Home > Finance > Quarterly results > Records tumble at L&W in Q2 as SciPlay acquisition edges closer

Records tumble at L&W in Q2 as SciPlay acquisition edges closer

| By Robert Fletcher
Light and Wonder (L&W) experienced further record performances across its igaming and SciPlay businesses in Q2, while the group noted its full acquisition of SciPlay is set to close before the end of the year.
Light & Wonder RouletteX

Revenue reached all-time highs across both businesses, following record performances by the segments in Q1. L&W also noted revenue growth within its core gaming segment during Q2, helped by a rise in sales in North America and Australia.

Regarding Australia, L&W proceeded with a secondary listing on the Australian Securities Exchange (ASX) in Q2. To date, over AU$1.00bn (£514m/€598m/US$656m) in L&W stock has been traded on the ASX.

SciPlay acquisition closing in Q4?

Q2 growth across all gaming segments

Lottery sales weigh on year-on-year comparisons

How did Light & Wonder perform in H1?

CFO transition approaches

SciPlay deal expected to close in Q4

Also in Q2, L&W set out plans to take advantage of growth within SciPlay by acquiring the remaining public shares of the business. Announced in May, the deal is worth US$422m (£331m/€385m) and brings SciPlay fully back into the L&W business.

Light & Wonder CEO Matt Wilson
Other companies don’t have the range of assets available to Light & Wonder, CEO Matt Wilson says

The group currently holds 83% of the economic interest in the social gaming business and 98% of the voting interest. L&W CEO Matt Wilson said the deal is close to conclusion and should close before the end of the year.

“We are excited about the announcement,” Wilson said on L&W’s earnings call. “We’re in a definitive agreement. We expect it to close in Q4, but this is really the last big milestone for us in terms of kind of streamlining the platform.

“There’s not a lot of players in the industry that have the unique collection of assets that we have, the land-based business, the leading igaming position and then the fastest growing social casino company. So, unlocking that full potential about building the world’s greatest products was key to bringing SciPlay back into the family.”

Light and Wonder Q2: Revenue growth across the board

Group revenue for the three months to 30 June was $731m, up 19.8% year-on-year. This was the result of growth across all three of L&W’s business segments.

Some $496m of total revenue was attributed to services activity and the remaining $235m product sales. 

Light & Wonder Frankenstein
Gaming machine sales were up 41% year-on-year in Q2

Gaming continued to lead the way with revenue up 20.8% to $471m. L&W noted a 41% rise in gaming machine sales, while gaming systems and table products revenue climbed 20.0% and 34.0%, respectively.

Turning to SciPlay, revenue reached a record $190m, a year-on-year rise of 18.8%. L&W put this down to the core social casino business, which it said delivered strong payer metrics and outpaced the market and gained share.

Revenue from the igaming business also climbed 16.7% to $70m, another new record for L&W. The group said this was driven by continued growth in the US, where revenue was 32.0% higher. This will likely increase again as L&W prepares to launch live online casino in Michigan during H2, pending regulatory approvals.

Lottery sale impacts year-on-year comparisons in Q2

Looking at spending in Q2, operating costs were 9.6% higher at $618m. L&W spent more in all areas, with the exception of restructuring. Selling, general and administrative remained the main outgoing at $203m. 

Scientific Games
The lottery business – and the Scientific Games name – were sold last year

L&W also noted $93m in other, finance-related costs, meaning pre-tax profit from continuing operations hit €20m. This was in contrast to the $140m loss posted at the same point in 2022.

The group paid $15m in income tax, leaving a net profit from continuing operations of $5m, compared to last year’s $150m loss. Adjusted EBITDA was also 32.6% higher at $281m.

However, when including discontinued operations, the results make for different reading. L&W completed the $5.80bn sale of its lottery business to Brookfield Business Partners in April last year.

Net profit from discontinued operations in Q2 last year was $3.26bn. As such, after also taking off $6.0m in net profit from non-controlling interest this quarter, the year-on-year comparison reads $1.0m net loss in 2023 versus a $3.29bn profit last year.

Revenue reaches $1.40bn in first half

Turning to the first half and how Q2 impacted L&Ws performance in the six months to 30 June, revenue hit $1.40bn. This was 18.3% more than $1.18bn in the previous year.

Gaming revenue was 19.5% higher at $890m, while SciPlay revenue hiked 18.2% to $376m and igaming revenue 11.7% to $134m. As for overall performance, services revenue was $973m and product sales revenue $427m.

Operating costs were 8.0% higher at $1.19bn and finance costs reached $169m. As such, pre-tax profit from continuing operations stood at $46m, compared to a $213m loss last year.

L&W paid $14m in tax, meaning net profit from continuing operations totalled $32m, a significant improvement on last year’s $217m loss. Adjusted EBITDA also increased 22.8% to $529m.

As for discontinued operations, last year net profit was $3.54bn. After taking away $11m in net profit from non-controlling interest this quarter, the year-on-year comparison was $21m in net profit for 2023 against a $3.32bn profit last year.

“Our reported numbers continue to validate the investments that we’ve made in our business and demonstrate the significant progress we are making towards our long-term targets,” Wilson said. 

“Year to date, we delivered double-digit top and bottom line growth across all three of our businesses, generated strong cash flows and reduced leverage, resulting in an exceptional second quarter.”

James prepares to depart Light & Wonder as CFO

Q2 marked the final full quarter of Connie James’ spell as chief financial officer at L&W. Last month, it was confirmed she will step down by the end of August.

CFO Connie James is preparing to step down from her role at L&W

Oliver Chow, senior vice-president of corporate finance at L&W, will become interim CFO. He will serve in the role until a permanent replacement is appointed, with a search currently ongoing. 

“I am proud to have been part of such a diverse and capable team and of our many accomplishments during my time here,” James said. “We accomplished a number of meaningful milestones in transforming the company and are now well-positioned with a healthy balance sheet and a strategic capital allocation plan. 

“The continued growth we saw in the second quarter reflects the focused execution that is in our DNA. With a wealth of talent, sound financials and an outstanding portfolio of assets, L&W continues to be in good hands moving forward as the leading cross-platform global games company.”

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