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spk00: Good day and thank you for standing by. Welcome to the SidePlay fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you need further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Jim Bombasi, Senior Vice President, Investor Relations. Please go ahead.
spk09: Thank you, Operator, and good morning, everyone. During today's call, we will discuss our fourth quarter and full year 2021 results and operating performance, followed by a question and answer period. With me today are CEO Josh Wilson and Interim CFO Daniel O'Quint. Our call today will contain statements 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, the materials relating to this call posted on our website, and our filings with the SEC. We will also discuss certain non-GAAP financial measures. A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our earnings release as well as on the investor section on our website. As a reminder, this conference call is being recorded. A replay of this webcast and accompanying materials will be archived in the investor section of our website at sideplay.com. Also, supplemental reference slides will be posted to our investor relations website. These slides are meant to facilitate your review of our company's results and be used as a reference document following the call. Now, let me turn the call over to Josh.
spk03: Thanks, Jim. Good morning, everyone, and thanks for joining today. We are making great progress strategically, operationally, and financially firmly executing on our strategy to become a diversified global game developer. as we grow our core business and lay the foundation to the further acceleration of our expansion in the casual market. We had a number of successes in the quarter and for the full year that I want to quickly highlight. Our core business is firing on all cylinders. We posted a record full year revenue and a second highest quarter revenue ever, fueled by strong monetization and engagement. We achieved an all-time high full-year revenue of $606 million, up 4% year-over-year. Our fourth quarter revenue grew 5% year-over-year and 5% sequentially outperforming the social casino market. Our key strategic initiatives, like Project All-Star, resulted in record engagement and monetization metrics. including record payer conversion and average monthly revenue per paying user in the quarter. Our portfolio of games is performing extremely well. Fourth quarter was the fifth consecutive record quarter for Goldfish, and on a sequential basis, Quick Hit was up 14%, and Jackpot Party grew 7%, making it its second highest revenue quarter ever. Importantly, we continue to focus on the bottom line, generating strong net operating cash flow of $164 million in 2021. Our strategic initiatives like Project All-Star are meaningfully contributing to the strong performance in our core social casino business, further improving the player experience and our ability to monetize players. We are rapidly expanding in casual with yesterday's announcement of our acquisition of Elictus and the worldwide launch of Solitaire Pet Adventure in the fourth quarter. We are advancing our strategy to be a diversified global game company with strong core business, growing studio capability, building a pipeline of new games, and our entry into the mobile ad market. Now, let's go into the great progress we are making operationally and what is driving that success. We have continued to benefit from the strategic investments we have made in our core social casino business as we refine our live service capabilities, including our live ops, data science, and user acquisition. One of our key initiatives, Project All-Star, has been the catalyst for driving our performance. With Project All-Star, we strategically add resources to the game once a game reaches critical scale, and we are seeing strong returns on our investment. By adding these resources, we further refine the content and features in the game, better segmenting the player base on their preferences and delivering a tailored experience that drives increased engagement. We are adding new meta features in the game like Unreal collectibles, task managers, and long-term albums, increasing the player engagement and getting our players to spend more time in our games. Our exceptional data and analytics capabilities analyzes the player behavior, helping us anticipate and deliver what they want to play next. Project All-Star has been a catalyst for the growth of our largest games. we have been able to continue to increase player engagement leading to record monetization levels. We have been able to successfully grow Jackpot Party, which was released in 2012, increasing its fourth quarter revenue 7% sequentially, record revenue for the year, and taking key payer metrics to record levels. Goldfish and Quicket are also benefiting from Project All-Star generating record revenue in 2021. We have the opportunity to further advance our capability as we expand in casual and enhance player engagement and monetization across both casual and social casino. Across the different sub-genres of casual, whether it's solitaire games, match, three games, puzzle games, or social casino, the common thread is the player. This