Light & Wonder has named Oliver Chow as permanent CFO following a successful interim tenure since August 2023.

Chow has also been appointed executive vice president and treasurer.

Chow, who previously served as the company’s senior vice president of corporate finance, stepped in when former CFO Connie James departed in August.

This prompted Light & Wonder to engage a leading search firm in finding a permanent CFO replacement, during a process that considered both internal and external candidates.

L&W CEO Matt Wilson said of the appointment: “Over the last four months, we’ve all been impressed with Oliver’s ability to seamlessly step into the role of chief financial officer. 

“With more than 15 years of entertainment and gaming leadership experience and deep financial expertise, Oliver was the candidate best positioned to lead us forward. 

“His attention to detail, combined with his willingness to take on a wider variety of challenges within the organisation with ease, has made us resolute in our decision,” he added.

Vision for growth

Chow said being appointed as CFO is a “privilege” and that he is excited to build on Light & Wonder’s “strong financial profile.”

“I am looking forward to supporting the organisation to further enable growth, margin expansion, and financial execution,” he said.

In Q3 2023, Light & Wonder generated a 13% year-on-year revenue increase to $731m in Q3 2023.

Consolidated AEBITDA grew 22% year-on-year to $286m, driven by double-digit growth for the fourth consecutive quarter across all business segments, encompassing gaming, SciPlay, and iGaming.

Prior to joining Light & Wonder in October 2022, Chow spent five years in senior-level finance roles at Aristocrat, most recently serving as CFO of Americas, EMEA and customer experience. 

Previously, he occupied various financial roles with Universal Pictures, Deluxe Entertainment Services and JPMorgan Chase. 

He is also a current board member of United Way of Southern Nevada, where he serves as board treasurer. 

Light & Wonder has appointed Oliver Chow as interim CFO with Connie James set to leave her position with the company.

James, who currently holds the position of executive vice president, CFO, treasurer, and corporate secretary, has decided to pursue an opportunity outside of the gaming industry.

The CFO transition will take effect on 25 August.

Light & Wonder has retained a leading search firm to identify a permanent successor and assist in evaluating both internal and external candidates for the role.

Seamless transition

CEO Matt Wilson expressed his appreciation for James’ contributions, stating: “Connie has played a key role in advancing Light & Wonder’s cultural and financial transformation, which has led to operational excellence, double-digit growth and a strengthened balance sheet.

“She also helped us build a deep and talented finance team that will help provide a smooth transition to the next chapter of financial leadership within the company,” he added.

James herself expressed her satisfaction with working alongside a talented team. “We have scaled our business, evolved our capital allocation strategy and driven considerable efficiencies that have created a stronger, more flexible Light & Wonder.

“I am confident that Light & Wonder is well-positioned for continued success, and I am focused on ensuring a seamless transition over the coming months,” James said.

Chow’s background

Prior to joining Light & Wonder in October 2022, interim CFO Chow spent five years in senior-level finance roles at Aristocrat, most recently serving as CFO for Americas, EMEA and customer experience.

Previously, he served in various financial roles with Universal Pictures, Deluxe Entertainment Services and JPMorgan Chase & Co. 

“We are pleased and fortunate to have a leader of Oliver’s caliber step into the role of interim CFO,” Wilson said.

“With more than 15 years of entertainment and gaming leadership experience and deep financial expertise, we are confident that Oliver is well-positioned to support the continued execution of our financial priorities while the board conducts its search,” he continued.

Light & Wonder also reiterated its target of achieving $1.4bn consolidated AEBITDA by 2025, highlighting the company’s strong financial performance across all key metrics in 2023.

Light & Wonder has hailed its strategic transformation and revealed plans to double down on cross-platform content development to capitalise on future growth opportunities.

Topline numbers

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.

News nugget

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.

Best quote

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.”

Best question

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.

Light & Wonder (L&W) was able to pay down its outstanding debt to $3.9bn in Q3 2022 as revenue generated by the business rose by 20.2% to $648m.

That left the supplier with consolidated adjusted EBITDA of $235m, up 15.8% year-on-year, but net income of just $20m, down from $100m in Q3 2021.

That reduction was the result of a one-time income tax benefit of $181m in the prior-year comparative period, L&W said.

The quoted figures represent comparative earnings from L&W’s continuing operations only, excluding the firm’s recently offloaded sports betting business OpenBet, whose $800m sale to Endeavor Group Holdings was completed in September.

Compared to December 2021, L&W’s business consolidation strategy – which also saw it sell off its lotteries division for $5.8bn in addition to the OpenBet sale – has helped bring about a significant turnaround in the company’s balance sheet.

Cash and cash equivalents held by the business totalled $1.28bn as of 30 September, compared to just $629m nine months before.

The firm has also paid down a significant portion of its debt, from $8.69bn at the end of 2021 to $3.9bn in September this year. 

That leaves the business with a more comfortable net debt leverage ratio of around 3.1x, sitting firmly within the firm’s target range of 2.5x to 3.5x. In 2020, L&W’s all-time high net debt leverage ratio reached as much as 10.5x.

In Q3, L&W’s land-based Gaming segment continued to account for the vast majority of revenue brought in by the business, at $419m or 64.7% of the total. 

