Core Insights - Light & Wonder (LNW) reported quarterly earnings of $1.81 per share, exceeding the Zacks Consensus Estimate of $1.42 per share, and showing an increase from $1.34 per share a year ago, resulting in an earnings surprise of +27.46% [1] - The company posted revenues of $841 million for the quarter ended September 2025, which was 2.51% below the Zacks Consensus Estimate, but an increase from $817 million year-over-year [2] - Light & Wonder has surpassed consensus EPS estimates in all four of the last quarters, but has only topped revenue estimates once in the same period [2] Financial Performance - The company's earnings surprise of +27.46% indicates strong performance relative to expectations, while the revenue miss suggests challenges in meeting market forecasts [1][2] - Light & Wonder shares have declined approximately 15.1% year-to-date, contrasting with the S&P 500's gain of 15.1% [3] Future Outlook - The company's earnings outlook is critical for assessing future stock performance, with current consensus EPS estimates at $1.79 for the upcoming quarter and $5.25 for the current fiscal year, alongside projected revenues of $928.8 million and $3.37 billion respectively [7] - The Zacks Rank for Light & Wonder is currently 4 (Sell), indicating expectations of underperformance in the near future due to unfavorable estimate revisions prior to the earnings release [6] Industry Context - The Gaming industry, to which Light & Wonder belongs, is currently ranked in the top 37% of over 250 Zacks industries, suggesting a relatively strong position within the market [8] - The performance of Light & Wonder may be influenced by broader industry trends, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2025 increased by 3% year over year to $841 million [4] - Adjusted EBITDA grew 18% year over year to $375 million, with a record margin expansion across all three businesses [4][22] - Adjusted EPS increased by 35% year over year to $1.81 [4][22] - Net income rose by 78% year over year, with diluted net income per share increasing by 89% to $1.34 [22] Business Line Data and Key Metrics Changes - Gaming revenue increased by 38% year over year to $241 million, driven by strong gaming operations performance and contributions from Grover [9][22] - Recurring revenue grew by 14% year over year, accounting for approximately 69% of consolidated revenue [5][22] - iGaming revenue reached a record $86 million, up 16% year over year, with Adjusted EBITDA increasing by 42% to $34 million [17][22] Market Data and Key Metrics Changes - North American gaming machine sales remained strong with over 6,000 units shipped in the quarter [12] - The average daily revenue per unit in North America increased by 5% year over year, excluding Grover units [11] - The company entered the Nebraska Skill Game market and commenced trials in the Eastern European Dynamic Multi-game market [12] Company Strategy and Development Direction - The company is transitioning to a sole standard listing on the ASX, expected to enhance its profile in the gaming industry [5][6] - Focus remains on the integration of Grover into game development and technology platforms, with expectations for significant contributions in 2026 [6][39] - The company emphasizes a disciplined capital allocation strategy to create sustainable shareholder value [8][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver growth and profitability despite broader market challenges [20] - The gaming consumer market remains resilient, with expectations for continued strong performance in the fourth quarter [44] - Management highlighted the importance of not compromising long-term growth for short-term goals, focusing on quality earnings [37] Other Important Information - The company returned $111 million to shareholders through share repurchases during the quarter [5][30] - Operating cash flows generated in the quarter amounted to $184 million, with free cash flow increasing by 64% year over year to $136 million [26] - The company maintains a net debt leverage ratio of 3.3 times following the Grover acquisition [28] Q&A Session Summary Question: How does the company see the fourth quarter shaping up to hit 2025 guidance? - Management highlighted strong U.S. sales and contributions from Grover, indicating a predictable earnings outlook for Q4 [34][35] Question: Can you provide an update on Grover's integration and Indiana launch? - Grover added 229 games in the quarter, with successful integration into the Light & Wonder family and preparations for the Indiana market entry [38][39] Question: What drove the gaming margin improvement in Q3? - The gaming operations business saw significant growth, contributing to margin expansion, with expectations for continued momentum [40][41] Question: What is the outlook for iGaming and SciPlay? - iGaming showed strong growth driven by first-party content, while SciPlay is focused on stabilizing mature games like Jackpot Party to return to growth [53][48][59]

