Q4 2023 Light & Wonder Inc Earnings Call
Operator: Hello all, and thank you for your patience. Today's call will begin in approximately two minutes. Hello all and welcome to the Light & Wonder 2023 4th Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.
Hello, and thank you for your patience today's call will begin in approximately two minutes time.
[music].
Operator: The brief question and answer session will follow the formal... If you'd like to ask a question, please press star followed by 1 on your telephone. I'll now turn the call over to Nick Zangari, Senior Vice President of Investor Relations. Thank you, operator, and good afternoon, everyone. Welcome to the fourth quarter and full year 2023 EARNINGS CONFERENCE CALL. With me today are Matt Wilson, our President and CEO, and Oliver Chow, our CFO. During today's call, we will discuss our fourth quarter and full year 2023 results and operating performance, followed by a question and answer session. Today's call will contain certain forward-looking statements that may involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call.
Hello, and welcome to the likes of Monday, 2023 fourth quarter earnings Conference call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation, if you'd like to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: Now I'll turn the call over to you next on coffee Senior Vice President of Investor Relations. Please go ahead.
Speaker Change: Thank you operator, and good afternoon, everyone.
Nick Zangari: For information regarding these risks and uncertainties, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We will also discuss certain non-GAAP financial measures. A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our earnings release as well as in the investor section of our website.
Speaker Change: Welcome to the fourth quarter and full year 2023 earnings conference call.
Speaker Change: With me today are Matt Wilson, our president and CEO and all of their child our CFO.
Speaker Change: During today's call, we will discuss our fourth quarter and full year 2023 results and operating performance followed by a question and answer session.
Nick Zangari: In 2022, we completed the sale of the lottery business to Brookfield Business Partners in the second quarter and the sale of the sports betting business to Endeavor in the third quarter. Accordingly, we have reflected these businesses as discontinued operations and in our consolidated statements of operations for comparable prior periods. We are reporting our results of continuing operations in three business segments: Gaming, SciPlay, and iGaming.
Speaker Change: Today's call will contain certain forward looking statements that may involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call.
Speaker Change: For information regarding these risks and uncertainties. Please refer to our earnings materials relating to this call posted on our website and our filings with the SEC.
Speaker Change: We will also discuss certain non-GAAP financial measures.
Nick Zangari: Amounts and disclosures referring to combined include both our continuing and discontinued operations. As a reminder, this conference call is being recorded. A replay of this webcast and accompanying material will be archived in the Investors section of our website. With that, I will now turn the call over to Matt.
Speaker Change: A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our earnings release as well as in the investors section of our website.
Speaker Change: In 2022, we completed the sale of the lottery business to Brookfield business partners in the second quarter and.
Matt Wilson: Thank you, Nick, and thanks everyone for joining today's call. Our fourth quarter performance capped off a banner year for Light & Wonder as we continue to build upon our strong business and financial foundation. Notably, we have consistently delivered on our key performance objectives since we announced the company's transformation strategy. Our numbers reflect strong execution and continued momentum, with consolidated revenue up 13% over the fourth quarter of last year, marking 11 consecutive quarters of year-over-year growth. We once again delivered double-digit growth across the board, as evidenced by our results throughout the year, and we have now achieved five consecutive quarters of double-digit revenue growth in all three businesses. As a result, we ended the year with a 16% increase in consolidated revenue, reaching a record $2.9 billion for 2023. Looking back, I would like to share with you what defined Light & Wonder and drove our success this past year. We have an exceptional team and experienced leadership with a winning mentality. I firmly believe that we have the best-in-class talent executing on a proven playbook, and I commend our entire team for an outstanding quarter and an outstanding year.
Speaker Change: And the sale of the sports betting business to endeavor in the third quarter Accordingly.
Speaker Change: Accordingly, we have reflected these businesses as discontinued operations in our consolidated statements of operations for comparable prior periods.
Speaker Change: We are reporting our results to continuing operations and three business segments gaming side play and I gave amounts and disclosures referring to combined include both our continuing and discontinued operations.
Speaker Change: As a reminder, this conference call is being recorded a replay of this webcast and accompanying materials will be archived in the investors section of our website.
Speaker Change: With that I will now turn the call over to Matt.
Matt Wilson: Thank you Nick and thanks, everyone for joining today's call.
Matt Wilson: Our fourth quarter performance capped off a banner year for lot and wonder as we continue to build upon a strong business and financial foundation, notably we have consistently delivered on our case the foremost objective since we announced the company's transformation strategy now.
Matt Wilson: This reflects strong execution and continued momentum with consolidated revenue up 13% over the fourth quarter of last year, marking 11 consecutive quarters of year over year growth.
Matt Wilson: We once again delivered double digit growth across the board as evidenced by our results throughout the year and have now achieved five consecutive quarters of double digit revenue growth in all three businesses.
Matt Wilson: As a result, we ended the year with a 16% increase in consolidated revenue, reaching a record $2 9 billion for 2023.
Matt Wilson: Looking back I would like to share with you what defined lot and Wanda and drive our success this past year.
Matt Wilson: Throughout 2023, we made strategic investments in the aspects of our business that we expect to drive long-term sustainable value, something we were not able to do before the transformation. Our improved financial position and disciplined capital allocation strategy support our ability to continue to invest in the future of Light & Wonder with a commitment to accelerating R&D investments and enhancing our product offering. We have a differentiated product strategy and demonstrated sound execution on our growth pillars, with refreshed hardware and content for both core and adjacent markets. We achieved impressive share gains in key markets, with the popular franchise Dragon Train continuing to drive our growth in Australia and creating notable operator engagement around our pending release in North America. We also made considerable progress in adjacencies, and we expect to be active in video lottery terminal markets, notably in Oregon and Quebec, where we've recently announced deals, as well as the coin-operated amusement machine market and historical horse racing markets in 2024.
Matt Wilson: We have an exceptional team and experienced leadership with a winning mentality.
Matt Wilson: Finally believe we have the best in class talent executing on our proven playbook and I commend our entire team for an outstanding quarter and an outstanding year.
Throughout 2023, we made strategic investments in the aspects of that business that we expect to drive long term sustainable value something we were not able to do before the transformation, our improved financial position and disciplined capital allocation strategy support our ability to continue to invest in the future of lot and wonder with a commitment to accelerating R&D.
Matt Wilson: Investment in enhancing our product offering.
Matt Wilson: We have a differentiated product strategy and demonstrated sound execution on our growth pillars with refreshed hardware and content for both core and adjacent market.
Matt Wilson: We achieved impressive share gains in key market with the popular franchise Dragon try and continuing to drive that growth in Australia, and creating notable operator engagement around our pending relates to North America.
Matt Wilson: We also have made considerable progress in Adjacencies and we expect to be active in video lottery terminal market, notably, Oregon in Quebec, where we've recently announced deals as well as the coin operated amusing machine market and historical horse racing markets in 2024.
Matt Wilson: Capitalizing on franchise extensions has been another key differentiator in driving our success. We have shifted our focus from allocating the majority of our resources to new niche markets coming online to now building on our evergreen franchises and game extensions, which can be leveraged across our entire ecosystem. In our digital businesses, SciPlay had another record quarter with continued market share momentum and higher revenue in the social casino space, which we will discuss in further detail.
Matt Wilson: Capitalizing on franchise extension has been another key differentiator in driving out excess we have shifted our focus from allocating the majority of our resources to new niche market coming online and now building on our evergreen franchises in gaming extension, which can be leveraged across our entire ecosystem.
Matt Wilson: In our digital businesses. So I thought I had another record quarter with continued market share momentum and higher revenue in the social casino space, which we will discuss in further detail.
Matt Wilson: Our iGaming business segment continues to be a growth driver for Light & Wonder, with a strong quarter reflecting contingent momentum in both the US and international markets. These results demonstrate the benefit of our robust R&D strategy, driving improved fan performance with impressive returns on our investments. We continue to see iGaming as a compelling opportunity as this market continues to develop over the coming years. For Light & Wonder, it truly is all about the game.
Matt Wilson: Like any business segment continue to be a growth driver for lot and Wanda with a strong quarter, reflecting continued momentum in both the U S and international market. These results demonstrate the benefits of our robust R&D strategy driving improved performance with impressive returns on our investments.
Matt Wilson: We continue to say I mean, it's a compelling opportunity as this market continues to develop over the coming years.
Matt Wilson: So a lot and one that it truly is all about the guy throughout the policy, we execute on our product strategy to build exciting industry, leading games that have continued to drive that performance metrics.
Matt Wilson: Throughout the past year, we executed on our product strategy to build exciting, industry-leading games that have continued to drive our impressive performance metrics. In addition, we are pleased with our continued progress on our cross-platform strategy, with development efficiencies being realized and content expansion across all channels driving digital revenue uplift. We are very pleased with our considerable progress across our business units as we continue to capitalise on the opportunities in a resilient gaming industry. I will now turn to our Business Unit Operational Highlights. Gaming continues to be a strong driver for Light & Wonder.
Matt Wilson: In addition, we are pleased with our continued progress on our cross platform strategy with development efficiencies being realized and content expansion across all channels driving digital revenue uplift.
Matt Wilson: We are very pleased with our considerable progress across that business unit as we continue to capitalize on the opportunity in a resilient gaming industry I will now turn into a business unit operational highlights.
Matt Wilson: Gaming continues to be a strong drive us a lot and one that our investments are bearing fruit as we deliver on strong top line growth up 13% for the quarter and 16% of the fleet.
Matt Wilson: Our investments are bearing fruit as we deliver on strong top-line growth, up 13% for the quarter and 16% for the full year. We saw continued momentum in gaming operations, ending the year with an increase of 590 units, or 2% growth in our North American in-store base year-over-year. These results were largely driven by premium units, which continued to increase for 14 consecutive quarters.
Matt Wilson: We saw continued momentum in gaming operation ending the year with an increase of 590 units or 2% growth in our north American installed base year over year.
Matt Wilson: These results were largely driven by premium units, which continued to increase for 14 consecutive quarters.
Matt Wilson: The performance of our games is on full display, with both North America and international revenue per day exceeding 2022 levels in the quarter and for the year. This is a testament to our strategy, focusing on fleet optimisation and ensuring the games we develop are casino floor mainstays, maximizing the full value of each and every unit we deploy on the casino floors. We will continue to build on our evergreen franchise extensions such as Ultimate Biolink, Puff & Puff, Dancing Drums, and recently Dragon Train, which was the biggest Australian launch in the company's history. Our licensed titles, such as top-performing Monsters and the highly anticipated Squid Game, featured on our highly successful Cosmic and new large-screen Jumbo Horizon Cabinet, are expected to extend our momentum heading into 2024, providing immersive and seamless
Matt Wilson: The performance of a guy who was on full display with both North America and international revenue per day exceeding 2022 levels in the quarter and for the year.
Matt Wilson: This is a testament to our strategy focusing on fleet optimization and ensuring the games, we developed a casino floor mainstay.
Matt Wilson: It's amazing the full value of each and every unit, we deploy on the casino floor.
Matt Wilson: We will continue to build on our evergreen franchise extension, such as ultimate filing Huff and Puff dancing drums, and recently Dragon trial, which was the biggest Australian launch in the company's history.
Matt Wilson: Now licensed titles, such as top performing month, two and highly anticipated squeak game based it on a highly successful cosmic a new large screen jumbo horizon cabinets are expected to extend that momentum heading into 2020 for providing immersive and seamless player experiences.
Matt Wilson: In game sales, our strategy was validated by an outstanding performance with over 37,000 units shipped globally for the year, a company record, and an increase of 40% compared to the prior year. Our progress in both North America and Australia is evident as we continue to maintain over 20% market share in both markets, with exceptional growth in the replacement segment year-over-year. We expect continued growth with our Cascada Series cabinets, notably the Cascada Dual Screen, which was named the Top Performing New Premium Cabinet at Island and the driver of our announced deal into Oregon and more recently Lotto Quebec. Moving on to systems,
Matt Wilson: In game sales.
Matt Wilson: Revenue was validated by an outstanding performance with all of the 37000 units shipped globally for the year, a company record and an increase of 40% compared to the prior year.
Matt Wilson: Our progress in both North America, and Australia is evident as we continue to maintain a 20% market share in both market with exceptional growth in the replacement segment year over year.
Matt Wilson: We expect continued growth without cause Scott a series cabinet, notably the cost got a dual screen, which was named top performing new premium cabinet at island and the driver of our announced deals into Oregon, and more recently a lot of Quebec.
Matt Wilson: On the systems.
Matt Wilson: Highlights for 2023 included key contract wins driven by our product portfolio with enhanced capabilities such as loyalty features, giving operators access to greater insight on player preferences. Our recent systems deal announcement with Harry Reid International Airport and Mohican Inspire Entertainment Resort in Korea fully demonstrates why we are the preferred choice for operators, providing an intuitive, curated customer journey at every touchpoint regardless of location, vertical, or platform. Our engaged product continues to gain traction as we focus on software services in addition to our in-demand hardware. We're excited by the offerings that we highlighted at the Global Gaming Expo, such as Cashless, which is currently gaining traction, including in Australia, as we participate in trials in NSW for responsible gaming initiatives. We expect Light & Wonder to maintain its leadership position in this space through innovation and partnership with our operator customers to bring the most comprehensive portfolios to the market. Now, on to tables.
Matt Wilson: For 2023 included key contract wins, driven by our product portfolio with enhanced capabilities, such as loyalty stages, giving operators access to greater insight on Playa preferences are racing systems deal announcement with heavyweight International airports and now he can inspire entertainment resort in Korea fully demonstrates why we are the preferred.
