Illumination & Marvel (I&M) achieved new milestones in both its betting and SciPlay ventures during the second trimester, while the organization declared that its full takeover of SciPlay will be finalized by year’s end.
I&M’s core betting enterprise witnessed revenue expansion in the second trimester, fueled by heightened sales in North America and Australia.
I&M concluded a secondary listing on the Australian Securities Exchange (ASX) in the second trimester. To date, over A$1 billion (GBP 514 million/EUR 598 million/USD 656 million) worth of I&M shares have been traded on the ASX.
The SciPlay acquisition is anticipated to be finalized in the fourth trimester.
All betting divisions experienced growth in the second trimester.
Lottery sales affected year-over-year comparisons.
How did Illumination & Marvel perform in the initial six months of the year?
A Chief Financial Officer transition is imminent.
The SciPlay agreement is expected to be concluded in the fourth trimester.
I&M formulated plans in the second trimester to leverage the growth within SciPlay by acquiring the remaining publicly traded shares of SciPlay. The agreement, announced in May, valued at $422 million (GBP 331 million/EUR 385 million), will fully integrate SciPlay into I&M’s operations.
The organization presently holds an 83% economic stake and 98% voting authority in the social gaming enterprise.
Matt Wilson, the chief executive officer of Light and Wonder, declared that the agreement is nearly finalized and is anticipated to be concluded by the end of the year.
“We are thrilled about this announcement,” Wilson stated during L&W’s earnings call. “We have signed a binding agreement. We anticipate it to be completed in the fourth quarter, but this is truly the final significant milestone in streamlining our platform.
“There aren’t many companies in this sector that possess a unique portfolio like ours, encompassing land-based operations, a leading online gaming enterprise, and the fastest-growing social casino company. Therefore, unlocking that potential and developing the best products globally is crucial to bringing SciPlay back into the fold.”
Light and Wonder’s second quarter: Revenue growth across all segments
Total revenue for the three months ending June 30 amounted to $731 million, representing a 19.8% year-over-year increase. This growth was driven by expansion across all three of L&W’s business segments.
$496 million of the total revenue originated from service activities, with the remaining $235 million stemming from product sales.
The gaming business continued to lead the charge, with revenue rising by 20.8% to $471 million. L&W noted that gaming machine sales surged by 41%, while gaming systems and table product revenue increased by 20.0% and 34.0%, respectively.
Turning to SciPlay, revenue reached a record $190 million, marking an 18.8% year-over-year increase. L&W attributed this to its core social casino business, which it stated exhibited robust paying metrics, outperforming the market and gaining market share.
Online gaming revenue also experienced a 16% increase.
L&Ws earnings surged by 7% in the second quarter of 2023, hitting a record high of $70 million. The organization attributed this growth to continuous expansion in the American market, where earnings increased by 32%. This figure is likely to climb again as L&W prepares to launch its online live casino in Michigan in the second quarter, pending regulatory approval.
Lottery sales affected the year-over-year comparison for the second quarter.
Examining second-quarter expenses, operational costs rose by 9.6% to $618 million. L&W increased spending across the board, except for restructuring. Sales, general, and administrative expenses remained the largest expense at $203 million.
L&W also noted that other finance-related costs were $93 million, resulting in a pre-tax profit from ongoing operations of €20 million. This is a sharp contrast to the $140 million loss recorded in the same period in 2022.
The organization paid $15 million in income taxes, leading to a net profit from ongoing operations of $5 million, compared to a $150 million loss in the same period last year. Adjusted EBITDA also increased by 32.6% to $281 million.
However, the outcomes are different if discontinued operations are included. L&W completed the sale of its lottery business to Brookfield Business Partners for $5.8 billion in April last year.
Net profit from discontinued operations in the second quarter last year was $3.26 billion. Therefore, after deducting the net profit of $6 million from non-controlling interests this quarter, the year-over-year comparison for 2023 resulted in a net loss of $1 million, compared to a profit of $3.29 billion in the same period last year.
Earnings for the first half of the year reached $1.4 billion.
The second quarter, ending on June 30th, had a noticeable effect on L&W’s financial performance. Revenue reached a total of $1.4 billion, marking an 18.3% jump compared to the same period in the previous year, which was $1.18 billion.
Gaming revenue saw a 19.5% increase, reaching $890 million. SciPlay’s revenue also rose by 18.2%, hitting $376 million, while iGaming revenue climbed by 11.7% to $134 million. In total, service revenue amounted to $973 million, and product sales revenue reached $427 million.
Operating costs experienced an 8.0% rise, reaching $1.19 billion, and financial costs climbed to $169 million. As a result, pre-tax profit from continuing operations was $46 million, a significant improvement compared to the $213 million loss recorded in the same period last year.
L&W paid $14 million in taxes, resulting in a net profit from continuing operations of $32 million. This marked a substantial improvement compared to the $217 million loss experienced in the previous year. Adjusted EBITDA also saw a 22.8% increase, reaching $529 million.
Regarding discontinued operations, the previous year’s net profit was $3.54 billion. After deducting $11 million in net profit from non-controlling interests in this quarter, the net profit for 2023 was $21 million, compared to $3.32 billion in the previous year.
“Our financial reporting data continues to show our commitment to the business and significant progress towards our long-term objectives,” stated Wilson.
“We achieved an exceptional second quarter with double-digit revenue and profit growth across all three of our business segments, generated strong cash flow, and reduced leverage.”
James is set to leave his position as Light & Wonder’s Chief Financial Officer.
Connie James’ final full period as Chief Financial Officer of L&W was the second quarter. Last month, the news of her exit at the end of August was verified.
Oliver Zhou, L&W’s Senior Vice President of Finance, will act as temporary Chief Financial Officer. He will occupy the position until a permanent replacement is located, a search that is currently in progress.
“I am pleased to have been a member of such a varied and skilled team and proud of the numerous achievements we accomplished during my time,” James stated. “We have reached many significant milestones in changing the company and now have a sound financial statement and strategic capital distribution plan, positioning us for continued prosperity.
“The ongoing growth we observed in the second quarter is a reflection of the concentrated execution that is in our nature. With a wealth of talent, a robust financial standing, and an exceptional collection of assets, L&W will continue to progress as a leading cross-platform global gaming enterprise.”
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