Light & Wonder, Inc.

Good afternoon. Thank you for attending today's light and wonder third quarter 2023 earnings conference call. My name is Alexis and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the call over to Nick Zungare. You may proceed.

Thank you, operator, and good afternoon, everyone. Welcome to our third quarter 2023 earnings conference call. With me today are Matt Wilson, our president and CEO, and Oliver Chow, our interim CFO. During today's call, we will discuss our third quarter 2023 results and operating performance, followed by a question and answer session. Today's call will contain certain forward-looking statements that may involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call. For information regarding these risks and uncertainties, Please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We will also discuss certain non-GAAP financial measures. A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our earnings release as well as in the investor section on our website. In 2022, we completed the sale of the lottery business to Brookfield Business Partners in the second quarter. and the sale of the sports betting business to Endeavor in the third quarter. Accordingly, we have reflected these businesses as discontinued operations and have consolidated statements of operations for comparable prior periods. We are reporting our results of continuing operations in three business segments, gaming, side play, and iGaming. Amounts and disclosures referring to combined include both our continuing and discontinued operations. As a reminder, this conference call is being recorded. A replay of this webcast and accompanying materials will be archived in the investor section of our website. With that, I will now turn the call over to Matt.

Thank you, Nick. Good afternoon, everyone, and good morning and evening for those on the call around the globe. Thanks for joining us on the heels of a very successful third quarter, both financially and operationally, as Light and Wonder continues to capitalize on a resilient gaming industry. once again delivering double-digit growth across all three of our businesses, with consolidated revenue growing 13% year-over-year to $731 million, bringing us to 10 consecutive quarters of year-over-year top-line growth. I continue to be pleased with the performance that was consistently delivered since we announced the company's transformation strategy. This includes two new key milestones which we achieved recently – First, as part of our secondary listing on the Australian Stock Exchange, or ASX, we have been targeting inclusion on the ASX 200 index, and this has now come to fruition with our addition into the index on October 18th. As feedback from the Australian investor community continues to exceed our expectations, the index inclusion enables exposure to a broader base of investors, further solidifying our position in the Australian capital market. Our efforts have not gone unnoticed. and this achievement marked an important step towards gaining additional global exposure for the company. Second, we closed the SidePlay transaction on October 23rd, finalising a critical piece of our strategic roadmap, welcoming the SidePlay team back to the family and fostering greater collaboration amongst the team to execute on our cross-platform strategy. As highlighted previously, our data-driven social first and A-B testing approach enables us to leverage our studio network, brands and expertise across the entire Light & Wonder platform to enhance operating efficiency and improve our hit rate. And we're not stopping here. We executed a number of strategic initiatives that continue to strengthen our focus on who we are as a company, a leader in games and platforms with a commitment to accelerating R&D investment to build great games and port them across our three channels. In addition to recalibrating and investing in our global game design studios, we are keeping our foot on the pedal as we acquire more industry talent. In fact, we recently announced the addition of industry-recognized studio head Kelsey Foster to our team. Known for her wildly successful premium and wide area progressive game, she will be leading a new US studio starting in 2024. The significant progress we are making strategically is fueling our operational execution and is reflected in our performance. At this point, I'd like to share some highlights from each of our businesses. First, in gaming, where we continue to execute on our robust product roadmap, building great games, which led to share games and momentum in adjacent market expansion. Gaming operations continues to be driven by our North American premium installation, which grew for the 13th consecutive quarter. Looking at our progress in optimising the global install base, we expect some of the plan removals to wind down in certain US markets, as well as the EMEA and LATAM markets over the coming months. Revenue per day in North America remains elevated as our WAP games such as Monsters Frankenstein, Journey to Planet Moolah and Ultimate Firelink franchise continue to top the charts on the back of our successful COSMIC and Mural cabinets. In fact, the success we are seeing in our Evergreen franchise extension gives us the confidence to further explore new likenesses. In this respect, We're proud to be the first company in the industry to partner with Netflix on the popular Squid Game series and bring this groundbreaking show to life across multiple casino platforms. And we'll continue to invest in licensed titles as part of our strategy, where we can point to our very successful Willy Wonka, Wizard of Oz and Monopoly games that have consistently demonstrated their longevity on casino floors. In game sales, We shipped over 8,600 units globally, with strength again in North America and international sales, as unit shipments grew by 5% and 41% year-over-year, respectively. We saw share gains in the North American market in the second quarter, excluding adjacencies, and based on the latest Max Gaming report, we reached a record 26% share in Australia this quarter and 33% in September alone. With the benefit from the release of Dragon Train, the game is performing strongly, with his four titles making the top four spots in the New South Wales market in September. Earlier this year, we partnered with Oregon Lottery as we target expansions in adjacencies. This marks the first release of the Cascada dual-screen multi-game domestically. And post-trial, I'm happy to share that we will be deploying 1,175 of these VLTs statewide over the next 12 months. Through another valued partnership with Betson, we will be also entering the Georgia coin-operated ammunizant machine, or Co-Am Market, where we'll be offering our games on the Cascada cabinet in the first quarter of next year, of which the Cascada dual screen has been the top indexing multi-screen cabinet for over 12 