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SciPlay Reports First Quarter 2023 Results


SciPlay Corporation (NASDAQ: SCPL) ("SciPlay" or the "Company") today reported results for the first quarter ended March 31, 2023.

SciPlay entered 2023 with strong momentum and continued to outpace the social casino market and gained share. Revenue grew 18% year-over-year, achieving another quarterly record primarily due to increased social casino payer engagement and record high average monthly paying users, all translating to strong cash flows. The increases in Net income and AEBITDA(2) outpaced Revenue growth at 31% and 21%, respectively. We also returned $60 million of capital to shareholders through the repurchase of our shares of Class A common stock, since the initiation of the program on May 9, 2022 and through May 9, 2023, completing the share purchase program authorization.

Josh Wilson, Chief Executive Officer of SciPlay, commented, "SciPlay continued its industry-leading performance in the first quarter of 2023, outpacing the social casino market for the fifth consecutive quarter. We continue to benefit from the investments that we've made in key growth drivers of our business and into the development of proprietary tools and systems. Our strong operating platform and industry-best team's innovation are providing our players with engaging entertainment experiences, resulting in more payers and increasing monetization per player. We are off to a great start in the first quarter and look forward to continuing on our path of sustainable and profitable growth."

Daniel O'Quinn, Interim Chief Financial Officer of SciPlay, added, "SciPlay posted strong financial results in the first quarter of 2023, reflecting progress on our key objectives: delivering great entertainment experiences to our players, investing in our game franchises, growing market share in social casino and prudently allocating capital. We are pleased to report the completion of our $60 million share repurchase program in about one year's time. Our Board has approved a new $60 million share repurchase authorization, which we will implement in a similar manner as the recently completed program."

(1) This amount is as of May 9, 2023.

(2) The financial measure "AEBITDA" is a non-GAAP financial measure defined below under "Non-GAAP Financial Measures" and is reconciled to the most directly comparable GAAP measure in the accompanying supplemental tables at the end of this release.

SUMMARY RESULTS

 

Three Months Ended

($ in millions)

March 31,

 

2023

 

2022

Revenue

$

186.4

 

 

$

158.0

 

Net income

 

41.8

 

 

 

32.0

 

Net income margin

 

22.4

%

 

 

20.3

%

Net cash provided by operating activities

 

41.7

 

 

 

36.6

 

Capital expenditures

 

3.8

 

 

 

2.0

 

 

 

 

 

Non-GAAP Financial Measures (1)

 

 

 

Adjusted EBITDA ("AEBITDA")

$

53.5

 

 

$

44.2

 

AEBITDA margin

 

28.7

%

 

 

28.0

%

 

 

 

 

 

As of March 31,

 

As of December 31,

Balance Sheet Measures

2023

 

2022

Cash and cash equivalents

$

357.5

 

 

$

330.1

 

Available liquidity(2)

 

507.5

 

 

 

480.1

 

 

 

 

 

(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"), Average Monthly Paying Users ("MPUs") and percentages; KPIs include only in-app purchases)

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

Increase /

 

2023

 

2022

 

(Decrease)

Mobile Penetration

91%

 

90%

 

1.0pp

Average Monthly Active Users

6.1

 

6.3

 

(0.2)

Average Daily Active Users

2.3

 

2.3

 

?

ARPDAU

$0.89

 

$0.74

 

$0.15

Average MPUs (in thousands)

625

 

560

 

65

AMRPPU

$97.43

 

$92.45

 

$4.98

Payer Conversion Rate

10.3%

 

8.9%

 

1.4pp

pp = percentage points.

First Quarter 2023 Financial Highlights

First Quarter Key Performance Highlights

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 Petstm Adventure, and Backgammon Live and a variety of hyper-casual games such as Rob Master 3Dtm, Deep Clean Inc.tm and Oh Godtm. 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 https://www.SciPlay.com.

You can access our filings with the Securities Exchange Commission ("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 http://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 LNW Gaming, Inc., and or their respective affiliates.

© 2023 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:

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 1, 2023 ("2022 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 2022 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

 

March 31,

 

2023

 

2022

Revenue

$

186.4

 

$

158.0

 

Operating expenses:

 

 

 

Cost of revenue(1)

 

57.7

 

 

 

48.2

 

Sales and marketing(1)

 

46.9

 

 

 

40.0

 

General and administrative(1)

 

22.1

 

 

 

16.7

 

Research and development(1)

 

12.7

 

 

 

11.5

 

Depreciation and amortization

 

5.9

 

 

 

4.7

 

Restructuring and other

 

1.4

 

 

 

2.2

 

Operating income

 

39.7

 

 

 

34.7

 

Other income (expense), net

 

6.0

 

 

 

(0.5

)

Net income before income taxes

 

45.7

 

 

 

34.2

 

Income tax expense

 

3.9

 

 

 

2.2

 

Net income

 

41.8

 

 

 

32.0

 

Less: Net income attributable to the noncontrolling interest

 

36.3

 

 

 

27.6

 

Net income attributable to SciPlay

$

5.5

 

 

$

4.4

 

 

 

 

 

Basic and diluted net income attributable to SciPlay per share:

 

 

 

Basic

$

0.25

 

 

$

0.18

 

Diluted

$

0.24

 

 

$

0.18

 

 

 

 

 

Weighted average number of shares of Class A common stock used in per share calculation:

 

 

 

Basic shares

 

22.0

 

 

 

24.6

 

Diluted shares

 

23.0

 

 

 

24.8

 

 

 

 

 

(1) Excludes depreciation and amortization.

