Key Points
- SciPlay revenue plummeted by a whopping 12% to $173m; its average monthly paying users dropped a staggering 17% to 426,000.
- New SciPlay CEO Matthieu Labbat has just jumped ship from a competitor which, as the CEO himself admitted quite candidly, has been kicking Light & Wonder’s butt.
- Group net income still rose 17% to $133m, but all is not well: full-year Consolidated AEBITDA growth is expected to come in at the lower end of guidance.
Light & Wonder Copied a Rival’s Winning Formula and it Backfired
Light & Wonder suffered its first quarterly revenue drop in 2026 back on 4 November and, on the very same day, they dropped a bombshell on the struggling social casino side of their business. They handed the reins to Matthieu Labbat, who’s fresh from a stint at a competitor that, by the CEO’s own admission, has been outclassing them. And this, despite Light & Wonder’s overall profit staying in the black, with net income rocketing 17% to $133m, according to the company’s latest third-quarter results release.
SciPlay Revenue Takes a Big Hit as Paying Players Flee
SciPlay, Light & Wonder’s social gaming division, generated a meagre $173m in revenue, down a painful 12% on the year before. AEBITDA, their preferred profit measure, fell 6% to $67m while their margin widened by a modest three per cent.
User numbers meanwhile took a significant hit, down 17% from an already underwhelming 514,000 to just 426,000. And it wasn’t just a one-off dip either, the decline continued from Q2 when SciPlay had a paltry 447,000 average monthly paying users. Conversion rates dropped to 9.3% from 10.0%, and users have steadily dwindled from 2.0 million to 1.8 million daily users. The revenue per paying user rose by a small margin to $132.80, but even that wasn’t enough to save the day given the large number of customers deserting ship.
Josh Wilson Bails and a Total Outsider Takes the Helm
Josh Wilson, who’d been at the tiller of SciPlay since 2019, stepped down at the end of October. Light & Wonder confirmed the news back in September but conveniently didn’t say what had prompted his departure. CFO Oliver Chow stepped in to keep the show on the road in the meantime, despite the fact that he totally contradicted the original “no change” statement when he said that “there will be no change in our strategy”. Oh, and by the way, revenues were already tanking, down 7% to $187m in the first quarter and a further 9% to $182m in the second quarter. To make matters worse, they also saw their Jackpot Party Casino players shrink. Group revenue was still going great guns, up 2% in each quarter to $790m in Q1 and $828m in Q2. But of course, the party had to come to an end sometime…
Matthieu Labbat took over on 4 November, the very same day that Light & Wonder released its results. He brings 13 years of experience in the mobile gaming space to the table, including nearly 7 and a half years’ stints with Product Madness, which he helped grow from a scrappy 120 employees to over 600 during his time at the helm of that more than $1bn a year business. He was straight into work, jetting off to Tel Aviv to get stuck in with the game teams, within just a few days of coming on board.
Strategy Review Following the Leadership Change
According to Matt Wilson, the handover “allows us to review our business strategy.” The review will focus on user acquisition spend, as well as game economy performance and cost structures.
Management had mentioned some of SciPlay’s difficulties at the second-quarter earnings call. According to executives, sweepstakes had driven up the installation costs and affected the game economy. Additionally, competitor marketing had impacted the relationship between installation costs and returns.
SciPlay plans to implement new features and launch a loyalty program in the following year. Matt Wilson warned that such moves would “extend the near-term pressure” before the business starts growing again. The forecast for the company’s performance in the fourth quarter already considers SciPlay underperforming relative to the market. Management also noted that it reviewed its spending in areas where costs are high and returns low, with SciPlay being one of those areas.
One title showed strong performance. Monopoly posted nine straight quarters of revenue growth. SciPlay still represents 21% of Light & Wonder’s revenue, hence its recovery is critical for the performance of the group.
Other Businesses Sustain Growth in Earnings for the Group
The performance of other businesses was better than that of SciPlay. iGaming revenue grew by 13% to $97m, while bets placed through the platform hit the record level of $31.7bn.
Gaming revenue dropped by 1% to $554m, but North America’s premium installed base grew for the 25th consecutive quarter. Machine sales rose by 5% to $199m, with 8,906 units sold. That figure was at the top of the guidance.
The premium installed base increased by 2,657 units over the year, while Grover, the charitable gaming unit, brought an additional 1,487 units. Some businesses underperformed. Systems revenue dropped by 24% to $55m due to reduced hardware sales, and table products revenue declined by 7% to $52m.
Operating expenses decreased by 5% to $582m, driving the operating income to $242m. Over the first nine months of the year, revenue grew by 1% to $2.44bn, while net income increased by 5% to $305m.
Debt Down, but Annual Outlook Cut
The level of Light & Wonder debt is estimated at $5.0bn at principal face value. Leverage based on net debt has decreased from 3.4x to 3.3x in June. Management plans to reduce this metric to below 3.0x in H1 2027.
According to CFO Oliver Chow, “Deleveraging was more important to us than share buybacks”. The firm has not made any purchases as part of its official share buyback programme in Q3.
Additionally, Light & Wonder repurchased 0.4 million CHESS Depositary Interests for approximately $30m, which will be held as a reserve for future employee awards.
Annual growth forecast for Consolidated AEBITDA, a non-GAAP earnings metric of the company, is revised to the low end of the guidance. Previously, it was expected that the annual figure would grow by mid-to-high single digits. Reduced demand in the social casino segment and delays in spending by customers affect this outlook. Management forecasts a strong fourth quarter and growth in recurring revenue which will mitigate the impact.
Expert Opinion: The Leadership Change that Comes with an Acknowledgement
It is hard to overlook the seven weeks from September when Light & Wonder stated that “there would be no change” in SciPlay strategy to November when Matt Wilson revealed a strategy review. Search for a successor had already begun in September, so it is possible that this timing was planned in advance.
Our opinion is straightforward – poor performance of SciPlay cannot be explained by blaming the free-to-play market only after Wilson revealed his concerns regarding a competitor. Market weakness is indeed real, but it does not explain why one company grows while another loses paying users.
Transition to direct-to-consumer sales requires less applause than it deserves. Higher margins on 17% fewer paying users protect profits in the short run, but they do not rebuild the paying user base. Additionally, management admitted that spending on attracting new paying users is no longer effective. Rebuilding the customer base may take time. We would give priority to paying users’ numbers over margins for the next two quarters.
Hiring an executive from a competitor that is outperforming your company is a reasonable step, but it also means additional public pressure.
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