Light & Wonder(LNW) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported consolidated revenue growth of 2% year over year to $774 million, marking the sixteenth consecutive quarter of revenue growth [21] - Net income increased to$ 82 million, with diluted net income per share rising to $0.94 from$ 0.88 in the prior year [22] - Consolidated EBITDA grew by 11% to $311 million, resulting in a consolidated EBITDA margin of 40%, a 300 basis point increase year over year [22][24] Business Line Data and Key Metrics Changes - Gaming revenue reached$ 495 million, a 4% increase, with EBITDA growing 9% to $254 million, reflecting a margin expansion of 200 basis points to 51% [24][26] - SciPlay revenue was$ 202 million, with EBITDA growing 3% to $64 million, representing a margin of 32% [27] - iGaming revenue increased by 4% to$ 77 million, with EBITDA growing 8% to a record $27 million [30] Market Data and Key Metrics Changes - The North American installed gaming base increased by approximately 500 units sequentially, with over 34,000 units now in operation [8][25] - Global gaming machine sales were$ 208 million, up 1% year over year, with a 26% increase in North American replacement market shipments [25][26] - The U.S. and Canada markets saw GGR increases of 3011% year over year, indicating strong market performance [14] Company Strategy and Development Direction - The company is focused on a comprehensive product roadmap and operational excellence, aiming for sustainable growth through R&D investments [5][6] - A strategic acquisition of Grover Gaming's charitable gaming asset is expected to enhance the company's role in the global gaming market [17][18] - The company plans to continue leveraging its diverse game franchises and first-party content to drive future growth [16][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the gaming industry's resilience despite potential macroeconomic challenges [6][7] - The company is committed to achieving its 2025 consolidated EBITDA target of $1.4 billion, despite tariff headwinds [35] - Management noted that GGR remains a critical metric, with strong performance observed across U.S. markets [86] Other Important Information - The company has implemented measures to mitigate tariff impacts, including diversifying the supply chain and pulling forward inventory [41][91] - The direct-to-consumer (DTC) platform has seen significant growth, now accounting for over 13% of revenue, with plans for further expansion [13][56] - The company is preparing for an upcoming Investor Day to discuss its fundamentals and growth strategy [19][20] Q&A Session Summary Question: Impact of tariffs on the business - Management indicated that tariffs are currently manageable, with strategies in place to mitigate costs and maintain targets [41][42][44] Question: U.S. Gaming operations yield - Management noted that weather-related factors impacted yields, but overall trading has returned to normal [50][51] Question: SciPlay business and DTC strategy - Management expressed excitement about a recent favorable ruling regarding alternative payment methods, which will support DTC growth [56][57] Question: International gaming business performance - Management acknowledged a decline in the international installed base but attributed it to tough comparisons from the previous year [62][63] Question: Update on dual listing exploration - Management confirmed ongoing discussions about an Australian listing but indicated a cautious approach due to market uncertainties [72][74] Question: Pathways to achieve EBITDA guidance - Management highlighted the importance of maintaining momentum in gaming operations and optimizing costs to reach the$ 1.4 billion EBITDA target [78][84]