overview - sciplay · (2) source: app annie. (3) source: emarketer. ~$85bn global mobile and tablet...

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


Overview April 2019

OVERVIEW

UNDER CONTRUTION

Overview


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.


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

+


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.


Overview April 2019

OVERVIEW

UNDER CONTRUTION

2019 Third Quarter Results Review


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.


$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


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%*

**

* *

*


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.


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%

*

*

*


Overview April 2019

OVERVIEW

UNDER CONTRUTION

Why we Win


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


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


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


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


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


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


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, 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.


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.


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.


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


Licensor Legends

ANCHORMAN™ ©2019 Paramount Pictures. All Rights Reserved.

BATTLESHIP is a trademark of Hasbro and is used with permission. © 2019 Hasbro. All Rights Reserved. Licensed by Hasbro.

BETTY BOOP ©2019 King Features Syndicate, Inc./Fleischer Studios, Inc. ™ Hearst Holdings, Inc./Fleischer Studios, Inc.

JAMES BOND, , and all other James Bond related materials © 1962-2019 Danjaq, LLC and Metro-Goldwyn-Mayer Studios Inc. JAMES BOND, , and all other

James Bond related trademarks are trademarks of Danjaq, LLC. All Rights Reserved.

CHEERS™ © 2019 CBS Studios Inc. CHEERS and related marks are trademarks of CBS Studios Inc. All Rights Reserved.

Cirque du Soleil and KOOZA are trademarks owned by Cirque du Soleil and used under license. © 2007 Cirque du Soleil. All rights reserved. Licensed by Cirque du Soleil.

CLUE and all related characters are trademarks of Hasbro and are used with permission. © 2019 Hasbro. All Rights Reserved. Licensed by Hasbro.

DEAN MARTIN™ © The Dean Martin Family Trust 2019. Used with permission. All rights reserved. Dean Martin™ is a trademark of the Dean Martin Family Trust.

JOHNNY CASH™ ©2019 John R. Cash Revocable Trust. Used with permission. All rights reserved. "Johnny Cash" is a registered trademark of the John R. Cash Revocable

Trust.

The Skull/KISS Depot Army Logo™ ©2019 Kiss Catalog Ltd. All rights reserved.

LOTERIA ™/©: Licensed by Don Clemente, Inc. 2019. All rights reserved.

MARGARITAVILLE™ © 2019 Margaritaville Enterprises, LLC. All rights reserved. MARGARITAVILLE is a registered trademark of Margaritaville Enterprises, LLC and is used

under license.

Michael Jackson™; Rights of the Publicity and Persona Rights: Triumph International, Inc. © 2019 Triumph International, Inc. Licensing Representative: Authentic Brands

Group, LLC.

The MONOPOLY name and logo, the distinctive design of 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. © 2019 Hasbro. All Rights Reserved. Licensed by Hasbro.

OUIJA is a trademark of Hasbro and is used with permission. © 2019 Hasbro. All Rights Reserved. Licensed by Hasbro.

Star Trek: TM & © 2019 CBS Studios Inc. All rights reserved. STAR TREK and related marks are trademarks of CBS Studios Inc.

Tetris™ & © 1985-2019 Tetris Holding.

THE FLINTSTONES™ and all related characters and elements © & ™ Hanna-Barbera. (s19)

THE GAME OF LIFE is a trademark of Hasbro and is used with permission. © 2019 Hasbro. All Rights Reserved. Licensed by Hasbro.

The Godfather™ and © 2019 Paramount Pictures. All Rights Reserved.

WONDER WOMAN and all related characters and elements © & ™ DC Comics. (s19)

YAHTZEE is a trademark of Hasbro and is used with permission. © 2019 Hasbro. All Rights Reserved. Licensed by Hasbro.

Other intellectual property, including the look and feel of the games and certain individual components and displays are trade dress of Scientific Games Corp. and its

Subsidiaries. TM and © 2019 Scientific Games Corp. and its Subsidiaries. All rights reserved.

overview - sciplay · (2) source: app annie. (3) source: emarketer. ~$85bn global mobile and tablet...

Documents