Hey, good morning, and, thank you for being here. We know it's a busy time of year. You could be anywhere. I know there's a number of companies reporting this morning, so thank you for taking the time to be with us. I'm Matt Wilson, the President and CEO of Light & Wonder. We're really excited to share with you the strategies and opportunities that are in front of us here at Light & Wonder, a truly transformed organization. You're gonna hear that as a key theme over the coming hour and a half. You're also gonna meet a great array of talented team members who've come here from all across the globe, people who run our businesses, run our product engine, our CFO, a number of different people. I'd like to first introduce Uncertain as a team member.
Hi, everyone. Thanks again for joining us today. It's great to see so many of you here in Australia and joining us virtually and around the globe. We have an exciting agenda, as you'll hear from the leadership of our company and key members of our business segments. We've been looking forward to sharing with you the momentum we're seeing in the business and the exciting opportunities that are still ahead of us. Before we start, please note that today's presentation may contain forward-looking statements and a discussion of non-GAAP financial measures within the meaning of the federal securities law. Financials are reported in this presentation are expressed in US dollars, unless otherwise stated. Please take some time to refer to our safe harbor disclosures. Actual results could differ materially from what we discuss today, and these statements are regarding future events are uncertain by their nature.
Our risk factors are discussed in our Form 10-K filed with the SEC. After today's presentation, we'll have a Q&A session, and we're looking forward to having a continued dialogue with you. To pose your questions, everyone listening via the webcast can enter their question via the chat window, and for those of you in the audience today, please scan the QR code, which is in front of you, which will bring you to a web page where you can submit your question. With that, we're very excited to turn it over to Jamie O'Dell, our board chair. Jamie?
Well, first of all, thank you everyone for coming. It's great to see so many familiar faces here today. I must say it's very nice to come back to see you all as Chairman of Light & Wonder. Matt, this chair gig is easy. I shouldn't tell you about it, but it takes me back to the days as CEO, so look forward to it. Matt, and our very talented management team are gonna talk through our business and our strategy. But firstly, I wanna just explain how we got to this point, and many of you will know the story, some of you may not. But at this juncture now where we're heading into the new level of our strategy. We're seeing execution is essential, having done some repair to the balance sheet, et cetera.
It really started. Toni and I were lucky, Toni Korsanos, our Vice Chair, in 2019, we were doing some consulting for Scientific Games, and so we kind of got to know the business. And then about a year later, Ron Perelman decided he wanted to sell his controlling stake, and we were able to put together a bid with the help of Caledonia to take over that stake and basically turn it from a managed controlled company through to an independent company. And the first thing we did was put new members on the board and really looked at the business deeply as a strategy. And what Toni and I immediately saw, that this was a great business. It had great talent, great assets, very strong market positions, but it was held back by two key factors.
The first was just this enormous amount of debt on the balance sheet. At times, gearing had got to almost 10 times, and when we got in, it was about six and a half, and the second was there were five separate businesses which had been acquired through M&A as separate businesses. The original Scientific Games was in fact the lotteries business, and you had sports, and you had social, iGaming, and then land-based gaming. So there was no real connectivity between the five, which meant there were lost opportunities, and you'll hear the team talk about cross-platform. But it wasn't just that, it was waste and cost and not having the same processes for things which can all be controlled by the same process.
So having seen that, that was the opportunity, we just recognized that the business was worth so much more than the sum of the parts. As soon as we got in and helped restructure our board to an independent board, we then looked at the strategy very carefully and determined that the way to recover that as quickly as we could was to divest of two assets, which was sports and lottery. Both very, very good, strong assets, but neither of them run by content. They have other aspects which run those businesses. And clearly, we wanted to build on our past at Aristocrat as being content leaders. So we divested of those two businesses.
I must say we were very pleased with the prices we got for lottery from Brookfield, $5.7 billion, and on sports betting, $800 million from Endeavor. I say great businesses, but those amounts we achieved in the sales were actually more than we had anticipated. So being in that position, we then started with those divestments, getting the team together, and really looking at how we could make the business overall more effective by being one content-led company across social, across iGaming, and land-based gaming. And I must say, we have got a great leadership team under Matt Wilson, with Siobhan in land-based gaming, with Dylan in iGaming, and also with Josh in SciPlay.
And you're gonna see that group, as well as supported by what I believe, no doubt, are the best content group in the world, and you're gonna meet Rich Schneider, Victor Blanco, and Nathan Drane today. So that was where the strategy got to. We're now through those elements of work. Matt appointed as CEO, which is proving to be the smartest decision we've made, and we're really pleased with the way Matt running the business. You'll find him a highly effective CEO. The last piece of the puzzle really came when we acquired the remaining stake of SciPlay. We had a stub of about 17%, a business which we used to previously control completely. That will now be in-house, and we expect that business deal to close sometime early in the fourth quarter. So now we are one again.
and one business, which is a content-led business, but has these three divisions working increasingly harmoniously across the piece. So very proud of that, and we feel very confident now that we have a structure and organization. We've brought more people onto the board. Stephen Morro, who comes originally from regulatory, then worked as the COO of IGT and more recently as a non-executive director of Aristocrat. Ginny Shanks, who comes from the operating side, having held senior roles with Pinnacle and with Caesars. So we have a really well-informed board who are highly engaged. We've got a balance sheet which is now recovered. You'll see the recent results, the momentum we're starting to get. The balance sheet now below three times, and you'll see good cash generation.
This is a great business with great margins, and that business, in the short term, will be investing more and more in content, people, technology, as we look to grow and continue to build on our sustainable growth plan. The final thing I want to address was just the ASX listing. It just was obvious to us, really, when we saw Nasdaq, and you understand Nasdaq, and we are primarily listed on Nasdaq. But Nasdaq is huge, and really getting recognition and value there is difficult, whereas we have a real Australian nexus. You know, first of all, Toni, myself, Matt, Nathan, many members of our team, I'm not missing obvious Australians, but we are all Australian, so we know this market, love this market, and that's a really important factor. The second is this is a very sophisticated group of investors.
You guys know this sector because of the sustainable success that Aristocrat have had in delivering growth on an ongoing basis, so you understand that, and it's far easier for us to communicate that with you. And thirdly, and not to be underestimated, we do have a strong nexus here in Australia. We've got about two hundred and seventy people. Matt will tell you about our very encouraging recent performance, and we tend to think of Australian market as being an early indicator of success around the world. So it's important to be successful in Australia because Australian gaming is still recognized as the core mathematics in our core business going forward. So that's our story so far.
I say I want to thank you for coming here, and most importantly, I want to get Matt back on stage to talk about where we go to from here. Thank you.
... remarkable transformation in just a short amount of time. We've achieved quite a lot, but the best is yet to come. This is a bit of a full circle moment for me. I started my career at Aristocrat, actually, at the AGE show in 2003, so I've been in the gaming industry for about twenty years. I did three years in the Australian market. I went to Asia in 2007 for five years as that market was expanding. I went to the U.S. in 2012 and held a series of different roles, ultimately ended up running their U.S. business over there. We took that business from number five to number one in the market, something we're very proud of. But we're here on another journey here, another transformation.
I left Aristocrat in June of 2019 and started March of 2020, which is an interesting time to start in a new job, in a new company. But pretty much since then, everything has changed. I'd like to frame up this story through this lens of from and to. So who were we as Scientific Games, and who are we now as Light & Wonder? And if you think about it from the most macro perspective, Jamie touched on this, but we were a collection, a Frankenstein collection of gaming assets. Everything from a sports platform business to a lottery business to a content business to a land-based gaming business. We were trying to be a lot of things to a lot of different segments. If you fast-forward to today, who is Light & Wonder?
We're a much more focused organization built around this idea of building great content. If you think about it from an ownership perspective and a board perspective, we had one majority controlling owner in the business that owned about 40% stake in the company. Since then, if you fast-forward, we have a diverse set of investors now. We have seven new board members, we have a new chair, a new vice chair, and a focus on governance, really important to us. If you're thinking again through the focus perspective, we were a holding company. The businesses weren't really working closely together to unlock the synergies that existed, primarily because there wasn't a lot of synergies between the lottery business and the sports platform business and the content business. They were doing very, very different things.
If you fast-forward to today, this business is really built around this idea of building great content and taking it across platform. Every dollar of investment we put into the R&D engine, we can monetize across the three businesses that we have in the portfolio. So you can just see this portfolio now fits together in the same universe. If you think through a net debt leverage ratio perspective, leading into the pandemic, we were about 6.4 times levered. In the middle of the pandemic, we got to 10.5 times levered. So not a great place to be from a leverage perspective. Fast-forward to today, 2.9, we're below three in this range of 2.5-3.5 that we've very clearly stated.
I think the thing I like most about this, if you think about it sequentially, Q4 '22, we were 3.3 times levered. Q1 this year, 3.1 times levered. Q2, 2.9 times levered. So you can really see the quality of the assets shining through in the portfolio, and the best is yet to come. From a share repurchase perspective, given our capital structure as Scientific Games, this was not a consideration, and now you can see we're 58% of the way through our $750 million share buyback program. And I think this just underscores the focus from the board and the management team about creating shareholder value in lots of different creative ways. I think the secondary listing is evidence of that. I think this share repurchase is also evidence of that.