Matt Wilson: For operators.
Matt Wilson: Riding and intuitive.
The customer journey at every touch point, regardless of location vertical platform.
Our engage product continues to gain traction as we focus on software services. In addition to our in demand hardware.
Matt Wilson: We're excited about the offerings that we highlighted at the global gaming Expo such as cashless, which is currently gaining traction including in Australia as we participate in trials in new South Wales for responsible gaming initiatives.
Matt Wilson: We expect lot and want to maintain a leadership position in this space through innovation and partnership with our operator customers to bring the most comprehensive portfolios to the market.
Matt Wilson: On the tables, we continue to be an industry late at night for best in class products and an extensive library of IP. The recovery in the global market has helped drive higher sales with table product revenue up 13%.
Matt Wilson: We continue to be an industry leader known for best-in-class products and an extensive library of intellectual property. The recovery in global markets helped drive higher sales, with table product revenue up 13%. Overall, we expect to expand on our recurring revenue stream and target long-term growth through product innovation and hardware investment, where we have a proven track record of success. To sum it up, I'm very pleased with our performance in gaming. Light & Wonder is still in the early innings of growth in this sector.
Matt Wilson: Overall, we expect to expand on a recurring revenue stream and target long term growth through product innovation and hardware investment, where we have a proven track record of success.
Matt Wilson: To sum it up I'm very pleased with our performance in gaming.
Matt Wilson: And wonder is still in the early innings of growth in this sector. Importantly, we are well positioned in every product category without training offering and our focused strategy to capitalize on new opportunities across this important segment.
Matt Wilson: Importantly, we are well positioned in every product category with our preeminent offerings and a focused strategy to capitalise on new opportunities across this important segment. Now turning to CyPlay, we continue to be pleased with our performance in the social casino space. CyPlay is now a fully integrated part of our portfolio, executing beyond expectations in a breakout year. First, I'd like to share that the integration has gone well.
Matt Wilson: Now turning to Si play, we continue to be pleased with our performance in the social casino space.
Matt Wilson: Clay is now fully integrated part of our portfolio executing beyond expectation and a breakout year.
Matt Wilson: First I'd like to share that the integration has gone well and we are executing on a cross platform strategy through a more harmonized development process across all businesses.
Matt Wilson: We are executing on our cross-platform strategy through a more unified development process across all businesses. Last year, I highlighted our key growth objectives for CyPlay, outpacing the social casino market, scaling average revenue per daily active user, and investing in both our CyPlay engines and product roadmaps. I'm very pleased that we have delivered on these objectives, reflecting both strong leadership and consistent execution. We outpaced the market again, now for 8 consecutive quarters, and have consistently gained share over the course of the year. Sites like Revenue 12% in the quarter and 16% for the year, both record levels. Our four largest games, Jackpot Party, Quick Hit Slots, Goldfish Casino, and 88 Fortunes, posted quarterly record revenues.
Last year I highlighted our key growth objectives, the stock right now.
Matt Wilson: Pacing the social casino market.
Matt Wilson: Average revenue per daily active user and investing in both our slot play engine and product roadmap.
Matt Wilson: I'm very pleased that we have delivered on these objectives.
Matt Wilson: <unk> strong leadership and consistent execution.
Matt Wilson: We outpaced the market again now for eight consecutive quarters and has consistently gained share over the course of the year.
Matt Wilson: <unk> grew revenue, 12% in the quarter and 16% for the year both record levels.
Matt Wilson: Our four largest game jackpot party cricket blocked gold fish casino and Adi's fortunes posted quarterly record revenues a testament to the success of our software engine as we continued to enhance our portfolio of games through a lot of strategy.
Matt Wilson: This is testament to the success of our CyCla engine as we continue to enhance our portfolio of games through our LiveOps strategy. Our recent Dancing Drums app launch was also a success as we continue to expand our land-based titles on our social platforms. Average monthly revenue per paying user was approximately $114, and average revenue per daily active user increased 15% year-over-year to $1, both record levels in the quarter. We will continue to invest in our capabilities and product roadmaps to drive engagement and loyalty while continuing to grow monetisation sustainably and responsibly, particularly in our core franchises. Entering the new year, we are focused on developing our direct-to-consumer platform, which we expect will enhance player relationships and engagement, accelerate the potential to expand margins over the long term, and grow lifetime player value. Clearly, CyPlay continues to be a valuable growth driver for Light & Wonder and a big part of our overall strategy.
Matt Wilson: Racing dancing drums, App launch was also a success as we continue to expand our land bank titles on our social platform.
Matt Wilson: Average monthly revenue per paying user was approximately $114 and average revenue per daily active user increased 15% year over year to $1 <unk>.
Matt Wilson: Record levels in the quarter.
Matt Wilson: We will continue to invest in our capabilities and product roadmap to drive engagement and loyalty, while continuing to grow monetization sustainably and responsibly, particularly in our core franchises.
Matt Wilson: Entering the new year, we are focused on developing our direct to consumer platform, which we expect will enhance player relationships and engagement accelerate the potential to expand margins over the long term and grow lifetime value.
Matt Wilson: Clearly saw fly continues to be a valuable gross driver for lot and Wanda and a big part of our overall strategy going forward, we look to extend our industry, leading social casino growth as we further differentiate our offerings from those of our peers.
Matt Wilson: Going forward, we look to extend our industry-leading social casino growth as we further differentiate our offerings from those of our peers. Now, looking at iGames, our portfolio expansion enables us to be one of the largest content providers in the industry, and we continue to see tremendous demand from operators and from players. Quarterly revenue increased 13% year-over-year to a record $70 million, with four-year revenue also at a record, reflecting the continued growth momentum in the U.S. and international markets.
Now looking at our game portfolio expansion enables us to be one of the largest content providers in the industry and we continue to see tremendous demand from operators and from players.
Matt Wilson: Quarterly revenue increased 13% year over year to a record $17 million with full year revenue also record, reflecting the continued growth momentum in the U S and international markets.
Matt Wilson: The growth is a testament to our best-in-class content aggregation platform and unmatched first-party content. The quarter was highlighted by record launches with Pyrox 2 and Ultimate Violent Cash Falls China Street, further demonstrating our content development roadmap and our cross-platform approach. Of the top 20 games on the OGS across the US, our first-party content accounts for over two-thirds of the total, driven by land-based titles, table games, and Lightning Box. In addition, Elk, Lightning Box, and Playzito all continue to scale with record GGR in the quarter.
Matt Wilson: The growth is a testament to our best in class content aggregation platform and unmatched third party content.
Matt Wilson: The quarter was highlighted by record launches with power ups to an ultimate filing cash flow kind of straight forward.
Matt Wilson: Demonstrating our content development roadmap in a cross platform approach.
Matt Wilson: Of the top 20 games on the Rgs across the U S. Our third party content accounts. The other two thirds of the total driven by land based titles table games and Lightning box. In addition, Elk Lightning box implies data, but we'll continue to scale with record <unk> in the quarter.
Matt Wilson: We are collaborating closely with operators on our live casino offering, which went live in the quarter in Michigan with Rush Street, Golden Nugget, and DraftKings. The initial feedback has been very positive, with teams working together on both sides as we continue to enhance our product with additional functionality. Importantly, other operators have taken note of our collaborative partnerships, and I am pleased to announce that we have signed an agreement with Penn Entertainment for Michigan, which will include Network and Bespoke Tables. While we are still in the early stages, we are already in discussions with customers on expansion opportunities into other regions. Over the long term, we expect this to be a growth driver for our iGaming business. The U.S. is a fast-growing market, and we will continue to drive our key initiatives, which are to execute on the launch of two Epic LAN-based titles plus one digital native title monthly, expand jackpots, steppers, and table game offerings with our IP and scale, and accelerate Elk Studios' launches and game services, such as marketing jackpot As we look to 2024, we expect to extend our momentum through our regionalized roadmaps and original content that have already brought us great success to date, as well as further expansion into new markets. We are encouraged by the legislative progress in Brazil, confirming our optimism for the future of iGaming legislation as a growth driver for Light & Wonder.
Matt Wilson: We are collaborating closely with operators and I locked casino offering which went live in the quarter in Michigan with Rostrate Golden Nugget and dropping the initial feedback has been very positive with teams working together on both sides as we continue to enhance that product with additional functionality.
Matt Wilson: Importantly, other operators have taken note about collaborative partnerships.
Matt Wilson: <unk> announced we signed an agreement with Penn Entertainment, Michigan, which will include network and bespoke tables.
Matt Wilson: While we are still in early stages, we are already in discussions with customers on expansion opportunities into other regions over.
Matt Wilson: Over the long term, we expect this to be a growth driver for our organic business.
Matt Wilson: The U S is a fast growing market and we will continue to drive out pay initiatives, which are to execute on the launch of two epic land based titles plus one digital 90 total monthly expand jackpot steppers in table game offerings, with our IP and scale and accelerate Elk studios launches and game services, such as marketing jackpot.
Matt Wilson: And multiplex ages, all while focusing on game placements and promotions.
Matt Wilson: As we look to 2024, we expect to extend down momentum through our regionalized Roadmaps and original content that have already brought us great success to date as.
Matt Wilson: As well as further expansion into new market. We are encouraged by the legislative progress in Brazil, confirming our optimism for the future of our gaming legislation as a growth driver for lot and wound up.
Matt Wilson: Our portfolio expansion and legalization will drive future growth, and our impressive scale, robust product offering, and well-established footprint globally position us well to execute when opportunities arise. We are very proud of our accomplishments in 2023 as we executed on a number of key strategic initiatives. Our successful secondary listing on the Australian Securities Exchange, or ASX, further expanded our global presence in May. Subsequently, we were added to the ASX 200 Index last October.
Matt Wilson: Our portfolio expansion and localization will drive future growth and our impressive scale robust product offering and well established footprint globally positions us well to execute when opportunities arise.
Matt Wilson: We are very proud of our accomplishments in 2023 as we executed on a number of key strategic initiatives.
Matt Wilson: A successful secondary listing on the Australian Securities exchange or ASX further expanded our global presence and mate.
Matt Wilson: Subsequently, we were added to the ASX 200 Index last October this inclusion and I have a lot and want us exposure to a broader base of investors further solidifying our position in the Australia capital markets.
Matt Wilson: This inclusion enabled Light & Wonder's exposure to a broader base of investors, further solidifying our position in the Australian capital market. Notably, feedback to date from the Australian investor community continues to exceed our expectations. As we previously mentioned, we closed the site by acquisition in October as well, with integration completed successfully, and collaboration on our cross-platform opportunity accelerated.
Matt Wilson: Notably feedback to date from the Australian Investor community continues to exceed our expectation.
Matt Wilson: As we previously mentioned we closed the thoughts of acquisition in October as well with integration completed successfully and collaboration on a cross platform opportunity accelerating.
Matt Wilson: Finally, we continue to strategically increase our investment in the business and return capital to shareholders, all while improving our cash conversion and further reducing leverage. I'm also pleased to report that Light & Wonder's strong performance did not go unnoticed, as we garnered several Distinguished Industry Awards this past year. As a testament to the success of our cross-platform strategy, we were named Multi-Channel Supplier of the Year at the International Gaming Awards. We were also named Full Service Platform Provider of the Year at the EGR North American Awards, fully demonstrating the power of our well-wrapped portfolio. Our business unit leadership and teams all received accolades at the SBC Awards in North America. Notably, CyPlay was named Social Casino Operator of the Year on the back of its banner year.
Matt Wilson: Finally, we continue to strategically increase our investment in the business and return capital to shareholders, all while improving our cash conversion and further reducing leverage I'm also pleased to report that lot and one of the strong performance did not go unnoticed as we got into several distinguished industry Awards this past year.
Matt Wilson: As a testament to the success of our cross platform strategy, we were named as the multichannel supplier of the year and the International Gaming Awards.
Matt Wilson: We were also named full service platform provider of the year of the AGR North American awards fully demonstrating the power of a well rounded portfolio.
Matt Wilson: Our business unit leadership and teams all received accolades at the SBC Awards in North America, notably soft play was named social casino operator of the year on the back of about a year.
Matt Wilson: Our momentum internationally was also recognized as we were named Casino Supplier of the Year at the Global Gaming Awards in Asia and, most recently, at ICE in London as well. Additionally, we were acknowledged for our CSR and ESG efforts by being named a diverse and inclusive team at the Women in Gaming Diversity Awards. As part of our recent transformation, we have also strengthened our commitment to be a positive influence on the industry, driving key social initiatives that are core to our values. Our primary focus on responsible gaming as an industry leader drives us to create products and services that can be enjoyed responsibly across the globe, as evidenced by our cashless collaboration with peers and regulatory organizations in Australia. Responsibility starts with us, and we will continue to educate our employees on awareness of responsible gaming policies and practices.
Matt Wilson: Our momentum internationally was also recognized as we were named casino supplier of the year at the Global Gaming Awards in Asia, and most recently asked in London as well.
Matt Wilson: Additionally, we were acknowledged.
Matt Wilson: And ESG efforts.
Matt Wilson: Nine a diverse and inclusive team at the women in gaming Diversity Award.
Matt Wilson: Part of our racing transformation, we have also strengthened our commitment to be a positive influence on the industry driving K social initiatives that are core to our values.
Matt Wilson: Our primary focus on responsible gaming as an industry leader that drives us to create products and services that can be enjoyed responsibly across the globe as evidenced with our cashless collaboration with peers and regulatory organizations in Australia.
