Light & Wonder (LNW) 12 Nov 242024 Q3 Earnings call transcript

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

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

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

please For refer to information call our the filings on and posted risks SEC. regarding and this to earnings materials these our relating our with website uncertainties,

be We each measure a can and each non-GAAP in non-GAAP to GAAP discuss most found reconciliation section non-GAAP comparable website. measures. financial release the certain also earnings measure will A of directly the located description our Investors our of measure in of

a turn As materials replay will call call Matt. the that, section being accompanying of in archived recorded. website. With the Investors over to reminder, A conference this be of and now this will webcast our is I

everyone. Nick, Thanks joining us you, and for today. Thank hello,

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mentioned, the SidePlay long over previously assess we release, continuously in a is optimize term. Overall, phase expected engine. which will is repeat the our rollout As the high to this the with confidence broader engagement player ability

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success leading products capitalize positioned to and services our ourselves position this and to to and We continue innovate are sector future we well growing with for will rapidly growth. on

As partners gratitude we for their unwavering commercial close the would few I over out operator our to and like my sincerest past months. express team the support to year,

have and focused stronger a that very meaningful forward long-lasting at than moving over will ever partnerships with grow customers we dedicated as several team I'm confident years. hand a our are We team. on problems the we solving together built fortunate have to past

forward, Looking outlook remains the promising.

business and navigate to of we right the and group ability grow on strategy innovate. talent the in people challenges suite gives collective to Most confidence future sustainably to we execute invest vision while and presence a in global our drive have time growth. to through at importantly, grow all, Our of to X the our product continuing map. Above continue road step us to products will

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today. all you with be to great It's Matt. Thanks,

quarter and ensure throughout the and work third our with business end of working Nearing stakeholders external organization to to diligently our units. our reflect metrics performance the results minimal key collective third from Our and the is hard the to ensure our business, reflect disruptions the and efforts. quarter, dedication continuity team stability

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and As revenue $X prior million X% certain AEBITDA and termination in revenue growth XX%, and period fees, from in previously discussed, respectively. year benefited the by AEBITDA impacting

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another billion the our high. $XX.X through totaled quarter, processed Wages during iGaming platform record

We continue to the our cross-platform will business, scale iGaming leveraging strategy.

extensive we of market-centric to the as our platform and map, on network of well innovative ahead scale and of portfolio uniquely capitalize our the content offerings growing With us. depth positioned opportunities of the as our are road

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by we financial regular quarter dynamic consistently quarter. That margin after we we've matter as of as business strong outcomes the fact, enhancement evidenced initiatives execute on a and continue of and As said, growth identify review. delivered to achieved navigated strong part larger that environments performance, our and

for eliminating bottom high-value allocating line and efficiencies and and optimizing fuel system focus key accelerating to top us redundancies, long-term growth. right-shoring by by for operations key prioritizing Our resources in initiatives migrations to projects

we $XXX approximately facets as on strategic key our we quarter, quarter, the in enabling of related in we flow the million including working and At cash $X.X to of was be cash healthy financing to as optimize of over approximately ratio million the for receivables efficiency. on continue had quarter such including end, ending conversion programmatic positively Entain liquidity, the addition we One implemented. to leverage and flow We towards continue quarter, expect X.Xx of remain us time is deal. Overall, agreements allocation balance targeted as of blueprint. We in options was X.Xx of hand, in range $XX available opportunistic primarily the debt of repurchases execute at annual trend capital we X.Xx, to and to preserve multiple forward. Consolidated advantages buybacks move sheet. in billion cash share our $XXX our previously with flexibility free operating net on to changes and to on our scale the collections timing end move capital we have the million cash to long-term lower

returned value $XX through capital realized the and to earnings of as we shareholders flow. to million here grow continue there buybacks. our we approximately tremendous a believe we During amount quarter, to free of is And cash be

And Additionally, the sustainable through to into our our we enhancing and continue will leadership positions. industry CapEx. R&D capabilities reinvest bolster to and drive business growth

As remains for our M&A, position consistent.

