LNW - Earnings call transcript Q1 2024

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Operator

Welcome to the Light & Wonder 2024 First Quarter Earnings Conference Call. [Operator Instructions]I will now turn the call over to Nick Zangari, Senior Vice President of Investor Relations.

Nick Zangari

Thank you, Operator, and welcome, everyone, to our first quarter 2024 earnings conference call. With me today are Matt Wilson, our President and CEO; and Oliver Chow, our CFO.

During today's call, we will discuss our first quarter results and operating performance, followed by a question-and-answer session.Today's call will contain forward-looking statements that may involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call.

SEC.We risks to please our this our with these earnings to website regarding certain filings relating discuss materials call the information and measures. refer uncertainties, our and non-GAAP For financial also will posted on is non-GAAP comparable of this A directly located reconciliation of the measure in recorded. earnings our release can reminder, be being the and each description measure call a section measure website.As non-GAAP a conference of to our Investors each GAAP most found in A section that, materials call the now replay and be will accompanying the of this of webcast archived in over turn I Investors to Matt. website.With our will

Matthew Wilson

to you, and thanks us joining everyone Thank today. Nick, for

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Oliver Chow

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Operator

first Jonas, is Truist. the from line with Instructions] question [Operator The of Barry

Barry Jonas

about are wanted can How that you're SciPlay. about do here? for get? And X% you high do growth And How trajectory up it how to ask thinking you you the for see I DTC, think now. ramping?

Matthew Wilson

this revenues that high to X% result this about this was obviously. Gold Wilson Party, to of pilot XX%, that of the consistently how of a the in used the back-to-back another Slots, think great DTC. proud all diversification Matt that of was I in results you kind question. to Great take can There think only has team games; our in QX industry space tackles portfolio. hairy hard more us ] see Fortunes, X% by through XXXX know coming business quarter-to-quarter, the MONOPOLY. big our XXXX. Hit and this Really meaningful exceptional all in big it's SciPlay across We really We game They really working year, contribution that as to the of go of share confidence the is it [ in XX results impressive.I expand specific orchestrate the gives very playbook marketplace, this another is we the DTC taking I liked doing able here, That's games further to that's about even were as of in of of we example mentioned, again. future.So just peers that that.One been retool result. platform.We the provider just the things I see X our the in revenues contributing Quick Jackpot last growth In making like quarter.And Fish, team contributions really XX%. problems.

need time. runway to having in over take a will stream time. So quarter that's it successful yes, But DTC see We'll that the It to beyond. a here revenue to line. up second we ramp really down see some long goalpost we the get the and

Oliver Chow

leverage continue for to engine returns into portfolio just engagement just on UA, going we'll did opportunities we strong and in to time.There's deploy prudently ad on further to to on continue the QX. did with enhance focus over the we're in And that games, of player and to saw across data the invest analytics returns. we improving and be also to lean build going that, to monetization continued us a QX, We make as spend SciPlay

and LTVs so over that team further we'll any And other to review if time. there's see drive with the opportunities

Matthew Wilson

team. Maybe got call-out the Tel out have Aviv, also a SciPlay team Austin, They've just huge Falls, one Iowa. headquartered team Israel. of Obviously, Cedar in for big a They final in in Texas.

this be to with, dealt So proud last making. their that up that teamwork put everything just quarters, results over and that given contribution has few team of the character, to It's more couldn't testament level a their from the team. they're just

done. in of just them back the it's really has So portfolio. and to fantastic And have team proud the results everything SciPlay the

Operator

of question Macquarie. line is next with Chad Beynon, the The from

Chad Beynon

to wanted unit sales. down drill I Matt, into Oliver,

Matt, of kind et of VLTs, bit Can in and meetings out little of adjacencies over of a past ahead opportunity you year-over-year kind stands of just a terms 'XX? couple nice talked and with just cetera, growth. some the calls. you've these flush So about COAM, in that what's where that earnings

Matthew Wilson

of Adjacencies. is growth for of business.There's We've the and question. XXXX of of building throughout strategy important 'XX. Great has And this. then effort a our been exciting for lot late portfolio. 'XX coming gaming online This part into the markets R&D an in part gaming of a gone number really the a years. I'm a Year towards of calling A resources, number lot this of

market, a continuation Illinois I for think us That's has VGT the to great of expand been it's market the there. which for continuing some time.