Matt Wilson: Responsibilities talks about.
Matt Wilson: We will continue to educate our employees on awareness are responsible gaming policies and practices.
Matt Wilson: Our corporate and social responsibility programs, as well as our environmental, social, and governance efforts, will continue to be a top priority for Light & Wonder. To sum up, we expect continued execution of our strategy in 2024. The results we delivered in 2023, along with our ability to attract best-in-class talent, establish market positions, and strong cross-platform capabilities, put us on a clear path to achieve our long-range targets. Our teams have done a tremendous job, and Light & Wonder is shining brighter than ever. We are ready to deliver on the promise of sustainable growth as we continue to be the leading cross-platform global games company. As you know, in December of last year, Oliver Chow was officially named the company's Executive Vice President and CFO. I am delighted to officially welcome Oliver to our senior leadership team. He has already played a pivotal role in driving the success of the transformation, and I'm confident that we'll benefit from his expertise and financial guidance as we continue to execute on our strategy. And with that, I'll turn it over to Oliver.
Matt Wilson: Our corporate and social responsibility programs as well as our environmental social and governance efforts will continue to be a top priority for lot and Wanda.
Matt Wilson: To sum it up we expect continued execution of our strategy in 2020 for the results. We delivered in 2023, along with our ability to attract best in class talent.
Matt Wilson: <unk> market positions and strong cross platform capabilities put us on a clear path to achieve our long range targets.
Matt Wilson: Our teams have done a tremendous job and lot Wanda is shining broader than ever we.
Matt Wilson: We are ready to deliver on the promise of sustainable growth as we continue to be the leading cross platform Global games company.
Matt Wilson: As you know in December of last year, all of which half was officially named the company's executive Vice President and CFO.
Matt Wilson: Allotted to officially welcome all of that to our senior leadership team. He has already played a pivotal role in driving the success of the transformation and I'm confident that we'll benefit from his expertise and financial guidance as we continue to execute on our strategy and with that I'll turn it over to all of us.
Oliver Chow: Thanks, Matt. These are exciting times for the industry and the company, and I'm honored to be part of it as CFO of Light & Wonder. It is my mission to build on our solid financial foundation, leveraging our highly cash-generative business with a continued focus on operational excellence. I appreciate the confidence that our global investor base has placed in us, and I take my role as a steward of investor capital very seriously.
Thanks, Matt.
All of: These are exciting times for the industry and the company and I'm honored to be part of it as CFO of light and wonder.
All of: It is my mission to build on our solid financial foundation, leveraging our highly cash generative business with a continued focus on operational excellence.
I appreciate the confidence that our global Investor base has placed in us and I take my role as a steward of investor capital very seriously.
Oliver Chow: That said, I look forward to working with all of you moving forward. Turning to our operating performance, we were able to capitalize on many of the opportunities presented to us in 2023 and delivered strong top and bottom line growth, both in the quarter and for the full year. For the fourth quarter, consolidated revenue increased 13% year-over-year to $770 million.
Speaker Change: That said I look forward to working with all of you moving forward.
Speaker Change: Turning to our operating performance.
Speaker Change: We're able to capitalize on many of the opportunities presented to us in 2023 and delivered strong top and Bottomline growth.
Quarter and for the full year.
Speaker Change: For the fourth quarter consolidated revenue increased 13% year over year to $770 million.
Oliver Chow: Full year consolidated revenue was up 16% to $2.9 billion, a new record for Light & Wonder. Our results were again driven by double-digit growth across all of our businesses. Operating income was $155 million in the quarter, an increase of 57% over the prior year period, primarily due to strong top-line growth. Lower DNA and Restructuring and Other Costs
Speaker Change: Full year consolidated revenue was up 16% to $2 9 billion.
Speaker Change: A new record for might wonder.
Speaker Change: Our results were again, driven by double digit growth across all of our businesses.
Speaker Change: Operating income was $155 million in the quarter, an increase of 57% over the prior year period, primarily on strong topline growth.
Speaker Change: Lower DNA and restructuring and other costs.
Oliver Chow: Full year operating income was $518 million, a 90% increase compared to the prior year. Consolidated AEPDA grew 14% to $302 million in the fourth quarter compared to the prior year period, primarily driven by double-digit top-line growth and maintaining strong margins across all of our businesses. WeGrew 2023 consolidated AIPDA by 22% to over $1.1 billion. A tremendous outcome reflecting the hard work of our talented team and the continued upward trajectory of our financial performance. Consolidated AEBITDA margin was 39% for the quarter and the year. We saw a 300 basis point increase over 2022 margin levels for the year, with all three business units over 200 basis points higher, executing with a continued focus on operational efficiency. Adjusted MPAT-A was $109 million for the quarter and $388 million for the year.
Speaker Change: Full year operating income was $518 million, a 90% increase compared to the prior year.
Speaker Change: Consolidated EBITDA grew 14% to $302 million in the fourth quarter compared to the prior year period.
Speaker Change: Primarily driven by double digit topline growth and maintaining strong margins across all of our businesses.
Speaker Change: We grew 2023 consolidated EBITDA, 22% to over $1 1 billion.
Speaker Change: Tremendous outcome, reflecting the hard work of our talented team and a continued upward trajectory of our financial performance.
Speaker Change: Consolidated EBITDA margin was 39% for the quarter and the year.
Speaker Change: We saw a 300 basis point increase over 2022 margin levels for the year.
Speaker Change: With all three business units over 200 basis points higher executing with a continued focus on operational efficiencies.
Speaker Change: Adjusted <unk> was $109 million per quarter and $388 million for the year.
Oliver Chow: As a reminder, this metric is not comparable to the prior year period due to the materially different debt and tax profile of the company prior to the completion of the divestitures. Consolidated operating cash flow was $167 million in the quarter. However, comparability is not meaningful, as the prior year period included $176 million of cash tax payments related to the vesture.
Speaker Change: As a reminder, this metric is not comparable to the prior year period due to the materially different debt and tax profile of the company.
Speaker Change: Prior to the completion of the divestitures.
Speaker Change: Consolidated operating cash flow was $167 million in the quarter.
Comparability is not meaningful at the prior year period included a $176 million of cash tax payments related to the divestitures full.
Oliver Chow: Full year consolidated operating cash flow was $590 million, up compared to the prior year, primarily due to cash taxes paid related to the divestitures, which were $32 million in the current year and $641 million in the prior year, as well as lower interest payments. Turning to the business unit, In gaming, we continue to execute against our KPIs, delivering exceptional financial performance supported by our strong product portfolio and proven market strategy. Revenue in the quarter grew 13% year over year to $496 million, and EBITDA increased to $245 million, a 14% increase compared to the prior year period. This impressive revenue growth was led by robust North American and international game sales in the quarter, which increased 31% year-over-year, with profitability primarily driven by revenue growth in the period.
Speaker Change: Full year consolidated operating cash flow was $590 million up compared to prior year, primarily due to cash taxes paid related to the divestitures, which were $32 million in the current year and $641 million in the prior year as well as lower interest payments.
Speaker Change: Turning to the business units.
Speaker Change: In gaming, we continue to execute against our Kpis delivering exceptional financial performance supported by our strong product portfolio and proven market strategy.
Speaker Change: Revenue in the quarter grew 13% year over year to $496 million and EBITDA increased to $245 million, a 14% increase compared to the prior year period.
Speaker Change: This impressive revenue growth was led by robust North American and international game sales in the quarter, which increased 31% year over year with profitability, primarily driven by revenue growth in the period.
Oliver Chow: Full-year revenue grew by 16% to $1.85 billion, and AYIPADA by 20% to $918 million, with solid growth across all businesses. YIVDA's margin was 49% in the quarter and 50% for the year as we trend in line against historical levels, which we expect to sustain given continued execution on our margin enhancement initiatives over the long run. Gaming operations revenue in the quarter increased 7% year-over-year, primarily driven by growth in our North American installed base and revenue per day.
Speaker Change: Full year revenue grew by 16% to $1 $85 billion, and EBITDA by 20% and $918 million with solid growth across all business units.
Speaker Change: And EBITDA margin was 49% in the quarter and 50% for the year as we trend in line against historical levels, which we expect to sustain given continued execution on our margin enhancement initiatives over the long run.
Speaker Change: Gaming operations revenue in the quarter increased 7% year over year, primarily driven by growth in our North American installed base and revenue per day.
Oliver Chow: Our premium North American install base grew 7% year over year. Revenue per day in the quarter grew 6% in North America and 16% in international compared to the prior year, driven by the performance of our premium games and as we continue to optimize our fleet. Global Game Sales, or a bus in the corner, with revenues of 19% sequentially and 31% year-over-year. In addition to the continual momentum in the North American replacement market, we also had a large replacement sale of over 3,700 units into the UK, which affected average selling price in the quarter.
Speaker Change: Our premium North American installed base grew 7% year over year.
Revenue per day in the quarter grew 6% in North America, and 16% and international compared to the prior year driven by the performance of our premium games and as we continue to optimize our fleet.
Speaker Change: Global game sales were robust in the quarter.
Speaker Change: With revenues up 19% sequentially and 31% year over year.
Speaker Change: In addition to the continued momentum in the North American replacement market. We also had a large replacement sale of over $3 700 units into the UK, which affected average selling price in the quarter.
Oliver Chow: We expect this ASP dynamic to continue as we enter the adjacent markets more meaningfully in 2024. On to systems, where we continue to expand on the recurring revenue stream and higher service and maintenance revenue in the quarter. To note, there was a sizable hardware sale for a new property in Asia in the prior year, which affected comparability. Lastly, table revenue was flat compared to the prior year, primarily due to the timing of product sales, which resulted in a stronger third quarter this year.
Speaker Change: We expect this ASP dynamic to continue as we enter into the adjacent markets more meaningfully in 2024.
Speaker Change: Onto systems, where we continued to expand our recurring revenue stream and higher service and maintenance revenue in the quarter.
Speaker Change: To note there was a sizable hardware sale for new property in Asia in the prior year, which affected comparability.
Speaker Change: Lastly, tables revenue was flat compared to the prior year, primarily due to the timing of product sales, which resulted in a stronger third quarter. This year.
Oliver Chow: Looking ahead over the next several years, we expect to expand on the higher-margin and recurring revenue segments of the gaming business over time. We expect 2024 to be another year of robust sales underpinned by innovation and investment in our product portfolio. Turning to side play, we once again delivered record fourth-quarter and full-year performance, outpacing the social casino market and gaining market share on solid execution against our ROI metric. Revenue in the quarter was up 12% year over year to $204 million on higher monetization, leveraging game content, dynamic live operations, and effective marketing strategies, with Quick Hits, Goldfish Casino, and 88 Fortunes all delivering significant double-digit gains on record revenues. EBITDA increased 17% to $69 million year-over-year, with AEPA margins of 200 basis points to 34%. Full year revenue was $777 million, up 16%, and EBITDA was $243 million, up 30%; both were the highest in Cypher history.
Speaker Change: Looking ahead over the next several years we.
Speaker Change: We expect to expand on the higher margin and recurring revenue segments of the gaming business over time.
Speaker Change: We expect 2024 to be another year of robust sales underpinned by innovation and investment in our product portfolio.
Speaker Change: Turning to slide five we once again delivered record fourth quarter and full year performance.
Speaker Change: Pacing, the social casino market and gaining market share on solid execution against our ROI metrics.
Speaker Change: Revenue in the quarter was up 12% year over year to $204 million on higher monetization leveraging game content.
Speaker Change: Dynamic live ops and effective marketing strategies with quick hits Goldfish casino and 88 fortunes, all delivering significant double digit gains on record revenue.
Speaker Change: EBITDA increased 17% to $69 million year over year.
Speaker Change: With EBITDA margins up 200 basis points to 34%.
Speaker Change: Full year revenue was $777 million up 16% and EBITA was $243 million up 30%.
Speaker Change: Both for the highest in <unk> history.
Oliver Chow: 5Play's investment in talent and core capabilities has driven significant uplift across key monetization metrics. We saw record average revenue per daily active user increase 15% to $1, and record average monthly revenue per paying user increased 15% to over $113 compared to the prior year quarter.
Speaker Change: Hyatt place investment in talent and core capabilities has driven significant uplift across key monetization metrics.
Speaker Change: We saw a record average revenue per daily active user increased 15% to one dollar and.
Speaker Change: And record average monthly revenue per paying user increase 15% to over $113 compared to the prior year quarter.
Oliver Chow: Our daily active users and monthly paying users both remain steady, and payer conversion rate continues to reach quarterly new heights at 10.7%. Prudent and diligent marketing and UA spend is reflective of CyPlay, and more broadly, Light & Wonder's DNA. Every decision is carefully considered prior to execution.
Speaker Change: Our daily active users and monthly paying users both remained steady.
Speaker Change: And payer conversion rate continues to reach quarterly new heights at 10, 7%.
Speaker Change: Prudent and diligent marketing and UA spend is reflective of Si play and more broadly lightened wonders DNA.
Speaker Change: Every decision is carefully considered prior to execution.
Oliver Chow: The margin expansion we saw over the past several quarters is a great example of the health of the side plate business. Based on our marketing return analysis, we have identified a number of UAE investment opportunities throughout 2024, notably in the first half, such as the new Joel McHale campaign we launched in the current quarter, along with expansion and innovation costs as we look to grow in nascent markets and develop new games. Our margins will fluctuate in the near term with these investors, all of which is expected to fuel long-term sustainable growth. We applaud the success SciPlay achieved this year and the incredible level of execution we're seeing across the portfolio. This gives us confidence in further development of greenfield opportunities, value-enhancing initiatives such as our direct consumer platform, and the performance of our core social casino business. On to iGaming, where our performance reflected growth momentum in the U.S. and international markets, as well as continued strength in our land-based original content launches and scaling third-party aggregation on our platform. Revenue in the quarter increased 13% year-over-year to $70 million, and EBITDA grew 21% to $23 million.
