Q4 2022 Sciplay Corp Earnings Call

March 2, 2023

Speaker 1: The.

Speaker 1: Area P.

Speaker 2: Good morning and thank you for standing by. Welcome to the Satellite Fort Goulder and Tool Year 2022 R&S Copper Scope.

Speaker 2: At this time, all participants are in listening mode. Please be advised that today's conference is being recorded.

Speaker 2: I'll let you hand conference over to your speaker today of a wine advice president, investor relations, signed by excuse me, side play corporation. Please go ahead.

Speaker 3: Thank you, operator. Good morning, everyone.

Speaker 3: During today's call, we will discuss our fourth quarter and full year 2022 financial results and operating performance, as well as our outlook for 2023, which will be followed by a question and answer period. With me today are Josh Wilson, the EO, and Daniel O'Quent, Interim, CFO .

Speaker 3: Our call today will contain remarks that include forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call. For more information regarding these risks and uncertainties, please refer to our earnings release issued yesterday and our findings.

Speaker 3: with the SEC. We will also discuss certain non-GAAP financial measures, including key performance indicators, which are based on in-app purchases only. A description of each non-GAAP measure, and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure.

Speaker 3: and be found in our earnings release as well as in the Investor section on our website. As a reminder, this conference call is being recorded. A replay of this webcast will be archived in the Investor section of our website at sideplay.com. Now I am pleased to turn the call over to Josh. Josh.

Speaker 4: Good morning, everyone. I am very happy to be with you today. Sideplay is on a multi-year journey, guided by our vision to spark the world's passion to play by providing the most engaging digital entertainment experiences. We know where we are going and we are lined on how we're going to get there.

Speaker 4: This resulted in record KPIs and propelled us to outpace the market in both the fourth quarter and full year.

Speaker 4: I'm extremely proud of our team and what we have accomplished. Our strong execution and ability to adapt have enabled us to successfully navigate industry dynamics and achieve strong performance in 2022. We are innovative, agile, and extremely motivated to win.

Speaker 4: and focused on delivering amazing experiences for our players and maximize shareholders value. Now for some key results. First, we delivered impressive top-line results, growing revenue 18% in the fourth quarter and 11% for the full year. This was fueled by our industry-leading execution, our live ops and our data-driven product roadmap.

Speaker 4: We achieved this growth despite the challenging industry backdrop as our talented teams remain focused and continue to innovate. Second, we achieved a number of records including growing our payers and our average monthly revenue per payer underscoring the quality of our earnings performance.

Speaker 4: Third, we generated robust cash flow of $150 million for the full year. This demonstrates the high-cash-generated nature of our business. And for, as of February 24, we have returned $41.7 million to our shareholders, through our stock repurchase program. We are confident that our strong foundation...

Speaker 4: combines with multiple growth initiatives, while drive us to post strong gains and out-to-form the market again. Now let's take a closer look at Q4. We delivered strong fourth quarter performance, demonstrated by our industry leading results. With our evergreen brand sizes leading the way, we generated record revenue and attained multiple records in Q4.

Speaker 4: Thank you for our social casino games grew 14% year over year, while the social casino industry is estimated to have declined by more than 3%. And we have achieved record tapioids including hair conversion of 10.4% and arc-dow of 87 cents.

Speaker 4: which grew 18% year over year. Based on eyelers and Christchacks, Social Casino Game Tracker Report published in January of 23, PSY play was cited as, quote, stand out for former of the year in the fourth quarter.

Speaker 4: Estimated to achieve the fastest growth of the top 15 game developers. And we did just that. Our Q4 performance was driven by our growth in payers. Of 13% year over year and to provide longer term perspective, payers have grown by 42% since 2017. We now have the most payers in side-place history.

Speaker 4: We have invested in our games and we will continue to do so as we execute on our product roadmap to deliver the best possible entertainment to our players. The strengths of our evergreen franchises and their differentiated GoToMarket approach have fueled side-place success. Here are just a handful of examples. Get-Pop Party smashed our single-day revenue record.

Speaker 4: Q4 was a record quarter, capping a record year. The game is now listed by Ilarge and Crytag as the number one US ranked social casino game. Quickest slots officially became the second $100 million revenue game in high-place portfolio. It is one of the fastest growing games in social casino. Countess Casino's gaming momentum.

Speaker 4: from our reimagined features and new live-off strategies. An 88 fortune benefited by adding a new economy, content design, and innovative features which are driving increased player engagement. As a result, SIPELY outperform the entire social casino market in 2022.

Speaker 4: imagined features and new live-off strategies. An 88 fortune benefited by adding a new economy, content design, and innovative features which are driving increased player engagement. As a result, Sipelite outperformed the entire social casino market in 2022. Let me repeat this.

Speaker 4: As a result, Sideplay outperformed the entire social casino market in 2022. Our accomplishments have been powered by a combination of innovation, capabilities, and investment. We have a scalable platform, unparalleled technology, and deep talent that form a runway for both current and long-term success.

Speaker 5: he

Speaker 4: have led us to develop an innovative UA solution that is aiding in our winning performance today. Our Global Analytics team developed and deployed algorithms that decipher and break down complex player behavior. Our LiveOps teams consistently develop and execute unsurpassed monitoring.

Speaker 4: approach. We made several noticeable advancements that boost our ATTEC capability by combining team learnings with multiple data sources, predictive analytics, and valuable end-game advertising strategy.

Speaker 4: We implemented predictive analytics tools and exclusive technology that focuses on revenue generation. We custom-tailored user experiences by detecting player patterns that maximize their lifetime value. We employed integrated predictive player modeling.

Speaker 4: to improve player behavioral insights and data quality. These strategies have driven improved insights on the players and drive higher return. Now let's turn to the future. As we propel into 2023, SciPlay has strong momentum with multiple growth drivers. We will continue to evolve, scale, and grow our franchises. Our main growth drivers will be to increase our payer base, their engagement time, and the amount of money our players will spend. In essence, the combination of our innovation, capabilities, and investment will enable us to continue closing the arped out gap with our peers. Our robust data driven product road maps are evolving our evergreen franchises. Our proprietary techs are solutions provide valuable insights about our players.

Speaker 4: The features they want and the economies that drive them. We continue to evolve our franchises as we implement new events, features, and content accessible from LifeMonders' extensive IP library. Our live ops teams create new engaging events for our players every day. These produce high monetization results and our recent launch direct-to-consumer platform, which allows us to deepen the relationship with our players.

Speaker 4: Our global team truly leveled up in 22. Thank you, side players around the world. We had an amazing year. A close by saying I'm confident in our team's continued strong execution and the strength of the side players business model and growth. We plan to outperform the overall social casino market and take share in 2023. Now I'm pleased to turn the call over to Daniel.

Speaker 6: I couldn't be prouder of what our teams have accomplished.

Speaker 6: Their energy and innovation are unparalleled. And there's the reason why we're able to achieve so many all-time records. Our success enabled us to make a competitive leap in social casino, significantly outroing the market. Now for some key highlights. First, we delivered strong financial performance in Q4 and the full year.

Speaker 7: year.

Speaker 6: underscoring the momentum and quality of our earnings performance. Third, Sipley continued to make key strategic investments

Speaker 6: scoring the momentum and quality of our earnings performance. Third, Cypherly continued to make key strategic investments in targeted segments of our business.

Speaker 6: including proprietary technologies and tablets to further strengthen our long-term growth plans. For, site-play continued to be a high-cash generating business. We delivered robust operating cash flow of $150 million in 2022.

Speaker 6: and repurchase $42 million or roughly 70% under our shared repurchase program through February 24th. Now let's get into some of the details. We generated strong fourth quarter revenue of $182 million, an all-time record of 18% year-over-year and 7% sequentially. Full year revenue of $671 million grew 11% also sitting an all-time record. Our social casino games grew 14%

Speaker 6: one chance for the full year.

Speaker 6: We agree our fourth quarter A, but at 24% to $59 million while achieving a 32% A, but a margin. Fueled by our strong top-line results as we move past the marketing innovation spin in Q2 and Q30. A bit of $187.99.

Speaker 6: Since 2017, we've grown revenue at a 13% cager and profitability at a much faster pace.

Speaker 6: with an A-bid-a-kager of 22% over the same period. Now let's turn to some key performance indicators for the fourth quarter, where we achieved a number of records. In the fourth quarter, we drew our payers 13% year-to-year record.

