Hailing “exceptional results” in the second quarter of 2024, Light & Wonder CEO Matt Wilson told Wall Street analysts his company was “well on track toward our 2025 targets,” including a $1.4 billion cash-flow benchmark set back in 2022.
North American unit sales of 5,800 gaming devices highlighted Light & Wonder’s 16th consecutive quarter of improved business. Cautioned Wilson, “We expect continued elevated unit growth, but at a more measured pace.”
Among the contributors to that sales figure was the Oregon Lottery, which bought an additional 1,200 terminals from Light & Wonder less than a year after its initial large-scale purchase. In terms of slot machines, the rollout of Squid Game and Huff ’n Puff Money Matches was said to be in progress.
Wilson also reported that Light & Wonder was leading Australia in ship share of machines and experiencing positive momentum in Macau. “We continue to see stability in our core table-game business.”
The CEO described Light & Wonder’s igaming business as seeing “healthy growth” across the United States, with $74 million in revenue (a record) and $24 million in cash flow. “We’re confident our investment in igaming will ultimately bear through,” said Wilson.
CFO Oliver Chow reported an eighth consecutive quarter of revenue growth, reaching $818 million, despite a one-time charge of $32 million “related to certain legal matters.” He didn’t elaborate what those were, even when pressed on the point.
Chow expected “a modest impact on margins in the third quarter,” due a package deal with Entain involving 4,000 devices. That is on top of 5,500 international unit sales in the second quarter. The CFO also announced a revenue-per-day increase of four percent.
The company’s SciPlay division’s revenue grew eight percent, driven mainly by four core titles. Average daily revenue per paying user was $117. Projected Chow, “We see the opportunity to lean into high-return marketing initiatives. We expect elevated capital costs to continue. These are critical investments,” he said of the company’s research-and-development and capex foci.
Asked about the effect of mergers and acquisitions in manufacturing, Wilson responded, “Our position is great. It’s a very interesting time in the market.”
He explained that private-equity firms were looking for stable cash-generating businesses “and that’s what they’re seeing in the sector.” As for his team, “We stay focused on controlling the controllable.”
As for Light & Wonder’s new products, Wilson said, “We’re really comfortable with the momentum we’re seeing,” including high user scores. Chow added that the quality of Light & Wonder’s cabinets themselves was further enhancing software sales.
Wilson and Chow used the call to announce a further three-year round of share repurchases, budgeted at $1 billion. “We’ll remain nimble as we go,” said the CFO. “We have significant optionality and flexibility.”
Chow said Light & Wonder has been able to reduce long-term debt, while buying back shares, adding, “We’ll look to take advantage of dislocations in the marketplace.” As for capex expenditures, he said they were a “key driver to grow the business.”
What’s next in the Asian and other international markets, Wilson was asked. He responded that Asia was “the slowest market to recover out of COVID.” Beyond that, he looked to the United Arab Emirates in 2027, Thailand in 2028 or 2029, and Japan at some unspecified point, adding, “Australia has emerged as a really great contributor to our business.”
North American growth prospects include VLTs in Quebec, among other Canadian provinces, as well as amusement devices in Georgia and historical horse racing machines overall. “We’re in the very early innings,” Wilson said.
By way of explanation, he said that in a stripped-down, post-COVID, business model, “All that was left was a core nucleus of the casino.” This refocused operators on the games themselves. “The best players want to play the best games and the operators have noticed that.”
Regarding those players, Wilson said, “We’re living in a very volatile news cycle,” alluding to the ongoing stock-market swoon. “You look at [gross gaming revenue] numbers, they’re very healthy. Gaming has proven to be a powerhouse that can operate through the cycles.”
He concluded, “We’re in growth mode. We watch with a certain level of paranoia, [but] we’re taking share and we’re building great games.”