at with some of are the XXXX. our these We provide disciplined as complementary that return a will the core opportunities recent continue to to exceed look and nearing clarity some extent the and approach thresholds. With business to to of end would options we're developments, I are our accretive like that announcements

full to for of near-term year, be growth expect the above consolidated with in Train the even the impact injunction. We Dragon EBITDA XX%

and business introduce $X.X firmed internationally. Corporate EBITDA XXXX are to impacted consolidated Our any consolidated discussed tuned XXXX, our continues million NPATA set both and will to legal to adjusted what not diverse a underpinned for remaining investors material range return of efforts $XXX high-performing of be to $XXX from supplement EBITDA range to quarter. position metrics. changes which of we million we XXXX target our gain timing us for our developments, an growth happy road robust billion, do our map, for in $X.X also and a well last and financial target to of anticipate I'm our that track target, by mitigation on billion of trajectory games costs domestically traction, for expected by performance

value the to nature cash-generative balance program allocation be the sheet it the a strong a to we'll in with working I business, highly long the am capital healthy turn highly The has journey questions. to compounder and framework remain best over as creation. with the run. And over proven to business now, be encouraged combined strategic drive a your confident shareholder of in operator of and for our growth

first go question Barry [Operator to Instructions] of And Jonas Truist. the

you I efforts about more mitigation if could Dragon domestic how was wondering talk both are the the markets. international Train going and Guys, for

Yes. Thanks, Barry.

the thank in big First revenue set pulled team. delivered another team a late outstanding you disruption results, the XX% of all, can together growth. I like of quarter. and [indiscernible] had see happened the here growth, to And XX% We

the the think of I culture the team it's quality we're building. and that testament a to

kind Dragon I when assets. it Train we there's of talk mitigation to think X that should that the universes comes about

able The premium base. in to We first XX% of games units base. some we is Filing and U.S. Invaders. new ops American We've coming like gaming about support convert to Ultimate that more had installed the the X,XXX installed to been titles said games North titles, We've those got

So in think a we've installed less outcome. I XXX great the base, lost than American North is units which

I customer a support a through publicly competitive for thank That's the want Light what you They our providing, us environment. base of supporting healthy want to it's we're and testament Wonder. so this. think & customer to

our a of performing That's Huff' yes, range we to base good those submission coming #X I the a field. in make Huff game, Puff. We had Puff said, an gains N' 'EVEN So sure extension N keep called game that of Hat in like into Edition. installed Hard

installed So go into will base. that the

we confident new goes we forward of introductions then product GXE. we grow at showed the that I'm So back base off so the can and maintain

November, year market sale at is dominated got it's midpoint to Happy single Dragon this now games. down Australian of earlier a through live The Australian That's the shifted product we've performing It new to the Train in a in say our #X our really clearly kind type in second the It's from market, right some gone launched product. Train commercialized pipeline we say we're to and focus share very there. really pipeline. of Dragon market universe provider is was and the the kudos efforts We Australia of haven't still, market. a the Shenlong best-in-show ship where lot AGE the of called mitigation well. Happy a Unleash. product

is So lots still of momentum underway.

of think portfolio. game was portfolio I but designers, XXX breadth the every Train games lots speaks the building Dragon just X of we gaming we've the it the to segments great globe. diverse that depth of this and make in year, of across got

about So I feel that. confident

of will we to impacted guided on numbers earlier, any the obviously the late the over ensure Yes. build perspective. the continue impact the we of think when September. to retain on And just of just I we last timing major from impact customers just in here legal modest developments based injunction on of of in costs in let's of expenses, have QX kind our say, collaborate Matt, as the They front. But to RPD of that. there actually Yes, just a on saw a last, quickly, timing spots timing costs months we the performance based kind minimal legal the on don't the Barry, to just we week will material I corporate to we'll Obviously, next at place the changes as conversions. But be last mentioned kind slight on likely were, that anticipate mentioned, that impact with that conversion will the monitor Mattias of QX. floor.p the just to went year. based terms

that's a games this we growth low point that single-digit over XXXX, kind to all by year-over-year think, of EBITDA mentioned So growth and Matt expect, full driving we'll view, rate QX, XX% great overall, to underpinned I back be the from of just in return a year earlier. normalized growth going think I but during

next Katz David goes David. of Jefferies. to The question

I particularly just that categories. wanted to of to talk sort and about the the in intros timing new follow premium of on you