Speaker 6: And we saw increases in payers throughout the year. Our ability to consistently deliver great and engaging content enabled us to achieve near-record average monthly revenue for paying user approximately $99.24 and $95 in the year. This marks our 11th consecutive quarter above $90. $90.

Speaker 6: This all translated to a record arc down of 87 cents in Q4, an increase of 18% year over year as we continue to close the gap with our peers.

Speaker 6: We achieved a pair of conversion rate of 10.4% in the fourth quarter and 9.6% in the full year. Also both all time records. Our KPIs filled throughout the year, underscoring the benefits of our key initiatives, robust product roadmap, best in class life, optical capabilities, and our player loyalty. The H.

Speaker 6: As an example, players who download the jackpot party before 2019 are more engaged and had higher retention during 2022. Like our long-term revenue and profitability growth, our Dow is grown at a 14% of 2018.

Speaker 6: While a peer conversion rate grew at a 13% pay year over the same period. Now let's turn to cash flow. We believe strong revenue growth, faster growth in the Aebeda, combined with strong cash flow are key drivers of shareholder value. The great thing is our business is highly efficient and cash generative. For 2022 we generated $150 million in operating cash flow, which included $24.5 million payment for the Washington State Matter. We have minimal capital expenditures.

Speaker 6: enabling us to convert a high percentage of operating cash flow into free cash flow. We ended the year with strong liquidity of $330 million in cash.

Speaker 6: and total liquidity of $480 million. We have the financial strength and flexibility to deploy excess capital to drive increasing shareholder value. Now let me take some time to discuss capital allocation.

Speaker 6: We continue to see opportunities to invest organically in our business. And we will also consider targeted and organic opportunities. And these include aqua hires as well as small game developers, but we see an opportunity to enhance engagement and monetization with our best in class capabilities.

Speaker 6: So we make these investments with the financial rigor and eye on their turns. We employ a data-driven approach to ensure that our investments are driving profitable growth.

Speaker 6: and shareholder value. We also believe the combination of organic growth, strong cash flow generation is fundamental to enhancing shareholder value. Accordingly, our board authorized a $60 million two-year share repurchase program in 2022. To this date, we've repurchased $60 million.

Speaker 6: 42 million or roughly 70% of the authorization in 10 months. Let me close my comments today and speak about the opportunity we see ahead in 2023. For a well-positioned to continue to take, share, and social casino and deliver share of the value. The marketing innovation campaigns we started in 2022 will continue into this year.

Speaker 6: From the seasonality standpoint, the campaign's spin last year impacted Q2 and Q3. This year, most of the innovation spin will happen in the first quarter. The highly successful Gerio-Cono campaign that ran for quick hit in January and February will be discussed in our Q1 call. In summary, our global team of more than 800 side players is executing at a high level.

Speaker 2: We have a strong foundation for continued growth and we're determined and highly motivated. We have the passion to win. Thank you and now I'll turn the call over to the operator and we'll take your questions. Thank you. Well, I'll begin the question answer session. That's a good question. I'm going to first start. I want to know what you touch on the phone. If you're using a sticker phone, please pick up your hands before pressing the keys. Put your audio question please press star then do. This time will pause one momentarily to assemble the roster. First question will be from Eric here and then open sex please go ahead. Thanks so much for taking the question and thanks for all the detail in the prepared remarks.

Speaker 2: Josh, want to come back to some of the comments you were making on user acquisition and the repositioning of the company and the platform from a marketing standpoint, both idiosyncratically and what you've built. How much of a competitive advantage should we be thinking about in terms of the quantification of the ability to outgrow the market or possibly out earn competitors from an ROI standpoint? That would be part one. And then number two, away from what you can build internally, any update about the way you're thinking about broader marketing ROI in the gaming sector. You've spent a lot of time experimenting and trying new avenues in the last 12, 18 months or curious for an update there as we look out to 23 and beyond. Thanks so much, guys.

Speaker 4: add tech capabilities, we double down on how we are using data to create player profiles, our UA team and our retargeting team really just leveled up their games. And with that, built new tools that really are sustainable and keeping us ahead of everyone else.

Speaker 4: We do continue to believe that we will outperform others in our returns, mainly for two reasons, because the way that our philosophy is on spending money, it's about getting the most value for every dollar. We're not tracing installs, we're not chasing mal, we are chasing value for this shareholder. And since our entire team takes this way...

Speaker 4: We've been able to get these returns, but it's not just the UAS side. It's also the games themselves. Our games through the implementation of the site play engine, some of the reorganizations we did, and just more heightened focus on running the live games, we've been able to significantly increase our LTV across almost our entire portfolio in 22, and it continues to look really, really good in 23. So the way I think, you know, I tend to hit that last question, it's about ROI. This is honestly how we think of everything we do. Everything we do is an ROI. So whether or not it's how we look at how we spend money, how we look at how we spend time, it is what can we do to maximize the play experience of every user we bring into our ecosystem? And what can we do to keep them playing and being entertained by us instead of wanting to go anywhere else? And, you know, there's also 22 show anything. I think we're doing a really good job. Thank you. Next question will be from two gruntless people. Please go ahead.

Speaker 6: Okay, thanks. Hey guys, good morning. So Dan, you addressed in your prepared remarks some of the investments in timing around marketing campaigns in 2023. What does that translate to in terms of your expectations for just the Bada Margin relative to where you ended up for 2022? That's the first question. And then maybe for Josh, the paying users have historically ticked higher in 4Q versus 3Q. The metric look like it slipped a little bit, this past quarter on a sequential basis. Anything noteworthy there? And typically you see sequential growth and paying users for 1Q over 4Q. Should we anticipate a similar seasonal trendline for the early part of 23? Thanks. Thanks for the question, Drew. Yeah, in the guidance that we give, like I said before Q2 and Q3 is when we had kind of the most of our marketing innovation. You know, we've learned a lot at which started this campaign in 2022. And that's the reason we kind of went into 2023 with the Gerio Tunnel campaign.

Speaker 6: We're going to have some ongoing stand-throughout 2023, but just from a guided standpoint, we want to make sure that we have everybody informed that Q1 margins will come down from Q4 to Q1 and then scale as we move throughout the year. Yeah, thanks Daniel. And then I'll piggyback on you know, a lot of this is what really...

Speaker 4: more in UA and then also the innovation campaign which Daniel talked about. We would expect Q2 and Q3 to come down slightly and then we all know that in Q4 marketing costs just become a little bit more expensive. So to Daniel's point, Q1, we will step down but we will continue stepping up as a whole.

Speaker 4: years, once we created a payer, we were able to maintain them and keep them in the game continuing to spend over time. So the reason we didn't have as large of a step up as far as individual payers in Q4 was not because the game didn't run well, it's because we had already been converting at such a high percentage all year. The one thing that did happen in Q4...

Speaker 4: is we were able to really focus on the wallets of the individuals continuing to build. And so we had the payers, we were able to grow the payers, but at the same time, the payers of the whole became more valuable as individuals. Now, to your point, yes, Q1 ends up with more payers. Most of the time, because of the increased UA, we see more people coming into the game, the more people that are coming in are very valuable users, and this is why we aim...

Speaker 4: December of 22.

Speaker 4: This is up being really, really encouraging for us because as you know, December is basically our seasonality month of the year because about half of the month is up being holidays. So could not be more proud of how our games and our teams are performing right now.

Speaker 2: Very helpful. Thanks, guys. Very welcome. Thank you. That's a question of what Matthew Thornton of Truits. Please go ahead.

Speaker 2: Hey, good morning Josh. Good morning Daniel. Thanks for taking the questions. I guess first one building off the prior question around U.A. I guess, you know, Josh, you need to just broader commentary about how U.A. The U.A. environment is trending for you into one Q. Any green shoots or is it still, you know, kind of touch and go here.

Speaker 2: And, and, and, and, and, and monetize, you know, monetization for art out to, you know, dipping your toe back into, again, maybe widening the top of funnel widening M.A.U.S. widening T.A.U.S. and kind of thinking about how you how you think about that.

Speaker 4: from a timing perspective when that might happen, how that might happen, and then I've got one follow up. Okay, excellent. Thanks, Matthew. It's good talking to you. UA. So, why I would think about UA right now is their Q1 UA is performing extremely well compared to Q4, but it normally does. But the more encouraging is Q1 looks very, very good to Q3, because it's a better comp than what it would have done to just Q3.

