Lightweight & Wonder (L&W) continued to achieve new milestones in its lottery and SciPlay operations during the second quarter, while the organization stated that its full purchase of SciPlay will be finalized by the end of the year.
L&W achieved new peaks in the second quarter, with the SciPlay acquisition nearing completion.
Both companies’ earnings reached record highs after the two divisions set records in the initial quarter. L&W also indicated that its core gaming business witnessed revenue growth in the second quarter, driven by amplified sales in North America and Australia.
Regarding Australia, L&W completed a secondary listing on the Australian Securities Exchange (ASX) in the second quarter. To date, L&W shares have been traded on the ASX for over A$1 billion (£514 million/€598 million/$656 million).
SciPlay acquisition to be finalized in Q4?
All gaming divisions expanded in Q2
Lottery sales influence year-on-year comparisons
How did Lightweight & Wonder perform in the initial six months of the year?
CFO transition is approaching
SciPlay agreement anticipated to close in Q4
Also in the second quarter, L&W outlined plans to capitalize on SciPlay’s growth by acquiring the remaining publicly traded shares of SciPlay. The agreement, announced in May, is valued at $422 million (£331 million/€385 million) and will fully reintegrate SciPlay into L&W’s business.
The organization presently holds an 83% economic interest and 98% voting interest in the social gaming business.
The chief executive of L&W, Matt Wilson, declared that the agreement is nearing completion and is anticipated to be finalized before the year’s end.
“We are enthusiastic about this,” Wilson stated during L&W’s earnings conference call. “We have signed a definitive contract. We anticipate its conclusion in the fourth quarter, but this represents the final significant milestone in our efforts to streamline the platform.
“Few companies within this sector possess the distinctive portfolio of assets that we do, encompassing a land-based enterprise, a prominent iGaming position, and the fastest-growing social casino entity. Consequently, unlocking this full potential, constructing the finest product globally, is paramount to reintegrating SciPlay into the fold.”
Light and Wonder’s performance in the second quarter: Revenue growth across all segments
Total revenue for the three months concluding on June 30 amounted to $731 million, reflecting a 19.8% year-on-year surge. This growth was fueled by expansion across all three of L&W’s business divisions.
Approximately $496 million of the total revenue was attributed to service operations, with the remaining $235 million stemming from product sales.
The gaming enterprise continued to spearhead growth, with revenue increasing by 20.8% to $471 million. L&W highlighted that gaming machine sales surged by 41%, while gaming systems and table product revenue expanded by 20.0% and 34.0%, respectively.
SciPlay’s revenue attained a record high of $190 million, representing an 18.8% year-on-year increase. L&W attributed this to its core social casino business, which it asserted delivered robust paying metrics, outperforming the market and gaining market share.
The iGaming business also witnessed revenue growth of 16%.
L&Ws earnings climbed by 7% in the second quarter of 2023, hitting $70 million, a new peak. The company attributed the increase to sustained growth in the US market, where income rose by 32%. This figure is anticipated to rise further as L&W prepares to launch its online live casino in Michigan in the second quarter, pending regulatory approval.
Lottery sales affected the year-on-year comparison for the second quarter.
Looking at second-quarter expenditures, operational costs climbed by 9.6% to $618 million. L&W boosted spending in all areas, except for restructuring. Sales, general, and administrative expenses remained the largest expenditure at $203 million.
L&W also noted that other finance-related costs were $93 million, leading to a pre-tax profit of €20 million from continuing operations. This contrasts with a loss of $140 million in the same period in 2022.
The company paid $15 million in income taxes, resulting in a net profit of $5 million from continuing operations, compared to a loss of $150 million in the same period last year. Adjusted EBITDA also increased by 32.6% to $281 million.
However, the outcomes would be different if discontinued operations were included. L&W completed the sale of its lottery business to Brookfield Business Partners for $5.8 billion last April.
Net profit from discontinued operations in the second quarter of last year was $3.26 billion. Therefore, after subtracting net profit of $6 million from non-controlling interests this quarter, the year-on-year comparison for 2023 resulted in a net loss of $1 million, compared to a profit of $3.29 billion in the same period last year.
Income for the first half of the year reached $1.4 billion.
The second quarter’s performance had a beneficial effect on L&W’s financial standing, with earnings reaching $1.4 billion in the six months concluding June 30. This signifies an 18.3% rise compared to the same period in the previous year, which was $1.18 billion.
Gaming revenue saw a 19.5% increase to $890 million, SciPlay revenue rose by 18.2% to $376 million, and iGaming revenue climbed by 11.7% to $134 million. Overall, service revenue amounted to $973 million, and product sales revenue reached $427 million.
Operational costs went up by 8.0% to $1.19 billion, and financial costs reached $169 million. Consequently, pre-tax profit from continuing operations was $46 million, in contrast to a loss of $213 million in the same period the previous year.
L&W paid $14 million in taxes, resulting in a total net profit from continuing operations of $32 million, a notable improvement compared to the loss of $217 million in the same period the previous year. Adjusted EBITDA also experienced a 22.8% increase to $529 million.
Regarding discontinued operations, net profit last year was $3.54 billion. After subtracting the net profit of $11 million from non-controlling interests in the current quarter, the net profit for 2023 was $21 million, compared to a profit of $3.32 billion in the same period the previous year.
“The figures we’ve released continue to showcase the investments we’ve made in our business and demonstrate the substantial progress we’ve made in achieving our long-term objectives,” stated Wilson.
“We’ve attained double-digit revenue and profit growth across all three of our business divisions, generated robust cash flow, and reduced leverage, making the second quarter an outstanding performance.”
James will be stepping down from his position as CFO of Light & Wonder.
Connie James’ final full term as Chief Financial Officer of L&W was the second quarter. Last month, the news of her departure, effective at the end of August, was made public.
Oliver Zhou, L&W’s Senior Vice President of Finance, will act as the temporary CFO. He will maintain this role until a permanent replacement is found, a search that is currently in progress.
“I am proud to have been a member of such a diverse and skilled team and to have observed the many achievements we accomplished during my time here,” stated James. “We have reached some significant milestones in transforming the company and are now in a strong financial position with a strategic capital allocation plan.
“The progress we continued in the second quarter reflects the focus on execution that is ingrained in our culture. With a wealth of talent, a robust financial position, and a strong portfolio of assets, L&W is set to continue its steady growth as a leading cross-platform global gaming enterprise.”
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