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CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE
Overview April 2019
OVERVIEW
UNDER CONTRUTION
SciPlay Third Quarter Results
Ended September 30, 2019
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 1
Agenda
Overview
2019 Third Quarter Results Review
Why we Win
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE
Overview April 2019
OVERVIEW
UNDER CONTRUTION
Overview
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 3
OFFERING 7 CORE GAMES…
$116mmRevenue (Q3 2019)
$32mmAEBITDA (Q3 2019)*
∼28%AEBITDA Margin (Q3 2019)*
11%Revenue Growth
(Q318 – Q319)
35%AEBITDA Growth
(Q318 – Q319)*
84%Mobile Penetration
(Q3 2019)
7.8mmAverage MAUs
(Q3 2019)
5.8%Payer Conversion
Rate (Q3 2019)
$84.90AMRPU
(Q3 2019)
2.7mmAverage DAUs
(Q3 2019)
$0.47ARPDAU
(Q3 2019)
<6mosAverage time to break
even from install
SciPlay at a Glance
Note: “MAU” means monthly active users. Payer conversion rate represents average number of players who made a purchase at least once in a month by average MAUs. “AMRPU” means
average monthly revenue per payer. “DAU” means daily active users. “ARPDAU” means average revenue per daily active user.
(*) For this entire presentation (*) denotes that the item is a Non-GAAP Financial Measure that is separately reconciled in the Appendix; unless otherwise noted.
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 4
Mobile Gaming is Large and Highly Engaging
(1) Source: IDC Worldwide Mobile and Handheld Gaming Forecast, 2019 – 2023. (2) Source: App Annie. (3) Source: eMarketer.
~$85bnGlobal mobile and tablet gaming market in 2019(1)
1.5bnpeople played games on mobile or tablet in 2017(1)
80%of spend on Apple and Google Play stores in 2017(2)
3 hrs 35 minspent per day on mobile devices by the average American in 2018(3)
Mobile Gaming Market Target Audience in the Casual Genre
Game
Genres
Target Demographic
Females/Males, Age 35+
Greater
Loyalty
Higher
Engagement
+Better
Monetization
+
Casual Games
+
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 5
Expanding Market Across Attractive Genres
Top Grossing iOS Games’ Rank Trajectory
After Hitting Top 25(4)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Ra
nk
ing
Months (After Hitting Top 25)
Social Casino Median All Other Games Median
…Anchored by Evergreen Social Casino
$85bnMobile Gaming(1)
$30bnCasual(2)
$5bnSocial Casino(3)
Further Expansion into Growing Casual Genre…
100
1
Our
Mark
et
Opport
unity
(1) Source: IDC Worldwide Mobile and Handheld Gaming Forecast, 2019 –2023. Total projected worldwide market in 2019 for smartphone and tablet gaming revenue.
(2) Source: Eilers & Krejcik. Total projected market in 2019 for social casino mobile games and other casual mobile games, such as puzzle, card and match three games.
(3) Source: Eilers & Krejcik. Total projected market in 2019 for social casino mobile games.
(4) Source: App Annie for top grossing games in the US on iPhone (as of October 2018). Includes only games that first achieved top 25 US grossing rank within the time period of 1/1/2012
through 7/1/2017.
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE
Overview April 2019
OVERVIEW
UNDER CONTRUTION
2019 Third Quarter Results Review
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 7
3Q19 Highlights
• Revenue grew 11% to $116M, which was higher than the market growth rate of
7% according to Eilers & Krejcik
• Mobile revenue increased 18% to $98M
• Net income increased $16M to $25M; margin of 22%
• AEBITDA grew 35%* to $32M*; robust AEBITDA margin of 28%*
• Cash flow from operations was $34M, reflecting strong results
• ARPDAU increased 9% to $0.47
• Payer conversion rate increased 7% to 5.8%
• Jackpot Party has moved into the Top 20 highest overall Mobile Grossing
Games, and is in the Top 5 for the Social Casino Games Category in the latest
reports by Eilers & Krejcik.
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 8
$80
$91 $95 $96 $98 $100$105
$114 $118 $118 $116 $120
Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19E
Revenue up 11% in Q3, to $116M
Revenue growth exceeded the industry rate, and mobile revenue
increased 18%
3Q’ 18 Revenue: $105M 3Q’ 19 Revenue: $116M+11%($ in millions)
1
(1) Implied midpoint of guidance
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 9
AEBITDA up 35% in Q3, to $32M
$13
$21$16
$19$23 $23 $24 $25 $25
$33 $32
Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19
3Q’18 AEBITDA: $24M 3Q ‘19 AEBITDA: $32M
($ in millions)
AEBITDA Growing at a Faster Rate than Revenue While the Company Launches and Invests in Games
+35%*
**
* *
*
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 10
Engaged User Base Driving Results
ARPDAU AMRPUPayer Conversion
Rate
$0.43 $0.47
3Q18 3Q19
$76.26 $84.90
3Q18 3Q19
5.5% 5.8%
3Q18 3Q19
Note: Payer conversion rate represents average number of players who made a purchase at least once in a month by average MAUs. “ARPDAU” means average revenue per daily
active user. “AMRPU” means average monthly revenue per payer.
