Light & Wonder, Inc. Reports Second Quarter 2023 Results

Delivered Consolidated Revenue Growth of 20% Year-Over-Year with Double Digit Growth Across all Businesses

Nine Consecutive Quarters of Consolidated Revenue Growth

Healthy Balance Sheet Position, Strong Cashflow Generation and Continued Deleveraging Profile

Commenced Trading on Australian Securities Exchange

Light & Wonder, Inc. (NASDAQ and ASX: LNW) (“Light & Wonder,” “L&W,” or the “Company”) today reported results for the second quarter ended June 30, 2023.

We continued with strong momentum and delivered a ninth consecutive quarter of consolidated revenue growth year-over-year. Consolidated revenue in the quarter grew 20%, resulting in strong margins and cash flows as we continued our advancement toward our long-term financial targets. The growth was driven by double-digit growth across all of our businesses, including another quarter of record revenues for SciPlay and iGaming:

• Gaming revenue increased 21% compared to the prior year period to $471 million, primarily due to continued momentum in Gaming machine sales, which increased 41% driven by increases in North American and Australian machine sales, coupled with strong performance in North American Gaming operations, Gaming systems and Table products.

• SciPlay achieved record revenue of $190 million, a 19% increase compared to the prior year period, driven by the core social casino business, which once again delivered strong payer metrics and outpaced the market and gained share.

• iGaming revenue reached another record quarterly revenue of $70 million, a 17% increase from the prior year period, primarily driven by continued growth in the U.S. market.

Matt Wilson, President and Chief Executive Officer of Light & Wonder, said, “Our reported numbers continue to validate the investments that we’ve made in our business and demonstrate the significant progress we are making towards our long-term targets. Year to date, we delivered double-digit top and bottom line growth across all three of our businesses, generated strong cash flows and reduced leverage, resulting in an exceptional second quarter. I am also pleased to share that Light & Wonder is expanding its global presence, with a successful ASX listing during the quarter that is gaining momentum with the investment community. We will continue to execute on our core strategy and product roadmap, and look forward to sharing more with you at Australasian Gaming Expo in August and Global Gaming Expo in October.”

Connie James, Chief Financial Officer of Light & Wonder, added, “I am proud to have been part of such a diverse and capable team, and of our many accomplishments during my time here as my tenure comes to an end at Light & Wonder. We accomplished a number of meaningful milestones in transforming the Company and are now well-positioned with a healthy balance sheet and a strategic capital allocation plan. The continued growth we saw in the second quarter reflects the focused execution that is in our DNA. With a wealth of talent, sound financials, and an outstanding portfolio of assets, Light & Wonder continues to be in good hands moving forward as the leading cross-platform global games company.”

LEVERAGE, CAPITAL RETURN, AND STRATEGY UPDATE

• Principal face value of debt outstanding⁽¹⁾ of $3.9 billion, translating to net debt leverage ratio⁽²⁾ of 2.9x, within our targeted net debt leverage ratio⁽²⁾ range of 2.5x to 3.5x, as of June 30, 2023, a decrease of 0.4x from December 31, 2022, and the lowest level in the Company’s recent history.

• Secondary listing on the Australian Securities Exchange (ASX) — the Company’s common stock is listed as CHESS Depositary Interests (CDIs) on the ASX and commenced active trading on May 22, 2023 (AEST) under the ticker symbol “LNW.” The Company believes this secondary listing will create substantial benefits for L&W and its shareholders, including enhancing the Company’s profile in Australia, one of the leading markets for L&W’s Gaming business, and providing the Company access to new long-term Australian institutional investors that complement our strong existing base of shareholders.

• Agreement to acquire the remaining 17% equity interest in SciPlay — On August 8, 2023, the Company entered into a definitive agreement to acquire the remaining equity interest in SciPlay not already owned by the Company (approximately 17%) pursuant to a merger in which SciPlay’s shareholders will receive $22.95 for each share of SciPlay Class A common stock they own (subject to certain exceptions set forth in the Merger Agreement, dated as of August 8, 2023, by and among Light & Wonder, Bern Merger Sub, Inc. and SciPlay (the “Merger Agreement”)) in an all-cash transaction (the “SciPlay Acquisition”). As a result of the SciPlay Acquisition, SciPlay will cease to be publicly traded and will become a wholly owned subsidiary of L&W. The Company believes that this transaction will enable seamless collaboration with SciPlay that will add further momentum to the Company’s already robust cross-platform strategy, provide flexibility for use of SciPlay cash flows for investments across the enterprise, and facilitate long-term margin enhancement opportunities via synergies, all of which are expected to increase shareholder value.