Specifically, maybe Puff, about Huff some which if again, could in some N' the is, market. we get out stuff on we've heard update

David. Yes, that happy Thanks, one. Yes. to take

I train, diverse X the a building in were said, we Dragon beyond game like So portfolio. portfolio

we on of you and know as I really [indiscernible] were of us you think display, saw and was who what many an as both X, manifestation organization. were there under it a I are

we about Light & you think Wonder, M&A. If together came through

So types franchises like valleys these companies industries, had X hood. of great and WMS each under and Master. Shuffle the really And a set of companies of

I display you think GXE. at on full saw that

saw versions kind the of new a Woowa. franchise from just you burden filing, game. importantly, betas and we've in versions Ultimate original of build X beyond saw So new been able Half mentioned you what you drones, And the to N' that do that new of of Planet Puff dancing to a

best California, where iGaming. think gaming land ops Southern the just this We creative even part saw a portfolio teams do base. to moment franchise does this test like best. ways. reinvigorating taking contributor in across down industry now game different I performing game that in games based, at is in actually of XX-year-old North which brand premium of think and casino workshop what the all the installed our the Huff in team game America, The a in #X making became which is the And you that in versions show is an facile in floor about the that at GXE. We is a new type not feel can bring different decade incarnation in getting together of that for to our channels, life be market on lots the also but our N' of a many of called N' are how they on Puff, at Huff the the social into Puff more ways have lots that mansion, the of money #X more

show. saw actually ready show. selling A us, for now. launched new for a a cabinet GXE, was on So the is of you at the floor commercialization We lot what

in [indiscernible] The Upright. this cabinet #X porter. been last the So the is [indiscernible] year. -- marketplace. extension It's about for COSMIC of the an the

we're So to quarter momentum going year. that next first into build late to that launch on in the We're QX. of going

Train Dragon GXE combination gaming to of think throughout of on So installed Upright base new we was COSMIC these showed in that we'll that fleet that XXXX. that new we then with at and continue really the ops I the growth means this leveraging brands kind the between holding games and investment have showing

So well roll really success confident that into the 'XX portfolio we here. set for is as up

David question of next Macquarie. Fabris to The goes

Look, discussions firstly, just could level. And fully an you I'm market of budgets? a I in curious at with comment gaming sustainable level? current any whether that, at I you casinos. within the the premium American guess ops customer wondering industry debate to if off, been where at on then provide mean, penetrated insights lot was on secondly North to I understand customers volumes are gaming there's can are

So your maybe this part going it thoughts increase reduces can as of whether floors on the forward? or

Yes, at great of the been last to the paranoia impact about we've say, mean level years. gaming the how to I'd is something on we for X the goals all see are I map it a macro look talking going Obviously, earnings question. healthy with segment.

move we we tribal 'XX the are what made market That's with replacement what macro puts share is the second We'll in alike. we really of have we not There's customers. that QX 'XX we're the from the think I ship But 'XX. like all set and a from maintained a take #X consistent in corporate customers. market. Proud everyone largely the in customers as but Obviously, vantage feel see where like to in we might the U.S. into our supportive aggregate, from is replacement perspective. our job in maximum well. And QX, is feel market, hearing as customers were supplier see to up share nicely. we that from say, quarter, point,

a about. importantly, from team the spoken to replacement diversify as think we've This worked III business away I Class business. purely hard our is adjacency really that we've a

Oregon So Lottery, HHR. all Georgia like These State are in. online that get and take addressable bringing share new VLPs, we unique discrete into markets can Canadian, Callan, markets addressable

terms the So improvements for these our for really you're is what seeing part laddering share opportunities. that is shift of up in organization a of

geographies, can a across I unique think business, order for also, U.K. is see which importantly, here the big really for thing diversification our you us. a

in leadership market Also, quarter's numbers. the the I game making in share November, big we've contribution #X said, position we're Asia. Like a provider ship So through this a midpoint Australia. sales of got to