Speaker Change: The margin expansion, we saw over the past several quarters is a great example of the health of the <unk> business.
Speaker Change: Based on our marketing return analysis, we have identified a number of UA investment opportunities throughout 2024, notably in the first half such as the new Joel Mchale campaign, we launched in the current quarter, along with expansion and innovation costs as we look to grow in nascent markets and developing new games.
Speaker Change: Our margins will fluctuate in the near term with these investments.
Speaker Change: All of which is expected to fuel long term sustainable growth.
Speaker Change: We applaud the success <unk> achieved this year and the incredible level of execution, we're seeing across the portfolio.
Speaker Change: This gives us confidence in further development of greenfield opportunities value enhancing initiatives, such as our direct to consumer platform.
Speaker Change: And the performance of our core social casino business.
Speaker Change: Anti gaming or our performance reflected growth momentum in the U S and international markets as well as continued strength in our land based original content launches and scaling third party aggregation of our platform.
Speaker Change: Revenue in the quarter increased 13% year over year to $70 million and EBITDA grew 21% to $23 million.
Oliver Chow: Full-year revenue increased by 15% to $275 million, and YIPA DAW was up 19% to $95 million. As a reminder, we benefited from termination fees in 2023 from certain operators as they pivoted on their digital strategy, which we do not expect to reoccur in 2024. YIPDA margin improved 200 basis points to 33% in the quarter versus the prior year period, given revenue growth. This resulted in an overall AEBITDA margin of 35% for the year as we continue to benefit from scale while also investing in our portfolio. We saw solid growth year over year in both our North America and international markets with record player numbers on our platform in the quarter. Wagers processed through our iGaming platform increased to $21.6 billion, also a record high.
Speaker Change: Full year revenue increased by 15% to $275 million and EBITDA was up 19% to $95 million.
Speaker Change: As a reminder, we benefited from termination fees in 2023 from certain operators as they pivoted on their digital strategy, which we do not expect to reoccur in 2024.
Speaker Change: EBITDA margin improved 200 basis points to 33% in the quarter versus the prior year period, driven by revenue growth.
Speaker Change: This resulted in an overall EBITDA margin of 35% for the year as.
Speaker Change: As we continued to benefit from scale, while also investing in our portfolio.
Speaker Change: We saw solid growth year over year in both our North America and in international markets with record player numbers on our platform in the quarter.
Speaker Change: Wagers processed through our I gaming platform increased to $21 6 billion.
Speaker Change: Also a record high.
Oliver Chow: In fact, we saw record quarters in the U.S. and Canada with GGR in each region of 23% year-over-year and double-digit sequential quarterly growth. The U.S. market was driven by an increased volume of land-based content, along with continued scaling of the OGS partner network. Ontario continues to ramp with an increasing volume of first-party content. GDR volumes in Europe also reach record highs, marking our third sequential quarter of growth with 11% year-over-year improvement driven by performance across first party, elk, and lightning box content.
Speaker Change: In fact, we saw record quarters in the U S and Canada with GTR in each region up 23% year over year and with double digit sequential quarterly growth.
Speaker Change: The U S market was driven by increased volume of land based content along with continued scaling of the lgs partner network Antara.
Speaker Change: Ontario continues to ramp with increasing volume of first party content.
Speaker Change: <unk> volumes in Europe also reached record highs, marking our third sequential quarter of growth with 11% year over year improvement driven by performance across first party.
Speaker Change: And lightning box content.
Oliver Chow: We are well positioned to continue expanding our iGaming business with a best-in-class aggregation platform and a robust product portfolio. Going into 2024, we expect growth to be largely in line with overall market expansion, excluding the termination fees we benefit from in 2023. Contributions from Blythe Casino are expected to be a modest drag on AEPDA and margins during the year as we continue to ramp up and invest in
We are well positioned to continue expanding our I gaming business with best in class aggregation platform and a robust product portfolio.
Speaker Change: Going into 2024, we expect growth to be largely in line with overall market expansion.
Speaker Change: Excluding the termination fees, we benefit from in 2023.
Speaker Change: Contributions from live casino is expected to be a modest drag on EBITDA and margins during the year as we continue to ramp up and invest in this business.
Oliver Chow: I am confident in our ability to expand margins as we scale our offerings over time. Over the past year, we've diligently managed our cost base and driven margin expansion. Operational excellence remains a top priority as we further integrate our businesses and identify efficiency.
Speaker Change: I am confident in our ability to expand margins as we scale our offerings over time.
Speaker Change: Over the past year, we've diligently managed our cost base and drove margin expansion.
Speaker Change: Operational excellence remains a top priority as we further integrate our businesses and identify efficiencies.
Oliver Chow: Importantly, with the results and healthy business that we saw this year, we will continue to reinvest back into all three platforms through R&D and CapEx to propel our growth pillars. We will maintain a strategic approach that ensures optimized output with a rigorous assessment of ROI. More importantly, we will continue to invest in our people and technology, the backbone of Light & Wonder that drove our success throughout this transformation and into the execution. As our business scales, we also expect associated corporate costs to increase proportionally, providing support for the business units through shared services and other functions.
Speaker Change: Importantly, with the results and healthy business that we saw this year, we will continue to reinvest back into all three platforms through R&D and capex to propel our growth pillars.
Speaker Change: We will maintain a strategic approach that ensures optimize output with a rigorous assessment of ROI.
Speaker Change: More importantly, we will continue to invest in our people and technology backbone of light and wonder that drove our success throughout this transformation and into the execution phase.
Speaker Change: As our business scales we.
Speaker Change: We also expect associated corporate cost to increase proportionately.
Speaker Change: Providing support for the business units to shared services and other functions.
Oliver Chow: We're building out a lean management team to embed this methodology throughout the organization to drive efficiency and scale. We're challenging our teams to act like owners and arming them with tools and training to make a difference across the organization. As a reminder, in Q3, we called out elevated legal costs of approximately $10 million, which we expect will have an impact across the first and second quarters of 2024.
We are building out a lean management team to embed this methodology throughout the organization to drive efficiency and scale.
Speaker Change: We're challenging our teams to act like owners and arming them with tools and training to make a difference across the organization.
Speaker Change: As a reminder in Q3.
Speaker Change: We called out elevated legal costs of approximately $10 million, which we expect will have an impact across the first and second quarters of 2024.
Oliver Chow: That said, we will continue to stay laser focused on improving processes. They've committed to margin expansion and driving sustainable long-term profitability through value-enhancing initiatives, ensuring we have a prudent sourcing process to drive efficiency as we scale our gaming business, and continuous improvement in developing our IT infrastructures. As I step into the CFO role, I'm fortunate to have inherited a business with a healthy balance sheet and a strong financial profile, especially after the side play deal that we closed in October for approximately $500 million before fees and other expenses. We ended the year with a net debt leverage ratio of 3.1 times, a 0.2 turn improvement over the prior year, and within our targeted range of 2.5 to 3.5 times. Recently, in January, we were able to further improve our transformed debt profile by repricing our Term Loan B.
Speaker Change: That said, we will continue to stay laser focused on improving processes.
Speaker Change: <unk> committed to margin expansion and driving sustainable long term profitability do value enhancing initiatives.
Speaker Change: Ensuring we have a prudent sourcing process to drive efficiency as we scale our gaming business.
Speaker Change: Continuous improvement and developing our it infrastructures.
Speaker Change: As I step into the CFO role and fortunate to have inherited a business with a healthy balance sheet and a strong financial profile.
Speaker Change: After the <unk> deal that we closed in October for approximately $500 million before fees and other expenses. We ended the year with a net debt leverage ratio of three one times, a two turn improvement over the prior year.
Speaker Change: And within our targeted range of two five to three five times.
Speaker Change: Recently in January we were able to further improve our transform debt profile by repricing our term loan b.
Oliver Chow: Reducing our interest rate by 35 basis points and driving approximately $8 million in annualized interest cost savings. With the refinance number 858 Senior Unsecured Notes that we completed in 2023, in total, we expect approximately $14 million in annualized interest expense savings. Our profile is further enhanced by gaining access to the cash on SIPLAY's balance sheet and the cash flow generated from the business going forward, providing flexibility and optionality for sustainable growth and value creation as we continue to optimize our cash balance. We reported a consolidated free cash flow of $70 million in the quarter. The current year period was affected by $16 million primarily in cost supporting the strategic review and related activities associated with the CyPlay merger, while the prior year was affected by $176 million in cash taxes paid related to the divestitures. All year consolidated free cash flow was $291 million, affected by $32 million in cash tax payments related to the divestitures and $25 million primarily in cost supporting the strategic review and related activities.
Speaker Change: Our interest rate by 35 basis points.
Speaker Change: And driving approximately $8 million in annualized interest cost savings.
With the refinancing of our eight <unk> senior unsecured notes that we completed in 2023.
Speaker Change: In total we expect approximately $14 million in annualized interest expense savings.
Speaker Change: Our profile is further enhanced by gaining access to the cash on <unk> balance sheet and the cash flow generated from the business going forward.
Speaker Change: Providing flexibility and optionality for sustainable growth and value creation as we continue to optimize our cash balances.
We reported consolidated free cash flow of $70 million in the quarter.
Speaker Change: The current year period was affected by $16 million, primarily in cost supporting the strategic review and the related activities associated with the <unk> merger.
Speaker Change: While prior year was affected by $176 million in cash taxes paid related to the divestitures.
Speaker Change: Full year consolidated free cash flow was $291 million affected by $32 million in cash tax payments related to the divestitures.
Speaker Change: And $25 million, primarily in cost supporting the strategic review and related activities.
Oliver Chow: Our 2023 free cash flow conversion rate, excluding the aforementioned items, was 31%, a 1,200 basis point increase from the prior year as we stayed committed to translating each dollar to the bottom line. Looking ahead, we expect restructuring costs to wind down as transaction-related costs roll off. Over the long term, cash interest savings will be at least partially offset by expected increases in capex, largely driven by gaming as we continue to invest in growing our premium install base. We'll have some puts and takes by quarter based on the seasonality of tax payments, working capital, and other items. But our annual cash flow conversion rate is expected to increase over time due to the flow through our highly cash-generative businesses and as we continue to focus on capital decisions and returns. Free cash flow generation remains a key priority and a driver of enhancing shareholder value.
Speaker Change: Our 2023 free cash flow conversion rate, excluding the aforementioned items was 31%.
Speaker Change: 1200 basis point increase from the prior year as we stay committed to translating each dollar to the bottom line.
Speaker Change: Looking ahead, we expect restructuring costs to wind down as transaction related costs roll off.
Speaker Change: Over the long term cash.
Speaker Change: Cash interest savings will be at least partially offset by expected increases in capex.
Speaker Change: Really driven by gaming as we continue to invest in growing our premium installed base.
Speaker Change: We will have some puts and takes by quarter based on the seasonality of tax payments working capital and other items.
Speaker Change: But our annual cash flow conversion rate is expected to increase over time on the flow through of a highly cash generative businesses and as we continue to focus on capital decisions and returns.
Speaker Change: Free cash flow generation remains a key priority and a driver to enhancing shareholder value.
Oliver Chow: In 2023, we continued what we set out to do. Advancing Our Balance and Opportunistic Capital Allocation Framework. Debt Reduction, which we've executed evidence for a transformed balance sheet, returning substantial capital to shareholders through share purchases. And lastly, disciplined investment and key growth opportunities. We returned $25 million of capital to shareholders through share repurchases during the quarter, for a total of $170 million returned during 2023.
Speaker Change: In 2023, we continued what we set out to do.
Speaker Change: Advancing our balanced and opportunistic capital allocation framework.
Speaker Change: Debt reduction.
Which we've executed evidenced through our transformed balance sheet.
Speaker Change: Turning to substantial capital to shareholders through share repurchases and lastly, disciplined investment in key growth opportunities.
Speaker Change: We returned $25 million of capital to shareholders through share repurchases during the quarter for a total of $170 million of turns during 2023.
Oliver Chow: Since the initiation of the program, we have returned $575 million of capital to shareholders, which is approximately 77% of total program authorization. We'll continue to monitor the market for opportunities going forward. As I mentioned before, we will continue to invest in our people and core capabilities to support sustainable long-term growth and bolster our leadership positions with an commitment to driving high ROI, which exceeds our return threshold. Our capital allocation priorities will always be in the context of a healthy balance sheet.
Speaker Change: Since the initiation of the program, we have returned $575 million of capital to shareholders.
Speaker Change: Approximately 77% of total program authorization.
Speaker Change: We will continue to monitor the market for opportunities going forward.
Speaker Change: As I mentioned before we will continue to invest in our people and core capabilities to support sustainable long term growth and bolster our leadership positions with a commitment to driving high ROI, which exceeds our return thresholds.
Speaker Change: Our capital allocation priorities will always be in the context of a healthy balance sheet.
