The coronavirus shutdown apparently has a silver lining, at least for SciPlay Corp.
The Las Vegas-based mobile games unit spun off from Scientific Games Corp., managed to escape the first quarter’s coronavirus bleakness, posting increases in net income, revenue, and a key cash flow measure from a year earlier. People mandated to stay home, apparently enjoy playing the company’s games.
However, SciPlay’s earnings per share and revenue missed Wall Street forecasts.
In a statement Monday, the Las Vegas-based company, born in May 2019, said net income was $31.1 million, or 19 cents per share, for the three months ended March 31. A year earlier, net income was $13.7 million, and the company had no earnings per share.
SciPlay said the continued popularity of its core games, particularly Monopoly Slots and Jackpot Party Casino, which ranks in the top 5 for among Social Casino Games Category in the latest report by Eilers & Krejcik, buoyed the latest earnings.
Analysts surveyed by Seeking Alpha had, on average, expected 21 cents in earnings per share for the latest quarter.
“SciPlay has been a beneficiary of the shelter in place as existing, new and returning users turned to mobile social casino play as a form of entertainment late in the quarter,” said Macquarie Securities gaming analyst Chad Beynon.
He added that SciPlay should see a faster ramp-up of new games “given the increase of play over the last several months.”
SciPlay’s adjusted earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, rose 39.2% to $34.8 million from $25 million.
Overall quarterly revenue was flat at $118.3 million compared with $118.4 million a year earlier. Mobile revenue rose 4% year over year to $101.2 million.
Seeking Alpha-polled analysts had expected revenue of $119.9 million.
Net cash provided by operating activities was $23.5 million, a $15 million year-to-year jump, reflecting strong results and including a $4 million payment related to contingent acquisition consideration.
In the earnings statement, SciPlay CEO Josh Wilson said the company’s results strengthened late in the quarter buoyed by the near nationwide coronavirus-related stay-at-home measures.
During the concluded quarter, SciPlay joined the World Health Organization’s #playaparttogether coronavirus awareness campaign.
“We will continue to provide a fun outlet for our players while the impact of COVID-19 continues to evolve and locations take steps to reopen and relax stay-at-home measures,” Wilson said. “As we look ahead, our team is eager to execute our winning strategy, explore new growth opportunities, keep improving our games, and drive enhanced results.”
SciPlay Chief Financial Officer Mike Cody said the net income and cash flow gains sparked continued meaningful cash flow generation that will poise the company to continue to expand revenue and earnings in the coming years.
“We couldn’t be more excited by our future prospects and opportunities,” he said.
Bank of America apparently shares Cody’s optimism. The bank on April 22 upgraded SciPlay shares to “neutral” from “underperform” and raised its price target on the shares to $11.30 from $9.
In an April 22 investors note posted on Seeking Alpha, Bank of America analyst Ryan Gee said positive revenue and download data factored in the upgrade. He said both could buoy investor sentiment and raise Wall Street consensus estimates.
Gee added that he sees SciPlay’s risk-reward balance in a better position now than it was at the end of 2019, which may offset the lack of upcoming catalysts and the work-from-home tailwind’s dissipation.
SciPlay shares rose in regular Monday trading on the Nasdaq, climbing 31 cents, or 2.61% to close at $12.21.
Follow Matthew Crowley on Twitter @copyjockey
