Global slot machine manufacturer and gaming content company Light & Wonder has been undergoing a metamorphosis in recent years. The transformation has seen the company with a new Chairman, a new CEO, a new name, a new strategy, a new stock market listing and – most importantly – a new and substantially increased EBITDA target. IAG CEO Andrew W Scott sat down with Light & Wonder CEO Matt Wilson in Macau to learn more.
Andrew W Scott (AWS): You grew up in southern Sydney, in a quiet suburb called Sylvania. The obvious question is: what’s a boy from Sylvania doing running one of the world’s largest gaming companies?
Matt Wilson (MW): Well, I think Australians punch above their weight in the gaming industry. If you go to any big gaming market around the world you will hear an Aussie accent, so I don’t think it’s unusual to have an Australian at the helm of a slot supplier. I started my career back in 2003 in Australia with Aristocrat and spent 16 years there. I sort of followed the gaming landscape and all the options that came with that. I’ve really grown up in the industry, starting in Australia and then coming to Asia in late 2007. I spent five years here – amazing years, some of my best years from a professional standpoint – and then moved to the US in 2012 and have been there ever since. I just worked my way up the ladder and had a lot of mentors that helped me on the journey.
AWS: It’s a fantastic story for those of us who’ve been in the Asia-Pacific region for many, many years, to see one of our own enjoy that success, because that period from 2007 was a bit of a sweet spot for the industry in Asia and particularly Macau.
MW: It was amazing. Again, I came back here for the first time in a very long time recently and with a huge smile on my face. I just had all these great memories of the people that I met along the way and the things that have happened.
The thing that really stood out for me was that when I got here in 2007, Macau was just getting started. There were obviously a lot of major casinos on the peninsula, but Cotai was just starting. It was just the Venetian then but there was this dream of what was going to happen: everything from the Cotai expansion to the bridge from Hong Kong to Macau – which I never thought would actually happen. And then and lo and behold, when I arrived here, I was driving across that bridge. Everything they said would happen in Macau has happened, which is quite amazing to look back on.
AWS: You mentioned about Australians punching above their weight. Australia is a country of 25 million people in a world of 8 billion, so around 0.3% of the global population. Yet in our industry you really do see Australians pretty much in all four corners of the globe. Why do you think that is?
MW: I think it’s a very mature industry in Australia. Slot machines in their current form were largely invented in Australia. You know, Len Ainsworth was a pioneer in that space. For many decades Australia had a unique type of product that I think really resonated with the US player, and that was maybe the genesis for the global expansion. I think you’ve got to credit Aristocrat with a lot of that success.
Australia has a kind of affinity for gaming from a consumer base but also from an investor base, so when we say Australians punch above their weight from a gaming perspective, it goes to investors as well. And that kind of talks to the secondary listing that we’ve just done on the ASX. That was about tapping into a large pool of investors that have a deep appreciation and understanding of the gaming business. So yes, you certainly find many Australians across operators, suppliers and investors.
AWS: You mentioned the secondary listing and some of the reasons behind making that move. Now that you have some months under your belt, how is the secondary listing playing out?
MW: We deliberated on this for quite some time : to ask ourselves, “Is this the right thing for our existing shareholders?” And we concluded that there was really no downside to doing it. It taps into a broader pool of investors like I mentioned. We listed in May [2023], and it’s gone wildly ahead of our expectations. About 15% of our market cap now trades on the ASX which represents about US$2 billion in market cap, so we didn’t expect to be here this quickly. It really activated a dormant investor community in Australia. They were looking for something to invest in next. If you think about the ASX, so many Australian companies have been taken private over the last six or 12 months. There’s been a real dearth of IPOs and not a lot of new things for investors to look at. Many investors in Australia can only invest in domestic stocks or domestic-only names, so us listing on the ASX essentially gave this investor base a new investment opportunity and it was very much demand-driven. We had people knocking on the door asking, “Why don’t you list in Australia? We would love to invest in your company.” So, we did, and they have.
AWS: Are you talking about Australian institutional investors who under their rules can only invest in Australia?
MW: That’s exactly right. Many of the fund managers that are deploying a lot of these superannuation funds can only invest in ASX- listed stocks, so we’re creating an opportunity for them to do that.
AWS: That’s a big percentage at 15%. When you look at the global market cap of all the markets around the world, I think Australia is around 1.5% of the world’s stock markets. And Light & Wonder is not necessarily a household name in Australia. How did your experience with Aristocrat and your Chairman Jamie Odell’s experience with Aristocrat help there?
