overview - sciplay · 2020-02-24 · overview april 2019 overview under contrution appendix....

CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE

Overview April 2019

OVERVIEW

UNDER CONTRUTION

SciPlay Fourth Quarter and FY 2019 Results Ended December 31, 2019

CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE PAGE 1

OFFERING 7 CORE GAMES…

$466MRevenue (FY 2019)

$122MAEBITDA (FY 2019)*

∼26%AEBITDA Margin (FY 2019)*

12%Revenue Growth

(2018 – 2019)

30%AEBITDA Growth

(2018 – 2019)*

84%Mobile Penetration

(Q4 2019)

7.6MAverage MAUs

(Q4 2019)

6.0%Payer Conversion

Rate (Q4 2019)

$88.06AMRPU

(Q4 2019)

2.6MAverage DAUs

(Q4 2019)

$0.50ARPDAU

(Q4 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 divided 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.

(1) FY 2019 revenue included a negative $4M impact from an out of period adjustment related to revenues denominated in foreign currencies (the "Q4 out of period adjustment"). Excluding this adjustment, the Company

would have achieved annual revenue guidance.

(2) FY 2019 AEBITDA* included a $3M impact from the adjustment mentioned above.

1

2


Q4 and FY 2019 Highlights

• Q4 2019 Revenue was $113 million, which included a negative $6M impact from

an adjustment recorded during the fourth quarter

• FY 2019 Revenue grew 12% to $466M, which included a negative $4M impact

from the same adjustment noted above. Excluding this adjustment we would

have achieved our annual revenue guidance

• Q4 2019 Net income increased $10M to $29M, which included a negative $4M

impact from the same adjustment noted above

• FY 2019 Net income increased $55M to $94M, which included a negative $2M

impact from the same adjustment noted above

• Q4 2019 AEBITDA grew 31%* to $32M*, which included a negative $4M impact

from the same adjustment noted above

• FY 2019 AEBITDA grew 30%* to $122M*, which included a negative $3M impact

from the same adjustment noted above

• FY 2019 cash flow from operations increased 21% to $93M, reflecting strong

results

• Q4 2019 AMRPU increased 15% to a quarterly record of $88.06


Revenue up 12% for FY 2019

-1%

($ in millions)

114 113

4Q18 4Q19

+12%

416 466

FY 2018 FY 2019

Q4 revenue included a negative $6M impact & FY 2019 revenue

included a negative $4M impact from the Q4 out of period adjustment


AEBITDA up 31% in Q4, & 30% for FY 2019

($ in millions)

*

**

+31%

2532

4Q18 4Q19

+30%

94

122

FY 2018 FY 2019

*

*

* *

*

*

Q4 AEBITDA included a negative $4M impact & FY 2019 AEBITDA

included a negative $3M impact from the Q4 out of period adjustment


Engaged User Base Driving Results

ARPDAU AMRPUPayer Conversion

Rate

$0.46$0.50

4Q18 4Q19

$76.40$88.06

4Q18 4Q19

5.9% 6.0%

4Q18 4Q19

Note: Payer conversion rate represents average number of players who made a purchase at least once in a month divided by average MAUs. “ARPDAU” means average revenue per

daily active user. “AMRPU” means average monthly revenue per payer.


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

~26%

*

*

*

Note: AEBITDA margin is a non-GAAP financial measure that is presented on a supplemental basis. We are not providing a forward-looking quantitative reconciliation of AEBITDA

margin to the most directly comparable GAAP measure because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items without

unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period.

CONFIDENTIAL & PROPRIETARY – DO NOT DISSEMINATE

Overview April 2019

OVERVIEW

UNDER CONTRUTION

Appendix


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, 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 presentation 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 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, 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; expectations of growth in total consumer spending on social casino gaming; our

dependence on certain key providers; 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; 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; the discontinuation or replacement of LIBOR, which may adversely affect interest

rates; 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 (“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”); and stock

price volatility.

Additional information regarding risks and uncertainties and other factors that could cause actual results to differ material ly from those contemplated in forward-

looking statements is included from time to time in our filings with the SEC, including under Part II, Item 1A "Risk Factors" in our Quarterly Report on Form 10-Q for the

quarter ended September 30, 2019. Additional information will also be set forth under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the full year

ended December 31, 2019. 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.


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 and we do not make any representation as to the accuracy of that information. In general, we

believe there is less publicly available information concerning international social gaming industries than the same industries in the U.S. Some data is also based on our

good faith estimates, which are derived from our review of internal surveys or data, as well as the independent sources referenced above. Assumptions and estimates

of our and our industry's future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in

"Risk Factors" in Part II, Item 1A of our quarterly reports on Form 10-Q. These and other factors could cause future performance to differ materially from our assumptions

and estimates.


Non-GAAP Financial Measures

Adjusted EBITDA, or AEBITDA, as used herein, is a non-GAAP financial measure that is presented as supplemental disclosure and is reconciled to net income attributable to

SciPlay as the most directly comparable GAAP measure as set forth in the above table. We define AEBITDA to include net income attributable to SciPlay before: (1) net income

attributable to noncontrolling interest; (2) interest expense; (3) income tax (benefit) 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. 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.


GAAP to Non-GAAP Reconciliation

Quarterly Years Ended December 31,

($ in millions) Q4'18 Q4’19 2018 2019

Net income attributable to SciPlay $18.7 $4.4 $39.0 $32.4

Net income attributable to noncontrolling interest - 24.2 - 61.1

Net income $18.7 $28.6 $39.0 $93.5

Contingent acquisition consideration 1.1 - 27.5 1.7

Restructuring and other 0.3 0.3 1.0 1.0

Depreciation and amortization 1.8 1.8 15.1 7.0

Other (income) expense, net (3.8) (0.9) (3.0) 1.5

Income tax expense 4.5 1.5 10.4 8.7

Stock-based compensation 1.9 0.8 4.0 8.9

AEBITDA $24.5 $32.1 $94.0 $122.3

% AEBITDA margin 21.5% 28.4% 22.6% 26.3%

Net income (loss) $18.7 $28.6 $39.0 $93.5

% Net income (loss) margin 16.4% 25.3% 9.4% 20.1%

Revenue $113.7 $112.9 $416.2 $465.8


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overview - sciplay · 2020-02-24 · overview april 2019 overview under contrution appendix....

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