Light & Wonder, Inc. · ASX:LNW
Light & Wonder — Investor Day (August 2023)
61 slides from Light & Wonder's investor day presentation, August 2023
Slide 1: AGE 2023 Investor Presentation
AGE 2023 Investor Presentation August 2023 © 2023 LIGHT & WONDER
Slide 2: 2023 AGE Investor Presentation Agenda
2023 AGE Investor Presentation Agenda Welcome Matt Wilson & Reuben Rattos Board Chair Address Jamie Odell Business & Strategy Overview Matt Wilson Gaming Siobhan Lane SciPlay Josh Wilson iGaming Dylan Slaney R&D & Cross-Platform Initiatives Panel Rich Schneider, Victor Blanco, Nathan Drane Financial
Slide 3: Forward Looking Statements
Forward Looking Statements In this presentation, Light & Wonder, Inc. (“Light & Wonder,” “L&W” or the “Company”) makes “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results
Slide 4: Forward Looking Statements: Recent Developments
Forward Looking Statements Recent Developments On August 8, 2023, Light & Wonder, SciPlay Corporation and Bern Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Light & Wonder (the "Merger Sub"), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to
Slide 5: Jamie Odell
Jamie Odell Executive Chair © 2023 LIGHT & WONDER 5
Slide 6: Light & Wonder Transformation (2019 – 2023)
Light & Wonder Transformation (2019 – 2023) SEPTEMBER 2020 Jamie Odell & Toni Korsanos MARCH 2022 approach potential investors to JUNE 2021 Announced acquire McAndrews & Forbes stake Announces intention rebranding of with a consortium of investors led by to divest Lottery and Scientific Games to JUN
Slide 7: Business & Strategy Overview
Business & Strategy Overview Matt Wilson © 2023 LIGHT & WONDER 7
Slide 8: Our Transformation Story
Our Transformation Story 2019 TODAY Diverse and complex asset portfolio Content-led portfolio with enviable margins, strong Profile poorly integrated, with high debt levels recurring revenues and growing digital mix New governance with no controlling shareholder, 7 Ownership / Board / new Board memb
Slide 9: Leading Positions with Competitive Advantages
Leading Positions with Competitive Advantages Land-Based Gaming SLOTS, TABLES, SYSTEMS SciPlay SOCIAL CASINO, CASUAL iGaming CONTENT, AGGREGATION, PAM(1), LIVE CASINO (1) Player Account Management. © 2023 LIGHT & WONDER 9
Slide 10: Compelling Value Proposition
Compelling Value Proposition Leading global games and platform provider Attractive market positions and unmatched cross- platform capability Becoming the Leading Transformed balance sheet Cross-Platform Sustainable growth, with high margins and robust Global Games cash flow generation Company Enhanc
Slide 11: Business Overview
Business Overview FY2022 Revenue Contribution(1) FY2022 AEBITDA Contribution(2) iGaming iGaming Trades under LNW ticker $ 240M $ 80M symbol 9% 8% on NASDAQ and now SciPlay $ 187M ASX SciPlay 18% $ 671M 27% $2.5B $913M Headquartered in Las Vegas, Nevada CONSOLIDATED CONSOLIDATED Gaming with presence
Slide 12: Streamlined R&D Singularly Focused on Building Great Games & Platforms
Streamlined R&D Singularly Focused on Building Great Games & Platforms Inherited a R&D program that was… • Decentralized and regionally structured • Not building right games for right markets • Not focused on largest revenue opportunities Unlocking the power of R&D investment to fuel cross-platform
Slide 13: Unmatched Portfolio of Evergreen Franchises
