Sciplay Corp

F:2XY

Earnings Call Transcript 2023-Q1

[Operator]

Good morning. And thank you for standing by. Welcome to the SciPlay First Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. Please be advised that today's conference is being recorded.

I'd like to hand the conference over to your speaker today, Robert Weiner, Vice President, Investor Relations, SciPlay Corporation. Please go ahead.

[Robert Weiner, Vice President, Investor Relations]

Thank you, operator, and good morning, everyone. During today's call, we will discuss our first quarter 2023 financial results and operating performance 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 that include forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call. For more information regarding these risks and uncertainties, please refer to our earnings release issued yesterday 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 Investors section on our website.

As a reminder, this conference call is being recorded. A replay of this webcast will be archived in the Investors section of our website at sciplay.com.

Now, I'm pleased to turn the call over to Josh.

[Josh Wilson, Chief Executive Officer]

Good morning and thanks so much for joining us. I'm excited to report that SciPlay continued its industry leading performance with a strong first quarter. Our games again outperform hitting tremendous numbers and again setting multiple records. For five consecutive quarters, our year-over-year growth has outperformed the entire social casino market. We accomplish this because we are innovative, focused, and driven by our passion to win. Our SciPlay teams consistently deliver engaging and entertaining experiences that our players enjoy and demand.

We know what is happening and when it is happening all the time. We evaluate and manage the business with precision and real time KPIs. We invest wisely with discipline and financial rigor. All of this is made possible by our global team of over 800 SciPlayers staff. We are united in our mission to be a player first focus and just win. We began the year with significant momentum, focused execution, winning strategies and smart investments. Our current achievements are phenomenal and are driving us to push beyond mere success. Our passion to win is deeply root in our culture and in everything we do. SciPlay is delivering value to our players and our shareholders and we are investing in our future from a position of strength.

Now, here are the details of Q1's results. Revenue grew to $186 million, up from $158 million in Q1 last year. This is 18% growth year-over-year driven by the enduring strong performance of our game franchises. Net income attributable to SciPlay was $5.5 million or $0.24 per diluted share in the first quarter, increasing by 25% and 33% respectively, compared to the first quarter of 2022. Our Q1 AEBITDA grew to $54 million, up from $44 million compared to last year's first quarter. This is year-over-year AEBITDA growth of 21%. We are growing profitability at a faster pace than revenue growth illustrating the leverage we are gaining from our investments. Combined, our investments in the SciPlay engine and the platform scalability are setting us up for long-term growth.

In the first quarter, our payer base grew and we increased monetization from existing payer cohorts. These two points are very important. They forecast the value of our games and their sustainability. Our games attract, retain and grow players and then convert them to payers. We have 6 million active customers and just over 10% are currently payers. This gives us enormous opportunity to continue expanding our payer base. We are proving these points by achieving several record KPIs, resulting in strong sequential growth in Q1. We had high performing payer conversion rate of 10.3%, up 16% year-over-year. In fact, we hit our highest number of payers again this quarter through more than 600,000 growing 6% over Q4 and up 12% year-over-year, we achieved Q1 ARPDAU of $0.89, an increase of 20% year-over-year. Our average monthly revenue per paying user increased by 5% year-over-year to $97.43 compared to $92.45 in Q1 last year. Q1 was very strong quarter and exceeded our expectations. Our game franchises continue to provide compelling entertainment to our players.

Jackpot Party Social Casino had strong double digit growth. The game set its third consecutive quarterly revenue record and maintained its number one ranking amongst all social casino games in the US. Quick Hit Slots posted its fifth consecutive quarterly revenue record. The game hit a new record with the highest number of DAU in its history. Quick Hit Slots is now one of the fastest growing games in social casino. During Q1, we launched the winning day campaign with Jerry O’Connell for Quick Hit Slots. The ads were run live on national TV, including major networks, cable and streaming devices. The campaign was integrated in game on Facebook and other digital channels, creating continuity and it yielded great returns.

