SCPL - Earnings call transcript Q3 2019

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Operator

Good day, and welcome to the SciPlay Third Quarter Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Trent Kruse, Senior Vice President of Investor Relations. Please go ahead.

Trent Kruse

Thank you, operator, and good afternoon, everyone.

will followed third by we and XXXX call, performance, operating a today’s discuss quarter our results During question-and-answer period. morning this Mike me are Josh Cottle, With Wilson Cody. Barry and

statements Act of discussed materially These will that contain that Our and certain from during XXXX. Private results could call Reform include those cause statements today actual forward-looking Litigation Securities under risks statements call. uncertainties involve the the differ to

afternoon, the release the and risks uncertainties, refer issued these call earlier earnings on our this relating regarding website information For posted materials to please this SEC. to and our our filings with

We in also reconciliation of of non-GAAP earnings well as our measure most the measures. a each measure non-GAAP A GAAP to the press section release will description website. discuss in on certain our each directly as and found non-GAAP Investors be measure comparable financial can

being website conference webcast of in reminder, our this and As on are Also, our Investor materials available call the will accompanying this Relations a A archived website. at reference supplemental be is replay slides of section sciplay.com. Investors recorded.

directly the will company’s the be management as to results speaking document of meant to your be not are and slides, these the reference a used call. to facilitate While following slides review

call Now over I’d turn like to the Barry. to

Cottle Barry

Mike everyone, Chief Trent. Thanks, and Executive SciPlay. Hello, Financial Along are us of Officer today. Officer with Cody, for me SciPlay; joining and thank you Chief Josh of Wilson,

quarter represented above-market strong QX As growth from another of team, you’ll the hear profitability. revenue and

the hear future have during call. of games untapped we and about about team ahead Our our is you’ll which growth excited given the of the strength incredibly us, opportunities more

the walk up we’ll to open Josh? the and to With Josh that, over then the I’ll and details, Mike questions. call to turn through call

Josh Wilson

Thanks, good afternoon, everyone. Barry, and

the into jump I to to our enhance underway moment continue to a highlight we I have to QX our wanted work results. Before take results,

become is mission our know, casual world. the to gaming company the in one you number As mobile

games largest in push learnings the and is titles. to envelope, team our ops driving to pushing live our gaining Our monetization other great

including We and in Showdown are quarter significant and Gold results. adding happy compelling soft portfolio we These and in are were and features Fish. launch the late with the across MONOPOLY, Bingo our live, now are new enhancements

scientific will to With titles Bao library, Xi our markets. have games great the as be are IP SciPlay in international able full Jin utilize such use we and the to that several currently in not recognition access at Ji

will leverage In to drive engagement acquisition, portfolio and team capabilities which user to industry-leading to allow review data-driven our M&A superior the addition, continue monetization to our several growth. and continues broaden exciting opportunities, significant us around

that, quarter With let’s results. move into third the

Krejcik. is quarter increased growing million, $X.XX. and We’re to market for to within strength to our grew record in X% rate at ARPDAU the we rate a improvement per third quarter. revenue a a Eilers according payer increase We XX% saw payer & continued to Revenue $XX.XX. of quarterly saw at above sequential that XX% in $XXX well saw monthly Average X.X%. And conversion we the

the increased XX% penetration with overall. now XX% Our mobile at revenue

players on more more mobile they their from as This shift a attention reach is desktop. basis allows it important dynamic to us as to

and incredibly due strategy to This generally in-game cadence incorporate portfolio Party. social loop-driven a growth Jackpot ability content further of including strong largest our games naturally continued as game, casino in nature Our strong new evergreen to results revenue events. in drove an reinforces genre and growth their sticky gameplay with

apps Monitor XXX casino and in as Jackpot are a popularity report of in the games incredibly the grossing The X by in regardless position our XX top games highest are of Social & the rankings games Google And social Party iOS game reflected Play. top has all genre growing mobile X individual Gaming grossing into is we and provider Eilers proud our of apps across that September top Krejcik. moved XXXX SciPlay mobile as core

to team shareholder enhance operational increase Our committed excellence value moving to is and forward. our results

We proven library to efficiencies. support utilize operational market-leading are content relationship Scientific deliver increased with its and Games leveraging to our

of a We place growth, games, have management shareholder road our an map launch, and above-market for revenue the strong opportunities, structure growth to plans and enhance ramp value. future growth leverage to cost portfolio in efficient

I’ll walk to Mike? Mike information Now detail. the Cody turn more to in financial it you through over

