SCPL - Earnings call transcript Q4 2020

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Operator

Good day, and welcome to the SciPlay Fourth Quarter 2020 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to James Bombassei. Please go ahead, sir.

James Bombassei

Thank you, operator.

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

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

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

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

These archived this of replay accompanying reference As materials being recorded. Also, sciplay.com. be a A now slides Relations over Josh. be the be conference is supplemental reference slides used following a meant I your review to website. call will of reminder, posted and webcast the and call website as Investor at our in document call. to the to of Investors turn this will our facilitate the company’s will results are to section

Josh Wilson

SciPlay. for XXXX really was year thanks us us. everyone joining Jim. and at afternoon, Thanks, Good a great for

to and million. We record our execution strong revenue XX% XX% the results. drove annual $XXX increased Our by outperforming AEBITDA by grew market

features driving new continue business our remains franchises strengthen player and with that core and contents we are to Our healthy engagement. evergreen

We to into additional firm which record this continue operating flow million, expand year’s While business, our year our further the casual base to this cash we opportunity genres. into commitment avenues revenue while market. adjacent to $XXX billion growing making $XX us are results, with we enables generated core several with see a diversify pleased

is XXXX delivering margin in record Our part and financial of sustainable of success growth track expansion. the

XXXX, we that look achieved a If you across expansions. To XXXX, at further XX% a at payer-focus XX% our strengthening strategy. franchises. and we was The all at casino strong key basis growth revenue CAGR grew ops live with end, and margin CAGR records player metrics XXXX to from of evergreen this our growth our AEBITDA social in

entirely attribute a to around and to ops beat operation, & success, addition we acquisition closed industry’s an of our social miss the as new ComeXPlay, a features, to the on the a some our we Direct for back get we’re remote top champions, shifted of and success world Relief. our to talent the strategy with to financial best like Eilers challenging host delivered didn’t with amazing our together they conversion monetization. programs, communities we’re Tots able I and Krejcik, executed on In and they casino to live and like company Toys our driving play environment named payer team responded brought on by and partners part new

core pre our games metrics, revenue key growing with COVID are and evergreen succeeding, result, a healthy, As levels. driving

when recall, XXXX, began. may QX in leaving quality into our tech XXXX QX orders You and good a investment and made in we late stability position games at an stay home

the on fresh of franchise rotating the new titles game these have already this to more providing order Jackpot experience, is games foundation we oldest game efforts with can XX% by In updated which led player increased Additionally, comfort XXXX. slot team time, and teams keep our a success. increase like add an long-term and and for to of created ongoing titles but And has out in and a discussed title The update in Party, similar is adding games than largest first tangible key enjoy. features new game. with whole for new the quality the franchises to game. revenue and more to evergreen to on the trying content team call, slot of the we dedicated features members. strategy. We organic has am roster throughput a further a happy of the XXX game, them Jackpot within Jackpot listeners by they tech our hit to some improving our To game engaging effort color, invest certain development structure This previous in replicating the new consistently game frequently is by our a Party. within say approach a ops, focus keep Party and in quarters, of I and effort returning pipeline live

live First increases op times session new Gold several higher features events, average longer item added Fish in ever bets, transactions. quarter and QX. revenue new daily These resulted experienced more in feature Grouper. more a its in team The called Greedy highest payers, spins, including collectible payer

I’d For go Fish avid encourage you players, aren’t check those it to who out you Gold of yourself.

new Slots, which Second, a we of comprehensive Quick capability. recently ops includes more tech increased live Hit version launched meta-game a and

be are to expecting improved will and We calls worldwide details effort of version QX. in we this further discuss this launched upcoming by currently as new

expand our I really genre. excited am the presence is push casual in something to And our about

mechanics analytics, games Solitaire Adventure, acquisition but launched to data for We the casino and genre. beta a full loop in core casual the with expertise live ops track launch homed Pets recently Our translate social simple well on user QX. in

social our characteristics to success with apply We’ve growth. our had and genres can Showdown. feel into strengths with this Our strategy already casual game casino, Bingo revolves strategy moving demographics of similar around we where with

a not game, game core slot similar is does it or Bingo dynamic. know, you a game loop As have but simple play

second starting be will we on base, new Project half earnings updates focused execute in we path a that as strategy, referred be a to to talent the call. on casual studio XXXX. we will Currently, out casual provide our will depth game add future that game to new we to progress, we and To we this a As for pipeline. as delivering build game continue of providing a X and the new will details end,

Our casual the which enabled of to core strong the casino and cash organic explore opportunity our by business, opportunities game M&A concurrently pipeline provides flows social is new development.