Unmatched Portfolio of Evergreen Franchises The MONOPOLY name and logo, the distinctive design of the game board, the four corner squares, the MR. MONOPOLY name and character, as well as each of the distinctive elements of the board, cards, and the playing pieces are trademarks of Hasbro for its pro
Slide 14: Positioned to Win
Positioned to Win Large Unmatched Significant Top Talent Clear Market Positions Momentum & Culture Roadmap Opportunity Compelling Investment Thesis © 2023 LIGHT & WONDER 14
Slide 15: Delivered Strong Growth Above Industry Average
Delivered Strong Growth Above Industry Average(1) Consolidated Revenue 6 months ended March 31, 2023 (1) • Investments made over last 18 months drove IN $MILLIONS outsized growth vs. Gaming supplier peers • Executing on product roadmap, fully leveraging $1,352 breadth and depth of our content and pr
Slide 16: Ladders up to Strong Financial Performance
. . .Ladders up to Strong Financial Performance IN $MILLIONS Consolidated Revenue Consolidated AEBITDA (1) Adjusted NPATA (1) $1,400 targeted 15% 2022 – 2025 CAGR(2) $1,400 $1,183 $529 $414 $731 $610 $281 $212 $179 $93 +20% +18% +33% +28% 2Q22 2Q23 1H22 1H23 2Q22 2Q23 1H22 1H23 - 2025 2Q23 1H23 Cons
Slide 17: Executive Leadership Team
Executive Leadership Team Sustainability Matt Wilson Oliver Chow Siobhan Lane Josh Wilson Dylan Slaney President & CEO Acting CFO(1) CEO, Gaming CEO, SciPlay CEO, iGaming Diversity, Responsible Equity & Gaming Inclusion Rich Schneider James Sottile Victor Blanco Roxane Lukas Michael Lorelli Chief Pr
Slide 18: People & Culture
where People & Culture are at the heart of all we do © 2023 LIGHT & WONDER | CONFIDENTIAL 18
Slide 19: Sydney 2023
Sydney 2023 WO R K HAR D, PLAY HA R D WIN AS A TEAM © 2023 LIGHT & WONDER 19
Slide 20: Our progress so far
Our progress so far We are committed and continue to progress our CSR journey across several of our pillars ENVIRONMENTAL SUSTAINABLE HIGHLIGHTS COMMUNITY HIGHLIGHTS DEI HIGHLIGHTS We donated We hosted Our team volunteered We launched our first six Began recognizing $100k 25+ 18k Employee Resource G
Slide 21: Committed to Responsible Gaming
Committed to Responsible Gaming The following principles set our global commitment to Responsible Gaming across all Light & Wonder products: • Comply with the American Gaming Association’s (AGA) Responsible Gaming Code of Conduct • Work with all stakeholders to prevent underage gaming • Develop and
Slide 22: Clear Roadmap to Drive Long Term Value
Clear Roadmap to Drive Long Term Value 1 Creating great content and franchises across Gaming, iGaming and Social 2 Expanding in high-growth digital markets 3 Enabling a seamless player experience with leading platforms 4 Maximizing cash flow to drive shareholder returns 5 Driven by high performing t
Slide 23: Gaming
Gaming Siobhan Lane © 2023 LIGHT & WONDER 23
Slide 24: Positioned to Take Market Share and Drive Shareholder Value
Positioned to Take Market Share and Drive Shareholder Value 2023 TOTAL ADDRESSABLE MARKET (1) A stable, resilient global market IN $MILLIONS High barriers to entry $3,400 $2,650 Well positioned to capture growth opportunities in the two largest profit pools: gaming operations and gaming sales $700 T
Slide 25: Operating in a Stable, Resilient Industry
Operating in a Stable, Resilient Industry... U.S. GROSS GAMING REVENUE (1) $ in millions $120,000 $90,000 Gaming Gross $60,000 Revenue has demonstrated $30,000 sustainable growth since 2000 $0 2003 2006 2009 2012 2015 2018 2021 (1) GGR according to H2 Gambling Capital Global Gambling 2023 June Data.
