SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-38889

~~SciPlay Corporation~~SCIPLAY CORPORATION

(Exact name of registrant as specified in its charter)


Nevada						83-2692460
(State or other jurisdiction of						(I.R.S. Employer Identification No.)
incorporation or organization)

6601 Bermuda Road, Las Vegas, Nevada 89119

(Address of principal executive offices)

(Registrant’s telephone number, including area code)

The registrant has the following number of shares outstanding of each of the registrant’s classes of common stock as of August ~~4, 2021:~~5, 2022:

Class A Common Stock: ~~24,444,101~~23,627,455

Class B Common Stock: 103,547,021

INDEX TO FINANCIAL INFORMATION

AND OTHER INFORMATION

FORWARD-LOOKING STATEMENTS

Throughout this Quarterly Report on Form 10-Q, 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. The forward-looking statements contained in this Quarterly Report on Form 10-Q are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in other locations as well. 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;

•~~risks~~Light & Wonder, Inc.’s (“Light & Wonder” and ~~uncertainties related~~“Parent”) announced decision to ~~the proposed acquisition of~~withdraw its offer to acquire our public shares ~~including regarding the terms~~not already owned by Light & Wonder may subject us to risks and consummation of such a transaction, whether it will yield additional value for our stockholders and whether it will adversely impact our business, financial results, results of operations, cash flows or stock price;uncertainties;

•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;

•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 our ~~parent, Scientific Games Corporation,~~Parent and other third parties, including the third-party intellectual property rights licensed to ~~Scientific Games Corporation,~~Light & Wonder, under our intellectual property license agreement with our ~~parent;~~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, Scientific Games Corporation,~~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 (“SciPlay Parent 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 ~~under “Risk Factors” in Part II, Item 1A of this Quarterly Report~~the Company’s current reports on Form 8-K, quarterly reports on Form 10-Q and ~~Part I, Item 1A “Risk Factors” in our 2020 Annual Report~~annual reports on Form 10-K, including the latest annual report filed with the SEC on March 1, 2, 2022 (“2021 ~~(the “2020~~ 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 Quarterly Report on Form 10-Q 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

Due to rounding, certain numbers presented herein may not precisely recalculate.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in millions, except per share amounts)

Sales and marketing(1)

General and administrative(1)

Research and development(1)

(1) Excludes depreciation and amortization.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in millions)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in millions, except par value)


		As of					As of
		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	300.8	$	268.9	Cash and cash equivalents	$	316.1	$	364.4
Accounts receivable, net	Accounts receivable, net	51.1		36.6		Accounts receivable, net	41.2		39.6
Prepaid expenses and other current assets	Prepaid expenses and other current assets	13.7		5.9		Prepaid expenses and other current assets	19.0		6.4
Total current assets	Total current assets	365.6		311.4		Total current assets	376.3		410.4
Property and equipment, net	Property and equipment, net	4.0		4.4		Property and equipment, net	3.0		3.5
Operating lease right-of-use assets	Operating lease right-of-use assets	7.6		8.5		Operating lease right-of-use assets	5.5		6.8
Goodwill	Goodwill	129.3		129.8		Goodwill	219.0		131.1
Intangible assets and software, net	Intangible assets and software, net	44.8		30.3		Intangible assets and software, net	80.1		49.6
Deferred income taxes	Deferred income taxes	78.8		82.5		Deferred income taxes	75.7		78.5
Other assets	Other assets	1.8		1.9		Other assets	1.6		1.7
Total assets	Total assets	$	631.9	$	568.8	Total assets	$	761.2	$	681.6
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	18.9	$	23.2	Accounts payable	$	19.8	$	20.0
Accrued liabilities	Accrued liabilities	30.3		22.9		Accrued liabilities	52.3		50.2
Due to affiliate	Due to affiliate	4.3		5.5		Due to affiliate	3.1		1.6
Total current liabilities	Total current liabilities	53.5		51.6		Total current liabilities	75.2		71.8

Operating lease liabilities	Operating lease liabilities	6.4		7.5		Operating lease liabilities	4.1		5.4
Liabilities under TRA	Liabilities under TRA	68.5		68.5		Liabilities under TRA	64.7		64.7
Other long-term liabilities	Other long-term liabilities	14.6		5.7		Other long-term liabilities	38.0		14.7
Total liabilities	Total liabilities	143.0		133.3		Total liabilities	182.0		156.6
Commitments and contingencies (see Note 8)	Commitments and contingencies (see Note 8)	0		0		Commitments and contingencies (see Note 8)	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Class A common stock, par value $0.001 per share, 625.0 shares authorized, 24.4 and 22.8 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		0		0
Class B common stock, par value $0.001 per share, 130.0 shares authorized, 103.5 and 103.5 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		0.1		0.1
Class A common stock, par value $0.001 per share, 625.0 shares authorized, 24.7 and 24.5 shares issued, 24.2 and 24.5 shares outstanding as of June 30, 2022 and December 31, 2021, respectively						Class A common stock, par value $0.001 per share, 625.0 shares authorized, 24.7 and 24.5 shares issued, 24.2 and 24.5 shares outstanding as of June 30, 2022 and December 31, 2021, respectively	—		—
Class B common stock, par value $0.001 per share, 130.0 shares authorized, 103.5 and 103.5 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively						Class B common stock, par value $0.001 per share, 130.0 shares authorized, 103.5 and 103.5 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	0.1		0.1
Additional paid-in capital	Additional paid-in capital	44.9		46.1		Additional paid-in capital	50.2		45.2
Retained earnings	Retained earnings	44.1		32.9		Retained earnings	62.3		52.2
Treasury stock, at cost, 0.5 and — shares, respectively						Treasury stock, at cost, 0.5 and — shares, respectively	(7.1)		—
Accumulated other comprehensive income	Accumulated other comprehensive income	0.8		0.9		Accumulated other comprehensive income	—		1.1
Total SciPlay stockholders’ equity	Total SciPlay stockholders’ equity	89.9		80.0		Total SciPlay stockholders’ equity	105.5		98.6
Noncontrolling interest	Noncontrolling interest	399.0		355.5		Noncontrolling interest	473.7		426.4
Total stockholders’ equity	Total stockholders’ equity	488.9		435.5		Total stockholders’ equity	579.2		525.0
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	631.9	$	568.8	Total liabilities and stockholders’ equity	$	761.2	$	681.6

See accompanying notes to condensed consolidated financial statements.	See accompanying notes to condensed consolidated financial statements.					See accompanying notes to condensed consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited, in millions)
Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Noncontrolling interest Total
Shares Amount Shares Amount
December 31, 2020 22.8 $ 0 103.5 $ 0.1 $ 46.1 $ 32.9 $ 0.9 $ 355.5 $ 435.5
Net income — — — — — 5.3 — 32.6 37.9
Stock-based compensation — — — — 0.4 — — 1.4 1.8
Vesting of RSUs, net of tax withholdings 1.6 — — — (2.3) — — (10.0) (12.3)
Distributions to Parent and affiliates, net — — — — — — — (0.3) (0.3)
Currency translation — — — — — — (0.4) (2.2) (2.6)
March 31, 2021 24.4 $ 0 103.5 $ 0.1 $ 44.2 $ 38.2 $ 0.5 $ 377.0 $ 460.0
Net income — — — — — 5.9 — 32.0 37.9
Stock-based compensation — — — — 0.7 — — 2.1 2.8
Distributions to Parent and affiliates, net — — — — — — — (13.8) (13.8)
Currency translation — — — — — — 0.3 1.7 2.0
June 30, 2021 24.4 $ 0 103.5 $ 0.1 $ 44.9 $ 44.1 $ 0.8 $ 399.0 $ 488.9
Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Noncontrolling interest Total
Shares Amount Shares Amount
December 31, 2019 22.7 $ 0 103.5 $ 0.1 $ 41.7 $ 12.0 $ 0.3 $ 223.4 $ 277.5
Net income — — — — — 4.4 — 26.7 31.1
Stock-based compensation — — — — 0.2 — — (0.1) 0.1
Currency translation — — — — — — (0.2) (0.6) (0.8)
March 31, 2020 22.7 $ 0 103.5 $ 0.1 $ 41.9 $ 16.4 $ 0.1 $ 249.4 $ 307.9
Net Income — $ — — $ — $ — $ 6.6 $ — $ 42.2 48.8
Distributions to Parent and affiliates, net — — — — — — — (11.6) (11.6)
Stock-based compensation — — — — 1.0 — — 4.1 5.1
Vesting of RSUs, net of tax withholdings 0.1 — — — — — — — —
Currency translation — — — — — — 0.2 0.7 0.9
June 30, 2020 22.8 0 103.5 0.1 42.9 23.0 0.3 284.8 351.1
See accompanying notes to condensed consolidated financial statements.



