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spk16: Good morning, and thank you for standing by. Welcome to the SidePlay fourth quarter and full year 2022 earnings conference call. At this time, all participants are in listen-only mode. Please be advised that today's conference is being recorded. I'll lift the hand of the conference over to your speaker today, Robert Weiner, Vice President, Investor Relations, SidePlay Corporation.
spk17: Please go ahead. Thank you, Operator, and good morning, everyone.
spk03: During today's call, we will discuss our fourth quarter and full year 2022 financial results and operating performance, as well as our outlook for 2023, which will be followed by a question and answer period. With me today are Josh Wilson, CEO, and Daniel O'Quinn, Interim CFO. Our call today will contain remarks and 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 and our filings with the FCC. We will also discuss certain non-GAAP financial measures, including key performance indicators, which are based on in-app purchases only. 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 in the investor section on our website. As a reminder, this conference call is being recorded. A replay of this webcast will be archived in the investor section of our website at Sideplay.com. Now I am pleased to turn the call over to Josh.
spk23: Good morning, everyone. I'm very happy to be with you today. Sideplay is on a multi-year journey guided by our vision to spark the world's passion to play by providing the most engaging digital entertainment experiences. We know where we are going and we are aligned on how we're going to get there. This resulted in record KPIs and propelled us to outpace the market in both the fourth quarter and full year. I'm extremely proud of our team and what we have accomplished. Our strong execution and ability to adapt have enabled us to successfully navigate industry dynamics and achieve strong performance in 2022. We are innovative, agile, and extremely motivated to win and focused on delivering amazing experiences for our players and maximize shareholders' value. Now for some key results. First, we delivered impressive top-line results, growing revenue 18% in the fourth quarter and 11% for the full year. This was fueled by our industry-leading execution our live ops, and our data-driven product roadmap. We achieved this growth despite the challenging industry backdrop as our talented teams remain focused and continue to innovate. Second, we achieved a number of records, including growing our payers and our average monthly revenue per payer, underscoring the quality of our earnings performance. Third, we generated robust cash flow of $150 million for the full year. This demonstrates the high cash generative nature of our business. And fourth, as of February 24th, we have returned $41.7 million to our shareholders through our stock repurchase program. We are confident that our strong foundation, combined with multiple growth initiatives, will drive us to post strong gains and outperform the market again. Now let's take a closer look at Q4. We delivered strong fourth quarter performance, demonstrated by our industry-leading results. With our evergreen franchises leading the way, we generated record revenue and attained multiple records in Q4. In Q4, our social casino gains grew 14% year-over-year, while the social casino industry is estimated to have declined by more than 3%. And we have achieved record KPIs, including payer conversion of 10.4% and ARPDAU of 87 cents, which grew 18% year-over-year. Based on Eilers and Krychek's Social Casino Game Tracker report published in January of 23, SciPlay was cited as, quote, standout performer of the year in the fourth quarter, estimated to achieve the fastest growth of the top 15 game developers. And we did just that. Our Q4 performance was driven by our growth in payers. of 13% year-over-year, and to provide longer-term perspective, payers have grown by 42% since 2017. We now have the most payers in SidePlay's history. We have invested in our games, and we will continue to do so as we execute on our product roadmap to deliver the best possible entertainment to our players. The strength of our evergreen franchises and our differentiated go-to-market approach have fueled SidePlay's success. Here are just a handful of examples. JetPop Party smashed our single-day revenue record, and Q4 was a record quarter, capping a record year. The game is now listed by Eilert and Crytek as the number one U.S.-ranked social casino game. Cricket Slots officially became the second $100 million revenue game in SciPlay's portfolio. It is one of the fastest growing games in social casino. Goldfish Casino is gaining momentum from our reimagined features and new live-off strategy. And 88 Fortunes benefited by adding a new economy, content design, and innovative features, which are driving increased player engagement. As a result, SidePlay outperformed the entire social casino market in 2022. Let me repeat this. As a result, SidePlay outperformed the entire social casino market in 2022. Our accomplishments have been powered by a combination of innovation, capabilities, and investment. We have a scalable platform, unparalleled technology, and deep talent that form a runway for both current and long-term success. In 2022, the SciPlay Engine became one of our main drivers of success. We implemented and optimized it across our game portfolio. The SciPlay Engine provides a wide range of optimizations and real-time solutions. The combined knowledge and expertise of our best in industry ad tech, data science, and analytics team have led us to develop an innovative UA solution that is aiding in our winning performance today. Our global analytics team developed and deployed algorithms that decipher and break down complex player behavior. Our LiveOps teams consistently develop and execute unsurpassed monetization strategies. These are driving industry-leading growth. Data science and analytics fused together with player behaviors enable us to drive conversion, retention, and increased player engagement. Cycli continued to evolve our data-driven approach. We made several noticeable advancements that boost our ad tech capabilities by combining team learnings with multiple data sources, predictive analytics, and valuable in-game advertising strategies. We implemented predictive analytics tools, an exclusive technology that focuses on revenue generation. We custom-tailored user experiences by detecting player patterns that maximize their lifetime value. We employed integrated predictive player modeling to improve player behavioral insights and data quality. These strategies have driven improved insights on the players and drive higher return. Now let's turn to the future. As we propel into 2023, SciPlay has strong momentum with multiple growth drivers. We will continue to evolve, scale, and grow our franchises. Our main growth drivers will be to increase our payer base, their engagement time, and the amount of money our players will spend. In essence, the combination of our innovation, capabilities, and investment will enable us to continue closing the ARKDAO gap with our peers. Our robust, data-driven product roadmaps are evolving our evergreen franchises. Our proprietary tech solutions provide valuable insights about our players, the features they want, and the economies that drive them. We continue to evolve our franchises as we implement new events, features, and content accessible from Light & Wonder's extensive IP library. Our LiveOps teams create new engaging events for our players every day. These produce high monetization results and our recent launch direct-to-consumer platform, which allows us to deepen the relationship with our players to push higher LTVs, reduce acquisition costs, and drive long-term margin expansion. Our strong execution in 22 is continuing in 2023. SidePlay's success and ability to deliver consistent value is cemented together by our team's expertise, our culture, our dedication, and our passion to win. Our global team truly leveled up in 22. Thank you, CyPlayers around the world. We had an amazing year. I'll close by saying I'm confident in our team's continued strong execution and the strength of CyPlay's business model and growth. We plan to outperform the overall social casino market and take share in 2023. Now I'm pleased to turn the call over to Daniel.
spk15: Thanks, Josh. Good morning, everyone. And thank you for joining us today. 2022 was a great year for SidePlay with outstanding Q4 results. We carried out our plan presented in the beginning of last year and achieved our full year financial targets for both the top and bottom line. We invested in our core capabilities, and we reinforced our foundation for the future. Our teams were focused and agile, successfully navigating industry dynamics while executing our product roadmaps. I couldn't be prouder of what our teams have accomplished. Their energy and innovation are unparalleled, and they're the reason why we're able to achieve so many all-time records. Our success enabled us to make a competitive leap in social casino, significantly outgrowing the market. Now for some key highlights. First, we delivered strong financial performance in Q4 and the full year, propelled by our evergreen franchises and our team's exceptional execution, likely achieved several all-time records while innovating and adapting to a challenging market environment. Second, we had record ARPDAU and a record number of payers, which we grew sequentially each quarter during the year, underscoring the momentum and quality of our earnings performance. Third, Syphilis continued to make key strategic investments in targeted segments of our business, including proprietary technologies and talent to further strengthen our long-term growth plans. SidePlay continued to be a high cash generating business. We delivered robust operating cash flow of $150 million in 2022 and repurchased 42 million or roughly 70% under our share repurchase program through February 24th. Now let's get into some of the details. We generated strong fourth quarter revenue of $182 million. an all-time record, up 18% year-over-year and 7% sequentially. Full-year revenue of $671 million grew 11%, also setting an all-time record. Our social casino gains grew 14% in the fourth quarter and 7% for the full year. This significantly outperformed the market that is estimated to decline 3% in both the fourth quarter and full year. We generated fourth quarter net income of $53 million, or 29% margin, and full year net income of $151 million. Diluted earnings per share attributable to SIPLAY was 32 cents for the fourth quarter and 91 cents for the full year. We grew our fourth quarter EBITDA 24% to $59 million, while achieving a 32% EBITDA margin, fueled by our strong top-line results as we moved past the marketing innovation spend in Q2 and Q3. EBITDA of $187 million was up slightly for the year, while our EBITDA margin of 28% was in line with our target. As we invested in our talent, the side-play engine, ad tech, and our D2C platform to drive long-term value. Since 2017, we've grown revenue at a 13% CAGR and profitability at a much faster pace, with an ABA CAGR of 22% over the same period. Now let's turn to some key performance indicators for the fourth quarter, where we achieved a number of records. In the fourth quarter, we drew our payers 13% year-over-year to a record, and we saw increases in payers throughout the year. Our ability to consistently deliver great and engaging content enabled us to achieve near-record average monthly revenue for paying users of approximately $99 in Q4 and $95 in the year. This marks our 11th consecutive quarter above $90. This all translated to a record ARPDAU of 87 cents in Q4, an increase of 18% year over year, as we continue to close the gap with our peers. We achieved a payer conversion rate of 10.4% in the fourth quarter and 9.6% in the full year. Also both all-time records. Our KPIs built throughout the year. underscoring the benefits of our key initiatives, robust product roadmap, best-in-class live ops capabilities, and our player loyalty. As an example, players who downloaded Jackpot Party before 2019 are more engaged and had higher retention during 2022. Like our long-term revenue and profitability growth, Our Dow has grown at a 14% CAGR over the last five years, while our peer conversion rate grew at a 13% CAGR over the same period. Now let's turn to cash flow. We believe strong revenue growth, faster growth and naivete, combined with strong cash flow are key drivers of shareholder value. The great thing is our business is highly efficient and cash generative. For 2022, we generated $150 million in operating cash flow, which included $24.5 million payment for the Washington State matter. We have minimal capital expenditures, enabling us to convert a high percentage of operating cash flow into free cash flow. We ended the year with strong liquidity of $330 million in cash and total liquidity of $480 million. We have the financial strength and flexibility to deploy excess capital to drive increasing shareholder value. Now let me take some time to discuss capital allocation. We continue to see opportunities to invest organically in our business. And we will also consider targeted inorganic opportunities. And these include aqua hires as well as small game developers where we see an opportunity to enhance engagement and monetization with our best-in-class capabilities. We make these investments with a financial rigor and an eye on returns. We employ a data-driven approach to ensure that our investments are driving profitable growth and shareholder value. We also believe the combination of organic growth, strong cash flow generation, is fundamental to enhancing shareholder value. Accordingly, our board authorized a $60 million two-year share repurchase program in 2022. To this date, we've repurchased 42 million or roughly 70% of the authorization in 10 months. Let me close my comments today and speak about the opportunity we see ahead in 2023. We're well positioned to continue to take share in social casino and deliver shareholder value. The marketing innovation campaigns we started in 2022 will continue into this year. From a seasonality standpoint, the campaign spend last year impacted Q2 and Q3. This year, most of the innovation spend will happen in the first quarter. The highly successful Jerry O'Connell campaign that ran for quick hit in January and February will be discussed in our Q1 call. In summary, our global team of more than 800 side players is executing at a high level. We have a strong foundation for continued growth and we're determined and highly motivated. We have the passion to win. Thank you, and now I'll turn the call over to the operator, and we'll take your questions.