is where we leverage our SidePlay engine to better understand each of our players' behavior. We learn more about each player's preferences with each game they play. We can then use this information to build features and events that fit the player's preferences. Over time, as the player continues to engage in our game, we use predictive analytics to anticipate what the player wants to play next and seamlessly deliver those features and events. allowing for deeper engagement, increasing long-term retention, and enhanced player lifetime value. With our latest initiative, which began earlier this year, we are advancing our side play engine by productizing our core capabilities, including live ops, ad tech and user acquisition, data science, and predictive analytics, enabling us to scale these capabilities across our portfolio of games whether it's social or casual. This is a centralized platform that will house the best features, tools, and capabilities that will be implemented across the portfolio of games, whether it's social or casual, to optimize engagement and monetization. Casual is a natural adjacency with similar player demographics and behaviors. Driven by a simple core game, which is enhanced through live services and meta, the same core capabilities that we use to drive engagement and retention in our social games. We are rapidly expanding in Casual with our acquisition of Allictus, which further scales us in Casual, enhancing our growth, and diversifying our revenue streams. Allictus is a proven and profitable developer of chart-topping games. The team has developed and published six games that have achieved number one top free game in the iOS US App Store. This acquisition significantly scales our users, growing DAO by 1.8 million and monthly active users by 28 million, expanding our first-party data and creating attractive cross-promotional opportunities. This acquisition broadens our global player base throughout Elictus' extensive international player network. Ellictus also provides us entry into the fast-growing 13 billion global mobile and game advertising network, diversifying our revenue streams. We are excited about the opportunity to leverage the SidePlay and Ellictus player universes and capture a larger share of the casual market. This is a smart, targeted acquisition that minimizes the upfront payment and incentivizes the talented management to grow the business profitably to enhance shareholder value. We also made progress with the launch of our Solitaire Pet Adventure in December. It is off to a great start with very high user engagement. Players are nearly using two pets per day on average, and they play about 10 rounds per day, which increases with every new improvement we make to the game's features. We are also making great progress with Project X, our new first party casual game on track to launch in the second half of 2022. The Sideplay Finland team has tremendous experience in developing casual games and is spearheading our Project X initiative. And with this initiative, we are setting up the game studio that will focus on delivering fresh casual content for the future. Our goal is simple but ambitious. We want to deliver one-of-a-kind player experiences through building amazing games. As we expand in casual and advance our capabilities, we will enhance our growth and profitability and drive value for our shareholders. With that, I'll turn it over to Daniel to go over the financial results. Daniel?
spk06: Thank you, Josh. It's great to be here. This was another strong quarter with solid top-line growth. a perfect way of finishing an exciting year. Our financial results reflect the strong execution on our strategy and sets up well for continued progress in 2022. As Josh mentioned earlier, we had a record year in terms of top line, with revenues of $606 million for the full year, an increase of $24 million over the prior year, an EBITDA of $186 million, translating into 31% AVA to margin, which is in line with our full year guidance. In the fourth quarter, we generated revenues of 154 million, an increase of 5% year over year. This was the second highest quarterly revenue reported in the company's history, demonstrating the success of key initiatives like Project All Star. Our sequential growth in the fourth quarter exceeded the social casino market by six percentage points, Net income in the fourth quarter declined $12 million from $31 million in the prior year. Our fourth quarter 2021 results included a $24.5 million charge related to the state of Washington settlement agreement. Our full year net income decreased $21 million to $125 million, primarily driven by the charges we incurred in the fourth quarter. Our EBITDA for 2021 was $186 million compared to $189 million in the previous year. The results reflect investments in talent, new capabilities for our side play engine, and incremental new gains in our pipeline. Our fourth quarter EBITDA increased 5% to $47 million year over year, and our EBITDA margin was 31%, which was a 10 basis point increase over the prior year. we have achieved strong results while continuing to invest in organic growth initiatives. Our key initiatives, like Project All-Star, are resulting in very strong engagement and monetization. Our ARP