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Light & Wonder, Inc. (LNW)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was mixed: revenue grew 2% YoY to $774M with consolidated AEBITDA up 11% to $311M and margin rising 300 bps to 40%, but GAAP diluted EPS was flat YoY at $0.94 as higher restructuring and taxes offset operating gains .
  • Versus S&P Global consensus, L&W missed on revenue ($774M vs $805.1M*) and EPS ($0.94 vs $1.14*), reflecting 2H-weighted game sales, late-quarter Jackpot Party changes, and weather-related yield pressure in the Northeast .
  • Management reaffirmed its 2025 Consolidated AEBITDA target of $1.4B (pre‑Grover) and referenced the associated 2025 Adjusted NPATA target range (prior disclosure: $565–$635M) despite tariff headwinds, citing supply-chain mitigations and margin initiatives .
  • Capital deployment remained active: $166M of buybacks (1.9M shares) in Q1; Grover Gaming charitable gaming assets closed on May 19 (post-Q1), adding a new recurring revenue vector and accelerating the company’s cross‑platform roadmap .

Values marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based margin expansion: consolidated AEBITDA +11% YoY to $311M; margins improved across all three segments (Gaming +200 bps to 51%, SciPlay +200 bps to 32%, iGaming +100 bps to 35%) .
    • Gaming momentum: Gaming AEBITDA +9% on 4% revenue growth; North America installed base +497 QoQ to 34,501 and maintained #1 ship share in Australia; North America unit shipments +30% YoY; CEO: “Our omni‑channel strategy [is] prosper[ing]… we remain confident in the various avenues of growth” .
    • Digital execution: iGaming wagers hit a record $25.2B; SciPlay DTC reached $27M (13% of SciPlay revenue), supporting margin expansion; CFO: “Underlying this expansion is our direct‑to‑consumer platform” .

  • What Went Wrong

    • Top‑line below Street: revenue $774M vs $805.1M* and GAAP EPS $0.94 vs $1.14*, as Q1 was 2H‑weighted for game sales and included higher restructuring and taxes; CFO cited weather pressure on U.S. WAP yields .
    • SciPlay revenue -2% YoY on fewer average monthly payers at Jackpot Party (partly timing of economy update), despite stronger monetization (ARPDAU +5% to $1.06); mgmt expects reacceleration in 2H .
    • Tariff uncertainty: new U.S./foreign tariffs raised near‑term cost pressure; CEO called them “mitigatable” via supplier diversification, onshoring/Mexico routing, and selective pass‑through if needed .

Values marked with * are retrieved from S&P Global.

Financial Results

Headline metrics (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$817 $797 $774
Net Income ($M)$64 $107 $82
Diluted EPS (GAAP)$0.71 $1.20 $0.94
Consolidated AEBITDA ($M, non‑GAAP)$319 $315 $311
Consolidated AEBITDA Margin (%)39% 40% 40%
Net Cash from Ops ($M)$119 $202 $185
Free Cash Flow ($M, non‑GAAP)$83 $74 $111

Q1 2025 actual vs S&P Global consensus

MetricActualConsensus*
Revenue ($M)774 805.1*
Primary EPS ($)0.94 1.14*

Values marked with * are retrieved from S&P Global.

Segment performance (Revenue/AEBITDA/Margin) – ($M) (oldest → newest)

SegmentQ3 2024 RevQ4 2024 RevQ1 2025 RevQ3 2024 AEBITDAQ4 2024 AEBITDAQ1 2025 AEBITDAQ3 2024 MarginQ4 2024 MarginQ1 2025 Margin
Gaming537 515 495 267 257 254 50% 50% 51%
SciPlay206 204 202 66 74 64 32% 36% 32%
iGaming74 78 77 24 25 27 32% 32% 35%
Total817 797 774 319 315 311 39% 40% 40%

KPIs and operating drivers (oldest → newest)

KPIQ3 2024Q4 2024Q1 2025
NA Gaming ops installed base (units)33,151 34,004 34,501
NA ADRPU ($/day)$49.05 $47.25 $48.25
U.S./Canada new unit shipments6,094 5,980 5,769
Global ASP per new unit$17,094 $18,666 $19,996
SciPlay DTC revenue ($M)$25 $27 $27
SciPlay ARPDAU ($)$1.04 $1.06 $1.06
SciPlay AMRPPU ($)$113.49 $117.15 $116.96
SciPlay Payer conversion (%)10.7% 10.9% 10.4%
iGaming OGS wagers ($B)$22.8 $24.0 $25.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated AEBITDA (non‑GAAP) targetFY 2025Reaffirmed at $1.4B (Q3’24) Remain committed to $1.4B (pre‑Grover) Maintained
Adjusted NPATA target range (non‑GAAP)FY 2025$565–$635M (Apr 2, 2025 update) Referenced as associated with $1.4B target (range reiterated previously) Maintained
Q1 2025 AEBITDA YoY growthQ1 2025“Low double‑digits” growth expected (from Q4 call materials) Delivered +11% YoY (AEBITDA $311M vs $281M) Met prior outlook

