Light & Wonder follows streamlining plan with 5% revenue growth from continuing operations in Q2

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Light & Wonder continued to execute its strategic objectives during Q2 2022, including the sale of its lottery and sports betting businesses and the continued reduction of net debt.

Most notably, the business completed the sale of its lottery division to Brookfield Business Partners during the second quarter reporting period, generating gross cash proceeds of $5.7bn in the process.

It continues to work towards the sale of its sports betting business to US media conglomerate Endeavor, under an amended agreement with total gross proceeds of $800m, consisting of $750m in cash and $50m in Endeavor stock.

That deal is expected to complete by the end of Q3.

These developments allowed the supplier to de-lever and transform its balance sheet, reducing the principal face value of debt outstanding by $4.9bn compared to Q1 2022, at a net debt leverage ratio of 3.6x, compared to 6.1x as of 31 March, 2022.

The business therefore continues to close in on its targeted net debt leverage ratio range of between 2.5x and 3.5x.

Revenue from continuing operations in Q2 totalled $610m, a 5% increase year-on-year from $581m. Light & Wonder pointed out the prior corresponding period benefitted from $38m in VAT recovery. Excluding this figure, Q2 revenue growth would have come in at 12.3%.

Adjusted EBITDA was down year-on-year, from $232m in Q2 2021 to $212m, at an EBITDA margin of 35%, down from 40% in the prior year period.

Light & Wonder CFO Connie James: “The pace and scale of the business and financial transformation over the past year has been incredible.”

Net loss from continuing operations was $150m, compared to a $51m net loss in Q1 2021. The net loss increased primarily as the result of a $147m loss on financing transactions, associated with its April 2022 debt pay down and refinancing transactions.

Revenue consisted of $390m from the land-based gaming segment (up from $367m), $160m from social gaming business SciPlay ($154m) and $60m from the iGaming segment, in line with the $60m iGaming revenue generated in Q1 2021.

The firm said that revenue from its iGaming business had grown in the US market, but that this was partially offset by an unfavourable $4m impact of foreign currency translation due to the strengthening US dollar, which reduced revenue by around 7%.

Barry Cottle, president and CEO of Light & Wonder, said: “We made great strides in the second quarter as we continued to execute on our vision and the transformation of our company. 

“With the lottery business sale and anticipated closing on the sale of our sports betting business by the end of the third quarter, we have achieved a significant milestone in the transformation of our organisation.

“The success we are seeing this quarter is the result of the fundamental changes we have made throughout the business. Adding it all up, we couldn’t be more excited about the progress we are making and our path forward as the leading cross-platform global game company.”

Connie James, Light & Wonder CFO, added: “The pace and scale of the business and financial transformation over the past year has been incredible.

“With our reconstituted balance sheet, we have the financial flexibility to invest in our largest growth opportunities to drive the business forward.

“With our strong financial profile, including a high mix of recurring and digital revenues, sustainable double-digit growth, and a strong cash flow profile we will generate significant excess capital. 

“We are actively executing on our capital allocation priorities as we paid down $4.9bn of debt in the quarter and repurchased $203m of our shares, or 27% of our total buyback authorisation, in just five months.

“As we look forward, we will continue to drive operational excellence throughout our organisation creating a strong foundation for growth,” she added. 

About the author

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Conor Mulheir

Conor entered the gaming industry in 2018 producing high-level live event content for audiences in London, Amsterdam and São Paulo. From 2020, he went on to report news and commission exclusive content for various gaming media brands before joining iGaming NEXT as editor in January 2022.

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