DAOs had a new record of 74 cents in the fourth quarter, an increase of 17% year over year. Likewise, Our average monthly revenue per paying user increased significantly in the fourth quarter to $98, an increase of $7 compared to the fourth quarter 2020. Furthermore, our year-over-year payer conversion rate was up 100 basis points, reaching a record 8.9% in the fourth quarter. Our business remains highly cash generative. For the full year, we generated $164 million in cash from operations and free cash flow of $149 million, which translates into free cash flow conversion rate of 80%. As for our balance sheet, it remained strong. We ended the year with $364 million of cash, a $95 million increase over the prior year. We were incredibly excited about adding Ellictus to our portfolio, and it fit squarely into our strategy. We've structured this transaction in a manner that is capital efficient, minimizing upfront payment, and generating significant shareholder value. We've also aligned management's incentive to drive value. Looking ahead, we're excited about 2022. Our business has amazing fundamentals. We had a great year with our core business firing on all cylinders. In addition, we're expanding into the casual segment. This will be a year of targeted investment to fuel growth in new games and our side play engine that will drive growth across all games. Taking all this into consideration, we expect to grow our 2021 revenues of $606 million by 10% inclusive of Ellictus. We expect to outperform the social casino industry in 2022. With the momentum we have in the business, and the expansion in casual, we believe it is an opportune time to invest in our side play engine, growing the number of new players by increasing our return on ad spend from six to nine months, as the engagement and monetization metrics of our games are at all-time high. This will enhance our revenue growth with a slight impact on our EBITDA margin of approximately 150 basis points as compared to fourth quarter 2021. This continues to be well above the pre-pandemic level in 2019. However, we anticipate AABDA margins will improve off of this base beginning in 2023. We are very proud of our accomplishments with a strong core business. As we invest in our future, we expect to accelerate our growth and drive shareholder value. With that, we are happy to take your questions. Operator?
spk00: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while the Q&A roster. Our first question comes from Ryan Stigdahl with Craig Holland. Your line is open.
spk01: Good morning, guys. Congrats on the acquisition.
spk03: Thanks a lot, Ryan.
spk01: Curious, you mentioned some, I think I caught a 10% growth, including elective acquisition. How much of that growth this year is expected from the acquisition versus core business?
spk03: Thanks a lot, Ryan. As we disclosed here in the remarks, we're expecting the 10% overall. And also during the remarks, we talked about that we're looking to beat the social casino market, which is around 5%. The rest would come through Ellictus, which has been a great – they have been a great growing business in the casual space. The hypercasual space is one of the fastest growing of the subgenres of casual, and so we're expecting great things from them. And the remaining is only the 10 months remaining of the year for Ellictus.
spk01: Josh, just to be clear, you expect the core business to grow greater than the industry at 5% with the difference in tech being the acquisition? Yes. Thank you. Then just on the terms of the acquisition, a bit unusual with such a high earn-out relative to the minority remaining ownership, but what are the terms of that five-year earn-out? What specific metrics will drive that from zero to 5 million? Yeah.
spk03: Yeah, so we're very, very excited about the deal and how it's structured. We felt like the deal itself we were able to get at a very, very good rate compared to what the market is getting. It is very much pointed towards keeping the current owners very, very engaged in the business for a very long period of time, so five years. Um, the actual structure is very, uh, standard for how, uh, companies are structured in, uh, in Turkey, but if they hit their earn out, the return to us becomes a very, very fair, favorable market, um, uh, multiple.
spk01: Got it. Um, and then as you think about the opportunity to expand their in-app ad platform, Is the plan to bring that across SidePlay's core games and then secondly to that? If so, is that targeted to all players or just non-payers today?
spk03: Yeah. So normally when you bring – so let me first say that the technology that they've built out is extremely impressive. The team there has built their own system that they are running. It is 100% data-driven. and does an amazing job of getting very, very high ECPMs. As we do look to evaluate whether or not it can go throughout the rest of our portfolio, the way I would think about it is in games that are very IAP-driven, you use Admon in the people who do not convert to the IAP.
spk01: Helpful. I'll turn it over to the others. Good luck, guys. Thanks.
spk09: Thanks, Brian. Operator, we'll take our next question.
spk00: Our next question comes from Benjamin Soft with Georgia Bank. Your line is open.