Financial Performance - Total revenue for the three months ended September 30, 2025, was $841 million, a 3% increase from $817 million in the same period of 2024[22] - Net income for the three months ended September 30, 2025, was $114 million, compared to $64 million for the same period in 2024, representing a 78% increase[26] - Operating income for the nine months ended September 30, 2025, was $600 million, up from $500 million in the same period of 2024, reflecting a 20% increase[22] - Total revenue for the nine months ended September 30, 2025, reached $2,424 million, compared to $2,391 million for the same period in 2024, marking a growth of 1.4%[65] - Net income for the nine months ended September 30, 2025, was $291 million, compared to $246 million for the same period in 2024, representing an increase of 18.3%[106] Cash and Assets - Cash and cash equivalents increased to $236 million as of September 30, 2025, from $196 million at the end of 2024[29] - Total assets rose to $6,509 million as of September 30, 2025, compared to $5,421 million at the end of 2024, marking a 20% increase[29] - Total receivables, net, increased to $746 million as of September 30, 2025, compared to $682 million as of December 31, 2024, reflecting a growth of 9%[70] - Current receivables as of September 30, 2025, were $687 million, up from $620 million as of December 31, 2024, with a net allowance for credit losses decreasing from $35 million to $28 million[69] Liabilities and Debt - Total liabilities increased to $5,786 million as of September 30, 2025, from $4,785 million at the end of 2024, reflecting a 21% increase[29] - Total long-term debt outstanding as of September 30, 2025, is $4.988 billion, with a book value of $4.942 billion, compared to $3.870 billion as of December 31, 2024[10] - The company recorded a contingent acquisition consideration liability of $63 million as of September 30, 2025, up from $15 million at the end of 2024[102] Income and Expenses - The company reported a basic net income per share of $1.37 for the three months ended September 30, 2025, compared to $0.72 for the same period in 2024, a 90% increase[22] - Research and development expenses for the three months ended September 30, 2025, were $62 million, slightly down from $66 million in the same period of 2024[22] - The cost of revenue for the three months ended September 30, 2025, was $217 million, compared to $246 million in the same period of 2024, showing a decrease of 11.8%[58] - Payroll and related expenses for the three months ended September 30, 2025, were $125 million, consistent with $126 million in the same period of 2024, indicating stability in labor costs[58] Acquisitions and Investments - The company completed the acquisition of Grover Charitable Gaming for an upfront consideration of $850 million, with potential contingent payments of up to $200 million based on revenue metrics over four years[37] - Capital expenditures for the three months ended September 30, 2025, totaled $79 million, up from $71 million in the same period of 2024, indicating an increase of 11.3%[61] Stockholder Information - Stockholders' equity as of September 30, 2025, totaled $723 million, an increase from $636 million on January 1, 2025[104] - The company repurchased approximately 4.3 million shares of common stock for $380 million during the nine months ended September 30, 2025, with an additional 1.3 million shares purchased for $101 million post-quarter[108] Legal and Regulatory Matters - The estimated range of possible legal losses related to various contingencies is up to approximately $14 million in excess of accrued liabilities[115] - LNWI faces a potential payment of approximately 90 billion Colombian pesos (about $30 million) plus default interest due to a ruling by the Tribunal in Colombia[119] - The claims in the Automatic Card Shufflers Litigation seek unspecified money damages, with discovery closing on December 1, 2023[124] Other Financial Metrics - AEBITDA for the three months ended September 30, 2025, was $375 million, compared to $319 million for the same period in 2024, reflecting a year-over-year increase of 17.6%[61] - Total stock-based compensation expense for the nine months ended September 30, 2025, was $87 million, up from $82 million in the same period of 2024[106] - The effective tax rate for the nine months ended September 30, 2025, was impacted by foreign earnings, with an income tax expense of $76 million compared to $61 million in 2024[110]

