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Light & Wonder, Inc. (LNW)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $809M (-1% YoY) with diluted EPS of $1.11; consolidated AEBITDA rose 7% to $352M and margin expanded 400 bps to 44% on stronger game performance, disciplined OpEx, iGaming growth, and Grover contributions .
  • Results missed S&P Global consensus: revenue $853.3M vs $809M, EPS $1.45 vs $1.11, Street EBITDA $352.0M vs actual EBITDA $299.0M; however, non-GAAP AEBITDA of $352M was strong and up YoY (Values retrieved from S&P Global).
  • FY25 guidance raised to include Grover: consolidated AEBITDA $1.43–$1.47B and Adjusted NPATA $550–$575M; management expects 3Q YoY AEBITDA growth in the low double digits and 4Q acceleration driven by timing of international game sales .
  • Capital management stepped up: buyback capacity increased by $500M to $1.5B (total), with a plan to utilize at least 50% of remaining $950M pre-Nasdaq delisting; sole primary ASX listing targeted by mid-November 2025 .
  • Stock reaction catalysts: headline miss vs consensus, margin expansion and recurring revenue quality, ASX-only listing and enlarged buyback, and charitable gaming integration momentum.

What Went Well and What Went Wrong

  • What Went Well
    • “20th consecutive quarter” of North American premium installed base growth; added 845 units sequentially and over 2,700 YoY; premium units now 52% of NA fleet .
    • Margin expansion across all businesses; consolidated AEBITDA margin up 400 bps to 44% with strong iGaming and Grover contributions; CFO: “margin optimization programs continue to progress as planned” .
    • iGaming delivered record quarterly revenue ($81M) and wagers ($26.6B), with AEBITDA up 17% and margin +300 bps YoY; focus shifting to higher-return proprietary/exclusive content .
  • What Went Wrong
    • Macro uncertainty led to cautious customer purchasing and delayed capex, pulling forward some swap hesitancy and pushing Canada timing; global unit sales down YoY (9,039 vs 11,310) .
    • SciPlay revenue fell 2% YoY on lower average monthly payers (notably Jackpot Party) and external competition from unregulated sweepstakes; despite ARPDAU +4% and record AMRPPU, payer conversion declined YoY .
    • Free cash flow was $29M vs $70M YoY, impacted by $73M legacy legal settlement payments; operating cash flow $106M (down from $141M YoY) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$797 $774 $809
Net Income ($USD Millions)$107 $82 $95
Diluted EPS ($USD)$1.20 $0.94 $1.11
Consolidated AEBITDA ($USD Millions)$315 $311 $352
Consolidated AEBITDA Margin (%)40% 40% 44%
Net Income Margin (%)13% 11% 12%
Net Cash from Ops ($USD Millions)$202 $185 $106
Free Cash Flow ($USD Millions)$74 $111 $29
SegmentRevenue Q2 2025 ($M)Revenue Q2 2024 ($M)AEBITDA Q2 2025 ($M)AEBITDA Q2 2024 ($M)AEBITDA Margin Q2 2025AEBITDA Margin Q2 2024
Gaming$528 $539 $280 $272 53% 50%
SciPlay$200 $205 $74 $70 37% 34%
iGaming$81 $74 $28 $24 35% 32%
Corporate/Other——($30) ($36) n/an/a
KPIs (Q2 2025 unless noted)Value
NA Installed Base (incl. Grover)46,372 units; +600+ Grover units since announcement; Grover active devices >11,000
NA Premium Mix52% of NA installed base
NA ADR per Unit$47.40 vs $50.41 YoY (ex-Grover ADR up YoY)
International Installed Base19,526 units; ADR $16.97 vs $15.59 YoY
Total New Unit Shipments9,039 vs 11,310 YoY; ASP $18,930
SciPlay ARPDAU / AMRPPU$1.08 / $128.96; payer conversion 9.8%; DTC revenue $35M (18% of SciPlay)
iGaming Wagers Processed$26.6B quarterly record
Q2 2025 vs S&P Global ConsensusConsensusActualSurprise
Revenue ($USD Millions)853.29*809 Miss (−$44.29M)*
Primary EPS ($USD)1.45*1.11 Miss (−$0.34)*
EBITDA ($USD Millions)352.00*299.00*Miss (−$53.00)*

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance/TargetCurrent GuidanceChange
Consolidated AEBITDAFY 2025$1.4B target (pre-Grover) $1.43–$1.47B (incl. ~$65M Grover) Raised/updated to include Grover
Adjusted NPATAFY 2025Not specified (targeted range referenced) $550–$575M New explicit range
Q3 Consolidated AEBITDA growth3Q 2025n/aLow double-digit YoY New intra-year cadence
4Q Growth cadence4Q 2025n/aAcceleration driven by timing of international game sales New intra-year cadence
Share Repurchase ProgramOngoing$1.0B authorized (June 2024) Increased to $1.5B; plan to utilize ≥50% of remaining $950M pre-delisting Raised
Net Debt Leverage TargetOngoing2.5x–3.5x 2.5x–3.5x; could temporarily exceed if full $950M capacity used; expect return to range near-term Maintained with caveat
Listing2025Considering ASX options Sole primary ASX listing; Nasdaq delisting expected by mid-Nov 2025 Transition confirmed
Dividendn/aNone disclosedNone disclosedn/a
OpEx/Tax Rate/OI&EFY 2025n/aCash tax tailwind of ~$40–$50M from U.S. legislation discussed; legal expenses expected to increase 2H Qualitative updates

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
Tariffs/MacroNew tariffs in Apr-2025; mitigation underway Early-Q2 operator hesitancy; improving tone; Asia sales weighted to Q4 Near-term headwind easing
Premium Installed Base18–19 quarters of growth; premium mix ~50–51% 20th consecutive quarter; premium 52% Strengthening
International Sales TimingQ4 2024 systems strong; Asia timing variable International game sales skew to Q4; AGE/G2E pipeline 4Q-weighted
SciPlay DTC/MonetizationDTC 13% in Q4 & Q1; ARPDAU up DTC 18%; ARPDAU record; sweepstakes impact acknowledged DTC scaling; external competitive pressure
Regulatory/LegalTCS antitrust settlement ($72.5M) Dragon Train litigation updates favor LNW; trials expected 2026 Progress; residual legal spend expected
Capital AllocationBuybacks continued; leverage ~3.0x Buyback capacity raised to $1.5B; leverage within target; potential temporary rise if fully deployed More aggressive buybacks
Listing StrategyASX listing review Sole ASX listing confirmed; Nasdaq delist timeline Decision finalized
Tax Legislation Tailwindn/aU.S. bill benefits R&D expensing, bonus depreciation, $40–$50M cash tax savings Positive tailwind

Management Commentary

  • CEO: “We have achieved 20 consecutive quarters of North American premium installed base growth… a true testament to the quality of our games underpinned by our unique R&D platform” .
  • CEO: “Integration of Grover is progressing ahead of schedule… very well-positioned in the charitable gaming business with a range of growth opportunities ahead of us” .
  • CFO: “Margin expansion was meaningful, reflecting business performance as well as optimization of resource allocation across digital, content and platform innovation” .
  • CFO: “We expect the third quarter year-over-year consolidated EBITDA growth to be in the low double digits… and an acceleration in growth… particularly in international game sales” .

Q&A Highlights

  • ASX-only listing and buybacks: Management plans to delist from Nasdaq by mid-November, consolidate liquidity on ASX, and use at least 50% of remaining $950M capacity pre-delisting; full use could briefly push leverage above 3.5x before returning to target .
  • Litigation: Courts granted motions favorable to LNW (trade secret specificity; denial of broad math model disclosure); trials expected in 2026; scope narrowed to Dragon Train and Jewel of the Dragon .
  • Guidance cadence: Base business targeting ~$1.4B; broader range reflects externalities (tariffs, macro) and near-term investments (Grover Indiana, studio scaling) to support 2028 $2.0B AEBITDA target .
  • Grover integration: +600 net unit adds since announcement; Indiana entry expected in fall; early L&W content on Grover platform to be showcased at G2E .
  • SciPlay/sweepstakes: Team throttling UA to higher-ROI channels; DTC scaled from 13% to 18% of revenue; markets banning sweepstakes show uplift in social casino KPIs .
  • Tax tailwind: U.S. legislation supports immediate R&D expensing, bonus depreciation for operators, and ~$40–$50M annual cash tax savings for LNW .

Estimates Context

  • Misses vs consensus: Revenue (−$44.3M) and EPS (−$0.34) missed S&P Global consensus; Street EBITDA missed by ~$53.0M, while non-GAAP AEBITDA was $352M and up 7% YoY (Values retrieved from S&P Global).
  • Implications: Street models likely adjust down near term for game sales timing and sweepstakes drag on SciPlay, while raising confidence in recurring AEBITDA margins given iGaming momentum and Grover contributions .

Key Takeaways for Investors

  • Quality-of-earnings improved: 44% consolidated AEBITDA margin with broad-based expansion; track recurring revenue drivers (gaming ops, iGaming, DTC) for durability .
  • Near-term top-line headwinds are timing-related: Macro-driven capex delays and Asia timing weigh on unit sales; management expects stronger 2H, particularly 4Q .
  • ASX-only listing and enlarged buyback are potential valuation catalysts: Liquidity consolidation plus aggressive repurchases may support share price into delisting timeline; monitor leverage trajectory vs 2.5x–3.5x target .
  • SciPlay DTC ramp offsets sweepstakes pressure: DTC mix up to 18%; continued focus on monetization and UA efficiency should stabilize DAU and payer trends .
  • Grover integration on track: Charitable gaming adds recurring revenue with greenfield expansion (e.g., Indiana); content synergy showcased at upcoming trade shows .
  • Watch tax policy benefits: R&D expensing/bonus depreciation and $40–$50M annual cash tax savings bolster cash conversion; legal expenses to rise in 2H .
  • 2H cadence matters: Low double-digit AEBITDA growth in Q3 and 4Q acceleration are critical for meeting the high end of FY25 guidance .

Citations:
Press release and 8-K tables and commentary: .
Q1 and Q4 prior quarters: .
Earnings call transcript quotes and Q&A: .
Values retrieved from S&P Global for consensus/actual EPS, revenue, and EBITDA.