spk10: Hey, guys. Thanks for the question. I was wondering if you could talk a bit more about how you plan to leverage your expertise and capabilities in social casino as you move further into the casual space, and specifically the opportunity you see to bring that to the acquired casual portfolio, definitely appreciate all the additional color you gave on the call today. And then I've got a follow up after that. Thanks.
spk09: Okay.
spk03: Hey, thanks a lot, Benjamin. So the great thing is, with our investment in Project All Star, where we invested in the games in our portfolio that were at the critical scale, and we were ready if they were ready to take on the resources we learned so much over the last three years, And with the investment we're making today in the SidePlay Engine, we're able to basically centralize all of those learnings and make a one platform that takes all of these successes we've had and features, live ops, live events, and tools, and make it available to any game that's inside of our portfolio. The great news is the SciPlay engine does not care what the simple core game is. So it doesn't care if it's a slot machine or a match-three game or a puzzle game. It's able to look at the behavior of the player itself and then decide what the next thing or the next day should look like. So we are very, very confident, and we have noticed this through the engagement that we're seeing in Solitaire Pet Adventure. When they are inside of the game, we are seeing them be as engaged as we could have ever hoped for. We also believe that by putting it into a centralized platform the way we are, you know, a lictus, which will come in as a hypercasual, but will slowly move towards a casual hyper model, they'll also be able to plug in and utilize the analytics and UA and ad tech tools that were being built into the engine in order to further scale their players also.
spk10: Great. And then just sort of on the strong monetization that you guys observed this quarter, I'm wondering what percentage of revenue is currently within the project all-star engine I assume that the plan is to bring that to other games, but at what point do those games scale up to become strong ROIs for that? And where do you think monetization can kind of get to over time, given you guys are already at pretty healthy levels? Thanks.
spk03: Yeah, great question. We do 100% believe in the investment we're making in the SciPlay engine, and it is very, very evident by what we're seeing with Jackpot Party, Goldfish, and Quick Hit. Jackpot Party growing 7% quarter-over-quarter, another full-year record. Quick Hit, 14% quarter-over-quarter, another full-year record. And Goldfish, its fifth consecutive record in a row and also another full-year revenue record. These are the three games in our portfolio right now that are using Project All Star. Once we're able to centralize and put it in there, we'll be able to put it into the other games in our portfolio, and we will expect similar growth rates out of those games. The investment to build out takes time, like any technology does. We've already started on it earlier this year. We expect to work on it through the year. I would expect to see the growth happening in 23 and beyond.
spk09: Operator, we'll take our next question.
spk00: Our next question comes from David Ponowski with JP Morgan. Your line is open.
spk04: Hi, thank you. Just a follow-up on Ellictus. Josh, can you maybe just expand a bit on what you think differentiates the studio from other competitors in the hyper-casual space in terms of, you know, UA game development or ad monetization? And then just given the growth that I may use from the transaction, do you see any opportunity to cross-sell some of those players over to your core games?
spk03: Yeah, thanks, David. You know, there are so many very positive things about electives. It's almost hard to know where to start. I'm going to start with, first, they have developed a culture that is as good as any culture I've ever seen. They fit the SciPlay culture on day one, and it makes us extremely excited. They also have a development process. that allows them to test the games at a very low cost in order to predict what the biggest hits will be, which is why they've been able to create six number one games in the IOS market in less than two years. They are constantly testing new items. which is the first time I've seen a company behave this way in that market, which is why I believe that they're already taking market share and growing faster in the fastest-growing subgenre of casual. And then the last question to the 28 million Mao, we could not be more excited. 28 million Mao does overlap very substantially with our core demographics. And we will look to see how we cross-platform or, sorry, I should say cross-game move the individuals on a monthly basis to put them in the highest LTV game in the SciPlay portfolio.
spk04: Okay. And then, Josh, I thought before you mentioned transitioning the output of Ellictus from only hypercasual to also some casual games. And, you know, I was just wondering if that's something that's in the pipeline now or is that more of a longer-term goal?