Mike Cody

year-over-year Thanks, Josh. XXXX. revenue We QX with XX% third $XX increased million, Mobile and AEBITDA delivered XX%. XX% results revenue increasing from solid quarter increasing up

to our with X.X% Our games. to revenue in player $X.XX. year-over-year Payer approximately in prior growing players driven ARPDAU interaction conversion was growth our X% paying rates year of the driven from up monetization increased from $X.XX by increased by X.X%

average monthly a reached record $XX.XX. per quarterly of Our payer revenue

was prior income is prior margin leverage due increased Net strong income to continued year. which increase $XX up in revenue million year-over-year business. Net versus million percentage versus $X.X XXX% the contingent This to growth points and X.X% year, million the the in to XX.X% in $X.X operating an included consideration expense. of the XX nearly

increase XXX the which prior We remain year. growing of were points AEBITDA XX.X%, committed to basis margins of XX% $XX while margins top to XX%. line. an long-term AEBITDA from was an And was achieve our AEBITDA million, goal increase of

XX.X% $XX.X revenue. Sales million and of of marketing expense represented

This including opportunities installs, with among a future more to As the we our shifted in portfolio to led ahead quarters QX games should shift approach, upcoming to period which holiday spend always monetize these done, operated have lead players to we marketing the ‘XX. returns. maximize in we and increased

to million with which quarter. Available cash, which ended million the included in to the million from million generated second business. quarter the our $X $XXX million, including revolver, us payment operating was of grow ample We $XX.X undrawn $XX.X an increase We in $XX.X by cash consideration. provided giving liquidity, resources was related contingent acquisition activities, a

will year-over-year fourth with growth. quarter solid confident sequential are we We deliver both another and

million or to to year-over-year XX% are We million growth. $XXX XXXX revising revenue full $XXX guidance our year XX% to

for the the about are We for and events the have planned holiday season, upcoming outlook long-term remains we strong. excited updates, business and the features

With your to questions. take we’re that, happy

Operator

go ahead. Deutsche [Operator from Instructions] comes Kraft Please Your question Bryan first Bank. with

Bryan Kraft

just it to related you, ask down So I on change to I I the your true, guess, the outlook. Wanted afternoon. that sequentially. assuming in coming that’s specifically being ratio Good what’s What’s XQ? guess, resurgence. Hi. on Party conversion confidence the confidence? that’s able payer in to assume that during the turn like in around? can may on how third course progressed you so be your you’re the it seeing seeing and And Jackpot of comment what far the comments, some sounds Based quarter

you on to wanted I comment can see So if that.

do long-term What order the time your target? you of realistically frame XX%. are Thank you that do out to And in some then order the to separately, to that of you. have target you think have is to in there? mentioned reach margin – that play what margin get things to And

Josh Wilson

is Josh. this Bryan,

tag-team and on question. this Mike I So will

with kind I’ll the one. of first start So

As did of you core mention, actually have games – top just in did broke are evergreen genre. strong seven into Party, casual a they’re the quarter, which know, our really XX you mobile regardless all nature. Jackpot of

news very things issues every very they’re But in exact. be confident five was The are we three their to each the live to It type third a good this that them quarter ops that to of we environment. back the trajectory past. that on get we’ll subset that And games, only growing seen of in be feel in common do very all able happen have of and in temporary, The operations the saw and running they’re fixable is games us. running – these they’re we normal are the day. very

Mike Cody

a And solid Bryan, this to the is point we’re Mike. range Very With we’ll QX. with comfortable guidance, on provided. that we’ve confident that – deliver your very

As as enter you weeks upcoming Josh and we’re of know, solid, season. quarter very holiday. And with all feel are mentioned, games the particularly of the we as holiday the are prepared we Christmas important the our last

growing results the teams working and every business to day the deliver Our best possible. are keep

confident that very we range provided. in we’re So

familiar And then our think revenue. do of we grow games. the as standpoint. as your the talked think and X-year with, scale things the life that a on X- as guidance we’ve business fast I AEBITDA the do, as number, And about our XX% costs from to the we range, you’re to of revenue like need revenue not margins the a and And grow of they grow, margins, on our long-term to cycle continued will

Bryan Kraft

Got it.

Okay. Thank you very much.

Mike Cody

Welcome.