Speaker 4: and open up the entire bucket again the way it used to be on that platform. But as everyone knows, Apple has not announced anything as of now. But with the tools that we have been building and the strength of our game right now, it has enabled us to continue to increase our spend on Apple.

Speaker 4: in order to push more users in. We've also learned so much from our innovation campaigns last year, where we were able to test different buckets, and by testing these different buckets, we were able to find a diverse group of users.

Speaker 4: that enabled us to enact on the Innovation Campaign that Daniel talked about hearing 2-1. This innovation, like, spoilers. This Innovation Campaign is showing us really great results. We aren't going to dig into the KPIs for that until...

Speaker 4: our next earnings call, but I could not be more proud of how our team went, innovated, innovated, innovated, and then found something that's going to be meaningful for the company. I don't think we're ever going to get away from being a pay-or-conversion company because ultimately every dollar we ever spend is about ROI. So for us.

Speaker 4: You know, we were just talking the other day that we're converting three year payers, sorry, three year non-payers at 0.5% a day. Like we're looking, you know, once we have you in our ecosystem and get you in there, it's about how do we turn you into a valuable payer for the company itself. And this is how we're going to close that arped-out gap that we've talked about so many times. I do think that we're looking at ways of increasing our MAU potential throughout the year and over the next coming years. Most likely it won't be through our core franchises today.

Speaker 4: It'll be through finding new avenues of places where we can bring in users at a significantly cheaper price, but still keep some retention there. So we get the total side-play network to grow, but then also gives us the ability to cross promote where needed. It's very complex.

And I think you said you had a follow up on this? Yeah, one quick follow up in Asha. I think you provided a good transition there. You didn't talk about some of the titles in the pipeline. I'm curious how would you think about those? I think Salatair was in monetization test. I'm kind of curious how those had performed and how I think about that title. And then Spell spinner, I think was approaching soft launch from that mistake. And so again, any early findings there, any update on how to think about it?

full-body timing on those titles. And I'll jump back in the queue. Thanks, Josh. Yeah, yeah, thanks, Matthew. So I think the reason that you didn't hear them in the actual script itself is we want to make it very, very clear to everyone that our main focus is our core franchises right now. These are what are driving the growth. These are what are driving the new payers. This is what is the core foundation of the company. Now, with, you know, we still are looking at, you know, new games, new revenue sources, new ways.

I will say, I'll admit, we've seen some ups and downs with it because marketing to new games has been challenging, especially ones that are a little bit more IAP focus.

SELF-FINNER continues to push. We did go through, we did the MVP test, we did the technical test. From a technology side, we feel really great about the game. Now we're doing the marketability test as far as making sure that the simple core loop is going to be sustainable and build long-term traffic.

hoping to have a little bit more information than that sometime in March. And then based on what we find out there, we'll go back and say, okay, we're ready to take the next step, which we sawp launch, or we go back and say, okay, we need to make tweaks to that simple core loop. The thing that we will promise you is we're not going to launch a game just to launch a game. We want to make sure that if we're taking a game to market, we're going to launch a game.

that it is something that has long-term sustainability and has the ability to be something that's added to the entire SciPlay portfolio, but also delivers amazing player experience. So we haven't taken our eye off it by any means. It's just not the main focus of the company, but we are still trying to get those over the finish line.

games and pipeline. Yeah, thanks David. We're right here. Look at this. You know, electus is still going. It is a super, super, let's say our talented team and we continue to be more and more oppressed with them, the more and more we're integrating the two companies.

They released Burr Shop 3D, which did, sorry, Faithmaster 3D, which was very, very successful in two-four of this year. We also saw a more of a mix into the Google Revenue as we've made the technical changes there needed in order to get more sustainability.

Now, we do have some more that we need to continue cleaning up there. At the same time, the studio has taken a small step backwards and said, hey, what can we do in order to find a little bit more retention out of the games than we see out of just peer hacker casual games? So they came up with an amazing plan with the leadership of the studio there.

On college, there's some hyper game simple core loops that are very, very evergreen in nature that are always in the top 100 and they're really focusing around them. And we're hoping to see the fruits of this coming in, you know, college, two, two, early, two, three. So can't wait to share more information.

But while that's happening, we also have amazing assets from the acquisition, the ad tech technology that they built that it just allows them to automate their waterfalls and get the highest ECPMs. We're already starting to integrate that technology. We're starting to work together as two companies, or as one company, when we start talking about finding users, bringing new users into

hub is really in Israel and they've been able to be ahead of the curve for the changes that are coming. Overall, we'll say we're not very worried, mainly because Google is not deprecating its disability to do marketing. It is just creating privacy.

you know, privacy challenges for third parties, but majority of the money spent on Google is through them. So we're not expecting any major changes there, and we expect this not to impact elictus or the broader sites like business at all in 23.

Thank you. Yes, Robin. Thank you. On that's what you'll be for my early of McWarley. Please go ahead. Hey guys, thanks for taking my questions and congrats on the out performance and the

One of the things we'll talk about, you know, the content, given the cross-platform, Light and Wonder strategy has been in place for a while now. Curious, are you seeing anything different just in terms of the velocity of slot content or innovation around that content? Yeah, thanks a lot, Aaron. Bye.

caused not only the innovation, but it is also called the quality of road maps to continue improving across all of social. Light Monders made some amazing investments bringing in some very, very top talent as Matt talked about yesterday. The output that is coming and the ideas that are coming from them, but then also the combined group.

has just leveled up the content that we're able to get to our players. Now, we are not quite at the point where we're seeing the speed of the content improved yet. That is still coming. But what we're seeing is much more data being passed between the two companies.

that are helping us make better decisions every day, not only on the side-to-side but the light and wonder side, and this type of data is going to help us and help our monetization teams continue providing not only best in class monetization, but best in class.

content to all of our users. Great, that's awesome. And maybe we want to touch on the comment you made earlier about being able to convert three-year non-pares. Just great. How were you able to do that? Is it a function of more of your games or some of the predictive analytics you were talking about?

So, you know, our games are really their ecosystems that have evolved over time. And just because the ecosystem as it sits today is not one that this player is willing to pay in, if we're able to maintain them in that ecosystem eventually.

We release a feature that causes or drives them to increase their play. In order to increase their play, they need to purchase more time. And this is where we're seeing the largest conversions come from. It's when we're adding some type of new feature or some type of new engagement loop inside of the game that is causing that behavior. And then on top of that, the...

more and more we get, let's call it educated on our player behaviors, especially now that we're combining our learnings from our ATTEC side with our data as science teams and our analytics teams. We're really getting more and more fine-toons about what each individual player is looking for inside of the game.

And our live-ops monetization teams are really doing a fantastic job of adjusting the player behavior that is putting them in the situation where they need to buy in order to get through the meta and the game. So at the end of the day, it's the quality of the people that are working for Sci-Play that are making all of this happen. Awesome, that's great. Thanks for all the color. Yeah. Thank you. Our next question will be from Matthew Coste, the Morphing Stanley. Please go ahead.

Great. Thanks for your question, Greg. Two. On the market, the broader market, are we in a sort of early stage of a recovery in terms of, you know, consumers willingness to spend money on an app purchases in the mobile gaming market broadly? Are you seeing any evidence that maybe like the worst of those kind of like the COVID hangover and the IDFA hangover are now totally behind us? And you mentioned that, you know, you expect to outgrow the market this year. Do you have an expectation for what the market will grow this year? That's first question.

The second is, should we expect kind of like the run rate for next year for marketing spend to be similar to the fourth quarter, which was a little bit lower than the middle Okay, so we're going to kind of bounce between a couple of us here probably to answer all these, but I'll go ahead and start with the market recovery. You know, it's interesting because I really wouldn't say that it's a market recovery or a market change or say the whole dynamics of everything.

started to shift at the back half of 21 and it kind of went into 22 and different companies adapted and changed to it at different rates. But I think this is kind of the new norm until Apple does whatever it will do with IDFA. So for us, we were one of the first companies that were able to understand that IDFA was going to have a large impact on our current business.

and have a large impact on how we're able to bring in new players. So what did we do? We took a step back and said we need to do everything different. And we said we need to focus on the players and players we have in our games today. This needs to be our main focus. And this is where the Sci-Play engine was born. And this really helped drive a lot of our 2022. At the same time, we understood that, okay, UA is something that has to continue. But the market has shifted so much that we need to think about it different. And this is where the investments we made in our ASO team, our growth team, our ATEC team. And they read to find how we look at spending money.

