Light and Wonder’s (L&W), which operates in the igaming and SciPlay sectors, experienced record performance during the second quarter. The group also announced that the full acquisition of SciPlay will be completed before the year ends.
Both businesses achieved record revenue levels, after the segment’s performance in Q1. L&W’s core gaming division also saw revenue increase in Q2, aided by an uptick in sales from North America and Australia.
L&W has listed on the Australian Securities Exchange in Australia (ASX). This was done during Q2 of this year. To date, over AU$1.00bn (PS514m/EUR598m/US$656m) in L&W stock has been traded on the ASX.
SciPlay to close in Q4?
All gaming segments grew in Q2
Lottery sales have a significant impact on comparisons between years
What was the performance of Light & Wonder in H1?
Transitioning to CFO:
SciPlay expected to complete deal in Q4
L&W also announced plans in Q2 to capitalize on the growth of SciPlay through the acquisition of remaining shares. The deal, announced in May and valued at US$422m ($331m/EUR385m), brings SciPlay back to the L&W family.
Currently, the group holds 98% voting rights and 83% economic interests in social gaming. L&W’s CEO Matt Wilson stated that the deal was close to completion and would close by the end of this year.
Wilson stated on L&W’s quarterly earnings call that he was excited by the news. “We’re in a definitive agreement. It’s expected to be closed in the fourth quarter, but it is the final big step in streamlining our platform.
There aren’t many players who have our unique assets, including the largest land-based casino, leading position in igaming, and the fastest-growing social casino. SciPlay was able to return into the SciPlay family by unlocking the full potential of building the best products in the world.
Light and Wonder Q2 revenue growth is across the board
The group revenue in the quarter ending 30th June increased by 19.8% on an annual basis to $731m. Growth was seen across L&W’s three business segments.
The total revenue of $496m was attributable to the services sector, while $235m went towards product sales.
The gaming industry continued to be the leader with revenues up by 20.8%, to $471m. L&W reported a 41% increase in sales of gaming machines, while revenue from gaming systems, table products, and gaming tables grew by 20.0% each.
SciPlay’s revenue grew by 18.8% year on year. L&W attributed this to its core social casino, which they said had strong metrics for payers and that it outpaced the competition and gained market share.
L&W’s revenue from the gaming business grew 16.7%, to reach $70m. This is another record. The group expects this to increase as L&W gets ready to launch a live online casino for Michigan in H2, subjected only regulatory approvals.
Lottery sales impact Q2 comparisons
In Q2, the operating costs increased by 9.6% to $618m. L&W increased spending in every area except restructuring. At $203m, the major outgoing was in selling, general and administration.
L&W reported $93m of other finance-related expenses, bringing the pre-tax profits from ongoing operations to EUR20m. The $140m losses posted in 2022 were a far cry from the EUR20m profit in 2018.
After paying $15m of income tax to the government, the group had a $5m net profit for continuing operations, as opposed to a $150m loss last year. The adjusted EBITDA, which was $281m in total, increased by 32.6%.
When you include discontinued operations in the calculation, however, it gives a different result. L&W sold its $5.80bn lottery business to Brookfield Business Partners last April.
In Q2 of last year, the net profit was $3.26bn. After subtracting $6.0m of net profit for non-controlling interests this quarter, 2023’s comparison shows a $1.0m loss versus last year’s $3.29bn.
First half revenue reaches $1.40 billion
In the six-month period ending 30 June, L&W’s revenue reached $1.40bn. It was an 18.3% increase over the $1.18bn of revenue in the prior year.
The gaming revenue increased by 19.5% to $890m. SciPlay revenue went up 18.2% to $476m. Igaming revenue grew 11.7% to $134m. Overall, the company’s performance was driven by $973m in services revenue and $427m from product sales.
Finance costs increased by $169m, and operating costs rose 8.0% to $1.19bn. Pre-tax profits from ongoing operations were $46 million, as opposed to the $213 million loss of last year.
L&W has paid tax of $14m. This means that the net profit for continuing operations is $32m. That’s a huge improvement over last year’s loss of $217m. The adjusted EBITDA increased by 22.8%, to $529m.
Last year’s net profit for discontinued operations was $3.54bn. The net profit of $11m from non-controlling interests this quarter was subtracted to arrive at $21m net profit in 2023, compared with $3.32bn last year.
Wilson stated that “Our reported figures continue to validate our investments in our business, and show the significant progress towards our long term targets.”
The second quarter was an outstanding one. We have achieved double-digit growth in our top line and bottom line across all of our three businesses. Our cash flow has been strong and we’ve reduced the leverage.
James prepares to depart Light & Wonder as CFO
Connie James, the chief financial officer of L&W for the last two years has announced that she is stepping down at the end of the month.
Oliver Chow will be the interim CFO. He is currently senior vice president of corporate finance for L&W. Oliver Chow will be the interim CFO until a replacement has been appointed. A search is currently underway.
James stated, “I’m proud of the many achievements we made during my tenure here and to be a part of a team that is so diverse and talented.” James said, “We achieved a number important milestones when it came to transforming the business and we are well-positioned now with a balanced budget and strategic capital allocation plans.
The continued growth in our second quarter is a reflection of the focussed execution in our DNA. L&W is in great hands as it continues its journey to become the world’s leading global cross-platform games company.
