SciPlay Posted Strong Q3 Revenue Growth, Decrease in Income

Social gaming operator SciPlay reported its financial results for the third quarter of 2022, posting double-digit revenue growth but increased operating expenses weighed on its bottom line.

Alictus’ Acquisition Playing Its Part

SciPlay published its earnings report for the quarter that ended September 30, 2022, posting revenue of $170.8 million, up 16.5% from $146.6 million registered in the third quarter of 2021. The new quarterly record was due to the strong social casino performance and the full quarter contribution from Alictus, the game developer acquired by SciPlay in March.

Commenting on the results, Josh Wilson, chief executive officer of SciPlay, highlighted the “record revenue and strong profitability in the third quarter” as the business managed to outperform the overall social casino market for the second quarter in a row due to its “long-term strategy, strategic investments and strong execution.”

During the quarter, SciPlay incurred higher operating costs primarily driven by marketing spend which increased by $14.9 million, $8.6 million higher personnel costs, including stock-based compensation, and an increase in depreciation and amortization by $4.5 million, and registered a net income of $33.7 million, down 8.9% from $37 million in the third quarter of 2021.

Adjusted EBITDA for the quarter came at $42.8 million, down 4.3% from $44.7 million in the previous comparable period in the year prior, also reflecting increased investment in innovation, SciPlay Engine and to build a direct-to-consumer platform that will support future growth for the business.

“Our strategic investments, including in the SciPlay Engine and our upcoming direct-to-consumer platform, will enhance our ability to drive growth and long-term margin expansion as we continue to scale ARPDAU and take a competitive leap in the current business environment,” Wilson added, reiterating SciPlay full-year 2022 revenue growth and adjusted EBITDA margin targets, focused on the “unparalleled combination of opportunities to grow and scale” as a vehicle for driving shareholder value.

Cash and Cash Equivalents Decreased

At the end of the quarter, cash and cash equivalents decreased by $65.2 million, or 17.9%, to $299.2 million mainly due to the $107.9 million cash consideration related to the Alictus acquisition.

Payments and related distributions to Light & Wonder incurred an additional $26.8 million, while $24.5 million in legal settlement and $18.2 million in share repurchases were the other significant cash outflows. Cash outflows were partially offset by $95.2 million cash flow from operations during the first three quarters.

SciPlay interim chief financial officer Daniel O’Quinn also commented on the results, pointing to the strong execution and engaging content as key drivers for revenue growth.

“We also made significant progress advancing our capital allocation priorities, including investing in our core capabilities to fuel long-term growth while also buying stock under our share repurchase program,” he added, outlining that to date SciPlay has repurchased “nearly half of the total program authorization in the first five months.”

“We have a strong balance sheet, with ample liquidity, and anticipate continuing to repurchase our shares given the compelling value,” O’Quinn concluded.