with There's ] multi-quarter up transact Canadian worth we'll of XXXX. as and quarters' a few games. markets a [ see We've throughout signed that.We shipped couple about opportunity. excited of we have OSL So to with that [ OSL ].There's a VLT more come

has 'XX. is come layer in got We've expansion We've Virginia Georgia really West opportunities. got mentioned, HHR VLTs.So online. it in COAM As you further a cake of

of really we the in book see coming our about on other.I great quarter, third layering second are it quarter start opportunities we seeing of But up you'll strong out and look nicely. in coming and typically each what sets think tranches think kind us that of to a these really games into think order diversified a pipeline.So but is way actually a gives large if I through contribution of think in adjacencies, these adjacencies top you I orders. these

categories. I hard in upside Drane the Nathan and significant XXXX been year us and adjacent really where get team we position, will this have think working be in and those a Siobhan to get

Operator

next question with the The is from Rohan Jarden. line Gallagher, of

Rohan Gallagher

with within to frustrated profitable gaming most last X Probably the with Train growth move, lack unpack see here that the We're point for in that games FY please? of you 'XX, towards realizing Can little a quarters. confidence in performing the segment space. install terms until the inflection targets exceptionally of starting 'XX, like obviously, operations, Dragon Australia. Gaming in up your bit well your that

Matthew Wilson

question. Great

the is for think deck gaming for ops [ stacked XXXX us. ] I in

solid seeing we're of you As pipeline mentioned, a opportunity here.

just I of we've think base quarter XXth clicked growth. off install the consecutive

looking gaming public and install base most that premium the opportunity.As markets. segment XX% one that that's we're we're know, profitable drive. And most care of we really category is you think category, of those see the It's base premium install North now that happening. most the American I That's in premium our offers comprised and about. I the reporting with to

terms that year-on-year So see RPDs. in of showing up you X% the in They're RPDs. can up

we're our the remainder X that. install reported that you very positioned One, well year. supports speaks survey. to Eilers base.And I'll for their slot quarterly give think that So of points data I overnight, premiumization the the of

#X was the was Puff Money you #X If at #X anticipated Huff Game, Match. most N' games on Squid list, was look that Train, Dragon

anticipated X in games it of top games, for. operators terms I the came & think was the Wonder XX% of are votes of the looking X most so On what one from And products. of Light total

So you, & sets Eilers that just recent year.Another XX top on new up I'll the Light shows the the you of games really point data nicely XX well. games the premium survey Wonder remainder of the pipeline for as give were

pickup the the contribution install see across can anticipated.So XXXX, And including highly year. of you our Train, are throughout of really product, the a for in Dragon year base the us and are well. I think a remainder a So breadth doing the games you games great can sets in installs in the performing expect then I think pipeline, up in really that material

Oliver Chow

install as to that, will that on Matt, premium install base, the CapEx expect grows. scale to build we to side, just we our continue especially And on scale as base

So invest demands with product the portfolio market, the the hearing broadly around our meet continue of the excitement just that CapEx that we're speaking. mentioned, Matt we'll to to customers from

this So great we've position, and for. is we're inflection in point waiting been a the

exciting. very So

Operator

line the with from Sigdahl, is question Ryan Craig-Hallum. of next The

Ryan Sigdahl

I on Oliver, a to Matt, focus here bit. little international want

there. outside Korea, continued increasingly advantage be curious, strength So sales It competitive you of it like South in core Australian anything games cetera, your are et game global Macau, powerful what a your But platform for Philippines, is can in U.S. and resonating whether and markets. seems guys? share, and you products

Matthew Wilson

great Another question.

think gaming category international us. the I hero a for was category

space. the in a are just I differentiated where supplier one significantly think way it's we

the Given our not of we're in global geographic diversity, diversity, our like footprint, space. our the many competitors product

have category XX% XX%. a from very unit We year-on-year, sales up was business.This perspective a diversified

that an So of business. growth just amazing

off story hats this Johnson, really Simon number. to who driving runs X-part So think business.I international our that's

The fascinating first is a art which in the A&Z think market, is of the case possible. I the one study

that earnings company Scientific this the call, that for #X first a or of Games. history, Bally player Shuffle business, for in And at nearly were really of Star been we time whether have team. company, been the in proud all years Master XX a just or As this on market. in this Games it's of or incarnations decades. sub-XX% in market Declaring We've Australian we

success. So just of of that tired talking level get don't about

in line probably I years if that's to role off on, hat to of listening growth a trajectory.I it played and second element a that I'd mentioned. take is you. the as on you we that, So exceptional. the quarters continue had see market, that to many the many that just runway anyone It's think And Asian

full in the So force I is think, moment. Philippines really, at the expansion

of in then Macau. big to through this saw some the You the come year.And remaining lot but of that driver quarters is a QX, other more

way. to really we're share I expect it to So here the too.So up nicely, a can meaningful in to you a next sets I player think continue we're months. in that the churn see a contribute XX And going gaming in market, to international regulatory and place take think XX% XX segment