Quick Hit Slots was ranked number one in the free casino games category on the Google Play Store during a majority of the campaign's period. The results were impressive. We continue to attract new players and new payers. As a result, we have extended the campaign into the second quarter. Overall, we continue to significantly outpace the social casino market. Our three main investment pillars the SciPlay engine, ad tech and talent are driving our industry leading performance. The SciPlay engine is a centralizing force. It is instrumental as both the portal and a unifier of data, cross platform learnings and as a stout provider of resources across our organization. Whether it's data science, economy, features or game mechanics, the SciPlay engine is a scalable and robust solution. It provides real time insights into player behavior, enabling us to offer improved segmentation, specialization and game performance. The player's experience is enhanced and [inaudible]. This leads to increased playing time and increased spending. Payer conversion rates remain high. Our players are more inclined to pay and pay more often. This is due to our team's improving player analytics and the introduction of new content and features into our games. Our Live Ops teams have developed dynamic game roadmaps that increase engagement and monetization. The teams leverage the SciPlay engine's real time learnings to optimize our player relationships and deliver unique personalized experiences. This improved segmentation and specialization has yielded positive results. We are growing our payer base by converting existing cohorts. SciPlay effectively adapted to the changes and the mobile gaming landscape by investing in our ad tech. Our teams develop proprietary ad tech that includes new retention, retargeting tools and optimized ASO models, player focused content marketing and creative based segmentation are incorporated to improve engagement, retention and conversions, all factors that drive revenue growth.

This year we are evolving our marketing activities into mature growth spaces by focusing on reactivations, audience expansions, amplify brand awareness, all of which increase traction and further propagate our growth. We invest in our talent and provide the tools and support to cultivate professional development and growth. Internal initiatives, programs and structuring have further invigorated our teams. Our teams are more productive than ever before and our gains are greater than ever. For example, we strategically manage our games portfolio from a holistic view across the entire organization, monitoring, adapting, pivoting and maximizing the capabilities of our agile platform. Our teams evaluate KPIs in relation to specific revenue and both fixed and variable cost. This enables the implementation of real time initiatives in our games.

This mindset is embedded in our culture and in the SciPlay DNA. We live and breathe this very hands-on approach every day, melding great data with great innovation and great execution to achieve our outcomes. At SciPlay, we continue to invest to drive long-term growth, competitive advantages, profitability and market expansion. We set stringent objectives and put each investment through rigorous financial evaluation and gait each stage of the investment's lifecycle. When we see wins, we reinvest based on ROI. When we don't see the expected returns, we realign capital investment. We are disciplined in our execution and capital deployment and remain ROI focused every step of the way.

For example, first, DTC platform, which is currently in the evaluation and testing phase. We are now in the crawl stage of our crawl walk and run release process, ensuring we have maximum protection of all of our valuable customers. Second, we are broadening our scope to find new players with new marketing initiatives, ad tech and brand awareness efforts, allowing us to continue increasing our marketing spend ROIs. And finally, our global operations footprint is expanding into areas of known for engineering prowess. This quarter's performance is a clear reflection of our team's strong execution and unwavering passion to win. Our SciPlayers around the world are responsible for our success. Our teams build the technology, develop the games, and are continuously innovating to provide the greatest entertainment experience possible.

We are so proud and grateful of each SciPlayer’s contribution. We remain committed to our players, our teams and our shareholders. Our dynamic growth plans, our player first focus and the resilience of our game franchises are the key elements to our success.

And now to you, Daniel.

[Daniel O'Quinn, Interim Chief Financial Officer]

Thanks, Josh. Good morning, everyone. And thank you for joining our call today. SciPlay posted strong financial results in the first quarter. This reflects the progress of our key objectives delivering great entertainment experiences to our players, investing in our game franchises, growing market share in social casino and prudently allocating capital. Our Q1 results continue to illustrate our path of overperformance compared to the overall social casino market. We're benefiting from the investments we made in our game franchises, our proprietary technologies, our systems and organizational scalability. By continuing to invest in our game franchises, we're delivering great player experiences. This comes through customization and segmentation from the SciPlay engine's improved data science and analytics.

Investments in people, product and process surrounding the SciPlay engine have increased the speed, collaboration and effectiveness of our team while sparking increased creativity and innovation. These are reflected in our sustained overperformance and continuing robust growth. Now, here are the key highlights for Q1. First, we continue to deliver strong financial performance with our game franchises. We set new records, achieving the highest number of payers based on increased player engagement. Second, our team's industry leading performance is reflected in the quality of our revenues and profitability growth, which is organically driven and sustainable. Third, we grew year-over-year net income and AEBITDA at a faster pace than revenue while expanding margins, we're also investing in our assets and future growth opportunities.

