Light & Wonder(LNW) - 2025 Q2 - Quarterly Results

Executive Summary & Strategic Highlights Second Quarter 2025 Performance Overview Light & Wonder reported Q2 2025 earnings growth and margin expansion across segments, with consolidated revenue slightly down but net income and AEBITDA up Q2 2025 Consolidated Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :------ | :------ | :--------- | | Consolidated Revenue | $809M | $818M | (1)% | | Net Income | $95M | $82M | 16% | | Consolidated AEBITDA | $352M | $330M | 7% | - Macroeconomic uncertainty led to cautious purchasing behavior and delayed capital expenditure among customers, impacting game sales timing[4] - Gaming business sold over 9,000 new units globally, maintaining strong market share momentum[4] - North American premium installed base increased for the 20th consecutive quarter, adding 845 units sequentially and over 2,700 units year-over-year[2] - iGaming business delivered quarterly record revenue[4] Strategic Initiatives & Capital Allocation Light & Wonder advances strategic initiatives, including a sole ASX listing, expanded share repurchases, and successful Grover integration ASX Listing & Share Repurchases - L&W Board approved a sole primary listing on the ASX, with delisting from Nasdaq expected by end of November 2025, reflecting strategic alignment with long-term growth plans and shareholder base[2][3][11] - Returned $266 million of capital to shareholders through share repurchases during the first half of 2025, completing approximately 55% of the previously authorized $1.0 billion plan[3][4] - Approved an additional $500 million for share repurchases, increasing the total program to $1.5 billion, demonstrating confidence in the company's outlook and value creation[3][4][11] - Principal face value of debt outstanding was $4.9 billion, resulting in a net debt leverage ratio of 3.7x as of June 30, 2025, or a combined net debt leverage ratio of 3.4x, remaining within the target range of 2.5x to 3.5x[11] Grover Acquisition - Completed the acquisition of Grover Gaming's charitable gaming business on May 16, 2025, for an upfront consideration of $850 million[2][4][15] - Grover is a leading provider of electronic pull-tabs across five U.S. states, with its financial results reported as part of the Gaming segment[15] - Integration of Grover is progressing ahead of schedule, with over 600 active units added since the acquisition announcement[2][4] - The acquisition was financed by borrowing $800 million under a new term loan 'A' facility[15] FY 2025 Financial Outlook FY 2025 Financial Guidance (Inclusive of Grover) | Metric | Guidance Range | | :--------------------- | :------------- | | Consolidated AEBITDA | $1.43B - $1.47B | | Adjusted NPATA | $550M - $575M | - Expected earnings to be second half weighted, with Q3 2025 year-over-year Consolidated AEBITDA growth in the low double-digits and accelerated growth in Q4, primarily driven by international game sales[15] Management Commentary Management emphasizes R&D, strong game performance, Grover integration, and the strategic benefits of a sole ASX listing - CEO Matt Wilson affirmed commitment to R&D investment to proliferate high-performing content and expand the North American installed base, while praising the ahead-of-schedule Grover integration and the strategic move to a sole ASX listing[8] - CFO Oliver Chow underscored the benefits of a diversified business model, disciplined execution leading to meaningful margin expansion, continued investment across the portfolio, and adherence to the share buy-back program while maintaining the targeted net debt leverage ratio[8] - Board Chair Jamie Odell stated that the move to a sole primary ASX listing, where equity trading already accounts for approximately 37% of total equity, is in the best long-term interests of shareholders, offering investment in a global growth company with strong fundamentals and recurring revenues[8] Financial Performance Highlights Summary Financial Results (Q2 & H1 2025) Summary financial results for Q2 and H1 2025 show mixed revenue but consistent growth in net income and AEBITDA, with increased debt Summary Financial Results (Q2 & H1 2025) | ($ in millions except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $809 | $818 | $1,582 | $1,575 | | Net income | 95 | 82 | 177 | 164 | | Net income per share – Diluted | 1.11 | 0.90 | 2.05 | 1.78 | | Net cash provided by operating activities | 106 | 141 | 291 | 312 | | Capital expenditures | 78 | 86 | 139 | 153 | | Consolidated AEBITDA | $352 | $330 | $663 | $610 | | Adjusted NPATA | 135 | 130 | 252 | 234 | | Adjusted NPATA per share – Diluted (or EPSa) | 1.58 | 1.42 | 2.93 | 2.54 | | Free cash flow | 29 | 70 | 140 | 162 | | Cash and cash equivalents (As of period end) | $136 | N/A | $136 | N/A | | Total debt (As of period end) | 4,856 | N/A | 4,856 | N/A | Second Quarter 2025 Financial Highlights Q2 2025 consolidated revenue slightly decreased, but net income and AEBITDA increased due to lower costs and margin expansion Q2 2025 Revenue and AEBITDA by Segment | Segment | Revenue 2025 ($M) | Revenue 2024 ($M) | Revenue Change ($M) | Revenue Change (%) | AEBITDA 2025 ($M) | AEBITDA 2024 ($M) | AEBITDA Change ($M) | AEBITDA Change (%) | AEBITDA Margin 2025 (%) | AEBITDA Margin 2024 (%) | PP Change | | :-------- | :---------------- | :---------------- | :------------------ | :----------------- | :---------------- | :---------------- | :------------------ | :------------------ | :---------------------- | :---------------------- | :-------- | | Gaming | $528 | $539 | $(11) | (2)% | $280 | $272 | $8 | 3% | 53% | 50% | 3 | | SciPlay | $200 | $205 | $(5) | (2)% | $74 | $70 | $4 | 6% | 37% | 34% | 3 | | iGaming | $81 | $74 | $7 | 9% | $28 | $24 | $4 | 17% | 35% | 32% | 3 | | Total | $809 | $818 | $(9) | (1)% | $352 | $330 | $22 | 7% | 44% | 40% | 4 | - Net income increased 16% to $95 million, driven by lower cost of revenue, reduced operating expenses, and lower restructuring costs, despite a decrease in consolidated revenue[21] - Net income per share increased by 23% to $1.11[21] - Adjusted NPATA increased 4% to $135 million, and Adjusted NPATA per share (EPSa) increased 11% to $1.58[21] - Net cash provided by operating activities was $106 million (down from $141 million YoY), primarily impacted by $73 million in legal settlement payments[