SciPlay

Prospectus Summary

PROSPECTUS SUMMARY
This summary highlights information included elsewhere in this prospectus and does not contain all of the information you should consider in making an investment decision. You should read this entire prospectus carefully, including the sections entitled "Risk Factors," "Business," "Special Note Regarding Forward-Looking Statements," "Selected Consolidated Financial and Other Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the notes thereto before making an investment decision regarding our Class A common stock.

SciPlay Corporation

Our mission is to become the #1 casual mobile gaming company in the world.

Overview

We are a leading developer and publisher of digital games on mobile and web platforms. Our total revenue has grown from $168.8 million in 2015 to $416.2 million in 2018, representing a compound annual growth rate, or CAGR, of 35%. The mobile portion of our revenue has grown from $109.4 million in 2015 to $323.3 million in 2018, representing a CAGR of 44%. According to data from Eilers & Krejcik, the average CAGR for mobile revenue in the social gaming industry was 25% over the same period. We create our games around compelling user experiences, often using authentic land-based content from Scientific Games to anchor these experiences. Our first social game, Jackpot Party Casino, has continued to grow since its launch in 2012, with many of the players who began playing in 2012 still playing six years later. During the fourth quarter of 2018, our games were played by a total of more than 11.6 million players. Of those players, more than 8.4 million played each month, with approximately 32% of the monthly players playing every day, for an average of 54 minutes each day. During that same quarter, according to Eilers & Krejcik, we achieved an 8.6% share of the mobile social casino market and our revenue growth was 5.5 times as high as the social casino market average.

We provide highly entertaining free-to-play games that millions of people play every day for their authenticity, engagement and fun. We believe our pace of content and feature releases, along with the data-driven, highly targeted and customized experience we provide in our games, result in increased loyalty and frequency of play. While most players play our games for free, a growing number of players, both in terms of total number and as a percentage of paying players, elect to purchase additional virtual coins, cards and chips to enable more game play, which can lead to the unlocking of content and features in a shorter elapsed time than players who opt to not buy virtual coins, cards or chips. The number of players who purchased virtual coins, cards and chips in the fourth quarter of 2018 was more than triple the number of players who did so in the first quarter of 2015, which has driven strong revenue, net income and AEBITDA growth. That number of paying players is still relatively small compared to the total number of players, which provides upside potential for continued growth.

We currently offer seven games, including social casino games Jackpot Party Casino, Gold Fish Casino, Hot Shot Casino and Quick Hit Slots, and casual games MONOPOLY Slots, Bingo Showdown and 88 Fortunes Slots. Each of these games achieved its highest monthly revenue in 2018. Our social casino games typically include slots-style play and occasionally include table games-style game play, while our casual games blend slots-style or bingo game play with adventure game features. All of our games are offered and played across multiple platforms, including Apple, Google, Facebook and Amazon. In addition to our internally created games, our content library includes recognizable, real-world slot and table games content from Scientific Games. This content allows players who like playing land-based slot machines to enjoy some of those same titles in our free-to-play games. We have access to Scientific Games' library of more than 1,500 iconic casino titles, including titles and content from third-party licensed brands such as JAMES BOND, MONOPOLY, MICHAEL JACKSON, CHEERS and THE GODFATHER. We believe our access to this content, coupled with our years of experience developing in-house content, uniquely positions us to create compelling social games.

We utilize a disciplined, data-driven approach to create a portfolio of games that spans markets and appeals to a wide range of players. We gather and analyze data to fine tune the game play experience and enrich our games. We also leverage extensive insights learned through our relationship with Scientific Games, which helps us differentiate our content and create deeply immersive game play.

We are a global organization powered by a culture of innovation. Our management team has more than 300 years of combined experience in the digital entertainment business and is supported by a diverse, collaborative team spanning three continents and five studios. Our executive leadership team emboldens our innovative, entrepreneurial spirit to guide us toward our goal of providing best-in-class player entertainment in the casual gaming industry. While much of our talent comes from within our company through employee growth and development, we supplement that talent with hand-picked candidates from top companies in the video game industry.