spk16: Thank you. Well, I'll begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To answer your question, please press star then two. This time, we'll pause momentarily to assemble the roster. First question will be from Eric Sheridan, Golden Sacks.
spk07: Please go ahead. Thanks so much for taking the question, and thanks for all the detail in the prepared remarks. Josh, I want to come back to some of the comments you were making on user acquisition and the repositioning of the company and the platform from a marketing standpoint. Both idiosyncratically in what you've built, how much of a competitive advantage should we be thinking about in terms of the quantification of the ability to outgrow the market or possibly out-earn competitors from an ROI standpoint? That would be part One, and then number two, away from what you can build internally, any update about the way you're thinking about broader marketing ROIs in the gaming sector? You've spent a lot of time experimenting and trying new avenues in the last 12, 18 months. We're curious for an update there as we look out to 23 and beyond. Thanks so much, guys.
spk23: Yeah, thanks a lot, Eric. It's great to talk to you today. You know, we could not be more proud about our UA team, our entire growth team as a whole. You know, we knew coming into 2022 that it needed to be a major investment for us. And we did that. We doubled down on our ad tech capabilities. We doubled down on how we are using data to create player profiles. Our UA team and our retargeting team really just leveled up their game. And with that, built new tools that really are sustainable and keeping us ahead of everyone else. We do continue to believe that we will outperform others in our returns, mainly for two reasons, because, you know, the way that our philosophy is on spending money, it's about getting the most value for every dollar. We're not tracing installs. We're not chasing Mao. We are chasing value for this shareholder. And since our entire team thinks this way, we've been able to get these returns. But it's not just the UA side. It's also the games themselves. Our games, through the implementation of the SidePlay Engine, some of the reorganizations we did, and just more heightened focus on running the live games, we've been able to significantly increase our LTV across almost our entire portfolio in 22 And it continues to look really, really good in 23. So the way I think, you know, I'm trying to hit that last question about ROI. This is honestly how we think of everything we do. Everything we do is an ROI. So whether or not it's how we look at how we spend money, how we look at how we spend time, it is what can we do to maximize the play experience of every user we bring into our ecosystem? And what can we do to keep them playing and being entertained by us instead of wanting to go anywhere else? And if, you know, the results of 22 show anything, I think we're doing a really good job.
spk16: Thank you. Next question will be from Drew Grumman. Steve, please go ahead.
spk10: Okay, thanks. Hey, guys, good morning. So Dan, you addressed in your prepared remarks some of the investments and timing around marketing campaigns in 2023. What does that translate to in terms of your expectations for a just EBITDA margin relative to where you ended up for 2022? So that's the first question. And then maybe for Josh, the paying users have historically ticked higher in 4Q versus 3Q. That metric looked like it slipped a little bit this past quarter on a sequential basis. Anything noteworthy there? And typically you see sequential growth in paying users for 1Q over 4Q. Should we anticipate a similar seasonal trend line for the early part of 23? Thanks.
spk17: Thanks for the question, Drew.
spk15: Yeah, in the guidance that we give, like I said before, Q2 and Q3 is when we had kind of the most of our marketing innovations. You know, we've learned a lot after we started those campaigns in 2022, and that's the reason we kind of went in to 2023 with the Jerry O'Connell campaign. You know, we're going to have some ongoing spin throughout 2023, but just from a guided standpoint, we want to make sure that, you know, we have everybody informed that, you know, Q1 margins will come down from Q4 to Q1 and then scale as we move throughout the year.
spk23: Yeah, thanks, Daniel. And I'm going to piggyback on. A lot of this is we're really back into what seasonality looks like for mobile video games. For a couple of years, COVID kind of threw us off a little bit. But really what traditionally it always looked like is kind of there again. UA returns are the highest and the most cost effective in the first quarter, as Daniel said. So we're also spending a little bit more in UA, and then also the innovation campaign, which Daniel talked about. We would expect Q2 and Q3 to come down slightly, and then we all know that in Q4, marketing costs just become a little bit more expensive. So to Daniel's point, Q1, we will step down, but we will continue stepping up as a whole. in order to get to where we end up for the full year margin. For paying users, it's interesting because in the past, I would say Q4 has always been the year where we ramped them up, but we ramped them up consistently all year. And the reason we were able to ramp them up consistently all year is once we created a payer, we were able to maintain them and keep them in the game, continuing to spend over time. So the reason we didn't have as large of a step-up as far as individual payers in Q4 was not because the games didn't run well, it's because we had already been converting at such a high percentage all year. The one thing that did happen in Q4 is we were able to really focus on the wallets of the individuals continuing to build. And so we had the payers, we were able to grow the payers, but at the same time, the payers as a whole became more valuable as individuals. Now, to your point, yes, Q1 ends up with more payers. Most of the time, because of the increased UA, we see more people coming into the game. The more people that are coming in are very valuable users, and this is why we increased the UA. Normally, what we will see is a little come down in the average monthly revenue per payer. This is just because it's compared to fourth quarter, which is very, very seasonality, all of the holidays that are in there. But I'm extremely pleased that if we went back and look at February of this year, we're actually at a very similar daily run rate to that we were in December of 22. This ends up being really, really encouraging for us. Because as you know, December is basically, you know, our seasonality month of the year because about a half of the month ends up being holidays. So could not be more proud of how our games and how our teams are performing right now.
spk10: Very helpful. Thanks, guys.
spk17: Very welcome. Thank you. Next question will be from Matthew Thornton of Truist.
spk04: Please go ahead. Hey, good morning, Josh. Good morning, Daniel. Thanks for taking the questions. I guess first one, building off the prior question around UA, I guess, Josh, any just broader commentary about how the UA environment is trending 4Q into 1Q? Any green shoots or is it still kind of touch and go here? And relatedly, I guess, how do you think about the time in which you start to maybe shift focus from payer conversion and monetization per ARPDAU to dipping your toe back into, again, maybe widening the top of funnel, widening MAUs, widening DAUs, and kind of thinking about how you think about that from a timing perspective, when that might happen, how that might happen. And then I've got one follow-up.
spk23: Okay, excellent. Thanks, Matthew. It's good talking to you. UA, so the way I would think about UA right now is their Q1 UA is performing extremely well compared to Q4, but it normally does. But the more encouraging is Q1 looks very, very good to Q3 because that's a better comp than what it would have done to just Q4. We have seen really good returns, which has enabled our growth team to continue to elevate the spend in Q1. But we feel very confident we're going to see those returns throughout the year. As far as the macro environment on UA goes, you know, we do continue to have struggles with IDFA. You know, we're still hoping at some point that they are going to make some type of shift and open up the entire bucket again the way it used to be on that platform. But as everyone knows, Apple has not announced anything as of now. But with the tools that we have been building and the strength of our game right now, it has enabled us to continue to increase our spend on Apple in order to push more users in. We've also learned so much from our innovation campaigns last year where we were able to test different buckets. And by testing these different buckets, we were able to find a diverse group of users that enabled us to enact on the innovation campaign that Daniel talked about here in Q1. This innovation, like spoiler, this innovation campaign is showing us really great results. We aren't going to dig into the KPIs for that until our next earning call, but I could not be more proud of how our team, you know, went, found, innovated, innovated, innovated, and then found something that's going to be meaningful for the company. I don't think we're ever going to get away from being a payer conversion company because ultimately every dollar we ever spend is about ROI and For us, we were just talking the other day that we're converting three-year non-payers at 0.5% a day. Once we have you in our ecosystem and get you in there, it's about how do we turn you into a valuable payer for the company itself. This is how we're going to close that ARPDAU gap that we've talked about so many times. I do think that we're looking at ways of increasing our MAU potential throughout the year and over the next coming years. Most likely it won't be through our core franchises today. It'll be through finding new avenues of places where we can bring in users at a significantly cheaper price, but still keep some retention there so we get the total SidePlay network to grow. but then also gives us the ability to cross-promote where needed. And I think you said you had a follow-up, Matthew?
