Light & Wonder (NasdaqGS:LNW) Q4 2025 Earnings call February 24, 2026 05:00 PM ET Company ParticipantsDavid Katz - Managing DirectorMatt Wilson - President and CEOMatthew Ryan - Co-Head of Equity ResearchOliver Chow - CFORohan Gallagher - EVP and Global Chief Corporate Affairs OfficerVictor Blanco - CTOConference Call ParticipantsAndre Fromyhr - Executive Director and Equity Research Analyst in Transport, Infrastructure, and Gaming ResearchBarry Jonas - Managing Director and Senior Gaming Equity AnalystDavi ...

Financial Data and Key Metrics Changes - In 2025, consolidated revenue reached $3.3 billion, up 4% from 2024, with fourth-quarter revenue of $891 million, a 12% year-over-year increase [27][28] - Consolidated EBITDA grew 29% year-over-year to $405 million in Q4, with annual AEBITDA of $1.44 billion, reflecting solid operational performance [29][30] - Adjusted NPATA per share (EPSA) increased 27% to $6.69, compared to $5.27 in the prior year [30] Business Line Data and Key Metrics Changes - Gaming revenue increased 17% to $602 million in Q4, driven by a 35% rise in gaming operations revenue to $237 million, and a record gaming machine sales of $234 million, up 20% year-over-year [12][27] - SciPlay revenue was $195 million for the quarter, with direct-to-consumer offerings growing to over 25% of total revenue, up from 13% at the end of 2024 [22] - iGaming revenue reached $94 million, up 21% year-over-year, with EBITDA of $36 million, reflecting a 44% increase [23][24] Market Data and Key Metrics Changes - North American install base for gaming operations increased 42% year-over-year to over 48,300 units, with average daily revenue per unit rising to $47, a 4% increase [14] - Global gaming machine sales were up 29% in unit shipments year-over-year to over 12,300 units [15] - The company is well-positioned for potential VLT expansion in states like Pennsylvania and Missouri, with a predicted market size of 40,000 units in Pennsylvania [64][66] Company Strategy and Development Direction - The company aims for $2 billion in consolidated EBITDA and EPSA exceeding $10.55 by 2028, focusing on growth initiatives and capital returns [5][6] - AI is viewed as a significant growth enabler, with the company launching an AI transformation program to enhance operational efficiency and game development [9][11] - The acquisition of Grover Gaming is expected to reinforce the company's recurring revenue model, with strong performance and expansion plans in Indiana [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth targets despite challenges, emphasizing the importance of operational efficiencies and strategic investments [5][43] - The company anticipates continued growth in premium North American gaming operations and expects to maintain a strong install base [32][44] - Legislative activities in various states present potential opportunities for market expansion, although these are not included in long-term guidance [66] Other Important Information - The company repurchased $877 million worth of shares in 2025, returning a total of $1.9 billion to shareholders since 2022 [6][42] - Operating cash flow was $319 million in Q4, up 58% year-over-year, with free cash flow increasing 138% to $176 million [36][38] - The company maintains a net debt leverage ratio of 3.4 times, with a principal debt value of $5.2 billion [39] Q&A Session Summary Question: Discussion on AI and competitive risks - Management highlighted the structural moats around the business, including strong market positions and established relationships with regulators, which help mitigate competitive risks [46][48] Question: Legislative activity regarding VLT expansion - Management expressed optimism about potential VLT expansion in states like Pennsylvania and Missouri, indicating readiness to deploy products if regulations are enacted [63][64] Question: Insights on Grover acquisition and growth prospects - Management reported strong performance from Grover, with expectations for similar market share in Indiana as seen in existing markets, and indicated a fee per day consistent with Class II standards [70][73]