You know, we're doing a lot of things to make sure we really optimize shareholder value. We take that very seriously. This is the best way to think about Light & Wonder today. Like I said, games and platforms are at the center of our universe. It's our obsession. It's the reason that we exist. It's the reason that many of us joined on this journey. We have three major businesses. We have the land-based business, which is our largest business. This is really built around the idea of building great slot games and great table games. About 80% of the profits in that business come from building great games. If you think about SciPlay, this is a business that's in the social casino arena. If you think about the four big games that drive that business, it's Jackpot Party, Quick Hits, Gold Fish, 88 Fortunes.
They're franchises and brands that started their career as a game on a slot machine somewhere on a gaming floor in North America, and have quickly become a massive growth engine for this business. So again, you can just see this idea of concepts that are built in land-based gaming are getting monetized very effectively again in another category. It's an amazing business. It's a business that you want to own in totality. It's the fastest-growing business in its segment. Exciting growth coming from that business. You'll hear from Josh in a minute, but a lot more to come, an exciting part of our portfolio. The iGaming business is unique and very interesting, I think particularly for Australian investors. It's new to a lot of people, probably in this room and on the line.
We were very fortunate that we made an acquisition back in two thousand and sixteen of NYX. That was a sports platform business and an iGaming business. We bought that business for about $660 million. We sold the sports platform bit for about $800 million last year. So we really benefited from going early, being in the space early, so financially very beneficial, but also, we inherited a team that really knows this category well. They've been at it for a decade, over a decade. They know how to build games at scale. They've built market-leading positions across PAM and aggregation, and you'll hear from Dylan a little bit more about that. Importantly, again, this business is really built around the idea of taking great games, both digital native games and land-based franchises, into the iGaming space.
So you can very quickly see we went from an organization that was very fragmented in their focus to now a games-obsessed organization that's able to take this investment and monetize it very effectively across the three channels that are in the portfolio. So from my position, I think this is a compelling value proposition. We are the leading global games and platform provider in the space. No one has what we have at scale, given the investments that we've made. We are in attractive markets with attractive market positions, and we have this ability to leverage this cross-platform idea, which you'll hear a lot about in the presentation later today. We have a transformed balance sheet, gives us great optionality, but we take that very seriously. You know, we'll be very disciplined and focused around capital allocation. That's one of our primary objectives.
You'll hear about the Q2 earnings, sustainable growth. Q2 was an amazing growth period for us. High margins, robust cash generation, and it's sustainable, and we've put a number of quarters back to back. This isn't just a future story, it's happening now. It's happening in the portfolio and the PNL. We have this laser focus on enhancing shareholder value. That's why we are here today in front of you. This is the composition of our businesses. This is our 2022 full-year earnings revenue and EBITDA. You can see we're a denominated gaming business at the moment. That's the vast majority of our revenues, but we have two high-growth digital businesses. We see this shifting in mix over time as these digital businesses scale, which is important.
You'll notice we trade on the NASDAQ under the LNW ticker, but very recently have become a dual-listed company here on the ASX, which is exciting. We're headquartered in Las Vegas. That's where I live. I've lived there for the last 11 years. I've got three little American daughters, so I'm going nowhere fast. And we have about 6,000 employees in the organization spread across six continents, so we're a very diverse organization from our geographical footprint. A huge portion of those employees are part of what we call the R&D engine. This is the thing that really differentiates us. It's really the thing that drives our businesses. It's the content generation. It's the building of the platforms to take these games cross-platform. I like to frame this up through the idea of from and to.
So who were we as Scientific Games? What were we focused on, and what are we focused on now? At Scientific Games, a dollar of investment in R&D would be spread across a lot of different priorities. A portion of that would go to building a lottery business or a lottery product. A portion of that would go to building or enhancing the sports platform business. A portion would go to building great content. Now, every dollar that we push through the R&D engine to build games can very effectively be monetized across all three channels. We were undisciplined and unfocused as an organization. We had this geographically dispersed design team that were building games for the markets in which they lived. So the Australian teams were building games for Australia with no real focus on the global markets.
I think the transformation that we saw at my prior company really came about through really harnessing the power of the R&D engine and being able to take those games across the globe. You know, we've seen a real convergence in the types of games that are successful, games that work in Australia, ultimately go on and be successful in the U.S. So building games in these geographic markets, but with a global focus, is a really, a real key part of that. We were fortunate enough to hire a future Hall of Fame CPO in Rich Schneider. The guy is clearly the best in the business at doing this. He spent a number of years at IGT through their glory days.
He joined Aristocrat about 10 years ago and was really the architect of their product success, really put their R&D program together, the segmentation, the focus, the ROI discipline. He's come here about 18 months ago, and he's rolling out the same playbook, and we're seeing really great early signs of success. So it, it's people that build these games, but we also are the benefactor of an amazing set of franchises. If you think about our business, it really came together through acquisition. The businesses under the Scientific Games hood were the lottery business, but also WMS, a powerhouse in the U.S. gaming business through the 2000s, and Bally, another market leader at what they do, and Shuffle Master, who had great IP as well. And so we are the benefactor now of all those three companies' franchises under the one hood.
It's billions of dollars in R&D that have been spent over decades to build these games that have brand affinity with players. And so now it's really about how do we best monetize those? How do we do it in a really disciplined way? How do we franchise manage? And again, Rich and Nathan, you'll hear about them, later in the presentation, are the best in the business at doing this. So we're in the early innings, but we're sitting on top of an amazing set of franchises, as an organization. So in my view, we're positioned to win. We work in these large markets. We have unmatched position. Again, nobody has what we have: a fast-growing social casino business, a large-scale land-based business, and an iGaming business, importantly, with a decade worth of experience that's at scale and at maturity. We have significant momentum.
This is evidenced by our Q2 earnings, and it wasn't just Q2. We had a great Q1 and a great first half. So again, this is a here-and-now story. All of this is driven by top talent. We inherited an amazing set of talent that needed to be focused, and we've done that. We've also onboarded a number of really key leaders across every different part of our business, from studio talent to product management talent to finance talent. You name it, they're, they've come to the organization with the same vision. They want to be part of another transformation. That's all, that's why we're here. So in my mind, we have a very clear roadmap.
We know who we are, we know what our focus areas are, and we know what we need to do to win, and we're from where I'm standing, I think this is a very compelling investment thesis. And it's working. It's showing up in the numbers. We just reported our ninth consecutive quarter of revenue growth, our fourth consecutive quarter of double-digit revenue growth, and our second consecutive quarter of all three businesses growing at double digits. If you look at the six-month period up to March thirty-first, this is the last time all of our competitors reported publicly, the industry grew at 11%. We grew at 17%, so we are the fastest-growing supplier in the space, an exciting place to be, and we think the best is yet to come. We put out these financial projections to 2025.
We believe we have high conviction for our ability to get to $1.4 billion in our EBITDA. You speak to people in our business, this is our mantra, this is our target, this is the thing that we are chasing, and we're becoming increasingly convicted about our ability to get there. I get asked the question all the time: What's the pathway to $1.4 billion? It's one quarter at a time. We need 15% CAGR to get us there. We grew 33% in Q2. So holding on to these growth levels throughout the next couple of years will get us on a path there, and we have very detailed plans by business unit, all the way down to the lowest-level assumptions about what it's gonna get us to that $1.4 billion. It's a mantra.
It's something that we're chasing as a team, and we believe we can get there. And it's sustainable. We have an amazing leadership team. These people are handpicked. They are the best at what they do. They're incredibly focused on creating great shareholder outcomes, but also great employee-level outcomes. They're passionate about driving this team to make them successful, to give them great careers, and to build, you know, a great aspirational culture at Light & Wonder. And that really is what underpins all of this. It's about people and culture. I know this is a financial presentation, but these things come together through the ground game. You've got to build a team that wants to win, that wants to be together, that wants to be part of a transformation, and that's a real key focus for me and the entire management team.
This is some fun we had recently on Sunday as a team. We got together and did the City2Surf. Again, you can see some of these people willingly participating, some less willingly, but they all showed up. And it's just a sign of, like, we wanna be together, we're on a mission together, and we're, you know, charging hard towards this great outcome that we've laid out to you today. I wanna shift our focus now just quickly to ESG and CSR. This has been a full-scale transformation. Every part of our portfolio, from R&D to operations to finances to the balance sheet, CSR and ESG are a fundamental pillar of what we're trying to do here. Every business has to focus on this. We believe it's a key focus for us going forward to make it sustainable.
We've started a program called Game Changers, so we've funded that. There's a core group in the business that are driving our ESG and CSR initiatives under a number of different pillars. There's some highlights on this chart. You know, we've won a number of different DE&I awards over the last year about being a great employer in that space. You'll hear from an amazing female leader later today. We've really focused on this to make sure it drives our business over the sustainable future. But there's a number of different pillars there as well, from environmental sustainability to community activity, and we're deploying resources, both monetary and employees on the ground there, to support these initiatives. If you're interested in this, there's more information on our website.
We have a very detailed report that will go into this in some level of detail. From a responsible gaming perspective, clearly, as an industry, this is something that we need to be focused on. We want this business to be healthy, this industry to be healthy, and, you know, we have to play our role in responsible gaming and making sure that we play our part. We are completely signed up and compliant with the AGA's code of conduct around responsible gaming. We've partnered with twenty organizations to drive education programs around problem gaming. We speak to our employees all the time about the challenges and the harm that can come with problem gaming. It's clearly a focus for us. Again, we want this industry to be healthy, sustainable in perpetuity. So in closing for my section, we have a clear roadmap to drive long-term value.