spk04: Yeah, one quick follow-up. And actually, I think you provided a good transition there. You didn't talk about, you know, some of the titles in the pipeline. So I'm curious how we should think about those. I think Solitaire was in monetization tests. I'm kind of curious how those have performed and how to think about that title. And then Spellspinner... I think was approaching soft launch, if I'm not mistaken. So, again, any early findings there, any update on how to think about full launch timing on those titles? And then I'll jump back into the queue. Thanks, Josh.
spk23: Yeah, thanks, Matthew. So I think the reason that you didn't hear them in the actual script itself is we want to make it very, very clear to everyone that our main focus is our core franchises right now. These are what are driving the growth. These are what are driving the new payers. This is what is the core foundation of the company. Now, we still are looking at new games, new revenue sources, new ways of bringing to expanding the portfolio. SPA is in the second round of what we call now monetization testing, which is basically marketing testing. It takes a while because we've got to wait until we get 30-day banked cohorts. So you basically wait a month until the end. Hoping to have a little bit more information and clarity on that one probably in Q2. I will admit we've seen some ups and downs with it because marketing to new games has been challenging, especially ones that are a little bit more IAP-focused. SpellSpinner continues to push. We did go through, we did the MVP test, we did the technical test. From a technology side, we feel really great about the game. Now we're doing the marketability test as far as making sure that the simple core loop is going to be sustainable and build long-term traffic. Hoping to have a little bit more information on that sometime in March. And then based on what we find out there, we'll go back and say, okay, we're ready to take the next step, which would be soft launch, or we go back and say, okay, we need to make tweaks to that simple core loop. The thing we will promise you is we're not going to launch a game just to launch a game. We want to make sure that if we're taking a game to market, that it is something that has long-term sustainability and has the ability to be... something that's additive to the entire SidePlay portfolio, but also delivers amazing player experience. So we haven't taken our eye off it by any means. It's just not the main focus of the company, but we are still trying to get those over the finish line.
spk17: Thank you. Next question will be from David Karnofsky, JP Morgan.
spk08: Please go ahead. Hi, thank you. I just wanted to see if there's any additional commentary you had on Elictus and Q4. And then you've noted in the past you reoriented the studio to be kind of Android first. I guess in that context, how are you thinking about risk of TAID deprecation and what that could mean for scaling the hypercasual games and pipelines?
spk23: Yeah, thanks, David. Hold on, let me write here. Lictus. Lictus is still going. It is a super talented team, and we continue to be more and more impressed with them. The more and more we're integrating the two companies. They released FadeMaster 3D, which was very, very successful in Q4 of this year. We also saw more of a mix into the Google revenue as we've made the technical changes there needed in order to get more sustainability. Now, we do have some more that we need to continue cleaning up there. At the same time, the studio has taken a small step backwards and said, hey, what can we do in order to find a little bit more retention out of the games than we see out of just pure hyper-casual games. So they came up with an amazing plan with the leadership of the studio there. There's some hyper-game simple core loops that are very, very evergreen in nature that are always in the top 100 and they're really focusing around them. And we're really, we're hoping to see the fruits of this coming and, you know, call it Q2, early Q3. So can't wait to share more information. But while that's happening, we also have amazing assets from the acquisition, the ad tech technology that they've built that it just, you know, allows them to automate their waterfalls and get the highest ECPMs. We're already starting to integrate that technology. We're starting to work together as one company when we start talking about finding new users, bringing new users into our ecosystem, and just purely around building great games. So the integration has been fantastic. As far as the Google changes, our team has been working with Google hand-in-hand, especially our growth team, which is located in Israel, and basically Google's marketing hub is really in Israel, and they've been able to be ahead of the curve for the changes that are coming. Overall, we'll say we're not very worried, mainly because Google is not deprecating its ability to do marketing. It is just creating privacy issues you know, call it privacy challenges for third parties. But majority of the money spent on Google is through them. So we're not expecting any major, major, okay, major changes there. And we expect this not to impact Ellictus or the broader Sideplay business at all in 23. Thank you. Yeah, you're welcome.
spk16: Thank you. Our next question will be from Aaron Lee of Macquarie. Please go ahead.
spk20: Hey, guys. Thanks for taking my questions, and congrats on the outperformance and the momentum. I wanted to talk about, you know, the content. Given the cross-platform light and wonder strategy has been in place for a while now, curious, are you seeing anything different just in terms of the velocity of slot content or innovation around that content? Thanks.
spk23: Yeah, thanks a lot, Aaron. So we've been working together since I think, call it May, June of last year. It's really when we started pulling our roadmaps together and really becoming one brain when it comes to thinking about slot machines. And this has caused not only the innovation, but it has also caused the quality of roadmaps to continue improving across all of social. Light and Wonder has made some amazing investments, bringing in some very, very top talent, as Matt talked about yesterday. And the output that is coming and the ideas that are coming from them, but then also the combined group, has just leveled up the content that we're able to give to our players. Now, we are not... quite at the point where we're seeing the speed of the content improve yet. That is still coming. But what we're seeing is much more data being passed between the two companies that are helping us make better decisions every day, not only on the SciPlay side, but the Light and Wonder side. And this type of data is going to help us and help our monetization teams continue providing not only best-in-class monetization, but best-in-class content to all of our users.
spk20: Great. That's awesome. And maybe we want to touch on the comment you made earlier about being able to convert three-year non-payers. Just curious, how were you able to do that? Is it a function of more of your games or some of the predictive analytics you were talking about?
spk23: Yeah, so I would say it's a quality of everything. So our games are really their ecosystems that evolve over time. And just because the ecosystem as it sits today is not one that this player is willing to pay in, if we're able to maintain them in that ecosystem, eventually we release a feature that causes or drives them to increase their play And in order to increase their play, they need to purchase more time. And this is where we're seeing the largest conversions come from is when we're adding some type of new feature or some type of new engagement loop inside of the game that is causing that behavior. And then on top of that, the more and more we get, let's call it, educated on our player behaviors, especially now that we're combining our learnings from our ad tech side with our data science teams and our analytics teams, we're really getting more and more fine-tuned about what each individual player is looking for inside of the game. And our live ops monetization teams are really doing a fantastic job of adjusting the player behavior that is putting them in the situation where they need to buy in order to get through the meta in the game. At the end of the day, it's the quality of the people that are working for SciPlay that are making all of this happen.
spk20: Awesome. That's great. Thanks for all the color.
spk16: Thank you. Our next question will be for Matthew Gloss. Morgan Stanley, please go ahead.
spk06: Great. Thanks for taking the questions. I have two.
spk11: On the market, the broader market, are we – In a sort of early stage of a recovery in terms of consumers' willingness to spend money on in-app purchases in the mobile gaming market broadly, are you seeing any evidence that maybe the worst of the COVID hangover and the IDFA hangover are now totally behind us? And you mentioned that you expect to outgrow the market this year. Do you have an expectation for what the market will grow this year? That's the first question. The second is just should we expect kind of like the run rate for next year for marketing spend to be similar to the fourth quarter, which was a little bit lower than the middle of the year.
spk23: Thank you. Okay, so I'll kind of start. We're going to kind of bounce between a couple of us here probably to answer all these, but I'll go ahead and I'll start with the market recovery. You know, it's interesting because I really wouldn't say that it's a market recovery or a market change. I would say the whole dynamics of everything is started to shift at the back half of 21, and it kind of went into 22, and different companies adapted and changed to it at different rates. But I think this is kind of the new norm until Apple does whatever it will do with IDFA. So for us, we were one of the first companies that were able to understand that IDFA was going to have a large impact on our current business and have a large impact on how we're able to bring in new players. So what did we do? We took a step back and said, we need to do everything different. And we said, we need to focus on the pairs and players that we have in our games today. This needs to be our main focus. And this is where the SidePlay engine was born. And this really helped drive a lot of our 2022. At the same time, we understood that, okay, UA is something that has to continue, but the market has shifted so much that we need to think about it different. And this is where the investments we made in our ASO team, our growth team, our ad tech team, and they redefined how we look at spending money. And they redefined it for the market that is at that point, not the market that used to be. And because of that, this is why we were able to take a step ahead of everyone else. Now, I do believe the mobile market as a whole will continue to adapt to this new environment, and it will continue to move forward for that reason. But even all the way through 2022, we had multiple games in the industry that did really, really well. It was just, you know, most companies didn't have multiple games doing well at once like we did. And so we did see glimmers of hope as far as that goes. Daniel, you want to?
spk15: Yeah, in terms of the market, you know, we look at kind of what Eilish puts out there. They have the market kind of flat to down.
spk14: What we're seeing in, you know, as we kind of move throughout 2023, we're continuing to see momentum and really feel like we believe that we can definitely outpace these estimates that they have for the year.
spk23: And I think when you're thinking about marketing spend, I wouldn't look at Q4 into Q1 and say this is what the run rate is because Q4 is normally a lower marketing spend for us because of the challenges that are there. But what I would say is I would expect year over year the total marketing spend to be very similar from 22 into 23.
