Light & Wonder reported revenue of $731m in Q2 2023 as CEO Matt Wilson discussed SciPlay synergies, ASX success and the search for a CFO.

Topline numbers

Light & Wonder has generated robust 20% year-over-year revenue growth to $731m in Q2 2023, which also marks the ninth consecutive quarter of revenue growth for the company.

Growth was underpinned by double-digit expansion across all business segments, including gaming, SciPlay and iGaming.

Gaming revenue surged by 21% to $471m compared to the previous year. This growth was primarily driven by the increasing momentum in gaming machine sales, which experienced a 41% increase.

SciPlay, the company’s social casino business, achieved record revenue of $190m, marking a 19% increase compared to the prior year.

The iGaming segment also demonstrated outstanding performance, with revenue reaching another record quarterly figure of $70m, showing a 17% increase from the previous year.

The growth was primarily driven by the continued expansion in the US market.

Adjusted EBITDA for the quarter came to $281m, up 33% on Q2 2022, while the business generated net income of $5m, compared to a $150m net loss in the prior year quarter.

In H1, revenue stood at $1.4bn, reflecting a remarkable increase of 18% from the previous year’s figure of $1.2bn.

Gaming revenue increased 19%, driven by robust growth in gaming machine sales, which grew 46% year-over-year, while SciPlay and iGaming each reached record revenue.

Meanwhile, net incomewas $32m compared to a net loss of $217m in the prior year period.

Adjusted EBITDA increased 28% year-over-year to $529m in H1.

News nugget

Upon releasing its Q2 results, Light & Wonder has also revealed that it will acquire the remaining 17% equity interest in SciPlay for $22.95 per share in an all-cash deal.

The transaction has been approved by both companies’ boards and is set to close in Q4 2023.

“We are excited to fully unite SciPlay with Light & Wonder, further accelerating our cross-platform strategy and creating an even stronger and more efficient platform for growth,” said Light & Wonder president and CEO Matt Wilson.

“Our combined balance sheets will provide us with the flexibility to further invest in developing and launching great games cross-platform and deliver enhanced returns to shareholders.

“We look forward to bringing our world-class teams together and are excited to innovate and grow as one unified company for the benefit of our employees, players and shareholders,” Wilson added.

During the conference call, Wilson provided further insight into the rationale behind the decision.

He highlighted the strategic role SciPlay will play within Light & Wonder’s portfolio, particularly in guiding disciplined R&D strategies.

Initial efforts involved AB testing games and gauging consumer preferences. However, integrating SciPlay more extensively is expected to yield unique advantages.

Notably, the company possesses a combination of assets, including a land-based business, a prominent iGaming position, and a rapidly expanding social casino division.

This amalgamation of strengths is believed to hold the key to unlock the full potential to build the “world’s greatest products and was key to bringing SciPlay back into the family”, Wilson said.

Light & Wonder had initially pursued the acquisition of the remaining interest in SciPlay towards the close of 2021.

However, the company subsequently retracted an all-stock offer due to its disciplined M&A approach to reduce debt.

Best quote

In response to the departure of CFO Connie James, CEO Wilson provided insights into the steps being taken by Light & Wonder to find a new permanent CFO.

The company appointed Oliver Chow as interim CFO in July.

“Oliver is obviously a keen candidate. He’s known to us, and he knows the gaming space really well. But we owe it to our investors to get the best candidate. So that’s what the search will entail. We’ve partnered with a leading search firm, and we’ll run the process. In the meantime, it’s business as usual.”

Light & Wonder CEO Matt Wilson

Best question

David Katz from Jefferies enquired about the execution of Light & Wonder’s Australian listing strategy, its alignment with expectations, and specifically, the evolving liquidity landscape.

Wilson described the outcome as having gone “beyond our wildest expectations”.

He shared that a significant Non-Deal Roadshow (NDR) conducted in Sydney in May garnered impressive interest from potential investors.

This engagement was reflected in the substantial number of Chess Depositary Interests (CDIs) of Light & Wonder stock traded on the Australian Securities Exchange (ASX), amounting to over A$1bn, which is far ahead “of where we thought we’d be at this time”.

CDIs are instruments traded on the ASX that allow non-Australian companies to list their shares on the exchange and use the exchange’s settlement systems.

Furthermore, Wilson shed light on the market capitalisation’s current levels on the ASX, indicating that they are well-positioned for potential inclusion in the ASX 300.

This inclusion could extend Light & Wonder’s appeal to a broader investor base in Australia, amplifying its presence in portfolios.

He acknowledged that they had achieved remarkable progress in just three months since the listing began, though he acknowledged that there’s still more to accomplish.

Current trading & outlook

Light & Wonder’s shares remained stable following the results presentation.

CEO Wilson conveyed a sense of optimism regarding the company’s ongoing progress, highlighting the validation of their investments through reported numbers.

Light & Wonder has managed to reduce its net debt leverage ratio to 2.9x, well within its targeted range of 2.5x to 3.5x, which reflects the company’s “prudent financial management and strategic approach to capital allocation”.

Wilson also pointed to the distinct yet complementary nature of the company’s three unique businesses – SciPlay, the land-based business, and iGaming.

“They’re all built off the back of world-class slot content, and we’ve got teams on either side very eager to work more closely together. So that’s the opportunity for us down the road,” he concluded.