It's about creating great content, great franchises, and deploying them across these three very unique but very complementary businesses that we have in the portfolio. It's about expanding into high-growth segments, iGaming, social casino are evidence to this. It's about enabling a seamless player experience that can play those franchises where they want, when they want. We're about maximizing cash flow, this is you know, key to our success going forward, and maximizing shareholder returns, and we take that obligation very seriously. It's all driven by a high-performance culture and incredible talent. We're positioned to win. It's exciting. I came here for a transformation. Left a great company in Aristocrat to come to this organization to do it again, and it's just so thrilling to see it really starting to show up on the scoreboard, and the momentum that we're building.
Thanks for listening to me. I want to hand it off to an incredible leader. She filled my very small shoes in the gaming business. Siobhan Lane runs the gaming business. She's our CEO there, and I'm thrilled to hand it to her now.
Thank you, Matt. Hi, everyone. Great to be with you all today. My name is Siobhan Lane, and I am the CEO of our gaming business here at Light & Wonder. I've been part of this incredible industry for over sixteen years, and I'm passionate about driving results and also driving organizational transformation and building great teams of talented individuals to drive those change programs. That's one of the reasons I was attracted to the opportunity to join Light & Wonder just three and a half years ago. The land-based gaming segment is an incredible segment. We are stable and resilient and growing, and we also have very high barriers to entry.
We participate in a $6.7 billion TAM here at Light & Wonder, and although we hold leading positions in the systems and table segments within this TAM, we have clear growth opportunities within the game segments. Gaming operations are games that we lease to casino operators, and that represents a TAM of $3.1 billion. Game sales are games that we sell outright to casino operators, and that represents a TAM of $2.4 billion. Now, relative to our current share positions, these two segments, it's clear we have considerable growth opportunities ahead of us. And like Matt said, we've done this before. We know the playbook that we need to run. We know the areas we need to invest in our business to really capitalize on these growth opportunities.
We also have a proven leadership team at the LNW Enterprise, but also in the gaming business, and 4,000 creators strong that are highly convicted and highly committed to the transformation that we're running, and again, to capitalize on those growth opportunities within gaming. Over the last 20 years, the land-based gaming segment has demonstrated consistent growth in gross gaming revenues. Although we were impacted severely by the pandemic in 2020, our recovery has never been stronger, with 2022 posting record gross gaming revenues and that strength continuing throughout 2023. We've been hard at work over the last 3 years in the gaming business, redefining our strategy and diligently focused on executing against that strategy. R&D is the engine of our business, like Matt said, but we were severely under-investing in R&D prior to this transformation taking effect.
So we've been ramping R&D investment year over year consistently for the last three years. It is our number one way we drive value to our customers and differentiate us as a supplier in the space. A lot of this scaled investment was focused on our largest growth opportunities in those game segments. So we ramped existing studio talent, and we attracted new studios to Light & Wonder to round out our portfolio of offerings. We also had to build out product management capability in the organization. Our product management teams really connect: What does the market need? What are customers buying? What are players playing? To what are our R&D teams working on? And that capability was really void in the organization before we came in. Our product management team builds the portfolio strategy. They understand what's trending in the market.
They segment the products in the market, and to drive share, we have to be consistently performing in each segment to drive the commercial results. We need to make sure that every single dollar that we invest in R&D is generating the right commercial returns, and we're as much focused on that as we are in building great games. The industry has a finite pool of great game design talent, and we're proud that Light & Wonder is home to many of those great game designers. Let me introduce you to just a few of them. Emma Charles worked with Scott Olive on the Lightning Link product for many years, and she made the decision to join the Light & Wonder team and start to run her own studio, Star Studio, out of Australia.
We're proud that Emma, just this week in Australia, launched her inaugural product under the Light & Wonder brand, Dragon Train. You'll see it at the Star Casino on the floor today. Jack runs his Big Rex Studio, also out of Australia, and he's seen early success with Kraken Unleashed and Dragon Unleashed franchises under his leadership. Kim Cohn is the queen of Ultimate Fire Link. This is a proven franchise in the industry, and Kim and her team out of Las Vegas continue to deliver hit after hit under the UFL franchise. Michael Mastropietro, or Mastro, as we like to refer to him, runs a team of hugely talented designers out of our Chicago creative center. They're responsible for delivering games such as Willy Wonka, Wizard of Oz, and more recently, Journey to the Planet Moolah.
Ted Hase and Yannis joined Light & Wonder just a couple years ago. They're industry veterans that have developed games such as Tarzan, The Walking Dead, and Buffalo Grand, and they've recently launched their two first products under the Light & Wonder brand, Dragon and Frankenstein, and we're proud to say that Frankenstein went straight to number one on the wide area progressive charts on the Eilers report. Last, but certainly not least, is Quynh Huynh. She runs the Elements Studio here in Australia, and she and her team are responsible for developing and curating some of the most notable brands in the industry, such as 88 Fortunes, Jin Ji Bao Xi, and Dancing Drums. These designers and the many more that work with Light & Wonder are truly masters of their craft.
Our job is to invest in R&D, to give them the resources, the platform, the technology, the market insights, and the creative freedom to do what they do best, and that's to hone their craft and to continue to deliver great game content to our players and our customers. Let's hear from the team directly.
Hello, my name is Nathan Drane, and I'm the Senior Vice President of Global Product Management. Something unique to us at Light & Wonder is the depth of our product management, game development framework, and our cross-platform strategy. This allows us to say where the market is and where we want to take the market. We assess our game performance and how we match up against the competition. Each creator has their own way of approaching our games and possesses the unique ability to identify the features that make it special. As a result, we've attracted some of the best proven talent in the industry, as we offer them a unique opportunity. When they work with us. They get to see their most successful games grow exponentially, cross over to new platforms, and reach players around the world. Take the hit franchise, 88 Fortunes.
It was first introduced as a land-based game in Macau in 2012, and it is now available everywhere. With its meteoric success, we devoted resources to expand the game, ensuring it's available globally on all Light & Wonder platforms.
I think people like my game because my game are fun and enjoyable. They are my babies, and all of my games are primarily designed around how the player feels.
I think the reason that people love our games is because we try to make them simple. Simplicity in design of anything turns out to be much more complicated than doing something that is complex.
What I think about when I'm creating a game is really the flow of the game. Are they excited in the right moments? Do they know where to look? Can they tell what's happening? Like, these are the things that I really want players to have an easy time with.
The shift in how Light & Wonder now invests in R&D, I think, can really be seen in how many hit games we've had in a row in Australia. We've just gone from strength to strength. It's a competitive industry. There's a lot of very innovative people. I think we've got the best of them. We can all make games the way we want to make games, not to a method, not to a recipe. They're all bespoke.
We have a really diverse set of games, and that really speaks to the great creative minds that we have all over the globe, in Chicago, in Sydney, Las Vegas, and Reno, building all these different products and coming at all these games from different perspectives and really offering a very diverse, fun product.
Story anchors basically all forms of entertainment. We try to anchor each game that we develop around a very, very strong story and give the player the full experience of that narrative arc, where we kind of take them on a ride.
To be a great game developer, you have to love games, right? You have to play games, and play games, and play games some more. You have to wanna put together puzzles and take them apart and figure out how to put them back together, and just do that over and over.
Light & Wonder offers me a lot of opportunities to innovate in game design, and we have a long history of creating unique features. I think the future is very bright. We have a lot of great ideas, great talents, and a great leadership team working together here.
We want our games to be those games that endure and that leave a lasting impression.
At Light & Wonder, we're in the business of creating one-of-a-kind entertainment experiences for our players. These experiences are formed from our product management and development framework, then brought to life from the imaginations of our talented designers. Their experience and love of gaming set us apart from other companies, set us up for tremendous opportunities, and a hit-driven future.
So we've set our new strategy, we've invested in new hardware, new games, and we're focused on executing on that strategy. And we're really proud to start delivering critical proof points that show our strategy is working. Over a year ago, we launched our Kascada dual-screen cabinet, and since that launch, it has retained the number one position on dual-screen cabinets on Eilers' Cabinet Performance Report, powered by games such as Huff N' More Puff and Dragon Unleashed. We also launched our Landmark 7000 mechanical stepper cabinet last year, and since that cabinet launched, it's retained the number one position in the mechanical reel segment on Eilers, powered by brands such as Triple Blazing 7s. And more recently, we launched the COSMIC cabinet, which participates in the premium portrait segment.
It now sits at number three in the premium video segment with Monsters: Frankenstein, the inaugural launch game from Studio X, Ted and Yannis' studio, sitting at number one in the wide area progressive segment. This is the largest profit pool in the gaming operations segment. And Ultimate Fire Link, Cash Falls, one of Kim's launch games, sitting at number three in the premium lease segment. We're also driving positive momentum in the Australian market. We consider Australia a bellwether market. If we can develop games and content that resonate with players in Australia, it's indicative of the growth that we can drive across remaining global markets. Three years ago, we were a 7% ship share player in Australia. We recalibrated our studio talent down here, we invested in new hardware, and we are now consistently delivering ship share above 20%.
We're delivering consistent game hits to the market, such as Dragon Unleashed, Thunder Drums, and Huff N' More Puff, and increasing customer confidence off the back of that. We're also now installing Emma's inaugural game under the Light & Wonder brand, Dragon Train, and we have a steady pipeline of pre-sales to execute on off the back of that launch. We're also delivering proof points in the critical North American market, which is our largest market within the gaming business. In that number one opportunity profit pool, we've delivered 12 consecutive quarters of growth in our premium gaming operations install base, which now represents 47% of our North America recurring revenue base. In the first half of this year, we shipped 16,800 units globally in our game sales segment, representing a 46% year-over-year increase in the first half.