Notes: L&W characterizes FY2025 targets as forward‑looking non‑GAAP “targets,” not formal GAAP guidance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
Tariffs / supply chainNo tariff impact noted; focus on cost control and margin strength New tariffs in April 2025; management implementing mitigation (diversification, onshoring/Mexico, supplier negotiations); called “mitigatable” Emerging headwind; mitigations in place
DTC (SciPlay)DTC at 12% in Q3; 13% in Q4; driver of margin expansion DTC $27M (13%); Apple ruling tailwind for more aggressive DTC ramp in 2025 Positive mix/margin tailwind
Product performance (Gaming)Share gains; installed base expansion; #1 ship share Australia NA installed base +497 QoQ; shipments +30% YoY; #1 ship share Australia maintained Sustained momentum
Jackpot Party (SciPlay)Portfolio strong; DTC scaling Late‑quarter economy rework; stabilization; mgmt expects 2H reacceleration Near‑term drag → improving
Litigation (Dragon Train)Preliminary injunction; replacements largely completed External review found no evidence of similar issues in other “hold and spin” games; reaffirmed 2025 targets Legal overhang moderating operationally
Capital allocationNew $1B buyback program; active repurchases $166M Q1 buybacks; Term Loan A commitments for Grover financing Ongoing deployment

Management Commentary

  • CEO: “Our focus on a comprehensive product road map … has enabled us to return to double‑digit consolidated EBITDA growth, pacing us towards our year‑end target.”
  • CEO on tariffs/targets: “Tariffs are looking mitigatable… we see a pathway to mitigate that [and] recommit to our $1.4 billion target.”
  • CFO: “Our continued business optimization led to … a consolidated EBITDA margin of 40%, a 300 basis point increase over the prior year period.”
  • CFO on DTC: “Underlying [margin] expansion is our direct‑to‑consumer platform, which generated $27 million… 13% of [SciPlay] revenue.”

Q&A Highlights

  • Tariffs: Management expects to mitigate via supply chain reconfiguration (including Mexico), supplier participation, and selective pass‑through if needed; pulled forward inventory to secure “multiple quarters” of unaffected stock .
  • U.S. gaming ops yield: Q1 softness was “mostly weather‑related” in the Northeast WAP footprint; discounting from Q4 has been unwound .
  • DTC tailwinds: Apple ruling on alternative payments is a margin tailwind; L&W plans to accelerate DTC roll‑out and share targets at Investor Day .
  • International dynamics: Installed base decline included conversions of leased units to sales in LatAm (one‑time shift); Australia remains #1 share despite tough comps .
  • Path to $1.4B AEBITDA: 2H revenue acceleration from gaming ops additions, SidePlay reacceleration, U.S. iGaming growth, and Grover (post‑close; not included in target) .

Estimates Context

  • Street (S&P Global) expected Q1 2025 revenue of ~$805.1M* and EPS of ~$1.14* versus actual $774M and $0.94 GAAP diluted EPS; the miss largely reflected 2H‑weighted game sales, higher restructuring/taxes, and weather‑impacted yields .
  • Caution on comparability: L&W’s reported AEBITDA is non‑GAAP; S&P’s “EBITDA” estimates may not be directly comparable to company AEBITDA.
    Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Q1 underwhelmed vs consensus on revenue and EPS, but quality of earnings improved with consolidated AEBITDA +11% and 300 bps margin expansion to 40% .
  • Gaming fundamentals remain solid (NA installed base up, shipments +30% YoY, #1 ship share Australia), supporting 2H trajectory as sales funnel converts .
  • SciPlay’s DTC channel (13% of revenue) and expected Jackpot Party reacceleration should aid digital margins and growth into 2H .
  • Tariffs present headline risk but are being actively mitigated; management reiterated the $1.4B 2025 AEBITDA target despite the new cost backdrop .
  • Capital allocation remains a support: $166M Q1 buybacks; Grover closed on May 19 adds a new recurring growth vector; near‑term catalysts include integration updates and Investor Day strategy execution .
  • Near‑term trading: Watch for estimate resets near-term on Q1 misses; medium‑term, focus on 2H revenue conversion, DTC expansion, and Grover ramp as potential positive revisions drivers .

Appendix: Additional detail

  • First Quarter 2025 financial summary: Revenue $774M; Net income $82M; Diluted EPS $0.94; AEBITDA $311M; Free cash flow $111M .
  • Segment details: Gaming revenue $495M/AEBITDA $254M (51% margin); SciPlay $202M/$64M (32%); iGaming $77M/$27M (35%) .
  • Balance/Leverage: Cash $134M; Total debt $3.907B; Net debt leverage 3.0x (TTM AEBITDA $1.274B) .
  • Business updates: Tariffs, Dragon Train review, Grover acquisition financing commitments, Investor Day May 20 .