And fourth, we have the liquidity, flexibility and financial strength provided by a high cash generating business. We generated $42 million in operating cash flow in Q1 and we completed the $60 million share repurchase program.

Now let's get into some of the financial performance details. We generated strong first quarter revenue of $186 million, an all-time record, up 18% year-over-year with our social casino gains significant outperforming the market. We generated first quarter net income of $42 million, or a 22% margin, and diluted earnings per share attributable to SciPlay of $0.24. We grew AEBITDA by 21% year-over-year to a $54 million, achieving a 29% margin. We continue to set records in several of our key performance indicators. In the first quarter, we grew our payers 12% year-over-year to a record 625,000. We also saw increases in payers on a sequential basis, which began in Q1 of last year. Our average monthly revenue per paying user was $97.43, marking the 12th consecutive quarter above $90.

We also set a record ARPDAU of $0.89, an increase of 20% year-over-year. We firmly believe strong revenue growth and even faster AEBITDA growth, combined with strong cash flow are the key drivers of shareholder value. SciPlay is executing all three of these objectives. They are driving increased scalability and efficiencies, enabling key investments and building on our competitive advantages. We continue to operate from a position of strength, generating $42 million in operating cash flow in Q1, ending the quarter with strong liquidity of $358 million in cash and total liquidity of $508 million. We have the financial strength and flexibility to deploy excess capital to drive increasing shareholder value. Currently, we're deploying capital in two areas. We're investing in our game franchises, which are driving profitable growth and translating into increasing shareholder value. We're also driving additional shareholder value by returning capital to shareholders through our execution of our share repurchase program. I'm pleased to report that in less than one year, we fully completed our $60 million share repurchase authorization, buying approximately 4.1 million shares through May 9.

Our Board and our team view repurchases as a good use of capital, boosting returns to shareholders, particularly in the current market environment. Our Board last week authorized a new $60 million share repurchase plan which we plan to execute in the same manner as the last plan. Now, I'd like to talk about two topics to add perspective to our fiscal discipline and our anticipated performance throughout the year. As I mentioned, our capital is being deployed wisely with a high focus on organic growth, the element within our greatest control. Of course, we see the macroenvironment just like everyone else. We will watch it closely and manage our business with a firm focus on both operating environments, macro external and the micro within our direct markets.

And to date, we've not seen adverse macro trends impact our business. Our philosophy is fiscally responsible capital management. This is particularly prudent in the current macroenvironment, and this is why we hold a significant portion of our cash and equivalents in government backed money market securities, offering a high level of safety and security. This enables us to operate competently in all environments. We're a data driven company, and always have been. Our decision making continues to be predicated on ROI. We plan growth investments each year, including deploying capital appropriately. We have the financial strength and flexibility to invest in multiple future growth initiatives at the same time. We have the data, expertise and financial strength to make informed, ROI driven decision. And we continue to see long term growth opportunities.

Now, let me discuss the anticipated full year performance and point out the differences we expect compared to last year. While we've not communicated specific financial guidance for 2023, we've committed to continuing to grow our business at a faster rate than the estimated social casino market. In Q1, we posted our fifth consecutive quarter of doing just that. We remain committed to this objective and are on track to achieve it this year. As a reminder, the summer months are historically slower in our business as the weather gets warmer as schools let out and vacation plans begin. We generally see less daily gameplay as people are outside enjoying the season. I'd also like to point out that we will incur additional expenses in 2023 over the run rates we had in 2022. The incremental expense began in Q1 of 2023 and will continue in the next three quarters of this year. Specifically, we grew our headcount last year in key areas to execute our growth strategy.

In aggregate, we anticipate incremental spend of $14 million for the remainder of the year. Additionally, as we previously noted, we expect incremental legal expenses of approximately $5.5 million to defend state allegations and legal matters. We just began to incur these expenses in Q1, leaving about $1.7 million per quarter for the next three quarters. Marketing spend timing is different this year as compared to last year. Our anticipated offline marketing expense of approximately $12 million will be spread more evenly across the year as compared to the $11 million we spent last year, which was predominantly weighted in Q3. To sum it up, we anticipate incremental expense of approximately $6.5 million in each of the next three quarters, totaling roughly $20 million. SciPlay is a disciplined and focused company with an industry best team. We're benefiting from our investments in scalable and proprietary systems that our people are leveraging for sustainable growth and market leadership. We generate a high percentage cash flow yield from our revenues. We invest our resources prudently for both the near and long term. Our team is aligned and focused on achieving three primary goals. One, outpace the growth in social casino market and take share. Two, expand margins prudently not at the expense of making investments in future growth. And three, generate significant and growing operating cash flows. These are SciPlay goals that we focus on every day. They are the keys to winning in the market, growing our business, and increasing shareholder value.