	Class A common stock			Class B common stock			Additional paid-in capital		Retained earnings		Treasury Stock		Accumulated other comprehensive income (loss)		Noncontrolling interest		Total
	Shares	Amount		Shares	Amount
December 31, 2021	24.5	$	—	103.5	$	0.1	$	45.2	$	52.2	$	—	$	1.1	$	426.4	$	525.0
Net income	—	—		—	—		—		4.4		—		—		27.6		32.0
Stock-based compensation	—	—		—	—		0.4		—		—		—		1.5		1.9
Vesting of RSUs, net of tax withholdings and other	0.2	—		—	—		—		—		—		—		(0.1)		(0.1)
Distributions to Parent and affiliates, net	—	—		—	—		—		—		—		—		(0.2)		(0.2)
Currency translation	—	—		—	—		—		—		—		(0.3)		(1.3)		(1.6)
March 31, 2022	24.7	$	—	103.5	$	0.1	$	45.6	$	56.6	$	—	$	0.8	$	453.9	$	557.0
Net income	—	—		—	—		—		5.7		—		—		26.6		32.3
Stock-based compensation	—	—		—	—		0.2		—		—		—		1.2		1.4

Distributions to Parent and affiliates, net	—	—		—	—		—		—		—		—		(0.1)		(0.1)
Repurchases of stock	(0.5)	—		—	—		5.7		—		(7.1)		—		(5.7)		(7.1)
Economic rebalancing(1)	—	—		—	—		(1.3)		—		—		—		1.3		—
Currency translation	—	—		—	—		—		—		—		(0.8)		(3.5)		(4.3)
June 30, 2022	24.2	$	—	103.5	$	0.1	$	50.2	$	62.3	$	(7.1)	$	—	$	473.7	$	579.2







	Class A common stock			Class B common stock			Additional paid-in capital		Retained earnings		Treasury Stock		Accumulated other comprehensive income (loss)		Noncontrolling interest		Total
	Shares	Amount		Shares	Amount
December 31, 2020	22.8	$	—	103.5	$	0.1	$	46.1	$	32.9	$	—	$	0.9	$	355.5	$	435.5
Net income	—	—		—	—		—		5.3		—		—		32.6		37.9
Stock-based compensation	—	—		—	—		0.4		—		—		—		1.4		1.8
Vesting of RSUs, net of tax withholdings	1.6	—		—	—		(2.3)		—		—		—		(10.0)		(12.3)
Distributions to Parent and affiliates, net	—	—		—	—		—		—		—		—		(0.3)		(0.3)
Currency translation	—	—		—	—		—		—		—		(0.4)		(2.2)		(2.6)
March 31, 2021	24.4	$	—	103.5	$	0.1	$	44.2	$	38.2	$	—	$	0.5	$	377.0	$	460.0
Net income	—	—		—	—		—		5.9		—		—		32.0		37.9
Stock-based compensation	—	—		—	—		0.7		—		—		—		2.1		2.8

Distributions to Parent and affiliates, net	—	—		—	—		—		—		—		—		(13.8)		(13.8)
Currency translation	—	—		—	—		—		—		—		0.3		1.7		2.0
June 30, 2021	24.4	$	—	103.5	$	0.1	$	44.9	$	44.1	$	—	$	0.8	$	399.0	$	488.9







(1) SciPlay Parent LLC equity attributable to SciPlay Corporation and the noncontrolling interest holders is rebalanced, as needed, to reflect changes in LLC Unit ownership.

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)


		Six Months Ended					Six Months Ended
		June 30,					June 30,
		2021		2020			2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	68.3	$	75.5	Net cash provided by operating activities	$	74.2	$	68.3
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(7.1)		(3.2)		Capital expenditures	(5.1)		(7.1)
Acquisition of business, net of cash acquired	Acquisition of business, net of cash acquired	0		(12.6)		Acquisition of business, net of cash acquired	(106.2)		—
Net cash used in investing activities	Net cash used in investing activities	(7.1)		(15.8)		Net cash used in investing activities	(111.3)		(7.1)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Payments under tax receivable agreement		0		(2.5)

Payments on license obligations	Payments on license obligations	(1.8)		0		Payments on license obligations	(1.9)		(1.8)
Payments of contingent consideration	Payments of contingent consideration	(1.0)		0		Payments of contingent consideration	(1.0)		(1.0)
Distributions to Scientific Games and affiliates, net		(14.1)		(11.6)
Taxes paid related to net share settlement of equity awards		(12.3)		0
Purchases of treasury stock						Purchases of treasury stock	(7.1)		—
Distributions to Light & Wonder and affiliates, net						Distributions to Light & Wonder and affiliates, net	(0.3)		(14.1)
Taxes paid related to net share settlement of equity awards and other						Taxes paid related to net share settlement of equity awards and other	(0.4)		(12.3)

Net cash used in financing activities	Net cash used in financing activities	(29.2)		(14.1)		Net cash used in financing activities	(10.7)		(29.2)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(0.1)		(0.1)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(0.5)		(0.1)
Increase in cash, cash equivalents and restricted cash		31.9		45.5
(Decrease) increase in cash, cash equivalents and restricted cash						(Decrease) increase in cash, cash equivalents and restricted cash	(48.3)		31.9
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	268.9		110.6		Cash, cash equivalents and restricted cash, beginning of period	364.4		268.9
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	300.8	$	156.1	Cash, cash equivalents and restricted cash, end of period	$	316.1	$	300.8

Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Cash paid for income taxes	Cash paid for income taxes	$	4.1	$	1.5	Cash paid for income taxes	$	2.0	$	4.1
Cash paid for contingent consideration included in operating activities		0		4.0

Supplemental non-cash transactions:	Supplemental non-cash transactions:					Supplemental non-cash transactions:
Non-cash additions to intangible assets related to license agreements	Non-cash additions to intangible assets related to license agreements	$	14.0	$	0	Non-cash additions to intangible assets related to license agreements	$	1.9	$	14.0

See accompanying notes to condensed consolidated financial statements.	See accompanying notes to condensed consolidated financial statements.					See accompanying notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in USD, table amounts in millions, except per share amounts)

(1) Description of the Business and Summary of Significant Accounting Policies

Background and Nature of Operations

SciPlay Corporation was formed as a Nevada corporation on November 30, 2018 as a subsidiary of Scientific Games Corporation, recently rebranded to Light & Wonder, Inc. (“~~Scientific Games”, “SGC”,~~Light & Wonder” and “Parent”), for the ~~purpose~~purposes of completing a public offering and related transactions (collectively referred to herein as the “IPO”) in order to carry on the business of SciPlay Parent LLC and its subsidiaries (collectively referred to as “SciPlay”, the “Company”, “we”, “us”, and “our”). The IPO was completed on May 7, 2019. As the managing member of SciPlay Parent LLC, SciPlay operates and controls all of the business affairs of SciPlay Parent LLC and its subsidiaries.

On July 15, 2021, Scientific Games submitted a proposal to our board of directors to acquire all the outstanding equity interest in SciPlay not already owned by Scientific Games (approximately 19%). The offer to all SciPlay shareholders (other than Scientific Games and it’s subsidiaries) is the receipt of 0.250 shares of Scientific Games common stock for each share of SciPlay Class A common stock. The transaction is subject to the negotiation and execution of a mutually acceptable merger agreement with a special committee of our board of directors, and we cannot guarantee that the proposal will result in a merger or any other transactions.

We develop, market and operate a portfolio of ~~social~~ games played on various mobile and web platforms, including Jackpot ~~Party Casino®,~~Party® Casino, Quick ~~Hit Slots®,~~Hit® Slots, Gold ~~Fish Casino®,~~Fish® Casino, Hot Shot Casino®, Bingo Showdown®, ~~MONOPOLY Slots®~~MONOPOLY® Slots, 88 Fortunes® Slots, Solitaire Pets™ Adventure, and ~~88 Fortunes Slots®~~Backgammon Live as well as other games in the hyper-casual space through our recent acquisition of Alictus Yazilim Anonim Şirketi (“Alictus”), such as ~~among others.~~ Candy Challenge 3D™, Boss Life™, and Deep Clean™. Our games are available in various formats. We have 1 operating segment with one business activity, developing and monetizing ~~social~~ games.

Basis of Presentation

The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, we have made all adjustments necessary to present fairly our consolidated statements of income, consolidated statements of comprehensive income, condensed consolidated balance sheets, consolidated statements of changes in stockholders’ equity and condensed consolidated statements of cash flows for the periods presented. Such adjustments are of a normal, recurring nature. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related Notes included in our ~~2020~~2021 Form 10-K. Interim results of operations are not necessarily indicative of results of operations to be expected for a full year.

Variable Interest Entities (“VIE”) and Consolidation

Subsequent to the IPO, our sole material asset is our member’s interest in SciPlay Parent LLC. In accordance with the Operating Agreement of SciPlay Parent LLC (the “Operating Agreement”), we have all management powers over the business and affairs of SciPlay Parent LLC and to conduct, direct and exercise full control over the activities of SciPlay Parent LLC. Class A common stock issued in the IPO do not hold majority voting rights but hold 100% of the economic interest in the Company, which results in SciPlay Parent LLC being considered a VIE. Due to our power to control the activities most directly affecting the results of SciPlay Parent LLC, we are considered the primary beneficiary of the VIE. Accordingly, beginning with the IPO, we consolidate the financial results of SciPlay Parent LLC and its subsidiaries.

Significant Accounting Policies

There have been no changes to our significant accounting policies described within the Notes of our ~~2020~~2021 Form 10-K, except as noted below.