And they redefined it for the market that is at that point, not the market that used to be. And because of that, this is why we were able to take a step ahead of everyone else. Now, I do believe the mobile market as a whole will continue to adapt to this new environment and then it will continue to move forward for that reason. But even all the way through 2022, we had multiple games in the industry that did really, really well.

2023 or continuing to see momentum and really still like we believe that we could definitely outpace the estimates that they have for the year.

And I think when you're thinking about marketing spend, I wouldn't look at Q4 and Q1 and say, this is what the run rate is because Q4 is normally a lower marketing spend for us because of the challenges that are there. But what I would say is I would expect.

year over year the total marketing spend to be very similar from 22 into 23. That's question will be from Nancy. No, Craig, how am I able to go? Please go ahead.

Good morning guys, six taking our questions. Curious on expectations for, I guess, throughout the year on DTC, kind of how you think about the investment needed there and then how that potentially ramps throughout the year in the fundamental? Yeah, DTC, we are so excited.

make sure that everything worked exactly the way we thought it should, make sure that the player experience once they get back into the overall game continues to work well. I would say that I think we would have thought right now that we would be a little bit further than we are right now with D2C. Mainly

because it took a little bit longer than we originally thought to get our payment process or over the line. But that is all now done. And, again, said we're into actual market testing. So what I would kind of expect from here, we're going to spend a little bit of time analyzing. We're going to run our second major test, probably somewhere in mid-Marchish. Then we're going to evaluate that again, assuming both of those are good, then we're going to start, you know.

And I say it's crawling, you know, since we're really talking about the people who are spending and behaving very, very healthy in our games right now, I'd rather have them spending where they are than lose them. So we're going to slowly start moving people. So yeah, way I would probably say it is you're going to see some movement in 23, but it's going to be very small because we're about three months behind where we originally planned to move that into Q1 and if there's but.

potential to add more of those throughout the year, or that's kind of a set plan at this point, the LLNB Q1. And then secondly, do you have any learnings or RLIC or any user metrics from the spend that you made in Q3 of this year? Oh, you mean last year. Yeah. So let me, so innovation. So, you know, major reason it is right now is when we were going back and looking through when to do it, the media cost is at its lowest in Q1. And we were able to get, you know, since it's still innovation, our next bite at the Apple without having to overspend to do it. And we're very, very happy we did.

Yes, we are evaluating it, especially as we have points where it is performing as well as some of our UAAs performing. And now we've kind of looked at this as well, it's about getting the right users in at the right cost. And so as we have more opportunities, if the ROI is where it is, we will continue to invest in it. We don't have any set right now, but we're a dynamic business that can change anything on any given day. So we just evaluate as we go. Last year, we ran, I'd call it three major campaigns. We ran the NASCAR campaign. The America's Got Talent campaign and then the Wendy Williams one.

Each one of us taught us different things. You know, NASCAR taught us that in the immediacy of an event, you start seeing reaction right away. You also know that you get branding from it. AGT taught us that the branding does make a difference, but having a super large market, but not tailored to your customers, may not work as well. And then, Wendy Williams, what we learned is having a...

them why, you know, our growth team, Noga, Toma, Yaron, that entire team put together this entire plan. And I do believe it will become a new staple of how we bring new customers into our game.

helpful. Congrats on the performance. Good luck, guys. Thank you. Next question will be from Omar Datskowski. Thank you, America. Please go ahead.

Hi Josh, thanks for taking my question. So thanks for mentioning that I guess you guys are sort of assuming that the market will be flat to down.

in 2023. I wanted to know whether that would assume a recession in 2023 or what the macarachanomic assumptions around that are. That's the first question. And then the second question, as part of the same first question I have, is, you know, what is your hypothesis on.

the average of how the average spend per payer would trend versus 22, if your payer's average real incomes were to fall in a recessionary scenario. So for example, if payers' real incomes were to be down year on year, would you expect that they would be, you know, the average revenue per payer would be down as well in 2023? And then I have a follow-up question I'm advertising.

Okay, thanks Omar. So, let's start with the market one. So, if you look at eyelash and Christchurch, they come out and said that they're expecting the market to be flat for this year. But the major reason that we're assuming the market is flat for this year is because we're assuming IDFA has no fix to it. So, let's start with the market.

in 2023. I think it's less to do with the macro environment is why and more to do with the user acquisition is more challenged. Now with that said, you know, things were more challenged last year. We have a lot of games do really well in the larger scale, whether or not it's either casual or social casinos. We had majority of our portfolio performed very well last year. And we expect to see that going into next year. You know, as we look at the broader you know, economics of people and what happened.

I think we kind of look at it as twofold. Like one, the average person in our game are making $5 and $10 purchases throughout a course of a week or a month. And it's not the type of expenditures that I expect to see get pulled out from people. I would imagine that the $10,000 vacation, $5,000 vacation, $20,000 car, those are going to be where they save money. Entertainment cost at this magnitude normally isn't the thing that is brought back. But what we are doing as a company is because of we have it.

so much access to not only data but hourly data. And since we have so many games in the portfolio, what we're able to do is we're able to look at these trends across multiple games at once. And one thing that we did at the beginning of this year was kick off a kind of like a global macro team inside of Sci-Fi. And our entire role inside of this is to look forward things that are happening in multiple games all at once. So if we see multiple games at once, all of a sudden slowing down number of times people purchased per week. Or if we see...

to your point, average revenue per pair or transaction move. We're going to get this information in the course of a couple of days, where a lot of people are going to have to wait months and months to understand it. And because we're going to get this information, we're going to be able to not only make the business shifts that we need to, but we're also able to make the game and entertainment shifts that we need to. So right now, we feel very confident that we're going to perform very well into 23. And as I mentioned earlier, February for us as a run rate.

What's the same as December ? And that's actually something that's not normal because December has that two weeks or the holidays that sit in and every year. Okay, thank you for the comprehensive response. So maybe my second question is in terms of advertising, have you extended the window against which you buy? You buy on the LTV curve. So for example.

If, let's say, two years ago you were buying and spending user acquisition against a 90-day or 120-day LTV target, have you moved out to, let's say, I don't know, 180 days or something like that, how has your thinking as to which part of the LTV curve you buy against shifted over the last six months? Yeah, so over the last six months we've made no change. I don't know if you remember at the beginning of last year because of the increased LTVs.

We did announce that we were moving our LTV, our window from six months to nine months. We held through that all of last year. And honestly, we continue to get stronger and stronger paybacks from it. We really measure our people and our gains and our payers and our gains by years. Jack Pop Party, which all this game in our portfolio, the people it brought back in 2012 actually spent more money in 2022 than they did in 2012. So we think of the LTV really as a true, true lifetime. The payback, as far as I'm concerned, is more about making sure that we hedge our fat in case there's any type of...

market movement that happens or any type of platform movement that happens. But we feel very, very confident right now that we're going to outperform the nine months. And to be honest, we constantly evaluate whether or not it makes sense to go from nine to twelve. We're not there today. We're going to continue where we are today. But we're also expecting to see the great returns we do that we're currently getting.

that happens or any type of platform movement that happens. But we feel very, very confident right now that we're going to outperform the nine months. And to be honest, we constantly evaluate whether or not it makes sense to go from nine to twelve. We're not there today. We're going to continue where we are today. But we're also expecting to see the great returns we do that we're currently getting. Awesome. Thank you Josh.

Thank you. I can't be able to question. All right. Question will be from Ben Sol. When I look at the drivers of growth and social casino this year, it was, you know, monthly paying users were up quite a bit and then the revenue per paying user was about flat and I'm just curious how you think of those two levers heading into 2023 and if you think it'll be similar or more more balance between the two.

Thanks. Yeah, so I'll be honest, my preference is I would always rather grow MPU and leave average monthly revenue for paying user flat. Why is that? Because if I'm growing MPU, I'm adding more payers into the portfolio and by adding more payers into the portfolio, I'm diversifying my revenue risk and giving ourselves a better chance of being sustained longer. So I would definitely say...

is first and foremost. If you actually looked at the scale of the portfolio from your side, it looks flat because it averages out, but actually our higher end payers continue to increase free how much suspending. We're just bringing so many more new payers in.

that the average is staying very, very flat over time. God, it's helpful. And then it's still really, but just curious what your takes are on the potential for alternative app stores and what that might mean for your business longer term.

