SciPlay Reports Third Quarter 2022 Results
SciPlay Corporation (NASDAQ: SCPL) reported strong Q3 2022 results, achieving record revenues of $170.8 million, a 17% increase YoY. Key performance indicators showed an ARPDAU rise of 16% to $0.80 and a payer conversion rate at a record 9.7%. However, net income decreased to $33.7 million from $37.0 million the previous year, primarily due to higher operating expenses. The company has returned $28 million in capital to shareholders via share repurchases. SciPlay maintains its revenue growth targets and plans to further invest in its direct-to-consumer platform.
- Revenue increased by 17% YoY to $170.8 million, achieving a new quarterly record.
- ARPDAU rose 16% to $0.80, indicating stronger monetization.
- Payer conversion rate reached a record 9.7%, demonstrating effective live-ops strategies.
- Average Monthly Paying Users increased to 0.6 million, setting a new record.
- Maintained an elevated AMRPPU above $90 for the 10th consecutive quarter.
- Net income declined to $33.7 million from $37.0 million YoY due to increased operating expenses.
- Increased marketing expenses ($14.9 million) and personnel costs ($8.6 million) impacted profitability.
- Net cash provided by operating activities decreased by $37 million YoY.
Delivered Strong Year-Over-Year and Sequential Performance with a Number of Quarterly Records:
- Revenue of
- ARPDAU of
- Average MPU of 0.6 Million, up
- Payer Conversion of
-
Outpaced the
Returned
“We’ve continued to enhance monetization and achieved multiple quarterly records fueled by our evergreen social casino franchises, demonstrating their longevity and ability to drive sustainable growth. With our investments, we are delivering better gaming content and experiences than ever before, deepening players’ engagement and boosting player life-time value.”
“Our strategic investments, including in the SciPlay Engine and our upcoming direct-to-consumer platform, will enhance our ability to drive growth and long-term margin expansion as we continue to scale ARPDAU and take a competitive leap in the current business environment. Given our strong performance this quarter, we are maintaining our full year 2022 revenue growth and AEBITDA margin(2) targets. We see an unparalleled combination of opportunities to grow and scale our business over the long-term and drive increased shareholder value.”
_________________
(1) The amount as of
(2) Represents a non-GAAP financial measure. Additional information on non-GAAP financial measures (including targets) presented herein is available at the end of this release.
SUMMARY RESULTS
|
Three Months Ended |
||||||
($ in millions) |
|
||||||
|
|
2022 |
|
|
|
2021 |
|
Revenue |
$ |
170.8 |
|
|
$ |
146.6 |
|
Net income |
|
33.7 |
|
|
|
37.0 |
|
Net income margin |
|
19.7 |
% |
|
|
25.2 |
% |
Net cash provided by operating activities |
|
21.0 |
|
|
|
58.0 |
|
Capital expenditures |
|
3.5 |
|
|
|
0.9 |
|
|
|
|
|
||||
Non-GAAP Financial Measures (1) |
|
|
|
||||
Adjusted EBITDA (“AEBITDA”) |
$ |
42.8 |
|
|
$ |
44.7 |
|
AEBITDA margin |
|
25.1 |
% |
|
|
30.5 |
% |
|
|
|
|
||||
|
As of |
|
As of |
||||
Balance Sheet Measures |
|
2022 |
|
|
|
2021 |
|
Cash and cash equivalents |
$ |
299.2 |
|
|
$ |
364.4 |
|
Available liquidity(2) |
|
449.2 |
|
|
|
514.4 |
|
|
|
|
|
||||
(1) The financial measures “AEBITDA” and “AEBITDA margin” are non-GAAP financial measures defined below under “Non-GAAP Financial Measures” and are reconciled to the most directly comparable GAAP measures in the accompanying supplemental tables at the end of this release. |
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(2) Available liquidity is calculated as cash and cash equivalents plus the undrawn capacity on our revolver. |
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Key Performance Indicators
(in millions, except Average Revenue Per Daily Active Users ("ARPDAU"), Average Monthly Revenue Per Paying User ("AMRPPU"), and percentages; KPIs include only in-app purchases) |
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Three Months Ended |
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Increase / |
||
|
2022 |
|
2021 |
|
(Decrease) |
Mobile Penetration |
|
|
|
|
1.0pp |
Average Monthly Active Users |
5.9 |
|
6.1 |
|
(0.2) |
Average Daily Active Users |
2.2 |
|
2.3 |
|
(0.1) |
ARPDAU |
|
|
|
|
|
Average Monthly Paying Users |
0.6 |
|
0.5 |
|
0.1 |
AMRPPU |
|
|
|
|
|
Payer Conversion Rate |
|
|
|
|
1.2pp |
pp = percentage points. |
|||||
Third Quarter 2022 Financial Highlights
-
Revenue was
$170.8 million 17% from the prior year period, achieving a new quarterly record, reflecting strong social casino performance and the full quarter contribution from Alictus. -
Net income was
$33.7 million $37.0 million $14.9 million $8.6 million $4.5 million 17% revenue growth and lower legal expense. Net income margin was19.7% for the quarter. -
AEBITDA, a non-GAAP financial measure defined at the end of this release, was
$42.8 million $44.7 million 25.1% for the quarter. -
Net cash provided by operating activities was
$21.0 million $37.0 million $24.5 million -
Cash and cash equivalents decreased by
$65.2 million $299.2 million $107.9 million $26.8 million $24.5 million $18.2 million $95.2 million
Third Quarter Key Performance Highlights
-
Jackpot Party Casino ® achieved a quarterly record revenue. - Quick Hit Slots® achieved third consecutive quarterly revenue record.