In Q2 alone, we shipped 9,100 units globally, over 5,000 of which were in the North America market, primarily in the Class III replacement segment, and we know we have many adjacent opportunities to also capitalize on in the North America game sales market. In fact, all four lines of business in the gaming division grew by double digits in Q2 year over year through gaming operations, game sales, systems, and tables. We have incredible momentum. We operate in a stabilized, resilient, and growing land-based industry. We're investing in the right areas to fuel that growth. We know the playbook that we have to run, and we're focused on talent across the business, but also that critical game design talent, and we know this is the cornerstone of our strategy.
I'm incredibly proud of the early proof points that we're delivering in gaming, but I do know the best has yet to come. Thank you, and please welcome Josh to the stage, who'll be talking about our SciPlay business.
Thank you, Siobhan. Thank you. Hey, everyone. I am Josh Wilson. I'm the CEO of SciPlay. Not very often I get to talk to an entire room full of people that are all slot enthusiasts. I'm not sure if you played Dragon Train yet, but holy cow, did it like, it is an amazing game! So please, please, please, go out and play it. I've been in video games now for more than twenty years. I've seen the industry move from CD-ROM to executables, to eventually the evolution of the iPhone, to games on mobile devices, and then eventually it moved into what it is today, which is free-to-play games. Free-to-play games are exactly what it sounds like. They are games that everyone gets a certain amount of play. All of this is free.
Inside of that economy of the game, if you want more time, you purchase it. You see these games all over. You see them with stuff like Candy Crush, Royal Match, Clash Royale . It is a very, very, very large industry. In fact, it's a $36 billion industry. Inside of this $36 billion industry is where SciPlay is. This is a social casino part. It's about $8 billion. Inside of that, we own about 10% of the entire market and growing. How are we doing this? We're doing this by leveraging our very strong talent. Industry leaders from different companies, Playtika, Aristocrat, Pixel, Google, Facebook, all over, and then also the tremendous brands from Light & Wonder. Stuff like Jackpot Party, Quick Hit Casino, and Gold Fish.
Together, it gives us a competitive advantage of this brand recognition that allows us to build our entire bases off it. When you look at SciPlay, we got into the free-to-play space in about 2012, and since 2012, we have more than two X'd the growth of the industry, and we've done this with a 44.5% CAGR. We have seen growth year over year over year, and we've done this by focusing on the payer, making sure that we're creating, retaining, and then growing them inside of our ecosystem, with having each individual payer paying more than $100 per month inside of our games. So you might ask yourself, why? Like, how do we do this? What did we need to do in order to do this? And it was about building an infrastructure.
It was about building an infrastructure that we would be able to take the smartest people throughout all of SciPlay and build a foundation, where we could take the best algorithms, the best AI inventions, features, Live Ops, and make sure that we only need to do it once and be able to share that across our entire portfolio. We call this our SciPlay engine, and it takes advantage of what I would say are four major pillars. First, data. We get more than three billion parts of data coming in per day. We use this real-time data in order to feed not only our machine learning and our different algorithms, but also feed other systems inside of the SciPlay engine, which then goes into our ad tech. What is our ad tech?
Our ad tech makes sure that we efficiently spend every dollar that we can in our UA to get the highest ROI. So this makes sure we identify who the player is, we make sure that we get them in, and then we make sure that we get the right content and the right experience in front of them. Next, Live Ops. Live Ops are the secret to having a great game in free-to-play. Live Ops allows us to create a segmented approach per individual, per game, per time of day. What this means is, if you have five minutes, I'm going to optimize your five minutes. When you have twenty minutes, we're going to get you to wanna play twenty-five, and you're gonna purchase that next five minutes. This is how we continue to grow the individuals inside. And last but not least is our DTC platform.
What is our DTC platform? It is our own platform where we are able to develop a strong relationship with the player. We're able to communicate to them in real time, give them messages in real time, but also give them individual offers. And by giving them these offers, what we're able to do is become more profitable for everything that we spend. We go from having a 30% platform fee all the way down to a 10%. In layman's terms, instead of making seventy cents on the dollar, we're making ninety cents on the dollar.... So how has this platform been built? How has it gone, and is it still working today? The answer is yes. Since going public, we've been able to grow our payer base over 600,000 people. This means we have 600,000 people paying per month.
Inside of that, we're able to retain and grow them, and this is where we're getting the more than $100 per month out of them, which is allowing us to almost double our ARPDAU since going public. When you wanna take a look at what does this look like from a half over half of this year to quarter over quarter, half over half, we've almost grown 20% year over year on revenue, but more than 30% AEBITDA. So not only are we growing payers, but we're becoming more efficient, and we're turning more of that into actual EBITDA for the bottom line.
So when we start looking at what do we need to execute on and what do we need to continue to push in order to continue to be the market, or as Matt said, the fastest growing in the market, it starts first by the integration of SciPlay into Light & Wonder. Taking the best of how we do data analytics with the team that Siobhan talked about, and Dylan will talk about, of the greatest slot designers in the world, and creating a one-size roadmap that will be number one. Next, continue to efficiently improve every dollar we spend. So we're spending more than $100 million in marketing or UA per year. Every percent falls directly to the bottom line, ensuring that we continue to evolve our Live Ops.
I believe strongly we're the number one Live Ops company in the world today, and our growth is showing it, but we cannot stop. We have to continue thinking outside the box, innovating, and being a step ahead of everyone else. And if we can execute on all this, we'll continue to scale our LTVs, and with by continuing to scale our LTVs, growing our ARPDAU. All of this together has made us a very, very strong growth company that has that generates a ton of cash. But our goal will always be to continue to take market share, to continue to be long-term growth, and to continue to be a player-first company. Thank you, everyone. It was great talking to you today, and I'd love to pass it off to Dylan.
Thanks, Josh. Hi, everybody, I'm Dylan Slaney, the CEO of iGaming here at Light & Wonder. I've led the iGaming business for the last five, six years in various incarnations, and it's a brilliant space to be in, and thank you for the opportunity to talk about this great ecosystem today. Prior to that, I spent about fifteen years working in and around the areas of data science, global innovation, and product development. And I've seen digital transformation, which is something that I'm passionate about, come to many different companies and verticals across my career. But now it's come into the gaming industry. I think Light & Wonder are uniquely positioned to take advantage of the great opportunities that are ahead from a digital transformation point of view.
We've assembled a winning team of people from within the industry and also from outside the industry who share that passion for digital transformation, and today I wanna tell you how I think we are uniquely positioned to continue to win within this amazing space. We're in the business of entertaining players. Winning for us is about delivering the best digital experiences to players across the globe, and it's the epicenter of everything that we do and drives how we think and how we execute. And as Matt talked about, we have four major products or services that we offer to capture growing share within the iGaming space. We have the broadest content offering, which includes our own proprietary IP and franchises, but also takes not just land-based content, but we also create digital-native content.
And when we talk about digital native, what we mean is content that's not been built for a land-based player, so it's never seen the light of day of a land-based casino. It's been purely built to satisfy the needs of pure digital native players. We have a leading platform in OpenGaming, which is a key strategic asset. We have a PAM or digital wallet, which helps connect the ecosystem together. And then recently, through the acquisition of Authentic Gaming, we added live casino, and live casino is one of the fastest growing segments within the iGaming marketplace. And it's the power of this portfolio that is one of our key assets, and we are a leading and trusted iGaming ecosystem. But we believe we're not just well-positioned, but we're uniquely positioned to lead in the expanding market.
That market is estimated to be, by the end of FY 2025, a $27 billion TAM, which is shared between operators and the supplier community. We only play as Light & Wonder in the regulated market space, in our key markets of U.K., Europe, U.S., and Canada. If we look at the U.S., because there's a lot of focus on that market at the moment, we'll see that grow, the CAGR of around 26% between FY 2021 and FY 2025, which is about two times that of the global average that we're seeing in the regulated market space. We're currently live in six states, with Rhode Island, the seventh state, due to come online early next year. We're starting to see some momentum build back into new states legalizing.
But what we're also seeing in the US is that it's land-based content and digital-native content that are really resonating with players. And we ultimately believe that every state where land-based gaming is live today in the US, that iGaming will follow. It's a matter of when, not if. We're also seeing growth opportunities elsewhere. Recently, the province of Ontario in Canada opened up. This is estimated to be a $1.5 billion market at maturity, roughly the size of Michigan in the US. And again, we're seeing tremendous opportunity for future growth there across both land-based and digital-native content. We're also seeing the opportunities in places like Latin America and South Africa, with continued growth in our mature markets of UK and Europe, and we'll touch on that later as well.
We believe that our products and capabilities are really set up to take advantage of this amazing growth opportunity. Our iGaming offering boasts one of the largest content offerings that's out there. We have about five thousand titles, which means we enjoy tremendous demand, both from players but also from operators, for the plethora of games that we offer across, again, the land-based and digital-native content areas. We build content. Okay? That should be no surprise to anybody in this room. We have an unmatched collection of games, of franchises and IP that cannot be found anywhere else. We're also cognizant that players don't just play our games. We allow our technology and services to be used by people to build games.
We're also a distributor of content, and that will only accelerate further as we've just done a recent acquisition with Playzido, which will help us to build more content for more studios and allow us to distribute that through our OpenGaming platform. And then we come to OpenGaming, one of our key products and our unique strategic asset within the iGaming space. This is where all our content is hosted from. It's the only place where operators can get access to our content, and it's our two-sided network. So we have operators and demand on one side, and we have content on the other side. And that product brings both of those two sides together, where we allow operators to connect in through one single integration to get access to all our services and our content.