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

Mike Cody

year a Thanks, Josh’s Josh. of a fronts. comments, was XXXX great on Echoing number

growth. generated prior in $X.X year, share-based we on $XX million the to XXXX. increase a year in XX% million in $XX.X quarter, than was above million market $XX XXXX in XX% versus QX in income increased including AEBITDA the the in increased and Focusing fourth higher to million XX% compensation. million which revenue, Net $XX.X estimated million the from prior $XXX.X QX

in For essentially strong broadly highest achieved metrics the all and financial achieved very results at ever speaking, fourth business AEBITDA $XXX.X our quarter, year, we very revenue $XXX.X and in million the full respectively. We million the and healthy. remains

stay-at-home has in dynamic been casino KPIs its payers social While our from on pre-COVID has games peak QX, rewarded levels. focus dissipated the key remain above as

To up, conversion example, grow monthly our works more. it from increased year-over-year grew to proximately and and user they’re X.X%. reached XX% payer quarterly per a in Average our of revenue up For payers we the engine as sum X% record spending quarter paying $X.XX. are to $XX.XX $X.XX ARPDAU fourth seeing

to at we months. to continue side, the target six user On acquisition breakeven spend expense

improving and and as to engine down of Our from prior expense XXX marketing we a ever efficiencies, revenue points drives lowered the XX.X% percentage basis sales year.

determined a an to $X for to will XXXX, increase see million Solitaire DAU, of we the expand Pets level percent Adventure Solitaire user Adventure our do will As small year. acquisition pipeline, in in spend and ramp but we on and by plan sales throughout the be grow expect to we we returns Pets both and ultimately launched The as spend spend start $X as marketing of revenue. the and spend million dollars currently in our

business an of year. activities. to liquidity, the was $XXX.X At year our million. in diversification the including XXX% million pursue available highly year $XXX.X revenue from provides Our XXXX, operating end resources with we over provided generative, our In by be cash $XXX.X from This cash generated We represents cash equivalents, year million million strategy. cash to prior with of revolver million $XXX which $XXX.X our an end, XXXX. increase increase ended continues which in undrawn was the and us nearly

Solitaire start as for will the currently and Eilers social to most home for $X and beginning Pets item a and XXXX, $X to ahead into quarter exceed & a from Krejcik from expect the first, second margin be game this as of will second aforementioned XXXX difficult a the And game seasonality reminder, additional marketing it Looking line year plan in the the behind couple COVID a of perspective, full dynamic, growth stay putting at to the our such the will we benefited the comp. We ahead, from casino team. million million year muscle in XXXX. X.X% A new notes new quarter we team for development research standpoint, include invest estimates. second, Adventure market

market. We expect expand these the and return investments to our have position in a casual high

team reiterate foundation this high interim, established with continues portfolio years coming games on to of talented positioned engine quality the in in With the target expand unmatched. powers into is We to are casino built believe and long-term the will social genres. we XX% we new to variability our as our our in cause with scale. margin we business Operator? highly further While that our to any of over-viewing are our happy perfectly take casino floor questions. continue growth, scale and content Coupled that,

Operator

Thank you.

begin Alexia JPMorgan. will Instructions] question now from Quadrani And the question-and-answer will ahead. first Please [Operator with We go the session. come

Alexia Quadrani

if have I of a I couple you. Thank questions, just may.

this the now couple I’m can own? you of of you in And of if a for how acquisition, years social to bit expanding elaborate the looking you question development fair my in one already area ago. coming see how companies SciPlay casino on on And then you all. And after the sort the plan the changes competitive can And time just at landscape of SciPlay first IPO seeing space that picture a comment further the really next the position we’re you follow-up maybe The question as for public on, are on kind a space. IP really, general, ComeXPlay? you M&A, amount of in maybe versus a is terms a how of bigger wondering

