Record SciPlay and igaming revenue drives growth at Light & Wonder in Q3

Success was widespread for Light & Wonder in Q3, which was also the fifth consecutive quarter of year-on-year, double-digit growth. The business said developments both during and after Q3 place it in a strong position for further growth moving forward.

One such development came in October when it acquired the remaining shares in SciPlay, the social gaming division it spun off in 2019. The 17% holding was acquired for more than $420m.

Meanwhile, Light & Wonder pushed ahead with its plans for a secondary listing on the Australian Stock Exchange (ASX). This was announced back in May and the business was added to the ASX 200 Index in October.

These developments support wider and longer-term plans at Light & Wonder. Last year, the business also sold its lottery business to private equity company Brookfield Business Partners. IT also completed the sale of its OpenBet sports betting platform to Endeavor.

“We’ve consolidated revenue, growing 13%, bringing up to 10 consecutive quarters of year-over-year top line growth,” president and CEO Matt Wilson said. “I continue to be pleased with the performance consistently delivered since we announced the company’s transformation strategies.

“This includes two new key milestones, which we achieved recently. And we’re not stopping here. We executed a number of strategic initiatives that continue to strengthen our focus on who we are as a company, a leader in games and platforms with a commitment to accelerating R&D investment to build great games and port them across our three channels.”

Divisional records tumble in Q3

Breaking down another quarter of growth, services revenue climbed 11.0% to $503m and products revenue 16.9% to $228m.

Light & Wonder highlighted several segmental records during the three months to 30 September. The first of these was within its SciPlay division, where revenue climbed 14.6% to a record $196m. Light & Wonder says this was primarily driven by the core social casino business, which delivered strong payer metrics and outpaced the market and gained share. 

Payer conversion rates for igaming also increased to 10.6%, while average revenue per daily active user (ARPDAU) grew 20.0% to a record $0.96. In addition, average monthly revenue per paying user AMRPPU grew 12.0% to a record $106.61. 

The second divisional record to fall was igaming revenue, which climbed 20.7% to an all-time-high of $70m. Light & Wonder noted growth in the US and international markets and also benefited from $3m in certain termination fees.

US igaming revenue was 25.0% higher, helped by land-based original content launches and scaling third-party aggregation on its platform. Shortly after Q3, Light & Wonder also rolled out live casino in Michigan.

Gaming remains primary revenue source for Light & Wonder

However, despite record performance elsewhere, gaming is still the core business for Light & Wonder. This division posted $465m in Q3 revenue, not a new record but an 11.0% increase on the previous year.

Light & Wonder said this was driven by continued momentum in gaming machine sales, up 23.0% year-on-year. Gaming operations maintained elevated average daily revenue per unit, while table products were 17.0% higher.

The business also referenced gaming operations revenue, which it said continues to benefit from growth in North American installed base placements and average daily revenue per unit. North American premium installed base grew for the 13th straight quarter, representing 47% of its total installed base mix.

Net profit year-on-year comparison skewed on sports betting business sale

As for spending, operating costs were 4.5% lower at $584m. The main outgoing for Light & Wonder was selling, general and administrative expenses at $204m.

Other costs, primarily interest expenses, hit $53m, meaning pre-tax profit from continuing operations amounted to $94m, up 291.7%. Light & Wonder paid $14m in tax which, after discounting $5m in profit from non-controlling interests, left a net profit of $75m.

This was 78.2% lower than $328m last year. However, the 2022 figures included a $362m pre-tax gain on the sale of the sports betting business. As a result, this skewed the year-on-year comparison.

As for consolidated adjusted EBITDA, this was 21.7% higher at $286m for Q3.

Year-to-date revenue passes $2.00bn

Looking at how Q3 impacted Light & Wonder in the year to date, revenue during the nine months to 30 September hit $2.13bn. This is 16.5% higher than $1.83bn at the same point last year and included $1.48bn in services revenue and $655m in products revenue.

Light & Wonder did not publish a segmental breakdown for the nine-month period. It did, however, state that operating costs were 6.9% higher at $1.77bn but other expenses fell 38.7% to $223m.

This left a pre-tax profit of $139m, in contrast to last year’s $189m loss. Light & Wonder paid $27m in tax and also took off $16m in profit from non-controlling interests. 

As such, net profit for the period hit $96m, down 97.4% from $3.65bn. Again, the previous year’s figures were skewed by the sports betting business sale, as well as the sale of its lottery business. Both sales led to a pre-tax gain of $4.93bn in 2022.

In terms of adjusted EBITDA, this increased 25.8% to $815m.

“Our tremendous team at Light & Wonder continues to deliver exceptional results with double-digit growth across all three of our businesses for the fourth consecutive quarter,” Wilson said.

“We will continue to capitalise on this momentum, as evidenced by the talent acquisition efforts we’ve recently accomplished. Our conviction has never been higher that we will reach our full potential as we approach the end of 2023.”