Yeah, so I mean first and foremost, we'll call it for DTC is the number one thing that we're looking to. I know it's not quite an app store, but it is up being our own platform at the end of the day where we get to be the payment provider and also get to own the communication with a player, which gives us just a deeper relationship with them.

So we're evaluating them on a weekly basis and anyone that we see start gaining any momentum early on, then we pivot over the development teams in order to get on there as soon as we possibly can. But we just stay on.

New app stores are not new to being talked about. They just haven't really been any that have taken a big share from either Google or Apple at this point. So it's more of just watching and valuating but being ready. Thank you. This concludes our question and answer session. I like to turn the conference back over to Mr. Josh Wilson for closing remarks.

We believe our 22 performance and our plans and beyond reinforced our commitment to spark the world's passion to play, our players are our number one priority. We are laser focused on them with the most engaging digital experience that we can get them and we look forward to reporting to you in just like 60 days. Have an amazing day everyone and we will talk to you soon. Thank you. Conference of Malcolm Golden.

Thank you for attending today's presentation. You may not.

I have.

Good morning and thank you for standing by. Welcome to the side play for Golder and Toolyear 2022 R&S Copper Skull.

At this time, all participants are in listening mode. We devise that today's conference is being recorded.

I would like to thank Conference Overyear speaker today of a wine advice president, investor relations, signed fine, excuse me, side play corporation.

offering so what your speaker today of a wider vice president, investor relations, signed fine, excuse me, side play corporation. Please go ahead.

Thank you, operator, and good morning, everyone. During today's call, we will discuss our fourth quarter and full year 2022 financial results and operating performance there, as well as our outlook for 2023, which will be followed by a question and answer period. With me today, our Josh Wilson.

CEO and Daniel O'Quint, interim CFL. Our call today will contain remarks that include forward-looking statements under the Private Security's litigation reform act of 1995. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call.

For more information regarding these risks and uncertainties, please refer to our earnings release issue yesterday and our findings.

with the FCC. We will also discuss certain non- GAAP financial measures, including key performance indicators, which are based on in-app purchases only. A description of each non-GAP measure, and a reconciliation of each non-GAP measure to the most directly comparable GAP measure, and be found in our earnings release as well as in the investor section on our website.

As a reminder, this conference call is being recorded. A replay of this webcast will be archived in the investor section of our website at sideplay.com. Now I am pleased to turn the call over to Josh. Good morning, everyone. I am very happy to be with you today.

Sideplay is on a multi-year journey guided by our vision to spark the world's passion to play by providing the most engaging digital entertainment experiences.

We know where we are going and we are aligned on how we're going to get there. This resulted in record KPIs and propelled us to outpace the market in both the fourth quarter and full year. I'm extremely proud of our team and what we have accomplished. Thank you very much.

Our strong execution and ability to adapt have enabled us to successfully navigate industry dynamics and achieve strong performance in 2022.

We are innovative, agile, and extremely motivated to win and focused on delivering amazing experiences for our players and maximize shareholder's value. Now for some key results. First.

We delivered impressive top line results, growing revenue 18% in the fourth quarter, and 11% for the full year. This was fueled by our industry-leading execution, our live-ups, and our data-driven product roadmap. We achieved this growth despite the challenging industry backdrop.

as our talented teams remain focused and continue to innovate. Second, we achieved a number of records, including growing our payers and our average monthly revenue per payer, underscoring the quality of our earnings performance. Third, we generated robust cash flow of $150 million for the full year. Third, we achieved a number of records, including growing our payers and our average monthly revenue per payer.

This demonstrates the high cash generated nature of our business. And for, as of February 24th, we have returned $41.7 million to our shareholders through our stock repurchase program. We are confident that our strong foundation...

combined with multiple growth initiatives will drive us to post strong gains and out to form the market again. Now let's take a closer look at Q4. We delivered strong fourth quarter performance.

Demonstrated by our industry leading results. With our evergreen franchise is leading the way, we generated record revenue and attained multiple records in Q4.

Thank you for our social casino games grew 14% year over year, while the social casino industry is estimated to have declined by more than 3%.

And we have achieved record tapioids, including paired conversion of 10.4% and ARPDAO of 87 cents, which grew 18% year over year.

Based on eyelers and Christchx, social casino game track or report published in January of 23.

The site play was cited as, quote, stand out performer of the year in the fourth quarter. Estimated to achieve the fastest growth of the top 15 game developers. And we did just that. Our Q4 performance was driven by our growth in pairs.

of 13% year over year and to provide longer term perspective, payers have grown by 42% since 2017.

We now have the most payers in site-place history. We have invested in our games and we will continue to do so, as we execute on our product roadmap to deliver the best possible entertainment to our players.

The strengths of our evergreen franchises and their differentiated go-to-market approach have fueled side-place success. Here are just a handful of examples. Gapop Party smashed our single-day revenue record, and Q4 was a record quarter capping a record year. The game is now listed by Irish and Craig Chad.

as the number one US ranked Social Casino game. Quickest slots officially became the second $100 million revenue game in High Place portfolio. It is one of the fastest growing games in Social Casino. Goldfish Casino is gaining momentum from our reimagined features and new live-off strategies. And 88 fortunes benefited by adding a new economy, content design, and innovative features.

which are driving increased player engagement. As a result, side play out performed the entire social casino market in 2022. Let me repeat this.

As a result, DiPlay outperformed the entire social casino market in 2022. Our accomplishments have been powered by a combination of innovation, capability, and investment. Our accomplishments have been powered by a combination of innovation, capability, and investment.

We have a scalable platform, unparalleled technology, and deep talent that formed a runway for both current and long-term success. In 2022, the Cyphera engine became one of our main drivers of success. We implemented and optimized it across our game portfolio.

The Cytelite engine provides a wide range of optimizations of real-time solutions.

The combined knowledge and expertise of our best in industry, ATTEC, data science, and analytics team.

have led us to develop an innovative UA solution that is aiding in our winning performance today. Our Global Analytics team developed and deployed algorithms that decipher and break down complex player behavior. Our LiveOps teams consistently develop and execute uncertain...

continue to evolve our data-driven approach. We made several noticeable advancements that boost our ATTEC capability by combining team learnings with multiple data sources, predictive analytics, and valuable in-game advertising strategy. We implemented predictive analytics tools.

an exclusive technology that focuses on revenue generation. We custom-tailored user experiences by detecting player patterns that maximize their lifetime value.

We employed integrated predictive player modeling to improve player behavioral insights and data quality. These strategies have driven improved insights on the players and drive higher return.

Now let's turn to the future. As we propel into 2023, Scythlay has strong momentum with multiple growth drivers.

We will continue to evolve, scale, and grow our franchises. Our main growth drivers will be to increase our payer base, their engagement time, and the amount of money our players will spend. In essence, the combination of our innovation, capabilities, and investments.

while enabling us to continue closing the arped out gaff with our peers. Our robust data driven product road maps are evolving our evergreen franchises.

Our proprietary tech solutions provide valuable insights about our players. The features they want and the economies that drive them. We continue to evolve our franchises as we implement new events, features, and content accessible from LifeMonders extensive IP library.

Our LiveOps teams create new engaging events for our players every day. These produce high monetization results, and our recent launch direct-to-consumer platform, which allows us to deepen the relationship with our players, to push higher LTVs, reduce acquisition costs, and drive long-term margin expansion.

Our strong execution in 22 is continuing in 2023. Cyphery success and ability to deliver consistent values meted together by our team's expertise, our culture, our dedication, and our passion to win. Our global team truly leveled up in 22. Thank you, Cypheryers, around the world. We had an amazing year.

A close by saying I'm confident in our team's continued strong execution and the strength of Cypher's business model and growth. We plan to outperform the overall social casino market and take share in 2023. Now I'm pleased to turn the call over to Daniel. Thanks, Josh. Good morning, everyone. And thank you for joining us today. 2022 was a great year for Cypher.

without standing Q4 results. We carried out our plan presented in the beginning of last year, and achieved our full year financial targets for both the top and bottom line.