spk03: Yeah, so let's call it a medium to long. So there's kind of like a three-three. So there's hyper-casual, then there's casual-hyper, and then there's casual. All are sub-genres of the larger casual. Right now, moving towards the work towards casual-hyper, and part of that will be how fast we can get our side play engine up and running and because a lot of the tools that they will use for the player engagement and live ops will come from that engine. Thank you. You're welcome.
spk09: Operator, we'll take our next question.
spk00: Our next question is from Aaron Lee with Macquarie. Your line is open.
spk07: Hey, good morning. Thanks for taking my question. So I wanted to touch on this again real quickly. Can you share what the geographic exposure of Lictus currently is and the demographics of their users? And in terms of seasonality, does it mirror your current portfolio?
spk03: Yeah. So as far as the geographic, they are literally everywhere. They still have around 50% U.S. base, but the rest is throughout the rest of the world. They overlap pretty significantly with what we call our core demographics, so call it 35 and over. Around 50% of all of the installs hit that market also, so it kind of hits the two. As far as seasonality, it's not quite the same as IAP games. because of how it goes worldwide. The main seasonality of IAP games is because a lot of it comes from the U.S. Since this is much more worldwide, they see a much more steady rate throughout the entire year.
spk07: Great. Very helpful. And then just on Project All-Star, It seems like this has been a great success for you guys. When it comes to this initiative, what inning do you think we're in, or is that not the right way to think about it, and this is more of like a continuous improvement sort of thing?
spk03: You know, amazing question. It's funny. I don't know that you could mention it as inning because I think every time you move forward with something, you start a new game. I think what we're doing right now is we're going to be creating a new sport. And what I mean by that is we've had such success over the last three years with our Project All-Star with our three largest games that we're going to redefine the company by taking all those learnings and centralizing them into one platform. And it will allow us to be looking at the entire portfolio of games and how to increase everything at once instead of making small investments one game at a time.
spk09: Perfect. Thank you. Aubrey, we'll take our next question.
spk00: Our next question is from Matthew Thornton with Truist Securities. Your line is open.
spk02: Hey, good morning, guys. Thanks for taking the question. Maybe one on Ellictus, and then I've got a couple quick follow-ups. Josh, on Ellictus, anything you can offer just around whether it's growth rate, margins, I would assume they're gross margins higher given the ad focus, but EBITDA margin maybe below yours, I would assume. Any synergies you've identified that you can offer some color on, and then just finally ad revenue, would you look to break that out going forward since that will obviously be a important part of the business going forward. Why don't I stop there and then I've got a follow-up.
spk03: Thanks a lot, Matthew. Let me handle this one at a time. We're evaluating whether or not to break this out. Somehow or another, we will differentiate how IAP and Admon is. We haven't 100% landed on the answer, but I believe we will relatively soon and hopefully that will give you the clarity that you're looking for there. It is a very high growth rate company. Like I said earlier, hypercasual is the fastest growing inside of the casual market, and they are taking market share inside of hypercasual. So from the growth side, it is a very exciting opportunity. On the margin side, we're not expecting any significant decrease of our margin because of bringing in bringing in electives. But they are a young, growing studio, and we are looking to invest to even further speed up their growth.
spk02: That's helpful. And maybe a couple quick follow-ups I could. On Solitaire Pets, I guess, would you characterize that as now kind of fully – at run rate or is monetization perhaps not fully turned on yet? I'm just kind of trying to get a sense as to where we should think of that in its life cycle. And then similarly on the website, I know the focus is obviously mobile and has been and will continue to be. Should we continue to expect the web business to kind of tail off or does it stabilize here? Just any thoughts there would be helpful as well. Thanks again.