Our financial model benefits from our diverse portfolio of evergreen games, our methodical approach to designing, developing and launching new titles and our attractive user economics. In addition to a revenue CAGR of 35% from 2015 through 2018, we have increased our ARPDAU from $0.21 for 2015 to $0.43 for 2018. From 2015 through 2018, we generated more than $1.2 billion in cumulative revenue and, according to Eilers & Krejcik, gained significant market share.

For 2018 and 2017, we generated revenue of $416.2 million and $361.4 million, respectively, or an increase of 15%. In 2018, we generated net income of $39.0 million and AEBITDA of $94.0 million, improvements of $15.9 million and $24.6 million, respectively, over 2017.

Our Industry and Market Opportunity

A number of trends are driving significant change in digital gaming, which we believe are causing growth in the casual games market and providing opportunities for us to grow our social casino games and expand into other areas of the casual games market:

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Digital gaming is an engaging form of entertainment. Digital gaming is a large and strategically important component of the overall entertainment market. Total consumer spend on digital gaming worldwide was approximately $138 billion in 2018, which was more than twice the approximately $58 billion consumers spent on movies and music in 2017, according to data from Newzoo, MPAA and IFPI.


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Mobile devices are a leading medium to consume digital content such as games. Consumers are increasingly using their mobile devices for entertainment and mobile games are being played extensively.


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Increasing number of players with the emergence of casual games. Digital game design and distribution in the casual game market has evolved as new game types and business models address incremental gaming audiences. The proliferation of smartphones and availability of mobile app stores has increased access to digital games, including in the social casino market and other areas of the casual game market. Casual games are also widening the appeal of gaming to mass audiences.


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Scale is increasingly strategic in order to succeed in mobile gaming. We believe scale provides valuable advantages in mobile gaming. Marketing and R&D can be significant expenses for mobile gaming developers, as thousands of titles compete for limited playing time. We believe large and stable user bases reduce the risk of content investments for new games as companies leverage data-driven insights from the game play of their existing user base.

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Social casino is an attractive market within digital gaming. The social casino market is characterized by games that are social and competitive, in known formats and self-directed in pace and session length. Social casino games are generally evergreen in nature due to their loop-driven game play and ability to naturally incorporate a cadence of new in-game content and events. According to Eilers & Krejcik, total consumer spend in the social casino category grew at a CAGR of 21% from 2013 through 2018 and is expected to be approximately $5.8 billion in 2019.


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Additional market opportunities within the broader mobile gaming landscape. We believe social casino games share several core mobile gaming concepts with broader markets, such as card games and pick three games, which should allow us to leverage our existing capabilities and grow with the broader market.

Our Value Proposition for Players

We believe in "selling fun, entertaining time" to our players as opposed to "selling slot spins." We offer the following key value propositions to our players:

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Authenticity. Our games provide an authentic experience of land-based games, including familiar mechanics, visuals, math and audio.


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Accessibility. Our games can be played using either mobile or web platforms.


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Fresh, new and event-driven content. Our games offer simple, intuitive core mechanics as well as multi-layer game plays that are highly immersive.


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Personalization. Our approach to our business allows us to provide game content that is highly personalized for each player based on the last seven days of that player's activity, enabling us to deliver a unique gaming experience to each member of our global audience.

Our Core Strengths

Diverse portfolio of evergreen games

We have created and acquired a diverse portfolio of enduring games featuring some of the most popular and well known titles in social gaming. Our games appeal to multiple markets through varying game mechanics and unique progression sequences, or experience paths, through our games.

Strategic data-driven approach to launch new games and optimize game performance

We incorporate data-driven decision-making into our entire game development process. For example, we use data to help determine what games we should make, when we should make them, when and how to launch them and to judge how well new features or new marketing campaigns work. Data also drives decisions in the marketing and user acquisition parts of our business. We continue to improve the efficiency of our marketing spend and the number of players we acquire per dollar by basing our decisions on historical data and the results actually achieved from marketing campaigns.