Class III the industry. Savona Nepenthe think We for across I positive really see team we've for being geographies, important adjacencies. across business So that the really us lines, across the the Mail product worked 'XX, replacement market into of diversify is hard U.S. health but

that strategy I at think the to is fruition really coming moment.

think think play play I on one, gaming the question lot of about expansion driving North think to investors and won't installed driving curious players logic been piles the realize games. had second terms your we've their that's the America? of dialogue really constrain in the best ops that this I what's the the to amount of costs a part of want expansion in the I base that in best about your a players best is, it's floor when of best those to the operators games. economics kind false preserve And has

that and business think I I think operators so that's And performing driving of games, highest their forward. you're seeing footprint the expanding

but or think So these for up, a economics levels the we that maybe see in even net maintaining ticking the sector. at positive just that's we

Gallagher Rohan. to goes next question Rohan Jarden. of The

all or for for about provided the with the to just I but like an pieces results guidance parts you introduction to the clarify 'XX, moving FY new FY and confirm behind associated please? of released, unpack QX 'XX? Can QX the guidance motivation the in the NPATA and AEBITDA suppose, NPATA guidance, guidance of I'll new on X guidance allocation, Neste the you the ask EBITDA was the going Matt, I call. car and

Yes. question. Thanks, appreciate I the Ron.

Ring our the execute of majority of some XXXX. fence customers mentioned the done, to to team perspective. And would as we has page do near-term So how job turn the could ensure kind the be only then but of I impact injunction impacts build -- the not working we an foundation continue and XXXX Dragon the mitigation we goals, kind incredible our to as with said, knew And We Matt the for there to from through working just strategic be reviews. earlier, the to Train we as associated sales customer of of game at commercial terms. From working some it's you think in gaming the as compounder perspective, view, markets, ops we if point head as an of North some QX into XXXX. collaboration kind we American that kind on in had build I specific growth impacts, hit of look where of a we're to continue some for well a about international conversion we come. If Australia gaming, through the as years costs the funnel of especially that we're really

the flat. But remains, the the the monetization the think market we've quarter with of to social the that mentioned the remains have consecutive think we really segment. casino progress to on I have, into market, put with best-in-class I relatively as this and outside of kind where best the continue social industry the say, growth, we would growth I'll I as our call, place outpacing the team made quarter. product in drive well think quarter we I I was start gaming of casino after XXth segment, that fly GCC that

we progress will So second slight year. And point we We this luckily next kind talk and last quarter good, perspective, as have term continue headwind of the but really into did about fees. then talking a finally, we and fourth only feel we'll about that from team termination Josh of that not gaming is the from view, fee. quarter a tired had this these that

out North million last to will that at termination cycle just execution space. look through we're just year, pace, year if that next So we and continued that setting grow ourselves continues had cleaner $X to a for we comp. But sizable fee the a American very really market, you it as at in be

ourselves a growth. QX, to growth reinvigorate these would here kind all So ourselves in rate we'll refocus EBITDA I kind call and and modest future what towards contributed of really of then factors

your you last I EBITDA And might bolster the simply NPATA really This target. adjusted second terms or of X.X of of translation include then to point in view, XX of from figured is here kind kind of reporting I over NPATA months. But think an just to the looked so have we question, that. appreciate

So this Australia. is a measure that's obviously widely used by our investor in base, particularly

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say, floating would has we've the reasonable interest over assumptions based rates, kind I of we've the forecast X And obviously investments made in on done the current in variability what rates, that provided. drive CapEx would some quarters, team is next, around that's assumptions tax So assumption. D&A

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The of next Ryan go Craig-Happum. to question Sigdahl

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your question. for thanks So