-
Payer conversion rate set a new record of
9.7% validating our continued payer focus and live-ops strategy to drive increased monetization. - Average Monthly Paying Users (MPU) increased to 0.6 million compared to 0.5 million in the prior year period, a new record.
-
Average Monthly Revenue Per Paying User (AMRPPU) maintained elevated levels with 10th consecutive quarter above
$90 -
Average Revenue Per Daily Active User (ARPDAU) was up
16% to a record$0.80 $0.69 -
Mobile penetration increased
1% from the prior year period to90% .
About
You can access our filings with the
All ® and © notices signify marks registered in
© 2022
Forward-Looking Statements
Throughout this press release, we make “forward-looking statements” within the meaning of the
- the continuing impact of the COVID-19 pandemic and any resulting social, political, economic and financial complications;
- our ability to attract and retain players;
- expectations of growth in total consumer spending on social gaming, including social casino gaming;
- our reliance on third-party platforms and our ability to track data on those platforms;
- our ability to continue to launch and enhance games that attract and retain a significant number of paying players;
- our ability to expand in international markets;
- our reliance on a small percentage of our players for nearly all of our revenue;
- our ability to adapt to, and offer games that keep pace with, changing technology and evolving industry standards;
- competition;
- our dependence on the optional purchases of coins, chips and cards to supplement the availability of periodically offered free coins, chips and cards;
- our ability to access additional financing and restrictions and covenants in debt agreements, including those that could result in acceleration of the maturity of our indebtedness;
- the discontinuation or replacement of LIBOR, which may adversely affect interest rates;
- fluctuations in our results due to seasonality and other factors;
- dependence on skilled employees with creative and technical backgrounds;
- our ability to use the intellectual property rights of Light & Wonder, Inc. ("Light & Wonder" and "Parent") and other third parties, including the third-party intellectual property rights licensed to Light & Wonder, under our intellectual property license agreement with our Parent;
- protection of our proprietary information and intellectual property, inability to license third-party intellectual property and the intellectual property rights of others;
- security and integrity of our games and systems;
- security breaches, cyber-attacks or other privacy or data security incidents, challenges or disruptions;
- reliance on or failures in information technology and other systems;
- loss of revenue due to unauthorized methods of playing our games;
- the impact of legal and regulatory restrictions on our business, including significant opposition in some jurisdictions to interactive social gaming, including social casino gaming, and how such opposition could lead these jurisdictions to adopt legislation or impose a regulatory framework to govern interactive social gaming or social casino gaming specifically, and how this could result in a prohibition on interactive social gaming or social casino gaming altogether, restrict our ability to advertise our games, or substantially increase our costs to comply with these regulations;
- laws and government regulations, both foreign and domestic, including those relating to our Parent and to data privacy and security, including with respect to the collection, storage, use, transmission, sharing and protection of personal information and other consumer data, and those laws and regulations that affect companies conducting business on the internet, including ours;
-
the continuing evolution of the scope of data privacy and security regulations, and our belief that the adoption of increasingly restrictive regulations in this area is likely within the