months straight. We are pleased with the strong performance of our games and cabinets, giving us the confidence to capitalise on opportunities in the various Canadian VLT markets. Journey to systems. We had a strong showing at the Global Gaming Expo, or G2E, where we are bolstering and enhancing our core capabilities, such as our system-agnostic global platform, Engage, which enables operators to leverage data to execute a cohesive, curated customer journey at every touchpoint, regardless of location, vertical or platform. Lastly, InTables, where we continue to lead the trend of proprietary table games and shuffles, as well as invest in talent and our product offerings. Dr. Mark Yosteloff, former chairman and CEO of Shufflemaster, is now on board as a consultant at Light and Wonder and will assist in the ideation of game design across all platforms with a particular focus on felt-based games, electronic table games, and cross-platform content. Turning to Sideplay, I'm thrilled with our performance and execution in the social casino space. The team has done an incredible job of growing the business with another record revenue of $196 million. once again outpacing the market and taking share, which is now over 10%. We continue to leverage and deploy our SidePlay engine across our portfolio of games, which led to double-digit growth in our four largest games, Jackpot Party, Quick Hit Slots, Goldfish Casino, and 88 Fortunes. The keys to our success at SidePlay lie in the following. We adopt a player-first approach with consistent delivery of new content, timely features, and dynamic community engagement tailored for our players. We're also nimble and adaptive to the ever-evolving landscape, managing the business with a rigorous financial focus on returns on investment. To that extent, we were able to achieve record monetization metrics in average monthly revenue per paying user and average revenue per daily active user yet again on a steady base of daily active users with payer conversion approaching 11%. We will continue to invest in our platform, adding automation standardisation, development and AI integration tools and process development to drive organisational efficiency, effectiveness and scalability on a fully integrated global scale. Additionally, our direct-to-consumer platform will be another key focus in the next phase of execution, ensuring security and ease of use to enable a seamless customer onboarding experience. So far, the player feedback, KPIs and operability of DTC is encouraging. and we'll continue to take a measured approach to introducing and migrating players to the platform. This will be a multi-year build for us, but I'm excited about the potential margin lift down the road from this initiative. Like many other companies, we have a global presence, and for our Sightplay team, that means a presence in Israel. Let me first say our thoughts go out to those affected by the recent tragic events in the region. As always, our first priority is ensuring the safety of our colleagues and their families at this time. We have been in close contact with our team members and our operations have not been impacted to date. We are continuing to closely monitor the situation and are committed to doing whatever is necessary to support our colleagues and their families. As mentioned previously, we've closed the SidePlay transaction, further fuelling a seamless collaboration among the teams that will drive momentum to the company's already robust cross-platform strategy. I'm eager to see what we can further achieve under a more effective operating model, which enables further game development synergies under one unified strategy and culture. On to iGaming, where we maintained a record $70 million in revenue for the quarter. Our core market revenue was up double digits, with total GGR up 16% and US GGR up 22% year over year, boosted by the launch of Rich Little Piggies meal tickets, which set records in the US and UK in the first 30 days, and the launch of two new games from the Coin Combo family, Perfect Peacock and Mighty Monkey, once again validating our cross-platform approach, bringing the best LAN-based titles to the iGaming channel. Internationally, we saw record GGR volumes in Europe, and Canada GGR grew for the eighth sequential quarter, or 22% above the prior year period. Our content aggregation platform, OGS, and its ability to scale is second to none, as we continue to see solid year-over-year growth from Lightning Box and Elk, with the latter up an astounding 64% versus the prior period, driven by strong performance from year-to-date launches, including Pyros, Metropolis 4, Rabbit Royale, and Tropical 2. I'm also pleased to announce the recent launch of our live casino product in Michigan. This marks another important step in our cross-platform strategies. as we look to leverage our proven proprietary table games IP into the digital space, providing a differentiated experience to players online with games they're familiar with in bricks and mortar casinos. Overall, we are well positioned in all parts of the iGaming value chain, underpinned by strong product portfolios and content roadmap with experienced leadership. We will continue to be a thought leader in the space through our strategy of leveraging new IP. With our Wonka franchise launch in the UK, omni-channel offerings such as shared jackpots, as well as further expansion of our original content. Since we were last in front of you on an earnings call, we've been able to showcase the exceptional work our team has been doing at two large industry gatherings. The Australian Gaming Expo held in Sydney in August, more recently G2E in Las Vegas last month, where I understand this year's attendance surpassed last year. Another validating factor that more people than ever are playing games and that the industry is on solid footing. L&W always has a large presence at G2E, and this year was no exception, as their customer-centric innovation and stellar player experience were highlighted by customers at the booth. As I previously mentioned, we announced our partnership with Netflix, with this debut of new Squid Game slot machine coming to life on our newest large-screen cabinet, Horizon, which we view as the next evolution of our highly successful jumbo cabinet after the V75. We also received great feedback on our wide range of cabinets and games on the floor. Additionally, we've also been intentional in aligning our portfolio strategy and commercial execution with market trends, focusing on product segmentation and understanding what customers want. As you can see, key investments in games and hardware are driving our success, and we have ample opportunities ahead of us given the growing demand for our games. which we're responding to with continued investment in our robust R&D engine. And with that, I'll hand it over to Oliver to provide more details on our financial performance.