Light & Wonder(LNW) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenue increased 12% year-over-year to $818 million, marking the eighth consecutive quarter of double-digit growth [20] - Operating income rose to$ 175 million, an increase of $62 million over the prior year, driven by higher revenue and stronger margins [20] - Consolidated AEBITDA grew 17% to$ 330 million, resulting in a margin of 40% for the quarter [20] - Adjusted NPATA increased 40% year-over-year to $130 million, primarily due to revenue growth and margin expansion [20] Business Line Data and Key Metrics Changes - In Gaming, revenue was up 14% to$ 539 million, with global gaming machine sales growth of 32% and gaming systems growth of 14% [21] - SciPlay revenue increased 8% year-over-year to $205 million, driven by growth in major social casino games [25] - iGaming maintained record revenue of$ 74 million, up 6%, with AEBITDA at $24 million and a margin of 32% [28] Market Data and Key Metrics Changes - North American installed base grew 7% to 32,566 units, with revenue per day rising 4% year-over-year [22] - International unit shipments increased 33% to over 5,500 units, with North America up 16% year-over-year [23] - The OGS platform delivered record gross gaming revenue volumes in the US and Canada, with year-over-year increases of 25% in both regions [15] Company Strategy and Development Direction - The company is focused on a robust product roadmap and cross-platform strategy to capitalize on growth opportunities in both land-based and digital markets [4][5] - A new three-year$ 1 billion share repurchase program was authorized, reflecting confidence in the company's value [5] - Continued investment in R&D and innovation is emphasized to enhance the overall gaming experience and market share [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the $1.4 billion adjusted AEBITDA target by 2025, citing strong operating momentum and investments made in various business segments [55] - The company is well-positioned to navigate the current M&A activity in the industry, focusing on executing its defined strategy [36] - Management highlighted the importance of maintaining a healthy balance sheet to support growth and capital deployment [30] Other Important Information - The company completed its first-ever share repurchase program and is seeing strong performance in its game franchises, with several titles performing exceptionally well [5][9] - The company is experiencing strong growth in the direct-to-consumer platform, which generated approximately 12% of SciPlay's total revenue [13] Q&A Session Summary Question: Impact of M&A on the market and positioning - Management believes the company is well-positioned amidst increased M&A activity, viewing it as a potential opportunity while focusing on executing its goals [36] Question: Current portfolio and future game releases - Management emphasized the importance of a strong R&D program and the momentum of existing game franchises, with several anticipated titles expected to drive future growth [39][40] Question: Higher restructuring and legal costs - Management indicated ongoing legal expenses are expected, with a projected corporate cost run rate of about$ 40 million as the business scales [42][43] Question: Share repurchase strategy - Management confirmed a programmatic approach to share repurchases, maintaining flexibility to capitalize on market opportunities while focusing on growth [45][46] Question: Direct-to-consumer growth and competition from sweepstakes - Management noted significant growth in direct-to-consumer revenue, while monitoring the emerging sweepstakes market closely [50][51] Question: Confidence in achieving the $1.4 billion AEBITDA target - Management expressed strong confidence in reaching the target, citing operational momentum and strategic investments [55] Question: Opportunities in international markets - Management highlighted growth in traditional Asian markets and emerging opportunities in the UAE and Japan as key areas for future expansion [58][59]