Company Reports

Light & Wonder's 2025 underlying EBITDA increased 16% to USD 1.4 billion. The result was driven by 4% revenue growth, mostly in gaming machines, and margin expansion across all businesses. Consolidated EBITDA margins were 44%, from 39% last year.

Light & Wonder has significantly simplified its business by divesting noncore lottery and sports betting assets. It is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, iGaming, and electronic gaming machines. The majority of Light & Wonder's revenue is derived from electronic gaming machines. Within this segment, revenue comes both from leased machines, which attract a fee per day or a percentage of the wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture a material, maintainable share in the EGM market. But we do not expect Light & Wonder to cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.

Light & Wonder released third-quarter fiscal 2025 earnings. Underlying EBITDA of USD 375 million was 18% higher than last year on the back of margin expansion across all segments and the first full quarter of earnings from the Grover acquisition.

Light & Wonder has significantly simplified its business by divesting noncore lottery and sports betting assets. It is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, iGaming, and electronic gaming machines. The majority of Light & Wonder's revenue is derived from land-based gaming. Within this segment, revenue comes both from leased machines, which attract a fee per day or a percentage of the wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture a material, maintainable share in the EGM market. But we do not expect Light & Wonder to cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.

Light & Wonder's second-quarter EBITDA lifted to USD 352 million, 7% higher than last year. Driven by stronger margins amid a 1% decline in revenue. The firm provided full-year 2025 EBITDA guidance, now including the recent Grover Gaming acquisition, of USD 1.43 billion to USD 1.47 billion.

Light & Wonder reported first-quarter 2025 underlying EBITDA of USD 311 million, up 11% on last year. Revenue lifted 2% year on year, and EBITDA margins expanded by about 3%. Earnings grew across all segments, most notably in the core gaming business, which lifted EBITDA 9% to USD 254 million.

Light & Wonder has significantly simplified its business by divesting noncore lottery and sports betting assets. It is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, iGaming, and electronic gaming machines. The majority of Light & Wonder's revenue is derived from land-based gaming. Within this segment, revenue comes both from leased machines, which attract a fee per day or a percentage of the wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture a material, maintainable share in the EGM market. But we do not expect Light & Wonder to cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.

Light & Wonder's 2024 underlying EBITDA lifted 11% to USD 1.2 billion. Electronic gaming machines remain the vast majority of earnings. Gaming growth was driven by a 22% increase in gaming machine sales and a 9% increase in the installed base of leased machines in North America.

Light & Wonder has significantly simplified its business by divesting noncore lottery and sports betting assets. It is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, iGaming, and electronic gaming machines. The majority of Light & Wonder's revenue is derived from land-based gaming. Within this segment, revenue comes both from leased machines, which attract a fee-per-day or percentage of wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture material, maintainable share in the EGM market. But we do not expect Light & Wonder to cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.

Light & Wonder has agreed to acquire the charitable gaming assets of Grover Gaming for a cash consideration of up to USD 1.05 billion. Grover provides electronic pull tabs to charitable organizations in five US states, for venues like bingo facilities, social clubs, and bars.

Light & Wonder has significantly simplified its business by divesting noncore lottery and sports betting assets. It is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, iGaming, and electronic gaming machines. The majority of Light & Wonder's revenue is derived from land-based gaming. Within this segment, revenue comes both from leased machines, which attract a fee-per-day or percentage of wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture material, maintainable share in the EGM market. But we do not expect Light & Wonder to cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.

Light & Wonder has significantly simplified its business by divesting noncore lottery and sports betting assets. It is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, iGaming, and electronic gaming machines. The majority of Light & Wonder's revenue is derived from land-based gaming. Within this segment, revenue comes both from leased machines, which attract a fee-per-day or percentage of wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture material, maintainable share in the EGM market. But we do not expect Light & Wonder to cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.

Light & Wonder's third-quarter 2024 underlying EBITDA is up 12% on the previous corresponding period to USD 319 million. This was principally driven by strong performance in outright machine sales, with 14% growth in gaming segment EBITDA to USD 267 million.