Scalable and reusable technology platform

We have made large investments in our shared technology infrastructure that enable us to operate our games effectively at a global level and run thousands of promotions, marketing campaigns and tournaments concurrently. Our proven, custom-built technology stack allows us to easily share best practices and successful features across games in our portfolio, further decreasing time to market for new content and reducing overall development costs.

Deep, global pool of talent

Our expansive talent pool includes nearly 400 employees and five studio facilities. We invest in an open culture of shared success that is driven by our founders and shared across our organization. Our culture fosters enthusiasm, loyalty and teamwork, which we believe is a significant competitive advantage in the evolving mobile gaming industry and serves as the foundation of our continued success.

Unparalleled relationship with Scientific Games and other third-party content owners

We benefit from access to one of the deepest gaming content libraries through our relationship with Scientific Games. Our connection to Scientific Games enables us to leverage attractive multi-year licensing agreements entered into by Scientific Games with the owners of other iconic third-party brands, such as JAMES BOND, MONOPOLY, MICHAEL JACKSON, CHEERS and THE GODFATHER. Our ability to access and successfully incorporate these highly recognizable brands within our games reduces our user acquisition costs and helps us target prospective players.

Strong platform provider partner relations

Our platform partners include Apple, Google, Facebook and Amazon. We participate in our platform providers' beta tests of new applications and features. Our partners host specialized and customized promotional activities with our games and provide dedicated business and technical teams for the successful implementation of our games onto their platforms.

Strategic roadmap approach to identify specific player markets

Our market-based portfolio management is fundamentally driven by our ability to customize our games for each target player universe. We leverage our knowledge of the playing patterns and preferences of specific segments of social gamers and create games from the ground up to appeal to those players.

Our Growth Opportunities

Continued growth from existing games

We continue to invest in and grow our current games by adapting and developing our monetization and marketing engines to improve player engagement, increase paying player conversion and drive per-player monetization. As we continue to develop our games, we believe we will be able to further monetize our existing user base and attract new players.

Develop new social casino games

We intend to continue to capitalize on our ability to build successful social casino games by introducing new titles that appeal to specific player segments and offer differentiated experiences.

Continue international growth and expansion

We intend to further expand our global presence by incorporating our vast library of recognizable and regionalized brands and content in our game design, customization and marketing for regional audiences. As the global mobile gaming market expands, we believe there is an opportunity to continue to improve our reach across the rest of the world by offering more targeted content than we currently offer and a better game play experience than is currently available to international players.

Expand into adjacent gaming markets

We intend to continue to address additional segments within the broader mobile gaming market by expanding into adjacent areas and investing in new game markets. We believe our extensive experience in developing and operating social gaming titles strongly positions us to enter untapped areas within the casual market, such as puzzles, card, poker and board games.

Leverage platform to scale through select acquisitions

We expect to continue to pursue select strategic acquisitions to fuel our top line growth and build our portfolio. We believe we can maximize the value of an acquired asset through our scalable platform and our rigorous, data-driven acquisition, engagement and monetization model.

Revolving Credit Facility

In connection with this offering, we plan to enter into a $150.0 million revolving credit facility, or the Revolver, dated as of the date of the consummation of this offering, by and among SciPlay Holding Company, LLC, or SciPlay Holding LLC, as the borrower, SciPlay Parent LLC, as a guarantor, the subsidiary guarantors party thereto, the lenders party thereto and , as administrative agent and collateral agent. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Revolving Credit Facility." The effectiveness of the Revolver is conditioned upon the consummation of this offering; however, this offering is not contingent upon the effectiveness of the Revolver.

Our Relationship with Scientific Games

Prior to the completion of this offering, we were an indirect wholly owned subsidiary of Scientific Games. In September 2016, in connection with the designation of SG Social Holding Company II, LLC and its subsidiaries as unrestricted subsidiaries under Scientific Games' debt agreements, we and Scientific Games entered into certain agreements that provided a framework for our relationship with Scientific Games, including Scientific Games' provision of intercompany services and licenses of intellectual property rights.