~~Minimum guarantees under licensing agreements~~

We enter into long-term license agreements with third parties in which we are obligated to pay a minimum guaranteed amount of royalties, typically periodically over the life of the contract. These license agreements provide us with access to a portfolio of major brands to be used across our games. We account for the minimum guaranteed obligations within Current liabilities and Other long-term liabilities at the onset of the license arrangement and record a corresponding licensed asset within intangible assets, net. The licensed intangible assets related to the minimum guaranteed obligations are amortized over the term of the license agreement with the amortization expense recorded in Depreciation and amortization. The long-term liability related to the minimum guaranteed obligations is reduced as royalty payments are made as required under the license agreement. We assess the recoverability of license agreements whenever events arise or circumstances change that indicate the carrying value of the licensed asset may not be recoverable. Recoverability of the licensed asset and the amount of impairment, if any, are determined using our policy for intangible assets with finite useful lives.

~~The following reflects amortization expense related to these licenses and recorded in depreciation and amortization:~~

Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Amortization expense $ 1.1 $ 0.2 $ 2.3 $ 0.4

~~The following are our total minimum guaranteed obligations for the periods presented:~~

As of
June 30, December 31,
2021 2020
Current liabilities $ 5.0 $ 2.6
Other long-term liabilities 10.0 0.3
Total minimum guarantee obligation $ 15.0 $ 2.9
Weighted average remaining term (in years) 3.7 2.4

~~Revolving Credit Facility~~

On May 27, 2021, SciPlay Holding Company, LLC (“SciPlay Holding”), a wholly-owned indirect subsidiary of SciPlay Corporation (the “Company”), entered into Amendment No. 1 to that certain $150.0 million revolving credit agreement, dated as of May 7, 2019 (the “Revolver”), by and among SciPlay Holding, SciPlay Parent Company, LLC, the several banks and other financial institutions or entities from time to time party thereto and Bank of America, N.A., as administrative agent, collateral agent and issuing lender (such amendment, “Amendment No. 1”).

Amendment No. 1 amended, among other things, certain negative covenants in the Revolver to permit SciPlay Holding to merge or consolidate with and into its direct subsidiary, Phantom EFX, LLC, which was renamed SciPlay Games, LLC (“SciPlay Games”) immediately following such merger. Substantially simultaneously with the merger, SciPlay Games expressly assumed all obligations of SciPlay Holding as the successor borrower under the Revolver.

~~The Revolver was undrawn as of June 30, 2021. We were in compliance with the financial covenants under the Revolver as of June 30, 2021.~~

New Accounting Guidance ~~- Not Yet Adopted~~

~~The FASB issued ASU No. 2020-04 and subsequently ASU No. 2021-01,~~ ~~Reference Rate Reform~~ (Topic 848) in March 2020 and January 2021, respectively. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, including derivative instruments impacted byThere have been no recent accounting pronouncements or changes in accounting pronouncements since those described within the ~~interest rates used for discounting cash flows for computing variable margin settlements, subject to meeting certain criteria,~~Notes of our 2021 Form 10-K that ~~reference LIBOR or other reference rates~~are expected to be discontinued, in 2022 or potentially 2023 (pending possible extension). The ASUs establish certain contract modification principles that entities can apply in other areas that may be affected by reference rate reform and certain elective hedge accounting expedients and exceptions. The ASUs may be applied

~~prospectively. We do not expect the adoption of this standard~~ to have a material impact on our consolidated financial statements.

~~We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements.~~

We generate revenue from the sale of coins, chips and cards, which players can use to play casino-style slot games, table games and bingo games (i.e., spin in the case of slot games, bet in the case of table games and use of bingo cards in the case of bingo games). We distribute our games through various global social web and mobile platforms such as Facebook, Apple, Google, Amazon, and Microsoft. The games we offer are ~~primarily~~ ~~WMS~~, ~~Bally~~, ~~Barcrest~~®,internally branded franchises, original content and ~~SHFL~~®third-party branded games. ~~In addition,~~With the acquisition of Alictus, we also ~~offer third-party branded games and original content.~~generate revenue from providing advertising platforms with access to our game software platform, which facilitates the placement of advertising inventory.

Disaggregation of Revenue

We believe disaggregation of our revenue on the basis of platform and monetization type as well as the geographical locations of our players is appropriate because the nature of revenue and the number of players generating revenue could vary on such ~~basis,~~bases, which represent different economic risk profiles.

The following table presents our revenue disaggregated by ~~type of platform:~~platform type:
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Mobile $ 135.9 $ 144.3 $ 268.7 $ 245.5
Web and other 18.1 21.3 36.4 38.4
Total revenue $ 154.0 $ 165.6 $ 305.1 $ 283.9


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Mobile in-app purchases	$	137.7	$	135.9	$	277.4	$	268.7
Web in-app purchases and other(1)	22.4		18.1		40.7		36.4

Total revenue	$	160.1	$	154.0	$	318.1	$	305.1
(1) Other primarily represents advertising revenue, which was not material in the periods presented.

The following table presents our revenue disaggregated based on the geographical location of our players:


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		June 30,				June 30,					June 30,				June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
North America(1)	North America(1)	$	140.8	$	152.6	$	279.3	$	260.6	North America(1)	$	145.7	$	140.8	$	290.6	$	279.3
International	International	13.2		13.0		25.8		23.3		International	14.4		13.2		27.5		25.8
Total revenue	Total revenue	$	154.0	$	165.6	$	305.1	$	283.9	Total revenue	$	160.1	$	154.0	$	318.1	$	305.1
(1) North America revenue includes revenue derived from the U.S., Canada and Mexico.	(1) North America revenue includes revenue derived from the U.S., Canada and Mexico.									(1) North America revenue includes revenue derived from the U.S., Canada and Mexico.

Contract Assets, Contract Liabilities and Other Disclosures

We receive customer payments based on the payment terms established in our contracts. ~~Payment~~For our in-app purchase revenue, payment for the purchase of coins, chips and cards is made at purchase, and such payments are non-refundable in accordance with our standard terms of service. Such payments are initially recorded as a contract liability, and revenue is subsequently recognized as we satisfy our performance obligations.

The following table summarizes our opening and closing balances in contract assets, contract liabilities and accounts receivable:


		Accounts Receivable		Contract Assets(1)		Contract Liabilities(2)			Accounts Receivable		Contract Assets(1)		Contract Liabilities(2)
Beginning of period balance	Beginning of period balance	$	36.6	$	0.2	$	0.6	Beginning of period balance	$	39.6	$	0.2	$	0.5
Balance as of June 30, 2021		51.1		0.1		0.5
Balance as of June 30, 2022								Balance as of June 30, 2022	41.2		0.2		0.5
(1) Contract assets are included within Prepaid expenses and other current assets in our consolidated balance sheets. (2) Contract liabilities are included within Accrued liabilities in our consolidated balance sheets.	(1) Contract assets are included within Prepaid expenses and other current assets in our consolidated balance sheets. (2) Contract liabilities are included within Accrued liabilities in our consolidated balance sheets.							(1) Contract assets are included within Prepaid expenses and other current assets in our consolidated balance sheets. (2) Contract liabilities are included within Accrued liabilities in our consolidated balance sheets.

During the six months ended June 30, 2022 and 2021, ~~and 2020,~~ we ~~recognized $0.6~~recognized $0.4 million and ~~$0.5~~$0.6 million, respectively, of revenue that was included in the opening contract liability balance. Substantially all of our unsatisfied performance obligations relate to contracts with an original expected length of one year or less.

Concentration of Credit Risk

Our revenue and accounts receivable are generated via certain platform providers, which subject us to a concentration of credit risk. The following tables summarize the percentage of revenues and accounts receivable generated via our platform providers in excess of 10% of our total revenues and total accounts receivable:


							Revenue Concentration
		Revenue Concentration					Three Months Ended		Six Months Ended
		Three Months Ended		Six Months Ended			June 30,		June 30,
		June 30, 2021	June 30, 2020	June 30, 2021	June 30, 2020		2022	2021	2022	2021
Apple	Apple	46.7%	45.5%	46.7%	45.7%	Apple	46.5%	46.7%	47.2%	46.7%
Google	Google	37.2%	38.4%	37.2%	37.5%	Google	34.3%	37.2%	34.6%	37.2%
Facebook	Facebook	12.5%	12.8%	12.3%	13.5%	Facebook	11.8%	12.5%	12.0%	12.3%

On March 1, 2022, we acquired 80% of all issued and outstanding share capital of privately-held Alictus, a Turkey-based hyper-casual gaming studio. The remaining 20% will be acquired ratably for potential additional consideration payable annually based upon the achievement of specified revenue and earnings targets by Alictus during each of the five years following the acquisition date. The equity rights and privileges of the remaining Alictus shareholders lack the traditional rights and privileges associated with equity ownership and accordingly, the transaction will be accounted as if we acquired 100% of Alictus on the acquisition date. Any future payments associated with the acquisition of the remaining 20% will represent a redeemable non-controlling interest, with a payout ranging from a minimum of $— to a maximum payout of $200.0 million. The Alictus acquisition allows us to expand our business into the casual gaming market, growing our game pipeline and diversifying our revenue streams as we advance our strategy to be a diversified global game developer.

The total purchase consideration was $133.5 million, which included $96.0 million in cash, $1.5 million cash holdback related to working capital adjustments, $15.0 million of cash that was deposited into an escrow account, and redeemable non-controlling interest valued at $21.0 million at the acquisition date.