Oliver Chow: That said, we remain flexible in evaluating all available options and will only deploy excess capital in the most value-creative ways to our show. We have a great team here at Light & Wonder, and I'm extremely excited to be partnering with Matt and the executive team to take us to the next level, to continue to execute our strategy that is core to our culture in a resilient and dynamic industry. What our teams have accomplished to date reflects strong momentum, and best of all, high confidence in our growth journey. With that, we will turn it over to the operator for your questions. Please press star followed by the number 1 if you'd like to ask a question and ensure your device is unmuted locally when it's your turn to... If you change your mind or your question has already been answered, you can withdraw your question by pressing star followed by the number on your screen.
Speaker Change: We will remain flexible in evaluating all available options and will only deploy excess capital in the most value accretive ways to our shareholders.
Speaker Change: We have a great team here of late and Wonder and I am extremely excited to be partnering with Mack and the executive team to take us to the next level.
Speaker Change: We continue to execute to our strategy that is core to our culture and.
Speaker Change: And a resilient and dynamic industry.
Speaker Change: When our teams have accomplished to date reflects strong momentum and best of all high confidence in our growth journey continuing.
Speaker Change: With that I will turn it over to the operator for your questions.
Speaker Change: Thank you. Please press star followed by the number one if you'd like to ask a question and ensure your devices, Amit you'd likely when it's your turn to speak.
Speaker Change: You changed your mind or your question has already been onset you can withdraw your question by question Star followed by the number changed.
Barry Jonas: Our first question comes from Barry Jonas of Tourist Security. Your line is open, please go ahead. Hey, guys. Can you give us an update on the road to 1.4 billion, maybe talk about how it's progressing? Thanks. Yeah, hey, Barry, Matt Wilson, we anticipated that question.
Speaker Change: Our first question comes from Barry Jonas of curious Securities. Your line is open. Please go ahead.
Barry Jonas: Hey, guys.
Barry Jonas: Can you give us an update on the road to one 4 billion and maybe talk about how it's progressing.
Matt Wilson: Yeah, Hi, Barry Matt Wilson, we anticipated that question.
Matt Wilson: First of all, for the Light & Wonder employees on the line, congratulations on what a fantastic quarter and a fantastic year. I think, you know, when we started off on this journey, May 22, we put our Investor Day targets out for $1.4 billion. It necessitated a 15% CAGR to get us there.
Matt Wilson: First of all for the lot and want our employees on the line congratulations what a fantastic quarter and a fantastic.
Matt Wilson: Yes, when we started off on this journey may of 'twenty, two we put in our Investor day targets out for $1 4 billion.
Matt Wilson: Necessitated a 15% CAGR to get US there, we just closed 2023 with a 22% growth rate of the EBITDA line.
Matt Wilson: We just closed 2023 with a 22% growth rate in the AEBDA line, which was very impressive from my vantage point. I think one of the equally impressive things was that all three of our businesses grew double digits. So the portfolio of businesses we have really validates the strategic decisions that we made to focus the organization around content.
Matt Wilson: Which was very impressive from my vantage point I think one of the equally impressive things was all three of our businesses grew double digits.
Matt Wilson: The portfolio of businesses, we have really validates the strategic decisions that we made to focus the organization around content.
Matt Wilson: I think we have in place the talent, the investments, and the product pipeline to continue this pathway to $1.4 billion. We've just kind of re-calibrated our strategic plan, and feel very confident we can get to $1.4 billion. I think this team is also doing a fantastic job just around cost optimisation. I think they're equally as focused on sustainable growth as they are on efficient growth.
Matt Wilson: We have in place the talent the investments in the product pipeline to continue this pathway to the $1 4 billion with just kind of recalibrated.
Matt Wilson: Our strategic plan and feel very confident we can get to the $1 4 billion. I think the same is also doing a fantastic job just around cost optimization I think equally as focused on sustainable growth as they are in efficient growth.
Matt Wilson: So lots of pathways to get us there. And we feel like with the year we just had in the quarter, we just have great momentum leading into the remaining years of that strategic plan. But Oliver, you may want to add some detail. Yeah, thanks, Matt. And hey, Barry, how are you?
Matt Wilson: Lots of pathway to get us there and we feel like with the year. We just had in the quarter. We just had great momentum leading into the remaining use of that strategic plan, but all of that you might want to add some detail yeah. Thanks, Matt Hey, Barry how are you.
Oliver Chow: As Matt mentioned, you know, we continue to have tremendous momentum across the business. We just posted our fifth consecutive quarter of double-digit year-over-year revenue growth across all three business units, which obviously gives us a lot of confidence in our ability to continue to deliver on our growth plan. We know what we need to do to execute against our commitments, and in gaming, that's to achieve modest share gains in core class three.
Speaker Change: As Matt mentioned, we continue to have tremendous momentum across the business. We just posted our fifth consecutive quarter of double digit year over year revenue growth across all three business units, which obviously gives us a lot of confidence in our ability to continue to deliver on our growth plans.
Speaker Change: We know what we need to do to execute against our commitments and in gaming.
Speaker Change: To achieve modest share gains in the core core class III so in game sales.
Oliver Chow: So in game sales, we demonstrated game sales growth in 2023 across both North America and Australian markets. And we'll also continue to grow and expand the gaming operations premium install base. The key for us will be the proliferation and adjacencies, and we'll continue to deliver strong products to the Oregon State Lottery, and we also recently announced our deal with Lotto Quebec. We'll also be entering the Georgia Co-op market here in the first half. From a CyPlay perspective, we continue to drive record revenue and gross share as we continue to leverage our best-in-class CyPlay engine across the portfolio.
Speaker Change: We demonstrated game sales growth in 2023 across both North America, and Australia markets and we will also continue to grow and expand the gaming operations premium installed base.
Speaker Change: The key for us will be the proliferation into Adjacencies and we'll continue to deliver strong products into Oregon State Lottery and we also recently announced our deal with lot of Quebec.
Speaker Change: We'll also be entering the Georgia coli market here in the first half.
Speaker Change: From a cycle perspective, we continue to drive record revenue and grow share as we continue to leverage our best in class Si play engine across the portfolio and we expect to.
Oliver Chow: And we expect to continue to scale ARPDAU while seeing stability in our player base, and that's going to be critical for us here over the next couple of years. You know, we've made strategic UA marketing investments, and we'll continue to do so effectively for long-term growth. Josh and the team are just, have just done an exceptional job in that space.
Speaker Change: We continue to scale <unk>, while seeing stability in our player base and that's going to be critical for us here over the next couple of years, we've made strategic UA marketing investments and we will continue to do so effectively for long term growth and Josh and the team are just have just done an exceptional job in that space.
Oliver Chow: In iGaming, you know, we expect continued growth in global markets, particularly here in North America, as we've seen over the past couple of years. But more importantly, being able to leverage our proven land-based titles cross-platform, as evidenced in some of the record game launches you saw across 2023. And then lastly, you know, Matt mentioned this earlier, our margin enhancement initiatives were a key contributor for us, and it showed in our healthy margins. So not only in the quarter but for the full year.
Speaker Change: And I gaming, we expect continued growth in global markets, particularly here in North America as we've seen over the past couple of years, but more importantly, being able to leverage our proven land based titles cross platform as we as evidenced in some of the record game launches you saw across 2023.
Speaker Change: That's expected to drive sustainable growth for us into the future and then lastly, Matt mentioned this earlier our margin enhancement initiatives, where were a key contributor for us and it showed in our healthy margins saw not only in the quarter, but for the full year and we just see opportunities to expand that over time as we continue to improve efficiencies throughout the business. So.
Oliver Chow: And we just see opportunities to expand that over time as we continue to improve efficiency, you know, throughout the business. So, short of it, our momentum and the performance in this quarter and 2023 really do give us a lot of confidence in our ability to capture the opportunities we see ahead to not only deliver 1.4 billion but to drive sustainable growth past. I guess that's a good point for my follow-up.
Speaker Change: Long short of it in our momentum and the performance in this quarter and 2023 really does give us a lot of confidence in our ability to capture the opportunities we see ahead to not.
Speaker Change: Not only deliver $1 4 billion, but to drive sustainable growth past 2025.
Speaker Change: Good.
Speaker Change: For my follow up I think as the.
Barry Jonas: You know, I think as the conviction of 1.4 grows, we're hearing some investors ask about what happens after that. Any chance you can give a little bit more color about how you see sort of the next steps beyond 1.4? Yeah, I think we've put together this organization of businesses that is a growth engine and will continue to be a growth engine beyond the 2025 timeframe. We obviously haven't put a target out yet; we'll kind of come back to investors probably in the next few quarters and kind of restate where we go beyond 2025. At the moment, we're laser focused on getting to that number, which there wasn't a lot of conviction for in the market a couple of years ago, but there is growing sentiment that it's an achievable set of targets. So yeah, not guiding anything beyond 2025; we'll kind of reconvene with the investor base soon enough. Awesome. Thanks so much. Our next question comes from Chad Beynon of Macquarie. Your line is open, please go ahead.
Speaker Change: Our conviction on one four grows we're hearing some investors ask about what happens after that any chance you could give a little bit more color about how you see sort of the next steps.
Speaker Change: Steps beyond the $1 four.
Speaker Change: Yes, I think.
We put together this organization of businesses that is a growth engine and we will continue to be a growth engine beyond the 2025 timeframe, we obviously havent put a target out yet.
Speaker Change: Come back to investors probably in the next few quarters and kind of race date, where we go beyond 2025 at the moment, we are laser focused on getting to that number which there wasn't a lot of conviction for in the market. A couple of years ago, but there is growing sentiment that it's an attainable set of targets yet not guiding to anything beyond 2025.
Speaker Change: Reconvening with Investor back soon enough.
Speaker Change: Okay.
Speaker Change: Thanks, so much.
Speaker Change: Our next question comes from Chad Beynon of Macquarie.
Chad Beynon: Your line is open. Please go ahead.
Chad Beynon: Afternoon, Matt Oliver team. Thanks for taking my question. I wanted to ask one specifically about gaming.
Chad Beynon: Good afternoon, Matt all of her team. Thanks for taking my question I wanted to ask one specifically around gaming over you just mentioned some of the adjacency opportunities like Oregon, Quebec co am et cetera.
Oliver Chow: Oliver, you just mentioned some of the adjacency opportunities like Oregon, Quebec, COAM, etc. But as we think about just the general replacement market, you're communicating with your partners in the US and Australia. How does that feel currently?
Chad Beynon: But as we think about just the general replacement market.
Chad Beynon: You are communicating with your partners in the U S and Australia, how does it feel currently and how does this compare to prior years, where the industry may have had elevated industry orders. Thanks.
Chad Beynon: And how does this compare to prior years where the industry may have had elevated industry orders? Thanks. Yeah, thanks, Chad.
Speaker Change: Yes, Thanks, Chad I think now the industry seems to be on solid footing I think we're seeing healthy player trends across all of our end markets. I think we did see some isolated softness in January.
Matt Wilson: I think the industry seems to be on solid footing. I think we're seeing healthy player trends across all of our end markets. I think we did see some isolated softness in January in the US land-based market in certain areas, and I think that was really attributed to weather, and I think that's a kind of one-time event that we cycled over.
Speaker Change: U S land based market in certain areas and I think that was really attributed to the weather and I think that's kind of one time event that we cycled over but aside from that really healthy end market I think one of the data points are uniquely interesting to US is the Eilers survey from Q4 and looking at specifically purchase intentions. So it does look like in that number.
Matt Wilson: But aside from that, really healthy end markets, I think one of the data points that's uniquely interesting to us is the ILS survey from Q4 looking specifically at purchase intentions. So it does look like, in that number, forward-looking purchase intentions by casino operators in North America are up sequentially year-on-year, which I think is very encouraging. There was also a nice tick-up in terms of their intentions to allocate their share to Light & Wonder.
Speaker Change: Forward looking purchase intentions by casino operators in North America are up sequentially and year on year, which I think is very encouraging ortho and not pick up in terms of their intention to allocate their share to lot and Wanda.
Matt Wilson: So I think the end markets are looking healthy. We stay focused on controlling the controllables, build great products, deliver great service to our customers, and we'll win as a consequence of that. Yeah, and just to build on that, Matt, obviously we haven't seen any major shifts just from an operator's purchasing behavior, so we do see a pretty solid funnel of demand here in Q1 and starting the early kind of stages of the Q2 funnel. In addition, we also see solid data points from a coin-in perspective, and those are trending well with our high-performing WAP titles.
Speaker Change: I think the end markets are looking healthy we stay focused on controlling the controllable build great products and deliver great service to our customers and win as a consequence of that yes, and just to build on that Matt. Obviously, we haven't seen any major shifts just from an operator's purchasing behavior. So we do see a pretty solid funnel demand here in Q1.
Matt Wilson: And starting the early stages of Q2 funnel. In addition, we also see solid data points from our coin in perspective, and those are trending well with our high performing Wap titles. So so broadly speaking we don't see anything in the data that would suggest any major shifts, but if we do we are well positioned to to move and pull.
Oliver Chow: So broadly speaking, we don't see anything in the data that would suggest any major shifts, but if we do, we're well-positioned to move and pull levers as we've executed on some really important critical operational enhancement initiatives. So overall, to Matt's point, healthy GGR levels, resilient gaming consumers, and we'll just be nimble with anything. It's great to hear from you. Thank you very much. I appreciate it. The next question comes from David Katz of Jeffrey's. Your line is 8. Thank you. Afternoon, everyone.
Matt Wilson: Leavers as we've executed on some really.
Matt Wilson: <unk> critical operational enhancement initiatives, so overall to Matt's point healthy CAGR levels resilient gaming consumer and will just be nimble if anything shifts.
Speaker Change: It's great to hear thank you very much appreciate it.