Operator

Markets. next Shweta Capital with Your Please RBC ahead. go comes question from

Shweta Khajuria

– there what’s Thank impact Great. adding versus growth what Party for? to from please talk you they some you to to QX I some that know it maybe games may how your were rate Can games. in could in the been the you. to newer Which in saw And a how Could you’ve gains reference the of they? your new features these do second, that were what the then – Jackpot the were? you the talk quantify do of some little quarter? of contribution the But features? impact those. positive think you they And premature guide from be you

Mike Cody

Shweta, this of question. is take I’ll first Mike. part your the

returns. our Josh solid Jackpot reference a Party So did game-level disclose we don’t quarter. had

to it. with your it then to question. grow, part that I’ll we’ll your talk And did but happy of turn disclose. about Josh extent the It very We’re over the of metrics that’s game-level about second

Josh Wilson

rewrites previous we with second kind in the in One to had expected these is ones. that, those Fish start different are that that to quarter part returns Casino. we year. we this – So both Bingo have few about Showdown of done Gold Both and a we launched into are of fourth the X the of have get mentioned seeing and talked

MONOPOLY We of feel growth have continue our X quarter. have game, through seen the fourth go last new features that, we we revenue And weeks. that to will the also in which confident released some good out

Shweta Khajuria

Mike. and Josh Thanks, Okay.

Operator

comes Malouf question next Craig-Hallum. with Our Mike from

Mike Malouf

Great. quarter? Wondering think the have see you any little Do if the still this can is how an XXXX a more give Thanks how Just talk that’s a about questions. acceleration us in growth you Or update for going. my international on sort you bit of you’ll story? fourth of rate. taking impacting

Josh Wilson

Yes.

this So is Mike, Josh.

testing will impact our XX today, it basically we’re which smaller the huge testing are current see a population. not games material two now, So of and quarter we’re in Fortunes MONOPOLY. as we fourth in Right with on

next Assuming the year. that of first move half fourth end look towards we expect, the to the in of we games and quarter would into other the ramp that see we then results

Mike Malouf

on then us color of change Okay. and you some use in your to regards Great. business And desktop impact to Flash? with its can the Chrome the give

Josh Wilson

Yes.

here. my So I’ll Yes. do best

today. the it. from or As product over. did Chrome did believe new from technology. we the We usage Google change Chrome now, Flash we give the is, move know, to to from browser XX% no for technology This loss cause browser. longer seeing do the DAU XX% a deprecated loss the of And users to us and our We over stable sustain web not could who it’s take, are

hope will we So the we current forward. that to maintain players be going able

Mike Malouf

impacted do Do you what quarter? it idea any you have you the for about think

Mike Cody

refer you revenue I it And think to we only numbers. to would XX.X we declining year implicit those the what’s web year. could last from XX.X be our in Q, in this down disclosed and

Mike Malouf

Got a it. lot. right. All Thanks

Operator

Your next Sachs. Instructions] Ng comes Goldman question [Operator from Michael with

Michael Ng

that question payer just the Thanks more conversion games It see I to and up couple little earlier half. relative a weakness. a conversion. bit about dropped payer off were conversion question. just Could just there off? fell games that that Hi. payer do here? follow were think led you those wanted elaborate going you the first And the which you And where I why mentioned from about to for on to the

Josh Wilson

Michael. Yes,

web I the talk was of also issue made. that a So change It’s about – web games because individual that we not disclose information. the the mixture can’t or do

know, valuable users, we growing As were wasn’t all users. the it they though very a even web population,

of So out the from rate was conversion part payer – brought there. the

sorry. here the and to their about sorry, Fish launches updates seeing, lot what with technology. – the the we’re of A of Gold MONOPOLY other improvements we we then part, started Our as coming the games, most the new see – up talked Bingo to and that

Michael Ng

you. Thank

Operator

turn to Mr. conference for This remarks. concludes back Josh over like to any closing the question-and-answer session. our I would Wilson

Josh Wilson

and today. get our joining at and SciPlay and And all support. make you validate players appreciate committed we team to us We of The strong why our results love to for every of go most work for the SciPlay team that want we millions is morning. for Thank I to returns up delivering your the their thank of shareholders. games

ahead, eager on new drive As winning we we our improving our look opportunities, strategy, growth explore are execute games keep results. to and

look mobile progress casual next number Our and during world. on global forward our our in team continued We remains the one focused to updating players gaming on becoming call. our delighting company the you

Operator

Thank now today’s has attending conference presentation. you for The concluded.

disconnect. now may You

SciPlay (SCPL) 11 Nov 192019 Q3 Earnings call transcript