We invested in our core capabilities and we reinforced our foundation for the future. Our teams were focused and agile, successfully navigating industry dynamics. Thanks.

while executing our product road maps. I couldn't be proud of what our teams have accomplished. Their energy and innovation are unparalleled. And there's the reason why we're able to achieve so many all-time records. Our success enabled us to make a competitive leap in social casino, significantly outroing the market. Now for some key highlights.

First, we delivered strong financial performance in Q4 and the full year, propelled by our Evergreen plant sizes and our team's exceptional execution. Bipoli achieved several all-time records while innovating and adapting to a challenging marketed environment. Second, we had record arb down in a record number of payers.

which we grew as sequentially each quarter during the year, underscoring the momentum and quality of our earnings performance. Third, Sipelay continued to make key strategic investments in targeted segments of our business.

including proprietary technologies and tablets to further strengthen our long-term growth plans. 4. Scypally continues to be a high-cash generating business. We delivered robust operating cash flow of $150 million in 2022. In repurchase $42 million or roughly 70% under our shared repurchase program through February 24th.

Now, let's get into some of the details. We generated strong fourth quarter revenue of 182 million, and all time record, up 18% year over year, and 7% sequentially. Full year revenue of 671 million grew 11% also setting and all time record. Our social casino games grew 14% in the fourth quarter, and 7% for the full year.

This significantly outperforms the market as estimated to decline 3% in both the fourth quarter and four year. We generated fourth quarter net income of $53.9 for 29% margin.

and full year net income of $151 million. The Looted earnings per share, the Tributable Scythes Way, was 32 cents for the fourth quarter.

and 91 cents for the full year. We agree our fourth quarter A, but at 24% to $59 million.

while achieving a 32% A even a margin. Fueled by our strong top-line results, as we move past the marketing innovation spin in Q2 and Q30. A bit of $187 million was up slightly for the year, while a bit of margin of 28% was in line with our target. As we invest in our talent, the Sightfully Engine,

add tech and our DTC platform to drive long-term value. Since 2017, we've grown revenue at a 13% cager and profitability at a much faster pace, with an A-beta cager of 22% over the same period.

Now, it's time to set key performance indicators for the fourth quarter, where we achieved a number of records. In the fourth quarter, we drew our payers 13% year-to-year record, and we saw increases in payers throughout the year. Our ability to consistently deliver great and engaging content enabled us to achieve near record average monthly revenue per paying user approximately $99.24.

and $95 in the year. This marks our 11th consecutive quarter above $90. This all translated to a record arc down of 87 cents in Q4, an increase of 18% year over year, as we continue to close the gap with our peers.

We achieved a pair of Conversion rate of 10.4% in the fourth quarter and 9.6% in the full year. Also both all time records. Our KPIs filled throughout the year.

underscoring the benefits of our key initiatives, robust product roadmap, best in class life, optical capabilities, and our players' loyalty. As an example, players who download the jackpot party before 2019 are more engaged.

and had higher retention during 2022. Like our long-term revenue and profitability growth, our Dow is grown at a 14% cager over the last five years. While a peer conversion rate grew at a 13% cager over the same period.

Now let's turn to cash flow. We believe strong revenue growth, faster growth in the EBITDA, combined with strong cash flow, are key drivers of shareholder value. The great thing is our business is highly efficient and cash generative. For 2022.

We generated $150 million in operating cash flow, which included $24.5 million payment for the Washington State Matter. We have minimal capital expenditures enabling us to convert a high percentage of operating cash flow into free cash flow. We ended the year with strong liquidity of $330 million in cash and total liquidity of $480 million.

We have the financial strength and flexibility to deploy Exos capital to drive increasing shareholder value. Now let me take some time to discuss capital allocation. We continue to see opportunities to invest organically in our business. We have the financial strength and flexibility to invest organically in our business.

And we will also consider targeted and organic opportunities. And these include aquahires as well as small game developers, but we see an opportunity to enhance engagement and monetization with our best in class capabilities. But we make these investments with the financial rigor and eye on their turns. We employ a data-driven approach to ensure that our investments are driving profitable growth. Answer, hold our value. We also believe the combination of organic growth.

for well-positioned to continue to take share in social casino and deliver share of the value.

The marketing innovation campaigns we started in 2022 will continue into this year.

From the seasonality standpoint, the campaign's spin last year impacted Q2 and Q3. This year, most of the innovation spin will happen in the first quarter. The highly successful Gerio-Cono campaign that ran for quick hit in January and February will be discussed in our Q1 call. In summary, our global team of more than 800 side players

is executing at a high level. We have a strong foundation for continued growth, and we're determined and highly motivated. We have the passion to win. Thank you, and now I'll turn the call over to the operator, and we'll take your questions.

Thank you. Well, I'll begin the question answer session. That's a good question. Any press star that wanted to touch the phone. If you're using a sticker phone, please pick up your hands at the full press in the keys. Put your audio question in please press star then do. This time will pause one momentarily to assemble the roster.

You know, be from Iroquired and Goldman Sachs, please go ahead. Thanks so much for taking the question and thanks for all the detail in the prepared remarks. Josh, want to come back to some of the comments you were making on user acquisition and the repositioning of the company and the platform from a marketing standpoint. You know, both idiosyncratically and what you built, how much of a competitive advantage should we be thinking about in terms of the quantification of the ability to outgrow?

Yeah, thanks a lot, Erica. It's great to talk to you today. You know, we could not be more proud about our UA team. Our entire growth team is a whole, you know, we knew coming into 2022 that it needed to be a major investment for us. And we did that. We doubled down on our ad-tech capabilities. We doubled down on how we are using data to make supply and labouriks. We joined terrorist groups. We called everybody before???? governments. We were."

create player profiles, our UA team and our retargeting team really just leveled up their games. And with that, built new tools that really are sustainable and keeping us ahead of everyone else. We do continue to believe that we will outperform others in our returns, mainly for two reasons because the way that our philosophy is on spending money, it's about getting the most value for every dollar. We're not tracing installs, we're not chasing mile, we are chasing value for this shareholder.

And since our entire team sinks this way, we've been able to get these returns. But it's not just the UA side. It's also the games themselves. Our games through the implementation of the site play engine, some of the reorganizations we did, and just more heightened focus on running the live games, we've been able to significantly increase our LTV across almost our entire portfolio in 22, and it continues to look really, really.

We do to keep them playing and being entertained by us instead of wanting to go anywhere else. And if there is also 22 show anything, I think we are doing a really good job. Thank you. Next question will be from two Krotlas people.

the first question. And then maybe for Josh, the paying users have historically ticked higher in 4Q versus 3Q. The metric looked like it slipped a little bit, this past quarter on a sequential basis. Anything noteworthy there, and typically you see sequential growth in paying users for 1Q over 4Q, should we anticipate a similar seasonal trend line for the early part of 23? Thanks.

Thanks for the questions, Drew. Yeah, and the guidance that we give, like I said before, Q2 and Q3 is when we had kind of the most of our marketing innovation. You know, we've learned a lot at where we started this campaign in 2022 and that's the reason we kind of went into 2023 with the Jerry O'Connell campaign. You know, we're going to have some ongoing stand-throughout 2023, but just from a guided standpoint.

always look like it's kind of there again. UA returns are the highest and the cost most cost effective in the first quarter, as Daniel said. So we're also spending a little bit more in UA and then also the the innovation campaign, which Daniel talked about. We would expect Q2 and Q3 to come down slightly and then we all

For paying users, it's interesting because in the past, I would say Q4 has always been the year where we ramped them up, but we ramped them up consistently all year. And the reason we were able to ramp them up consistently all year is once we created a pair, we were able to maintain them and keep them in the game continuing to spend over time. So the reason we didn't have as large of a step up as far as individual players in Q4 was not because the game didn't run well, it's because we had already been converting.

at such a high percentage all year. The one thing that did happen in Q4 is we were able to really focus on the wallets of the individuals continuing to build. And so we had the payers, we were able to grow the payers, but at the same time the payers of the whole became more valuable as individuals. Now to your point, yes Q1 ends up with more payers.

Most of the time because of the increased UA, we see more people coming into the game. The more people that are coming in are very valuable users and this is why we increase the UA. Normally what we will see is a little come down in the average monthly revenue per payer. This is just because it's compared to fourth quarter which is very very seasonality, all of the holidays that are in there. But I'm extremely pleased that if we went back and look at February of this year, we're actually at a very similar daily run rate to that we were in December of 22.