We are off to a great start in Q1 and look forward to continuing on our path of sustainable, profitable growth. Operator, you can open it up for questions now.

[Operator]

[Operator Instructions]

The first question comes from Ryan Sigdahl with Craig-Hallum.

[Unidentified Analyst]

Good morning, this is Will on for Ryan. Thanks for taking our questions. First wanted to touch on Spell Spinner, so testing is ongoing. Plays a little differently when we compare it to your other titles. That said, what does the target audience, how does it differ from your existing demographic? And what does the customer acquisition strategy look like going forward? Thanks.

[Josh Wilson, Chief Executive Officer]

Thanks, Ryan. Sorry. Thanks, Will. Yes. As you know, you played it and you see it the way it behaves. It is significantly different as far as the rest of the portfolio goes, and therefore it does go after a little bit different target demographic, it tends to skew a little bit more into RPG overlapping with casual than most of our games, which all fall into the more casual or social casino as a whole. So it would tend to have a little bit younger demographic. Therefore the marketing strategy as a whole would be a little bit different because you're going to look at different pockets where those individuals are going to keep playing and where they're going to be able to see ads.

The strategy around it right now is just understanding what the cost is overall. So doing just light market testing, continuing to do early testing on early KPIs. So to really comment on what a scaling would look like, we're way too early to talk about that because it's really still in the crawl phase of our crawl, walk, run process. But to your original question, it would be a much, I shouldn't say much younger, but definitely younger demographic.

[Unidentified Analyst]

Great. And then maybe as a quick follow up, does this greater expansion into casual categories make the content partnership with Light and Wonder less critical going forward or how do you think about that?

[Josh Wilson, Chief Executive Officer]

It's relatively interesting because when I think about it, I kind of don't think about it as am I expanding into social casino or casual or art? I look at it as I am expanding into a place that has a group of people that behave in the way I need in order to grow a game or expand a game. So when we look inside of the casual market, really, really what we're seeing is people who behave in the meta game and the live ops very, very similar as social casino. So we kind of go around to saying like the same type of mechanics work around those simple for look. The content for Light and Wonder is as important today as it's ever going to be. Because it is a big part of not only the branding of how we grow and how we actually advertise the games itself, but it is for better or worse, they're new, simple math models that get put into our game that are proven to work in casinos around the world, and we get free access to them. So at no point would I ever say it's less important. We will just have some games that don't use it.

[Operator]

Next question comes from Ben Soff with Deutsche Bank.

[Ben Soff, Deutsche Bank]

Hey, guys, thanks for the question. Really strong results this quarter. You guys talked a little bit more generally about the factors that led to that. I'm wondering if you have some more specific examples of kind of the segmentation and optimization that you guys are doing and then maybe a housekeeping question. Can you guys talk about the growth for social casino versus ad revenue this quarter and maybe how we should sort of think about milestones or evaluating the ad business as we go through the rest of the year? Thanks.

[Josh Wilson, Chief Executive Officer]

Yes. Ben, it's great to hear from you and thank you so much for the compliment. We're really proud of everything we were able to accomplish. It's very difficult to look at the world and say this segmentation or this specialization is what driven the growth, because the reality is execution across multiple pillars that are what allowing us to be able to grow the way we are. And all of these pillars were fundamental in the investments that we made in 2022 to build foundations for each of these. So when I look at the foundation first as a SciPlay engine, which we really give us these learnings around features, live ops, data technology, which really gives us more information for being able to segment out users in a more finite level.

And this really gets us the ability. If I would have said, hey, we go out there and we have 20 segments that people that bucket together and go, but being able to do this, we're actually able to go to an infinite number of segments because we segment them, sub segment them down by adding in more metrics and more attributes to create a new lookalike for the group. And so it's really not easy to say it's this segment or this segment. Now, what's worked really, really amazing with this is, because of this it flows right over to how do we run the live game. And running the live game, the most important thing is being able to get the right billboard or the right feature or the right task in front of the right person at exactly the right time. And this increases our odds of getting that in front of them. And so the two really work together in order to drive. And the amazing part out of this is all this does is make the user more engaged. By becoming more engaged, they're worth more money.