spk05: Great. Thank you so much.
spk23: You're welcome.
spk16: Thank you. Next question will be from Ryan Signal, Craig Hallam Capital Group. Please go ahead.
spk13: Good morning, guys. Thanks for taking our questions. Curious on expectations for, I guess, throughout the year on DTC, kind of how you think about the investment needed there and then how that potentially ramps throughout the year in the fundamentals.
spk23: Yeah, DTC, we are so excited. We actually did some of our first, let's call it market testing or kind of sub-testing over the last couple weeks, and we're starting to see throughput for it. We now are going to take a step back, go through everything, reanalyze, make sure that everything worked exactly the way we thought it should, make sure that the player experience once they get back into the overall game, continues to work well. I would say that I think we would have thought right now that we would be a little bit further than we are right now with D2C, mainly because it took a little bit longer than we originally thought to get our payment processor over the line. But that is all now done. And like I said, we're into actual market testing. So what I would kind of expect from here, we're going to spend a little bit of time analyzing. We're going to run our second major test probably somewhere in mid-March-ish. Then we're going to evaluate that again. Assuming both of those are good, then we're going to start, you know, and I say it's crawling. You know, since we're really talking about the people who are spending, and behaving very, very healthy in our games right now. I'd rather have them spending where they are than lose them. So we're going to slowly start moving people. So the way I would probably say it is you're going to see some movement in 23, but it's going to be very small because we're about three months behind where we originally planned on being.
spk13: Great. Then just on the marketing innovation campaign, Curious the decision to move that into Q1 and if there's potential to add more of those throughout the year or if that's kind of a set plan at this point that will only be Q1. And then secondly, do you have any learnings or ROIC or any user metrics from the spend that you made in Q3 of this year?
spk23: Oh, you mean last year? Yeah. So let me – so innovation. So, you know, major reason it is right now is – When we were going back and looking through when to do it, the media cost is at its lowest in Q1. And we were able to get, since it's still innovation, our next bite at the apple without having to overspend to do it. And we're very, very happy we did. Yes, we are evaluating it, especially as we have points where it is, performing as well as some of our UA is performing. And now we've kind of looked at this as, well, it's about getting the right users in at the right cost. And so as we have more opportunities, if the ROI is where it is, we will continue to invest in it. We don't have any set right now, but we're a dynamic business that can change anything on any given day. So we just evaluate as we go. Last year, We ran, I'd call, three major campaigns. We ran the NASCAR campaign, the America's Got Talent campaign, and then the Wendy Williams one. Each one of us taught us different things. NASCAR taught us that in the immediacy of an event, you start seeing reaction right away. You also know that you get branding from it. AGT taught us that the branding does make a difference. But having a super large market but not tailored to your customers may not work as well. And then Wendy Williams, what we learned is having an everyday action or everyday communication with the players really changes their engagement and changes their affinity for the brand and you get great returns. But learned on being at 4 p.m. every day is a downside. So we took all of these learnings, and this is what all the changes that went into the Jerry O'Connell. And it's a large reason why our growth team, Noga, Tomer, Yaron, that entire team put together this entire plan. And I do believe it will become a new staple of how we bring new customers into our games.
spk13: Helpful. Congrats on the performance. Good luck, guys.
spk16: Thank you. Next question will be from Omar Deskowski, Bank of America. Please go ahead.
spk02: Hi, Josh. Thanks for taking my question. So thanks for mentioning that I guess you guys are sort of assuming that the market will be flat to down in 2023. I wanted to know whether... whether that would assume a recession in 2023 or what the macroeconomic assumptions around that are. That's the first question. And then the second question, as part of the same first question I have, is what is your hypothesis of how the average spend per payer would trend versus 2022 if your payers' average real incomes were to fall in a recessionary scenario? So for example, if payers' real incomes were to be down year on year, would you expect that they would be, you know, the average revenue per payer would be down as well in 2023? And then I have a follow-up question on advertising.
spk23: Okay. Thanks, Omar. So let's start with the market one. So if you look at Eilish and Krychak, they've come out and said that they're expecting the market to be flat for this year. But the major reason that we're assuming the market is flat for this year is because we're assuming IDFA has no fix to it in 2023. I think it's less to do with the macro environment is why and more to do with the user acquisition is more challenged. Now, with that said, things were more challenged last year. We had a lot of games do really well in the larger scale, whether or not it's either casual or social casino. We had the majority of our portfolio perform very well last year, and we expect to see that going into next year. As we look at the broader economics of people and what happens, I think we kind of look at it as twofold. Like one, the average person in our game are making $5 and $10 purchases throughout a course of a week or a month. And it's not the type of expenditures that I expect to see get pulled out from people. I would imagine that the $10,000 vacation, $5,000 vacation, $20,000 car, those are going to be where they save money. Entertainment costs at this net magnitude normally isn't the thing that is brought back. But what we are doing as a company, and because we have so much access to not only data but hourly data, and since we have so many games in the portfolio, what we're able to do is we're able to look at these trends across multiple games at once. And one thing that we did at the beginning of this year was kick off a... kind of like a global macro team inside of SidePlay. And our entire role inside of this is to look for things that are happening in multiple games all at once. So if we see multiple games at once all of a sudden slowing down number of times people purchase per week, or if we see, to your point, average revenue per payer or transaction move, we're going to get this information in the course of a couple days. where a lot of people are going to have to wait months and months to understand it. And because we're going to get this information, we're going to be able to not only make the business shifts that we need to, but we're also able to make the game and entertainment shifts that we need to. So right now we feel very confident that we're going to perform very well into, you know, 23. And as I mentioned earlier, you know, February for us as a run rate, was the same as December. And that's actually something that's not normal because December has a two weeks worth of holidays that sit in it every year.
spk02: Okay, thank you for the comprehensive response. So maybe my second question is, in terms of advertising, have you extended the... the window against which you buy, you know, on the LTV curve. So, for example, you know, if, let's say, two years ago you were buying and spending user acquisition against, I don't know, a 90-day, you know, or 120-day LTV target, you know, have you moved out to, let's say, I don't know, 180 days or something like that? You know, how has your thinking as to, you know, which part of the LTV curve you buy against you know, shifted or changed over the last six months?
spk23: Yeah, so over the last six months, we've made no change. I don't know if you remember at the beginning of last year, because of the increased LTVs, we did announce that we were moving our LTV, our window from six months to nine months. We held through that all of last year. And honestly, we continue to get stronger and stronger paybacks from it. You know, we really measure our people in our games and our payers in our games by years. You know, Jackpot Party, which is the oldest game in our portfolio, you know, the people it brought back in 2000, or sorry, that installed the game in 2012 actually spent more money in 2022 than they did in 2012. So we think of the LTV really as a true, true lifetime. The payback, as far as I'm concerned, is more about making sure that we hedge our bet in case there's any type of market movement that happens or any type of platform movement that happens. But we feel very, very confident right now that we're going to outperform the nine months. And to be honest, we constantly evaluate whether or not it makes sense to go from nine to 12. We're not there today. We're going to continue where we are today, but we're also expecting to see the great returns we do that we're currently getting.
spk27: Awesome. Thank you, Josh.
spk16: Thank you. Again, if you have a question, please press star them on. Our next question will be from Ben Saw. So don't you think, please go ahead.
spk09: Hey guys, thanks for taking the question. When I look at the drivers of growth in social casino this year, it was, monthly paying users were up quite a bit and then the revenue per paying user was about flat. And I'm just curious how you think of those two levers heading into 2023 and if you think it'll be similar or more balanced between the two. Thanks.
spk23: Yeah, so I'll be honest. My preference is I would always rather grow MPU and leave average monthly revenue per paying user flat why is that because if I'm growing MPU I'm adding more payers into the portfolio and by adding more payers into the portfolio I'm diversifying my my revenue risk and giving ourselves you know a better chance of being sustained longer so I definitely say payers is first and foremost if you actually looked at the scale of the portfolio from from your side it looks flat and because it averages out, but actually our higher-end payers continue to increase how much they're spending. We're just bringing so many more new payers in that the average is staying very flat over time. Got it.
spk09: That's helpful. And then it's still early, but just curious what your takes are on the potential for alternative app stores and what that might mean for your business longer term.
spk23: Yeah, so I mean, first and foremost, we'll call it for us, the DTC is the number one thing that we're looking to. I know it's not quite an app store, but it ends up being our own platform at the end of the day where we get to be the payment provider and also get to own the communication with the player, which gives us just a deeper relationship with them. We are constantly evaluating every new app store that comes out. I would say the learnings I've had over time is you don't want to be first to a new app store in today's world, but you don't want to be last. So we're evaluating them on a weekly basis, and anyone that we see start gaining any momentum early on, then we pivot over the development team in order to get on there as soon as we possibly can. But new app stores are not new to being talked about. There just hasn't really been any that have taken a big share from either Google or Apple at this point. So it's more of just watching, evaluating, but being ready.
spk16: Thank you. This concludes our question and answer session. I'd like to turn the conference back over to Mr. Josh Wilson for closing remarks.
spk23: Hey, thank you. You know, we believe our 2022 performance and our plans and beyond reinforce our commitment to spark the world's passion to play, our players are our number one priority. We are laser focused on them with the most engaging digital experience that we can get them. And we look forward to reporting to you in just like 60 days. Have an amazing day, everyone, and we will talk to you soon.
spk17: Thank you. Conference is now concluded. Thank you for attending today's presentation. Hello. Thank you. Thank you.