This ends up being really, really encouraging for us because, as you know, December is basically our seasonality month of the year because about half of the month ends up being holidays. So could not be more proud of how our games and our teams are performing right now. Very helpful, thanks guys. Very well. Thank you. That's what you'll be for Matthew Thorne of Truace.

and monetization per arped out to dipping your toe back into, again, maybe widening the top of photo, widening MAUs, widening DAUs, kind of thinking about how you think about that from a timing perspective, when that might happen, how that might happen. And then I've got one follow up.

Okay, everyone. Thanks, Matthew. It's good talking to you. UA. So, why I would think about UA right now is their Q1 UA is performing extremely well compared to Q4, but it normally does. But the more encouraging is Q1 looks very, very good to Q3 because it's a better comp than what it would have gone to just Q4. We've seen really good returns, which has enabled our growth team to continue to elevate the spend in Q1. But we feel very confident we're going to see those returns throughout the year.

As far as the macro environment on UA goes, you know, we do continue to have struggles with IDFA. You know, we're still hoping at some point that they are going to make some type of shift and open up the entire bucket again the way it used to be on that platform. But as everyone knows, Apple has not announced anything as of now. But with the tools that we have been building and the strength of our game right now, it has enabled us to continue to increase our spend on Apple in order to push more users in. We've also...

learned so much from our innovation campaigns last year where we were able to test different buckets and by testing these different buckets we were able to find a diverse group of users that enabled us to enact on the Innovation campaign that Daniel talked about here in Q1 This innovation like spoilers this innovation campaign is showing us really great results We aren't going to dig into the KPIs for that and tell our next earning call but I could not be more proud of how our team went, innovated, innovated, innovated and then found something that's going to be meaningful for the company. I don't think we're ever going to get away from being a payer of conversion company because ultimately every dollar we ever spend is about ROI.

So for us, we were just talking the other day that we're converting three-year non-pairs at 0.5% a day. Like we're looking, once we have you in our ecosystem and get you in there, it's about how do we turn you into a valuable payer for the company itself. And this is how we're going to close that ARP Dow gap that we've talked about so many times. I do think that we're looking at ways of increasing our MAU potential throughout the year and over the next coming years. Most likely, it won't be through our core franchises today. It'll be through finding new avenues of places where we can bring in users at a significantly cheaper price.

but still keeps some retention there. So we get the total side play network to grow, but then also gives us the ability to cross promote where needed. And I think you said you had a follow up, Audrey? Yeah, one quick follow up, and Ashley, I think you provided a good transition there. You didn't talk about some of the titles in the pipeline. I'm curious how would you think about those? I think Solitaire was in monetization test. I'm kind of curious how those have performed and how to think about that title. And then Spell, Stinner, I think was approaching soft launch. I'm not mistaken. So again, any early findings there, any update on how to think about?

marketing testing. It takes a while because we got away until we get 30-day baked cohorts. So you basically wait a month until the end. Hoping to have a little bit more information and clarity on that one. Probably in Q2. I will submit. We've seen some ups and downs with it because marketing to new games has been

loop is going to be sustainable and build long-term traffic. Hoping to have a little bit more information and that's sometime in March. And then based on what we find out there, we'll go back and say, okay, we're ready to take the next step, which we sawp launch, or we go back and say, okay, we need to make tweaks to that simple core loop.

The thing that we will promise you is we're not going to launch a game just to launch a game We want to make sure that if we're if we're taking a game to market that it is something that has long-term sustainability and has the ability to be Something that's added it to the entire Sci-Play portfolio, but also delivers amazing player experience So it's we haven't taken our eye off it by any means. It's just not the main focus of the company But we are still trying to get those over the finish line

Thank you. Next question will be from David from Offsky. Thank you. I just wanted to see if there is any additional comment on the list. Thank you for. And then in the end of the year in the past, you reoriented the studio to be kind of Android first, I guess, in that context, I was thinking about risk of key ID, deportation and what that could mean for scaling the hyper casual games and pipeline. Yeah, thanks David. Along with you right here. Look at this. You know, electus is still going. It is a super, super, let's our talented team and we continue to be more and more press with them, the more and more we're integrating the two companies.

with the leadership of the studio there. On, college, kind of, there's some hyper game, simple core loops that are very, very evergreen in nature that are always in the top 100, and they're really focusing around them. And we're really, we're hoping to see the fruits of this coming in college. This coming in college.

two, two, early two, three. So can't wait to share more information. But while that's happening, we also have amazing assets from the acquisition, the ad tech technology that they built that it just allows them to automate their waterfalls and get the highest ECPMs. We're already starting to integrate that technology. We're starting to work together as two companies, or as one company, when we start talking about finding users, bringing new users into our ecosystem, and just purely around building great games. So the integration has been fantastic. As far as the Google changes, our team has been working with Google, Handin' Hand, especially our growth team, which is...

located in Israel and one of the, basically Google marketing hub is really in Israel and they've been able to be ahead of the curve for the changes that are coming. Overall, we'll say we're not very worried mainly because Google is not deprecating its disability to do marketing. It is just creating privacy, you know, privacy challenges for third parties, but majority of the money spent on Google is through them.

So we're not expecting any major, major changes there and we expect this not to impact elictus or the broader sites like business at all in 23. Thank you. Yes, you're welcome. Thank you. On SQuatch, you'll be from Aaron Lee of McQuarree. Please go ahead. Hey guys, thanks for taking my questions and congrats on the outperformance and the momentum. One is to talk about, you know, the content given the cross-platform light and wonder strategy has been in place for a while now. Curious, are you seeing anything different just in terms of the velocity of slot content or innovation around that content? Thanks.

Yeah, thanks a lot, Aaron. So we've been working together since I think, you know, called May, June , of last year. It's really when we started pulling our road maps together and really becoming one brain when it comes to thinking about slot machines. And this is caused not only the innovation, but it is also caused the quality of road maps to continue improving across all of social. Light Monders made some amazing investments bringing in some, some like very, very top talent, as Matt talked about yesterday. And the output that is coming and the ideas that are coming from them, but then also the combined group has just leveled up the content that we're able to give to our players. Now, we are, we're not quite at the point where we're seeing the speed of the content improved yet. That is still...

quality of everything. So, you know, our games are...

Really, their ecosystems that have evolved over time. And just because the ecosystem as it sits today is not one that this player is willing to pay in. If we're able to maintain them in that ecosystem eventually, we release a feature that causes or drives them to increase their play. And in order to increase their play, they need to purchase more time. And this is where we're seeing the largest conversions come from. It's when we're adding...

some type of new feature or some type of new engagement loop inside of the game that is causing that behavior. And then on top of that, the more and more we get, let's call it educated on our player behaviors, especially now that we're combining our learnings from our ATTEC side with our data as science teams and our analytics teams, we're really getting more and more fine tuned about what each individual player is looking for inside of the game. And our live-ops monetization teams are really doing a fantastic job of adjusting the player behavior that is putting them in the situation where they need to buy in order to get through the meta in the game. So at the end of the day, it's the quality of the people that are working for Sci-Play that are making sure that they're doing their job. And that's all of this happening. Awesome, that's great. Thanks for all the color.

Thank you. Our next question will be from Matthew Gost. More Boots family. Please go ahead. Great. Thanks for asking the questions, guys. On the broader market, are we in a sort of early stage of a recovery in terms of, you know, consumers willingness to spend money on an app purchases in the mobile gaming market broadly? Are you seeing any evidence that maybe like the worst of both kind of like the COVID hangover and the IDFA hangover are now totally behind us? And you mentioned that, you know, you expect to outgrow the market this year. Do you have an expectation for what the market will grow this year? That's first question. The second is just should we expect kind of like the run rate for next year for marketing spend to be similar to the fourth quarter, which was a little bit lower than the middle of the year? Thank you.

Okay, so we're going to kind of bounce between a couple of us here probably to answer all these, but I'll go ahead and start with the market recovery. It's interesting because I really wouldn't say that it's a market recovery or a market change. I would say the whole dynamics of everything started to shift at the back half of 21 and it kind of went into 22 and different companies adapted and changed to it at different rates.

