this area is likely within
the U.S. and other jurisdictions;
- risks related to foreign operations, including the complexity
of foreign laws, regulations and markets; the uncertainty of
enforcement of remedies in foreign jurisdictions; the effect of
currency exchange rate fluctuations; the impact of foreign labor
laws and disputes; the ability to attract and retain key personnel
in foreign jurisdictions; the economic, tax and regulatory policies
of local governments; and compliance with applicable anti-money
laundering, anti-bribery and anti-corruption laws;
- influence of certain stockholders, including decisions that may
conflict with the interests of other stockholders;
- our ability to achieve some or all of the anticipated benefits
of being a standalone public company;
- our dependence on distributions from SciPlay Parent Company,
LLC to pay our taxes and expenses, including substantial payments
we will be required to make under the Tax Receivable Agreement (the
“TRA”);
- failure to establish and maintain adequate internal control
over financial reporting;
- stock price volatility;
- litigation and other liabilities relating to our business,
including litigation and liabilities relating to consumer
protection, gambling-related matters, employee matters, alleged
service and system malfunctions, alleged intellectual property
infringement and claims relating to our contracts, licenses and
strategic investments;
- our ability to complete acquisitions and integrate businesses
successfully;
- our ability to pursue and execute new business
initiatives;
- our expectations of future growth that will place significant
demands on our management and operations;
- natural events and health crises that disrupt our operations or
those of our providers or suppliers;
- changes in tax laws or tax rulings, or the examination of our
tax positions;
- levels of insurance coverage against claims;
- our dependence on certain key providers; and
- U.S. and international economic and industry conditions.
Additional information regarding risks and uncertainties and
other factors that could cause actual results to differ materially
from those contemplated in forward-looking statements is included
from time to time in our filings with the SEC, including the
Company's current reports on Form 8-K, quarterly reports on Form
10-Q and annual reports on Form 10-K, including the latest annual
report filed with the SEC on March 2, 2022 ("2021 Form 10-K")
(including under the headings "Forward Looking Statements" and
"Risk Factors"). Forward-looking statements speak only as of the
date they are made and, except for our ongoing obligations under
the U.S. federal securities laws, we undertake no and expressly
disclaim any obligation to publicly update any forward-looking
statements whether as a result of new information, future events or
otherwise.
This press release may contain references to industry market
data and certain industry forecasts. Industry market data and
industry forecasts are obtained from publicly available information
and industry publications. Industry publications generally state
that the information contained therein has been obtained from
sources believed to be reliable, but that the accuracy and
completeness of that information is not guaranteed. Although we
believe industry information to be accurate, it is not
independently verified by us and we do not make any representation
as to the accuracy of that information. In general, we believe
there is less publicly available information concerning
international social gaming industries than the same industries in
the U.S. Some data is also based on our good faith estimates, which
are derived from our review of internal surveys or data, as well as
the independent sources referenced above. Assumptions and estimates
of our and our industry's future performance are necessarily
subject to a high degree of uncertainty and risk due to a variety
of factors, including those described under “Risk Factors” in Part
II, Item 1A of our Quarterly Reports on Form 10-Q and Part I, Item
1A “Risk Factors” in our 2021 Form 10-K. These and other factors
could cause future performance to differ materially from our
assumptions and estimates.
Due to rounding, certain numbers presented herein may not
precisely recalculate.
SCIPLAY CORPORATION
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited, in millions,
except per share amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Revenue
$
170.8
$
146.6
$
488.9
$
451.7
Operating expenses:
Cost of revenue(1)
52.0
46.2
148.1
141.3
Sales and marketing(1)
49.5
32.9
136.1
101.7
General and administrative(1)
17.4
13.1
48.8
46.8
Research and development(1)
11.8
9.8
34.6
28.8
Depreciation and amortization
5.6
4.4
15.8
11.3
Restructuring and other
1.1
1.7
4.4
3.1
Operating income
33.4
38.5
101.1
118.7
Other income (expense), net
1.4
0.1
0.9
(0.4
)
Net income before income taxes
34.8
38.6
102.0
118.3
Income tax expense
1.1
1.6
4.0
5.5
Net income
33.7
37.0
98.0
112.8
Less: Net income attributable to the
noncontrolling interest
28.9
31.1
83.1
95.7
Net income attributable to SciPlay
$
4.8
$
5.9
$
14.9
$
17.1
Basic and diluted net income attributable
to SciPlay per share:
Basic
$
0.20
$
0.24
$
0.61
$
0.71
Diluted
$
0.20
$
0.24
$
0.61
$
0.69
Weighted average number of shares of Class
A common stock used in per share calculation:
Basic shares
23.7
24.5
24.3
24.0
Diluted shares
24.0
24.8
24.6
24.9
(1) Excludes depreciation and
amortization.
SCIPLAY CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in millions,
except par value)
As of
September 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
299.2
$
364.4
Accounts receivable, net
43.6
39.6
Prepaid expenses and other current
assets
7.7
6.4
Total current assets
350.5
410.4
Property and equipment, net
3.0
3.5
Operating lease right-of-use assets
5.3
6.8
Goodwill
217.5
131.1
Intangible assets and software, net
77.4
49.6
Deferred income taxes
73.8
78.5
Other assets
1.6
1.7
Total assets
$
729.1
$
681.6
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
17.1
$
20.0
Accrued liabilities
27.7
50.2
Due to affiliate
3.5
1.6
Total current liabilities
48.3
71.8
Operating lease liabilities
3.6
5.4
Liabilities under TRA
60.2
64.7
Other long-term liabilities
38.4
14.7
Total stockholders’ equity(1)
578.6
525.0
Total liabilities and stockholders’
equity
$
729.1
$
681.6
(1) Includes $472.1 million and $426.4
million in noncontrolling interest as of September 30, 2022 and
December 31, 2021, respectively.
