Light & Wonder Inc Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Light & Wonder Inc's Q3 2025 earnings call highlighted strong earnings growth, margin expansion across all businesses, and a focus on recurring revenue and strategic capital allocation. The company discussed its financial performance, business segment results, the Grover Gaming integration, and its outlook for future growth, including its transition to a sole standard listing on the ASX.
Key Financial Results
Consolidated revenue increased by 3% year-over-year to $841 million.
Consolidated AEBITDA grew by 18% year-over-year to $375 million, supported by record margin expansion across all three businesses.
Adjusted NPATA increased by 25% year-over-year.
Adjusted NPATA per share (EPSa) increased by 35% year-over-year to $1.81.
Recurring revenue grew 14% year-over-year, accounting for approximately 69% of consolidated revenue.
Net income per share on a diluted basis increased by 89% to $1.34, compared to $0.71 in the prior year period.
Adjusted NPATA per share increased 35% to $1.81 compared to $1.34 in the prior year period.
Free cash flow was $136 million, a 64% year-on-year increase.
Business Segment Results
Gaming revenue was driven by strong gaming operations performance, which increased 38% year-over-year to $241 million on North American units installed and $40 million on Grover contribution.
SciPlay's QUICK HIT Slots and 88 FORTUNES delivered record quarterly revenues.
iGaming delivered record revenue of $86 million, up 16% year-over-year.
iGaming AEBITDA increased 42% year-over-year to $34 million, with AEBITDA margins up 800 basis points.
Capital Allocation
Returned $111 million of capital to shareholders through share repurchases.
R&D and CapEx allocation targeted at 17% of consolidated revenue.
Repurchased an additional $101 million of shares subsequent to the end of the third quarter.
Completed $765 million of its total authorized $1.5 billion share repurchase program as of the end of the third quarter.
The company has returned $1.5 billion to shareholders through the repurchase of approximately 19.9 million shares.
Industry Trends and Dynamics
Resilient gaming market with strong GGR.
Operators reinvesting in their floors with best games.
Continued increase in the percentage of premium games on casino floors.
Initial data suggests potential improvement in the social casino market as sweepstakes regulations evolve.
Competitive Landscape
Light & Wonder leads in the new Eilers game index with three out of the top five indexing New Premium Leased and WAP games.
Piggy Bankin' Break In debuted at number one as a top indexing new video real game in the latest Eilers report.
OGS is regarded as one of the most mature iGaming content aggregation platforms in the industry.
Macroeconomic Environment
Expects a mid to high single-digit million-dollar range of quarterly tariff impact, starting in the fourth quarter and into 2026.
Growth Opportunities and Strategies
Continued expansion of the Charitable Gaming business with entry into Indiana.
Focus on seamless integration of Grover into game development and technology platforms.
Leveraging and prioritizing robust R&D engine across complementary channels.
Continued investment in building and deploying engaging games through omni-channel strategy.
Expanding US presence of ELK Studios with a pending license in Michigan.
Received approval to go live in the Philippines as the first licensed iGaming supplier.
Focus on improving working capital cycles, inventory position, and capital expenditures to improve cash conversion.
Financial Guidance and Outlook
Confident to land within both the full year 2025 targeted consolidated AEBITDA and adjusted NPATA range accounting for Grover.
Gaming AEBITDA margin, inclusive of Grover, to trend in the low 50% range.
SciPlay direct-to-consumer platform expected to reach 30% target by 2028.
Effective tax rate is expected to remain between the 21% to 24% range.
Expects amortization of intangibles and interest expense to continue to trend up year-over-year on the Grover acquisition.
Expects to quickly return within targeted leverage range, underpinned by the strong cash generation of our business.