We accounted for this acquisition using the acquisition method of accounting, whereby the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on respective estimated fair values. The estimated fair values of the acquired assets and assumed liabilities and resulting goodwill are subject to adjustment as we finalize our purchase price accounting, and such adjustments could be material.

We incurred acquisition-related costs, which were recorded in Restructuring and other, of $1.2 million for the six months ended June 30, 2022.

The following table summarizes the preliminary allocation of the Alictus purchase price expected to be finalized by the fourth quarter of 2022:


	March 1, 2022
Cash and cash equivalents	$	4.7
Accounts receivable		5.4
Prepaid expenses and other current assets(1)		7.1
Intangible assets:
“Alictus” trade name, useful life of 5 years		4.4
Intellectual property (game content and related technology), useful life of 6 years		29.8
Goodwill		92.7
Total assets		144.1
Accounts payable and other current liabilities		3.6
Deferred tax liabilities		7.0
Total liabilities		10.6
Total consideration transferred	$	133.5
(1) Other current assets includes $6.1 million in Turkish lira-denominated time deposits, discussed in further detail within this note to the financial statements.

Cash, cash equivalents, accounts receivable and other current assets (other than the time deposits) and most liabilities (other than as primarily related to deferred income taxes) were valued at the existing carrying values which approximated the estimated fair values. The estimated preliminary fair value of deferred income taxes was determined by applying the applicable enacted statutory tax rate to the temporary differences that arose on the differences between the financial reporting value and tax basis of the acquired assets and assumed liabilities.

Other current assets includes $6.1 million in Turkish lira-denominated time deposits, which include protection provided by the Turkish Ministry of Treasury and Finance against currency fluctuations as compared to the U.S. dollar. These time deposits have an original maturity term of six months, and are classified as short-term investments. They are measured at fair value under ASC 820 as Level 2 investments, and the change in fair value was not material between the acquisition date and June 30, 2022.

The fair value of intangible assets that have been preliminarily identified was determined using the relief from royalty method using Level 3 inputs in the hierarchy as established by ASC 820. The discount rate used in the valuation analysis was 18%, and the royalty rate used was 1% for the valuation of the “Alictus” trade name and 21% for the valuation of the acquired game content and related technology.

The fair value of the redeemable non-controlling interest was determined using a Monte Carlo simulation model, based on inputs that are classified as Level 3 under the ASC 820 fair value hierarchy using a discount rate ranging between 2% and 3%, and is primarily based on reaching certain revenue and earnings-based metrics, with a maximum payout of up to $200.0 million. We measure the fair value of redeemable non-controlling interest as of the acquisition date, and record such redeemable non-controlling interest as a liability on the Company’s consolidated balance sheet on the acquisition date. The fair value of the liability is remeasured when the contingency is resolved based on actual performance or settlement.

The factors contributing to the recognition of goodwill are based on enhanced financial and operational scale, games diversification, expected synergies, assembled workforce, and other strategic benefits. None of the resultant goodwill is expected to be deductible for income tax purposes.

The results of operations from Alictus have been included in our consolidated statement of income since the date of acquisition and are not significant to our operations.

(2) Intangible Assets and Software, net and Goodwill

The following table presents certain information regarding our intangible assets and software:


		Gross Carrying Amount		Accumulated Amortization		Net Balance			Gross Carrying Amount		Accumulated Amortization		Net Balance
Balance as of June 30, 2021
Balance as of June 30, 2022								Balance as of June 30, 2022
Intellectual property								Intellectual property	$	76.0	$	(40.5)	$	35.5
Customer relationships								Customer relationships	30.1		(23.1)		7.0
Software								Software	32.9		(20.1)		12.8
Licenses								Licenses	25.4		(6.8)		18.6
Brand names and other								Brand names and other	10.7		(4.5)		6.2
Total intangible assets and software								Total intangible assets and software	$	175.1	$	(95.0)	$	80.1

Balance as of December 31, 2021								Balance as of December 31, 2021
Intellectual property	Intellectual property	$	41.9	$	(37.8)	$	4.1	Intellectual property	$	49.6	$	(40.4)	$	9.2
Customer relationships	Customer relationships	30.5		(20.9)		9.6		Customer relationships	30.7		(22.1)		8.6
Software	Software	26.5		(15.4)		11.1		Software	28.1		(17.8)		10.3
Licenses	Licenses	23.7		(5.8)		17.9		Licenses	23.6		(4.5)		19.1
Brand names	Brand names	6.0		(3.9)		2.1		Brand names	6.7		(4.3)		2.4
Total intangible assets and software	Total intangible assets and software	$	128.6	$	(83.8)	$	44.8	Total intangible assets and software	$	138.7	$	(89.1)	$	49.6

Balance as of December 31, 2020
Intellectual property		$	42.2	$	(37.2)	$	5.0
Customer relationships		30.5		(19.8)		10.7
Software		21.9		(13.8)		8.1
Licenses		7.7		(3.5)		4.2
Brand names		6.1		(3.8)		2.3
Total intangible assets and software		$	108.4	$	(78.1)	$	30.3

The following reflects amortization expense related to intangible assets and software included within depreciation and amortization:
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Amortization expense $ 3.0 $ 1.8 $ 6.0 0 $ 3.5


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Amortization expense	$	5.0	$	3.0	$	9.3	$	6.0

The table below reconciles the changes in the carrying value of goodwill for the period from December 31, ~~2020~~2021 to June 30, ~~2021.~~2022.


	Total
Balance as of December 31, ~~2020~~2021	$	~~129.8~~131.1
Acquired goodwill	92.7
Foreign currency adjustments	~~(0.5)~~(4.8)
Balance as of June 30, ~~2021~~2022	$	~~129.3~~219.0

Our operating leases primarily consist of real estate ~~leases such as offices. Our leases have remaining terms of approximately 4 years.~~office leases. We do not have any finance leases. Our total variable and ~~short term~~short-term lease payments and operating lease expenses were immaterial for all periods presented.

Supplemental balance sheet and cash flow information related to operating leases is as follows:


		June 30,			December 31,				June 30,			December 31,
		2021			2020				2022			2021
Operating lease right-of-use assets	Operating lease right-of-use assets	$	7.6		$	8.5		Operating lease right-of-use assets	$	5.5		$	6.8
Accrued liabilities	Accrued liabilities	2.1			2.0			Accrued liabilities	2.2			2.2
Operating lease liabilities	Operating lease liabilities	6.4			7.5			Operating lease liabilities	4.1			5.4
Total operating lease liabilities	Total operating lease liabilities	$	8.5		$	9.5		Total operating lease liabilities	$	6.3		$	7.6

Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:							Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases for the six months ended June 30, 2021 and 2020, respectively		$	1.2		$	1.2
Operating cash flows for operating leases for the six months ended June 30, 2022 and 2021, respectively								Operating cash flows for operating leases for the six months ended June 30, 2022 and 2021, respectively	$	1.3		$	1.2
Weighted average remaining lease term, years	Weighted average remaining lease term, years	3.8			4.3			Weighted average remaining lease term, years	2.8			3.3
Weighted average discount rate	Weighted average discount rate	5.0		%	5.0		%	Weighted average discount rate	5.0		%	5.0		%

Lease liability maturities:


		Operating Leases			Operating Leases
Remainder of 2021		$	1.3
2022		2.5
Remainder of 2022				Remainder of 2022	$	1.2
2023	2023	2.5		2023	2.5
2024	2024	2.4		2024	2.4
2025	2025	0.7		2025	0.7
Thereafter		0

Less: Imputed Interest	Less: Imputed Interest	(0.9)		Less: Imputed Interest	(0.5)
Total	Total	$	8.5	Total	$	6.3

As of June 30, ~~2021,~~2022, we did not have material additional operating leases that have not yet commenced.

We hold an economic interest of ~~19.1%~~18.9% in SciPlay Parent ~~LLC subsequent to the IPO.~~LLC. The ~~80.9%~~81.1% economic interest that we do not own represents a noncontrolling interest for financial reporting purposes. SciPlay Parent LLC is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As such, SciPlay Parent LLC is not subject to income tax in most jurisdictions, and SciPlay Parent LLC’s members, of which we are one, are liable for income taxes based on their allocable share of SciPlay Parent LLC’s taxable income. The effective income tax rates for the three and six months ended June 30, ~~2021~~2022 were2.1% and 4.3%, respectively, and 4.5% and 4.9%~~, respectively, and 6.0% and 5.6%~~ for the three and six months ended June 30, ~~2020.~~2021. The effective income tax rates were determined using an estimated annual effective tax rate after considering any discrete items for such periods. Our effective tax rate differs from the U.S. statutory rate of 21% primarily because we generally do not record income taxes for the noncontrolling interest portion of U.S. pre-tax income.

During the six months ended June 30, ~~2020,~~2022 and 2021, there were no payments ~~totaling $2.5 million were~~ made to ~~Scientific Games~~Light & Wonder pursuant to the TRA. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the total TRA liability was ~~$72.5~~$68.8 million, of which ~~$4.0~~$4.1 million was included in Accrued ~~liabilities.~~liabilities for both periods.