Slide 26: Key Strategic Executions
Key Strategic Executions Increasing R&D investment in game development Invested and recalibrated game design studios in Australia & the U.S. Intentional product segmentation, portfolio strategy, and commercial execution that align with market trends © 2023 LIGHT & WONDER 26
Slide 27: Focused on Game Design Talent to Unleash Potential
Aligning our top talent with our most Focused on Game Design promising growth opportunities Talent to Unleash Potential through Global Creative Centers EMMA CHARLES JACK CHESWORTH KIMBERLY COHN MICHAEL TED HASE YANIS QIN YOU AUSTRALIA AUSTRALIA LAS VEGAS MASTROPIETRO LAS VEGAS TSOMBANIDIS AUSTRALIA
Slide 28: Growing Array of High-Performing Games and Cabinets
Growing Array of High-Performing Games and Cabinets with New Launches in 2023 Landmark 7000 Cosmic Dual Kascada Screen •• Continues Most popular Premieres at lead to #3 stepper Premium launch, Video the industry in (1) remained the #1 in the Multi Screen Mechanical Upright • category, Reel Monster –
Slide 29: Positive Momentum in ANZ
Positive Momentum in ANZ Ship Share 2022 - Q2 2023(1) Customer 60 Secured Impactful Dragon confidence Train launch events 50 20%+ 1,500+ 40 of ship share (1) for consecutive quarters Placements across 3 Product Families (2) 3 in New South Wales 30 (Q1, Q2 23) 20 Setting revenue 1 in Queensland Recor
Slide 30: Performance Across All Gaming Business Lines
Performance Across All Gaming Business Lines Boosted By Investments in Product Roadmap KEY HIGHLIGHTS Gaming Operations Game Sales GAMING | IN $MILLIONS North America Premium Units Grew Now Shipped over Revenue Revenue AEBITDA 12 47% 16,800 +46% Consecutive of North America Global Units YoY in 1H23
Slide 31: Driving Commercial Results Through Positive Hardware and Software Performance
Driving Commercial Results Through Positive Hardware and Software Performance Stabilized in a resilient industry Investing in the right areas to drive growth Focused on talent as the cornerstone of our strategy © 2023 LIGHT & WONDER 31
Slide 32: SciPlay
SciPlay Josh Wilson © 2023 LIGHT & WONDER 32
Slide 33: Delivered Share Gains in Social Casino with Further Opportunities in Attractive TAM
Delivered Share Gains in Social Casino with further Opportunities in Attractive TAM Casual Games - ~$36 billion TAM(1) • Market leader in the Social Casino genre, diversifying business through prudent expansion into natural adjacencies $8B TAM (1) Market Share Social Casino Social Casino - ~$8 billi
Slide 34: Track Record of Driving Organic Growth Leading to Record Performance
Track Record of Driving Organic Growth Leading to Record Performance in 2023 Gaining a Competitive Lead in Social Casino with Six Consecutive Quarters of Over Performance(1) DRIVING SUBSTANTIAL GROWTH 10.5% Revenue | IN $MILLIONS (2) average payer Since 2012 conversion(3) in 2Q23 44.5% SciPlay grew
Slide 35: Continued Investments in SciPlay Engine
Continued Investments in SciPlay Engine Driving Performance of Evergreen Game Portfolio DTC (Direct to Consumer) • Leveraging Data Science o Grow lifetime values (LTVs) through improved player engagement and retention New Games • Evolving AdTech for Heightened Effectiveness o Proprietary technology
Slide 36: Proven Execution Continues to Drive Market Outperformance
Proven Execution Continues to Drive Market Outperformance Jackpot Party®, Quick Hit Slots® and Gold Fish Casino® Game Franchises Achieving Record Revenue in Q2 2023 SCIPLAY | IN $MILLIONS 75%+ 94%+ Revenue AEBITDA Average Revenue Per $376 Payer Conversion Rate Daily Active User 10.5% $0.93 $318 $190
Slide 37: Spark the World's Passion to Play
