Light & Wonder achieves 18% Q4 revenue growth and sets sights on $1.4bn AEBITDA target
Light & Wonder has hailed its strategic transformation and revealed plans to double down on cross-platform content development to capitalise on future growth opportunities.
Light & Wonder (L&W) has reported double-digit growth across all lines of business. In Q4 2022, the supplier saw an 18% year-on-year revenue increase to $682m.Breaking down revenue growth by business segment, both L&W’s land-based Gaming segment and its mobile-focused subsidiary SciPlay posted growth of 18%, while iGaming registered 15% growth year-on-year.
Moreover, AEBITDA grew 23% and reached $265m in Q4 at a margin of 39%.
For the full year 2022, revenue increased 17% to $2.5bn.
Growth was primarily driven by a 21% revenue rise in land-based Gaming, which remained the supplier’s largest earner, bringing in $1.6bn.
SciPlay revenue grew 11% annually to $671m, a new quarterly record for the segment, while iGaming revenue rose 6% to $240m.
AEBITDA climbed by 15% to $913m on a margin of 36%.
L&W’s quoted figures show comparative earnings from continuing operations, excluding the OpenBet business and the lotteries division as both were divested during 2022.
The supplier also maintained its net debt leverage ratio of 3.3x, which therefore remained within its target range of 2.5x to 3.5x.
L&W has completed its strategic transformation, which has resulted in a streamlined organisation.
Going forward, L&W plans to double down on its cross-platform approach to content development to drive greater synergies between its business segments.
As part of this strategy, the company looks to launch two of its top-performing land-based titles digitally every month, CEO Matt Willson said.
Moreover, L&W will release additional games from the studios it has acquired. The supplier aims to launch a total of eight key game themes across all three platforms throughout 2023.In addition, L&W’s live casino studio in Michigan has received provisional licensing approval, paving the way for the company to bring its offering to market.
This segment is a crucial driver of long-term growth in the iGaming industry, representing up to 30% of the total addressable market (TAM).
L&W is confident it can compete and win in this space, Willson said, despite intense competition from the likes of Evolution and Playtech.
“We are entering 2023 with incredible momentum thanks to our successful fourth quarter and with a clear strategy in place to future growth,” Willson said.
“We know that the digitalisation of gaming is only going to continue with new jurisdictions poised to come online in 2023 and beyond.
“Light & Wonder is strategically positioned to capitalise on those growth opportunities that come with it,” he concluded.
L&W CFO Connie James: “We returned significant capital to our shareholders, totalling $413m since our share repurchase programme was announced a year ago. We now have a strong balance sheet and clear roadmap to advance with discipline on our balanced and opportunistic capital allocation strategy.”
Analyst Barry Jonas from Truist Financial enquired about L&W’s $1.4bn AEBITDA target for 2025, highlighting that other firms in the industry had revealed more conservative targets given current macroeconomic uncertainties.
Willson commented that L&W is currently seeing positive results in all key performance indicators across its markets, which gave it reason to be optimistic.“We’re not delusional,” he added, however.
He went on to suggest that 10 different economists would give 10 different interpretations of the macro-economic outlook, including the likelihood and severity of an impending recession.
“We’ve planned for all 10 of those scenarios and many more, and we know what levers to pull should the macro-conditions hit the sectors that we operate in. But at the moment, we’re proving to be very resilient as an industry,” he said.
Current trading & outlook
L&W stated that the Q4 2022 results serve as evidence that the strategy is effective, which has given the company confidence to reach its target of $1.4bn in AEBITDA by 2025.