SciPlay (NASDAQ:SCPL) Beats Q1 Sales Targets

Radek Strnad /
2023/05/09 4:22 pm EDT
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Digital casino game developer SciPlay (NASDAQ:SCPL) reported Q1 FY2023 results topping analyst expectations, with revenue up 18% year on year to $186.4 million. SciPlay made a GAAP profit of $41.8 million, improving on its profit of $32 million, in the same quarter last year.

Is now the time to buy SciPlay? Access our full analysis of the earnings results here, it's free.

SciPlay (SCPL) Q1 FY2023 Highlights:

  • Revenue: $186.4 million vs analyst estimates of $178.9 million (4.18% beat)
  • EPS: $0.24 vs analyst expectations of $0.24 (1.94% miss)
  • Free cash flow of $45.5 million, down 13% from previous quarter
  • Gross Margin (GAAP): 69%, in line with same quarter last year
  • Average Monthly Paying Users: 0.63 million, up 25 thousand year on year

Josh Wilson, Chief Executive Officer of SciPlay, commented, “SciPlay continued its industry-leading performance in the first quarter of 2023, outpacing the social casino market for the fifth consecutive quarter. We continue to benefit from the investments that we've made in key growth drivers of our business and into the development of proprietary tools and systems. Our strong operating platform and industry-best team's innovation are providing our players with engaging entertainment experiences, resulting in more payers and increasing monetization per player. We are off to a great start in the first quarter and look forward to continuing on our path of sustainable and profitable growth.”

Headquartered in Las Vegas, SciPlay (NASDAQ:SCPL) offers digital casino games that favor repetition over skill.

Since videogames were invented in the 1970s, they have gradually taken more share of entertainment time. Cheap, powerful computing and graphics chips have made ever more realistic versions of classic sports, driving and shooting games while also introducing immersive metaverse-like gaming. Ubiquitous mobile devices have powered a surge in “snackable” games that can be played on the go. Over time, games have developed more social engagement features where friends can play games together over the internet. The business models of games publishers have become less volatile due to digitization of distribution, in game monetization, and like Hollywood, an increasing dependence on surefire hit franchises. Covid driven lockdowns accelerated adoption and usage of videogames – a trend that has not slowed.

Sales Growth

SciPlay's revenue growth over the last three years has been mediocre, averaging 15.3% annually. This quarter, SciPlay beat analyst estimates and reported a moderate 18% year on year revenue growth.

SciPlay Total Revenue

Ahead of the earnings results the analysts covering the company were estimating sales to grow 2.65% over the next twelve months.

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Usage Growth

As a video gaming company, SciPlay generates revenue growth by growing both the number of players playing its games, as well as how much each of those players spends on (or in) their games.

Over the last two years the number of SciPlay's paying users, a key usage metric for the company, grew 12.1% annually to 0.63 million. This is decent growth for a consumer internet company.

SciPlay Average Monthly Paying Users

In Q1 the company added 25 thousand paying users, translating to a 4.17% growth year on year.

Key Takeaways from SciPlay's Q1 Results

With a market capitalization of $371.8 million SciPlay is among smaller companies, but its more than $357.5 million in cash and positive free cash flow over the last twelve months give us confidence that SciPlay has the resources it needs to pursue a high growth business strategy.

It was good to see SciPlay outperform Wall St’s revenue and EBITDA expectations this quarter. That feature of these results really stood out as a positive. On the other hand, revenue growth is overall a bit slower these days. Zooming out, we think this was still a decent, albeit mixed, quarter, showing the company is staying on target. The company is up 2% on the results and currently trades at $17.34 per share.

Should you invest in SciPlay right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.