That represented year-on-year growth of 23.6%, meaning Gaming was also the supplier’s fastest growing segment. The growth was driven by a 47% increase in gaming machine sales combined with continued growth momentum in Gaming operations, the supplier said.

Its mobile-focused subsidiary SciPlay was L&W’s next best earner, bringing in $171m, an increase of 16.3% year-on-year and representing 26.4% of overall group revenue in Q3.

Growth in the subsidiary was driven primarily by its core social casino business, which L&W said continued to gain market share while achieving a record player conversion rate of 9.7%.

The iGaming segment showed slower year-on-year growth than the others, up 9.4% to $58m and therefore representing around 9% of overall group revenue.

iGaming growth was driven by continued expansion in the US market, L&W said, but was partially offset to the tune of $5m by the unfavourable impact of foreign currency translations due to the strength of the US dollar.

The US market specifically delivered a more impressive 39% revenue growth for the iGaming segment.

Now, the business has set out clear intentions to launch live casino operations in the US in order to offer a new suite of products to its iGaming clients.

L&W CEO Matt Wilson told analysts on the firm’s Q3 earnings call: “With live dealer, we took a capital-efficient approach to enter this important segment of the market, combining the targeted acquisition of Authentic with our proprietary table games IP and expertise. 

“We are actively preparing to go live in Michigan shortly with three major product offerings; Blackjack, Baccarat, and Roulette. Going forward, we are well set up for growth with a number of key initiatives globally, including the continued scaling of our original game launches globally, the ramping of exclusive content for operators and plans to launch live dealer in the US.”

L&W acquired live casino supplier Authentic Gaming in November 2021. 

At the time, iGaming CEO Dylan Slaney said the deal would leave the business “uniquely positioned to continue to excite and entertain players to capture both the growth opportunities that exist within live casino and the convergence of players globally across digital and land-based channels by providing leading immersive experiences.”

Its foray into the live dealer space represents just the latest transformational change taking place within the business.

L&W CEO Matt Wilson: “Most organisations don’t go through this level of change in 10 years, let alone 18 months.”

Wilson told analysts during the Q3 earnings call that: “If you think about everything that’s been accomplished in the last 18 months – from a new strategic vision, a new brand, a new board, a new chairman, new investors, a repaired balance sheet – it’s been an amazing journey this last 18 months.

“Most organisations don’t go through this level of change in 10 years, let alone 18 months.”

L&W’s Q3 growth has been evidenced in overall US market dynamics during the quarter, as the firm’s share of online slots GGR grew to 21.7% in September, according to the latest Eilers & Krejcik Online Game Performance Report.

The firm’s CFO Connie James said L&W is now advancing its capital allocation priorities of returning capital to shareholders (it returned $241m to shareholders through share repurchases in Q3) and making disciplined investments in key growth initiatives.

Looking to the future, the business remains committed to its 2025 target of $1.4bn in adjusted EBITDA, James added, with live dealer operations expected to play a major part in achieving that goal.

Investors should continue to expect double-digit growth from the business year-on-year between now and then, James concluded.

Light & Wonder has revealed that its executive vice president, CFO, treasurer and corporate secretary Constance (Connie) James is set to receive a cash retention bonus of $500,000 next year.

In her role, James oversees the company’s global financial strategy and is responsible for executing financial best practices and maximising shareholder value, as well as overseeing the finance, accounting, tax, treasury, facilities, IT and procurement functions of the business.

The bonus has been promised as a result of the expected increase in James’ responsibilities and workload in light of the appointment of Matthew Wilson as the firm’s interim president and CEO, after Barry Cottle announced he would stand down from that position at the end of August.

While Cottle will support the transition as a consultant, Light & Wonder has commenced a search process to identify a permanent CEO and has engaged an unnamed US executive search firm to lead the process among both internal and external candidates.

In addition to James’ cash bonus, Light & Wonder will also waive continued service requirements with respect to time-vesting restricted stock units previously granted to her, which were scheduled to vest on 20 March 2023.

The agreement is dependent upon James remaining with the company through the filing of its annual report with the SEC on form 10-K, for the fiscal year ending 31 December 2022. That report is likely to be filed around March 2023.

James will also be entitled to the retention benefits and the waiver of any continued service requirements with respect to time-vesting restricted stock units in the event of her termination of employment by the company without “cause” or by James for “good reason” prior to the retention date.

James has played an integral part in the transformation of Light & Wonder’s balance sheet this year, with the business having completed the sale of its lottery segment to Brookfield Business Partners for $5.8bn in April, using the proceeds to pay down its significant debts.

At the time, ex-chief executive Cottle said: “The lottery business sale closing is a significant step towards streamlining our portfolio and strengthening our balance sheet as we execute on our strategy to transform our business with a singular focus on building great games and franchises to entertain our players wherever and whenever they want to play.”

Following the sale, James added: “We now have the financial flexibility and balance sheet integrity that, combined with our double-digit growth profile and high mix of digital and recurring revenues, give us a tremendous opportunity to continue to drive shareholder value.”

That divestment, along with the expected sale of its sports betting business to US media conglomerate Endeavor, allowed the supplier to significantly de-lever its balance sheet in Q2 2022, reducing the principal face value of debt outstanding by $4.9bn compared to Q1 2022, at a net debt leverage ratio of 3.6x, down from a 6.1x ratio.