SUMMARY RESULTS

Unless otherwise noted, amounts, percentages and discussion included below reflect the results of operations and financial condition of the Company’s continuing operations, which includes its Gaming, SciPlay and iGaming businesses. We have reflected our former Lottery business (disposed during the second quarter of 2022) and Sports Betting business (disposed during the third quarter of 2022) (collectively referred to as the “Divestitures”) as discontinued operations.

Second Quarter 2023 Financial Highlights

• Second quarter consolidated revenue was $731 million compared to $610 million, up 20% compared to the prior year period driven by double-digit growth across all of our businesses, representing a ninth consecutive quarter of growth. Gaming revenue increased 21%, driven by another quarter of robust growth in Gaming machine sales, which grew 41% year-over-year, while SciPlay and iGaming each reached another quarterly revenue record.

• Net income was $5 million compared to a net loss of $150 million in the prior year period, which included a $147 million loss on financing transactions associated with the debt pay down and refinancing transactions in April 2022. The current year period increased primarily due to higher revenue and operating income as well as lower interest expense.

• Consolidated AEBITDA, a non-GAAP financial measure defined below, was $281 million, an increase of 33% compared to the prior year period, driven by double-digit growth across all of our businesses and margin expansion.

• Net cash provided by operating activities was $34 million compared to combined net cash used in operating activities of $(37) million in the prior year period. The current year period cash flows benefited from lower interest payments, partially offset by $32 million in cash taxes paid related to the Divestitures and $7 million related to professional services associated with the ASX listing, while prior year period combined cash flows were impacted by costs associated with the strategic review and related transactions and accelerated interest payments related to the debt pay down and refinancing transactions.

• Free cash flow, a non-GAAP financial measure defined below, was $24 million compared to combined free cash flow⁽¹⁾ of $(95) million in the prior year period. The current year period free cash flow was impacted by $32 million in cash taxes paid related to the Divestitures and $7 million related to professional services associated with the ASX listing, while the prior year period combined free cash flow was primarily impacted by approximately $114 million in costs supporting strategic review and related transactions (including the Lottery business closing expenses) and accelerated interest payments related to the debt pay down and refinancing transactions.

• Net debt leverage ratio, a non-GAAP financial measure defined below, was 2.9x as of June 30, 2023 compared to 3.3x as of December 31, 2022, remaining in our targeted net debt leverage ratio⁽¹⁾ range of 2.5x to 3.5x.

First Half 2023 Selected Financial Highlights

• First half consolidated revenue was $1,400 million compared to $1,183 million, up 18% compared to the prior year period driven by double-digit growth across all of our businesses. Gaming revenue increased 19%, driven by robust growth in Gaming machine sales, which grew 46% year-over-year, while SciPlay and iGaming each reached record revenue.

• Net income was $32 million compared to a net loss of $217 million in the prior year period, which included a $147 million loss on financing transactions associated with the debt pay down and refinancing transactions in April 2022. The current year period increased primarily due to higher revenue and operating income as well as lower interest expense.

• Consolidated AEBITDA, a non-GAAP financial measure defined below, was $529 million, an increase of 28% compared to the prior year period, driven by double-digit growth across all of our businesses and margin expansion.

• Adjusted NPATA, a non-GAAP financial measure defined below, was $179 million.

Second Quarter 2023 Business Segments Key Highlights

• Gaming revenue increased 21% to $471 million compared to the prior year period, driven by continued momentum in Gaming machine sales, growing 41%. Gaming operations maintained elevated average daily revenue per unit, while Gaming systems continued strong momentum, growing 20%, and Table products revenue returned to growth increasing 34% compared to the prior year period. Gaming AEBITDA was $233 million, up 30% compared to the prior year period with AEBITDA margin improving 3 percentage points.

• Gaming operation revenues continue to benefit from year-over-year growth in our North American and International average daily revenue per unit, as a result of strong content performance and the continued success of our KASCADA^® and MURAL^® cabinets as well as recently launched COSMIC^™ cabinet, validating our continued investment in our R&D engine to drive our long-term growth. Our North American premium installed base, which represents 47% of our total installed base mix, and revenue per day remained at elevated levels.