MW: I think Aristocrat is an incredible company. It’s done remarkable things. It’s one of the biggest turnarounds in Australian corporate history. You know, when Jamie started there the stock was AU$2 and when he left it was AU$30, so an unbelievable transformation.
I think we can put our businesses side by side and they have a lot of the same characteristics. The management team, a lot of the investors, a lot of the board members, the Chairman and the Vice Chairman all came from that company. But that doesn’t give you a free kick. You must deliver results, and I think importantly, that’s what we’ve been doing over the last few quarters.
Sure, when we first arrived it was a nice story with us saying, “We’re going to do this. We’re going to transform this organization like we transformed the last one. We’re going to divest some assets. We’re going to rebrand and do all these things.” And I think what you’re seeing in the stock price now is a real appreciation for the results showing up on the scoreboard.
We grew 33% year-on-year in Q2. That’s the fastest growing supplier in the space, so we’re getting credibility, not just a story. We’re getting credibility now that it’s showing up in the numbers and that’s the thing investors judge you on, not what you’ve done historically or what Aristocrat has done.
AWS: Let’s talk about your time at the helm of Light & Wonder. You came into the job in March 2020, which was probably the worst month imaginable in the last hundred years to do so. Now we’re on the other side of the pandemic and it’s starting to move into the rear vision mirror, what can you offer as lessons you have learned from that experience?
MW: I didn’t think a global pandemic could shut the gaming industry down the way it did. I thought it was an amazing, resilient industry. And it has been. I mean, once the economies came back and the restrictions came off, even in Macau you’re seeing it come raging back to life. In a strange way, COVID was a catalyst for us to rethink everything. If we didn’t have a pandemic and a new Chairman [former Aristocrat CEO Jamie Odell was announced as the Chairman of Light & Wonder in September 2020], I might have come in and changed things at the margins, but the pandemic made us rethink things in totality. And if you remember the Scientific Games story, we were a company that was heavily levered. We had a huge debt issue. We were six-and-a-half times levered [net debt to Adjusted EBITDA ratio] going into the pandemic. We were 10-and-a-half times levered in the middle of the pandemic. So, we couldn’t tinker at the margins. We had to think big about how we would transform the organization.
I think if we didn’t have a pandemic, we wouldn’t have had a turnover in the investor base, and we wouldn’t have a new Chairman. Many of the things that played out probably wouldn’t have played out. We had a major shareholder who owned 40% of the company, a controlling interest, and I think he’d still own the company today if it wasn’t for this huge pandemic. So, it really made us rethink everything about the company. We ended up selling the lottery business and selling the sports business. We decided we want to be an organization focused on content. We repaired the balance sheet, because we can’t live in a world where we’re 10-and-a-half times levered. That was a scary place to be, so I think in a strange way, COVID was a catalyst for everything that came beyond that. And we had to think big and be bold about our decision making.
AWS: The readers of IAG are generally Asia-based and you’ve spent time here in Asia at the coalface, which is different than most global CEOs. They are usually American or European, and that gives them a certain way of thinking about Asia. But being from Australia, and having spent five years here, how do you think that makes you think differently about Asia than your typical US or European global CEO?
MW: I think I’m very fortunate that I’ve had a career that’s taken me to basically every corner of the global gaming industry. It does give you a broad perspective. And I think many people look at Asia and think, well, what a great growth opportunity, but they don’t completely comprehend what it takes to be successful here. You must invest. There’s a very specific set of product requirements that you need to invest behind. And if you’re not willing to do that work and make Asia a priority in your product roadmap, you don’t just get to play here easily. You must be all in. I think I’ve learned that from my experience with Aristocrat, and certainly Light & Wonder is a powerhouse in this region. The team has a lot to be proud of for what they’ve been able to achieve here. But I think maybe the lesson I’ve learned is that, to play and to be a benefactor of the growth that happens here, you must be a willing participant that’s prepared to roll their sleeves up and invest to unlock that opportunity.
AWS: You recently came out publicly claiming that you want Light & Wonder to achieve US$1.4 billion in annual EBITDA by 2025. At the time, it was around the US$900 million mark, so that’s a huge increase – some 67% – in a relatively short period of time, given that 2025 is only a few quarters away. How are you going?