Operator

from the The Marquee. is Sundram, question Rohan of line MST with next

Rohan Sundram

Matt, in the visibility you well? order globally describe these demand for rate from you markets your slot would markets key key me your in one as and Oliver how team, how just of terms across the customers? forward And would

Matthew Wilson

from of I the in North looking GGR quarter well next many of if It's think perspective, levels. you And the forward remaining looking in observed, week.I And and January, just did macro a pre-COVID I bounce-back a a the on specifically all think we seeing think related. solid We're you're GGR. in at posted industry softness in to we industry, bit little Rohan. weather America, like up really saw number. months a the Thanks,

the driving that from point, the behavior, And improving changes our is purchase on things One So I two really solid. really footing.We're, I there's order vantage any seeing order puts games. think us. that not in and industry solid think book customer for book looks

really back to we that Puff variety in in the Eilers again N' of Even of #X studios from have the a space games a and improvement quality. More driving So report, game in product Huff the variety core

perspective. discrete the is of forward.And are These looking order from about. So and that government see, just that one kind of perspective new well market kind we story other the adjacent book we a underpins are both opportunities from a that spoke then can capitalized, this

in in of are So us the things the the remainder less gives adjacencies.So of volatile different a say, terms confidence combination good other those pipeline, the would lot in places. around of all international year.I those think markets the I

Asia lows coming full off seeing and few in you're the strength. think I back the to rebound last really years

Australia think in I is that a market there. consistent we're churn participating

there.But very there. at nothing don't there's balance, radical industry that solid moment is the the markets think, the We anything I end the suggesting watch and So on the I on but closely, in expect macro footing. about any consumer changes to worry

Oliver Chow

coin couple solid adds. a quarter. do points well just And [ data Obviously, very in ] here see trending quick our of end pretty the from we

for to initiatives see suggest the We would we why here over through of pretty robust different, here important margin start I even well that points some able anything us and give And so Matt's other balance anything as levels be we're that's flexibility see that as the us being to but think we the the it's businesses that. about to in data year. in enhancement think we in our point, the don't GGR working point, see quarter.So to Matt's digital to

Operator

is next from The question with David line of Katz, the Jefferies.

David Katz

number into longer can how year second even where they slide the Can next up. blocks we next sort Oliver, cash about this not building we building and, get question, the flow have go X stack back see the billion-ish year. we as a question we term, up where just next Can won't-you getting billion around decide is things? $X.X talk part is and those really year?And and, $X.X to toward get $X.X just we you out allow as but of conversion One for billion evolving the that will-you conversion and or to blocks us flow for over of cash how to number that

Matthew Wilson

Barry call without Expected first, convicted. out an the Street the billion that still billion. earnings have we've yes, every off number. Obviously, that.But is Can't very, very question, telling $X.X to David, $X.X lead the the been with call earnings

that our at collectively. And can $X.X of If we're billion. think all last squarely on Light trajectory us it get we another north there.I speak is it's get quarter star, you mantra, is we & the our very here confident this momentum the to feel chasing demonstration people to operating it to puts thing Wonder, is that

of a that let pathways. nice on all of different getting versed a number But hockey businesses. to pathways to approach any see across stick won't Oliver You to these well number. speak He's in linear 'XX this. different kind 'XX. see I'll of very We the

Oliver Chow

of to blocks, pathways too. in the to has $X.X really Listen, billion? the point, On Matt's terms nothing think, changed Yes. building I the

the here, continue markets. monetization just to in strategy, kind we're iGaming talked quickly, and and global have But a be making strong us in forth. think us the gaming, of provide in consistently key in the So earlier the of the us already here see markets, be we've point expect will perspective, that head some for about share really in strides the perspective to kind engagement, the great also kind always of our and by very component that here we've Class markets SciPlay as the engine continued Matt's call.SciPlay, adjacent will will into an really UA driven gains of 'XX.And from retention put and from core critical gaming we in III that's DTC we kind really outpaced tailwinds we particularly initiatives that And we I U.S. we've prudent peers segments.So growth consistently these for the in

map.So focusing really and initiatives enhancement an which and deploying we're all content, executing help the robust operational organization, with keep as consistent regionalized you've the margin on the our then us pretty over few seen cross-platform excellence propel is very As $X.X there, road proven to the remains just that content, a strategy past years, of really that, coupled will billion.