Speaker Change: Thanks, Let's welcome. The next question comes from David Katz of Jefferies. Your.
Your line is open.
David Katz: Thank you afternoon, everyone. So I wanted to talk about.
David Katz: So I wanted to talk about the product and some of the standouts, you know, what we've seen so far from Dragon Train, which is primarily, if I'm correct, driving Australia and, you know, not fully loaded and approved here in the US, right? That's happening over the next couple of quarters. If you could, you know, just color in for us what we might expect to see from that and, you know, just help us understand what other product introductions we might be seeing in those coming months that, you know, sort of drive us through the rest of this year also. And then I have one quick question.
David Katz: Product and some of the standout what we've seen so far from Dragon train, which is primarily if I'm correct driving Australia.
David Katz: Not fully loaded and approved here in the U S right that's happening over the next couple of quarters.
David Katz: If you could just color in for us what we might expect to see from that.
David Katz: Just help us understand what other product introductions, we might be seeing in those coming months.
David Katz: Sort of drivers through the rest of this year also and then I have one quick follow up.
Matt Wilson: Yeah, great. Thanks, David. Yeah, this is a product we're really excited about. We debuted it at the AGE show back in August, and subsequently, it went to market in Australia.
Speaker Change: Yeah, great. Thanks, David Yes. This is the product we're really excited about we debuted this at the <unk> show back in August subsequently went to market in Australia very quickly went to number 123 and four in the Israeli market.
Matt Wilson: Very quickly it went to numbers one, two, three, and four in the Australian market, and has really been dominating the New South Wales market. It was now in Queensland and Victoria.
Speaker Change: Has really been dominating the new South Wales market with now in Queensland, and Victoria has done very well across all of those markets. So kudos to the team down there thats built this market leading product, we're really excited about taking it to all of that market's not Jeff.
Matt Wilson: It's done very well across all of those markets, so kudos to the team down there that's built this market-leading product. We're really excited about taking it to all of our markets, not just gaming, but taking it to CyPlay and also taking it to iGaming. Yeah, the launch in the US is imminent.
Speaker Change: But taking it to <unk> and also taking it to I gaming the launch in the U S is imminent.
Matt Wilson: So it's a this quarter, next quarter type rollout event. Pipeline's building nicely. But I think importantly, we've got a really diverse set of products that's driving interest from operators. I think, again, pointing back to the ILS survey, we had a really nice release last week with a diverse set of games kind of lighting up the charts. So really encouraged by that.
Speaker Change: This quarter next quarter type rollout event pipeline is building nicely.
Speaker Change: But I think importantly, we've got a real diverse set of product that's driving interest from from operators I think again pointing back to the Ilo Survey, we had a really nice released last week with a diverse set of guidance kind of lining up the charts are really encouraged by that and the teams across the globe not just the dragon trying team who were really proud of but the entire R&D organization.
David Katz: And the teams across the globe, not just the Dragon Train team, who we're really proud of, but the entire R&D organization, you can just really start to see the fruits of the labor that's gone into kind of turning the product strategy around, showing up on the scoreboard in the ILS results. And that, ultimately, will show up on the scoreboard from a financial perspective. So yeah, launch is imminent in the US, and it'll go across all of our channels. And we're very excited about that. And just one quick follow-up. I know, Oliver, you mentioned adjusted cash conversion in your prayer remarks. Is there a sort of notional target or, you know, normalized aspirational level, whatever other adjective we could put around it, for what cash conversion you could get to one day in the future? Yeah, thanks.
Speaker Change: You can just really start to see the fruits of the labor that's going into kind of turning the product strategy around showing up on this cohort in the <unk> results and that ultimately will sharpen this cohort from a financial perspective side, yet launch is imminent in the U S and will go across all of our channels and we're very excited about that product.
Speaker Change: Understood.
Speaker Change: Just one quick follow up I know Oliver you mentioned cash adjusted cash conversion.
Speaker Change: And you're.
Oliver: In your prepared remarks.
Speaker Change: Is there a sort of notional target or normalized aspirational level or whatever other adjectives, we could put around it for what cash conversion you could get to one day in the future.
Oliver: Yeah. Thanks. Thanks for the question, Yes, listen I think we look at free cash flow in a couple of different ways. One is we're going to look at it from an annualized basis first and foremost so we know theres a lot of noise.
Oliver Chow: Thanks for the question. Yeah, listen, I think we look at free cash flow in a couple of different ways. One is, you know, we're going to look at it on an annualized basis, first and foremost. So we know there's a lot of noise within some of the quarters. In terms of kind of guidance, we haven't really provided updated guidance there, but what I will say is that, you know, we see us optimizing our cash flow here, and ultimately, this is a great starting point for us, and we'll continue to sustainably drive that higher over the coming years. But, you know, there'll be some puts and takes here, but I think ultimately we're going to scale from this point forward. Thank you. The next question comes from Rowan Gallagher of Garda. Please go ahead.
Oliver: Within some of the quarters in terms of kind of guidance, we haven't really provided updated guidance there, but what I will say is that.
Oliver: We see it.
Oliver: We are optimizing our cash flow here and ultimately this is a great starting point for us and will continue to sustainably drive that higher over the coming years.
Oliver: But there'll be some puts and takes here, but I think ultimately we're going to scale from this point forward.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Robert Gallagher Jordan. Please go ahead.
Rowan Gallagher: Yeah, hey, Matt, Oliver, good afternoon. Good morning to people here in Australia. Question in relation to game sales, outright sales obviously were a key feature this quarter. Obviously, you've talked about adjacencies, you're the market leader in Illinois, and you've had some early success in Oregon and Canada. Can you talk through the adjacencies, Matt, in particular sizing the market and the opportunity for Light & Wonder going forward, please? Yeah, hey Rowan and everyone down under.
Speaker Change: Yeah, Hey, Matt I'll have a good afternoon.
Hey, good morning pipeline here in Australia.
Speaker Change: Question in relation to time sales outlet sales, obviously, that's a key feature of this quarter.
Speaker Change: Obviously, you've talked about Adjacencies market later in Illinois, you have had some early success in Oregon, Canada.
Speaker Change: Can you talk through around the Adjacencies, Matt in particular sizing the market and the opportunity for Monday going forward. Please.
Speaker Change: Yeah.
Matt Wilson: Yeah, Hi, Ya Rona and everyone Downunder, yes, the adjacencies opportunities a big theme of the gaming story here in terms of growth.
Matt Wilson: Yeah, the adjacencies opportunity is a big theme of the gaming story here in terms of growth over the next few quarters and few years, I would say. It's a share taker strategy. These are markets that we've been delivering exactly 0% share in for the last five years.
Matt Wilson: Three quarters in two years I would say it's it is a share taking strategy. These are markets that we've been delivering exactly zero percent share and for the last five years and.
Matt Wilson: And so every incremental order we get in these adjacencies is naturally, you know, share gain. So yeah, like you said, OSL has been a great opportunity for us. We're a market leader in that space now. Our product that we've rolled out is the best performing in that region, which is exciting. You know, we should see subsequent orders coming off the back of that OSL introduction.
Matt Wilson: Every incremental or do we get in these adjacencies is naturally share guy and so like you said ourselves being a great opportunity for us where our market later in that space now a product that we've rolled out is the best performing in that region, which is exciting we should say subsequent orders coming off the back of that our cell introductory we announced the lora.
Matt Wilson: We announced the Lotto Quebec opportunity. They've been a great partner of ours for years, so this is expanding that partnership into the VLT space. So that's a 2024 opportunity, which is exciting. I think Georgia Co-Am, we announced our partnership with Betson.
Matt Wilson: About opportunity there <unk> been a great partner about the years. So this is expanding that partnership into the <unk>. So that's a 2024 opportunity which is exciting I think Georgia, <unk>, we announced a partnership with Betsen. So we're starting to transact in that market. This is a kind of a multiyear journey with the Georgia market and then historical horse.
Matt Wilson: So we're starting to transact in that market. This is a kind of a multi-year journey with the Georgia Co-Am market. And then historical horse racing, we were an early adopter here in the HHR world, and it's proven to be a great tailwind for us.
Matt Wilson: I think we were an early adopter here in the <unk> world and it's proven to be a great tailwind for US we are a market later in that space, We command a leading share position. So as that market continues to expand we naturally expand along that with with.
Matt Wilson: We're a market leader in that space, and we command a leading share position. So as that market continues to expand, we naturally expand along with that with a great share in those markets. So yeah, a significant driver for the gaming business, which I think is important. Like I said, these are discrete markets with unique opportunities. We've got the capability to build the product. And it's not, you know, as competitive as you see in the Class 3 replacement market. So we're kind of expecting more modest share gains in the Class 3 space, but really, a big driver of the plan is these adjacent categories. And do you include Class 2 in your adjacencies these days?
Matt Wilson: With great Shanghai's market. So, yes significant driver for the gaming business, which I think important like I said these are discrete market with unique opportunities we've got the capability to build the product.
Matt Wilson: And it's not.
Matt Wilson: As competitive as you say in the class III replacement market. So we're kind of expecting more modest share gains in the class III space, but really a big driver of the planet These adjacent categories.
Speaker Change: And do you include class II near Adjacencies. Thanks, Dave.
Rowan Gallagher: Yeah, so we're active in class two in many markets. So, yeah, a significant opportunity for us. And I think that'll be more in the kind of late 24, 25 time frame as we start to expand beyond the tranche of adjacencies that I just... And a cheeky follow-up, if I may, Matt, and maybe directed at Oliver, ASP obviously was down materially, probably influenced by a significant order into the UK. Oliver, could you just talk through what would be a more normalized ASP, recognising the lump Thank you. Yeah, yeah, thanks, Rowan.
Dave: Yeah. So we're active in class II and many markets significant opportunity for us and I think that'll be more in the kind of late 'twenty four 'twenty five timeline timeframe as we start to expand.
Dave: The tranche of Adjacencies that I just mentioned.
Speaker Change: And the cheeky follow up if I may and that might be directed at Oliver.
Speaker Change: Pay obviously was down materially probably influenced by significant order into the UK.
Speaker Change: All of it could you just talk through what would be a more normalized ISP Ricky.
Speaker Change: Recognizing the lumpiness that at COSE during quarters. Thank you.
Yeah, Yeah. Thanks, Robert Yeah, as I've mentioned in the prepared remarks.
Oliver Chow: Yeah, as I mentioned in the prepared remarks, it was the UK order that had a mixed effect on our ASP. We do expect that to be, I would say, somewhat leveled to 24 as we proliferate into these adjacent markets. We know that these adjacent markets have slightly lower ASPs than your typical class three replacement market, so I would imagine that it will still be impacted. All right. Thank you, gentlemen. Bye-bye comes from Ryan Sigdal of Craig Hallam.
Speaker Change: It was the UK order that that had a mix effect on our asps.
Speaker Change: We do expect that to.
Ricky: To be I would say somewhat leveled and into 'twenty four as we proliferate into these adjacent markets. We know that these adjacent markets have.
Ricky: Slightly lower asps than your typical class three replacement market. So.
Ricky: I would I would imagine that it will still be impacted from that perspective.
Speaker Change: Alright, Thank you gentlemen.
Speaker Change: Youre welcome.
Speaker Change: The next question comes from Ryan <unk> of Craig Hallum. Your line is open.
Ryan Sigdal: Your line is open. Hey, Matt Oliver. Good afternoon. Curious about LiveDealer. So nice to see that launch here, adding Penn, some good updates there. But curious how quickly you think you can really scale this product given the enormous market opportunity with effectively one competitor out there? And then, kind of along that, is the plan to lean in and expand more with DraftKings and Penn with bespoke and branded tables across different states, or is the higher priority and kind of lower hanging fruit to try and get active with more operators? Thanks.
Ryan: Hey, Matt Oliver and good.
Ryan: Good afternoon curious on live dealer, so nice to see that launch here, adding pan some good updates there, but curious how quickly you think you can really scale this product given the enormous market opportunity with effectively one competitor out there.
Ryan: And then secondly, kind of along that is the plan to lean in and expand more with draft kings and Pan with bespoke unbranded tables across different states or is the higher priority and kind of lower hanging fruits to try and get active with more operators.
Matt Wilson: Yeah, great question. We see LiveDealer as a multi-year opportunity. We believe in the outlook for iGaming. States will legalize it naturally over the coming years, and so we just look into the future and say, this will be a large and active market. We have the Shufflemaster IP under the hood in terms of a portfolio of assets, so it's a natural extension of our end market.
Speaker Change: Yes, great Great question, Yeah, we stay a lot dealer as a multiyear opportunity we believe in the outlook for I gaming state to legalize naturally over the coming years and so we just look into the future and say this will be a large and active market. We have the shuffle master I pay under the Hood in terms of our portfolio.
Speaker Change: Of assets, it's a natural extension of our end markets. So it's a market we're going to ban we're going to position ourselves for the long time here. So really in the near term it's about nailing a scaling.
Matt Wilson: So it's a market we're going to be in. We're going to position ourselves for the long term here. So really, in the near term, it's about nailing and scaling. So nail Michigan, continue to expand partners there, get it to a point where we've ironed everything out and we're optimized, and at that point, we can naturally move into the other markets that are live at the moment. So we have no shortage of demand to take the product into other states that are legal at the moment, but we want to make sure that we've got Michigan completely nailed down, and then we'll scale it across extended markets. I would say the best way to think about live dealer for us is that this market's going to be big, it's going to be vibrant in the coming years, and my responsibility is to position the business for success in perpetuity, Thanks, Matt. Good luck, guys. Next up, we have Rowan Thundrum from MST Marquis. Please go ahead.