Spark the World’s Passion to Play by Providing the Most Engaging Digital Entertainment Working collaboratively across Light & Wonder to build great games and execute on our cross-platform strategy Proprietary ad tech driving player acquisition and retention Investing in multiple initiatives to drive
Slide 38: iGaming
iGaming Dylan Slaney © 2023 LIGHT & WONDER 38
Slide 39: Leading and Trusted iGaming Ecosystem
Leading and Trusted iGaming Ecosystem with Unparalleled Combination of Solutions Leading content in markets we operate in Content Creation Unparalleled platform & capabilities Fast growing opportunity Digital PAM(1) Live Casino Differentiated position and value creation (1) Player Account Management
Slide 40: Well-Positioned to Capture Meaningful Share with Outsized Opportunities
Well-Positioned to Capture Meaningful Share with Outsized Opportunities CANADIAN ALL REGULATED PROVINCES EURO MARKETS (1) $27B+ ONTARIO UNITED KINGDOM LIVE IN 6 U.S. STATES Global GGR FY25 LATAM (2) Current addressable markets SOUTH AFRICA 26% CAGR 21/25 Additional growth opportunities (1) Internal
Slide 41: Experienced iGaming Leader with Best-in-Class Content Aggregation Platform OGS
Experienced iGaming Leader with Best-in-Class Content Aggregation Platform OGS(1) OPERATORS OUR STUDIOS • Proprietary Content Leveraging L&W’s evergreen franchises and digital native content 4.5B Monthly Game Spins PARTNER STUDIOS • Partnership-Developed Content 35 Markets Developed in collaboration
Slide 42: Continued Focus on iGaming Initiatives
Continued Focus on iGaming Initiatives Building Momentum on 2023 Roadmap 1 Ready to launch 1st Live Casino in Michigan(1), 3 And 1st game show launched Further strengthening in U.K and Europe regionalized roadmaps in the U.K. and Europe 5 6 Continue to assess M&A Leveraging the Playzido opportunitie
Slide 43: Accelerated Land-Based and Regionalized Content Launches Driving Performance
Accelerated Land-Based and Regionalized Content Launches Driving Performance KEY HIGHLIGHTS iGAMING | IN $MILLIONS U.S. Revenue E.U. & U.K. OGS(1) GGR Revenue AEBITDA +32% 2Q23 +14% 2Q23 $120 $134 +33% 1H23 $70 $60 $47 $41 $24 Record Studio New Launches $21 Performance Playzido with BCLC in Canada 2
Slide 44: Key Takeaways
Key Takeaways Unmatched ecosystem to offer players Uniquely positioned as a developer and An unbeatable distributor platform from which to Expanding share in growing markets seize tremendous opportunity in the Accelerating investments in content, product & iGaming market talent Operating at the hear
Slide 45: The Power of Cross-Platform
Rich Schneider Chief Product Officer The Power of Cross- Victor Blanco Chief Technology Officer Platform Panel Nathan Drane SVP Global Product Management © 2023 LIGHT & WONDER 45
Slide 46: Financial Discussion
Financial Discussion Oliver Chow © 2023 LIGHT & WONDER 46
Slide 47: Value Creation Framework
Value Creation Framework Committed to Enviable and Durable Financial Profile Enhancing Value to All Shareholders Enhanced Shareholder Value Ca Si al C ed gn r pit rm ific ea f o ns eet an t a t io Tr h n l y S i c al nce d la R a Ba © 2023 LIGHT & WONDER | CONFIDENTIAL 47 © 2023 LIGHT & WONDER 47
Slide 48: Earnings Underpinned by Strong Financial Profile
Earnings Underpinned by Strong Financial Profile Significant recurring revenue(1) Focused teams driving Consolidated AEBITDA(2) grew faster streams & scaling digital operational excellence to than Consolidated Revenue YoY, businesses further strengthen margins alongside significant Free Cash Flow(2)
Slide 49: Delivering Sustainable Long-Term Growth
Delivering Sustainable Long-Term Growth GROWTH DRIVERS Gaming • Robust product roadmap CONSOLIDATED AEBITDA (1) • Share gains in Game Ops and Game Sales • Expand into adjacencies targeted With Clear SciPlay $1.4B (3) Focus on • Social casino business outpace market growth targeted 15% • Opportunity