Matthew Wilson

team call-out that on one the efficiently. but I'd of to doing it focused combination like this that's make, And is growth,

building So then fantastic line potential team a opportunity. enhancement optimizing it, a does the materialize. buffer we if top need that of costs, some pipeline that margin big This if not but of that it, see in and just incrementality we job doesn't us also gives

So excited and about pathways, and clear obvious the us. it's to

Oliver Chow

working and see especially kind levels team as an then levels, that kind flow listen, the of a us conversion free focus to QX, and to years. And conversion key your ebb leadership we in a capital for to annual continue within favorably David, especially and investments.But and we of tax rate to related our question, as There's flow interest as do here and flow. as payments, organization. here some trend seasonality, free And of cash overall, -- timing obviously, over be CapEx cash quarters will continues the coming here of to expect timing well

cash-generative CapEx, in to compromise invest be scale, to long-term earlier, we continue we like flow move coming really that and strong benefit will the over really increased year, of this we for earnings a rate. or We years. growth have. I is key that the as are businesses conversion cash XX% as the quarter mentioned we'll our free But achieve that to we and to And prior not versus reflective drivers highly just specific us R&D going forward.But past from to continue

So we're that in being to yes, over scale able confident time.

Operator

Jeff of next with is The Stantial, line from question the Stifel.

Jeffrey Stantial

views on have segments. just or question your so, you acquisition so Matt, I'm landscape seeing over year as how Oliver, if we Are M&A to longer? start the get interest there? curious asking from out your rates to strategic opportunities last updated contemplate the X Matt, one interesting prices trended all And us. across of really higher for

Matthew Wilson

think that building this Elk Lightning look business transformation really in has Box, think disciplined. the squarely things focused thing, and It's of our you iGaming if say things R&D look when the Another vision.I X get and like like great acquisition words that's the last, in line the over space underpinned we've comes at the question if another and, at management studios, expansion I by.I would years, organic you with and years. X.X studios, think of this have.I the we're under the that's frame and Reno, online obviously, around that's the one about done all another at X are opportunities interested of Foster a core. I we balance last what sheet really characterize team control say, you board we're our Kelsy been into that example the looking great close over and in bringing that in.Really to what think campus her And what

content evaluate go look across and mission that are chosen on supports was diverse the amount that and the a want of portfolio. into clearly target M&A We land-based of and not not. leading every we company.And star digital. We global lottery a Games put but I back to mean, we're in and we're be Scientific assets to wildly clear and cross-platform vision, huge hurry who and complexity We've sports portfolio who north games a this we'll and importantly, have strategy. a content and,

the industry people focused through in to of I squarely M&A. lot a it number team clean a up this a at the get work businesses vision. with here. a kind there's and relates operating of comes been lived We've that of of with level dealing done think our to experience we've chaos.So with the for That complexity as

piece So further on, us do we'll in a help splashy that M&A. look project that at but of to a not assets hurry huge

Operator

is question Justin line next from CLSA. the of The Barratt, with

Justin Barratt

Matt, was wondering just you sheet, balance if you I expand. just could sort of touched on but the

maintain term? sheet is of I and $XXX we should balance should sort you your look, any of think continue further So of fill then chance that guess, free any million a level of buybacks beyond the flow form cash about, near potential improved there also to then generate buybacks. downwards as that But reinstated program? this sort dividend how for is And

Matthew Wilson

then I'll kick and it to that Oliver. hand off

to is both those I yes that to the answer of things. think

levels buybacks it's market continue I continue seem back then go from where the allocators for think to at million. that but for.We us.But as invest is to of perpetuity. anything dislocations think the profile that, us about and opportunistic price, in to to both that's look what when buybacks. Oliver, We We intend to looking through the portion organically capital investors to ways to growth the trajectory. and $XXX explain still behind inorganically we execute share We'll remaining to add? in to very We organization come here, want prudent the these are do for also there's share continue that think growth to a on know