We see a higher LTV. And then we couple all of that with the amazing investments that we are making in our ad tech/marketing team where we're doing everything, we can to find the right users in the right place, no matter what channel it is, we able to get them for the right cost, giving us just adding all three together the highest ROIs that we have seen in a really like as long as I can remember. So I hope I'm doing a good job of answering it, but it’s like it would do it not justice to just say the segmentation on itself.

[Ben Soff, Deutsche Bank]

Okay, makes sense. And then on the ad side.

[Josh Wilson, Chief Executive Officer]

Yes, on the ad side. I think the way to think of it right now is we kind of expect our ad business to stay relatively flat over the next quarter or two, but in the background, we're actually working on ways to kind of pivot and move out of what's happened in the market right now. As we all know, the Hyper Games market has significantly changed over the last year. Since about May last year, mainly driven by the further pushing of IDFA and making the marketing or the arbitrage marketing much, much harder. So with this, you have to develop a way of getting what I would call as a little bit higher call it dates 30 retentions. And so our very talented elected team has been working on kind of a new system of games that is built on engaging people much sooner in their life cycle to keep them in multiple games, sorry keeping them in multiple days per week, which then will all add to that longer term retention.

So as far as looking model wise, I would assume very, very flat over the next couple of quarters, but then hitting towards the end of the year kind of starting to creep up from there, but really having the momentum in 2024.

[Operator]

The next question comes from Aaron Lee with Macquarie.

[Aaron Lee, Macquarie]

Hey, good morning. Thanks for taking my question. And another congrats on another record quarter. I wanted to touch on marketing really strong sequential user growth and payer growth. Obviously, seems like the marketing innovation campaigns continue to pay off and still an area where you continue to differentiate yourselves. Can you talk about what you learned from the latest round of marketing innovation and just how we should be thinking about marketing and UAE spend for the balance of the year?

[Josh Wilson, Chief Executive Officer]

Yes. Thanks a lot, Aaron, also very, very proud of the team and everything they did in order to show the results really up to all of them. That is getting us to where we are as a company today. Like I kind of answered in the last question. To me, marketing is one of the pillars. You can't do any of the pillars great and the other two just okay or you will fail. So we kind of look at it as we grow the player the way we are, it gives us the luxury of being able to continue to invest in marketing. Now, what our team has been able to do, which is what I would say is best in market at the current moment, based on everything else that we're seeing, is they're able to take the user information that is coming in and be able to get a very accurate idea of the value.

By being able to do this, we're able to ping more and more channels across the entire network and now being able to even expand it into, as you just mentioned, the innovation world. The innovation world, we're taking the exact same approach that we do with every other dollar we spend, which is we want to make sure that we're getting the right investment for the dollar. We're not spending our money to grow revenue. We're spending our money to eventually grow EBITDA. And what the team has been able to do is put together a way of measuring this with a lot very precise accuracy, which gives us a lot of confidence in spending, which was allow us to continue spending through the Q1 quarter, which led to be honest, our results that were above our own expectations. We're going to take those learnings, which is basically understanding what places, what channels, what times, what shows, where are the right places to do things and then when to invest the most into that area and then dive in deeper.

Now, what we will say is it's not just an innovation of spending the dollars, also the integrating it into the game, integrating it into our social media world. It's really building an entire experience for the user so they don't just see an ad and come in, they literally feel like they're walking into this environment that was driven by innovation spend. But the reality is the whole experience is being innovative. So we're super pleased with the results and our plan is to do a couple more runs at it by the end of the year as long as it's ROI positive and that's kind of how our approach is going to look.

[Aaron Lee, Macquarie]

Great. That's very helpful. Also wanted to touch on generative AI, which seems to be the topic of the hour. Any thoughts as to how you view this generative AI technology broadly and whether it can be something you incorporate into your business? Thank you.