But I think this is kind of the new norm until Apple does whatever it will do with IDFA. So for us, we were one of the first companies that were able to understand that IDFA was going to have a large impact on our current business and have a large impact on how we're able to bring in new players. So what did we do? We took a step back and said we need to do everything different. And we said we need to focus on the players and players we have in our games today. This needs to be our main focus. And this is where the Sci-Play engine was born. And this really helped drive a lot of our 2022. At the same time, we understood that, okay.

UA is something that has to continue, but the market has shifted so much that we need to think about it different. And this is where the investments we made in our ASO team, our growth team, our ATEC team, and they redefined how we look at spending money, and they redefined it for the market that is at that point, not the market that used to be.

And because of that, this is why we were able to take a step ahead of everyone else. Now, I do believe the mobile market as a whole will continue to adapt to this new environment and then it will continue to move forward for that reason. But even all the way through 2022, we had multiple games in the industry that did really, really well. It was just, you know, most companies didn't have multiple games doing well at once like we did. And so we did see glimmers of hope as far as that goes. Daniel, you want to... Yeah, in terms of the market, you know, we've looked at kind of what Irish puts out there. They have the market kind of flat down.

What we're seeing is we kind of moved throughout 2023. We're continuing to see momentum and we still like we believe that we could definitely outpaste the estimates that they have for the year. And I think when you're thinking about marketing spend, I wouldn't look at Q4 and Q1 and say, this is what the run rate is because Q4 is normally a lower marketing spend for us because of the challenges that are there. But what I would say is I would expect year over year, the total marketing spend to be very similar.

from 22 into 23. Great, thank you so much. You're welcome. Thank you. That's what you'll be for my answer. No, Craig Hanuman, Capo Group. Curious on expectations for, I guess, Kind of how you think about the investment needed there and then how that potentially ramps throughout the year. In the bonneme de los. Yeah, DTC, we are so excited. We actually did some of our first.

So let's call it market testing or kind of sub-testing over the last couple of weeks. And we're starting to see throughput for it. We now are going to take a step back, go through everything, re-analyze, make sure that everything worked exactly the way we thought it should, make sure that the player experience once they get back into the overall game continues to work well. I would say that I think we would have thought right now that we would be a little bit further than we are right now with D2C, mainly because it took a little bit longer than we originally thought to get our payment process or over the line.

But that is all now done. And again, we're into actual market testing. So what I would kind of expect from here, we're going to spend a little bit of time analyzing. We're going to run our second major test, probably somewhere in mid-Marchish. Then we're going to evaluate that again. Assuming both of those are good, then we're going to start, you know, and I say it's crawling, you know, since we're really talking about the people who are spending and behaving very, very healthy in our games right now, I'd rather have them spending where they are than lose them. So we're going to slowly start moving people. So we have way I would probably say it is you're going to see some movement.

When we were going back and looking through when to do it, the media cost is at its lowest in Q1 and we were able to get, you know, to still innovation, our next bite at the Apple without having to overspend to do it. And we're very, very happy we did. Yes, we are evaluating it, especially as we have points where...

It is performing as well as some of our UAAs performing. And now we've kind of looked at this as well. It's about getting the right users in at the right cost. And so as we have more opportunities, if the ROI is where it is, we will continue to invest in it. We don't have any set right now, but we're a dynamic business that can change anything on any given day. So we just evaluate as we go. Last year, we ran, I'd call three major campaigns. We ran the NASCAR campaign. The America's got talent campaign and then the Windy Williams one. Each one of us taught us different things. NASCAR taught us that in the immediate...

all the changes that went into the Jerry O'Connell. And it's a large reason why our growth team, Noga, Toma, Yaron, that entire team put together this entire plan. And I do believe it'll become a new staple of how we bring new customers into our range.

Helpful. Congrats on the performance. Good luck, guys. Thank you. Next question will be from Omar, the Scoutski. Thank you, America. Please go ahead. Hi, Josh. Thanks for taking my question. So thanks for mentioning that I guess you guys are sort of assuming that the market will be flat to down in 2023. I wanted to know whether that would assume a recession in 2020.

be down year on year, would you expect that they would be, you know, dapper-driven or prepared would be down as well in 2023. And then I have a follow-up question I advertising. OK. Thanks. Thanks, Omar. So let's start with the market one. So if you look at Eilish and Crychat, they come out and said that they're

is why and more to do with the user acquisition is more challenged. Now with that said, you know, things were more challenged last year. We had a lot of games do really well in the larger scale, whether or not it's either casual or social casinos. We had...

majority of our portfolio performed very well last year. And we expect to see that going into next year. You know, as we look at the broader, you know, economics of people and what happened, I think we kind of look at it as twofold. Like one, the average person in our game are making five and ten dollar purchases throughout a course of a week or a month. And it's not the type of expenditures that I expect to see.

portfolio, what we're able to do is we're able to look at these trends across multiple games at once. And one thing that we did at the beginning of this year was kick off a kind of like a global macro team inside of Sci-Fi. And our entire role inside of this is to look for things that are happening in multiple games all at once. So if we see multiple games at once, all of a sudden slowing down number of...

that we need to, but we're also able to make the game and entertainment shifts that we need to. So right now we feel very confident that we're gonna perform very well into 23. And as I mentioned earlier, February for us as a run rate, what's the same as December ? And that's actually something that's not normal.

because December has that two weeks worth of holidays that sit in and every year. Okay, thank you for the comprehensive response. So maybe my second question is, in terms of advertising, have you extended the window against which you buy on the LTV curve? So for example, if let's say two years ago you were buying and spending user acquisition against, I don't know, a 90 day or 120 day LTV target, have you moved out to, let's say, I don't know, 180 days or something like that. How has your thinking as to which part of the LTV curve you buy against?

shifted or changed over the last six months? Yeah, so over the last six months we've made no change. I don't know if you remember at the beginning of last year because of the increased LTBs, we did announce that we were moving our LTB, our window from six months to nine months. We held through that all of last year, and honestly we continue to get stronger and stronger paybacks from it. We really measure our people and our games and our payers and our games by years. You know, jackpot party which oldest game in our portfolio, the people it brought back in 2000, or sorry, that installed the game in 2012.

actually spent more money in 2022 than they did in 2012. So we think of the LTV really as a true, true lifetime. The payback, as far as I'm concerned, is more about making sure that we hedge our bet in case there's any type of market movement that happens or any type of platform movement that happens. But we feel very, very confident right now that we're gonna outperform the nine months. And to be honest, we constantly evaluate whether or not it makes sense to go from nine to 12. We're not there today. We're gonna continue where we are today, but we're also expecting to see the great returns we do that we're currently getting. Awesome. Thank you, Josh. Thank you. I can't be able to question. Please press store them on. All right. Question will be from Ben Solson. Don't you think? Please go in. Yes. You'll find that. Hey guys, thanks for taking the question. When I look at the drivers of growth in social casino this year, it would, you know, monthly paying users were up quite a bit. And then.

So revenue per paying user was about flat and I'm just curious how you think of those two levers heading into 2023 and if you think it'll be similar or more more balanced between the two. Thanks. Yeah, so I'll be honest, my preference is I would always rather grow MPU and leave average monthly revenue per paying user flat. Why is that? Because if I'm growing MPU, I'm adding more payers into the portfolio and by adding more payers into the portfolio, I'm diversifying my revenue risk and giving ourselves a better chance of being sustained longer. So I definitely say payers is first and foremost. If you actually looked at the scale of the portfolio from your side, it looks flat because it averages out. But actually our higher end payers continue to increase how much they're spending. We're just bringing so many more new payers in that the average is staying very, very flat over time. Got it. That's helpful. And then it's still really, but just curious what your take star on the potential for alternative app stores and.

What that might mean for your business longer term? Yeah, so I mean first and foremost, I will call it for us. The DTC is the number one thing that we're looking to. I know it's not quite an app store, but it is up being our own platform at the end of the day where we get to be the payment provider and also get to own the communication with the player, which gives us just a deeper relationship with them. We are constantly evaluating every new app store that comes out. You know, I would say the learnings I've had over time is you don't want to be first to a new app store in today's world, but you don't want to be last. So we're evaluating them on a weekly basis and anyone that we see start gaining any momentum early on, then we pivot over the development team. In order to get on there as soon as we possibly can, but we just knew new app stores are not new to being talked about. They just hasn't really been any that have taken a big share from either Google or Apple at this point. So it's more of just watching.

Q4 2022 Sciplay Corp Earnings Call

Request a DemoDemo

SCPL

Sciplay

Earnings