U.S. and other jurisdictions; - risks related to foreign operations, including the complexity of foreign laws, regulations and markets; the uncertainty of enforcement of remedies in foreign jurisdictions; the effect of currency exchange rate fluctuations; the impact of foreign labor laws and disputes; the ability to attract and retain key personnel in foreign jurisdictions; the economic, tax and regulatory policies of local governments; and compliance with applicable anti-money laundering, anti-bribery and anti-corruption laws;
- influence of certain stockholders, including decisions that may conflict with the interests of other stockholders;
- our ability to achieve some or all of the anticipated benefits of being a standalone public company;
-
our dependence on distributions from
SciPlay Parent Company, LLC to pay our taxes and expenses, including substantial payments we will be required to make under the Tax Receivable Agreement (the “TRA”); - failure to establish and maintain adequate internal control over financial reporting;
- stock price volatility;
- litigation and other liabilities relating to our business, including litigation and liabilities relating to consumer protection, gambling-related matters, employee matters, alleged service and system malfunctions, alleged intellectual property infringement and claims relating to our contracts, licenses and strategic investments;
- our ability to complete acquisitions and integrate businesses successfully;
- our ability to pursue and execute new business initiatives;
- our expectations of future growth that will place significant demands on our management and operations;
- natural events and health crises that disrupt our operations or those of our providers or suppliers;
- changes in tax laws or tax rulings, or the examination of our tax positions;
- levels of insurance coverage against claims;
- our dependence on certain key providers; and
-
U.S. and international economic and industry conditions.
Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the
This press release may contain references to industry market data and certain industry forecasts. Industry market data and industry forecasts are obtained from publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. Although we believe industry information to be accurate, it is not independently verified by us and we do not make any representation as to the accuracy of that information. In general, we believe there is less publicly available information concerning international social gaming industries than the same industries in the
Due to rounding, certain numbers presented herein may not precisely recalculate.
|
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CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||
(Unaudited, in millions, except per share amounts) |
||||||||||||
|
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|||||
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|
Three Months Ended |
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Nine Months Ended |
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|
|
|
|||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenue |
$ |
170.8 |
|
$ |
146.6 |
|
$ |
488.9 |
|
$ |
451.7 |
|
Operating expenses: |
|
|
|
|
|
|
|
|||||
Cost of revenue(1) |
|
52.0 |
|
|
46.2 |
|
|
148.1 |
|
|
141.3 |
|
Sales and marketing(1) |
|
49.5 |
|
|
32.9 |
|
|
136.1 |
|
|
101.7 |
|
General and administrative(1) |
|
17.4 |
|
|
13.1 |
|
|
48.8 |
|
|
46.8 |
|
Research and development(1) |
|
11.8 |
|
|
9.8 |
|
|
34.6 |
|
|
28.8 |
|
Depreciation and amortization |
|
5.6 |
|
|
4.4 |
|
|
15.8 |
|
|
11.3 |
|
Restructuring and other |
|
1.1 |
|
|
1.7 |
|
|
4.4 |
|
|
3.1 |
|
Operating income |
|
33.4 |
|
|
38.5 |
|
|
101.1 |
|
|
118.7 |
|
Other income (expense), net |
|
1.4 |
|
|
0.1 |
|
|
0.9 |
|
|
(0.4 |
) |
Net income before income taxes |
|
34.8 |
|
|
38.6 |
|
|
102.0 |
|
|
118.3 |
|
Income tax expense |
|
1.1 |
|
|
1.6 |
|
|
4.0 |
|
|
5.5 |
|
Net income |
|
33.7 |
|
|
37.0 |
|
|
98.0 |
|
|
112.8 |
|
Less: Net income attributable to the noncontrolling interest |
|
28.9 |
