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Light & Wonder, Inc. (LNW)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered revenue of $0.841B (+3% YoY), diluted EPS of $1.34 (+89% YoY), and Consolidated AEBITDA of $0.375B (+18% YoY) with margin expanding to 45% on broad-based operational efficiencies, record iGaming, and Gaming Ops strength including Grover contributions .
  • Versus Wall Street consensus, revenue and EPS were modest misses (revenue: $861.3M estimate vs $841.0M actual; EPS: $1.41 estimate vs $1.34 actual), while EBITDA estimates (SPGI) are not directly comparable to LNW’s AEBITDA due to non-GAAP differences; management emphasized recurring-revenue resiliency and margin quality going into Q4* .
  • FY 2025 guidance maintained: Consolidated AEBITDA $1.43–$1.47B and Adjusted NPATA $550–$575M, with CFO reiterating effective tax rate ~21–24% and Gaming EBITDA margin expected to trend in low 50% range inclusive of Grover .
  • Capital allocation actions are a near-term stock narrative: $111M Q3 buybacks (+$101M post-quarter to Oct 31) with ~$735M remaining authorization, and debt maturity extended from 2028 to 2033 at a lower rate (7.00%→6.25%), supporting flexibility amid ASX sole listing transition .

What Went Well and What Went Wrong

What Went Well

  • Gaming operations strength and install base growth: Gaming Ops revenue +38% YoY to $241M, driven by a 2,834-unit YoY increase in North America (ex-Grover) and $40M Grover contribution; segment AEBITDA +14% YoY with 500 bps margin expansion .
  • Record iGaming with margin expansion: iGaming revenue +16% YoY to $86M; AEBITDA +42% to $34M; wagers on OGS hit $28.0B; CEO highlighted first-party content dominance across OGS (7 of top 10) .
  • Management capital returns and listing strategy: “We… returned $111M to shareholders… underscoring our confidence” (CFO); CEO: transitioning to sole ASX listing “simplifies our listing structure… enhances Light & Wonder’s profile” .

What Went Wrong

  • SciPlay revenue declined 4% YoY to $197M on lower average monthly payers (notably Jackpot Party), despite stronger monetization (ARPDAU +4% YoY to $1.08, AMRPPU +11% to $126.23) .
  • International gaming sales softness and timing: Lower international machine sales vs prior year; management flagged timing shifts (Asia into 2026) and SSBT order mix effects, with tariffs expected to be a mid-to-high single-digit millions quarterly headwind starting Q4 .
  • Reported North America ADRPU diluted by inclusion of lower-yield Grover units (ex-Grover ADRPU +5% YoY); product sales declined 21% YoY on timing, offset by strong Gaming Ops and table products .

Financial Results

Consolidated Performance (Sequential trend and YoY margin progression)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$774 $809 $841
Net Income ($USD Millions)$82 $95 $114
Diluted EPS ($USD)$0.94 $1.11 $1.34
Consolidated AEBITDA ($USD Millions)$311 $352 $375
Consolidated AEBITDA Margin %40% 44% 45%
Free Cash Flow ($USD Millions)$111 $29 $136

Q3 Year-over-Year Snapshot

MetricQ3 2024Q3 2025
Revenue ($USD Millions)$817 $841
Net Income ($USD Millions)$64 $114
Diluted EPS ($USD)$0.71 $1.34
Consolidated AEBITDA ($USD Millions)$319 $375
Consolidated AEBITDA Margin %39% 45%

Segment Breakdown (Q3)

SegmentRevenue ($USD Millions)YoY %AEBITDA ($USD Millions)YoY %Margin %
Gaming$558 +4% $305 +14% 55%
SciPlay$197 −4% $71 +8% 36%
iGaming$86 +16% $34 +42% 40%
Total$841 +3% $375 +18% 45%

KPIs and Operating Metrics

KPIQ3 2024Q2 2025Q3 2025
NA Installed Base (Units)33,151 46,372 47,240
NA ADRPU ($/day)$49.05 $47.40 $45.35
International Installed Base (Units)21,426 19,526 19,494
International ADRPU ($/day)$15.11 $16.97 $16.19
New Unit Shipments (Total)13,063 9,039 8,608
ASP per New Unit ($)$17,094 $18,930 $19,637
SciPlay DTC Revenue ($M)$25 $35 $40
ARPDAU ($)$1.04 $1.08 $1.08
AMRPPU ($)$113.49 $128.96 $126.23
Payer Conversion (%)10.7% 9.8% 10.0%
iGaming OGS Wagers ($B)$22.8 $26.6 $28.0
Grover Revenue ($M)n/a$21 $40

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated AEBITDA ($USD Billions)FY 2025$1.43–$1.47B $1.43–$1.47B Maintained
Adjusted NPATA ($USD Millions)FY 2025$550–$575M $550–$575M Maintained
Effective Tax Rate (%)FY 2025n/a21–24% (CFO commentary) New color (range)
Gaming EBITDA Margin (%)Near-termn/aLow 50% range inclusive of Grover New color
Tariff Impact ($USD Millions)Q4 2025 onwardTariffs noted, mitigation planned Mid–high single-digit per quarter headwind Raised visibility (cost headwind materializing)
Share Repurchase2025$1.5B program; $550M used by Q2 $765M used YTD by Oct 31; ~$735M remaining; expect meaningful use before YE Increased execution; remaining capacity clarified
DebtCapital Structure7.00% 2028 notes outstanding Issued $1B 6.25% 2033 notes; redeemed 7.00% 2028; revolver repaid Extended tenor, lowered rate
ListingTransitionDelist end-Nov expected Nasdaq delisting Nov 13, ASX sole primary listing schedule on track Executed per timeline

Earnings Call Themes & Trends

TopicQ1 2025 (Prior-2)Q2 2025 (Prior-1)Q3 2025 (Current)Trend
Tariffs / Supply ChainTariffs introduced; mitigation strategies underway Less visibility; macro caution impacted sales timing Tariffs now a mid–high single-digit $M quarterly headwind; mitigation ongoing Headwind crystallizing; management proactive
Gaming Ops & Installed BaseNA Ops growth; +497 units seq; ADRPU +5% YoY Ops +19% YoY; +2,780 NA units YoY Ops +38% YoY; +2,834 NA units YoY; Grover +$40M Strengthening; recurring mix rising
International SalesANZ share elevated in PCP; variability expected Macro-driven cautious purchases; timing impacts Asia timing pushes into 2026; SSBT order expected Q4 Timing-driven variability; pipeline intact
iGaming+4% revenue; OGS wagers $25.2B +9% revenue; wagers $26.6B +16% revenue; margin +800 bps; wagers $28.0B Accelerating growth and margins
SciPlay DTC / MonetizationDTC 13%; ARPDAU $1.06; AMRPPU $116.96 DTC 18%; ARPDAU $1.08; AMRPPU $128.96 DTC 20%; ARPDAU $1.08; AMRPPU $126.23; JP stabilization plan Mix shift to DTC; top-line recovery targeted
R&D / Tech (Carbon, AI)Continued investment; margin expansion Optimization of allocation across digital/content/platform Carbon rebuild with AI tools; faster omnichannel deployment Platforming to speed content
Listing / Capital MarketsASX listing considerations Sole ASX listing approved; plan to delist Nasdaq Nasdaq delisting imminent; ASX profile enhancement Transition progressing

Management Commentary

  • CEO: “Our R&D engine continues to deliver world-class content, reflected in another strong quarter for Gaming operations and record iGaming performance… integration of Grover… prepared to participate in… Indiana… in the coming months.”
  • CFO: “Our continued focus on operational excellence and disciplined execution once again drove year-over-year Net income and Consolidated AEBITDA growth… approximately 51% of our expanded share buyback program [completed].”
  • CFO (call): “Gaming Adjusted EBITDA margin… to trend in the low 50% range… tariffs… mid to high single-digit million… starting in the fourth quarter and into 2026.”
  • CEO (call): “Recurring revenue grew 14% YoY… approximately 69% of our consolidated revenue in the quarter… key driver of our cash flow flywheel.”

Q&A Highlights

  • FY25 achievement path: Management cited recurring revenue strength (69% of Q3 revenues), NA sales momentum, Canada VLT timing, SSBT order in Europe, and DTC scaling, with tariffs a manageable offset; reiterated line of sight to guidance .
  • Grover integration and Indiana: +229 units in Q3; full-quarter $40M contribution; Indiana launch likely Q1 2026 due to regulations; LNW content to appear on Grover devices early 2026 .
  • Gaming margins/product mix: Q3 mix favored Ops; Q4 expected normalization with SSBT product sales; Grover is margin-accretive; RPDs grew 5% YoY excluding Grover .
  • Demand environment: Resilient GGR supports replacement cycles; premium floor mix rising; potential accelerated depreciation tailwind into 2026 budgets; strong operator feedback on new cabinets .
  • SciPlay stabilization: Jackpot Party economy/Live Ops refactoring underway; monetization metrics healthy; DTC mix tailwind; targeted return to top-line growth in 2026 .
  • iGaming drivers: First-party content (Huff & Puff, Pirates) fueling share and margins; organizational simplification and content leadership highlighted .

Estimates Context

MetricQ1 2025 Estimate*Q1 2025 ActualQ2 2025 Estimate*Q2 2025 ActualQ3 2025 Estimate*Q3 2025 Actual
Revenue ($USD Millions)$805.1*$774 $853.3*$809 $861.3*$841
Primary EPS ($USD)$1.14*$0.94 $1.45*$1.11 $1.41*$1.34
EBITDA ($USD Millions)$308.3*$311 (AEBITDA) $352.0*$352 (AEBITDA) $363.2*$375 (AEBITDA)
Revenue – # of Estimates17*—18*—18*—
EPS – # of Estimates8*—9*—9*—

Notes:

  • Results modestly missed consensus revenue and EPS in Q3; EBITDA comparison requires care as SPGI EBITDA differs from LNW’s non-GAAP AEBITDA. Margin expansion and recurring revenue strength remain positives going into Q4 .
  • Management’s tariff headwind (mid–high single-digit $M/quarter) could pressure 4Q EPS, while SSBT/Canada VLT and DTC/iGaming momentum support revenue mix and margin quality near term .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Recurring revenue flywheel strengthening: 69% recurring in Q3 supports predictability, margin durability, and FCF compounding into Q4 and 2026 .
  • Gaming Ops and iGaming are the growth engines: Ops units and first-party digital content drove record AEBITDA margins; watch SSBT and Indiana charitable gaming for incremental catalysts .
  • SciPlay mix shift is accretive despite top-line dip: DTC at 20% and strong monetization underpin margins; management targets top-line recovery in 2026 as JP stabilizes .
  • Tariff headwinds are now in the numbers: Expect mid–high single-digit $M pressure per quarter; management executing mitigation through pricing/mix and hardware/content strategies .
  • Capital allocation remains shareholder-friendly: Accelerated buybacks ($111M Q3; $101M post-quarter) with ~$735M remaining and improved debt tenor/rate enhance flexibility during ASX transition .
  • Guidance intact with quality of earnings: FY25 AEBITDA and Adjusted NPATA maintained; CFO reaffirmed tax rate range and low-50s gaming margin outlook inclusive of Grover .
  • Trading lens: Near-term narrative hinges on SSBT/Canada VLT execution, tariff mitigation optics, and ASX-only listing liquidity; medium-term thesis anchored by omnichannel content leverage and recurring revenue scale across Ops, iGaming, and DTC .

Appendix – Additional Data Points

  • Cash from operations $184M (+55% YoY) and FCF $136M (+64% YoY) in Q3; available liquidity $1.226B; net debt leverage 3.5x (3.3x combined) .
  • Segment margins: Gaming 55%, SciPlay 36%, iGaming 40% in Q3 (all up YoY) .
  • Grover KPIs: ~11,250 active devices; +229 sequential units; expected Indiana entry Q1 2026 .