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

PART I. FINANCIAL INFORMATION This section presents Light & Wonder's unaudited condensed consolidated financial statements and related notes for the periods ended June 30, 2025 and 2024 Item 1. Condensed Consolidated Financial Statements (unaudited) This section presents Light & Wonder's unaudited condensed consolidated financial statements and detailed notes for the periods ended June 30, 2025 and 2024 Consolidated Statements of Operations This section provides the unaudited consolidated statements of operations for Light & Wonder for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Operations (in millions, except per share amounts) | Metric | 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 | | Operating income | $202 | $175 | $371 | $340 | | Net income | $95 | $82 | $177 | $164 | | Basic net income per share | $1.12 | $0.92 | $2.09 | $1.83 | | Diluted net income per share | $1.11 | $0.90 | $2.05 | $1.78 | Consolidated Statements of Comprehensive Income This section presents the unaudited consolidated statements of comprehensive income for Light & Wonder for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Comprehensive Income (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $95 | $82 | $177 | $164 | | Foreign currency translation gain (loss), net of tax | $75 | $(1) | $123 | $(30) | | Derivative financial instruments unrealized (loss) gain, net of tax | $(3) | $0 | $(8) | $6 | | Total comprehensive income | $167 | $81 | $292 | $140 | Consolidated Balance Sheets This section provides the unaudited consolidated balance sheets for Light & Wonder as of June 30, 2025 and December 31, 2024 Consolidated Balance Sheets (in millions) | Item | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $136 | $196 | | Total current assets | $1,237 | $1,183 | | Goodwill | $3,355 | $2,890 | | Intangible assets, net | $882 | $454 | | Total assets | $6,490 | $5,421 | | Total current liabilities | $697 | $735 | | Long-term debt, excluding current portion | $4,818 | $3,847 | | Total liabilities | $5,788 | $4,785 | | Total stockholders' equity | $702 | $636 | Condensed Consolidated Statements of Cash Flows This section presents the unaudited condensed consolidated statements of cash flows for Light & Wonder for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $291 | $312 | | Net cash used in investing activities | $(1,000) | $(158) | | Net cash provided by (used in) financing activities | $660 | $(250) | | Decrease in cash, cash equivalents and restricted cash | $(41) | $(99) | | Cash, cash equivalents and restricted cash, end of period | $271 | $422 | - Acquisitions of businesses and assets, net of cash acquired, significantly increased cash used in investing activities to $(861) million in H1 2025 from $(5) million in H1 2024[28] - Purchase of L&W common stock increased to $(270) million in H1 2025 from $(175) million in H1 2024[28] Notes to Condensed Consolidated Financial Statements This section provides detailed notes to Light & Wonder's unaudited condensed consolidated financial statements, explaining significant accounting policies, segment performance, debt, equity, and ongoing litigation (1) Description of the Business and Summary of Significant Accounting Policies This section describes Light & Wonder's business, its reportable segments, and summarizes significant accounting policies, including details on the Grover acquisition - Light & Wonder is a leading cross-platform global games company, reporting results in three segments: Gaming, SciPlay, and iGaming[30] - Completed the acquisition of Grover Charitable Gaming on May 16, 2025, for an upfront consideration of $850 million, plus up to $200 million in contingent acquisition consideration[34] - Grover is a leading provider of electronic pull-tabs across five U.S. states, and its operating segment was aggregated with the Gaming reportable business segment[34][41] Preliminary Purchase Price Allocation for Grover Acquisition (May 16, 2025, in millions) | Item | Amount | | :--- | :--- | | Accounts receivable | $9 | | Property and equipment | $52 | | Intangible assets | $464 | | Goodwill | $392 | | Other current and non-current assets | $1 | | Total assets | $918 | | Total current and non-current liabilities | $4 | | Net assets acquired | $914 | | Consideration transferred: | | | Cash, net of purchase price adjustments | $858 | | Fair value of contingent consideration | $56 | | Total consideration transferred | $914 | (2) Revenue Recognition This section details Light & Wonder's revenue recognition policies, including revenue breakdown by segment and specific recognition methods for new acquisitions Revenue by Reportable Business Segment (in millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Gaming | $528 | $539 | $1,022 | $1,016 | | SciPlay | $200 | $205 | $402 | $411 | | iGaming | $81 | $74 | $158 | $148 | | Total revenue | $809 | $818 | $1,582 | $1,575 | - Grover revenues are generated from electronic pull tabs, with consideration based on a percentage of gross gaming revenue, recognized over time as gaming operations revenue[46] - Rental income revenue increased to $151 million for the three months ended June 30, 2025 (from $136 million in 2024) and to $289 million for the six months ended June 30, 2025 (from $263 million in 2024)[47] (3) Reportable Segments This section provides financial information by Light & Wonder's reportable business segments, including AEBITDA and segment assets AEBITDA by Reportable Segment (in millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Gaming | $280 | $272 | $534 | $504 | | SciPlay | $74 | $70 | $138 | $132 | | iGaming | $28 | $24 | $55 | $48 | | Total AEBITDA | $352 | $330 | $663 | $610 | Segment Assets (in millions) | Segment | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Gaming | $4,902 | $3,964 | | SciPlay | $481 | $444 | | iGaming | $843 | $735 | | Total Reportable Segments | $6,226 | $5,143 | | Unallocated and Reconciling Items | $264 | $278 | | Totals | $6,490 | $5,421 | (4) Restructuring and Other This section details the pre-tax restructuring and other costs incurred by Light & Wonder, categorized by type, for the reported periods Pre-Tax Restructuring and Other Costs (in millions) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Employee severance and related | $2 | $0 | $12 | $1 | | Legal and related | $0 | $32 | $0 | $32 | | Strategic review, acquisitions and related | $11 | $0 | $17 | $1 | | Restructuring, integration and other | $4 | $2 | $8 | $6 | | Total | $17 | $34 | $37 | $40 | (5) Receivables, Allowance for Credit Losses and Credit Quality of Receivables This section provides details on Light & Wonder's receivables, including current and long-term balances, allowance for credit losses, and credit quality analysis, particularly for LATAM receivables Receivables, Net (in millions) | Category | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Current receivables, net | $643 | $585 | | Long-term receivables, net | $93 | $97 | | Total receivables, net | $736 | $682 | - As of June 30, 2025, 4% of total receivables, net, were past due by over 90 days, consistent with December 31, 2024[66] LATAM Receivables (As of June 30, 2025, in millions) | Category | Total | Current | Balances over 90 days past due | | :--- | :--- | :--- | :--- | | Receivables | $65 | $44 | $21 | | Allowance for credit losses | $(19) | $(9) | $(10) | | Receivables, net | $46 | $35 | $11 | (6) Inventories This section details Light & Wonder's inventory balances, categorized into parts and work-in-process, and finished goods, as of the reported periods Inventories (in millions) | Category | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Parts and work-in-process | $142 | $126 | | Finished goods | $45 | $32 | | Total inventories | $187 | $158 | (7) Property and Equipment, net This section presents Light & Wonder's property and equipment, net of accumulated depreciation, and details the depreciation expense for the reported periods Property and Equipment, Net (in millions) | Category | As of June 30, 2025 (Net Balance) | As of December 31, 2024 (Net Balance) | | :--- | :--- | :--- | | Gaming machinery and equipment | $845 | $745 | | Total property and equipment, net | $351 | $286 | Depreciation Expense (in millions) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Depreciation expense | $43 | $32 | $84 | $63 | (8) Intangible Assets, net and Goodwill This section provides a breakdown of Light & Wonder's intangible assets, net, and goodwill by reportable segment, including changes due to acquisitions and foreign currency adjustments Intangible Assets, Net (in millions) | Category | As of June 30, 2025 (Net Balance) | As of December 31, 2024 (Net Balance) | | :--- | :--- | :--- | | Customer relationships | $587 | $274 | | Intellectual property | $197 | $123 | | Licenses | $62 | $48 | | Brand names | $3 | $3 | | Trade names | $28 | $2 | | Patents and other | $5 | $4 | | Total intangible assets | $882 | $454 | Goodwill by Reportable Segment (in millions) | Segment | Balance as of December 31, 2024 | Acquired goodwill | Foreign currency adjustments | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Gaming | $2,357 | $392 | $31 | $2,780 | | SciPlay | $209 | $0 | $5 | $214 | | iGaming | $324 | $0 | $37 | $361 | | Totals | $2,890 | $392 | $73 | $3,355 | - Acquired goodwill of $392 million is related to the Grover acquisition[77] (9) Software, net This section details Light & Wonder's software assets, net of accumulated amortization, and the associated amortization expense for the reported periods Software, Net (in millions) | Category | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Software | $1,197 | $1,137 | | Accumulated amortization | $(1,021) | $(976) | | Software, net | $176 | $161 | Software Amortization Expense (in millions) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Amortization expense | $19 | $17 | $38 | $35 | (10) Long-term Debt This section provides a detailed breakdown of Light & Wonder's outstanding long-term debt, including maturity dates, interest rates, and book values, along with recent changes to debt facilities Outstanding Debt (in millions) | Debt Type | Final Maturity | Rate(s) | Book Value as of June 30, 2025 | Book Value as of December 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | LNWI Revolver | 2030 | variable | $195 | $0 | | LNWI Term Loan A | 2028 | variable | $798 | $0 | | LNWI Term Loan B | 2029 | variable | $2,124 | $2,133 | | 2028 Unsecured Notes | 2028 | 7.000% | $696 | $695 | | 2029 Unsecured Notes | 2029 | 7.250% | $496 | $496 | | 2031 Unsecured Notes | 2031 | 7.500% | $544 | $543 | | Other | --- | --- | $3 | $3 | | Total long-term debt outstanding | | | $4,856 | $3,870 | - LNWI Revolver commitments increased to $1.0 billion (from $750 million) and maturity extended to February 2030[80] - LNWI borrowed $800 million in term loans under the new LNWI Term Loan A facility, maturing May 2028, to fund the Grover acquisition[81] (11) Fair Value Measurements This section discusses Light & Wonder's fair value measurements, including the use of interest rate swap contracts to hedge variable rate debt and details on contingent acquisition consideration liabilities - The company uses interest rate swap contracts to hedge $700 million notional amount of variable rate debt, effectively fixing the interest rate at a weighted-average fixed rate of 2.8320% until April 2027[88] Derivative Financial Instruments Unrealized (Loss) Gain (Net of Tax, in millions) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | (Loss) gain recorded in accumulated other comprehensive loss | $(3) | $0 | $(8) | $6 | Contingent Acquisition Consideration Liabilities (in millions) | Category | Total | Included in Accrued Liabilities | Included in Other Long Term Liabilities | | :--- | :--- | :--- | :--- | | Balance as of December 31, 2024 | $15 | $8 | $7 | | Additions (Grover acquisition) | $56 | | | | Payments | $(2) | | | | Other adjustments | $(6) | | | | Balance as of June 30, 2025 | $63 | $13 | $50 | (12) Stockholders' Equity This section provides an overview of Light & Wonder's stockholders' equity, including changes in total equity, stock-based compensation expense, and share repurchase activities - Total stockholders' equity increased to $702 million as of June 30, 2025, from $636 million at January 1, 2025[97] Stock-based Compensation Expense (in millions) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total stock-based compensation expense | $31 | $31 | $59 | $53 | - Repurchased approximately 3.1 million shares of common stock for an aggregate cost of $268 million (including excise tax) during the six months ended June 30, 2025[102] - Board of Directors approved an additional $500 million for share repurchases on July 31, 2025[102] (13) Income Taxes This section details Light & Wonder's income tax expense and effective tax rate, along with the impact of foreign earnings and new tax legislation Income Tax Expense (in millions) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income tax expense | $29 | $26 | $51 | $44 | - The effective tax rate differed from the U.S. statutory rate of 21% primarily due to worldwide tax rates on foreign earnings[104] - The company is currently assessing the impact of the One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, on its consolidated financial statements[105] (14) Leases This section outlines Light & Wonder's lease obligations, including total operating lease expense and the maturity schedule for operating lease liabilities Total Operating Lease Expense (in millions) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating lease expense | $7 | $6 | $13 | $12 | Operating Lease Liabilities Maturities (As of June 30, 2025, in millions) | Year Ending December 31 | Amount | | :--- | :--- | | Remainder of 2025 | $11 | | 2026 | $19 | | 2027 | $12 | | 2028 | $8 | | 2029 | $2 | | Thereafter | $1 | | Less Imputed Interest | $(4) | | Total | $49 | (15) Litigation This section details Light & Wonder's legal proceedings, including accrued liabilities for legal matters, estimated possible losses, and specific updates on various settlements and ongoing litigations - Accrued liabilities for legal matters were $17 million as of June 30, 2025, significantly down from $89 million at December 31, 2024[108] - The estimated range of additional possible loss for reasonably possible legal contingencies is up to approximately $14 million in excess of accrued liabilities[109] - The TCS John Huxley Matter was settled for $72.5 million in April 2025[119] - Several social casino gaming class actions (Allah Beautiful, Sprinkle, Andrea Sornberger, Roberts, Ebersole, Murnaghan, Ewing, Fuqua, Timothy Sornberger) are in various stages of settlement or court approval[123][124][126][127][128][129][131][132][133] - Ongoing litigation includes Aristocrat Matters (U.S. and Australia) regarding DRAGON TRAIN and JEWEL OF THE DRAGON games, and Evolution Matter regarding ROULETTEX®, POWERX®, and 88 Fortunes Blaze Live Roulette game[134][136][137] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Light & Wonder's financial performance, strategic initiatives, and operational results, including the Grover acquisition and liquidity - Light & Wonder is executing its strategy to become a leading cross-platform global games company with a focus on content and digital markets[142] - Completed the acquisition of Grover Charitable Gaming for $850 million upfront, financed by an $800 million Term Loan A facility[143][144] - Consolidated revenue for Q2 2025 decreased slightly by 1% to $809 million, and H1 2025 revenue remained flat at $1.6 billion, impacted by macroeconomic uncertainty and cautious customer purchasing behavior[145] - Returned $266 million to shareholders through share repurchases in H1 2025, completing approximately 55% of the $1.0 billion program, with an additional $500 million authorized in July 2025[146] - Board approved moving from its current dual listing on Nasdaq and ASX to a sole primary listing on the ASX by end of November 2025[147] BUSINESS OVERVIEW This section provides an overview of Light & Wonder's business strategy, recent acquisitions, financial performance, and key corporate decisions - Light & Wonder is a leading cross-platform global games company with a focus on content and digital markets, reporting in Gaming, SciPlay, and iGaming segments[141][142] - Acquired Grover for $850 million upfront on May 16, 2025, financed by an $800 million Term Loan A facility[143][144] - Consolidated revenue for Q2 2025 decreased 1% to $809 million, and H1 2025 revenue was $1.6 billion, due to macroeconomic uncertainty impacting game sales timing[145] - Approved sole primary listing on ASX, delisting from Nasdaq by end of November 2025[147] - New trade tariffs and policies are expected to create incremental cost pressures, but mitigation strategies are in place to significantly mitigate these effects[148][149] CONSOLIDATED RESULTS This section presents Light & Wonder's consolidated financial performance, including revenue, operating expenses, and net income, with explanations for key changes Consolidated Financial Performance (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $809 | $818 | $1,582 | $1,575 | | Total operating expenses | $607 | $643 | $1,211 | $1,235 | | Operating income | $202 | $175 | $371 | $340 | | Net income before income taxes | $124 | $108 | $228 | $208 | | Net income | $95 | $82 | $177 | $164 | - Total cost of revenue decreased primarily due to lower cost of products on lower revenue[155] - SG&A decreased by $12 million (Q2) and $13 million (H1) due to lower bad debt expense and salaries/benefits[156] - D&A increased by $12 million (Q2) and $17 million (H1) due to Gaming operations installed base investments and Grover acquisition assets[157] - Restructuring and other decreased due to a $32 million legal charge in Q2 2024, partially offset by Grover acquisition costs and iGaming Live Casino discontinuation charges in 2025[158] REPORTABLE BUSINESS SEGMENT RESULTS This section analyzes the financial performance of Light & Wonder's reportable business segments: Gaming, SciPlay, and