spk12: Thank you. Thank you.
spk16: Good morning, and thank you for standing by. Welcome to the SidePlay fourth quarter and full year 2022 earnings conference call. At this time, all participants are in listening mode. Please be advised that today's conference is being recorded. I'll lift the hand of the conference over to your speaker today, Robert Weiner, Vice President, Investor Relations, SidePlay Corporation.
spk17: Please go ahead. Thank you, Operator, and good morning, everyone.
spk03: During today's call, we will discuss our fourth quarter and full year 2022 financial results and operating performance, as well as our outlook for 2023, which will be followed by a question and answer period. With me today are Josh Wilson, CEO, and Daniel O'Quinn, Interim CFO. Hello. Our call today will contain remarks and 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 and our filings with the SEC. We will also discuss certain non-GAAP financial measures, including key performance indicators, which are based on in-app purchases only. 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 in the investor section on our website. As a reminder, this conference call is being recorded. A replay of this webcast will be archived in the investor section of our website at Sideplay.com. Now I am pleased to turn the call over to Josh.
spk23: Good morning, everyone. I'm very happy to be with you today. Sideplay is on a multi-year journey guided by our vision to spark the world's passion to play by providing the most engaging digital entertainment experiences. We know where we are going and we are aligned on how we're going to get there. This resulted in record KPIs and propelled us to outpace the market in both the fourth quarter and full year. I'm extremely proud of our team and what we have accomplished. Our strong execution and ability to adapt have enabled us to successfully navigate industry dynamics and achieve strong performance in 2022. We are innovative, agile, and extremely motivated to win, and focused on delivering amazing experiences for our players and maximize shareholders' value. Now for some key results. First, we delivered impressive top-line results, growing revenue 18% in the fourth quarter and 11% for the full year. This was fueled by our industry-leading execution our live ops, and our data-driven product roadmap. We achieved this growth despite the challenging industry backdrop as our talented teams remain focused and continue to innovate. Second, we achieved a number of records, including growing our payers and our average monthly revenue per payer, underscoring the quality of our earnings performance. Third, we generated robust cash flow of $150 million for the full year. This demonstrates the high cash generative nature of our business. And fourth, as of February 24th, we have returned $41.7 million to our shareholders through our stock repurchase program. We are confident that our strong foundation, combined with multiple growth initiatives, will drive us to post strong gains and outperform the market again. Now let's take a closer look at Q4. We delivered strong fourth quarter performance, demonstrated by our industry-leading results. With our evergreen franchises leading the way, we generated record revenue and attained multiple records in Q4. In Q4, our social casino gains grew 14% year-over-year, while the social casino industry is estimated to have declined by more than 3%. And we have achieved record KPIs, including payer conversion of 10.4% and ARPDAU of 87 cents, which grew 18% year-over-year. Based on Eilers and Krychek's Social Casino Game Tracker report published in January of 23, SciPlay was cited as, quote, standout performer of the year in the fourth quarter, estimated to achieve the fastest growth of the top 15 game developers. And we did just that. Our Q4 performance was driven by our growth in payers. of 13% year-over-year, and to provide longer-term perspective, payers have grown by 42% since 2017. We now have the most payers in SidePlay's history. We have invested in our games, and we will continue to do so as we execute on our product roadmaps to deliver the best possible entertainment to our players. The strength of our evergreen franchises and our differentiated go-to-market approach have fueled SidePlay's success. Here are just a handful of examples. Jackpot Party smashed our single-day revenue record, and Q4 was a record quarter, capping a record year. The game is now listed by Eilers and Crytek as the number one U.S.-ranked social casino game. Quicket Slots officially became the second $100 million revenue game in SciPlay's portfolio. It is one of the fastest-growing games in social casino. Goldfish Casino is gaining momentum from our reimagined features and new live-off strategy. And 88 fortunes benefited by adding a new economy, content design, and innovative features, which are driving increased player engagement. As a result, SidePlay outperformed the entire social casino market in 2022. Let me repeat this. As a result, SidePlay outperformed the entire social casino market in 2022. Our accomplishments have been powered by a combination of innovation, capabilities, and investment. We have a scalable platform, unparalleled technology, and deep talent that form a runway for both current and long-term success. In 2022, the SciPlay Engine became one of our main drivers of success. We implemented and optimized it across our game portfolio. The SciPlay Engine provides a wide range of optimizations and real-time solutions. The combined knowledge and expertise of our best in industry ad tech, data science, and analytics team have led us to develop an innovative UA solution that is aiding in our winning performance today. Our global analytics team developed and deployed algorithms that decipher and break down complex player behavior. Our LiveOps teams consistently develop and execute unsurpassed monetization strategies. These are driving industry-leading growth. Data science and analytics fused together with player behaviors enable us to drive conversion, retention, and increased player engagement. Cycli continued to evolve our data-driven approach. We made several noticeable advancements that boost our ad tech capabilities by combining team learnings with multiple data sources, predictive analytics, and valuable in-game advertising strategies. We implemented predictive analytics tools, an exclusive technology that focuses on revenue generation. We custom-tailored user experiences by detecting player patterns that maximize their lifetime value. We employed integrated predictive player modeling to improve player behavioral insights and data quality. These strategies have driven improved insights on the players and drive higher return. Now let's turn to the future. As we propel into 2023, SciPlay has strong momentum with multiple growth drivers. We will continue to evolve scale, and grow our franchises. Our main growth drivers will be to increase our payer base, their engagement time, and the amount of money our players will spend. In essence, the combination of our innovation, capabilities, and investment will enable us to continue closing the arced out gap with our peers. Our robust, data-driven product roadmaps are evolving our evergreen franchises. Our proprietary tech solutions provide valuable insights about our players, the features they want, and the economies that drive them. We continue to evolve our franchises as we implement new events, features, and content accessible from Light & Wonder's extensive IP library. Our LiveOps teams create new engaging events for our players every day. These produce high monetization results and our recent launch direct-to-consumer platform, which allows us to deepen the relationship with our players to push higher LTVs, reduce acquisition costs, and drive long-term margin expansion. Our strong execution in 22 is continuing in 2023. SidePlay's success and ability to deliver consistent value is cemented together by our team's expertise, our culture, our dedication, and our passion to win. Our global team truly leveled up in 22. Thank you, CyPlayers around the world. We had an amazing year. I'll close by saying I'm confident in our team's continued strong execution and the strength of CyPlay's business model and growth. We plan to outperform the overall social casino market and take share in 2023. Now I'm pleased to turn the call over to Daniel.
spk15: Thanks, Josh. Good morning, everyone, and thank you for joining us today. 2022 was a great year for SidePlay with outstanding Q4 results. We carried out our plan presented in the beginning of last year and achieved our full-year financial targets for both the top and bottom line. We invested in our core capabilities, and we reinforced our foundation for the future. Our teams were focused and agile, successfully navigating industry dynamics while executing our product roadmaps. I couldn't be prouder of what our teams have accomplished. Their energy and innovation are unparalleled, and they're the reason why we're able to achieve so many all-time records. Our success enabled us to make a competitive leap in social casino, significantly outgrowing the market. Now for some key highlights. First, we delivered strong financial performance in Q4 and the full year, propelled by our evergreen franchises and our team's exceptional execution, likely achieved several all-time records while innovating and adapting to a challenging market environment. Second, we had record ARPDAU and a record number of payers, which we grew sequentially each quarter during the year, underscoring the momentum and quality of our earnings performance. Third, Syphilis continued to make key strategic investments in targeted segments of our business, including proprietary technologies and talent to further strengthen our long-term growth plans. SitePlay continued to be a high-cash generating business. We delivered robust operating cash flow of $150 million in 2022 and repurchased $42 million, or roughly 70%, under our share repurchase program through February 24th. Now let's get into some of the details. We generated strong fourth quarter revenue of $182 million. an all-time record, up 18% year-over-year and 7% sequentially. Full-year revenue of $671 million grew 11%, also setting an all-time record. Our social casino games grew 14% in the fourth quarter and 7% for the full year. This significantly outperformed the market that is estimated to decline 3% in both the fourth quarter and full year. We generated fourth quarter net income of $53 million, or 29% margin, and full year net income of $151 million. Diluted earnings per share attributable to SidePlay was 32 cents for the fourth quarter and 91 cents for the full year. We grew our fourth quarter EBITDA 24% to $59 million, while achieving a 32% EBITDA margin, fueled by our strong top-line results as we moved past the marketing innovation spend in Q2 and Q3. EBITDA of $187 million was up slightly for the year, while our EBITDA margin of 28% was in line with our target. As we invested in our talent, the side-play engine, AdTech, and our D2C platform to drive long-term value. Since 2017, we've grown revenue at a 13% CAGR and profitability at a much faster pace, with an EBITDA CAGR of 22% over the same period. Now let's turn to some key performance indicators for the fourth quarter, where we achieved a number of records. In the fourth quarter, we drew our payers 13% year over year to a record, and we saw increases in payers throughout the year. Our ability to consistently deliver great and engaging content enabled us to achieve near record average monthly revenue for paying user of approximately $99 in Q4 and $95 in the year. This marks our 11th consecutive quarter above $90. This all translated to a record art doubt of 87 cents in Q4, an increase of 18% year over year. As we continue to close the gap with our peers, we achieved a pair conversion rate of 10.4% in the fourth quarter and 9.6% in the full year. Also both all time records. Our KPIs built throughout the year. underscoring the benefits of our key initiatives, robust product roadmap, best-in-class live ops capabilities, and our player loyalty. As an example, players who downloaded Jackpot Party before 2019 are more engaged and had higher retention during 2022. Like our long-term revenue and profitability growth, Our Dow has grown at a 14% CAGR over the last five years, while our peer conversion rate grew at a 13% CAGR over the same period. Now let's turn to cash flow. We believe strong revenue growth, faster growth in EBITDA, combined with strong cash flow are key drivers of shareholder value. The great thing is our business is highly efficient and cash generative. For 2022, we generated $150 million in operating cash flow, which included $24.5 million payment for the Washington State matter. We have minimal capital expenditures, enabling us to convert a high percentage of operating cash flow into free cash flow. We ended the year with strong liquidity of $330 million in cash and total liquidity of $480 million. We have the financial strength and flexibility to deploy excess capital to drive increasing shareholder value. Now let me take some time to discuss capital allocation. We continue to see opportunities to invest organically in our business. And we will also consider targeted inorganic opportunities. And these include aqua hires as well as small game developers where we see an opportunity to enhance engagement and monetization with our best-in-class capabilities. We make these investments with a financial rigor and an eye on returns. We employ a data-driven approach to ensure that our investments are driving profitable growth and shareholder value. We also believe the combination of organic growth, strong cash flow generation, is fundamental to enhancing shareholder value. Accordingly, our board authorized a $60 million two-year share repurchase program in 2022. To this date, we've repurchased 42 million or roughly 70% of the authorization in 10 months. Let me close my comments today and speak about the opportunity we see ahead in 2023. We're well positioned to continue to take share in social casino and deliver shareholder value. The marketing innovation campaigns we started in 2022 will continue into this year. From a seasonality standpoint, the campaign spend last year impacted Q2 and Q3. This year, most of the innovation spend will happen in the first quarter. The highly successful Jerry O'Connell campaign that ran for quick hit in January and February will be discussed in our Q1 call. In summary, our global team of more than 800 side players is executing at a high level. We have a strong foundation for continued growth and we're determined and highly motivated. We have the passion to win. Thank you, and now I'll turn the call over to the operator, and we'll take your questions.
spk16: Thank you. Well, I'll begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To answer your question, please press star then two. This time, we'll pause momentarily to assemble the roster. First question will be from Eric Sheridan, Golden Sacks. Please go ahead.
spk07: Thanks so much for taking the question, and thanks for all the detail in the prepared remarks. Josh, I want to come back to some of the comments you were making on user acquisition and the repositioning of the company and the platform from a marketing standpoint. Both idiosyncratically in what you've built, how much of a competitive advantage should we be thinking about in terms of the quantification of the ability to outgrow the market or possibly out-earn competitors from an ROI standpoint? That would be part One, and then number two, away from what you can build internally, any update about the way you're thinking about broader marketing ROIs in the gaming sector? You've spent a lot of time experimenting and trying new avenues in the last 12, 18 months. We're curious for an update there as we look out to 23 and beyond. Thanks so much, guys.
spk23: Yeah, thanks a lot, Eric. It's great to talk to you today. You know, we could not be more proud about our UA team, our entire growth team as a whole. We knew coming into 2022 that it needed to be a major investment for us, and we did that. We doubled down on our ad tech capabilities. We doubled down on how we are using data to create player profiles. Our UA team and our retargeting team really just leveled up their games. And with that, built new tools that really are sustainable and keeping us ahead of everyone else. We do continue to believe that we will outperform others in our returns, mainly for two reasons. Because, you know, the way that our philosophy is on spending money, it's about getting the most value for every dollar. We're not tracing installs. We're not chasing mal. We are chasing value for this shareholder. And since our entire team thinks this way, we've been able to get these returns. But it's not just the UA side, it's also the games themselves. Our games, through the implementation of the SidePlay Engine, some of the reorganizations we did, and just more heightened focus on running the live games, we've been able to significantly increase our LTV across almost our entire portfolio in 22 And it continues to look really, really good in 23. So the way I think, you know, and trying to hit that last question about ROI, this is honestly how we think of everything we do. Everything we do is an ROI. So whether or not it's how we look at how we spend money, how we look at how we spend time, it is what can we do to maximize the play experience of every user we bring into our ecosystem? And what can we do to keep them playing and being entertained by us instead of wanting to go anywhere else? And if, you know, the results of 22 show anything, I think we're doing a really good job.
spk17: Thank you.
spk16: Next question will be from Drew Grumman. Steve, please go ahead.
spk10: Okay, thanks. Hey, guys. Good morning. So Dan, you addressed in your prepared remarks some of the investments and timing around marketing campaigns in 2023. What does that translate to in terms of your expectations for a just EBITDA margin relative to where you ended up for 2022? So that's the first question. And then maybe for Josh, the paying users have historically ticked higher in 4Q versus 3Q. That metric looks like it's slipped a little bit this past quarter on a sequential basis. Anything noteworthy there? And typically you see sequential growth in paying users for 1Q over 4Q. Should we anticipate a similar seasonal trend line for the early part of 23? Thanks.
spk17: Thanks for the question, Drew.
spk15: Yeah, in the guidance that we give, like I said before, Q2 and Q3 is when we had kind of the most of our marketing innovations. You know, we've learned a lot after we started those campaigns in 2022, and that's the reason we kind of went in to 2023 with the Jerry O'Connell campaign. You know, we're going to have some ongoing spin throughout 2023, but just from a guided standpoint, we want to make sure that, you know, we have everybody informed that, you know, Q1 margins will come down from Q4 to Q1 and then scale as we move throughout the year.
spk23: Yeah, thanks, Daniel. And I'm going to piggyback on. A lot of this is we're really back into what seasonality looks like for mobile video games. For a couple years, COVID kind of threw us off a little bit. But really what traditionally it always looked like is kind of there again. UA returns are the highest and the most cost effective in the first quarter, as Daniel said. So we're also spending a little bit more in UA, and then also the innovation campaign, which Daniel talked about. We would expect Q2 and Q3 to come down slightly, and then we all know that in Q4, marketing costs just become a little bit more expensive. So to Daniel's point, Q1, we will step down, but we will continue stepping up as a whole. in order to get to where we end up for the full year margin. For paying users, it's interesting because in the past, I would say Q4 has always been the year where we ramped them up, but we ramped them up consistently all year. And the reason we were able to ramp them up consistently all year is once we created a payer, we were able to maintain them and keep them in the game, continuing to spend over time. So the reason we didn't have as large of a step-up as far as individual payers in Q4 was not because the games didn't run well, it's because we had already been converting at such a high percentage all year. The one thing that did happen in Q4 is we were able to really focus on the wallets of the individuals continuing to build. And so we had the payers, we were able to grow the payers, but at the same time, the payers as a whole became more valuable as individuals. Now, to your point, yes, Q1 ends up with more payers. Most of the time, because of the increased UA, we see more people coming into the game. The more people that are coming in are very valuable users, and this is why we increased the UA. Normally, what we will see is a little come down in the average monthly revenue per payer. this is just because it's compared to fourth quarter, which is very, very seasonality, all of the holidays that are in there. But I'm extremely pleased that if we went back and look at February of this year, we're actually at a very similar daily run rate to that we were in December of 22. This ends up being really, really encouraging for us. Because as you know, December is basically, you know, our seasonality month of the year because about a half of the month ends up being holidays. So could not be more proud of how our games and how our teams are performing right now.
spk10: Very helpful. Thanks, guys.
spk17: Very welcome. Thank you. Next question will be from Matthew Thornton of Truist.
spk04: Please go ahead. Hey, good morning, Josh. Good morning, Daniel. Thanks for taking the questions. I guess first one, building off the prior question around UA, I guess, Josh, any just broader commentary about how the UA environment is trending 4Q into 1Q? Any green shoots or is it still kind of touch and go here? And relatedly, I guess, how do you think about the time in which you start to maybe shift focus from payer conversion and monetization per ARPDAU to, you know, dipping your toe back into, again, maybe widening the top of funnel, widening MAUs, widening DAUs, and kind of thinking about how you think about that from a timing perspective, when that might happen, how that might happen. And then I've got one follow-up.
spk23: Okay, excellent. Thanks, Matthew. It's good talking to you. UA, so the way I would think about UA right now is their Q1 UA is performing extremely well compared to Q4, but it normally does. But the more encouraging is Q1 looks very, very good to Q3 because it's a better comp than what it would have done to just Q4. we've seen really good returns, which has enabled our growth team to continue to elevate the spend in Q1. But we feel very confident we're going to see those returns throughout the year. As far as the macro environment on UA goes, we do continue to have struggles with IDFA. We're still hoping at some point that they are going to make some type of shift and open up the entire bucket again the way it used to be on that platform. But as everyone knows, Apple has not announced anything as of now. But with the tools that we have been building and the strength of our game right now, it has enabled us to continue to increase our spend on Apple in order to push more users in. We've also learned so much from our innovation campaigns last year where we were able to test different buckets. And by testing these different buckets, we were able to find a diverse group of users that enabled us to enact on the innovation campaign that Daniel talked about here in Q1. This innovation, like spoiler, this innovation campaign is showing us really great results. We aren't going to dig into the KPIs for that until our next earning call, but I could not be more proud of how our team went, found, innovated, innovated, innovated, and then found something that's going to be meaningful for the company. I don't think we're ever going to get away from being a payer conversion company because ultimately every dollar we ever spend is about ROI and So for us, we were just talking the other day that we're converting three-year non-payers at 0.5% a day. Once we have you in our ecosystem and get you in there, it's about how do we turn you into a valuable payer for the company itself, and this is how we're going to close that ARPDAU gap that we've talked about so many times. I do think that we're looking at ways of increasing our MAU potential throughout the year and over the next coming years. Most likely it won't be through our core franchises today. It'll be through finding new avenues of places where we can bring in users at a significantly cheaper price, but still keep some retention there so we get the total SidePlay network to grow. but then also gives us the ability to cross-promote where needed. And I think you said you had a follow-up, Matthew?
