Light & Wonder CEO insists flurry of M&A activity has provided “halo effect” on supplier sector

Light & Wonder CEO and president Matthew Wilson has heralded the “halo effect” that has come with the recent flurry of M&A activity within the supplier sector.

Within the last three months, AGS, IGT and Everi have all been the subject of acquisitions, with the latter two simultaneously acquired by a newly formed holding company owned by funds managed by affiliates of Apollo Global Management for a fee of around $6.3bn.

The fact that all three have been taken private was something Wilson addressed while speaking on an earnings call following the release of his own company’s second quarter financial results.

The Light & Wonder chief is of the view that all three being taken into private hands is a positive sign in terms of the perception of the supplier side of the industry.

Wilson explained: “It’s a very interesting time in the markets at the moment with M&A activity certainly ticking up, I think it’s a function of rates stabilising and deals getting easier to price, so I want to congratulate AGS, IGT and Everi for all getting their transactions away. Congratulations to the CEOs of those companies.

“Interestingly, they’ve all been taken private, which I think is driven by the fact that those private equity companies are looking for businesses that are resilient, stable and cash generative and clearly that’s what they see in this sector, so I think it’s a good halo effect for the supplier side of the industry.”

Wilson did go on to concede that these types of acquisitions bring with them a “level of disruption”, before adding he is thankful for the fact that Light & Wonder is on the other side of such deals at this stage.

Light & Wonder completed the acquisition of SciPlay in October 2023, having snapped up the remaining 17% equity interest in the business for $22.95 a share.

Having been pressed for comment on whether the amount of M&A activity currently being seen by the firm’s competitors would impact Light & Wonder’s positioning in the market, the CEO used it as an opportunity to talk up the company and its performance in Q2 of this year.

He continued: “We have a defined strategy, we have clear goals that are outlined, we’ve got great operating momentum, so for our organisation, it’s really just [to] stay focused on executing towards our goals.

“Clearly, you can see we have done that this quarter, we’ve done that exceptionally well.”

When it comes to Light & Wonder’s second quarter display, it was another strong performance in what was the 13th consecutive quarter of consolidated revenue growth, with the firm posting a topline figure of $818m, representing a 12% year-on-year (YoY) rise.

Breaking revenue down by segment, gaming revenue increased by 14% YoY to contribute to the lion’s share of the overall figure and post a total of $539m, inspired by a 32% rise in global gaming machine sales.

SciPlay recorded an 8% YoY revenue rise to $205m alongside adjusted EBITDA of $70m, while the igaming division revenue rose 6% to $74m with flat adjusted EBITDA of $24m.

Bosses explained that SciPlay’s 8% rise compared to the corresponding quarter last year stems from record monetisation in the core social casino business.

Average revenue per daily user climbed 12% YoY to a record total of $1.04, while average monthly revenue per paying user also returned a record rise of 15% to $116.91.

Net income for the quarter was recorded at $82m against $5m for Q2 2023.

In June 2024, Light & Wonder was added to the Russell 100 Index, bolstering the group’s profile within the investment community.

Wilson said: “Light & Wonder continues to capitalise on opportunities underpinned by our scale and diversified product offerings as demonstrated through the growth momentum across the business. We saw strong progress in the gaming business as the expansion of units in the North American installed base reached an inflection point.

“Our global presence enables further product refinement and market penetration with our suite of games and casino solutions. We continue to develop our catalogue of proven, evergreen franchises to bring the most engaging experiences to our players, leveraging the power of our portfolio across land-based, social and igaming platforms.

“The uplift that we have continued to see across the business is a testament to the quality of the talent and culture in our organisation. I am pleased with the continued momentum that we are seeing and know that the best is yet to come.”