(5) Related Party Transactions

The following is the summary of expenses paid to ~~Scientific Games~~Light & Wonder and settled in cash:
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020 Financial Statement Line Item
Royalties to Scientific Games for third-party IP $ 0.7 $ 2.0 $ 1.4 $ 3.7 Cost of revenue
Parent services 1.6 1.0 3.2 2.4 General and administrative
TRA payments (see Note 4)(1)
0 2.5 — 2.5 Accrued liabilities
Distributions to Scientific Games and affiliates, net(1)
13.8 11.6 14.1 11.6 Noncontrolling interest
(1) Under the terms of the Operating Agreement, SciPlay Corporation relies on distributions from SciPlay Parent LLC to pay its obligations under the TRA and any other tax obligations. All distributions must be on a pari-passu basis, thus initiating a pro-rata distribution to Parent and affiliates.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021		Financial Statement Line Item
Royalties to Light & Wonder for third-party IP	$	0.1	$	0.7	$	0.4	$	1.4	Cost of revenue
Parent services	1.6		1.6		3.0		3.2		General and administrative

Distributions to Light & Wonder and affiliates, net(1)	0.1		13.8		0.3		14.1		Noncontrolling interest

(1) Under the terms of the Operating Agreement, SciPlay Corporation relies on distributions from SciPlay Parent LLC to pay its obligations under the TRA and any other tax obligations. All distributions must be on a pari-passu basis, thus initiating a pro-rata distribution to Parent and affiliates.

The following is the summary of balances due to affiliates:
June 30, 2021 December 31, 2020
Royalties to Scientific Games for third-party IP $ 1.4 $ 2.5
Parent services 0.7 0.8
Reimbursable expenses to Scientific Games and its subsidiaries 2.2 2.2
$ 4.3 $ 5.5


	June 30, 2022		December 31, 2021
Royalties to Light & Wonder for third-party IP	$	0.2	$	0.3
Parent services	0.4		0.9
Reimbursable expenses to Light & Wonder and its subsidiaries	2.5		0.4
	$	3.1	$	1.6

Parent Equity Awards

See Note 6 for disclosures related to Parent’s equity awards.

As more fully described in Note 10 of our 2021 Form 10-K, we entered into the IP License Agreement from which we obtained an exclusive (subject to certain limited exceptions), perpetual, non-royalty-bearing license from a subsidiary of the Parent (“SG Gaming”) for intellectual property created or acquired by SG Gaming or its affiliates on or before the third anniversary of the date of the IP License Agreement. Under the terms of the IP License Agreement, some rights would have changed from exclusive to non-exclusive for newly created intellectual property and other rights would not have extended to newly created intellectual property as of May 6, 2022. On May 6, 2022, we entered into an amendment which extended our rights under the IP License Agreement through July 7, 2022. We are in the process of negotiating new terms with the Parent.

(6) Stockholders’ Equity and Noncontrolling Interest

Noncontrolling Interest

We are a holding company, and our sole material assets are SciPlay Parent LLC Interests (“LLC Interests”) that we purchased from SciPlay Parent LLC and SG Social Holding Company I, LLC, representing an aggregate ~~19.1%~~18.9% economic interest in SciPlay Parent LLC. The remaining ~~80.9%~~81.1% economic interest in SciPlay Parent LLC is owned indirectly by ~~SGC,~~Light & Wonder, through the ownership of LLC Interests by the indirect ~~wholly-owned~~wholly owned subsidiaries of ~~SGC, the SG Members.~~Light & Wonder.

Stock-Based Compensation

The following table summarizes stock-based compensation expense that is included in general and administrative expenses:


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		June 30,				June 30,					June 30,				June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

SciPlay awards	SciPlay awards	$	3.4	$	5.0	$	5.1	$	4.9	SciPlay awards	$	1.6	$	3.4	$	4.1	$	5.1
Parent awards	Parent awards	0.1		0.1		0.2		0.3		Parent awards	(0.1)		0.1		—		0.2
Total	Total	$	3.5	$	5.1	$	5.3	$	5.2	Total	$	1.5	$	3.5	$	4.1	$	5.3

As of June 30, ~~2021,~~2022, we had ~~$15.8~~$14.9 million in unrecognized stock-based compensation expense that is expected to be recognized over a weighted-average expected vesting period of ~~1.4~~1.5 years, of which ~~$9.4~~$3.1 million relates to performance-based restricted stock units.

16Share Repurchase Program

On May 9, 2022, our Board of Directors approved a share repurchase program under which the Company is authorized to repurchase, from time to time through May 9, 2024, up to an aggregate amount of $60.0 million of our outstanding Class A common stock. Repurchases may be made at the discretion of the Board of Directors through one or more open market transactions, privately negotiated transactions, including block trades, accelerated share repurchases, issuer tender offers or other derivative contracts or instruments, “10b5-1” plan, or other financial arrangements or other arrangements. Repurchases are funded from cash flows generated by SciPlay Parent LLC and its operating subsidiaries. Immediately prior to the execution of such repurchases, a redemption is effected of a corresponding number of SciPlay Parent LLC partnership units held by the Company at an aggregate redemption price equal to the aggregate purchase price (plus any expenses related thereto) of the shares of Class A common stock being repurchased by the Company. During the six months ended June 30, 2022, we repurchased 0.5 million shares of Class A common stock under the program at an aggregate cost of $7.1 million.

(7) Earnings per Share

The table below sets forth a calculation of basic earnings per share ("EPS") based on net income attributable to SciPlay divided by the basic weighted average number of Class A common stock outstanding during the period. Diluted EPS of Class A common stock is computed by dividing net income attributable to SciPlay by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to all potentially dilutive securities, using the treasury stock method. No material number of restricted stock units was excluded from the calculation of diluted weighted-average common shares outstanding for the ~~three~~three- and ~~six month~~six-month periods ended June 30, ~~2021~~2022 and ~~2020.~~2021.

We excluded Class B common stock from the computation of basic and diluted EPS, as holders of Class B common stock do not have economic interest in us, and, therefore, a separate presentation of EPS of Class B common stock under the two-class method has not been presented.

Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Numerator:
Net income $ 37.9 $ 48.8 $ 75.8 $ 79.9
Less: net income attributable to the noncontrolling interest 32.0 42.2 64.6 68.9
Net income attributable to SciPlay $ 5.9 $ 6.6 $ 11.2 $ 11.0
Denominator:
Weighted average shares of Class A common stock for basic EPS 24.4 22.8 23.8 22.7
Effect of dilutive securities:
Stock-based compensation grants 0.3 1.4 1.1 1.5
Weighted average shares of Class A common stock for diluted EPS 24.7 24.2 24.9 24.2
Basic and diluted net income attributable to SciPlay per share:
Basic $ 0.24 $ 0.29 $ 0.47 $ 0.48
Diluted $ 0.24 $ 0.27 $ 0.45 $ 0.45


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Numerator:
Net income	$	32.3	$	37.9	$	64.3	$	75.8
Less: net income attributable to the noncontrolling interest	26.6		32.0		54.2		64.6
Net income attributable to SciPlay	$	5.7	$	5.9	$	10.1	$	11.2
Denominator:
Weighted average shares of Class A common stock for basic EPS	24.6		24.4		24.6		23.8
Effect of dilutive securities:
Stock-based compensation grants	0.2		0.3		0.2		1.1
Weighted average shares of Class A common stock for diluted EPS	24.8		24.7		24.8		24.9
Basic and diluted net income attributable to SciPlay per share:
Basic	$	0.23	$	0.24	$	0.41	$	0.47
Diluted	$	0.23	$	0.24	$	0.41	$	0.45

(8) Litigation

From time to time, we are subject to various claims, complaints and legal actions, including notifications of alleged infringement of patent or other intellectual property rights, in the normal course of business. There have been no material changes to these legal matters since our ~~2020~~2021 Form 10-K was filed with the ~~SEC, except as described below. In addition, we may receive notifications alleging infringement of patent or other intellectual property rights.~~

~~Washington State Matter~~

~~On April 17, 2018, a plaintiff, Sheryl Fife, filed a putative class action complaint,~~ ~~Fife v. Scientific Games Corporation~~, against SGC in the United States District Court for the Western District of Washington. The plaintiff seeks to represent a putative class of all persons in the State of Washington who purchased and allegedly lost virtual coins playing SGC’s online social casino games, including but not limited to ~~Jackpot Party Casino~~ ~~and~~ ~~Gold Fish Casino~~. The complaint asserts claims for alleged violations of Washington’s Recovery of Money Lost at Gambling Act, Washington’s consumer protection statute, and for unjust enrichment, and seeks unspecified money damages (including treble damages as appropriate), the award of reasonable attorneys’ fees and costs, pre- and post-judgment interest, and injunctive and/or declaratory relief. On July 2, 2018, SGC filed a motion to dismiss the plaintiff’s complaint with prejudice, which the trial court denied on December 18, 2018. SGC filed its answer to the putative class action complaint on January 18, 2019. On August 24, 2020, the trial court granted plaintiff’s motion for leave to amend her complaint and to substitute a new plaintiff, Donna Reed, for the initial plaintiff, and re-captioned the matter ~~Reed v. Scientific Games Corporation~~. On August 25, 2020, the plaintiff filed a first amended complaint against SGC, asserting the same claims, and seeking the same relief, as the complaint filed by Sheryl Fife. On September 8, 2020, SGC filed a motion to compel arbitration of plaintiff’s claims and to dismiss the action, or, in the alternative, to transfer the action to the United States District Court for the District of Nevada,

and that motion is fully-briefed and pending before the trial court. On April 9, 2021, the plaintiff filed a motion to certify the putative class and for a preliminary injunction. Although the case was brought against Scientific Games, pursuant to the

~~Intercompany Services Agreement, we would expect to cover or contribute to any damage awards due to the matter arising as a result of our business.~~

~~We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible loss.~~

~~SciPlay IPO Matter (New York)~~

On or about October 14, 2019, the Police Retirement System of St. Louis filed a putative class action complaint in New York state court against SciPlay, certain of its executives and directors, and SciPlay’s underwriters with respect to its initial public offering (the “PRS Action”). The complaint was amended on November 18, 2019. The plaintiff seeks to represent a class of all persons or entities who acquired Class A common stock of SciPlay pursuant and/or traceable to the Registration Statement filed and issued in connection with SciPlay’s initial public offering, which commenced on or about May 3, 2019. The complaint asserts claims for alleged violations of Sections 11 and 15 of the Securities Act, 15 U.S.C. § 77, and seeks certification of the putative class; compensatory damages of at least $146.0 million, and the award of the plaintiff’s and the class’s reasonable costs and expenses incurred in the action.