spk04: Yeah, one quick follow-up, and actually I think you provided a good transition there. You didn't talk about some of the titles in the pipeline. So I'm curious how we should think about those. I think Solitaire was in monetization tests. I'm kind of curious how those have performed and how to think about that title. And then Spellspinner – I think was approaching soft launch, if I'm not mistaken. So, again, any early findings there, any update on how to think about full launch timing on those titles? And then I'll jump back into the queue. Thanks, Josh.
spk23: Yeah, thanks, Matthew. So I think the reason that you didn't hear them in the actual script itself is we want to make it very, very clear to everyone that our main focus is our core franchises right now. These are what are driving the growth. These are what are driving the new payers. This is what is the core foundation of the company. Now, we still are looking at new games, new revenue sources, new ways of bringing to expanding the portfolio. SPA is in the second round of what we call now monetization testing, which is basically marketing testing. It takes a while because we've got to wait until we get 30-day banked cohorts. So you basically wait a month until the end. Hoping to have a little bit more information and clarity on that one probably in Q2. I will admit we've seen some ups and downs with it because marketing to new games has been challenging, especially ones that are a little bit more IAP-focused. SpellSpinner continues to push. We did go through, we did the MVP test, we did the technical test. From a technology side, we feel really great about the game. Now we're doing the marketability test as far as making sure that the simple core loop is going to be sustainable and build long-term traffic. Hoping to have a little bit more information on that sometime in March. And then based on what we find out there, we'll go back and say, okay, we're ready to take the next step, which would be soft launch, or we go back and say, okay, we need to make tweaks to that simple core loop. The thing we will promise you is we're not going to launch a game just to launch a game. We want to make sure that if we're taking a game to market, that it is something that has long-term sustainability and has the ability to be... something that's additive to the entire SidePlay portfolio, but also delivers amazing player experience. So we haven't taken our eye off it by any means. It's just not the main focus of the company, but we are still trying to get those over the finish line.
spk17: Thank you. Next question will be from David Karnofsky, JP Morgan.
spk08: Please go ahead. Hi, thank you. I just wanted to see if there's any additional commentary you had on Elictus and Q4. And then you noted in the past you reoriented the studio to be kind of Android first. I guess in that context, how are you thinking about risk of TAID deprecation and what that could mean for scaling the hypercasual games and pipelines?
spk23: Yeah, thanks, David. Hold on, let me write here. Lictus. You know, Lictus is still going. It is a super, super talented team, and we continue to be more and more impressed with them. The more and more we're integrating the two companies. You know, they released Barbershop 3D, which did, oh, sorry, Fade Master 3D, which was very, very successful in Q4 of this year. We also saw more of a mix into the Google revenue as we've made the technical changes there needed in order to get more sustainability. Now, we do have some more that we need to continue cleaning up there. At the same time, the studio has taken a small step backwards and said, hey, what can we do in order to find a little bit more retention out of the games than we see out of just pure hyper-casual games. So they came up with an amazing plan with the leadership of the studio there. There's some hyper-game simple core loops that are very, very evergreen in nature that are always in the top 100 and they're really focusing around them. And we're really, we're hoping to see the fruits of this coming in, you know, call it Q2, early Q3. So can't wait to share more information. But while that's happening, we also have amazing assets from the acquisition. The ad tech technology that they've built that it just, you know, allows them to automate their waterfalls and get the highest eCPMs. We're already starting to integrate that technology. We're starting to work together as one company when we start talking about finding new users, bringing new users into our ecosystem, and just purely around building great games. The integration has been fantastic. As far as the Google changes, our team has been working with Google hand-in-hand, especially our growth team, which is located in Israel, and basically Google's marketing hub is really in Israel, and they've been able to be ahead of the curve for the changes that are coming. Overall, we'll say we're not very worried, mainly because Google is not deprecating its ability to do marketing. It is just creating privacy issues you know, call it privacy challenges for third parties. But majority of the money spent on Google is through them. So we're not expecting any major, major, okay, major changes there. And we expect this not to impact Ellictus or the broader Sideplay business at all in 23. Thank you.
spk16: Yes, you're welcome. Thank you. Our next question will be from Aaron Lee of Macquarie. Please go ahead.
spk20: Hey, guys. Thanks for taking my questions, and congrats on the outperformance and the momentum. I wanted to talk about, you know, the content. Given the cross-platform light and wonder strategy has been in place for a while now, I'm curious, are you seeing anything different just in terms of the velocity of slot content or innovation around that content? Thanks.
spk23: Yeah, thanks a lot, Aaron. So we've been working together since I think, call it May, June of last year. It's really when we started pulling our roadmaps together and really becoming one brain when it comes to thinking about slot machines. And this has caused not only the innovation, but it has also caused the quality of roadmaps to continue improving across all of social Light and Wonder has made some amazing investments, bringing in some very, very top talent, as Matt talked about yesterday. And the output that is coming and the ideas that are coming from them, but then also the combined group, has just leveled up the content that we're able to give to our players. Now, we are not... quite at the point where we're seeing the speed of the content improve yet. That is still coming. But what we're seeing is much more data being passed between the two companies that are helping us make better decisions every day, not only on the SidePlay side, but the Light and Wonder side. And this type of data is going to help us and help our monetization teams continue providing not only best-in-class monetization, but best-in-class content to all of our users.
spk20: Great. That's awesome. And maybe we want to touch on the comment you made earlier about being able to convert three-year non-payers. Just curious, how were you able to do that? Is it a function of more of your games or some of the predictive analytics you were talking about?
spk23: Yeah, so I would say it's a quality of everything. So our games are really their ecosystems that evolve over time. And just because the ecosystem as it sits today is not one that this player is willing to pay in, if we're able to maintain them in that ecosystem, eventually we release a feature that causes or drives them to increase their play And in order to increase their play, they need to purchase more time. And this is where we're seeing the largest conversions come from, is when we're adding some type of new feature or some type of new engagement loop inside of the game that is causing that behavior. And then on top of that, the more and more we get, let's call it, educated on our player behaviors, especially now that we're combining our learnings from our ad tech side with our data science teams and our analytics teams, we're really getting more and more fine-tuned about what each individual player is looking for inside of the game. And our live ops monetization teams are really doing a fantastic job of adjusting the player behavior that is putting them in the situation where they need to buy in order to get through the meta in the game. At the end of the day, it's the quality of the people that are working for SciPlay that are making all of this happen.
spk20: Awesome. That's great. Thanks for all the color.
spk16: Thank you. Our next question will be from Matthew Cost, Morgan Stanley. Please go ahead.
spk06: Great. Thanks for taking the questions. I have two.
spk11: On the market, the broader market, are we – in a sort of early stage of a recovery in terms of consumers' willingness to spend money on in-app purchases in the mobile gaming market broadly? Are you seeing any evidence that maybe like the worst of kind of like the COVID hangover and the IDFA hangover are now totally behind us? And you mentioned that you expect to outgrow the market this year. Do you have an expectation for what the market will grow this year? That's the first question. The second is just should we expect kind of like the run rate for next year for marketing spend to be similar to the fourth quarter, which was a little bit lower than the middle of the year.
spk23: Thank you. Okay, so I'll kind of start. We're going to kind of bounce between a couple of us here probably to answer all these, but I'll go ahead and I'll start with the market recovery. You know, it's interesting because I really wouldn't say that it's a market recovery or a market change. I would say the whole dynamics of everything is started to shift at the back half of 21, and it kind of went into 22, and different companies adapted and changed to it at different rates. But I think this is kind of the new norm until Apple does whatever it will do with IDFA. So for us, we were one of the first companies that were able to understand that IDFA was going to have a large impact on our current business and have a large impact on how we're able to bring in new players. So what did we do? We took a step back and said, we need to do everything different. And we said, we need to focus on the pairs and players that we have in our games today. This needs to be our main focus. And this is where the SidePlay engine was born. And this really helped drive a lot of our 2022. At the same time, we understood that, okay, UA is something that has to continue, but the market has shifted so much that we need to think about it different. And this is where the investments we made in our ASO team, our growth team, our ad tech team, and they redefined how we look at spending money. And they redefined it for the market that is at that point, not the market that used to be. And because of that, this is why we were able to take a step ahead of everyone else. Now, I do believe the mobile market as a whole will continue to adapt to this new environment, and it will continue to move forward for that reason. But even all the way through 2022, we had multiple games in the industry that did really, really well. It was just, you know, most companies didn't have multiple games doing well at once like we did. And so we did see glimmers of hope as far as that goes. Daniel, you want to?
spk15: Yeah, in terms of the market, you know, we look at kind of what Eilish puts out there. They have the market kind of flat to down.
spk14: What we're seeing in, you know, as we kind of move throughout 2023, we're continuing to see momentum and really feel like we believe that we can definitely outpace these estimates that they have for the year.
spk23: And I think when you're thinking about marketing spend, I wouldn't look at Q4 into Q1 and say this is what the run rate is because Q4 is normally a lower marketing spend for us because of the challenges that are there. But what I would say is I would expect year over year the total marketing spend to be very similar from 22 into 23.