Speaker Change: Michigan continue expand partners there get it to a point.
And everything out.
Speaker Change: Were optimized and at that point, we can naturally move into the other markets that are live at the moment. So we have no shortage of demand to take the product into other states that are illegal at the moment, but we want to make sure that we've got Michigan completely nailed down and then we will scale over extended markets, but I would say the best way to think about lot dealer for US is this market.
Speaker Change: As can be big it's going to be vibrant over the coming coming years and my responsibility is to position the business for success in perpetuity.
Speaker Change: <unk> deal is a natural space for us to participate in.
Speaker Change: Thanks, Matt Good luck guys.
Speaker Change: Thank you.
Speaker Change: Next up we have Robyn dungeon MF.
Robyn: Mr. <unk>. Please.
Robyn: Please go ahead.
Rowan Gallagher: Thank you and good afternoon Matt Oliver and team. Just the one from me relating to Australia... Given the momentum, the success you've seen thus far, what's the strategy to sustain and maintain that? Yeah, thanks for the question, Rowan. Yeah, particularly exciting for me having, you know, started my career in Australia and moved to Asia. It's just really nice to see the team down there delivering such exceptional results. I think the international business broadly delivered 93% year-on-year growth in terms of gaming sales, which is a huge growth number and really the consequence of two things. One is Asia coming back online in a material way, but then also, you know, very impressive share gains in the Australian market, year-on-year up from 14% to 24%. You know, this is a market we were a 7% to 9% share player in, and pretty irrelevant, to be honest with you.
Robyn: Thank you and good afternoon met Oliver and team just the one for me relating to the side of your business given the momentum and the success you've seen what's.
Robyn: What's the strategy.
Robyn: Sustain and maintain that.
Robyn: Okay.
Robyn: Yeah.
Speaker Change: Yeah. Thanks for the question Robert.
Speaker Change: Yes, particularly exciting for me having.
Speaker Change: In my career in Australia moved to Asia. So, we're just really not to say the team down there delivering such exceptional results I think the international business broadly delivered 93% year on year growth in terms of gaining sales, which is a huge growth number and really the consequence of two things. One is is it coming back online in a material way.
Speaker Change: But then also very impressive share guidance in the Australian market year on year up from 14% to 24%.
Speaker Change: As the market, we were 7% to 9% share player in.
Speaker Change: It's pretty irrelevant to be honest with you. So I think yes. This is becoming a great contributor to our success. Obviously the products that are driving our success down there I kind of got global.
Matt Wilson: So I think, you know, this is becoming a great contributor to our success. Obviously, the products that are driving our success down there are going to go global, but it also demonstrates just, you know, our ability to get into new markets, make appropriate investments and deliver great returns. So yeah, it just gives us a lot of confidence in other areas of the gaming market that we can get into and explore. So yeah, incredibly exciting.
Speaker Change: But also it demonstrates just.
Speaker Change: Our ability to get into new markets to make appropriate investments and deliver great returns.
Speaker Change: So it just gives us a lot of confidence in other areas of the gaming market that we can get in and explore side incredibly.
Oliver Chow: And just a quick add to that: I think for us, it's much broader than just drag and train. I mean, we'll continue to drive our evergreen franchises, which really fuel the initial part of our growth here in Australia, and we'll have strong depth and breadth of product overall to be able to drive share gains. The next question is from Jo Stalp of SXSW. Your line is open, please go ahead. Thank you. Hi Matt, Oliver.
Speaker Change: Incredibly exciting.
Speaker Change: Just a quick add to that I think for us it's much broader than just dragging trained I mean, we will continue to drive our evergreen franchises.
Speaker Change: Fuel the initial part of our growth here in Australia, and we will have strong depth and breath of product overall, it will be able to drive share gains over time.
Speaker Change: Thanks, guys.
Speaker Change: Okay.
Speaker Change: The next question is from Jeffrey Schnell.
Speaker Change: E.
Jeffrey Schnell: Your line is open. Please go ahead.
Jeffrey Schnell: Thank you.
Jeffrey Schnell: Yeah.
Jeffrey Schnell: Hi, Matt Oliver I wanted to ask about North American game ops and.
Jo Stalp: I wanted to ask about North American Game Ops and, you know, just kind of how to think about the right levels of growth in terms of, you know, the main inputs and installation base and revenue per unit. Is there a way to think about, you know, just the installation of premium games throughout the year over the past, you know, four quarters in 23, meaning, you know, that increased monetization will be lumpy in terms of kind of what sort of quarterly improvement we see in 24? What's the right way to think about that?
Jeffrey Schnell: Just kind of how to think about their own <unk>.
Speaker Change: Light levels of growth in terms of.
Speaker Change: The main inputs.
Speaker Change: Stall base and revenue per unit is there a way to think about.
Speaker Change: Just see installation.
Speaker Change: Of premium games throughout the year over the past four quarters in 'twenty three meaning.
Speaker Change: That increase monetization will will be lumpy in terms of.
Speaker Change: What sort of quarterly improvement, we see in 'twenty four what's what's the right way to think about that.
Matt Wilson: Yeah, obviously, there's kind of two major drivers there. There's obviously installation base growth, and then what are we doing on the RPD side. So on revenue per day, we've seen a nice sequential uptick in terms of revenue per day, and that really is driven by better products and more premiumization of the install base. I think you'll see an inflection point in 2024 from my vantage point with the portfolio we have lined up, and the complementary nature of the different cabinets we're launching and the games we're launching. We've done a lot of heavy lifting in the installation base to make sure that our legacy fleet has been addressed with the appropriate amount of capex. So I think you'll see RPDs kind of in this range, and then the net benefit will be as we start to expand the installation base over time. That'll be the tailwind that drives that revenue for that segment higher.
Speaker Change: Yeah, obviously, there's kind of two major drivers.
Speaker Change: Honestly the installed base growth.
Speaker Change: Then what are we doing on the op side. So on the revenue per day, we're seeing a nice sequential uptick in terms of the revenue per day and that really is driven by better product and.
Speaker Change: More premium amortization of the install base I think you'll see an inflection point in 2024 from from my vantage point with the portfolio, we have lined up kind of the complementary nature of the different cabinets with launching in guidance with launching we've done a lot of heavy lifting in the install base to make sure that our legacy fleet has been addressed with the appropriate amount.
Speaker Change: Capex.
Speaker Change: Youll see <unk> kind of in this range and then kind of the net benefit will be as we start to expand the installed base over time that'll be the tailwind that drives that revenue for that segment higher.
Matt Wilson: But again, I feel like 2024 looks like an inflection point from where I'm standing in terms of the net ads you'll start to see quarter over quarter. And Matt, by that, you mean essentially with your incremental new games, Dragon Train, Monsters, and Squid Games. You know, most of those, at least in the earlier part of, say, the launch of those new games are largely going to affect game operations first before they trickle down into the other segments. Is that fair?
Speaker Change: But again I still feel like 2024 looks like an inflection point from where I'm standing in terms of the net adds youll start to say quarter over quarter.
Speaker Change: And Matt.
Speaker Change: <unk> essentially.
Speaker Change: Your incremental new games Dragon training Monster squid games.
Speaker Change: Most of those at least in the in the earlier part of say the launch of those new games.
Speaker Change: Our largest going to affect game ops first before they trickle down into the other segments is that fair.
Matt Wilson: Yeah, those titles you mentioned specifically are premium gaming ops titles, so they won't be sold, and they won't be taken to those other markets. So it really is in the US a premium gaming ops story for those titles that you mentioned, and the portfolio is designed specifically for that. So we're encouraged about the lineup and what it can produce for us in 2024 and beyond. Gotcha. Thanks a lot. The next question comes from Jeff Stanchel of Stiefel. Hey, afternoon. Matt Oliver.
Matt: Yes, it does.
Speaker Change: Title He mentioned, specifically a premium gaming ops titles, so that won't be solved.
Speaker Change: That won't be taken to the market. So it really is in the U S. A premium gaming up story.
Speaker Change: How does that you mentioned and the profile is designed specifically for that.
Speaker Change: We're encouraged about the lineup and what it can produce for us in 2024 and beyond.
Speaker Change: Got you thanks a lot.
Speaker Change: The next question comes from Jeff <unk> of Stifel.
Jeff: Please go ahead.
Jeff: Hey afternoon that Oliver Thanks for taking my question.
Jeff Stanchel: Thanks for taking my question. Another strong quarter here inside PlayArto, up 15% year-on-year on an 18% comp. Matt, can you just spend a minute here on the forward outlook? More specifically, what inning would you say you're in with regard to harvesting returns on some of the investments that you've made into the centralization engine and ad tech capabilities? And to add to that, can you just expand a bit more on the DTC rollout? What's left in terms of execution on product development? What levers can you pull to encourage user adoption? And how should we think about the cadence of adoption, maybe relative to peers out there with more mature DTC offerings? That's all for me. Yeah, a great question.
Jeff: Another strong quarter here inside play our DAU up 15% year on year on an 18% comp Matt can you just spend a minute here on on the forward outlook more specifically what inning would you say you are in with regards to harvesting returns on some of the investments that you've made into the centralization engine and AD tech capabilities and to add to that can you just expand a bit more.
Jeff: On the side of a DTC rollout what's left in terms of execution on product development and what levers can you pull to encourage user adoption and how should we think about the cadence of adoption maybe relative to peers out there with more mature do you see offerings.
Speaker Change: All for me thanks.
Speaker Change: Yeah Yeah.
Matt Wilson: I think SyFly is becoming quite metronomic in the way they just deliver outstanding result after outstanding result. Clearly, the fastest growing social casino company in the industry and taking a wild amount to share, and I think it all comes back to, we've got a best-in-class team with a really focused strategy, so we made the right strategic investments about two years ago in the CyPlay engine, which just really gave us all the tools that we needed to make sure that we were driving each of our games efficiently. So, again, a nice uptick in ARPDAU, really holding on to our DAU across all the four major games. It was a collective effort across many games that drove this result, so in this business, the trend is your friend or your enemy.
Speaker Change: Yeah, Great question, I think <unk> is becoming quite metric I'll make about the way. They just deliver outstanding result, after outstanding result, clearly the fastest growing social casino company in the industry and taking a wild amounts of share in I think.
Speaker Change: It all comes back to we've got a best in class team with a really focused strategy. So we've made the right strategic investments about two years ago and the SIFI engine, which just really gave us all the tools that we needed to make sure that we're driving each of our games efficiently. So again nice uptick an opt out.
Speaker Change: We're really holding onto our DAU across the four major games.
Speaker Change: It was a collective effort across many games that drove this result.
Speaker Change: In this business the trend is your friend or your enemy. So for US we're kind of up into the right with satellite and we have been for the last few years. So nothing suggest that that will stall anytime soon great momentum leading into Q1.
Matt Wilson: So for us, we're kind of up and to the right with CyPlay, and we have been for the last few years, so nothing suggests that that'll stall anytime soon. Great momentum leading into Q1. Oliver, anything to add or subtract? Yeah, I think just a couple adds there.
Speaker Change: Yeah Fantastic result, Episodically in what is apparently a challenged market.
Speaker Change: I'll have anything to add or subtract yeah. I think just a couple of adds there I think we are also focused on developing our DTC platform, which we expect will enhance player relationship engagement over time and that should hopefully accelerate or the potential of our expanded margins and then grow player lifetime values. The other thing that we.
Oliver Chow: I think we are also focused on developing our DTC platform, which we expect will enhance player relationship engagement over time, and that should hopefully accelerate the potential of our expanded margins and then grow player lifetime values. The other thing that we talk about a lot is really just the continued prudent and diligent spend across marketing UA. Josh and the team are the best in the business, driving high ROI in this space, and so we'll continue to identify a number of these opportunities throughout 2024. As I mentioned earlier, we're doing concurrent marketing campaigns for Joel McHale and Jerry O'Connell, so the teams are looking to drive high-return UA spend here, and we'll continue to kind of evaluate that. Yeah, and maybe specifically to your question about which inning we are in, I'd say we're in kind of the early-middle innings in terms of the growth profile of the games that we have. I think, in relation to DTC, we haven't even sung the national anthem yet.
Speaker Change: Talk about a lot is really just the continued prudent and diligent spend across marketing UA, Josh and the team are the best in the business driving high ROI over the in this space and so we will continue to identify a number of these opportunities throughout 2024 as I mentioned earlier, we're doing concurrent marketing campaigns for Joel Mchale and Jerry.
Speaker Change: <unk> so.
Speaker Change: The teams are looking to drive high return UA spend here and we'll continue to kind of evaluate that over time that might be specifically to your question about which inning are we in I would say we're in kind of early middle innings in terms of the growth profile on the gains that we have I think in relation to data. They say, we havent, even some of the national anthem, yet if you look at it.
Matt Wilson: Like if you look at our industry peers, they're putting 24 to 25% through DTC; we're less than 1%. So the optionality for us is all in front of us, and that's a great margin enhancement opportunity for us over the coming year. Great. Very helpful. Thank you both. The next question comes from Justin Barrett of the LSA. Please go ahead. Hi Matt, hi Oliver, thanks for your time today.
Speaker Change: The industry pays there.
Speaker Change: Yes, putting 24%, 25% through data say with less than 1%. So the optionality for US is all in front of us and that's a great margin enhancing opportunity for us over the coming years.
Speaker Change: Great very helpful. Thank you both.
Speaker Change: Okay.
Speaker Change: The next question comes from Justin <unk> of.
Justin: CLSA. Please go ahead.