SCIPLAY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in millions, except par value)

 

 

 

 

 

As of

 

March 31, 2023

 

December 31, 2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

357.5

 

$

330.1

Accounts receivable, net

 

64.2

 

 

 

51.0

 

Prepaid expenses and other current assets

 

7.3

 

 

 

8.0

 

Total current assets

 

429.0

 

 

 

389.1

 

Property and equipment, net

 

3.6

 

 

 

3.0

 

Operating lease right-of-use assets

 

4.2

 

 

 

4.8

 

Goodwill

 

216.1

 

 

 

217.6

 

Intangible assets and software, net

 

79.6

 

 

 

74.8

 

Deferred income taxes

 

72.3

 

 

 

74.5

 

Other assets

 

1.7

 

 

 

1.9

 

Total assets

$

806.5

 

 

$

765.7

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

20.7

 

 

$

18.4

 

Accrued liabilities

 

37.9

 

 

 

35.2

 

Due to affiliate

 

4.0

 

 

 

3.8

 

Total current liabilities

 

62.6

 

 

 

57.4

 

Operating lease liabilities

 

2.4

 

 

 

3.1

 

Liabilities under TRA

 

60.2

 

 

 

60.2

 

Other long-term liabilities

 

26.0

 

 

 

29.4

 

Total stockholders' equity(1)

 

655.3

 

 

 

615.6

 

Total liabilities and stockholders' equity

$

806.5

 

 

$

765.7

 

 

 

 

 

(1) Includes $540.6 million and $506.4 million in noncontrolling interest as of March 31, 2023 and December 31, 2022, respectively.

SCIPLAY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)

 

 

 

 

 

Three Months Ended

 

March 31,

 

2023

 

2022

Net cash provided by operating activities

$

41.7

 

 

$

36.6

 

Net cash used in investing activities

 

(3.8

)

 

 

(108.2

)

Net cash used in financing activities

 

(10.2

)

 

 

(0.7

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(0.3

)

 

 

(0.1

)

Increase (decrease) in cash, cash equivalents and restricted cash

 

27.4

 

 

 

(72.4

)

Cash, cash equivalents and restricted cash, beginning of period

 

330.1

 

 

 

364.4

 

Cash, cash equivalents and restricted cash, end of period

$

357.5

 

 

$

292.0

 

 

 

 

 

Supplemental cash flow information:

 

 

 

Cash paid for income taxes

$

0.4

 

 

$

0.5

 

 

 

 

 

Supplemental non-cash transactions:

 

 

 

Non-cash additions to intangible assets related to license agreements

$

7.1

 

 

$

?

 

SCIPLAY CORPORATION

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO SCIPLAY TO AEBITDA

(Unaudited, in millions)

 

 

 

 

 

Three Months Ended

 

March 31,

 

2023

 

2022

Net income attributable to SciPlay

$

5.5

 

 

$

4.4

 

Net income attributable to noncontrolling interest

 

36.3

 

 

 

27.6

 

Net income

 

41.8

 

 

 

32.0

 

Restructuring and other(1)

 

1.4

 

 

 

2.2

 

Depreciation and amortization

 

5.9

 

 

 

4.7

 

Income tax expense

 

3.9

 

 

 

2.2

 

Stock-based compensation

 

6.5

 

 

 

2.6

 

Other (income) expense, net

 

(6.0

)

 

 

0.5

 

AEBITDA

$

53.5

 

 

$

44.2

 

Revenue

$

186.4

 

 

$

158.0

 

Net income margin (Net income/Revenue)

 

22.4

%

 

 

20.3

%

AEBITDA margin (AEBITDA/Revenue)

 

28.7

%

 

 

28.0

%

 

 

 

 

(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

 

March 31,

 

2023

 

2022

Net income margin (Net income/Revenue)

22.4

%

 

20.3

%

Restructuring and other

0.7

%

 

1.4

%

Depreciation and amortization

3.2

%

 

3.0

%

Income tax expense

2.1

%

 

1.4

%

Stock-based compensation

3.5

%

 

1.6

%

Other (income) expense, net

(3.2

)%

 

0.3

%

AEBITDA margin (AEBITDA/Revenue)

28.7

%

 

28.0

%

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 or gain on debt financing transactions; and (8) other expense or 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.


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