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 11
Long-Term AEBITDA Margin Goal
Continue profit margin expansion through strong revenue growth and
operational leverage as games scale and enter growth stage
Current>35%
Goal
~28%
*
*
*
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE
Overview April 2019
OVERVIEW
UNDER CONTRUTION
Why we Win
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 13
SciPlay Platform Built to Scale
BREADTH AND DEPTH OF EXPERIENCE
TECHNOLOGY STACK
UserAcquisition Engagement Monetization
GAMES ACROSS MULTIPLE GENRES
FUTURE PIPELINE
Seamless and Integrated Across Games
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 14
Deep and Largely Exclusive Library of Content
3rd Party Brands
Market Leading, Proven Gaming Content Library Leads to Efficient Cost Structure
Marquee Partnerships
1,500+ Titles Large In-House library
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 15
Significant Growth Opportunities
Existing games
New games
International
New Models
Selective M&A
Continue to grow DAU,
payer conversion and
ARPDAU
Develop and scale new
social casino and casual
titles
Continue international
growth and expansion
Growth from new
monetization models
Untapped strategic growth
opportunities
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 16
Games in Various Stages of Growth
Develop(9-12 Months)
Launch(3-6 Months)
Ramp(1-1½ Years)
Growth(2+ Years)
FUTURE PIPELINE
All Games Go Though a Similar Life Cycle
Most Games in Early Stages of Life Cycle
Margins Improving as Games Progress Along a Predictable Trajectory
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 17
High Operating Leverage as Games Launch, Ramp and Grow
%C
on
trib
utio
n M
arg
in(1
)
2018 Percentage Contribution Margin by Game
Year Launched
2018
2017 2014-15(2) 2012
(1) Represents revenue less platform fees, IP royalties, marketing and dedicated game team expenses.
(2) Bingo Showdown acquired by SciPlay in 2017.
Significant operational leverage as
game scales and enters growth stage
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 18
Why We Win
Access to a Wealth of Owned and Licensed Authentic IP
Perfect Balance of Art and Science
Superior Game Live Ops Built on a Scalable Platform
Exceptional Monetization Engines Fueled by Data-Driven Approach
Strategic Approach to Market Segmentation and Portfolio Development
Strong Talent Mix Comprised of Industry Veterans
Core Values and Culture of Innovation, Passion and Creativity
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE
Overview April 2019
OVERVIEW
UNDER CONTRUTION
Appendix
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 20
Forward-Looking Statements; Additional Notes
Throughout this presentation, 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, guidance, 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, and include, without
limitation, SciPlay's revenue guidance for full year 2019. SciPlay is providing the financial guidance in this presentation to provide investors with certain useful
information to assist them with evaluating the Company. This information should not be considered in isolation or as a substitute for SciPlay’s As Reported financial
results prepared in accordance with U.S. GAAP. This guidance should be read in conjunction with SciPlay’s respective financia l statements and related footnotes filed
with the SEC. SciPlay does not expect to continue to provide financial guidance and disclaims any obligation to update such information, as noted below. These
forward-looking 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: our ability to attract and retain players;
our reliance on third-party platforms; our dependence on the optional purchases of virtual currency to supplement the availability of periodically offered free virtual
currency; our ability to continue to launch and enhance games that attract and retain a significant number of paying players; our reliance on a small percentage of
our players for nearly all of our revenue; our ability to adapt to, and offer games that keep pace with, changing technology and evolving industry standards;
competition; the impact of legal and regulatory restrictions on our business, including significant opposition in some jurisdictions to interactive social gaming, including
social casinos, and how such opposition could lead these jurisdictions to adopt legislation or impose a regulatory framework to govern interactive social gaming or
social casinos specifically, and how this could result in a prohibition on interactive social gaming or social casinos 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, 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; our ability to use the intellectual property rights of our parent, Scientific Games Corporation, and other third parties, including the
third-party intellectual property rights licensed to Scientific Games Corporation, under our intellectual property license agreement ("IP License Agreement”) with our
parent; protection of our proprietary information and intellectual property, inability to license third-party intellectual property and the intellectual property rights of
others; security and integrity of our games and systems; security breaches, cyber-attacks or other privacy or data security incidents, challenges or disruptions; reliance
on or failures in information technology and other systems; our ability to complete acquisitions and integrate businesses successfully; our ability to pursue and execute
new business initiatives; fluctuations in our results due to seasonality and other factors; dependence on skilled employees with creative and technical backgrounds;
natural events that disrupt our operations or those of our providers or suppliers; risks relating 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; U.S. and international economic and industry conditions; changes in tax laws or tax
rulings, or the examination of our tax positions; 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; restrictions and covenants in debt agreements, including those that could result in acceleration of the maturity of our
indebtedness; failure to maintain adequate internal control over financial reporting; influence of certain stockholders, including decisions that may conflict with the
interests of other stockholders; our ability to achieve some or all of the anticipated benefits of being a standalone public company; our dependence on distributions
from SciPlay Parent Company, LLC to pay our taxes and expenses, including substantial payments we will be required to make under the Tax Receivable Agreement;
and stock price volatility.
Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-
looking statements is included from time to time in our filings with the SEC, including the Company’s current reports on Form 8-K and quarterly reports on Form 10-Q.
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.
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 21
Forward-Looking Statements; Additional Notes
You should also note that this presentation may contain references to industry market data and certain industry forecasts. Industry market data and industry forecasts
are obtained from publicly available information and industry publications. Industry publications generally state that the information contained therein has been
obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. Although we believe industry
information to be accurate, it is not independently verified by us. In general, we believe there is less publicly available information concerning international social
gaming industries than the same industries in the U.S. Some data is also based on our good faith estimates, which are derived from our review of internal surveys or
data, as well as the independent sources referenced above. Assumptions and estimates of our and our industry's future performance are necessarily subject to a high
degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors” in the Company’s quarterly reports on Form 10-Q. These and other
factors could cause future performance to differ materially from our assumptions and estimates.
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 22
Non-GAAP Financial Measures
The Company’s management uses the following non-GAAP financial measures in conjunction with GAAP financial measures: Adjusted EBITDA, or AEBITDA and AEBITDA margin.
These non-GAAP financial measures are presented as supplemental disclosures. They should not be considered in isolation of, as a substitute for, or superior to, the financial
information prepared in accordance with GAAP, and should be read in conjunction with the Company’s financial statements filed with the SEC. The non-GAAP financial
measures used by the Company may differ from similarly titled measures presented by other companies. Specifically, the Company’s 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.
The Company’s 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.
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. AEBITDA should not be considered in isolation of, as a substitute for, or superior to, the consolidated financial information prepared in
accordance with GAAP, and should be read in conjunction with the Company’s financial statements filed with the SEC. AEBITDA may differ from similarly titled measures
presented by other companies.
AEBITDA is reconciled to 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) contingent acquisition consideration; (6) 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;
(iii) unusual items (including certain legal settlements) and (iv) other non-cash items; and (e) cost-savings initiatives; (7) stock-based compensation; (8) loss (gain) on debt
financing transactions; and (9) other expense (income) including foreign currency (gains) and losses.
AEBITDA margin, as used herein, represents our AEBITDA (as defined above) for the three- and nine-month periods ended September 30, 2019 and 2018, each calculated as a
percentage of revenue. AEBITDA margin is a non-GAAP financial measure that is presented as supplemental disclosures for illustrative purposes only and is reconciled to net
income (loss) margin, the most directly comparable GAAP measure, in a schedule above.
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 23
GAAP to Non-GAAP Reconciliation
QuarterlyYears Ended December
31,
($ in millions) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1’19 Q2’19 Q3’19 2017 2018
Net income (loss) attributable to
SciPlay$4.4 $8.5 $4.7 $5.5 ($1.1) $12.2 $9.2 $18.7 $13.7 $12.3 $2.0 $23.1 $39.0
Net income attributable to
noncontrolling interest- - - - - - - - - 13.9 23.0 - -
Net income (loss) $4.4 $8.5 $4.7 $5.5 ($1.1) $12.2 $9.2 $18.7 $13.7 $26.2 $25.0 $23.1 $39.0
Contingent acquisition
consideration- - - - 18.0 - 8.4 1.1 0.3 1.4 - - 27.5
Restructuring and other 0.2 0.1 - - 0.1 - 0.6 0.3 0.3 0.2 0.2 0.3 1.0
Depreciation and amortization 2.4 3.2 5.7 5.7 5.8 5.8 1.7 1.8 1.7 1.8 1.7 17.0 15.1
Other expense (income), net 1.3 1.4 (0.2) 0.1 (0.1) 0.7 0.2 (3.8) 1.6 0.4 0.4 2.6 (3.0)
Income tax expense (benefit) 4.0 7.0 4.0 7.1 (0.6) 3.7 2.8 4.5 4.7 (0.7) 3.2 22.1 10.4
Stock-based compensation 1.0 1.1 1.6 0.6 0.6 0.7 0.8 1.9 2.7 3.9 1.5 4.3 4.0
AEBITDA $13.3 $21.3 $15.8 $19.0 $22.7 $23.1 $23.7 $24.5 $25.0 $33.2 $32.0 $69.4 $94.0
% AEBITDA margin 16.7% 23.4% 16.6% 19.9% 23.3% 23.2% 22.5% 21.5% 21.1% 28.1% 27.5% 19.2% 22.6%
Net income (loss) $4.4 $8.5 $4.7 $5.5 ($1.1) $12.2 $9.2 $18.7 $13.7 $12.3 $25.0 $23.1 $39.0
% Net income (loss) margin 5.5% 9.3% 4.9% 5.8% (1.1%) 12.2% 8.7% 16.4% 11.6% 22.2% 21.5% 6.4% 9.4%
Revenue $79.8 $91.0 $95.1 $95.5 $97.5 $99.7 $105.3 $113.7 $118.4 $118.1 $116.4 $361.4 $416.2
CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 24
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