On or about December 9, 2019, Hongwei Li filed a putative class action complaint in New York state court asserting substantively similar causes of action under the Securities Act of 1933 and substantially similar factual allegations as those alleged in the PRS Action (the “Li Action”). On December 18, 2019, the New York state court entered a stipulated order consolidating the PRS Action and the Li Action into a single lawsuit. On December 23, 2019, the defendants moved to dismiss the consolidated action.

On August 28, 2020, the court issued an oral ruling granting in part and denying in part the defendants’ motion to dismiss. On December 14, 2020, plaintiffs in the consolidated action filed a motion to certify the putative class. That motion is not yet fully-briefed.

~~SciPlay IPO Matter (Nevada)~~

On or about November 4, 2019, plaintiff John Good filed a putative class action complaint in Nevada state court against SciPlay, certain of its executives and directors, SGC, and SciPlay’s underwriters with respect to SciPlay’s initial public offering. The plaintiff seeks to represent a class of all persons who purchased Class A common stock of SciPlay in or traceable to SciPlay’s initial public offering that it completed on or about May 7, 2019. The complaint asserts claims for alleged violations of Sections 11 and 15 of the Securities Act, 15 U.S.C. § 77, and seeks certification of the putative class; compensatory damages, and the award of the plaintiff’s and the class’s reasonable costs and expenses incurred in the action. On February 27, 2020, the trial court entered a stipulated order that, among other things, stayed the lawsuit pending entry of an order resolving the motion to dismiss that was pending in the SciPlay IPO matter in New York state court. On September 29, 2020, the trial court entered a stipulated order that extended the stay pending a ruling on class certification in the SciPlay IPO matter in New York state court.

Based on our assessment under ASC 410 and ASC 450 and consideration of the two SciPlay IPO matters above, we determined that both loss and insurance proceeds loss recovery, which we believe is recoverable under our insurance policy, are deemed probable and reasonably estimable. As a result, we recorded approximately $8.3 million in Accrued liabilities and $8.0 million in Prepaid expenses and other current assets as of June 30, 2021, with no material impact on our statement of income for the three and six month period ended June 30, 2021.SEC.

~~(9) Subsequent Events~~

~~Acquisition of Koukoi Games Oy (“Koukoi”)~~

On July 2, 2021, we acquired privately held Koukoi, a Finland-based developer and operator of casual mobile games for $5.3 million cash consideration, net of cash acquired. The acquisition allows us to expand our casual games portfolio. We are in the process of completing the preliminary purchase price accounting and expect that a substantial portion of the purchase price will be allocated to acquired intellectual property.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to enhance the reader’s understanding of our operations and current business environment from management’s perspective and should be read in conjunction with the description of our business included under Part I, Item 1 “Condensed Consolidated Financial Statements” and Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and under Part I, Item 1 “Business”, Item 1A “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our ~~2020~~2021 Form 10-K. The terms “we” and “our” as used herein refer to SciPlay and its consolidated subsidiaries.

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be read in conjunction with the disclosures and information contained and referenced under “Forward-Looking Statements” and “Risk Factors” included in this Quarterly Report on Form 10-Q and “Risk Factors” included in our ~~2020~~2021 Form 10-K.

You can access our filings with the SEC through the SEC website at https://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 https://www.sciplay.com/investors/, and we use this website address 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 contents of our website are not incorporated by reference in this Form 10-Q and shall not be deemed “filed” under the Securities Exchange Act of 1934, as amended.

BUSINESS OVERVIEW

We are a leading developer and publisher of digital games on mobile and web platforms. We ~~currently offer seven~~operate in the social gaming market, which is characterized by gameplay online, on mobile phones or on tablets that are social and competitive, and self-directed in pace and session length, as well as the hyper-casual space, which is characterized by simpler core ~~games, including social casino games~~ ~~Jackpot Party Casino~~®~~, Quick Hit Slots~~®, ~~Gold Fish Casino~~®loops and ~~Hot Shot Casino~~®, ~~and~~more repetitive gameplay than casual ~~games,~~ ~~MONOPOLY Slots~~®~~, Bingo Showdown~~®~~and~~ ~~88 Fortunes Slots~~®, and we recently added a solitaire social game targeted toward casual game players as a part of the Come2Play acquisition on various platforms referenced herein. We currently plan to launch an additional casual game in 2022. Our social casino games typically include slots-style game play and occasionally include table games-style game play, while our casual games blend slots-style or bingo game play with adventure game features. All of our games are offered and played on multiple platforms, including Apple, Google, Facebook, Amazon, and Microsoft. In addition to our internally created games, our content library includes recognizable, real-world slot and table games content from Scientific Games. This content allows players who like playing land-based slot machines to enjoy some of those same titles in our free-to-play games. We ~~have access to Scientific Games’ library of more than 1,500 iconic casino titles. We also have access to content from third-party licensed brands such as~~ ~~MONOPOLY~~™, ~~JAMES BOND~~™, ~~THE FLINTSTONES~~™, ~~MICHAEL JACKSON™, and~~ ~~PLAYBOY~~™.

We generate ~~substantially all~~a substantial portion of our revenue from in-app purchases in the ~~sale~~form of coins, chips and cards, which players ~~of our games~~ can use to play ~~casino-style~~ slot games, ~~and~~ table games ~~and~~or bingo games. We generate additional revenue in the hyper-casual space from the receipt of advertising revenue. Players who install our social games typically receive free coins, chips or cards upon the initial launch of the game and additional free coins, chips or cards at specific time intervals. Players may exhaust the coins, chips or cards that they receive for free and may choose to purchase

additional coins, chips or cards in order to extend their time of game play. Once obtained, coins, chips and cards (either free or purchased) cannot be redeemed for cash nor exchanged for anything other than game play within our apps. Players who install our hyper-casual games receive free, unlimited gameplay that requires viewing of periodic in-game advertisements.

~~As described~~We currently offer a variety of social casino games, including Jackpot Party® Casino, Gold Fish® Casino, Quick Hit® Slots, 88 Fortunes® Slots, MONOPOLY® Slots and Hot Shot Casino®. We continue to pursue our strategy of expanding into the casual games market. Current casual game titles include Bingo Showdown®, Solitaire Pets™ Adventure and Backgammon Live as well as many titles in ~~Note 1, on July 15, 2021, Scientific Games submitted~~the hyper-casual space through our recent acquisition of Alictus, including games such as Candy Challenge 3D™, Boss Life™ and Deep Clean™. We currently plan to launch an additional casual game and a ~~proposal~~number of hyper-casual games in 2022. Our social casino games typically include slots-style game play and occasionally include table games-style game play, while our casual games blend solitaire-style or bingo game play with adventure game features and our hyper-casual games include many simple core loop mechanics. All of our games are offered and played across multiple platforms, including Apple, Google, Facebook, Amazon and Microsoft. In addition to our ~~board~~internally created game content, our content library includes recognizable game content from Light & Wonder. This content allows players who like playing land-based game content to enjoy some of ~~directors~~those same titles in our free-to-play games. We have access to ~~acquire the approximately 19% remaining equity interest in SciPlay not already owned by them.~~Light & Wonder’s library of more than 1,500 iconic casino titles, including titles and content from third-party licensed brands such as MONOPOLY™, THE FLINTSTONES™, JAMES BOND™ and PLAYBOY™(1). We believe our access to this content, coupled with our years of experience developing in-house content, uniquely positions us to create compelling digital games.

Recent Events

InOn March ~~2020,~~1, 2022, we acquired 80% of a Turkey-based hyper-casual gaming studio, Alictus (see Note 1). Alictus has developed and published a number of games, including Candy Challenge 3D™, Rob Master 3D™, Deep Clean Inc.™, Oh God!™, Money Buster!™ and Collect Cubes™. The Alictus acquisition allows us to further scale in the World Health Organization declared the rapidly spreading COVID-19 outbreak a pandemic. In response to the COVID-19 pandemic, governments across the world are implementing measures to prevent its spread, including the temporary closure of all non-essential businesses and travel restrictions. Many ofcasual market while diversifying our current and potential players may have significantly more free time to play our games, however they may also experience sustained consumer unease and have lower discretionary income. While the increased player engagement we experienced during the first half of 2020 as a result of the stay-at-home measures across the U.S. have begun to recede, we are still seeing an increase in paying player engagement as compared to the pre-COVID time period. We are not able to predict and quantify the ultimate impact of further COVID-19 developments on our results of operations in future periods.revenue streams.