|
|
31.1 |
|
|
83.1 |
|
|
95.7 |
|
Net income attributable to |
$ |
4.8 |
|
$ |
5.9 |
|
$ |
14.9 |
|
$ |
17.1 |
|
|
|
|
|
|
|
|
|
|||||
Basic and diluted net income attributable to |
|
|
|
|
|
|
|
|||||
Basic |
$ |
0.20 |
|
$ |
0.24 |
|
$ |
0.61 |
|
$ |
0.71 |
|
Diluted |
$ |
0.20 |
|
$ |
0.24 |
|
$ |
0.61 |
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|||||
Weighted average number of shares of Class A common stock used in per share calculation: |
|
|
|
|
|
|
|
|||||
Basic shares |
|
23.7 |
|
|
24.5 |
|
|
24.3 |
|
|
24.0 |
|
Diluted shares |
|
24.0 |
|
|
24.8 |
|
|
24.6 |
|
|
24.9 |
|
|
|
|
|
|
|
|
|
|||||
(1) Excludes depreciation and amortization. |
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|
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(Unaudited, in millions, except par value) |
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|
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||
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As of |
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|
|
|
|
||
ASSETS |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
299.2 |
|
$ |
364.4 |
Accounts receivable, net |
|
43.6 |
|
|
39.6 |
Prepaid expenses and other current assets |
|
7.7 |
|
|
6.4 |
Total current assets |
|
350.5 |
|
|
410.4 |
Property and equipment, net |
|
3.0 |
|
|
3.5 |
Operating lease right-of-use assets |
|
5.3 |
|
|
6.8 |
|
|
217.5 |
|
|
131.1 |
Intangible assets and software, net |
|
77.4 |
|
|
49.6 |
Deferred income taxes |
|
73.8 |
|
|
78.5 |
Other assets |
|
1.6 |
|
|
1.7 |
Total assets |
$ |
729.1 |
|
$ |
681.6 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable |
$ |
17.1 |
|
$ |
20.0 |
Accrued liabilities |
|
27.7 |
|
|
50.2 |
Due to affiliate |
|
3.5 |
|
|
1.6 |
Total current liabilities |
|
48.3 |
|
|
71.8 |
Operating lease liabilities |
|
3.6 |
|
|
5.4 |
Liabilities under TRA |
|
60.2 |
|
|
64.7 |
Other long-term liabilities |
|
38.4 |
|
|
14.7 |
Total stockholders’ equity(1) |
|
578.6 |
|
|
525.0 |
Total liabilities and stockholders’ equity |
$ |
729.1 |
|
$ |
681.6 |
|
|
|
|
||
(1) Includes |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(Unaudited, in millions) |
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|
Three Months Ended |
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Nine Months Ended |
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|
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net cash provided by operating activities |
$ |
21.0 |
|
|
$ |
58.0 |
|
|
$ |
95.2 |
|
|
$ |
126.3 |
|
Net cash provided by (used in) investing activities |
|
0.8 |
|
|
|
(6.6 |
) |
|
|
(110.5 |
) |
|
|
(13.7 |
) |
Net cash used in financing activities |
|
(38.4 |
) |
|
|
(21.5 |
) |
|
|
(49.1 |
) |
|
|
(50.7 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(0.3 |
) |
|
|
0.1 |
|
|
|
(0.8 |
) |
|
|
— |
|
(Decrease) increase in cash, cash equivalents and restricted cash |
|
(16.9 |
) |
|
|
30.0 |
|
|
|
(65.2 |
) |
|
|
61.9 |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
316.1 |
|
|
|
300.8 |
|
|
|
364.4 |
|
|
|
268.9 |
|
Cash, cash equivalents and restricted cash, end of period |
$ |
299.2 |
|
|
$ |
330.8 |
|
|
$ |
299.2 |
|
|
$ |
330.8 |
|
|
|
|
|
|
|
|
|
||||||||
Supplemental cash flow information: |
|
|
|
|
|
|
|
||||||||
Cash paid for income taxes |
$ |
1.1 |
|
|
$ |
0.4 |
|
|
$ |
3.1 |
|
|
$ |
4.5 |
|
|
|
|
|
|
|
|
|
||||||||
Supplemental non-cash transactions: |
|
|
|
|
|
|
|
||||||||
Non-cash additions to intangible assets related to license agreements |
$ |
0.5 |
|
|
$ |
3.5 |
|
|
$ |
1.3 |
|
|
$ |
16.8 |
|
|
|||||||||||||||
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO SCIPLAY TO AEBITDA |
|||||||||||||||
(Unaudited, in millions) |
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|
||||||||
|
Three Months Ended |
|
Nine Months Ended |
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|
|
|
|
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income attributable to |
$ |
4.8 |
|
|
$ |
5.9 |
|
|
$ |
14.9 |
|
|
$ |
17.1 |
|