Through that platform, we see around four and a half billion rounds of data every single month. That is a key and unique strategic asset that not only allows us to understand player behavior, not only helps us to develop different types of content and see what content players are playing, but it also allows us to make really acute and strategic M&A investments. Lightning Box and Elk were two that came out of seeing that data and seeing that their content resonate with players in various markets. That, when we add up that portfolio, is really unique in the iGaming space. We're a valuable partner both to content studios and to operators, and that platform is easily scalable as markets continue to grow. 2023 has been focused on really building on our leading position.
We've doubled the amount of content going into the key U.S. growth market through a strategic investment in a new studio in Las Vegas that works side by side with the land-based studio to bring more of our brilliant land-based IP and franchises to market in a more quicker, more efficient way. Our first live casino studio is now in soft play in the U.S., and is due to go live in Michigan in the next few weeks, and we'll launch there with three of the Tier One U.S. operators in DraftKings, Golden Nugget and Rush Street. And earlier last month, we also launched our first live game show in the U.K. with a brand called 7s On Fire , and we launched that with Sky Betting & Gaming, one of the U.K.'s leading Tier One operators.
Our regional focus roadmaps, so really looking at the data that comes out of OpenGaming and focusing the content that we develop and distribute into those markets, is really starting to play off, and we're seeing continued momentum and growth across all our key markets. Our acquisitions, so the four that we've made in Playzido, in Elk, in Lightning Box, in Authentic Gaming, are really building momentum. We're extending their scale, their reach, their access to new markets, and we're bringing more of their amazing products and services to players and customers across the globe. We've built a tremendous momentum within our iGaming business. This is not the first time we're doing this.
We've been at this, as Matt talked about, for, you know, for a long time, and we're really starting to see the maturity of our thinking and the talent really start to come to bear on what now is a very, very strong performance. And when we look at that performance, okay, these are our proof points as to why the strategy is working. We are seeing strong top line and bottom line performance. At our recent Q2 earnings, we announced a record quarter of revenue, which represented a growth of over 17% year over year. Our U.S. performance continues to outstrip the market growth. So our performance grew at 32% versus a market of 23% in Q2.
And again, this is being driven by that investment that we made in Las Vegas Studio, bringing more of our great land-based content to players in the US. But also then the scaling of the OpenGaming ecosystem and getting more content and more partners connected into that as well. In our mature markets of UK/Europe, we saw a 15% year-over-year growth in Q2. Again, driven by strong launches of our great IP, like Monopoly, but also through, again, the scaling of the performance that we've seen through a recent acquisition that we did with a company called Elk. And Elk and Lightning Box have set record GGR growth year to date, and it's amazing to see again that the size and scale that the OpenGaming ecosystem can bring to recent acquisitions. And those acquisitions have been very, very strong.
They're capital-efficient investments that ultimately enhance our strategic growth opportunity and position us to capture more share of this ever-expanding iGaming ecosystem. And 2023 is on track to be another record year for LNW iGaming. If we bring all this together, we have a tremendous opportunity in front of us. We are in a mature space. We're a mature business in a fast-growing digital sector. We've got four amazing product or services that we offer in terms of land-based and digital-native content, the OpenGaming aggregation system. We've got live casino moving into a high-growth sector as well, and we've got the digital PAM and wallet. That is a unique set of products, and it's a unique portfolio within the business.
We're empowering our teams to really get after the strategic growth opportunity that's there, and I look forward to speaking to you more about it over today. So thank you very much for your time. I'm now gonna hand you over to Rich Schneider and the team to go through our cross-platform strategy. Thank you very much.
At the middle one or the end one? That's me? Ah, okay, there we go. All right, forgive us while we get organized here.
Last touch.
Good morning, everybody. It's great to be back in Australia, talking to Australian investors. I'm Rich Schneider. I'm the Chief Product Officer of Light & Wonder. I've been in this business for 34 years, which is a bit of a shocker. I was at IGT for many years in their heyday, and then, as Matt mentioned, I came to Aristocrat and was part of that amazing transformational journey that we did there.
And I should be out on my sailboat now, but what I really saw in this management team and the talent at Light & Wonder was the real belief that we could do this again, and that was just so much fun and rewarding at Aristocrat that I just could not be on my sailboat. I had to be a part of it. So with that, guys, why don't you introduce yourselves and say why you're here and what you do?
Thanks, Rich. Yeah, I'm a few years behind you. I've got about 15 years of experience in the gaming industry. I started in the Australian market. I worked for Aristocrat straight out of university. I worked closely with Rich on the content turnaround down under. And then I also worked in the Macau, the Manila market, the Asia market, during that integrated resort expansion, and then that led me to the US around 7 years ago. That global experience, I joined Light & Wonder in 2021 and became the leader of the global product management team, and my role within that is what Siobhan described, which is, we review the profit pools, we review the market segments, which segments we wanna play in, and then we craft a strategy to address that.
My role is translating that strategy to the studios to make sure that we develop the right products for every segment that we choose to play in.
All right.
Morning, I'm Victor Blanco. I'm the Chief Technology Officer for Light & Wonder. I started my journey in gaming about twenty-three years ago, helping develop the first Xbox game console. I joined this industry around thirteen years ago, first at Aristocrat. As I was wrapping up my time there, I was the Chief Technology Officer as well. I was responsible for their global software and hardware strategy, and then just a year and a half ago, I joined Rich, Nathan, and the team to at Light & Wonder, to win another championship and do the same thing again.
That's great. That's great. Well, let's get started. So, look, it's clear, I think, from listening to all the business units talk that content is really at the heart of these three businesses. And what we find, even though the channels are unique, you know, in the physical platforms, but the player tastes are really remarkably uniform. And what we do know is when we have a hit in one channel, generally speaking, it's gonna be a hit in all three. And this fact really opens up some unique opportunities for us in Light & Wonder, and so we're gonna spend the next few minutes just exploring that. So, Nathan, let's start with you. I know you spent a lot of time with the land-based operators.
Do they have a view on the value of this, having content across multiple channels?
Yeah, absolutely. I think with the advent of social casino and both the legislation of iGaming, we've seen operators become a lot more interested in engaging with players in these different mediums, and this has huge benefits. One of our biggest customers that's leading the charge on cross-platform is the British Columbia Lottery Corporation. So they're up in Canada. They're really at the forefront of what we call omni-channel. That's where you launch a game into multiple channels at once, so that could be land-based, iGaming, could be lottery scratch tickets. This provides huge benefits, and their studies show that 75% of digital slot players, the iGaming slot players play slots in their land-based casinos. So when they launch that same game simultaneously into the iGaming, it is the same player. And there's benefits to this simultaneous launch.
So if they launch in multiple channels at once, that can drive new player acquisition. It can drive instantaneous exposure. It can also provide meaningful loyalty. You know who that player is. You understand their journey, you understand their preferences, and ultimately, you can grow the lifetime value of the player. Their statistic says that a dual-channel player, an iGaming and a land-based player, has up to 30% more play than a single-channel player. 30% more play is pretty significant, and I know, Victor, this is something you're looking at, which is driving simultaneous channels.
Yeah, to support the vision and the drive to get our content into as many channels as quickly as possible, as a technology team, we have to enable the adaptation of those games. We're addressing this with three fronts right away. One of the first one is, we really wanna minimize the amount of game code that has to be redeveloped between land, social, and iGaming. What we've done, each of these platforms has very different technology stacks, so it proves to be a very big challenge. What we've done is we're creating an innovative software solution that's unique to our business, that will allow us to reuse a significant portion of the game code developed for one of the platforms, and bringing it right over to the other two.
The second is, it's really critical to retain the visual style of a game, but there's a lot of work that has to happen because we're talking about content that may have been originally developed for massive land-based gaming displays, and we wanna bring these down to smaller mobile and web experiences. What we've done is built a set of tools that are gonna help us with the rapid, rapid adaptation of these presentations across the different content form factors. And then finally, field quality is really critical for the reputation of our games, and so we're having a lot of focus there. We're delivering this by investing heavily in test automation that we can reuse across all three businesses.
All right, great. You know, that statistic of 30% more play is really striking to me. You know, it really speaks to the fact that I think, you know, players see value in engaging our content across these channels. So Nathan, what does the data tell us? We have all this data now. What does the data tell us about our players and their taste, and their habits?
Yeah, well, one of the huge benefits we have of the SciPlay business and the iGaming OGS is we have access to all this data. So you'll hear us talk about that a lot. This is gonna enable us to make much more informed decisions, and some of the things this data tells us, the player is the same. We just heard that BCLC, but also on the social side, 93% of social players have visited a casino in the last year. 64% of them have visited 20 times. So these are our frequent, high-value players. When we look at social, we have 35 million active users monthly.
That's a huge amount of gameplay data that we can use to make those better decisions, and on the OpenGaming, the iGaming side, 4.5 billion individual game rounds are played each month. And just to show how complementary these categories are, on our social platforms, 9 out of the top 10 titles are actually our land-based titles, are proliferating into our social platforms.
Tell us more about why this is so important for us here at Light & Wonder.
Yeah, there are a few different areas that this is important. I think one of them is this is about accessibility. It's convenience. It's about an ability to launch and promote our brands across all three channels to players. We're trying to build brands. We have brands like UFL, Dancing Drums. We have great licenses like Monopoly. So we're trying to build those over time, and build out a brand loyalty to that, and on the land-based side, it might take us months to a year to get millions of spins, millions of players. But a great example on social, we launched Gold Fish last year. In the first week, we had over 300 million spins. Again, that would take us months to get that velocity.