spk05: Great. Thank you so much.
spk16: You're welcome. Thank you. Next question will be from Ryan Signall, Craig Hallam Capital Group. Please go ahead.
spk13: Good morning, guys. Thanks for taking our questions. Curious on expectations for, I guess, throughout the year on DTC, kind of how you think about the investment needed there and then how that potentially ramps throughout the year in the fundamentals.
spk23: Yeah, DTC, we are so excited. We actually did some of our first, let's call it market testing or kind of sub-testing over the last couple weeks, and we're starting to see throughput for it. We now are going to take a step back, go through everything, reanalyze, make sure that everything worked exactly the way we thought it should, make sure that the player experience once they get back into the overall game, continues to work well. I would say that I think we would have thought right now that we would be a little bit further than we are right now with D2C, mainly because it took a little bit longer than we originally thought to get our payment processor over the line. But that is all now done. And like I said, we're into actual market testing. So what I would kind of expect from here, we're going to spend a little bit of time analyzing. We're going to run our second major test probably somewhere in mid-March-ish. Then we're going to evaluate that again. Assuming both of those are good, then we're going to start, you know, and I say it's crawling. You know, since we're really talking about the people who are spending, and behaving very, very healthy in our games right now. I'd rather have them spending where they are than lose them. So we're going to slowly start moving people. So the way I would probably say it is you're going to see some movement in 23, but it's going to be very small because we're about three months behind where we originally planned on being.
spk13: Great. Then just on the marketing innovation campaign, Curious the decision to move that into Q1 and if there's potential to add more of those throughout the year or if that's kind of a set plan at this point that will only be Q1. And then secondly, do you have any learnings or ROIC or any user metrics from the spend that you made in Q3 of this year?
spk23: Oh, you mean last year? Yeah. So let me – so innovation. So, you know, major reason it is right now is – When we were going back and looking through when to do it, the media cost is at its lowest in Q1. And we were able to get, since it's still innovation, our next bite at the apple without having to overspend to do it. And we're very, very happy we did. Yes, we are evaluating it, especially as we have points where it is, performing as well as some of our UA is performing. And now we've kind of look at this as, well, it's about getting the right users in at the right cost. And so as we have more opportunities, if the ROI is where it is, we will continue to invest in it. We don't have any set right now, but we're a dynamic business that can change anything on any given day. So we just evaluate as we go. Last year, We ran, I'd call, three major campaigns. We ran the NASCAR campaign, the America's Got Talent campaign, and then the Wendy Williams one. Each one of us taught us different things. NASCAR taught us that in the immediacy of an event, you start seeing reaction right away. You also know that you get branding from it. AGT taught us that the branding does make a difference. But having a super large market but not tailored to your customers may not work as well. And then Wendy Williams, what we learned is having an everyday action or everyday communication with the players really changes their engagement and changes their affinity for the brand and you get great returns. But learned on being at 4 p.m. every day is a downside. So we took all of these learnings, and this is what all the changes that went into the Jerry O'Connell. And it's a large reason why, you know, our growth team, Noga, Tomer, Yaron, that entire team put together this entire plan. And I do believe it will become a new staple of how we bring new customers into our games.
spk13: Helpful. Congrats on the performance. Good luck, guys.
spk16: Thank you. Next question will be from Omar Deskowski, Bank of America. Please go ahead.
spk02: Hi, Josh. Thanks for taking my question. So thanks for mentioning that I guess you guys are sort of assuming that the market will be flat to down in 2023. I wanted to know whether... whether that would assume a recession in 2023 or what the macroeconomic assumptions around that are. That's the first question. And then the second question, as part of the same first question I have, is what is your hypothesis of how the average spend per payer would trend versus 2022 if your payers' average real incomes were to fall in a recessionary scenario? So for example, if payers' real incomes were to be down year on year, would you expect that they would be, you know, the average revenue per payer would be down as well in 2023? And then I have a follow-up question on advertising.
spk23: Okay. Thanks, Omar. So let's start with the market one. So if you look at Eilish and Krychak, they've come out and said that they're expecting the market to be flat for this year. But the major reason that we're assuming the market is flat for this year is because we're assuming IDFA has no fix to it in 2023. I think it's less to do with the macro environment is why and more to do with the user acquisition is more challenged. Now, with that said, things were more challenged last year. We had a lot of games do really well in the larger scale, whether or not it's either casual or social casino. We had the majority of our portfolio perform very well last year, and we expect to see that going into next year. As we look at the broader economics of people and what happens, I think we kind of look at it as twofold. Like one, the average person in our game are making $5 and $10 purchases throughout a course of a week or a month. And it's not the type of expenditures that I expect to see get pulled out from people. I would imagine that the $10,000 vacation, $5,000 vacation, $20,000 car, those are going to be where they save money. Entertainment costs at this magnitude normally isn't the thing that is brought back. But what we are doing as a company, and because we have so much access to not only data but hourly data, and since we have so many games in the portfolio, what we're able to do is we're able to look at these trends across multiple games at once. And one thing that we did at the beginning of this year was kick off a kind of like a global macro team inside of SidePlay. And our entire role inside of this is to look for things that are happening in multiple games all at once. So if we see multiple games at once all of a sudden slowing down number of times people purchase per week, or if we see, to your point, average revenue per payer or transaction move, we're going to get this information in the course of a couple days, where a lot of people are going to have to wait months and months to understand it. And because we're going to get this information, we're going to be able to not only make the business shifts that we need to, but we're also able to make the game and entertainment shifts that we need to. So right now, we feel very confident that we're going to perform very well into 23 and As I mentioned earlier, February for us as a run rate was the same as December. And that's actually something that's not normal because December has two weeks worth of holidays that sit in it every year.
spk02: Okay. Thank you for the comprehensive response. So maybe my second question is in terms of advertising, have you – have you extended the window against which you buy on the LTV curve? So, for example, if, let's say, two years ago you were buying and spending user acquisition against, I don't know, a 90-day or 120-day LTV target, have you moved out to, let's say, I don't know, 180 days or something like that? How has your thinking as to which part of the LTV curve you buy against you know, shifted or changed over the last six months?
spk23: Yeah, so over the last six months, we've made no change. I don't know if you remember at the beginning of last year, because of the increased LTVs, we did announce that we were moving our LTV, our window from six months to nine months. We held through that all of last year. And honestly, we continue to get stronger and stronger paybacks from it. You know, we really measure our people in our games and our payers in our games by years. You know, Jackpot Party, which oldest game in our portfolio, you know, the people it brought back in 2000, or sorry, that installed the game in 2012, actually spent more money in 2022 than they did in 2012. So we think of the LTV really as a true, true lifetime. The payback, as far as I'm concerned, is more about making sure that we hedge our bet in case there's any type of market movement that happens or any type of platform movement that happens. But we feel very, very confident right now that we're going to outperform the nine months. And to be honest, we constantly evaluate whether or not it makes sense to go from nine to 12. We're not there today. We're going to continue where we are today, but we're also expecting to see the great returns we do that we're currently getting.
spk27: Awesome. Thank you, Josh.
spk16: Thank you. Again, if you have a question, please press star them on. Our next question will be from Ben Saw. So don't you think, please go ahead.
spk09: Hey guys, thanks for taking the question. When I look at the drivers of growth in social casino this year, it was, monthly paying users were up quite a bit and then the revenue per paying user was about flat. And I'm just curious how you think of those two levers heading into 2023 and if you think it'll be similar or more balanced between the two. Thanks.
spk23: Yeah, so I'll be honest. My preference is I would always rather grow MPU and leave average monthly revenue per paying user flat Why is that? Because if I'm growing MPU, I'm adding more payers into the portfolio. And by adding more payers into the portfolio, I'm diversifying my revenue risk and giving ourselves a better chance of being sustained longer. So I definitely say payers is first and foremost. If you actually looked at the scale of the portfolio, from your side, it looks flat. because it averages out, but actually our higher-end payers continue to increase how much they're spending. We're just bringing so many more new payers in that the average is staying very flat over time.
spk09: Got it. That's helpful. And then it's still early, but just curious what your takes are on the potential for alternative app stores and what that might mean for your business longer term.
spk23: Yeah, so I mean, first and foremost, we'll call it for us, the DTC is the number one thing that we're looking to. I know it's not quite an app store, but it ends up being our own platform at the end of the day where we get to be the payment provider and also get to own the communication with the player, which gives us just a deeper relationship with them. We are constantly evaluating every new app store that comes out. I would say the learnings I've had over time is you don't want to be first to a new app store in today's world, but you don't want to be last. So we're evaluating them on a weekly basis, and anyone that we see start gaining any momentum early on, then we pivot over the development team in order to get on there as soon as we possibly can. But new app stores are not new to being talked about. There just hasn't really been any that have taken a big share from either Google or Apple at this point.
spk17: So it's more of just watching, evaluating, but being ready. Thank you.
spk16: This concludes our question and answer session. I'd like to turn the conference back over to Mr. Josh Wilson for closing remarks.
spk23: Hey, thank you. You know, we believe our 2022 performance and our plans and beyond reinforce our commitment to spark the world's passion to play, our players are our number one priority. We are laser focused on them with the most engaging digital experience that we can give them. And we look forward to reporting to you in just like 60 days. Have an amazing day, everyone, and we will talk to you soon.
spk17: Thank you.
spk23: Conference is now concluded.
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