On ~~July 2, 2021,~~May 9, 2022 our Board of Directors approved a share repurchase program under which the Company is authorized to repurchase, from time to time through May 9, 2024, up to an aggregate amount of $60.0 million of our outstanding Class A common stock (see Note 6). Since the initiation of the program on May 9, 2022 and through August 5, 2022, we ~~acquired privately held Koukoi, a Finland-based developer~~returned $15.0 million of capital to shareholders through the repurchase of 1.1 million shares of Class A common stock.

(1) The MONOPOLY name and ~~operator~~logo, the distinctive design of ~~casual mobile games which allows us to expand our casual games portfolio. See Note 9.~~the game board, the four corner squares, the MR. MONOPOLY name and character, as well as each of the distinctive elements of the board, cards and the playing pieces are trademarks of Hasbro for its property trading game and game equipment and are used with permission. © 2022 Hasbro. All Rights Reserved. Licensed by Hasbro.

©2022 Playboy Enterprises International, Inc. PLAYBOY, PLAYMATE, PLAYBOY BUNNY and the Rabbit Head Design are trademarks of Playboy Enterprises International, Inc. and used under license by SciPlay Games, LLC.

1920

RESULTS OF OPERATIONS

Summary of Results of Operations

Three Months Ended Six Months Ended
June 30, Variance June 30, Variance
($ in millions) 2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020
Revenue $ 154.0 $ 165.6 $ (11.6) (7) % $ 305.1 $ 283.9 $ 21.2 7 %
Operating expenses 114.2 114.3 (0.1) — % 224.9 200.4 24.5 12 %
Operating income 39.8 51.3 (11.5) (22) % 80.2 83.5 (3.3) (4) %
Net income 37.9 48.8 (10.9) (22) % 75.8 79.9 (4.1) (5) %
Net income attributable to SciPlay 5.9 6.6 (0.7) (11) % 11.2 11.0 0.2 2 %
AEBITDA $ 47.9 $ 59.6 $ (11.7) (20) % $ 93.8 $ 94.4 $ (0.6) (1) %
Net income margin 24.6 % 29.5 % (4.9) pp nm 24.8 % 28.1 % (3.3) pp nm
AEBITDA margin 31.1 % 36.0 % (4.9) pp nm 30.7 % 33.3 % (2.6) pp nm
pp = percentage points.
nm = not meaningful.


	Three Months Ended											Six Months Ended
	June 30,						Variance					June 30,						Variance
($ in millions)	2022			2021			2022 vs. 2021					2022			2021			2022 vs. 2021
Revenue	$	160.1		$	154.0		$	6.1		4	%	$	318.1		$	305.1		$	13.0		4	%
Operating expenses	127.1			114.2			12.9			11	%	250.4			224.9			25.5			11	%
Operating income	33.0			39.8			(6.8)			(17)	%	67.7			80.2			(12.5)			(16)	%
Net income	32.3			37.9			(5.6)			(15)	%	64.3			75.8			(11.5)			(15)	%
Net income attributable to SciPlay	5.7			5.9			(0.2)			(3)	%	10.1			11.2			(1.1)			(10)	%
AEBITDA	$	41.1		$	47.9		$	(6.8)		(14)	%	$	85.3		$	93.8		$	(8.5)		(9)	%
Net income margin	20.2		%	24.6		%	(4.4)		pp	nm		20.2		%	24.8		%	(4.6)		pp	nm
AEBITDA margin	25.7		%	31.1		%	(5.4)		pp	nm		26.8		%	30.7		%	(3.9)		pp	nm
pp = percentage points. nm = not meaningful.

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 below 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;~~adjustments (including contingent acquisition consideration); (iii) unusual items (including ~~certain~~ legal ~~settlements)~~settlements related to major litigation); and (iv) other non-cash items; ~~(e) contingent acquisition consideration~~ and ~~(f)~~(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.

2021

The following table reconciles Net income attributable to SciPlay to AEBITDA and AEBITDA margin:


		Three Months Ended						Six Months Ended							Three Months Ended						Six Months Ended
		June 30,						June 30,							June 30,						June 30,
($ in millions, except percentages)	($ in millions, except percentages)	2021			2020			2021			2020			($ in millions, except percentages)	2022			2021			2022			2021
Net income attributable to SciPlay	Net income attributable to SciPlay	$	5.9		$	6.6		$	11.2		$	11.0		Net income attributable to SciPlay	$	5.7		$	5.9		$	10.1		$	11.2
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	32.0			42.2			64.6			68.9			Net income attributable to noncontrolling interest	26.6			32.0			54.2			64.6
Net income	Net income	37.9			48.8			75.8			79.9			Net income	32.3			37.9			64.3			75.8
Restructuring and other	Restructuring and other	1.1			1.0			1.4			1.5			Restructuring and other	1.1			1.1			3.3			1.4
Depreciation and amortization	Depreciation and amortization	3.5			2.2			6.9			4.2			Depreciation and amortization	5.5			3.5			10.2			6.9
Income tax expense	Income tax expense	1.8			3.1			3.9			4.7			Income tax expense	0.7			1.8			2.9			3.9
Stock-based compensation	Stock-based compensation	3.5			5.1			5.3			5.2			Stock-based compensation	1.5			3.5			4.1			5.3
Other expense (income), net		0.1			(0.6)			0.5			(1.1)
Other expense, net														Other expense, net	—			0.1			0.5			0.5
AEBITDA	AEBITDA	$	47.9		$	59.6		$	93.8		$	94.4		AEBITDA	$	41.1		$	47.9		$	85.3		$	93.8
Revenue	Revenue	$	154.0		$	165.6		$	305.1		$	283.9		Revenue	$	160.1		$	154.0		$	318.1		$	305.1
Net income margin (Net income/Revenue)	Net income margin (Net income/Revenue)	24.6		%	29.5		%	24.8		%	28.1		%	Net income margin (Net income/Revenue)	20.2		%	24.6		%	20.2		%	24.8		%
AEBITDA margin (AEBITDA/Revenue)	AEBITDA margin (AEBITDA/Revenue)	31.1		%	36.0		%	30.7		%	33.3		%	AEBITDA margin (AEBITDA/Revenue)	25.7		%	31.1		%	26.8		%	30.7		%

Revenue, Key Performance Indicators and Other Metrics

Web in-app purchases and other(1)

(1) Other primarily represents revenue generated from providing advertising platforms with access to our game software platform, which facilitates the placement of advertising inventory. The advertising revenue was not material in the periods presented.

Revenue information by geography is summarized as follows:

(1) North America revenue includes revenue derived from the U.S., Canada and Mexico.

For the three months ended June 30, ~~2021,~~2022, revenues ~~decreased~~increased primarily as a result of ~~declining paying player engagement, as evidenced by AMRPPU, largely due to~~higher advertising revenue following the ~~easing of stay-at-home measures compared to~~Alictus acquisition, while the ~~height of COVID prevention measures in the prior year.~~core social casino games’ revenue slightly declined.

For the six months ended June 30, ~~2021,~~2022, revenues increased as a result of an increase in average monthly paying users due to ~~elevated player engagement from continued COVID prevention measures~~a higher payer conversion rate during the ~~first quarter 2021 compared to limited COVID-prevention measures for most of~~period, coupled with a $9.9 million increase in advertising revenue following the ~~first quarter 2020 in addition~~Alictus acquisition.

For the three and six months ended June 30, 2022, MPU has increased while we have experienced lower AMRPPU due to the introduction of new ~~content and features resulting in increased~~ paying player ~~interaction.~~cohorts. These cohorts are not currently monetizing at the same level as our existing payer base, but we do anticipate the newer cohorts’ monetization to increase over time. Payer conversion and AMRPPU continues to be higher than pre-COVID periods.

The following reflects our Key Performance Indicators and Other Metrics:

We manage our business by tracking several key performance indicators, each of which is tracked by our internal analytics systems and referred to in our discussion of operating results. Our key performance indicators are impacted by several factors that could cause them to fluctuate on a quarterly basis, such as platform providers’ policies, restrictions,

For a description of the definitions of our key performance indicators and other metrics and their usefulness to our investors, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our ~~2020~~2021 Form 10-K.

In-App Purchases(1):

pp = percentage points.

(1) The above KPIs include only in-app purchases, as advertising revenue is not material for the periods presented.

pp = percentage points.

(1) The above KPIs include only in-app purchases, as advertising revenue is not material for the periods presented.

The increase in mobile penetration percentage for ~~both comparable periods~~the three and six months ended June 30, 2022 primarily reflects a continued trend of players migrating from web to mobile platforms to play our games.

Average MAU for the three and ~~average DAU for both comparable periods~~six months ended June 30, 2022 decreased due to the turnover in ~~users due to more efficient marketing towards potential paying players.~~users. ARPDAU increased as a function of lower average DAU for periods presented.

~~For~~Average DAU was flat for the three months ended June 30, ~~2021, AMRPPU decreased with consistent average MPU as payer engagement decreased as a result of the easing of stay-at-home measures compared~~2022 while slightly decreasing due to the ~~height of COVID prevention measures~~turnover in ~~the prior year. For~~users compared to the six months ended June 30, ~~2021,~~2022.