Net income attributable to noncontrolling interest |
|
28.9 |
|
|
|
31.1 |
|
|
|
83.1 |
|
|
|
95.7 |
|
Net income |
|
33.7 |
|
|
|
37.0 |
|
|
|
98.0 |
|
|
|
112.8 |
|
Restructuring and other(1) |
|
1.1 |
|
|
|
1.7 |
|
|
|
4.4 |
|
|
|
3.1 |
|
Depreciation and amortization |
|
5.6 |
|
|
|
4.4 |
|
|
|
15.8 |
|
|
|
11.3 |
|
Income tax expense |
|
1.1 |
|
|
|
1.6 |
|
|
|
4.0 |
|
|
|
5.5 |
|
Stock-based compensation |
|
2.7 |
|
|
|
0.1 |
|
|
|
6.8 |
|
|
|
5.4 |
|
Other (income) expense, net |
|
(1.4 |
) |
|
|
(0.1 |
) |
|
|
(0.9 |
) |
|
|
0.4 |
|
AEBITDA |
$ |
42.8 |
|
|
$ |
44.7 |
|
|
$ |
128.1 |
|
|
$ |
138.5 |
|
Revenue |
$ |
170.8 |
|
|
$ |
146.6 |
|
|
$ |
488.9 |
|
|
$ |
451.7 |
|
Net income margin (Net income/Revenue) |
|
19.7 |
% |
|
|
25.2 |
% |
|
|
20.0 |
% |
|
|
25.0 |
% |
AEBITDA margin (AEBITDA/Revenue) |
|
25.1 |
% |
|
|
30.5 |
% |
|
|
26.2 |
% |
|
|
30.7 |
% |
|
|
|
|
|
|
|
|
||||||||
(1) Refer to AEBITDA definition for a description of items included in restructuring and other. |
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RECONCILIATION OF NET INCOME MARGIN |
||||||||||||
TO AEBITDA MARGIN |
||||||||||||
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|
|
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|
||||
|
|
Three Months Ended |
|
Nine Months Ended |
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|
|
|
|
|
||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Net income margin (Net income/Revenue) |
|
19.7 |
% |
|
25.2 |
% |
|
20.0 |
% |
|
25.0 |
% |
Restructuring and other |
|
0.6 |
% |
|
1.2 |
% |
|
0.9 |
% |
|
0.7 |
% |
Depreciation and amortization |
|
3.3 |
% |
|
3.0 |
% |
|
3.2 |
% |
|
2.5 |
% |
Income tax expense |
|
0.7 |
% |
|
1.1 |
% |
|
0.8 |
% |
|
1.2 |
% |
Stock-based compensation |
|
1.6 |
% |
|
0.1 |
% |
|
1.4 |
% |
|
1.1 |
% |
Other (income) expense, net |
|
(0.8 |
)% |
|
(0.1 |
)% |
|
(0.1 |
)% |
|
0.1 |
% |
AEBITDA margin (AEBITDA/Revenue) |
|
25.1 |
% |
|
30.5 |
% |
|
26.2 |
% |
|
30.7 |
% |
Non-GAAP Financial Measures
Adjusted EBITDA, or AEBITDA, as used herein, is a non-GAAP financial measure that is presented as supplemental disclosure and is reconciled to net income attributable to
Our management uses AEBITDA and AEBITDA margin to, among other things: (i) monitor and evaluate the performance of our business operations; (ii) facilitate our management’s internal comparisons of our historical operating performance and (iii) analyze and evaluate financial and strategic planning decisions regarding future operating investments and operating budgets. In addition, our management uses AEBITDA and AEBITDA margin to facilitate management’s external comparisons of our results to the historical operating performance of other companies that may have different capital structures and debt levels. Our management believes that AEBITDA and AEBITDA margin are useful as they provide investors with information regarding our financial condition and operating performance that is an integral part of our management’s reporting and planning processes. In particular, our management believes that AEBITDA is helpful because this non-GAAP financial measure eliminates the effects of restructuring, transaction, integration or other items that management believes have less bearing on our ongoing underlying operating performance. Management believes AEBITDA margin is useful as it provides investors with information regarding the underlying operating performance and margin generated by our business operations. The forward-looking non-GAAP financial measure AEBITDA margin target range is presented on a supplemental basis. We are not providing a forward-looking quantitative reconciliation of AEBITDA margin target range to the most directly comparable GAAP measure because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the relevant period.
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Media Relations
Director,
SciPlayPress@sciplay.com
Investor Relations
Vice President, Investor Relations
SciPlayIR@sciplay.com
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