So it's not just a velocity, it's a marketing, it's an exposure, and but by the time those players walk into that casino, they're familiar with our products. They're seeking out our products on those casino floors.
Yeah, that's that velocity is just really amazing. So, you know, beyond those sort of post-launch advantage, Nathan, I know you and your team are really deeply involved in using that data during the development process to improve the quality and performance of the game. So, tell us how that works.
Yeah, it's a great point. Obviously, we just talked about all the aftermarket. You know, you're getting the product out, you've developed it, you've got a great brand on your hands. But what about improving our hit rate? What about making sure every R&D dollar is spent in the best and most utilized way? And what this cross-platform opportunity is, we can now rapid test. So we can rapid test game names, we can rapid test user interfaces, we're rapid testing math models. We can even rapid test AB, so we can put different AB tests of games in, and all of this is to make more informed game decisions and more efficient use of our R&D dollars.
Yeah, and to support that from a technology perspective, I spoke previously about taking complete production versions of games across the different platforms, but the real challenge is, while a game is in flight, while it's being developed, that's where it's really critical to bring it back to the customer and get that, that real-time feedback. Unfortunately, that's a big disruption to our studios. If we're building a land-based game, and then constantly adapting it every time we want mobile, mobile feedback, that's very expensive. So to streamline this, we've developed a very different technology solution that will help us deliver these games while in development to mobile and web experiences in just days, with very little disruption to studios. This allows us to build a tighter feedback loop from our player insights back to our studios, so we can make some of the best games.
So also in technology, we're developing a few cross-platform initiatives to support our casino operators. Rich, do you wanna speak to our strategy there?
Yeah, yeah. I'll talk a little bit about that. So if you put yourself in the shoes of a casino operator that will also have a iGaming-based platform, you know, what do they really need to effectively operate, you know, those two channels? And, you know, what they really need is, of course, a consolidated view of player activity, you know, of what's happening in land-based, what's happening in digital, and what's happening enterprise-wide, so they can really control and manage that player and patron journey.
So they really need this to manage the relationships, to find out who are their most valuable players, what sort of offers can they give these players, and, you know, when they make investments on player acquisition or retention, they're making the absolute smartest and highest return on investment. The good news in that is that we're really well-positioned for that. You heard Dylan mention the PAM system. That stands for player account management systems. It's one of the leading products in the digital space. And then combine that with our systems product in the land-based world. We also have our player account management system, which serves those same purposes.
We've taken these products, we've looked at the market, we've segmented the market into really two major segments. One that are the smaller independent operators, so think of a tribal casino in Michigan. They're really looking at having a tightly integrated experience between the digital player and the land-based player, and really tightly integrating that cross-channel play. We have a product called Engage. We just recently purchased a company called House Advantage. It was a great product that gives enterprise-wide database customer loyalty, that had digital integration already done, and so that's a product which is really shrink wrap ready to go into this smaller enterprise market.
And then for the larger operators, you know, large digital presence, you know, big huge scale digital operators are our industry-leading PAM product that Dylan spoke about. Really really works for that. So we think we're really well-positioned to serve our operators you know with the products that they need in the space. So Victor Blanco, I want to turn it back to you just for a second here. We wouldn't, it wouldn't be an investor presentation without talking about AI. So tell us tell us-
Yeah
... tell us what we're doing in AI.
It is a hot topic and definitely one I'm passionate about. I do believe in the benefits that AI can bring to Light & Wonder. We're already invested in generative AI, so we're leveraging this in our art teams right now in studios, so we can do more rapid iteration of our game assets. Our development teams are also now currently using generative AI as coding assistants, so we can get more productivity for new features and products. We're leaning in on predictive AI in our systems business. This is allowing us to better identify and anticipate our players' behaviors. We can use that then to generate real-time player insights and focused engagement opportunities for our casino operators.
And then finally, we're reaching out to experts in the field of AI, bringing them into the business to help us better understand how we can leverage custom AI models, and solutions deliver greater efficiencies and new product innovations.
That's great. Well, listen, I think that wraps it up for us, so wanna thank you for your time. I think you can tell how excited we are about what's happening here at Light & Wonder, and just a bright future we see ahead of us. So with that, I think I'm gonna turn it over to our Chief Financial Officer, Oliver, to talk about the financials.
Good job, guys. All right. Hello, everyone. For those who I haven't met, my name is Oliver Chow, and I'm the Acting CFO here at Light & Wonder. I've been with the company here for just around 10 months, previously serving as a Senior Vice President of Corporate Finance. Prior to Light & Wonder, I spent five and a half years at Aristocrat, where I served as the Gaming CFO of the Americas, EMEA, and Customer Experience. I'm honored to be with you all today to present our financial framework, and also close out this year on a really great momentum. Over the past year plus, we've continued to highlight three key elements of our value creation framework.
First, with our streamlined and integrated portfolio, with a laser focus on building great games, cross-platform through evergreen franchises, which you all got a chance to preview throughout today's event. We really do have an enviable and durable financial profile. This is underpinned by sustainable growth on both the top and bottom line, with a high mix of recurring revenues and healthy margins, all of which translates into high cash generation. Second, we have a transformed balance sheet. As a reminder, for those who are not familiar with the Light & Wonder story, just three years ago, we were highly levered at ten and a half times gearing. Ten and a half times.
Last year, we finalized and divested our lottery and sports businesses for a combined $6.5 billion in gross proceeds, and through these divestitures, we were able to reduce our debt by $4.8 billion. And we just reported our second quarter 2023 earnings with a 2.9 times gearing, the lowest level in the company's recent history, which I know many of you will be very pleased with. That is a reduction of over 70% from its peak. What an incredible accomplishment from our broader team at Light & Wonder, and to all the employees who helped drive this transformation and overall financial profile.
Third, our new path forward will lead to significant cash and capital creation, enabling us to drive tremendous shareholder value over time through our disciplined capital allocation strategy, which is reviewed extensively by our teams, and I'll go into more details here shortly. As you heard from Matt earlier, we had another phenomenal quarter, which was indeed underpinned by a strong financial result. Year over year, for the first half, we grew 18% top line and 28% consolidated AEBITDA, and generated $98 million in consolidated free cash flow. We continued to drive high cash generation with strong margins and an expanding digital business. In fact, we delivered record SciPlay and iGaming revenues in the second quarter and the first half of 2023.
More importantly, 70% of our business came from recurring revenues, and $510 million from our digital businesses alone, demonstrating our commitment to expanding our high-growth digital space. Despite these great numbers, the teams are still hyper-focused on driving operational excellence, which runs deep in our DNA. We'll continue to work through margin enhancement initiatives across the organization. We're exploring and executing initiatives through manufacturing, freight, value engineering, and really through our digital and corporate functions as well. We are leaving no stone unturned. The vision for our financial shape remains: sustainable revenue growth, AEBITDA growing faster than revenue, and cash flow faster than AEBITDA. As the team mentioned earlier, we've got incredible momentum across the business right now, with a focus on creating great games, products, and services.
We're seeing proof points throughout the business, which gives us confidence in achieving our long-term commitment to growth through 2025. In gaming, Siobhan, Rich, and Nathan have created a robust product roadmap, which you all saw a little bit earlier, which will support share gains in gaming operations, game sales, and key adjacencies such as Class II, VLT, and HHR markets, where we are currently underrepresented. We are revamping our systems and table strategies through innovation and enhanced capabilities to drive a recurring revenue stream, as well as defend our leadership position. In SciPlay, our goal remains to outpace market and gain share, like we've done successfully over the last three quarters, with a key focus on monetization. We know that there is further runway to expand ARPDAU and scale player lifetime value. Additionally, we will continue to grow our pipeline of games and expansion into ad monetization.
This is a result of investments that we've made over the last twelve to eighteen months, which is reflected in our performance, and we'll continue to prioritize investment opportunities to scale the business over time. In iGaming, U.S. and international proliferation will be critical to our growth. One of our key differentiators is that we have a mature business model that participates in all parts of the value chain. We expect to drive share gains with increase in original content and expansion into live casino. Continued investment in R&D and the R&D engine, ensuring every dollar is making impact to the bottom line, coupled with our core strategy across our businesses, will support sustainable growth into the future. With our transformed balance sheet and momentum that we have across the business, we will continue to take a balanced and opportunistic approach to our capital allocation strategy.
Through our capital allocation, we will make strategic decisions to drive shareholder value consistently over time. We'll have some options, whether that's paying down debt, like we've done very well over the past year, and is now approximately 62% fixed and 38% floating mix. We'll continue to monitor for share dislocations in the market and see where opportunities arise for us to repurchase shares in the future, if that will drive the most shareholder return over time. Our program, from inception through the end of Q2, we've repurchased approximately $438 million, or 7.6 million shares, which represents about 58% of our share repurchase program. We'll make disciplined investments in key growth areas, whether that be organically through our R&D investments, where we continue to target 10% of our revenues, or in CapEx, where we've invested about 7% of our revenues.
This is the lifeblood of our organization: creating great games, new products and services, investing in growing our gaming ops footprint, modernizing our systems offerings, and enhancing our digital platforms. We'll also evaluate M&A opportunities, which will need to exceed our rigorous financial hurdles, focusing on high ROI, accelerating our strategic considerations, or complementing our core capabilities. At the end of the day, decision-making on our capital allocation strategy will be through the lens of maximizing returns over the long term. To summarize, with our transformed balance sheet, momentum across the businesses, and with our strong and diverse culture and high-performing employees across the globe, the conviction to our financial commitment of $1.4 billion by 2025 has never been stronger.
