SciPlay (SCPL) is a leading developer and publisher of digital games for the social gaming market, which encompasses mobile and Web-based games that are social and competitive, and self-directed in pace and session length, notes Taesik Yoon, growth stock expert and editor of Forbes Investor.
Its current portfolio includes four social casino games — Jackpot Party Casino, Gold Fish Casino, Hot Shot Casino and Quick Hit Slots — which consist of slots-style and table games-style game play, and three casual games — MONOPOLY Slots, Bingo Showdown and 88 Fortunes Slots, which blend slots-style or bingo game play with adventure game features.
The company also reported a good Q3. Indeed, while earnings for the period of 23 cents per share fell 4 cents short of consensus, this still represented a more than doubling from the 9 cents it earned in the prior year quarter.
This significant boost to the bottom line came from lower sales and marketing expenses and the company’s continued effective execution of its live ops strategy to increase monetization of its games and franchises, which drove a quarterly record payer conversion rate of 7.3% and a 10.8% rise in average monthly revenue per payer to $94.10 and led to above-market year-over-year revenue growth of 29.9% to $151.2 million, with the latter exceeding the average analyst forecast by $6.1 million.
Boosted by this strong operating performance, SCPL was also able to generate $56.4 million in operating cash flow. This represents a whopping 150% increase from last year’s $22.6 million and left the company with a very comfortable cash cushion of $210.3 million against its already debt-free balance sheet.
This strong liquidity position provides ample resources for the company to continue its push into the casual gaming space to augment the growth in its social casino games, as well as get the most from the baseline activity in its existing games that remain above pre-COVID-19 levels even as the tailwind from “stay-at-home” begins to normalize.
Given this rosy outlook, we’re optimistic that the stock can continue adding to its recent gain. It was only in September when we booked a nice 22% gain in these shares. We’re now presented with another great buying opportunity in SCPL that could quickly pay off again.