spk03: Okay, so great questions. For the Solitaire game, we are super, super early in its lifecycle yet. You know, we released the game. We started marketing. We're seeing amazing engagement. But with every new game that you launch, as you get more customers, you get more data. And so right now, we're still focused on tweaking the game, still adjusting the economy as we go. because we want to make sure that the game has not only the engagement but also the retention metrics needed in order to scale to become, you know, a tens of millions of dollar franchise for us. So I would say at this point it's in the, you know, it's still on, you know, week one of its total life cycle. We're just getting started. Okay, sorry, I blanked on the question real quick. Sorry about that. So the web business, so I would actually think of it two ways. One is part of our SciPlay engine is we're going to build out our own proprietary platform or a direct-to-customer platform, which is going to be web-based. In that web-based, we'll handle the transactions on our own, and therefore the platform fee that we are spending with Facebook, Apple, and Android will significantly go away. There'll still be a credit card fee, obviously. That will actually increase the amount of revenue that we're seeing on our web platform. Do I believe Facebook itself will decline over time? Yes. But not our overall revenue as we develop and release the platform.
spk09: Operator, we'll take our next question.
spk00: Our next question comes from Matthew Cost with Morgan Stanley. Your line is open.
spk05: Great. Thanks for taking the question. I guess I have two here. So just going back to a comment you made on the call about pushing the payback period out from six to nine months, you know, as I understand it, you know, that six-month payback period has kind of been the target for you guys, you know, certainly for your whole history as a public company. So I guess what were the factors that drove you to, you know, to push it out from six to nine months? You know, thank you for quantifying, like, the impact on profitability. That's helpful. But, like, you know, from a macro perspective, is there a measurability problem or an ad efficacy problem that caused you to kind of, like, basically cast a wider net in order to make sure you're bringing in the volume of users that you need. What was the thinking behind pushing that period out? And then I have a follow-up. Thank you.
spk03: Yeah. So I would actually think about it this way. So as we invested in Project All-Star, we were able to significantly increase the revenue and long-term or the lifetime value of users. not only increase it in periods of time, but also increase the long tail of it. And this made us more and more confident that we would be able to move from the six months to the nine months and still get a very good return on our ad spec over time. If you go to our deck and you see the jackpot party cohorts slide that we put in the deck, you see that the cohort that we brought in in 2012 spent more money with us in 2021 than they did in 2012. Each year it's increased. So we are starting to look at that as, okay, I'm willing to bring in more people for a little bit at nine months because we're expecting to maintain these people for five to ten years, giving us a very, very favorable long-term return.
spk05: Got it. That's helpful. Thank you. And then just on your international operations, I think as of your most recent 10K, and obviously there will be a new one coming out, it did say you had some operations in Kiev in Ukraine. Yes. I'm just wondering, you know, are those operations disrupted? Have you been able to outsource them elsewhere, and what was the impact there?
spk03: Yeah. Thank you for the question. So, I mean, first and foremost, yes, we have, you know, around – 50-some people in Kiev. Our hearts go out to what is happening there. Our first priority is making sure that they are safe, that we're doing everything we can to ensure that they're able to make it through what is the terrible situation that is happening there. We did put things in place before to make sure that nothing would happen you know, materially impact the larger business, you know, as we were leading up to this. But I will just, you know, go one step. Really, our major concern for our studio there is their safety and just hopefully this ending soon and them getting back to a normal life.
spk09: Great. Thank you. Operator, next question, please.
spk00: Our next question is from Drew Crum with Stifel. Your line is open.
spk11: Okay, thanks. Hey, guys. Good morning. Sales and marketing spends seem to be well managed at less than 22% of revenue. Any notable trends around user acquisition during 4Q you'd call out? And you kind of addressed this in your comments, but can you discuss maybe in a little more detail how you're approaching investments here in 2022 for the core business? And then I have a follow-up. Okay.
spk03: You know, from the marketing side, you know, as everyone knows, the IDFA that happened, you know, mid-year caused all digital UA to kind of hiccup. As the year progressed each quarter, things got better, better, better. In Q4, we felt like we were firing on all cylinders. You know, things are continuing to improve each quarter as we learn the new way to market inside of IOS. But as far as the quarter itself, it went exactly the way we had planned. So I see no disruptions going into Q1 of this year. I expect to continue to scale there. The investments, as we talked about, kind of looking at as, you know, two major organic pillars. The first is our, you know, our side play engine project. pushing that and centralizing it so we'll be able to use it across the entire portfolio of games. Once we have that up and running, we're expecting to see all of our games increase in all of its player metrics. And then the next is producing one to two new games a year. As we start building out the studios for this, there's an investment period of actually building the games. And then these would be the two major organic investments we are looking at in 2022.
spk11: Got it. Very helpful. Thanks, Josh. And then my follow-up is more big picture. Daniel, you suggested a step down this year with the adjusted EBITDA margin, but improvement next year. Previously the company had suggested a longer-term target in the mid-30s range. Curious if that's still your goal given all the investment spend and the acquisition. Thanks.
spk03: Yeah, I'll go ahead and take this one, Drew. So, you know, our goal, you know, we're a highly cash-generative company. We've had great growth rates. Uh, you know, we're looking at these investments because they, we believe that that they're the best investments for our shareholders. Um, you know, so we will, as we said in the call, you know, invest, which will slightly bring down the margin, but we believe over time, the revenue growth and the return will, will bring up the margin going forward in the future. Um, you know, our target is to always become, you know, the most efficient company we can over time. But anytime we see investment that we can, you know, super speed our revenue growth for the long-term ROI of the company, we're going to look at those and evaluate them.
spk09: Got it. Thanks, Josh. Thanks, Drew. Operator, we have time for one more question.
spk00: Our last question comes from Franco Granda with DA Davidson. Your line is open. Thank you.
spk08: Yeah, good morning, everyone. Thanks for squeezing me in here. You know, you talked about how you're going to incorporate the casual model into electives. Can you perhaps talk about, you know, the difficulties that would come with that? Will it require new game development, or is it something you can do with existing games that electives offers?
spk03: Yeah, so once again, the electives, they're amazing at creating new games, putting them out. But in the hyper-casual space, it's all about the simple core game and then understanding what the next game coming out. They had started working on some live ops and some short-term meta, which was already in their planned future. When we're able to centralize our side play engine, it will take them years, not years, to get to. It will forward-step them years. because they'll get all of the learnings we have gotten over time and be able to do the live events and the player segmentation needed in order to build out some simple meta into the hyper-casual games. I hope that answers your question.
spk08: Yeah, yeah, I know it does. Thanks, Josh. And then one more, I guess I was hoping to understand a little bit better, um, the advertising solutions that elect this has, you know, where these solutions, something that they developed in house to use in house, uh, where they're selling it to someone else. And then, uh, I guess, yeah, let's talk about that.
spk03: Yeah. So the solution, everything that they have built is their own, uh, their own proprietary, uh, solution. It, it seriously is amazing. They're able to take data from all networks and create their own first-party data, allowing them to very much tailor the ad that is going to each individual. One of the very first things that we will do during the integration is find out where the technology synergies between the two companies can make both companies stronger, and this is absolutely one of the things that Ellictus will bring to SyPlay that will level up all of our ad spend capabilities.
spk08: And then a quick follow-up to that. How scalable are the solutions? Do you think you'll be able to easily scale them to your size?
spk03: Yes, absolutely. It's all technology. So the way that this is built out, they built out a platform that they were very confident would hold hundreds of millions of users. So the scale of it is not, like, we have no worry about the scale side of it.
spk09: All right, great. Thanks. Great thing, Franco. I'll turn it back over to Josh for some final comments.
spk03: You know, we could not be more thrilled about the momentum that we're seeing in our business. 2021 proved to us that a new baseline has been set, and we are very, very excited about our progress. Our strong results in the fourth quarter demonstrated strong momentum across all of our businesses. Our average revenue per day increased at a CAGR of 14% since 2019 on our core business. This is a result of us engaging and monetizing our players. We are now adding another leg of growth with the launch of new games and our acquisition of Ellictus. We could not be more excited about the future. Thank you.
spk09: Great. Thank you, everyone, for joining the call. I'll turn it back over to the operator.
spk00: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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