Barrett Justin question, next to go The you. of CLSA. Thank

have important ask I from you litigation just And that to question and target? is margin result specific about of to risk around drag in the sold feel Dragon And to Australia any your remove wanted expansion on Australia. will there already floors I that just need like I 'XX margins. Is just look, litigation need progress the as a ask to I guess, in that to, Train that at target, trains the a FY the all progress. then, how on

we the quarters. over does that scale in look -- Justin, can shown really, X stability margins, next levels Creating you if for performance I last thanks this quarter across think really don't really businesses value the an at I element question. And for several think if several terms those and Yes, the all itself really us margin think and and key robust of the years. at our lend we've in for perspective, we of proven absolutely is us keep nature to the those segments, current margin look from of having that quarter. a over it I that

we gaming obviously significant that's year, expect And gaming in into to any expect to we're shifts, continue as for while growth mix going We the head product business quarters, that to next perspective, we're of future line. but to we the we business. do we optimize trend going continue efficiencies And several this barring move invest the over forward. done to continue to last and that for as we've

we our expect we on expand. So as base start that and scale especially operations over gaming the term, installed to margin to long

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I growth goes next But once for MST. earlier, to how that, an me, just but it's X your achieved $X.X you describe growth would across after -- Rohan the you've guidance Sundram beyond and question outlook, Matt, the again. appreciate the medium-term you've EBITDA touched -- it that? have runway you of billion around The reiterated be might that, businesses on ahead

Yes, often, strategic well beyond XXXX. plan our X it's hear quite one another at there's a business years. extends we XXXX, build XXXX, question, finish we visible journey takes a to line we future that out no asked the get Obviously, annually, a X for that beyond transformation key what's

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So we that. see a continuation of

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goes final Partners. Mason question of to Paul Evans the And and

in us any things? helpful might a ask opportunity and internationally events a sort years. to wanted catalysts? like about I happening of sort sales big regulatory up couple stuff sort a just could I in magnitude medium-term the Philippines. give of And other in the color But bit you of There's of of those expansion UAE and international think big a in sort timing that Macau, I be that's on And outright of opportunities. the like believe of there's coming

GGR 'XX. then [indiscernible] that's The kind global and 'XX, on been some about into we've That's of opportunity plans in Philippines, competing a again as The last scale Yes. active that in year. extensively. a pretty casino terms big, Its of spoken market ambitious for There's a near-term active operation.

the churn a and participant that. regulatory number So is player the big years. to We're Philippines. The going we're Macau in of in #X a over happen

It's pretty years. for for opportunity there market us, good X much these So that in a that days be to outrate a actually will again it's.

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bring in the that and to portfolio operators So others licensed ultimately successful. our to are be we bed market can when that like help

excited helping see see about the expansion time of probably the is to way kind we out of frame we're 'XX them to and trying life. 'XX, figure that opportunity multisite kind but a really we when So that over be to along coming as that successful, Roque a

also got opportunities. their the process of with You've expansion Thailand dealing

You've the horizon. on Japan got

of market. opportunities a in So set online international really the coming unique

get got as in international I that up think, to propel leadership us a the markets market great we're very well team. success. We've positioned to and set our help in store some

Thailand, that of probably to Macau all to, a opportunity. back And then I'd more say, near-term about So of if think more and beyond. Japan, the come Philippines UAE, 'XX you like

the some for So yes, business. I think the meaningful horizon on catalysts gaming

back We further have Matt I'll for comments. questions. hand no to closing any

operator. Thank you,

on some belief way. reinforcing to our at up, growth. despite like industry our to a our we see We GXE those initiatives. take XXXX the on further remain path target track Before new was customers along on EBITDA innovation to that the both consolidated regarding to It affirming and and leaders moment we I'd received we products wrap the achieve are from reflect towards positive feedback challenges right and recession this incredible truly year the

team, and to for adapt Wonder strength a again journey of Our you is team. continue a all resiliency continued come support. of & excited stay stakeholders. ability testament Wonder the the to & and On your for Light value Thank behalf we're execute to about our focused, of day. and ahead the Light Have we as yet entire the great the milestones creating

Thank you. for now you Thank today's joining. all This concludes call.

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