Financial Performance - Consolidated revenue increased by 3% year-over-year to $841 million[9,63], driven by Gaming and iGaming revenue growth[63] - Consolidated AEBITDA increased by 18% year-over-year to $375 million[9,63], with margin expansion across all businesses[63] - Adjusted NPATA increased by 25% year-over-year to $153 million[9,63], benefiting from revenue growth and expanded AEBITDA margins[63] - Adjusted NPATA per share (EPSa) increased 35% year-over-year to $1.81[9,63] Segment Results - Gaming revenue increased by 4% year-over-year to $558 million[19,23], driven by Gaming operations and Table products[23] - SciPlay revenue decreased by 4% year-over-year to $197 million[19,23], but AEBITDA increased by 8% to $71 million[23] - iGaming revenue increased by 16% year-over-year to $86 million[19,23], with AEBITDA increasing by 42% to $34 million[23] Key Metrics - Recurring revenue accounted for approximately 69% of consolidated revenue, totaling $580 million, a 14% year-over-year increase[9] - North America installed base increased 42% year-over-year to 47,240 units, including over 11,250 units from Grover Gaming[29,33] - Wagers processed through OGS in iGaming grew 23% year-over-year to $28 billion[52,53] Capital Allocation - $111 million was returned to shareholders through share repurchases in 3Q25[9] - The company maintains a net debt leverage ratio of 3.5x[78]

Financial Performance - Consolidated revenue for Q3 2025 was $841 million, a 3% increase from $817 million in Q3 2024[5] - Net income rose 78% to $114 million, with net income per share increasing 89% to $1.34 compared to the prior year[5] - Consolidated AEBITDA grew 18% to $375 million, while Adjusted NPATA increased 25% to $153 million, or $1.81 per share[5] - Third quarter consolidated revenue was $841 million, a 3% increase from $817 million in the prior year, driven by a 4% increase in Gaming revenue and a 16% increase in iGaming revenue[21] - Net income rose 78% to $114 million, compared to $64 million in the prior year, with net income per share increasing 89% to $1.34[21] - Consolidated AEBITDA increased 18% to $375 million, up from $319 million in the prior year, primarily due to revenue growth from Gaming and iGaming[21] - Adjusted NPATA increased 25% to $153 million, with adjusted NPATA per share rising 35% to $1.81[21] - Operating income increased to $229 million in Q3 2025, up from $159 million in Q3 2024, marking a 44% growth[38] - The company reported a net income margin of 14% for Q3 2025, up from 8% in Q3 2024[45] Cash Flow and Shareholder Returns - Generated $184 million in net cash from operating activities and $136 million in free cash flow, representing year-over-year growth of 55% and 64%, respectively[5] - Returned $111 million to shareholders through share repurchases during the quarter, with a total of $1.5 billion returned since March 2022[11] - Free cash flow increased to $136 million from $83 million in the prior year, driven by similar factors impacting net cash from operating activities[21] - Free cash flow for the three months ended September 30, 2025, was $136 million, compared to $83 million in the same period of 2024, an increase of 63.9%[64] Debt and Financial Position - Principal face value of debt outstanding was $5.0 billion, with a net debt leverage ratio of 3.5x as of September 30, 2025[11] - Long-term debt, excluding current portion, rose to $4,893 million as of September 30, 2025, compared to $3,847 million at the end of 2024[40] - Total debt as of September 30, 2025, was $4,942 million, an increase from $3,870 million as of December 31, 2024[59] - The net debt leverage ratio improved to 3.5 as of September 30, 2025, compared to 3.0 as of December 31, 2024[59] Revenue Breakdown - Gaming revenue increased 4% to $558 million, driven by a 38% rise in Gaming operations revenue to $241 million[5] - SciPlay revenue decreased 4% to $197 million, with average revenue per daily active user increasing 4% to $1.08[24] - iGaming revenue reached $86 million, a 16% increase, with wagers processed through the platform hitting a record $28.0 billion[24] - Total revenue for the Gaming Business Segment reached $558 million, a 3.9% increase compared to $537 million in the same quarter of 2024[50] Operational Developments - The integration of Grover Gaming into the omni-channel strategy is progressing well, with plans to participate in the Indiana charitable gaming market[7] - Transition to a sole primary listing on the ASX is on schedule, with 57% of total outstanding shares converted to ASX tradable interests[15] - The installed base of gaming operations in the U.S. and Canada increased to 47,240 units, up from 33,151 units year-over-year, reflecting a growth of 42.5%[50] - Total new unit shipments for gaming machines were 8,608, down from 13,063 in the same quarter of 2024, indicating a decrease of 33.5%[50] Financial Metrics and Guidance - The company maintains its full-year 2025 financial outlook, with Consolidated AEBITDA guidance between $1.43 billion and $1.47 billion[15] - Adjusted NPATA guidance range for fiscal year 2025 is provided, but a forward-looking quantitative reconciliation to GAAP measures is not available due to uncertainties[78] - Consolidated AEBITDA is presented as a supplemental disclosure and is reconciled to net income, highlighting its importance in evaluating operational performance[82] - Free cash flow is calculated as net cash from operating activities minus capital expenditures and adjusted for changes in restricted cash[89] Non-GAAP Measures - Management introduced the usage of Combined non-GAAP financial measures post-Grover acquisition, which includes results for both the Company and Grover[70] - Net debt leverage ratio and Combined net debt leverage ratio are used to monitor the Company's overall liquidity and financial flexibility[71] - Adjusted NPAT and Adjusted NPATA provide additional perspective on performance by eliminating effects of certain items, which are less indicative of ongoing operations[72] - Combined measures are useful for investors as they provide insights into the combined business of the Company and Grover, enhancing comparisons of liquidity and leverage[74]