iGaming, detailing revenue and AEBITDA Consolidated Revenue by Reportable Business Segment (in millions) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Gaming | $528 | $539 | $1,022 | $1,016 | | SciPlay | $200 | $205 | $402 | $411 | | iGaming | $81 | $74 | $158 | $148 | | Total Revenue | $809 | $818 | $1,582 | $1,575 | GAMING This section details the Gaming segment's revenue and AEBITDA performance, highlighting impacts from gaming operations, machine sales, and the Grover acquisition - Gaming revenue decreased 2% in Q2 2025 but increased 1% in H1 2025[152] - Gaming operations revenue grew 19% in Q2 2025 and 12% in H1 2025, benefiting from $21 million in Grover revenue and strong game performance[152][170][172] - Gaming machine sales decreased 16% in Q2 2025 and 8% in H1 2025 due to macroeconomic uncertainty and delayed capital expenditures[152][170][173] - U.S. and Canada Gaming operations installed base increased by 13,806 units (42%) year-over-year, including 11,026 units from Grover[170][172] - Gaming AEBITDA increased by $8 million (Q2) and $30 million (H1), with AEBITDA margin increasing to 53% (Q2) and 52% (H1) due to favorable revenue mix and margin enhancements[175] SCIPLAY This section analyzes the SciPlay segment's revenue and AEBITDA, focusing on changes in player metrics and the growth of the direct-to-consumer platform - SciPlay revenue decreased 2% for both Q2 and H1 2025, primarily due to a decline in average monthly payers, partially offset by an increase in average monthly revenue per paying user[153][178][187] - Average monthly revenue per paying user increased 10% for Q2 2025 and 6% for H1 2025[153][183] - Direct-to-consumer platform revenue increased 46% in Q2 and 75% in H1, representing approximately 16% of total SciPlay revenue for H1 2025, contributing to higher margins[177][183] - SciPlay AEBITDA increased by $4 million (Q2) and $6 million (H1), with AEBITDA margin increasing to 37% (Q2) and 34% (H1) due to higher margins from the direct-to-consumer platform[191] SciPlay Key Performance Indicators (Three Months Ended June 30) | Metric | 2025 | 2024 | Variance | | :--- | :--- | :--- | :--- | | Average MAU (millions) | 5.2 | 5.4 | (4)% | | Average DAU (millions) | 2.0 | 2.1 | (5)% | | ARPDAU | $1.08 | $1.04 | 4% | | Average MPUs (thousands) | 512 | 574 | (11)% | | AMRPPU | $128.96 | $116.91 | 10% | | Payer Conversion Rate | 9.8% | 10.5% | (0.7)pp | iGAMING This section reviews the iGaming segment's revenue and AEBITDA growth, driven by North American market momentum and partner network expansion, alongside the discontinuation of Live Casino operations - iGaming revenue increased 9% in Q2 2025 and 7% in H1 2025, driven by momentum in North American markets and expansion of the partner network[153][197] - Wagers processed through the Open Gaming System increased to $27 billion (Q2) and $52 billion (H1)[197] - The company is discontinuing Live Casino operations to reallocate resources, with no material impact expected on long-term growth prospects[194][198] - iGaming AEBITDA increased 17% (Q2) and 15% (H1), with AEBITDA margin increasing to 35% for both periods due to lower operating expenses[198] RECENTLY ISSUED ACCOUNTING GUIDANCE This section addresses the impact of recently issued accounting guidance on Light & Wonder's consolidated financial statements - No recently issued accounting guidance is expected to have a significant effect on the consolidated financial statements[199] CRITICAL ACCOUNTING ESTIMATES This section discusses Light & Wonder's critical accounting estimates, noting updates related to business combinations and goodwill following the Grover acquisition - No significant changes to critical accounting estimate policies, except for updates related to business combinations and goodwill following the Grover acquisition[201][202] - The company now has seven reporting units: Gaming, Grover, U.K. Gaming, Casino Management Systems, Table Products, SciPlay, and iGaming[203] - Goodwill is tested for impairment annually on October 1 or sooner if circumstances change; no such events occurred as of June 30, 2025[203] LIQUIDITY, CAPITAL RESOURCES AND WORKING CAPITAL This section analyzes Light & Wonder's liquidity, capital resources, and working capital, detailing cash flow activities, available liquidity, and debt management Cash and Available Revolver Capacity (in millions) | Item | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $136 | $196 | | Revolver capacity | $1,000 | $750 | | Revolver capacity drawn | $(195) | $0 | | Letters of credit | $(10) | $(10) | | Total available liquidity | $931 | $936 | - Net cash provided by operating activities decreased by $21 million to $291 million for H1 2025, primarily due to changes in working capital and $73 million in legal settlement payments[212][213] - Net cash used in investing activities increased by $842 million to $1,000 million for H1 2025, primarily due to the Grover acquisition ($861 million)[212][214] - Net cash provided by financing activities increased by $910 million to $660 million for H1 2025, driven by new debt borrowings (LNWI Term Loan A and Revolver) partially offset by $270 million in share repurchases[212][215] - No significant off-balance sheet arrangements as of June 30, 2025[217] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to market risks, primarily focusing on interest rate risk, detailing the impact of variable rate debt and the use of interest rate swap contracts to manage this exposure - As of June 30, 2025, $3.1 billion of long-term debt is variable rate, with a hypothetical 1% change in interest rates resulting in approximately $31 million change in interest expense[219] - Interest rate swap contracts are used to hedge a portion of variable rate debt, effectively fixing the interest rate on a $700 million notional amount until April 2027[220] Item 4. Controls and Procedures Management confirms effective disclosure controls and procedures, with ongoing integration of Grover's internal controls - Disclosure controls and procedures were effective as of June 30, 2025[222] - The company is integrating Grover's internal controls over financial reporting; no other material changes to internal control over financial reporting occurred during Q2 2025[223] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings This section refers to Note 15 of the financial statements for a comprehensive discussion of the company's legal proceedings, which include various litigations and arbitrations - For a detailed discussion of legal proceedings, refer to Note 15 in this Quarterly Report on Form 10-Q[224] Item 1A. Risk Factors Updates risk factors including economic conditions, geopolitical events, and potential impacts of delisting from Nasdaq and sole ASX listing - Unfavorable U.S. and international economic conditions, including inflation, rising interest rates, and new trade tariffs, continue to adversely affect business, discretionary spending, and customer capital expenditures[226][227][229][234][236] - Geopolitical factors like armed conflicts (e.g., in Israel) could negatively affect SciPlay's operations and the supply chain for the Gaming business[231][232] - The decision to pursue a sole primary listing on the ASX and delist from Nasdaq could negatively affect the liquidity and trading prices of common stock, and impact access to capital markets[237] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities under its authorized program, including the repurchase of 1.2 million shares for $100 million during the three months ended June 30, 2025 Issuer Purchases of Equity Securities (Three Months Ended June 30, 2025, in millions, except for price per share) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Cost of Repurchase | Approximate Dollar Value Remaining Under Programs | | :--- | :--- | :--- | :--- | :--- | | 4/1/2025 - 4/30/2025 | 0.6 | $81.52 | $53 | $494 | | 5/1/2025 - 5/31/2025 | 0.6 | $85.81 | $47 | $447 | | 6/1/2025 - 6/30/2025 | 0.0 | $0.00 | $0 | $447 | | Total | 1.2 | $83.33 | $100 | $447 | - Share repurchases are subject to a 1% excise tax, with $2 million recorded as of June 30, 2025[241] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities[242] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Not applicable[243] Item 5. Other Information This section discusses insider trading arrangements and policies, noting that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[245] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various agreements, corporate documents, certifications, and XBRL related files - Lists various exhibits, including the Asset Purchase Agreement for Grover Gaming, Credit Agreement, Incentive Compensation Plan, and certifications[246] SIGNATURES This section contains the official signatures for the quarterly report SIGNATURES The report was duly signed on behalf of Light & Wonder, Inc. by Oliver Chow, Executive Vice President, Chief Financial Officer and Treasurer, on August 6, 2025 - Report signed by Oliver Chow, Executive Vice President, Chief Financial Officer and Treasurer, on August 6, 2025[250][251]