• SciPlay revenue increased 19% to $190 million compared to the prior year period, breaking another record. SciPlay AEBITDA was $59 million, up 44% compared to the prior year period with AEBITDA margin improving 5 percentage points. Growth was primarily driven by the core social casino business, which delivered strong payer metrics and once again outpaced the market and gained share. Payer conversion rates increased year-over-year to 10.5%, while ARPDAU⁽¹⁾ grew 26% to a record $0.93 and AMRPPU⁽²⁾ grew 12%, reaching a record $102.04. The second quarter performance continues to demonstrate strong player engagement and monetization leveraging engaging game content, dynamic Live Ops and effective marketing strategies.

• iGaming revenue increased 17% to $70 million record quarterly revenue, and AEBITDA was $24 million compared to $21 million in the prior year period. The revenue and AEBITDA increases were primarily driven by continued growth in the U.S. market and also benefited from $2 million in certain termination fees. The U.S. market delivered 32% year-over-year revenue growth, driven in part by our continued strength in our land-based original content launches and scaling third party aggregation on our platform. We are on track to launch our live casino operations in Michigan during the second half of 2023, pending final regulatory approvals.

• Consolidated capital expenditures were $59 million in the second quarter of 2023.

Earnings Conference Call

As previously announced, Light & Wonder executive leadership will host a conference call on Tuesday, August 8, 2023, at 4:30 p.m. EDT to review the Company’s second quarter results. To access the call live via a listen-only webcast and presentation, please visit explore.lnw.com/investors/ and click on the webcast link under the Events and Presentations section. To access the call by telephone, please dial: +1 (833) 470-1428 for U.S. or +1 (404) 975-4839 for International and ask to join the Light & Wonder call using conference ID: 667374. A replay of the webcast will be archived in the Investors section on www.lnw.com.

About Light & Wonder

Light & Wonder, Inc. is a global leader in cross-platform games and entertainment. The Company brings together approximately 6,000 employees from six continents to connect content between land-based and digital channels with unmatched technology and distribution. Guided by a culture that values daring teamwork and creativity, the Company builds new worlds of play, developing game experiences loved by players around the globe. Its OPENGAMING^® platform powers the largest digital-gaming network in the industry. The Company is committed to the highest standards of integrity, from promoting player responsibility to implementing sustainable practices. To learn more, visit www.lnw.com.

You can access our filings with the Securities Exchange Commission (“SEC”) through the SEC website at www.sec.gov or through our website, and we strongly encourage you to do so. We routinely post information that may be important to investors on our website at explore.lnw.com/investors/, and we use our website as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (Reg FD).

The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document, and shall not be deemed “filed” under the Securities Exchange Act of 1934, as amended.

All ® notices signify marks registered in the United States. © 2023 Light & Wonder, Inc. and/or their respective affiliates. All Rights Reserved.

Forward-Looking Statements

In this press release, Light & Wonder makes “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “target,” “should,” “could,” “potential,” “opportunity,” “goal,” or similar terminology. These statements are based upon Management’s current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties and other factors, including, among other things:

• our inability to successfully execute our strategy and rebranding initiative;
• slow growth of new gaming jurisdictions, slow addition of casinos in existing jurisdictions and declines in the replacement cycle of gaming machines;
• risks relating to foreign operations, including anti-corruption laws, fluctuations in currency rates, restrictions on the payment of dividends from earnings, restrictions on the import of products and financial instability;
• difficulty predicting what impact, if any, new tariffs imposed by and other trade actions taken by the U.S. and foreign jurisdictions could have on our business;
• U.S. and international economic and industry conditions, including increases in benchmark interest rates and the effects of inflation;
• public perception of our response to environmental, social and governance issues;
• changes in, or the elimination of, our share repurchase program;
• resulting pricing variations and other impacts of our common stock being listed to trade on more than one stock exchange;
• level of our indebtedness, higher interest rates, availability or adequacy of cash flows and liquidity to satisfy indebtedness, other obligations or future cash needs;
• inability to further reduce or refinance our indebtedness;
• restrictions and covenants in debt agreements, including those that could result in acceleration of the maturity of our indebtedness;
• competition;
• inability to win, retain or renew, or unfavorable revisions of, existing contracts, and the inability to enter into new contracts;
• risks and uncertainties of potential changes in U.K. gaming legislation, including any new or revised licensing and taxation regimes, responsible gambling requirements and/or sanctions on unlicensed providers;
• inability to adapt to, and offer products that keep pace with, evolving technology, including any failure of our investment of significant resources in our R&D efforts;
• the possibility that the conditions to the completion of the SciPlay Acquisition may not be satisfied on the anticipated schedule or at all;
• the possibility that the SciPlay Acquisition may not be consummated or that Light & Wonder and SciPlay may be unable to achieve expected operational, strategic and financial benefits of the SciPlay Acquisition;
• the possibility of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;
• the outcome of any legal proceedings that may be instituted following announcement of the SciPlay Acquisition;
• failure to retain key management and employees of SciPlay;
• unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, war or hostilities or the COVID-19 pandemic, as well as management’s response to any of the aforementioned factors;
• changes in demand for our products and services;
• inability to achieve some or all of the anticipated benefits of SciPlay being a standalone public company;
• dependence on suppliers and manufacturers;
• SciPlay’s dependence on certain key providers;
• ownership changes and consolidation in the gaming industry;
• fluctuations in our results due to seasonality and other factors;
• security and integrity of our products and systems, including the impact of any security breaches or cyber-attacks;
• protection of our intellectual property, inability to license third-party intellectual property and the intellectual property rights of others;
• reliance on or failures in information technology and other systems;
• litigation and other liabilities relating to our business, including litigation and liabilities relating to our contracts and licenses, our products and systems, our employees (including labor disputes), intellectual property, environmental laws and our strategic relationships;
• reliance on technological blocking systems;
• challenges or disruptions relating to the completion of the domestic migration to our enterprise resource planning system;
• laws and government regulations, both foreign and domestic, including those relating to gaming, data privacy and security, including with respect to the collection, storage, use, transmission and protection of personal information and other consumer data, and environmental laws, and those laws and regulations that affect companies conducting business on the internet, including online gambling;
• legislative interpretation and enforcement, regulatory perception and regulatory risks with respect to gaming, especially internet wagering, social gaming and sports wagering;
• changes in tax laws or tax rulings, or the examination of our tax positions;
• opposition to legalized gaming or the expansion thereof and potential restrictions on internet wagering;
• significant opposition in some jurisdictions to interactive social gaming, including social casino gaming and how such opposition could lead these jurisdictions to adopt legislation or impose a regulatory framework to govern interactive social gaming or social casino gaming specifically, and how this could result in a prohibition on interactive social gaming or social casino gaming altogether, restrict our ability to advertise our games, or substantially increase our costs to comply with these regulations;
• expectations of shift to regulated digital gaming or sports wagering;
• inability to develop successful products and services and capitalize on trends and changes in our industries, including the expansion of internet and other forms of digital gaming;
• the continuing evolution of the scope of data privacy and security regulations, and our belief that the adoption of increasingly restrictive regulations in this area is likely within the U.S. and other jurisdictions;
• incurrence of restructuring costs;
• goodwill impairment charges including changes in estimates or judgments related to our impairment analysis of goodwill or other intangible assets;
• stock price volatility;
• failure to maintain adequate internal control over financial reporting;
• dependence on key executives;
• natural events that disrupt our operations, or those of our customers, suppliers or regulators; and
• expectations of growth in total consumer spending on social casino gaming.

Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the SEC, including the Company’s current reports on Form 8-K, quarterly reports on Form 10-Q and its latest Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2022 on March 1, 2023 (including under the headings “Forward Looking Statements” and “Risk Factors”). Forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no and expressly disclaim any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

You should also note that this press release may contain references to industry market data and certain industry forecasts. Industry market data and industry forecasts are obtained from publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. Although we believe industry information to be accurate, it is not independently verified by us and we do not make any representation as to the accuracy of that information. In general, we believe there is less publicly available information concerning the international gaming, social and digital gaming industries than the same industries in the U.S.

Due to rounding, certain numbers presented herein may not precisely recalculate.

No Offer or Solicitation

This earnings release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval in any jurisdiction pursuant to or in connection with the SciPlay Acquisition or otherwise, nor shall there be any sale of securities in any jurisdiction in which any such offer, solicitation or sale would be unlawful. Any securities to be offered may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Additional Information and Where to Find It

Certain participants in the transactions contemplated by the Merger Agreement will prepare and file a Schedule 13E-3, which will contain important information on Light & Wonder, SciPlay, the Merger Agreement, the SciPlay Acquisition and related matters, including the terms and conditions of the SciPlay Acquisition and the Transactions. You may obtain copies of the Schedule 13E-3, any amendment or supplements thereto, other relevant materials (when available) and all documents filed by Light & Wonder with the SEC regarding this transaction, free of charge, at the SEC’s website, www.sec.gov or from Light & Wonder’s website at https://explore.lnw.com/investors/.