Our goal remains to drive sustainable long-term value to our shareholders and to our teams, and we're focused on creating a seamless player experience by creating great games through evergreen franchises, fully cross-platform. We'll continue to drive high cash businesses and fuel our strategic capital allocation decisions, focus on productivity and efficiencies through margin enhancement, and make disciplined investments through the lens of high ROI and meaningful value. Like I said earlier, through the phenomenal work of our broader team, we have an enviable and durable financial profile as we work towards our long-term goals. I appreciate the time to share our financial story and our journey, and I look forward to working with the broader investor community over time. Thank you, and we'll transition to Q&A.
Hi, everyone. We're gonna spend the next approximately 30 minutes or however many questions that you get through. You can just go back one. So if you can scan the QR codes, that will take you through to the web page, where you can enter your questions in the chat function. And for those of you on the webcast, you can do the same. So all good? Okay, we'll get started, guys. So Matt, there seems to appear to be more discipline around your product roadmap and the cadence of new releases. Can you talk about what you've put in place and what we should expect over the next few years in regards to game releases, target audiences, and the distribution across the three channels?
Yeah, this has been a key focus for us. I think, one of the key things we've put in place now is a really streamlined roadmap. We had kind of a disaggregated portfolio planning process across SciPlay and iGaming and gaming. Our, our vision is to be the leading cross-platform global games company, and it starts with joint planning, making sure that our roadmaps are aligned, efficient. You know, as Rich touched on earlier, the player behaviors that we're seeing across these channels are, are very analogous, they're very similar. So joining those roadmaps up and planning them effectively allows us to be efficient. But Rich, do you want to build on that potentially?
Yeah, look, I think, you know, it, it was this thought 'cause we, we were three independent businesses planning roadmaps independently, and so really the first step was to really plan the roadmaps together. That, that meant when we knew we had a hot release coming of, let's say, the next UFL game, you know, normally that would have taken us a year and a half or two years to get that onto the other channels. You know, now, you know, Dylan's team, Josh's team, you know, they are ready, and we try to sync those just as tightly as we can make it. And, and just the velocity that gives the business is fantastic.
Then on top of that, you know, the brand recognition, you know, the other player awareness that we get is really a multiplier for us.
Yeah, and I guess the kind of building on that, the future focus is we've made these critical investments in new studios. Studio X, which you spoke about extensively over the last few quarterly cycles, which is Ted Hase studio, is really starting to show up in the P&L now. He's a world-class game designer. We added him to the roster. His first game went straight to number one. We've added Emma Charles in the Australian studios. I think the benefit we have is we kind of peg R&D as a percentage of revenue. So as revenues continue to expand, it means we have more dollars to invest, which means more studios, more scaled studios. So expect that from us over time. We're very intentional about how we spend R&D dollars, and we expect to add to the roster over time.
Josh, question for you for SciPlay. Just in, I guess, in terms of the SciPlay engine and the investment around people, ad tech, marketing, and technology, given your growth in, you know, industry-leading growth in social casino, where do you see this getting to? And, you know, just I guess with the COVID bounce back and industry consolidation, do you wanna talk to that?
Yeah, it's a really interesting question 'cause I get asked the question quite often, and the reality is, no one knows what the top end of this looks like. If you would have asked me in 2014, I would've said, "No chance anyone will have a $0.20 ARPDAU." You would've asked me in 2018, I'd have said, "No chance that anyone gets a $0.50 ARPDAU." Today, we're talking about $2 ARPDAU. The reality is we're growing, we're creating payers. The social casino is the most evergreen gaming out there, so they're staying with the games. So it's this perfect mixture of, we have players that have been playing with us for 12 years that continue to become more and more valuable, and we're adding people into the funnel.
So it's this just one plus one equals ten opportunity because it's just it just doesn't seem to stop. COVID, for our world, was fantastic. Like, everyone had to go home. They decided their form of entertainment was video game. Yee-haw for me. But what it did for our industry is, like, overnight, it increased the entire rev pool by twenty-some%. So I try to explain to people as like, all of a sudden, where we should have been in twenty twenty-three, we were at in twenty twenty. So the next year was a smaller jump, but that's because the last year was three times bigger than it should have been.
Now, we're back where, you know, we look at our last twelve months, we're in a double-digit growth rate again, and this double-digit growth rate is 100% based on the SciPlay engine and the tools that we've put, and then the content working with Light & Wonder, and as Light & Wonder continues to take more and more of the share, continues to build more and more brands, we continue to use that to bring in players from all over the world.
Thanks, Josh. Matt, just I guess with the second quarter results reported last week and how strong they were, you wanna just maybe give us some of the highlights and the takeaways, and maybe Oliver, just some any other bits you wanna add through?
Yeah, I think at the most macro level, it's the financial performance showing up on the scoreboard after a lot of hard work over three years. We've really set the platform up for success. I mean, speaking to investors a year ago when I first took on the job and talking about the story of Light & Wonder and all the great things we're gonna do, I guess the feedback I had a lot was: "That's a nice story." But it's really showing up in the numbers now. It's really sequential outperformance quarter after quarter. I think Q2 was really a highlight for us, 33% growth year on year at the EBITDA line. No one's growing at that pace in the industry right now, so it was exceptional. And I think unpacking it a little bit, it was double-digit performance across all three business lines.
It was not one, you know, part of the portfolio carrying another. So really, each of the BUs, congratulations on an outstanding quarter. I thought the margins were impressive year on year. Again, margin expansion across all three lines of business. So it's talking to a focus on top line, but also disciplined in cost management, and I think that's really a muscle that we've built over the last year. I think the game sales rebound in Siobhan's business was incredible. I think the ARPDAU accretion we're seeing quarter after quarter in Josh's business has been very impressive, and we have a lot of runway to go there. You know, Dylan's business outpacing market growth, so not much more you can ask for from a CEO.
It's a fun set of numbers to stand in front of, and just wanna congratulate the team publicly. But, Oliver, anything you wanna add?
Yeah. I mean, I think the only other thing I'd call out here is from a free cash flow perspective, where we are, where we expect it to be. So Q1, over 30% free cash flow conversion. Q2, we knew we were gonna have the last divestiture tax payment of $32 million and some ASX listings there. As we look into the second half, we fully expect to get back above the 30% mark and then start to scale from there. So great momentum across the business, and we look to scale that over time.
Okay, and one for iGaming. So, Dylan, can you run us through your iGaming solution to a casino customer and how you might be up against some of the larger operators like MGM? What does your solution have as an advantage versus the larger digital offering customers, and do they have an advantage of having all slot product on offer?
Yeah, great question. Thank you. So obviously, MGM are a key customer of ours, but the way that we talk about our iGaming solution is, first and foremost, it's about the brilliant content that we offer, so our proprietary content. That's renowned and known in most markets, whether that's land-based or digital native. They have to connect into our platform to get access to that content. And that's the first piece. It's if you want our content, whether it's land-based, whether it's great franchises like Wonka, like Monopoly, or it's our digital native content from people like Elk, that's the only place that you come to get access to that content.
So whether you're MGM or whether you're a smaller up-and-coming supplier in any market, it's the same integration process to get access, first and foremost, to that proprietary content, and then secondly, to get access to all the other content that we provide. We help studios build onto our network because we have that scale. Often we talk about it like a bit like Netflix. You don't just watch one, you know, one piece of content on Netflix. You can get access to a plethora of different content, depending on what your genres that you like, what content you want to consume. Think of OpenGaming like that. It's the place where you come to get the content that will really resonate with your players.
But in the first instance, it's about our IP and about the brilliant content that we produce.
Thanks, Dylan. Siobhan, one for you. This is from Rohan Sundram at MST, so he's somewhere here. What has been driving the strengths and resilience of the U.S. gaming market in your view, and where do you see it as the biggest opportunities, including adjacent market opportunities?
Yeah, great question. We're certainly seeing consumer spend continue. I mean, record revenues in 2022 and strength continuing in 2023. I mean, gaming operations, the lease segment, was really the first to recover off the back of the pandemic. This year, we're seeing strength of recovery in that game sales segment, which is driving those strong numbers in Q2 that we posted. From an adjacency standpoint, for Light & Wonder, as we mentioned, you know, we're underrepresented, but this is an area where we have core capabilities. You know, we're close to 50% of the market in Illinois VLT. We participate in HHR, but we're underrepresented in Canadian VLT as an example. Ontario, we have a field trial running there.
So there's certainly lots of opportunities out there in the adjacencies, and this is a core capability that we have and we've proven. But we had to prioritize the level of investment more toward core segments when we came in to run the transformation strategy, and but we knew there was expansion opportunities in those adjacencies. And we fully intend to take advantage of those, and those are all identified on our roadmap go forward and contributing to the growth profile that we've committed to.
I think maybe just one development we've seen in the last six months, which I think is hitting the radar right now, is North Carolina VGT expansion, a significant market opportunity. We see that likely getting legalized in the coming 12 to 18 months. It's looking like a 30,000-unit market, is what most analysts are projecting there. You know, we are a 50% player in Illinois, so if we get 50% share of that market 30%, 40%, pick a number in terms of share, that's a substantial increase to our addressable market.
I know a lot of other competitors are looking at that space, but we have boots on the ground now, looking at the game types that are gonna be required to be successful in that market, and we're very, very focused on capturing as large a share as possible in that market.