SCIPLAY CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in
millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net cash provided by operating
activities
$
21.0
$
58.0
$
95.2
$
126.3
Net cash provided by (used in) investing
activities
0.8
(6.6
)
(110.5
)
(13.7
)
Net cash used in financing activities
(38.4
)
(21.5
)
(49.1
)
(50.7
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(0.3
)
0.1
(0.8
)
—
(Decrease) increase in cash, cash
equivalents and restricted cash
(16.9
)
30.0
(65.2
)
61.9
Cash, cash equivalents and restricted
cash, beginning of period
316.1
300.8
364.4
268.9
Cash, cash equivalents and restricted
cash, end of period
$
299.2
$
330.8
$
299.2
$
330.8
Supplemental cash flow information:
Cash paid for income taxes
$
1.1
$
0.4
$
3.1
$
4.5
Supplemental non-cash transactions:
Non-cash additions to intangible assets
related to license agreements
$
0.5
$
3.5
$
1.3
$
16.8
SCIPLAY CORPORATION
RECONCILIATION OF NET INCOME
ATTRIBUTABLE TO SCIPLAY TO AEBITDA
(Unaudited, in
millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net income attributable to SciPlay
$
4.8
$
5.9
$
14.9
$
17.1
Net income attributable to noncontrolling
interest
28.9
31.1
83.1
95.7
Net income
33.7
37.0
98.0
112.8
Restructuring and other(1)
1.1
1.7
4.4
3.1
Depreciation and amortization
5.6
4.4
15.8
11.3
Income tax expense
1.1
1.6
4.0
5.5
Stock-based compensation
2.7
0.1
6.8
5.4
Other (income) expense, net
(1.4
)
(0.1
)
(0.9
)
0.4
AEBITDA
$
42.8
$
44.7
$
128.1
$
138.5
Revenue
$
170.8
$
146.6
$
488.9
$
451.7
Net income margin (Net income/Revenue)
19.7
%
25.2
%
20.0
%
25.0
%
AEBITDA margin (AEBITDA/Revenue)
25.1
%
30.5
%
26.2
%
30.7
%
(1) Refer to AEBITDA definition for a
description of items included in restructuring and other.
RECONCILIATION OF NET INCOME
MARGIN
TO AEBITDA MARGIN
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net income margin (Net income/Revenue)
19.7
%
25.2
%
20.0
%
25.0
%
Restructuring and other
0.6
%
1.2
%
0.9
%
0.7
%
Depreciation and amortization
3.3
%
3.0
%
3.2
%
2.5
%
Income tax expense
0.7
%
1.1
%
0.8
%
1.2
%
Stock-based compensation
1.6
%
0.1
%
1.4
%
1.1
%
Other (income) expense, net
(0.8
)%
(0.1
)%
(0.1
)%
0.1
%
AEBITDA margin (AEBITDA/Revenue)
25.1
%
30.5
%
26.2
%
30.7
%
Non-GAAP Financial Measures
Adjusted EBITDA, or AEBITDA, as used herein, is a non-GAAP
financial measure that is presented as supplemental disclosure and
is reconciled to net income attributable to SciPlay as the most
directly comparable GAAP measure as set forth in the above table.
We define AEBITDA to include net income attributable to SciPlay
before: (1) net income attributable to noncontrolling interest; (2)
interest expense; (3) income tax expense; (4) depreciation and
amortization; (5) restructuring and other, which includes charges
or expenses attributable to: (a) employee severance; (b) management
changes; (c) restructuring and integration; (d) M&A and other,
which includes: (i) M&A transaction costs; (ii) purchase
accounting adjustments (including contingent acquisition
consideration); (iii) unusual items (including legal settlements
related to major litigation) and (iv) other non-cash items; and (e)
cost-savings initiatives; (6) stock-based compensation; (7) loss
(gain) on debt financing transactions; and (8) other expense
(income) including foreign currency (gains) and losses. We also use
AEBITDA margin, a non-GAAP measure, which we calculate as AEBITDA
as a percentage of revenue.
Our management uses AEBITDA and AEBITDA margin to, among other
things: (i) monitor and evaluate the performance of our business
operations; (ii) facilitate our management’s internal comparisons
of our historical operating performance and (iii) analyze and
evaluate financial and strategic planning decisions regarding
future operating investments and operating budgets. In addition,
our management uses AEBITDA and AEBITDA margin to facilitate
management’s external comparisons of our results to the historical
operating performance of other companies that may have different
capital structures and debt levels. Our management believes that
AEBITDA and AEBITDA margin are useful as they provide investors
with information regarding our financial condition and operating
performance that is an integral part of our management’s reporting
and planning processes. In particular, our management believes that
AEBITDA is helpful because this non-GAAP financial measure
eliminates the effects of restructuring, transaction, integration
or other items that management believes have less bearing on our
ongoing underlying operating performance. Management believes
AEBITDA margin is useful as it provides investors with information
regarding the underlying operating performance and margin generated
by our business operations. The forward-looking non-GAAP financial
measure AEBITDA margin target range is presented on a supplemental
basis. We are not providing a forward-looking quantitative
reconciliation of AEBITDA margin target range to the most directly
comparable GAAP measure because we are unable to predict with
reasonable certainty the ultimate outcome of certain significant
items without unreasonable effort. These items are uncertain,
depend on various factors, and could have a material impact on GAAP
reported results for the relevant period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109005921/en/
Media Relations Andrea Schneider +1 917-769-6060
Director, Global Communications SciPlayPress@sciplay.com
Investor Relations Robert Weiner +1 904-495-8227 Vice
President, Investor Relations SciPlayIR@sciplay.com
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