[Josh Wilson, Chief Executive Officer]

Yes, I mean, AI is a really interesting one, right? And it feels like in the last quarter it went from 10 miles an hour to 100 miles an hour. And everyone's talking about it, everyone's going and there are so many what I would say is there's so much low hanging fruit to it that can be really utilized across different departments inside of our company. From fast generation of art in order to get multiple concepts done quicker through concept art, so therefore allowing us to do prototypes quicker and really, really will be very, very innovative in the marketing art world where you need to make hundreds and hundreds of concepts in order to find the one or two that work. This is the low hanging fruit that you just do right away. Then there's the communication part. Is there a way that we can integrate it into our VIP/customer service? Different ways that we message things, different text that's used throughout the game, different ways of just making things quicker, faster. Then the long term is looking at like, how do we use it in order to help make decisions?

Now, it sounds amazing and great, but the one thing to remember is in order for it to work, you have to feed it. And every time you're feeding it with information that is unique or IP that is unique to you and your company, you've now shared those learnings with everyone else who uses it. So I think where companies are going to be really quick about just jumping in all in, they're not going to understand the ramifications of what it meant for the next person that says, write me a game like this. And now the AI has an example of what you did. And so for us, we're being a little bit more cautious about anything that we feel is our own secret sauce. But for sure going to continue evaluating ways that we can either bring the information or the AI internally where we own both sides of it, or as we feel more and more comfortable that the data can be secluded off. But right now we've already seen a couple of companies have breaches, and so it happens.

[Operator]

Our next question comes from Franco Granda with DA Davidson.

[Franco Granda, DA Davidson]

Hi, good morning, everyone. Congrats on the good results. I have a couple of questions for you this morning. You've done a really good job at growing your payer base from converting your existing cohorts, but I was wondering if you could speak to what you've seen happen to the audience size, to the overall audience size for social casino, then have a follow up.

[Josh Wilson, Chief Executive Officer]

Yes. So I would say I'm going to first answer it from what I see on our side and how we feel it's going, and then I'll give a hypothesis of what I think is happening. But I obviously don't have access to everyone's data, so I'm going to say it's a hypothesis. On our side, we had really, really good growth on the audience side in Q1, mainly driven from a few different things. The first quarter is seasonality. A lot of installs come in, organics go up pretty dramatically with that CPIs come down because the marketing competition also normally takes a break out of the fourth quarter and then add on to that the very tremendous performance that we got out of the Jerry O’Connell. So right, in this case, one plus one plus one kind of equals forward for us.

Now, I don't just expect that growth to continue going because the seasonality wears in and then the marketing comes in. But I do expect us to do what we've done in the past, which is be able to really close to maintain our audience growth, or our audience throughout the year. Maybe a little degradation to it, but that degradation is mainly because of how we ROI focus our marketing more than it is anything else. Now, what do I expect to see in the overarching market? Probably Q1 everything probably went up a little over Q4 because seasonality would have been everywhere. I doubt majority of companies had the one plus one plus one equals four. I would say they probably one plus one equals two. But as we continue getting into the rest of the year, what I would imagine is the payers in the market stay relatively flat, but you see kind of MAU across come down a little bit. And this has less to do with anything else other than how well do you maintain your paying group. This is something we focus on. This is something that is 100% what we are aiming to do all the time. It is our mission as a player first focused company. But I don't think everyone in the industry has that mentality. A lot of people have the mentality of give me money, not play my game.

[Franco Granda, DA Davidson]

Yes, I know that makes a lot of sense. And I hope to one day be able to add one plus one plus one and get four or five on my end, as you are right now. But my other question was around your revenue per monthly paying user. It keeps reaching new highs, nearing $100 now, how much more room for upside do you see from here? Because it seems like it's quite high at this point.

[Josh Wilson, Chief Executive Officer]

Yes, I'll be honest, Franco, it's not my favorite KPI and it is honestly not one as a company, we spend a lot of time focusing on. And the reason I say that is it is more important to me that I have more payers than it is how much payers pay. Now the reason ours continues to go up is the people who are later in their life cycle. People have been playing three, four years, year-over-year they've just become worth more and more as our game becomes the one that they continue investing in and growing. But if our growth and marketing team can bring me in a whole bunch of new users at great price. Technically, that metric won't go up, but my payers will go up dramatically. So I think the best way to probably pay attention to this is, like, MPU payers ARPDAU are probably really the things that show health in the business. How high do I think it can go? As long as we keep running the business like we are today, I expect it to continue rising year-over-year. But like I said, it's not a focus of ours.