Oliver Chow

organic targeted as capital several potential capital be dividends speaking, really to no more range; invest and in can enhance absolutely focus that's midpoint our us so point, now share would next we the board we'll say, a perspective. business.But not blueprint the But with on best of really the in we're see whole point there's view, and continue to our put of of a now continue X.Xx.And going allocation consider uses down the some leverage buyback over and Currently, structural that talent such programmatic make be and investments. just place, changes plans this I execute we at net repurchases.Matt to funds key I mentioned including certainly and back at from to highest areas from constantly of years, blueprint. will uses think, dividends as of, core something And in line. we're between largely our also we to that the the to shareholder systematic the have is I we allocation tools we plan that yes, XXbX-Xs and the a value. absolutely a see, for to at a of Matt's of deviate X.Xx QX, point.In returns from our and sure, to we point evaluate mean, engage That opportunities capital lot

Operator

The next is Paul the with Partners. of from Evans Mason, line question and

Paul Mason

Just wanted to ask bit. about cross-platform a

has looks business Could got this well. these on of when bit of games like, the been coming hot a horizon some we as land-based as that's maybe Your some content timing well? casino great iGaming or you Frankenstein. about, out: Train, social see Dragon hit the It might like talk

Matthew Wilson

gaming It content in our being it ops great and company the fantastic best. really portfolio I channels.Dragon moved X taking a of these all premium its [ idea same is X ] Australia. Like is that building fed a across this It and the off earlier, was company a franchises businesses think said started we example. to of Train strategy U.S. I having in in chose then that at

social it in in June, that after the space you'll it space. shortly see and the see You'll in casino iGaming

this really time is our X deploying CTO, a trying one Victor allow between first being that GDK and channels. yes, we our also the we these the we'll key platform, cut franchises.We thesis, when them take data it the platform, onto the ecosystem. down the these and have take time will ways way who games, the across time game It's to building is all that lag called a some channels.We the to and space update community.But efficiently build going first making. then all floor, have there, Carbon, build then games game coming across the to also the we But moment. that for X a So investment great we're have across not the worked game production. different back casino it on gaming us exciting.And very land-based working way, which That's investment a all It's at which an very the so social time other is coming a to from effectively on Blanco, across get we

cross-platform the asset testing So into and to another. A/B see games, in between And maturate lag rapid channel shorter deployed we're start yes, time a and game opportunities. a starting one in being leaning built testing.So shorter way those really to we're being you'll in

Operator

next Allan Franklin, of is Canaccord The question with Genuity. from the line

Allan Franklin

think noting about the also margin can there to touch some progress please? to the wanted the first be quarter Appreciate over just groups. of that margin each was that I dynamics, performance year, steady low, the the for on quarter how please. in business And seasonally just course just that of

Oliver Chow

results great Allan, to was from in I the hear QX. Yes, very with pleased you. here

SciPlay.And well continue the to gaming we that from efficiencies, our should will UA a approach, take have benefiting continue as we as with really all growth. for as on margins. we But healthy We here.In see laser-focused automation further we to then on opportunities factor original a scale expect to are margins, time.At expansion laser-focused opportunities our And and into to to margins content post continue overall.So margins services margin operations we we top expect with continue cost scale a this gaming, see be earlier, quarter line we're more that DTC still business. yes, SciPlay, multitude continue expand jurisdictions chain terms enhancement sustainable we our time. in to of to continue bottom to rollout. while to initiatives you we have that seen. A our supply we'll now opportunities here within business really grow invest in time, and We're we continues we lean going and starting to as margins in mentioned as helped be Over on available fairly expand do team back campaigns our we scale scale live us just be processes and have investing prudent key margins, that strong execute the the very And to we online.So casino. coming robotic focus to margins of margin to really And while as have to over in continued iGaming in there them on base, staying forward, our install long-term test initiatives. through over starting management will maintain shared offerings steady be expand us will may

Operator

no There to Matt concluding conference questions waiting for like are the this additional I to at would time. now remarks. pass over

Matthew Wilson

company X Great. strategy. Games into we years differentiated Thank Wonder a transformed new Light vision and ago, you. Scientific & About constrained a with bold from as

to journey, you again build thank part are this I people-first approach you to the further world-class, the forward to ASX, companies joining who way.Thank getting every backed X-year As the here. with in for recognized a dedication listing have your foundation incredibly process, one be us. a fastest of want proud of industry, along upon the for I'm accomplishments anniversary our to of continue look to we culture.To of I of happen we be we as part growing we you and solid by all one and you this of the each on as secondary our

Operator

Call. concludes your and enjoy day. That you of for the your First Wonder Earnings Quarter rest XXXX Thank participation, & the Light Conference

Light & Wonder (LNW) 8 May 242024 Q1 Earnings call transcript