Slide 50: Advancing on Balanced and Opportunistic Capital Allocation Strategy
Advancing on Balanced and Opportunistic Capital Allocation Strategy to Enhance Value Debt Reduction $4.8B in debt reduction since December 2021 Returning Capital to Shareholders Through Share Repurchases Disciplined Investment in Key Growth Opportunities Organic – Targeting R&D ~10% of revenue & CAP
Slide 51: Delivering on Our Strategy to Drive Long-Term Value
Delivering on Our Strategy to Drive Long-Term Value Creating fully cross-platform, seamless player experience Focused on great games and evergreen franchises available on any platform Expanding in high-return markets Enviable and Durable Investing in core markets and strategic adjacencies Financial
Slide 52: Q&A
Q&A Please scan the QR code to submit your questions © 2023 LIGHT & WONDER 52
Slide 53: Appendix
Appendix © 2023 LIGHT & WONDER 53
Slide 54: Non-GAAP Financial Measures
Non-GAAP Financial Measures The Company’s management (“Management”) uses the following non-GAAP financial measures in conjunction with Consolidated AEBITDA (representing AEBITDA from continuing operations) GAAP financial measures: Consolidated AEBITDA (representing continuing operations), AEBITDA fr
Slide 55: Non-GAAP Financial Measures (Cont'd)
Non-GAAP Financial Measures (Cont’d) AEBITDA from Discontinued Operations Combined Free Cash Flow AEBITDA from discontinued operations, as used herein, is a non-GAAP financial measure that is presented as a Combined free cash flow, as used herein, represents a non-GAAP financial measure that combine
Slide 56: Reconciliation of Consolidated AEBITDA, Discontinued Operations and Combined AEBITDA
L&W Reconciliation of Consolidated AEBITDA – Continuing Operations, AEBITDA from Discontinued Operations and Combined AEBITDA Three Months Ended Six Months Ended Twelve Months Ended December 31, December 31, December 31, June 30, 2023 June 30, 2022 June 30, 2023 March 31, 2023 June 30, 2022 March 31
Slide 57: Reconciliation of Debt Outstanding to Net Debt Leverage Ratio
L&W Reconciliation of Principal Face Value of Debt Outstanding to Net Debt Leverage Ratio As of June 30, 2023 December 31, 2020 December 31, 2019 (1) Consolidated AEBITDA/Combined AEBITDA $ 1,029 $ 800 $ 1,334 Total debt $ 3,886 $ 9,303 $ 8,725 Add: Unamortized debt discount/premium and deferred fin
Slide 58: Reconciliation of Operating Cash Flow to Free Cash Flow
L&W Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow Three Months Ended June 30, 2023 2022 Continuing Discontinued Consolidated Operations Operations (1) Combined(2) Net cash provided by (used in) operating activities $ 34 $ 27 $ (64) $ (37) Less: Capital expen
Slide 59: Reconciliation of Equity Investments Earnings to EBITDA
L&W Reconciliation of Earnings (Loss) from Equity Investments to EBITDA from Equity Investments Year Ended December 31, 2020 2019 Continuing Discontinued Continuing Discontinued Operations Operations Operations Operations Earnings (loss) from equity investments $ 3 $ (9) $ 5 $ 19 Add: Income tax exp
Slide 60: Reconciliation to Consolidated AEBITDA Margin
L&W Reconciliation to Consolidated AEBITDA Margin Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 (1) Consolidated AEBITDA $ 281 $ 212 $ 529 $ 414 Revenue 731 610 1,400 1,183 Net income (loss) margin from continuing operations 1 % (25) % 2 % (18) % (2) Consolidated AEBITDA
Slide 61: Reconciliation of Net Income to Adjusted NPATA
L&W Reconciliation of Net (Loss) Income Attributable to L&W to Adjusted NPATA Three Months Six Months Ended Ended June 30, 2023 June 30, 2023 Reconciliation of Net (Loss) Income Attributable to L&W to Adjusted NPATA Net (loss) income attributable to L&W $ (1) $ 21 Net income attributable to noncontr