[Franco Granda, DA Davidson]

No. That makes total sense. And if I could squeeze the last one in here. You obviously talked about all of the different areas you're investing your capital on and how much more, I guess, availability you have for that. What is the appetite for M&A? Obviously, you're still absorbing the acquisition from last year and making changes to that, but are you seeing attractive opportunities in this space?

[Daniel O'Quinn, Interim Chief Financial Officer]

Hey, Franco. It’s Daniel. Yes, in terms of M&A, I mean like we've talked about before, our capital allocation strategies, kind of three points of focus, which are investing in the business and talking about the investments that we've been making and the results we've been getting. And then we have the share repurchase program. And then lastly, we have M&A I mean, we are consistently looking at opportunities, but we have a pretty high bar in terms of making sure we have the right strategic bid. We also look at making sure we have the right ROIs and if it's accretive for SciPlay, but yes, wouldn't rule anything out, but we're just looking constantly in the market. You want to add anything, Josh?

[Josh Wilson, Chief Executive Officer]

Yes, I'll add a little bit. And this is just more on market dynamics than it is anything else. Where we have seen some of the market multipliers coming down, then we see something like what happened with hopefully that crazy changes that market dynamic all again, I don't think we've hit the bottom of the M&A market yet. I do think it's come down some, but right now, enough companies have enough cash that they're able to provide, be able to sustain, and I think they're trying to sustain long enough for the market growth to turn around and then get back to growth as a company and therefore add value to their business. The question is going to be, will the overarching market turn around before they run out of cash?

And if it doesn't happen, then I think we're going to have a lot of stuff come up at once, and it'll be a very, very attractive multiplier. But at this point, as me looking at the world, I don't imagine that things will turn around for the masses unless Apple comes out with a solution for firing people from their network. Because majority of companies do not have the overarching game building and growth facilities we do. And this is why there's [inaudible] for growth today.

[Operator]

The next question comes from Eric Sheridan with Goldman Sachs.

[Eric Sheridan, Goldman Sachs]

Thanks for taking the question. I hope everyone on the team is well, if I can come back, I think you talked about the DTC platform being in the testing phase, and as we look out not only to 2023 Josh, but beyond help us better understand what's being built on the DTC platform. How would you be thinking about being deployed more widely within your array of your go-to-market strategies, not only just this year, but on a multiyear view? And what are you sort of continuing to look for the DTC platform to go wider as we move a couple of quarters down the road. Thanks so much.

[Josh Wilson, Chief Executive Officer]

Thank you, Eric. It's great to talk to you. The DTC platform is very interesting, and we're very excited for what it can do for our company and what it'll bring. And during the script, I said we're at the crawl phase of it. And we're at this phase because every payer that we have inside of any platform that is already paying is part of who we are today, and it's part of our success and growth.

So anytime you move them from what they're already doing, you have a risk. And the reason we're in the crawl phase is we want to make sure that if we try to move a payer from one platform to our DTC, we have like a 99.9% conversion rate and we don't potentially lose someone because it's much better off to get them to purchase than not get them to purchase at all.

The worldwide is really think about it less of probably a worldwide and look at it as more of expansion through our games over time. We'll start with different games and ramp them up. The first will be talking to people through email, introducing it to them, because that's the least amount of risk. Now with everything that Apple has come out and announced over the last couple last month or so with everything that's happening at Epic, it's now opening up the door for potentially doing an option inside of the game and pushing them. Now the email has almost zero risk because they weren't in the game when they did it. But the other one does have what I would call an inherent risk to it, which is they're in the game. They have to leave the game and then come back to the game.

And every time you add a friction point is a potential that someone could leave. And so this part will take us long time to make sure that it's perfect. Our goal is to do it right, not to do it fast. Now, I would expect to see towards the end part of this year, we're starting to probably push it up a little bit more, but still a very small percentage of the reach of our population. But in 2024, we're going to expect it to start hitting a larger population of our payers throughout at least our largest board game.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference over to Josh Wilson for any closing remarks.

[Josh Wilson, Chief Executive Officer]

We're off to a great start in 2023. We're hungry. We continue to charge forward. We have so much more things we want to do and accomplish. A big thank you to all of our awesome SciPlayers players around the world. You're amazing, and every day you prove it to us. I look forward to reporting on the progress in our second quarter call this summer. Thank you for participating.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.