MW: Well, I think we have to the end of 2025! When we put those investor targets out in May of 2022, we were a long way from US$1.4 billion EBITDA, but we have a history as a management team of dreaming big, of being bold and ambitious. And I came here to be part of a transformation. I didn’t come here to be incrementally better. We want to be a company that’s doing big things and big transformational things, and with that comes big goals. Goals are things that push you to do more than you think is achievable. And so, when we put those numbers out, we got no credit for them. People thought it was a nice fictional story. But I mentioned earlier that we’ve had sequential quarters of amazing growth, and I think people are now saying, “Wow, they’re actually on the path to do this.”
When we announced the target, it was a 15% CAGR KPI to get us there. We grew 33% in Q2, so we are growing ahead of expectations. I think the gaming business is growing faster than we expected. I think our social casino business is on a complete tear, it’s really outpacing the market growth. Our iGaming is a business with great tailwinds. You don’t do transformational things without being ambitious, and I think that setting that goal and stating it publicly has pushed the teams to do big things. We’re on a path to get there and we feel convicted. We’re getting more credit for that every day with investors, so it’s an exciting place to be.
AWS: Asia is really a cluster of quite a few different markets with quite different profiles, characteristics and preferences. Where do you think the big opportunities are for Light & Wonder in Asia?
MW: There’s no mistaking the opportunity that the Philippines presents for us over the next three years. It’s quite astounding to see the level of growth that they’re committing to. Again, they’ve done something bold and ambitious by declaring publicly their ambition to double their GGR in five years. That comes off the back of more integrated resorts. It’s a slot-centric market and we’re a slot supplier that’s doing really big things there with lots of great products that tie into that. We’re scaling up to participate in that market growth in a meaningful way.
I think Macau’s back on a path to recovery as well. It’s a market that needs new products to continue to innovate and to engage players, so we’re committed to building products for this market. We’ve got a few huge franchises that are hitting the radar here in the coming months.
I think broader Asia, to your point – it’s not a one-size-fits-all market. The Philippines is a huge growth opportunity. Macau and the other markets are also right there in terms of building momentum for us.
AWS: iGaming is very strong in Europe, and North America is starting to open up to it, but in Asia we just can’t seem to get a stable and regulated iGaming industry going. How do you think iGaming should be approached in Asia?
MW: We are obviously a company that really prides itself on regulatory compliance, so we comply with the regulations in the marketplace today. We’ve got more than our plate full driving the growth agenda in the US. I mean, the US market is growing wickedly. You look at the New Jersey market which has been live for a decade: it’s still growing at 15% CAGR a decade after its inception. You’ve got the new markets growing kind of in the mid-20s. So, there is huge growth in the US where we think we’ll see market expansion over time. Asia is very interesting, but we’ll only fly in this market to the extent that it meets regulatory compliance. We know a black-market industry exists in this part of the world. And you know, we are all about regulated, taxable gaming that can drive great outcomes for governments. To the extent that they’re considering, we’re happy to have a conversation, but we hold our compliance in high regard.
AWS: How about the social gaming space. Can you tell us about your company’s approach?
MW: It’s a huge industry in the US and Australia. It’s about an US$8 billion TAM [total addressable market] and it’s mobile and it’s free to play. It’s been around since about 2010 so it’s now quite a mature industry. I guess SciPlay is the benefactor of a business that really wasn’t invested in appropriately, so we’ve been investing in that business to unlock growth. It’s been growing about 20% quarter-on-quarter so it’s a real hard- charging business for us. There are a few major players around the world, and it has a large TAM and is stable and mature. We’re taking a huge amount of share and growing really fast.
AWS: You’re a young CEO. Describe for us your leadership style. How do you like to approach the concept of leadership?
MW: I like to think of my style as more captain over coach. I think of myself as being a participant on the field with the teams driving that growth agenda. I think the fact that I’ve grown up in the business makes me somewhat relatable. I understand that I have employees at all levels of the organization, so I connect with them. And I think that being a leader opens up a lot of opportunities for you in terms of direct dialog with your team. One of the challenges you face as a CEO is really trying to understand what’s actually going on in the business, so when you have this captain over coach mentality, people are willing to share more with you. And if you can just get to the heart of what the issues are – what do we need to prioritize – I think that’s half the battle as a CEO. I think my background in the industry, the fact that I’ve grown up and I’ve done a lot of different roles, gives me a unique perspective as a CEO.
AWS: Finally, do you have a message or something you’d like to say to the Asian gaming industry in general?
MW: I would like to say that we have big, bold ambitions in this market, and we know that for us to deliver on those ambitions, we must have a customer base that wants us to be successful. So, we’re here to be your partner. We’re here to invest behind our ambitions to make sure that we’re driving the success of your business. That’s really the reason we exist.
