Light & Wonder reduces debt with OpenBet sale proceeds in Q3

Q3 2022 Light & Wonder Earnings Report
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For Light & Wonder, the third quarter was about completing the transition from Scientific Games to a company with a new name and a new focus. Highlighted by the completion of its sale of the sports betting arm of the company to endeavor, the company is now squarely focused on the world of casino.

“With the sale of the sports betting business, we have rapidly delivered on our promise to transform our business and streamline our organization. We have a unique collection of assets that are powered by games, technology, and our amazing teams. Our strengthened balance sheet puts us in a great position to build on our momentum and capture the incredible opportunities in front of us. With a sharpened focus and clear roadmap to win, we are executing on our growth strategy to drive share gains,” said CEO Matt Wilson in a release.

Top line numbers from Light & Wonder

With the elimination of the lottery and sports betting divisions of the company, the Q3 numbers compared purely the verticals still within the company to how those verticals performed last year.

  • Revenue: $648 million (up 20.2% YoY)
  • Net income: $20 million (down 80% YoY)
  • Consolidated AEBITDA: $235 million (up 15.8% YoY)
  • Cash and cash equivalents: $1.28 billion (up 103% YoY)
    Total debt: $3.9 billion (down 55% YoY)

As the company transitioned, it became significantly more liquid largely given the completion of the $800 million sale of OpenBet to Endeavor. Some of that money also went to a share buyback program. The company has repurchased $241 million of shares this year and plans to buy back a total of $750 million over three years. The sale of the lottery and sports betting verticals generated over $800 million in gross proceeds.

CFO Constance James noted the company used those proceeds, in part, to reach their targeted net debt leverage ratio range. The debt reduction efforts saved $52 million in interest this quarter alone.

“We are a firm believer that free cash flow is one of the key drivers of shareholder value. And in 2023, as we move past the strategic initiatives, we will see substantial free cash flow per share as we benefit from our strong growth profile, the transformation of our balance sheet, the flow-through of operational efficiency benefits, and active repurchasing of our shares,” she noted.

Light & Wonder now focused on R&D and casino games

Like many other American companies this quarter, Light & Wonder continued to perform well in GGR despite economic headwinds. The newly appointed Wilson highlighted the success of several company titles, including Ultimate Fire Link Explosion, Dragon Unleashed, and Gold Fish Feeding Time – Castle.

The US business thrived in part thanks to the acquisition of House Advantage and its Halo Loyalty Solutions platform. The company continued to post strong results in iGaming as well.

“Among the top 20 games in our iGaming platform in the U.S. in the quarter, our original content generated approximately 80% of the GGR in this quarter,” Wilson observed. James also noted that the company has achieved eight-straight quarters of GGR growth when it comes to US iGaming.

The company is also on the verge of rolling out a live dealer offering in Michigan with Blackjack, Baccarat, and Roulette. James predicted it will eventually account for 30% of the company’s online casino business.