Mike Cody

interesting, same From if message, the perspective, I’ve our has telling gone believe Cody. this have social Alexia, Okay. casino are you’re the top Mike lot XX positive company of sort of It the a now companies been story They’re a that ever I people right, more public. reinforcing telling. It’s that is public and of actually, recently there’s thing. we is this seven we’re games.

don’t We’ve so this. a really these so from for companies And see downside competition competing we years, difference. to a against standpoint, been no

game the we a forward. front, going M&A looked certainly, ComeXPlay at as for On us casual first

larger looking we’re size games casual, to even focused answer looking ComeXPlay. on well you casual to smaller on acquihires well. as one. spectrum that small into at may to And One as I question IP, we further your get on the want social more of in transformational look clarify than terms acquisitions right across much sure IP, we I question casino, more at companies, As as we’re the

Alexia Quadrani

can Just looking to own? already expand elaborate, to elaborate us you you maybe some but you’re IP how further gave on the you detail,

Mike Cody

Okay.

think, So I referring SGIP in you’re is what terms to? that the of

Alexia Quadrani

Yes. Yes.

Mike Cody

Okay.

first that rights three you as the So have perpetual years the post exclusive our we for IPO. know,

this use that that we Our in much have point games to exclusively the today. plan pretty IP at is

into casino more social that’s bit expanded value, based-IP. that IP less little a we casual As really has

Josh I those so add mentioned, games. titles in continue XXX over JACKPOT And into to believe PARTY. the that

and over rotating with we’re future we So a make we X,XXX we the continue we those that IP titles to runway use long to believe titles, of to sure have always that. in in have want and

Alexia Quadrani

right. you Thank All much. very

Operator

Securities. come The with Matthew go Please next question will ahead. Thornton from Truist

Matthew Thornton

the size bingo terms Josh Good is title. the had target. that public, afternoon, guys like excuse margin me, guys. like in Thanks I make on, about solitaire was think you first, secondly, us, of on could of XX% just, have proxy look what just Thanks XX% think for good I would that us maybe How when so opportunity to opportunity question. – Showdown, make around And a there? that five-year that you Bingo for Maybe target the taking sure that Mike maybe the you remind want I for you about it would guys. to came right? talked somewhere XX%. a that the Can

Josh Wilson

lot, Okay. Matthew. Thanks a

instead the that Tri between at are market. the and doing trying Pets solitaire, The between are the difference is we’re of it we really better So Adventure would great of question card potential comps game to game games more is, it around major Bingo, think compared There other Klondike Spider. them the has with way game. Both compare Peaks medic solitaire I this the it are theirs in simple currently couple like to ramp good the of to once to look to on loops our games our particular solitaire a in compare Tri as Solitaire I difference believe a Harvest, able Grand out very that or there market. to And Peaks. similar Solitaire

Mike Cody

reiterate target we a valid. long-term our XX% we And EBITDA, then on that’s did believe and still

social we should say towards within issues I casino, XX% are marching However there. that our, no

the making XXXX to from going we��re casual investments the in some space. mentioned have we social be However, in

look think was you would XX.X%. continuing a march the near then in year. proxy as QX somewhere good we the XXXX as at term, think, anticipate XX% We but I that as scale. XXXX range for our So It margins, for being about towards

Josh Wilson

question. we’ll take our Operator, next

Operator

The question Please will Cost go from with come Matthew Morgan ahead. next Stanley.