Core Perspective - Light & Wonder (LNW) stock is currently viewed as a value investment opportunity, trading approximately 32% lower than its 1-year peak and at a price-to-sales (PS) multiple below the average of the past 3 years [1][3]. Company Overview - Light & Wonder provides technology-driven products and services for the gaming and lottery sectors, including gaming machines, lottery offerings, player loyalty programs, and interactive marketing initiatives globally [5]. Financial Performance - The company has shown revenue growth of 3.9% over the last twelve months (LTM) and an average growth of 11.7% over the past 3 years [8]. - Light & Wonder maintains a free cash flow margin of approximately 10.4% and an operating margin of 24.7% LTM [8]. - The stock trades at a price-to-earnings (PE) multiple of 18.3, indicating a modest valuation despite positive fundamentals [8]. Market Position - Compared to the S&P 500, LNW offers lower valuation, higher 3-year average revenue growth, and more favorable operating margins [8].

Core Viewpoint - Light & Wonder, Inc. intends to delist its common stock from the Nasdaq and transition to a sole primary listing on the Australian Securities Exchange (ASX) [1] Group 1 - The decision to transition to the ASX reflects the company's strategic direction [1]

Core Viewpoint - Light & Wonder, Inc. is currently involved in ongoing litigation with Aristocrat, with a recent ruling from the Nevada Court favoring Aristocrat's request for discovery of mathematical models related to certain games released since 2021 [1] Group 1: Legal Proceedings - The Nevada Court granted Aristocrat's renewed motion to obtain discovery of math models for specific Light & Wonder hold and spin games [1] - This ruling follows a previous denial of a similar request by the Court [1]

Core Viewpoint - Light & Wonder (LNW) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of changing earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for Light & Wonder suggest an improvement in the company's underlying business, likely leading to an increase in stock price [5][10]. Zacks Rating System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7][9]. - The upgrade of Light & Wonder to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions - Light & Wonder is expected to earn $5.29 per share for the fiscal year ending December 2025, with no year-over-year change, while the Zacks Consensus Estimate has increased by 2.2% over the past three months [8].

Core Viewpoint - Light & Wonder, Inc. announced a plan to offer $1 billion in senior unsecured notes due 2033 through its subsidiary, Light and Wonder International, Inc. [1] Group 1: Offering Details - The company intends to offer $1 billion in aggregate principal amount of senior unsecured notes [1] - The offering is subject to market and other conditions [1] Group 2: Use of Proceeds - The net proceeds from the offering will be used to repay all outstanding borrowings under its revolving credit facility [1]