For the three and six months ended June 30, 2022, AMRPPU ~~increased with consistent~~decreased while average MPU ~~due to elevated player engagement from continued COVID prevention measures during the first quarter 2021~~increased as payer conversion improved compared to ~~limited COVID-prevention measures for most of~~ the ~~first quarter 2020 in addition to the introduction of new content~~three and ~~features resulting in increased paying player interaction.~~six months ended June 30, 2021.

Payer conversion rates ~~have increased seven consecutive quarters~~are at an all-time high due to ~~the increased~~consistent payer interaction with the games by our players as a result of the introduction of new content and features into our games.

Sales and marketing(1)

General and administrative(1)

Research and development(1)

(1) Excludes depreciation and amortization.

pp = percentage points.

(1) Excludes depreciation and amortization.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $.001 par value	SCPL	The NASDAQ Stock Market


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	56

	Consolidated Statements of Income for the Three and Six Months Ended June 30,~~, 2021~~ 2022 and ~~2020~~2021	56

	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30,~~, 2021~~ 2022 and ~~2020~~2021	67

	Condensed Consolidated Balance Sheets as of June 3 0 30 , ~~2021~~2022 and December 31, ~~2020~~2021	78

	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30,, 2022 and 2021 ~~and 2020~~	89

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 , ~~2021~~2022 and ~~2020~~2021	910

	Notes to Condensed Consolidated Financial Statements	1011

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2627

Item 4.	Controls and Procedures	2627

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	2627

Item 1A.	Risk Factors	2627

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2827

Item 3.	Defaults Upon Senior Securities	28

Item 4.	Mine Safety Disclosures	28

Item 5.	Other Information	28

Item 6.	Exhibits	29


(in millions, except for price per share)
ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased as Part of Publicly Announced Program		Average Price Paid per Share		Total Cost of Repurchase		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program

4/1/2022 - 4/30/2022	—		$	—	$	—	$	60.0
5/1/2022 - 5/31/2022	—		$	13.83	$	0.3	$	59.7
6/1/2022 - 6/30/2022	0.5		$	13.76	$	6.8	$	52.9
Total	$	0.5			$	7.1


Exhibit Number						Description

3.1						Amended and Restated Articles of Incorporation of SciPlay Corporation (incorporated by reference to Exhibit 3.1 to SciPlay Corporation’s Current Report on Form 8-K filed on May 8, 2019).
3.2						Second Amended and Restated Bylaws of SciPlay Corporation (incorporated by reference to Exhibit ~~3.2~~3.1 to SciPlay Corporation’s Current Report on Form 8-K filed on ~~May 8, 2019).~~July 29, 2022),(†)
10.1						~~Amended and Restated Employment~~Purchase Agreement, dated as of ~~February 5, 2021 (effective as of June~~March 1, ~~2021),~~2022, by and ~~between Scientific~~among SciPlay Acquisition, LLC, Arif Emre Taş, Ecem Baran Taş, ALİCTUS YAZILIM ANONİM ŞİRKETİ and SciPlay Games, ~~Corporation and Barry Cottle~~LLC (incorporated by reference to Exhibit ~~10.1~~2.1 to SciPlay Corporation’s ~~Quarterly~~Current Report on Form ~~10-Q~~8-K filed on ~~May 10, 2021)~~March 2, 2022).*
10.2						Amendment ~~to Employment Agreement,~~No. 2, dated as of ~~April 27, 2021, by and between Scientific Games Corporation and Michael Winterscheidt.*(†)~~
~~10.3~~						~~Amendment No. 1, dated as of May 27, 2021,~~February 28, 2022, among SciPlay ~~Holding Company,~~Games, LLC, as the borrower, SciPlay Parent Company, LLC, the several lenders from time to time parties thereto and Bank of America, N.A., as administrative agent, collateral agent and issuing lender, which amended the Credit Agreement, dated as of May 7, 2019 ~~(incorporated~~(as amended, supplemented, amended and restated or otherwise modified from time to time, including without limitation, by ~~reference to Exhibit 10.1 to SciPlay Corporation’s Current Report on Form 8-K filed on May 27, 2021).~~
~~10.4~~						~~Amended and Restated SciPlay Corporation Long-Term Incentive Plan (Amended and Restated~~that certain Amendment No. 1, dated as of ~~June 9,~~May 27, 2021) (incorporated by reference to Exhibit 10.1 to SciPlay Corporation’s Current Report on Form 8-K filed on ~~June 11, 2021)~~March 2, 2022).*
10.3						First Amendment to IP License Agreement, dated May 6, 2022 (incorporated by reference to E xhibit 10.1 to SciPlay Corporation’s Current Report on Form 8-K filed on May 10, 2022).
31.1						Certification of the Chief Executive Officer of SciPlay Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(†)
31.2						Certification of the Interim Chief Financial Officer of SciPlay Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(†)
32.1						Certification of the Chief Executive Officer of SciPlay Corporation pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2						Certification of the Interim Chief Financial Officer of SciPlay Corporation pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Label Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
(†) Filed herewith. ** Furnished herewith. *Management contracts and compensation plans and arrangements.


		SCIPLAY CORPORATION
		(Registrant)

		By:	/s/ ~~Michael D. Cody~~Daniel O’Quinn
		Name:	~~Michael D. Cody~~Daniel O’Quinn
		Title:	Interim Chief Financial Officer

		~~By:~~	~~/s/ Michael F. Winterscheidt~~
		~~Name:~~	~~Michael F. Winterscheidt~~
		~~Title:~~	~~Chief Accounting Officer~~ and Secretary
Dated:	August 9, ~~2021~~2022


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☒


		Accounts Receivable Concentration as of
		June 30,	December 31,		Accounts Receivable Concentration as of
		2021	2020		June 30, 2022	December 31, 2021
Apple	Apple	64.1%	49.2%	Apple	46.0%	49.8%
Google	Google	24.6%	35.4%	Google	31.0%	33.9%
Facebook	Facebook	8.6%	11.5%	Facebook	10.5%	12.1%


	June 30, 2021		December 31, 2020
Royalties to Scientific Games for third-party IP	$	1.4	$	2.5
Parent services	0.7		0.8
Reimbursable expenses to Scientific Games and its subsidiaries	2.2		2.2
	$	4.3	$	5.5


(in millions, except ARPDAU, AMRPPU, and percentages)	(in millions, except ARPDAU, AMRPPU, and percentages)	Three Months Ended											Six Months Ended											(in millions, except ARPDAU, AMRPPU, and percentages)	Three Months Ended											Six Months Ended
		June 30,						Variance					June 30,						Variance						June 30,						Variance					June 30,						Variance
		2021			2020			2021 vs. 2020					2021			2020			2021 vs. 2020						2022			2021			2022 vs. 2021					2022			2021			2022 vs. 2021
In-App Purchases(1):																								In-App Purchases(1):
Mobile Penetration	Mobile Penetration	88		%	87		%	1.0		pp	nm		88		%	86		%	2.0		pp	nm		Mobile Penetration	90%			88%			2.0		pp	nm		90		%	88		%	2.0		pp	nm
Average MAU	Average MAU	6.3			8.1			(1.8)			(22.2)	%	6.5			7.8			(1.3)			(16.7)	%	Average MAU	5.9			6.3			(0.4)			(6.3)	%	6.1			6.5			(0.4)			(6.2)	%
Average DAU	Average DAU	2.3			2.7			(0.4)			(14.8)	%	2.4			2.7			(0.3)			(11.1)	%	Average DAU	2.3			2.3			—			—	%	2.3			2.4			(0.1)			(4.2)	%
ARPDAU	ARPDAU	$	0.72		$	0.67		$	0.05		7.5	%	$	0.70		$	0.58		$	0.12		20.7	%	ARPDAU	$	0.74		$	0.72		$	0.02		2.8	%	$	0.74		$	0.70		$	0.04		5.7	%
Average MPUs	Average MPUs	0.5			0.5			—			—	%	0.5			0.5			—			—	%	Average MPUs	0.6			0.5			0.1			5.0	%	0.6			0.5			0.1			4.1	%
AMRPPU	AMRPPU	$	96.29		$	101.13		$	(4.84)		(4.8)	%	$	94.55		$	92.36		$	2.19		2.4	%	AMRPPU	$	90.99		$	96.29		$	(5.30)		(5.5)	%	$	91.72		$	94.55		$	(2.83)		(3.0)	%
Payer conversion rate	Payer conversion rate	8.5		%	6.8		%	1.7		pp	nm		8.3		%	6.5		%	1.8		pp	nm		Payer conversion rate	9.4		%	8.5		%	0.9		pp	nm		9.2		%	8.3		%	0.9		pp	nm
pp = percentage points. nm = not meaningful.

pp = percentage points. (1) The above KPIs include only in-app purchases, as advertising revenue is not material for the periods presented.																								pp = percentage points. (1) The above KPIs include only in-app purchases, as advertising revenue is not material for the periods presented.


	Cash Payments Due In
	Total		Less than 1 year		1 - 3 years		4 - 5 years		More than 5 years
License royalty minimum guaranteed payments	$	15.0	$	5.0	$	9.2	$	0.8	$	—