Matthew Cost

taking for if questions. I Thanks Two, the everyone. could. Hi

up like where below XQ So just sequentially and were they were XQ. it payers looks in actually in

looks So COVID of that seems really kind beyond even, the it impact XQ. plus number like, months in you the of as got peak six payers, strong

stuff of wondering one and we what holiday X, the Thanks. are then second Project studio invest and just decisions XXXX the seeing wondering new as a is when then just kind do if behave I’m So And that more was to period. you drivers payers tell could about and about start those how little us move of you’re in into I on balancing bit you to out how internally start there organically? studios versus were that

Josh Wilson

Matthew. lot, a Thanks Okay.

new then QX – the and of XXX%, we the calls, you with QX our XXX% XXXX, us to through from So it about features foundation both it of of the second remember spoke of GOLD the healthy, investments this where features. payers. and view, core We game, we this second time earnings of all it released our forward. the point for the if all-star the fruits that and we to if of our allowed QX and the past which which focus last revenue payers’ technology, and the games all-star game of then out was believe going also and across JACKPOT in really all got running technology the at our is made only baseline how project full year, you in QX remember QX ops able sorry build speed, update FISH, We record of QX, FISH. year labor some new PARTY was from live project business but on going not of of huge that saw GOLD XXXX, into had were team where is

from continue And of deck project time. standpoint, so the it’s a to there twofold. we expect From kind to over grow

fold those in organic focused were new games, all So first investments talent all we our doing games. as we current the onto the of was,

today, into we things. that our two as and What go simple monetization can Solitaire how far bring up avenues. are we live it’s the probably better we more of something think simple logic going portfolio. end a even the on build across in them world casino I about what of technology the to the the what our we ops standpoint we or in standpoint feel looking the core able these and at about and at as seeing engines we As do monetization very extremely open maybe the one we we from that’s into that based world, take more confident future, order studios design from of as get direction be are in Bingo But the loops, or felt whether we’re UA expand plug to started social we to thing out type better there, or type on like one day, to talent or the talent excited loop already have really hand not, core

Mike Cody

answer. first other throughput point for is PARTY the were of adding And of Josh’s of time. copying structure one on our last call teams part and just clarification to Project our name that the back development on JACKPOT internal in we case all-star done

Josh Wilson

Thank you, Mike.

Matthew Cost

Got it. Thanks.

Operator

ahead. The come next will question go Please with Crum Drew Stifel. from

Drew Crum

guys. Hey Good Thanks. Okay. afternoon.

XX% for of revenue this that Can learnings Solitaire you of year? to Party you’ve willing any trends, ramp closer expectations Pets So represented last Thanks. testing your as And year. that for move Jackpot than more you it game you’re are share about then like talk during what that your launch what separately, rather? seen looks to

Josh Wilson

more start had the made as year structure make to confident us Jackpot far we saying could copy in that us by that excited not copy It and the technology will more the we Party, that I’ll team decision As our with be that in roadmap extremely successful more XXXX. future.

have Party. Jackpot same for We the expectations

We to growth. market leader a outperform market and expect being continue continuing it to

As most to we have the one teams world a game of day the basis. the on day running talented in

the – learnings of those are that about it. point launch at in from of technical this we slot, So sorry from

say the still launch don’t believe delayed, QX in of And – of year. we we is soft be had that game benchmarks is on would don’t to can And hope that we standpoint, as have use. But I it’s it solid technology we engagement right be. we this from which we do metrics as a would coming beating that So we it will now, have not forward. all set what the the

James Bombassei

Operator, our take we’ll next question.

Operator

ahead. Chad Macquarie. will question come from Please next go with Beynon The

Chad Beynon

of enough results. that my for on the Eilers and to plan different help congrats question was the couple exceed estimate. to what could I kind XXXX, a in you if years, were just obviously Hi, back you mention afternoon. you the on wondering bit little was for seasonality XXXX. basis seasonality than Mike, saw a past good looking kind of taking over Thanks we

little ops think the So could see back-half? about from just some you’ll bit rank should like you a standpoint, Solitaire look benefiting in order maybe us the live help a of and obviously that from that what

Mike Cody

was QX, Yes. go would QX, pre-COVID same. very seasonality different. QX, Obviously about Typically Absolutely. QX, roughly you the

In be don’t that. expect last it QX obviously We mentioned tough comp. a our was will year. so And that repeat also we much prepared to remarks, larger

stack again Pets them year, Quick with new end Solitaire out if we’d ranking Hit to your next for So coming launching expect back nature. be a weighted that of with Adventure things

QX growth So again, do QX think in interesting we But it’d be go probably versus QX. to see sequential how, quarters. and see again, to some QX all I expect