Justin: Hi, Matt Hi, Oliver Thanks for your time today.
Justin Barrett: I'm just noticing you've had some great success with your international unit shipments over the last sort of 12 to 24 months and you've sort of made comments about the UK and Australia, but I'm just wondering if you could comment broadly on where you see your most International Growth Opportunities going forward, please. Yeah, nice to be with you. I think probably twofold.
Justin: Just noticing you've had some great success on your international unit shipments over the last sort of 12 to 24 months and you've sort of made comments around UK and Australia, but I'm. Just wondering if you could comment broadly on where you see the most significant international growth opportunities going forward. Please.
Speaker Change: Yet not familiar with you I think probably twofold.
Matt Wilson: Continued success in Australia. It's a large, vibrant market. It's been stable and resilient for decades, and we expect it to continue that way. So, continuing to take share in that market, I think, with Dragontrain and other products, we're very early in the cycle in terms of what looks like a multi-quarter, multi-year opportunity for us in Australia. And then I think in Asia. I was back there in September of last year
Speaker Change: <unk> success in Australia, it's a large vibrant market, it's been stable and resilient for decades, and we expect it to continue that way so.
Speaker Change: Continuing to take share in that market I think with Dragon trying in other products.
Speaker Change: We're very early in the cycle in terms of.
Speaker Change: What looks like a multi quarter multi year opportunity for us in Australia, and then I think in Asia I was back there in September of last year I lived there for five years.
Matt Wilson: I lived there for five years in a formal life, and it's just so fantastic to see that market back on solid footing. You see Macau coming back to life on the operator side, and with the churn opportunity there, that's exciting for us over the next couple of years. But I think the really exciting opportunity is the Philippines.
Speaker Change: In a former life and decide fantastic to see that market back on solid footing.
Speaker Change: You say Macau coming back to life on the operator side and with the 10 opportunity there that's exciting for us over the next couple of years, but I think.
Speaker Change: The really exciting opportunities the Philippines.
Matt Wilson: The chairman of PAGCOR down there, the regulators, has a mandate to grow GDR. Very exciting, very big word, and so that comes off the back of investing in Fahriles, product in new IRs, and you know, we are a market leader in Asia. So, I think Asia is a very exciting opportunity for us, but specifically the Philippines. So yeah, looking forward to making the most of that opportunity in the coming years. Thanks very much. The next question comes from Alan Franklin of Canonical Genuity. Please go ahead.
Speaker Change: The chairman of Petco down there the regulator.
Speaker Change: Has a mandate to grow <unk>.
Speaker Change: In a very big way and so that comes off the back of investing in for a product in <unk>.
Speaker Change: We are our market later in Asia. So I think is a very exciting opportunity for us, but specifically the Philippines.
Speaker Change: So yeah looking forward to making the most of that opportunity over the coming in.
Speaker Change: Thanks very much.
Speaker Change: The next question comes from Alan Franklin of Canaccord Genuity. Please go ahead.
Alan Franklin: Yeah, good morning, guys. Thank you for your time. I hope you're well.
Alan Franklin: Yes. Good morning, guys. Thank you for your time hope you're well.
Oliver Chow: Um, yeah, a fair few of my questions have been answered, but just one quick one, please, just around... Post the Fireplay acquisition and just looking at the current leverage in the business, it does feel like this will sort of trickle down over the course of time, but how do you think about your capital allocation plans going forward, please, in the current situation with the buyback program? Yeah, thank you.
Alan Franklin: Yes, essentially all my questions have been answered, but just one quick one please just around.
Alan Franklin: Post the <unk> acquisition.
Alan Franklin: Just looking at the current leverage in the business.
Alan Franklin: I feel like this will this also trickled down over the course of time, but how do you. How are you thinking about your capital allocation plans going forward plays in the cards.
Alan Franklin: Situation with with the buyback program.
Speaker Change: Yes. Thank you. Thank you for the question Yeah, our capital management strategy stays largely consistent with what we've previously shared we continue to see the benefit of our our strong balance sheet positioning us really well to take on value accretive opportunities as they arise.
Oliver Chow: Thank you for the question. Yeah, our capital management strategy stays largely consistent with what we previously shared. You know, we continue to see the benefit of our strong balance sheet positioning us really well to take on value-creative opportunities as they arise. Specifically, to your question around leverage, we are comfortably within our targeted range of 2 12 and 3 12 times, and we ended the year at 3.1 times levered, and that's following the completion of the SidePlay transaction. We believed back in Q3 that the SidePlay transaction was about a half-turn increase, but we were able to de-lever and capitalize on our highly cash-generative business. Now that the side plate transaction has been completed and our leverage remains well within our target range, we will continue to be opportunistic with the share purchase program. In fact, we've just created a more structured program, which we're now currently implementing. So, long-term, we continue to see this as a significant value creation opportunity for us. We were active throughout 2023, and in Q4, we purchased about $25 million in shares, and from a full-year 2023 point of view, we spent $170 million to buy back shares.
Speaker Change: Specifically to your question around leverage we are comfortably within our targeted range of two five to three five times and we ended the year at three one times Levered and that's following the completion of that of the <unk> transaction.
Speaker Change: We believed it back in Q3 that the <unk> transaction was about a half a turn increase but we were able to delever and capitalize on our highly cash generative businesses now.
Speaker Change: Now that the <unk> transaction has been completed and our leverage remains well within our targeted range. We will continue to be opportunistic with the share repurchase program. In fact, we have just created a more structured program, which we are now currently implementing so long term we continue to see this as a significant value creation opportunity.
Speaker Change: For US we were active throughout 2023 and in Q4, we repurchased about $25 million worth of shares and from a full year of 23 point of view, we spent $170 million.
Speaker Change: To buy back shares. So looking ahead, we'll continue to execute on our capital allocation priorities in a in a very disciplined manner, whether thats further investments in R&D and Capex.
Matt Wilson: So looking ahead, we'll continue to execute on our capital allocation priorities in a very disciplined manner, whether that's further investments in R&D and CapEx or other uses of funds. So we'll continue to evaluate that, but we're in a great place just given where we are from a balance sheet. Yeah, maybe just one additional build there. We did a lot of heavy lifting through the divestitures and the strategic review to clean up the complexity in the portfolio, and what we have now is a very focused organization with a very clear mission to be the leading cross-platform global games company. We want to stay true to that.
Speaker Change: Or other uses of funds. So we'll continue to evaluate that but we're in a great place just given where we are from a balance sheet perspective, and maybe just one additional build there we did a lot of heavy lifting through the divestitures and the strategic review to clean up the complexity in the portfolio and what we have now is a very focused organization with a very clear mission about being the leading <unk>.
Speaker Change: Ross platform Global games company, we want to strive to stay true to that I think that that strategy is being validated like I said earlier, all three of our business is growing double digits.
Matt Wilson: I think that strategy has been validated, like I said earlier, all three of our businesses growing double digits. So what you can expect from us is a management team that's very focused on being efficient around costs but also with capital allocation, making sure we have a very high bar for anything M&A-related and staying really focused on keeping the leverage where we said it would be and buying back our stocks. And our final question comes from Carlo Santarelli. Go to https://otter.ai, Thanks, guys. Um, just a couple, if I may. One of them is going to be really quick.
Speaker Change: You can expect from us as a management team that's very focused on being.
Speaker Change: Efficient around cost, but also with capital allocation, making sure we have a very high bar for anything M&A related and staying really focused on keeping the leverage where.
Speaker Change: We said it would be in and buying back our stock.
Speaker Change: Thanks.
Speaker Change: And our final question comes from Carlo Santarelli of Deutsche Bank. Please go ahead.
Speaker Change: Yeah.
Carlo Santarelli: Thanks, guys. Just a couple if I may one of them is going to be really quick Oliver the termination fees within our gaming 6 million. The right number that you guys need to kind of comp for next year.
Carlo Santarelli: Oliver, the termination fees within iGaming, is $6 million the right number that you guys need to kind of comp for next year? That's correct. Okay, and then moving on, if you guys were to just kind of take your installed base and the constituents of it between premium and everything else, as of, you know, the start of this year, and kind of think about the win-per-day premium that that will provide you as a base level of growth in an all-things-equal kind of domestic scenario in terms of slot GGR and whatnot, on a percentage basis, what would you Yeah, it is a pretty complex question, but I guess my initial reaction to that is that we have seen a shift away from our public markets' in-store base towards the premium category.
Oliver: That's correct yes.
Speaker Change: Okay.
Speaker Change: And then moving on.
Speaker Change: If you guys and this might be a little bit more complicated, but if you guys were to just kind of take your install base and the constituents of that between premium and everything else.
Speaker Change: As of the start of this year and kind of think about the <unk>.
Speaker Change: Win per day premium that that will provide you as a base level of growth.
Speaker Change: All things equal kind of domestic scenario in terms of Splotchy, Jr, and whatnot.
Speaker Change: On a percentage basis, what would you kind of calculate that as before the additions obviously.
Speaker Change: Yes that is a pretty complex question, but I guess my initial reaction to that is we have seen a shift away from our public market install base towards the premium category. So there is a tailwind in terms of op days, because the <unk> days in the premium category are obviously higher than the <unk>.
Carlo Santarelli: So there is a tail win there in terms of RPDs because the RPDs in the premium category are obviously higher than the public. We do expect through 2024 for that to continue in terms of the ads that come into the in-store base being premium units. So that'll be kind of incremental to RPDs over time. That's the way to think about the construct of our in-store base in relation to premium gaming apps. So I'd say there's some upside here from an RPD perspective given the mixed shift, and we expect our in-store base to grow over time. Okay, that's helpful.
Speaker Change: <unk>, we do expect through 'twenty four for that to continue in terms of the adds that come into the installed base to be premium units that'll be kind of incremental to <unk> over time, that's the way to kind of think about kind of the construct of our install base and in relation to premium gaming up. So there's I'd say, there's some upside here from an op eight eight.
Speaker Change: Especially given the mix shift and then we would expect our installed base to grow over time.
Speaker Change: Okay.
Oliver Chow: And then, just lastly, Oliver, you talked about R&D and CapEx investments and, obviously, some investments on the social side and whatnot. Could you kind of just try and quantify, perhaps, the level of magnitude of these investments? Yeah, no, thank you.
Speaker Change: That's helpful. And then just lastly, Oliver you talked about R&D and Capex investments and obviously.
Speaker Change: Some investments on the social side and whatnot.
Speaker Change: Could you kind of just try and quantify perhaps like the level of magnitude.
Speaker Change: These investments.
Oliver: Yeah, no. Thank you yeah, listen, we know that R&D and Capex sort of.
Oliver Chow: Yeah, listen. We know that R&D and CapEx are called organic investments, a critical component to our growth as we move forward. So, you know, we do see a combined R&D and CapEx target of about 17% at the total level. And obviously, that's at the gross level between, I would say, a 10% and 7% R&D to CapEx level. So that's at the gross level.
Oliver: Organic investment is a critical component to our growth as we move forward. So we do see a combined R&D and capex target of about 17% at the total level and obviously that's at the gross level between I would say, a 10% and 7%.
Oliver: R&D to Capex levels. So that's at the gross level and ultimately as our revenues continue to scale over time that will just give us further ammunition to reinvest back into into our core and drive sustainable growth over time so.
Oliver Chow: And ultimately, as our revenues continue to scale over time, that will just give us further ammunition to reinvest back into Corp. and DRIVE Sustainable Growth Over Time. This is absolutely an area of focus for us, and we'll continue to invest organically as we believe that's one of the highest rates of ROI. Okay, so the numbers go up, but the tethering to revenue stays broadly in that 17% range. That's what you're
Oliver: This is absolutely an area of focus for us and will continue to invest organically as we believe that's the highest one of the highest returns of of ROI for us.
Speaker Change: Okay. So the numbers go up but the tethering to revenue stays broadly in that 17% range Thats, what youre, saying.
Carlo Santarelli: Yes, that's correct, and we'll continue to evaluate those levels as we go along. Great, thank you guys very much. We have no further questions in the queue, so I'll turn the call back over to Matt Wilson for any closing remarks. Thank you, Operator. In closing, I would like to acknowledge our Light & Wonder employees, whose commitment and dedication made the past year a success and provide us with great confidence for the future. Our global team continues to do inspiring work every day, delivering exciting new content for industry-leading games, utilizing the latest technologies, and creating an exceptional customer experience. We're excited about the opportunities ahead in 2024 as we continue to execute our strategy in this dynamic environment. Thank you for being with us today and thank you for your support. Please join us on today's call. Thank you for joining. You may now disconnect your line. www.lightandwonder.com
Speaker Change: Yes, that's correct and we will continue to evaluate those levels right now as we move forward.
Speaker Change: Yeah.
Speaker Change: Great. Thank you guys very much.
Speaker Change: Hey, you're welcome we have no further questions in the queue. So I'll turn the call back on to the team that Wilson for any closing remarks.
Speaker Change: Okay.
Wilson: Thank you operator in closing I would like to acknowledge our lot and wander employees, whose commitment and dedication made the past year of success and provide us with great confidence for the future. Our global team continues to do inspiring work every day delivering exciting new content for industry, leading game utilizing the latest technologies and create an exception.
Wilson: Customer experience, we're excited about the opportunities ahead in 2024 as we continue to execute on our strategy in this dynamic environment. Thank you for being with US today and thank you for your support.
Speaker Change: This concludes today's call. Thank you for joining you may now disconnect your lines.
Wilson: Okay.
Wilson: Yes.
Wilson: Yes.