A question from Rohan Gallagher from Jarden. So probably for Matt and Dylan. What does success look like from a live casino perspective?
He's also asking about getting live in Michigan , so that's fine. Which we're nearly there, so yeah, watch for that over the next few weeks. I think for me it's always about the product first. Great product, players having resonance with our product, product will ultimately drive market share. And that's where the focus has been. If anybody wants to see later on, down in the product presentations, we've got the view of our first live casino show that we launched in the UK a couple of weeks ago.
And that is our take with our brand, with our IP, on you know how you fuse together essentially basic roulette with a you know slot game, and package all that together in a brilliant product that's resonating with players in the UK and other European markets. And that's where the focus has been, building out that product portfolio, being excellent on delivering different product experiences into the live space, and then our market share will come from that.
Yeah, I think, I tell Dylan all the time, "You can't call it live casino unless you're live." And we thankfully are on the doorstep here of getting approval and-
Right
... going live in Michigan. But this is a long game. Like, this will be 30% of the addressable market in the Americas for the foreseeable future. So we're building for that to capture that opportunity over multiple years, decades. You know, we're positioning ourselves for the growth in the market over a long period.
This question from Matt Ryan, from Barrenjoey. And it's probably for you, Matt, and maybe Siobhan. You made some comments on the last quarterly earnings call suggesting the churn of low-yielding gaming ops product is coming to an end. Can you expand on this? And is there growth in the gaming ops install base, you know, one of the most material drivers of your growth targets?
Yeah, I'll have the first crack at this, and then... Yeah, I think one of the biggest challenges we had in the from section of that from and to presentation I mentioned earlier was we didn't have the, the capital to refresh our gaming ops install base as Scientific Games pre-2019. So we had a, a large legacy base. So over the last three years, we've been really addressing that by driving CapEx into the install base to make sure our games are fresh, and healthy, and vibrant on the casino floor. And so we've done a lot of heavy lifting over the last three years, and so I feel like we're at a position now where our new launches will show up in more net adds as we go forward.
So less CapEx into addressing the legacy fleet is the way that we see it, but.
Yeah, and there's two key metrics that we really wanna deliver on in gaming operations. I mean, certainly volume of install base is one of them, but it's really about that yield, that RPD. You know, we want high profitable units to really be driving that install base, and so we're—you'll see that growth in RPD as we kinda churn out those lower performing units. And then we get that right balance of, you know, legacy cabinets in the fleet producing, you know, low book value, but producing a good return. And then we have to protect and grow that space by injecting new hardware constantly. So it's about getting that balance. We certainly intend to grow volume in that space, but we most importantly want that, that yield to continue to grow and optimize.
And we expect that to be part of the profile go forward.
Thanks, Siobhan. Oliver and Matt, probably one for you. What are your capital management plans? Is it continue the share buyback, and any plans to raise equity as part of the recent ASX secondary listing?
Yeah. You wanna take it?
Yeah.
Yeah, sure. I'll kick it off, and then, Matt, you can add to it. So yeah, I mean, I think our broader capital management strategy is intact. We're currently well within our 2.5-3.5 times gearing range at the moment, even with the SciPlay deal. That will bring us up a bit, but ultimately we'll still have a bit of headroom overall. And as Matt mentioned, just with the cash generative businesses that we have, we are starting to see that gearing come down, so 3.3 to 3.1 to now 2.9 times.
So what that does, couple that with a very healthy balance sheet, gives us a lot of optionality to either look at share repo, and if that makes sense to do so, and provides a higher return on investment relative to other opportunities that we'll have, whether that's M&A, whether that's share, you know, debt pay down, et cetera. But Matt, I don't know if you-
Yeah, we have some runway left in the share buyback.
Yeah.
We still see considerable upside from here. We're highly convicted around our 2025 target, so we feel like there's a dislocation between where the stock's priced today relative to where it should be. If once you upgrade your models to that 2025 $1.4 billion target, there's considerable runway from here. So buying back our own stock is a great piece of M&A, essentially, that'll support the share price going forward.
A question from Joe Stauff from Susquehanna, in the US. So Joe, thanks for joining us on the line. For you, Siobhan, in Australia, you seem to be, like, you're taking share from just Aristocrat. Just wondering if you increased the share for, from the low twenties from here?
Yeah, I mean, our intention is not to stop. You saw the engine of game designers that we have within Light & Wonder, and, you know, we intend to continue to deliver that consistent game releases with high performance to the Australian market, just like our strategy in the North American market, and continue to grow share off the back of that, so not stopping.
Mm.
I'd add to that, that there are segments of the market which we really aren't well positioned in, so, hotels in New South Wales, for example.
Yeah.
So a great opportunity there that we haven't focused on, and you know, we're-
... if we can grow the Australian teams, every bit of extra dollar I can get, I'm investing in Australian content development team.
I would say that we're indiscriminate about who we take share from. We're share taking junkies, and take it from anywhere we can get it. It's not specifically about addressing Aristocrat. It's-
Yeah
... us building better product, being more relevant for operators. And I think with the launch of Dragon Train and the games that are coming behind that, I think we're well positioned to maintain and grow share from here.
Question from David Fabris, from Macquarie. Matt, can you talk to the risks or pain points that may disrupt our ability to get to the 2025 AEBITDA target?
Yeah, I think we obviously exist because our customers exist. So to the extent that any kind of macro pressure could challenge their balance sheets, that would obviously be a flow-on effect to us. We don't see that. Yet, I think a year ago, we were talking about how deep the recession would be, and now we're talking about, you know, potentially a soft landing. So there's really no signs in our kind of lead indicators in the end markets of any challenges. You know, we're seeing operators really holding on to these elevated GGR levels, which is exciting. I think as we continue to control the controllables, we can take a bigger share of the markets that are out there. I've said it on earnings calls a few times.
I feel like, if you go back to the prior macro challenges in the GFC, you know, you could see the recurring revenue business really go roaring back. The part of the portfolio that was challenged in that, you know, economic crisis was really about the CapEx budgets, and that's what got throttled back. But we're in a different position now. We're coming off the back of the pandemic, two and a half years of pretty chronic underinvestment in gaming floors. If you think about twenty twenty was almost a zero CapEx year for operators, 2021 was about 50% of normalized levels. It started to come back online on twenty twenty-two, back to 2019 levels, and we're seeing kind of elevated replacement numbers in twenty twenty-three.
So I think even if we saw a limited pullback, I think operators would power through that cycle. I think if they recognized one thing in the pandemic, it's really that the games are the economic engine on casino floors. It's the reason that players come to casino floors. So I think we're in a good position from a macro standpoint, and the markets that we operate in are really healthy at the moment.
Question from Oscar King on the line. So I've probably Siobhan, for you. Could you provide some further detail into the replacement demand from casinos post-COVID and where that demand sits now?
Yeah, I think to build on what a lot of Matt just said, you know, that recurring revenue segment was the first to recover, but we're really seeing those capital investments now. Because, you know, that investment in gaming floors was kind of slowed down over the last two to three years with the pandemic, and again, operators leaned more on that lease product to refresh their floors. But, you know, it's a highly competitive segment. Especially in regional markets, they have to invest in that gaming floor. That's where, you know, a lot of the GGR came from, and the money came from whenever the recovery was underway. So we don't see any major slowdowns of that replacement and operators really intending to invest in updating their gaming floors.
We also have markets like Asia, you know, continuing to recover at a... They were behind sort of the rest of the market. So we're seeing some really good demand coming out of that market now. Yeah, it's looking good.
Excellent. Oliver, one for you. Given the announcement last week to acquire the remainder of SciPlay, how will you be funding the acquisition, and what will be the impact to leverage?
Yeah. So given where the deal is today at 22.95, ultimately, that's around a $500 million acquisition overall. Funding it through cash, which is always great. And so ultimately, like I had mentioned earlier, from a leverage perspective, we will see a bit of a bump in leverage, but again, with some headroom at the top end. So that should naturally delever over time, over the next several quarters. So we feel we'll be pretty squarely between our 2.5 and 3.5 zone overall.
Yeah, we'll pop up a little bit in the range.
Yeah.
But, I mean, SciPlay is a 90% free cash flow generation business.
That's right.
So from there, we'll kind of, over the coming quarters, you know, get lower in the range, probably be back in the high twos, before you know it.
Last question, Oliver, for you. You know, it's great to see that we had some additional disclosures for this period. Should we expect expanded disclosures going forward?
Yeah, we know how important it is for these disclosures, especially for this market, especially around, you know, halves and NPAT, et cetera. We've kind of worked through with our internal, external, kind of legal and accounting teams. And so we will be gradual over time, and we'll start to provide more disclosures over time in the next several quarters. But ultimately, we just want to make sure that we're covered from an SEC perspective. So yeah, we'll expect us to provide more information over the next several quarters.
I'll just close then. Right? Yes. Well, sorry about that. Well, first of all, thanks for spending the morning with us again. I know you have a million things going on. There's lots of companies reporting earnings this morning, but you chose to be here with us. Hopefully, we've made it worth your time. I hope you can feel the passion and energy, enthusiasm about the future at Light & Wonder. We've been through an incredible transformation, but the job is not yet done. We have more to do. We believe the momentum we have in the business will continue over the coming quarters and years, and I'm just so excited to be here. Hopefully, you've seen the quality of the management team. It's the best in the industry.
And hopefully, you have a chance to follow us now down to the show floor, hear from some of our game designers, specifically about the products they're building that will fuel our continued growth. So from me to you, thank you very much for being here. Appreciate it.