Chad Beynon

Okay. then on how to IDFA that And Appreciate Apple’s updated any that. views the impact changes outlook. and will

Josh Wilson

Yes.

any of impact confident negative it As very we will our are today, have to not that outlook.

preparing place the months, we that for that when efficiently on be ready the years. the believe have said, and we they will IDFA But everything that we spend are we nine that we’re run make with we have marketing for going for goes to We I in doing also able few change and to believe like the to changes going changes have change happen last this SKAdNetwork. now, at been our the live, continue as official it

Mike Cody

in game years, within over revenue games than for Jackpot our a think you the many including more its prior. who have built players XXXX of from of from like the since our has have how comes cohorts or the been XX% if coming Party game years, been about again players monetization lot And

Chad Beynon

Appreciate both. you Thank Okay. it.

Josh Wilson

you. Thank

Operator

Capital Ryan Hallum Please go will question from Group. next The with ahead. Craig come Sigdahl

Ryan Sigdahl

decision questions. casual new Good to SciPlay using I’m game a existing guys. or project develop afternoon, studio ComeXPlay, my taking curious the start even games, versus on just X studios. to Thanks

Josh Wilson

Okay.

may Ryan, the I or our ComeXPlay of one So use mean, studios. tactically, studio we existing

Cedar that utilize We or is, the in we So may in about Tel Aviv. Falls it may out the build development I way Kiev. think we center Austin, think would

are phase. someone look going that part of ownership have on internally at are as technology calls. talk the may beginning SciPlay about it we we’re through but the to end from to But I only which build it we in resources we is launch we’re out the up the team, the design it way think or external from in then any that will later bringing going not document, of our and locations, we’re the saying what and all the

Ryan Sigdahl

for for you Got UA it. well It helpful. revenue, cadence Pets Project on costs thinking just about will Then talked as That’s quarterly ramp margins. on year. sounds the throughout Solitaire X, like as

throughout fair kind declines of year? is So margin EBITDA the to sequential it in assume

Mike Cody

our it Well, depends marketing spending. and sales really again on

think We’re see again, XXXX will seeing returns business. be using materially to there, as by different going core the so don’t it’s I a in you fluctuations quarter, QX proxy.

Ryan Sigdahl

queue. guys. the Thanks, in back hop I’ll Great.

James Bombassei

Operator, our last we’ll take question.

Operator

from last Ng Goldman The ahead. Please question Sachs. come go will Mike with

Mike Ng

are Hi, after if strategy, question. another a cash after you Thank flow to aggressively ComeXPlay your very bit has up for acquisition? much thank lot of strong you a some M&A year. just you I seeking could about the up studio cash much. the was talk you how SciPlay roll building very guys this particularly wondering generation, little

Josh Wilson

Thanks Yes. lot, a Mike.

have that want some our very not but there it’s do and companies to fit are continue out say, only out companies promising core on lot amazing of hard are of I out think focusing there. growth, balance are we that amazing that are process that So, them companies forward. the there, to there, a so sheets going

core simple plug field that loop into simple them So, that and than we were. something that in faster has engine grow a help our they casual can

So plus on SciPlay’s two. more more that than one making equals then that And of top sure we’re culture. that a fit finding or one companies one than

culture only only plugs not in plugs that the bring on together not company we also in making but that win, wanting sure other side, So the we but wanting any a whole. win and to to numbers built of in have culture as side in a

we that out order first boxes do extremely for check believe those active something it in and that there. has be every option But in we’ll it to I that two on. to is be think looking would to continue proceed I evaluating

Mike Ng

appreciate Thank you thoughts. very much, Josh. I the

Operator

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

Josh Wilson

Thanks everyone really your We for appreciate support. joining today.

We and progress expand in updating to organically are you we as We the a and XXXX segment. our on day. continuing you the truly excited grow continued during first quarter continue forward our presence call. for to Casual to great look Thank have

James Bombassei

for Thanks everyone call, after be us the joining we’ll for questions. the on available call

Operator

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

disconnect. now may You

SciPlay (SCPL) 2 Mar 212020 Q4 Earnings call transcript