The United States District Court of Nevada has granted Aristocrat a preliminary injunction against no-moat Light & Wonder’s Dragon Train game, prohibiting further sales in the US. The case centers around similarities between Light & Wonder’s game and narrow-moat Aristocrat’s highly successful Dragon Link series, including allegations of copyright infringement and misappropriation of trade secrets. Specifically, intellectual property and game mechanics, and the role former Aristocrat employees, now at Light & Wonder, had in its development. The court decision finds Aristocrat is “extremely likely to succeed” in demonstrating trade secrets were misappropriated in the development of Dragon Train.

Light & Wonder has significantly simplified its business by divesting noncore lottery and sports betting assets. It is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, iGaming, and electronic gaming machines. Most of Light & Wonder's revenue—around two thirds in 2022—is derived from land-based gaming. Within this segment, revenue comes both from leased machines, which attract a fee-per-day or percentage of wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture material, maintainable share in the EGM market. But we do not expect Light & Wonder to cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.

We lift our fair value estimate for no-moat Light & Wonder by 7% to USD 104 (AUD 160) per share. The increase is in roughly equal parts due to an increase in our earnings forecasts and time value of money. Second-quarter fiscal 2024 underlying EBITDA rose 17% on the prior corresponding period, or PCP, to USD 330 million. The better-than-expected result was driven by strong performance in the core gaming market, the majority of Light & Wonder's earnings. We lift our full-year forecast by 3% to USD 1.2 billion—chiefly an upgrade to our estimate for the more durable installed base of leased machines. As leased machine revenue is relatively durable, we expect the higher installed base to also benefit later years. We lift our fiscal 2025 and 2026 EBITDA forecasts by 3% and 2%, respectively. Shares in Light & Wonder currently trade around fair value.

Light & Wonder continues to perform strongly. Underlying first-quarter EBITDA of USD 281 million was about 13% higher than the previous corresponding period. This broadly tracks our unchanged full-year forecast of USD 1.2 billion. This was primarily driven by the core gaming business, lifting underlying segment EBITDA 13% on the PCP to USD 232 million. We think much of this success comes down to the new Dragon Train game, which enjoys exceptional success in Australia.

We lift our fair value estimate for shares in no-moat Light & Wonder by 8% to USD 97/AUD 150 on the back of higher earnings forecasts for the core gaming business. Underlying 2023 EBITDA lifted 22% to USD 1.1 billion, about 3% ahead of our forecast. The firm enjoyed double-digit revenue and earnings growth across all segments by leveraging content research and development spending across gaming, SciPlay, and iGaming. R&D investment is necessary for a healthy pipeline of new products, software developments, and platform enhancements. However, we do not think Light & Wonder has carved an economic moat. While hit games can come down to chance, we do not believe Light & Wonder has garnered the appropriate intellectual property or brand assets to enjoy excess economic returns over the long run, particularly given stiff competition from market leader Aristocrat.

Light & Wonder has significantly simplified its business by divesting noncore lottery and sports betting assets. It is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, iGaming, and electronic gaming machines. Most of Light & Wonder's revenue—around two thirds in 2022—is derived from land-based gaming. Within this segment, revenue comes both from leased machines, which attract a fee-per-day or percentage of wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture material, maintainable share in the EGM market. However, we do not expect Light & Wonder will cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.

Light & Wonder significantly simplified its business by divesting noncore lottery and sportsbetting assets. Light & Wonder is now a more focused entity, cut in much the same image as dominant competitor Aristocrat, with operations across the social casino space, iGaming, and electronic gaming machines. Most of Light & Wonder's revenue—around two thirds in 2022—is derived from land-based gaming. Within this segment, revenue comes both from leased machines, which attract a fee-per-day or percentage of wagered amount, and outright sales. To maintain share over the long run in the fiercely competitive EGM market, manufacturers need to consistently deliver new, high-quality games that keep consumers engaged and maximize revenue for gaming venues. This requires continuous spending on research and development. Relative to its main competitor Aristocrat, Light & Wonder spends a lower percentage of revenue on R&D. As a result, we expect it will be difficult to capture material, maintainable share in the EGM market. However, we do not expect Light & Wonder will cede share to smaller players either, as its R&D spending is multiples of most of its smaller competitors.