In connection with the closing of this offering, we will enter into new or amended agreements with Scientific Games or one or more of its subsidiaries in order to provide a similar framework for our relationship with Scientific Games. Pursuant to a new intercompany services agreement, or the Intercompany Services Agreement, Scientific Games will continue to provide us with support for certain operational and administrative functions. Bally Gaming, Inc., or Bally Gaming, a wholly owned subsidiary of Scientific Games, and SG Holding I will enter into a new intellectual property license agreement, or the IP License Agreement. SG Holding I will use $ million in proceeds received from us in this offering to make a one-time payment to Bally Gaming under the IP License Agreement, or the Upfront License Payment, and will then assign the rights of the IP License Agreement to one of our subsidiaries immediately following this offering.

So long as the IP License Agreement remains in effect, we do not expect to pay any future royalties or fees for our use of intellectual property owned by Bally Gaming or its affiliates in our currently available games. Pursuant to the terms of the IP License Agreement, we will acquire an exclusive (subject to certain limited exceptions), perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming or its affiliates on or before the third anniversary of the date of the IP License Agreement. Our rights to this intellectual property will be for use in any of our currently available or future social games that are developed for mobile platforms, social media platforms, internet platforms or other interactive platforms and distributed solely via digital delivery, which games we collectively refer to as Covered Games. We will also acquire a non-exclusive, perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming or its affiliates after such third anniversary, but only in our currently available games. Under the terms of the IP License Agreement, we will receive an exclusive (subject to certain limited exceptions) license to use third-party intellectual property licensed to Bally Gaming on or before the third anniversary of the date of the IP License Agreement, to the extent permitted to be sublicensed to us, in any of the Covered Games and a non-exclusive license to use third-party intellectual property licensed to Bally Gaming after the third anniversary of the date of the IP License Agreement, to the extent permitted to be sublicensed to us, but only in our currently available games. Under the IP License Agreement, we will be required to pay to Bally Gaming all costs, fees and expenses related to such third-party licenses, including proportionate pass-through expenses, such as our allocable share of minimum guarantees to the owners of such intellectual property.

The IP License Agreement will not provide us any right to use intellectual property created or acquired by Bally Gaming or its affiliates after the third anniversary of the date of the IP License Agreement, or licensed to Bally Gaming after the third anniversary of the date of the IP License Agreement in any of our future games released after the date of the IP License Agreement.

In addition to the license rights, we will have a right of first negotiation to convert non-exclusive licenses to exclusive licenses, and to license intellectual property rights not covered by the IP License Agreement.

Bally Gaming will own any intellectual property that we develop, to the extent it is an improvement, enhancement, modification, or derivative work of any intellectual property licensed to us under the IP License Agreement.

For a description of the Intercompany Services Agreement and the IP License Agreement, see "Certain Relationships and Related Party Transactions—Relationship with Scientific Games."

We expect that being a standalone public company will provide us with a number of material opportunities and benefits, including the following:

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allowing investors to evaluate the distinct merits, performance and future prospects of our business, independent of Scientific Games' other businesses;


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improving our strategic and operational flexibility and increasing management focus as we continue to implement our strategic plan, and allowing us to respond more effectively to different player needs and the competitive environment for our business;


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allowing us to adopt a capital structure better suited to our financial profile and business needs, without competing for capital with Scientific Games' other businesses;


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creating an independent equity structure that will facilitate our ability to effect future acquisitions utilizing our capital stock; and


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facilitating incentive compensation arrangements for employees more directly tied to the performance of our business, and enhancing employee hiring and retention by, among other things, improving the alignment of management and employee incentives with performance and growth objectives of our business.

The Transactions

Prior to the consummation of this offering and the organizational transactions described below, the SG Members were the only members of SciPlay Parent LLC. SciPlay was incorporated as a Nevada corporation on November 30, 2018 to serve as the issuer of the Class A common stock offered hereby.

In connection with the closing of this offering, we will consummate the following organizational transactions: