Light & Wonder, Inc. (NASDAQ:LNW) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows strong financial performance, with year-over-year increases in revenue, EBITDA, and free cash flow. The acquisition of Grover Gaming is expected to enhance growth, and management's optimistic guidance for future revenue and margin expansion is promising. The share repurchase program and positive developments in DTC growth further bolster sentiment. While there are some concerns about tariffs and international market conditions, management's strategies to mitigate these impacts are reassuring. Overall, the positive financial results and strategic initiatives suggest a likely positive stock price movement.
Key Financial Performance
Consolidated Revenue $774 million, a 2% increase year-over-year, driven by growth in gaming and iGaming businesses.
Net Income $82 million, increased due to higher revenue and margins, offset by higher restructuring and other expenses.
Diluted Net Income per Share $0.94, compared to $0.88 in the prior year period.
Consolidated EBITDA $311 million, an 11% increase year-over-year from $281 million, due to business optimization and margin expansion.
Consolidated EBITDA Margin 40%, a 300 basis point increase year-over-year.
Adjusted NPATA $117 million, up 11% year-over-year, driven by revenue growth and margin expansion, partially offset by higher income taxes.
Adjusted NPATA per Share $1.35, a 21% increase compared to $1.12 in the prior year period.
Operating Cash Flow $185 million, an 8% increase year-over-year.
Free Cash Flow $111 million, a 19% increase year-over-year, reflective of strong earnings and lower CapEx.
Gaming Revenue $495 million, a 4% increase year-over-year, bolstered by growth across all business lines.
Gaming EBITDA $254 million, a 9% increase year-over-year, due to improving top line and margin expansion.
Gaming Operations Revenue $173 million, a 5% increase year-over-year.
Global Gaming Machine Sales $208 million, up 1% year-over-year, primarily from strong performance in the North American replacement market.
Systems Revenue $63 million, a 5% increase year-over-year.
Table Products Revenue $51 million, a 9% increase year-over-year.
SciPlay Revenue $202 million, driven by record performance by Quick Hit Slots and 88 Fortunes.
SciPlay EBITDA $64 million, a 3% increase year-over-year.
iGaming Revenue $77 million, a 4% increase year-over-year.
iGaming EBITDA $27 million, an 8% increase year-over-year.
Free Cash Flow $111 million, a 19% increase year-over-year.
Share Repurchase Completed an additional 17% of the authorized $1 billion program, purchasing 1.9 million shares totaling $166 million.
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Operating Highlights
New Game Launches: Our Chief Product Officer has turbocharged our game launches with a robust roadmap of games coming across cabinets on both the gaming operations and game sales categories globally.
Game Performance: Light & Wonder holds 40% of the top 25 new premium and WAP games in the first quarter of 2025.
Game Sales: Over 9,700 global units shipped in the quarter, driven by share gains.
New Game Releases: New first party game launches, including Huff and More Puff and Wizard of Oz Over the Rainbow, set new single game GGR records.
Market Expansion: We expect to broaden our first party content as the overall iGaming market grows and as we expand our presence with the introduction of elk games in the fast growing Ontario market.
Acquisition of Grover Gaming: The strategic acquisition of Grover Gaming’s charitable gaming asset is expected to enhance our role as a leading cross platform global games company.
New Market Opportunities: The state of Indiana legalized e pool tabs effective July one of this year, presenting a sizable opportunity.
Operational Efficiency: Our commitment to operational excellence and continuous improvement is reflected in our first quarter performance.
Cost Management: We have been executing an in-depth analysis of our business and relevant costs over the past couple of years.
Supply Chain Optimization: We are executing longer term plans to enhance our supply chain and operational efficiency.
Strategic Focus: Renewed focus on high return initiatives, such as cultivating first party content and leveraging our diversified game franchises.
Financial Strategy: We expect to deliver our 2025 consolidated EBITDA financial target of $1.4 billion despite tariff headwinds.
Share Repurchase Program: Completed an additional 17% of our authorized $1 billion program, having purchased 1.9 million shares totaling $166 million.
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Risk or Challenges
Economic Environment: The company acknowledges uncertainty in the current markets and the potential for a long-term structural shift in policies that could lead to a softer macroeconomic environment, impacting operators and end consumers.
Supply Chain Challenges: Light & Wonder is navigating a dynamic environment regarding supply chain uncertainties, particularly concerning tariffs. The company is executing long-term plans to enhance supply chain efficiency, including onshoring production and relocating sourcing.
Regulatory Issues: The recent legalization of e-pool tabs in Indiana is seen as a positive development, but the company remains vigilant about regulatory changes that could impact operations.
Litigation Risks: The company is involved in ongoing litigation and has engaged a third-party expert to audit games for compliance, which could pose risks if issues are identified.
Acquisition Risks: The pending acquisition of Grover Gaming's charitable gaming assets introduces risks related to integration and regulatory approvals, although the company is optimistic about the strategic benefits.
Competitive Pressures: The gaming industry is highly competitive, and while Light & Wonder has shown resilience, it must continuously adapt to maintain its market position amid evolving consumer preferences and competitor actions.
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Guidance & Outlook
Comprehensive Product Roadmap: Focus on a comprehensive product roadmap, operational excellence, and cross-platform strategy to achieve double-digit consolidated EBITDA growth.
R&D Investment: Reinvesting into R&D for sustainable growth despite market uncertainties.
Acquisition of Grover Gaming: Strategic acquisition expected to enhance role as a leading cross-platform global games company.
Direct to Consumer (DTC) Platform: Cultivating DTC platform to ensure seamless customer experience and rolling out in phases.
Margin Enhancement Initiatives: Implementing margin enhancement initiatives to improve cash conversion and reinvestment.
2025 EBITDA Target: On track to deliver 2025 consolidated EBITDA financial target of $1.4 billion.
Free Cash Flow: Free cash flow for the quarter was $111 million, a 19% increase compared to Q1 2024.
Game Sales Expectations: Expect game sales to be back half weighted with opportunities to commercialize content.
Adjusted NPATA: Adjusted NPATA for the quarter was up 11% year over year to $117 million.
Share Repurchase Program: Completed an additional 17% of the authorized $1 billion share repurchase program.
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Shareholder Return Plan
Share Repurchase Program: Completed an additional 17% of our authorized $1 billion program, having purchased 1.9 million shares totaling $166 million.
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Key Q&A
Q:How are tariffs impacting the business on the cost side and customer trends?
A:Tariffs are currently manageable, with the company finding ways to mitigate their impact through supply chain reconfiguration. Management sees a pathway to meet their $1.4 billion target despite the challenges.
Q:What is the impact of U.S. Gaming Ops yield in the first quarter?
A:The yield was affected by weather-related issues, particularly in the Northeast, but management believes they are returning to normal trading conditions.
Q:How will the recent ruling with Apple affect the DTC strategy?
A:The ruling is seen as a positive development, allowing for increased DTC growth, which has already risen from 0% to over 13%. Management plans to share targets at the upcoming Investor Day.
Q:What is happening with the international gaming business and volume sales?
A:There is some seasonality affecting sales, with tough comps from previous high sales periods. However, management remains optimistic about future growth in international markets.
Q:What are the updates on the Australian listing?
A:Management is supportive of the Australian listing but is cautious due to market uncertainties. They are engaging with stakeholders but do not expect immediate announcements.
Q:What is needed to achieve the $1.4 billion EBITDA target?
A:Management emphasizes the need for continued growth in gaming ops, DTC, and margin expansion, while acknowledging the challenges posed by the macroeconomic environment.
Q:How are tariffs impacting input costs and customer decision-making?
A:Customer reactions vary, with some pulling orders and others pausing. Management notes that the gaming sector remains resilient, and they are focused on mitigating costs.
Q:What are the expectations for revenue growth and margin expansion?
A:Management expects revenue growth to accelerate in the second half of the year, driven by improved performance in key areas like SciPlay and the Grover transaction.
Q:What is the status of the carbon platform and its efficiencies?
A:The carbon platform is under development, with Grover serving as a key use case. Management anticipates future efficiencies but has not yet realized them in the P&L.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific timing for tariff impacts on input costs and customer decision-making, using vague language about customer reactions and the overall market situation.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America gain
American GGR
Aristocrat mass
Aristocrat math
Australia variety
BetMGM
CEO Chow
Chow CFO
DTC platform
Grover Gaming
Grover capital
Hold Spin
NASDAQ Transcript
New
Spin game
Transcript Light
Upright Cabinet
acquisition Grover
economy
effort driver
evidence Aristocrat
fundamental
game hardware
game launch
game mid
integration
party content
plan Grover
pool
presentation Vice
product portfolio
reacceleration Jackpot
service
share gain
state
value game
website
LNW Transcript
Light & Wonder, Inc. (LNW) Q3 2025 Earnings Call Transcript
Positive11-8
The earnings report highlights strong financial performance with record iGaming revenue and significant year-over-year growth in net income and free cash flow. The Q&A section reveals positive sentiment, with management expecting a robust Q4 and maintaining guidance targets. Despite some timing issues and tariff impacts, the company is focused on strategic growth in iGaming, SciPlay, and international markets. The strong operational metrics and optimistic guidance suggest a positive stock price movement, especially given the lack of market cap data to assess volatility.
Light & Wonder, Inc. (LNW) Q2 2025 Earnings Call Transcript
Positive8-6
The earnings call summary presents a positive outlook: strong financial metrics, strategic growth initiatives, and a robust shareholder return plan. The Q&A section reveals favorable litigation updates and promising integration with Grover Gaming. The increased share buyback program and positive guidance adjustments further enhance sentiment. Despite minor concerns like revised NPATA guidance, the overall tone is optimistic, suggesting a positive stock price movement in the short term.
Light & Wonder, Inc. (NASDAQ:LNW) Q1 2025 Earnings Call Transcript
Positive5-8
The earnings call shows strong financial performance, with year-over-year increases in revenue, EBITDA, and free cash flow. The acquisition of Grover Gaming is expected to enhance growth, and management's optimistic guidance for future revenue and margin expansion is promising. The share repurchase program and positive developments in DTC growth further bolster sentiment. While there are some concerns about tariffs and international market conditions, management's strategies to mitigate these impacts are reassuring. Overall, the positive financial results and strategic initiatives suggest a likely positive stock price movement.
Light & Wonder, Inc. (LNW) Q1 2025 Earnings Call Transcript
Positive5-7
The earnings call summary reveals strong financial performance with revenue, EBITDA, and free cash flow growth. The acquisition of Grover Gaming and a robust share repurchase program are positive catalysts. The Q&A section indicates manageable challenges, with management providing optimistic guidance and strategies to mitigate risks. Despite some unclear responses, the overall sentiment is positive. The lack of market cap information prevents precise impact estimation, but based on available data, a positive stock price movement of 2% to 8% is expected over the next two weeks.
LNW Slides
LNW Report
Frequently Asked Questions
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