(PRESS RELEASE) -- Light & Wonder, Inc. today reported results for the first quarter ended 31 March 2023.
We entered 2023 with strong momentum and delivered another quarter of double-digit topline growth with strong cash flows continuing to execute on our strategic plan and progress toward our long-term financial targets. Consolidated revenue grew 17%, driven by growth across all of our businesses, including another quarter of record revenues for SciPlay and iGaming:
Gaming revenue increased 18% to $419 million compared to the prior year period, primarily driven by continued strength in Gaming machine sales, which increased 53%, and strong performance in Gaming operations and systems.
SciPlay achieved record revenue of $186 million, an 18% increase compared to the prior year period, driven by the core social casino business, which delivered strong payer metrics and once again outpaced the market and gained share.
iGaming revenue reached record quarterly revenue of $65 million, a 10% increase from the prior year period, primarily driven by continued growth in the U.S. market.
“We’re off to a strong start in 2023, delivering on all key metrics and once again driving double-digit revenue growth across all three of our businesses,” said Matt Wilson, President and Chief Executive Officer of Light & Wonder. “Our strategy and disciplined investments are driving enhanced returns as we continue to develop and execute on our robust product roadmap, building off the strong momentum that we saw in 2022. The teams executed several notable wins and key launches in the quarter, and we have a full pipeline of games that support progress toward our long-term targets. With leading talent, technology and products, we continue to strengthen our position as the leading cross-platform global games company.”
“We continue to capitalize on the strong growth opportunities that we see in our markets, and drive margin enhancement across the business as we remain focused on operational excellence,” said Connie James, Chief Financial Officer of Light & Wonder. “This quarter demonstrates Light & Wonder’s favorable financial profile with strong topline growth flowing to the bottom line, and importantly strong cash conversion, enabling us to invest in future sustainable growth. We continue to focus on generating significant cash flow while maintaining our balanced and opportunistic approach to capital management and a healthy balance sheet to enhance value for our shareholders.”
Leverage, Capital Return, and Strategy Update:- Net debt leverage ratio of 3.1x, within our targeted net debt leverage ratio range of 2.5x to 3.5x, as of March 31, 2023, a decrease of 0.2x from December 31, 2022.
- Returned $437 million of capital to shareholders through the repurchase of approximately 7.6 million shares of L&W common stock since the initiation of the program through 4 May 2023, representing 58% of total program authorization.
- Preparing for potential Australian Securities Exchange (“ASX”) secondary listing — the Company’s Board of Directors has approved proceeding with a secondary listing on the ASX, in addition to the Company’s existing primary Nasdaq listing. The Board believes there are substantial potential benefits for the Company and its shareholders in pursuing a secondary listing on the ASX, including enhancing the Company’s profile in Australia, one of the leading markets for the Company’s Gaming business, and providing the Company access to new long-term Australian institutional investors that would complement its strong existing base of shareholders in the U.S. and Australia.
Summary Results:
- Unless otherwise noted, amounts, percentages and discussion included below reflect the results of operations and financial condition of the Company’s continuing operations, which includes its Gaming, SciPlay and iGaming businesses. We have reflected our former Lottery business (disposed during the second quarter of 2022) and Sports Betting business (disposed during the third quarter of 2022) (collectively referred to as the “Divestitures”) as discontinued operations.
First Quarter 2023 Financial Highlights:- First quarter consolidated revenue was $670 million compared to $572 million, up 17% compared to the prior year period driven by double-digit growth across all of our businesses. Gaming revenue increased 18%, driven by another quarter of robust growth in Gaming machine sales, 53% year-over-year, while both SciPlay and iGaming reached new quarterly records.
- Net income was $27 million compared to a net loss of $67 million in the prior year period, primarily due to higher revenue and operating income as well as lower interest expense in the current period.
- Consolidated AEBITDA, a non-GAAP financial measure defined below, was $249 million, an increase of 23% compared to the prior year period, driven by double-digit growth across all of our businesses and improved margin.
- Net cash provided by operating activities was $185 million compared to combined net cash provided by operating activities of $94 million in the prior year period. The current year period cash flows benefited from lower interest payments coupled with favorable working capital changes primarily due to the timing of disbursements as well as receivables and inventory levels beginning to normalize, while the prior year period reflects cash flows from the Lottery business (which we divested during the second quarter of 2022), which were partially offset by higher payments associated with the strategic transactions.
- Free cash flow, a non-GAAP financial measure defined below, was $74 million compared to combined free cash flow of $(11) million in the prior year period. The current year period free cash flow benefited from lower interest payments and favorable changes in working capital, as described above. The prior year period combined free cash flow was negatively affected by unfavorable changes in working capital accounts, primarily related to the timing of disbursements, including costs associated with the strategic transactions and timing of inventory purchases.
- Net debt leverage ratio, a non-GAAP financial measure defined below, was 3.1x as of 31 March 2023 compared to 3.3x as of December 31, 2022, remaining in our targeted net debt leverage ratio range of 2.5x to 3.5x.
First Quarter 2023 Key Highlights:- Gaming revenue increased 18% to $419 million compared to the prior year period, driven by continued momentum in Gaming machine sales, growing 53%. Gaming operations maintained elevated average daily revenue per unit, while Gaming systems continued strong momentum, growing 8%. Gaming AEBITDA was $206 million, up 20% compared to the prior year period.
- Gaming operation revenues continue to benefit from year-over-year growth in our North American installed base and average daily revenue per unit, as a result of strong content performance and the continued success of our KASCADA and MURAL cabinets. Our North American premium installed base has grown for the 11th consecutive quarter, representing 46% of our total installed base mix, while revenue per day remained at elevated levels. Additionally, we continue to see positive momentum with the Kascada Dual Screen and LANDMARK 7000 cabinets, validating our continued investment in our R&D engine to drive our long-term growth.
- SciPlay revenue increased 18% to $186 million compared to the prior year period, breaking another record by achieving the highest quarterly revenue ever. Growth was primarily driven by the core social casino business, which delivered strong payer metrics and once again outpaced the market and gained share. SciPlay continued to benefit from key investments that are driving strong engagement and monetization of our players. Payer conversion rates continued strong momentum, while ARPDAU grew 20% year-over-year to a record $0.89, and AMRPPU held at elevated levels.
- iGaming revenue increased 10% to $65 million, and AEBITDA was $23 million compared to $21 million in the prior year period. The revenue and AEBITDA increases were primarily driven by continued growth in the U.S. market. The U.S. market delivered 34% year-over-year revenue growth, driven in part by the strong launches of our land-based original content and scaling third party aggregation on our platform. The launch of our live casino in Michigan is pending final regulatory approval, now expected during the second half of the year.
- Consolidated capital expenditures were $53 million in the first quarter of 2023.