Light & Wonder, Inc. Reports Fourth Quarter and Full Year 2024 Results

Business Wire 25-Feb-2025 4:05 PM

Delivered Record Full Year Consolidated Revenue with Double-Digit Growth of 10% Year-Over-Year

Added 850+ North American Gaming Operations Units Sequentially and 2,700+ Unit Expansion Year-Over-Year

Returned $462 million of Capital to Shareholders through Share Repurchases during 2024

Announced Strategic Acquisition of Grover Gaming's Charitable Gaming Business

Light & Wonder, Inc. (NASDAQ and ASX: LNW) ("Light & Wonder," "L&W," "we" or the "Company") today reported results for the fourth quarter and fiscal year ended December 31, 2024.

We closed another strong year, delivering record financial and operational performance and continuing our advancement toward our 2025 financial targets. For the full year 2024, the Company delivered:

• Record full year consolidated revenue of $3.2 billion, increasing 10%, with annual growth driven by continued strong performance across all businesses.
  • Gaming revenue increased to $2.1 billion, up 12%, driven by continued momentum in Gaming machine sales, which increased 22% primarily on market share gains in North America and Australia, coupled with Gaming systems growth of 13% driven by our innovative hardware and software solutions, and North American Gaming operations unit expansion driving 4% growth in Gaming Operations fueled by the improving performance of our diverse portfolio of hit franchises.
  • SciPlay revenue rose to $821 million, up 6%, and once again outpaced social casino market revenue growth, delivered record payer metrics and expanded our direct-to-consumer high margin revenue channel, which was approximately 11% of total SciPlay revenue.
  • iGaming revenue increased 9% to $299 million reflecting continued growth momentum in the U.S. and international markets driven by our industry-leading platforms and strong content launches.
• Robust double-digit earnings growth with Operating income growth of 29%, Consolidated AEBITDA⁽¹⁾ growth of 11%, and Adjusted NPATA⁽¹⁾ growth of 24%.
• Returned $462 million to shareholders through share repurchases as we fully completed our initial $750 million share repurchase program and completed approximately 29% of the new $1 billion share repurchase plan authorized in June 2024. Since initiation of the program in March of 2022, the Company has returned over $1 billion or 14.3 million shares or 15% of total outstanding shares prior to the commencement of the programs.

Matt Wilson, President and Chief Executive Officer of Light & Wonder, said, "We ended a strong 2024 with continued double-digit revenue and earnings growth for the year. The Gaming machine sales share gains in North America and Australia this year are a testament to our R&D investment, commercial strategy and robust product roadmap. Furthermore, we have also realigned studio needs, adding more talent and expanding existing studios. Our recently announced strategic acquisition of Grover Gaming's charitable business enhances our cross-platform strategy and presence in regulated land-based markets, giving us a broader distribution base for our vast content library and accelerating our drive for sustainable future growth."

Oliver Chow, Chief Financial Officer of Light & Wonder, added, "Our healthy financial foundation gives us flexibility to deploy capital where it best drives long-term value consistent with our capital deployment framework. We expect that the acquisition of Grover Gaming's charitable business will contribute to our expansive recurring revenue base and is complementary and synergistic to our high margin and cash generative business, enhancing our growth profile and cross-platform strategy. We continue to see tremendous value in our shares and have executed a meaningful $462 million in share repurchases in 2024. We believe our healthy earnings growth and further optimization of our capital structure will continue to serve us well and provide stability as we expand the business globally."

LEVERAGE, CAPITAL ALLOCATION AND BUSINESS UPDATE

• Principal face value of debt outstanding⁽¹⁾ was $3.9 billion, translating to a net debt leverage ratio⁽²⁾ of 3.0x as of December 31, 2024, a 0.1x decrease from December 31, 2023, and remaining within our targeted net debt leverage ratio⁽²⁾ range of 2.5x to 3.5x.
• Returned $243 million of capital to shareholders through the repurchase of approximately 2.6 million shares of L&W common stock during the quarter and $462 million or 4.8 million shares during 2024.
• Amended our credit agreement on February 10, 2025. The amendment, among other things, (i) provides for increased revolving commitments of $1.0 billion, replacing the existing revolving commitments of $750 million, (ii) extends the maturity of the revolving commitments to the earlier of (x) February 10, 2030 and (y) such earlier date that is 91 days prior to the maturity of our existing term loans (scheduled to mature on April 14, 2029) and existing notes (the earliest maturity of which is scheduled for May 15, 2028), solely to the extent more than $500 million of such term loans and/or such applicable notes are outstanding on such earlier date, and subject to us having sufficient liquidity to repay such term loans and/or applicable notes at such time and, (iii) reduces the applicable margin for the revolving loans by up to 50 basis points.
• Announced strategic acquisition of Grover Gaming's charitable business on February 18, 2025 for an upfront consideration of $850 million, subject to customary purchase price adjustments, that will be funded with the combination of existing cash and incremental debt financing. Grover Gaming is a leading provider of electronic pull-tabs distributed over five fast-growing U.S. states: North Dakota, Ohio, Virginia, Kentucky and New Hampshire. The transaction is expected to close during the second quarter of 2025, subject to required regulatory and other approvals and customary closing conditions.
• On February 23, 2025, the Company entered into an agreement to pay $72.5 million to resolve the antitrust claims related to its automatic card shuffler business brought in TCS John Huxley America, Inc., et al. v. Scientific Games Corporation, et al., in 2019. The antitrust claims were based on alleged conduct beginning fifteen years ago in 2009. While the settlement resolves the disputed claims, the Company has not admitted any liability in this matter.
• First Quarter 2025 business update — Based on the timing dynamics of Game Sales and high-return investment opportunities, both of which are expected to drive enhanced organic growth as the year progresses, we expect first quarter 2025 year-over-year Consolidated AEBITDA⁽²⁾ growth to be in the low double-digits.
• ASX Listing Review — Light & Wonder is approaching the second anniversary of its successful secondary listing on the Australian Securities Exchange ("ASX"), which now represents approximately 30% of total ownership. The Company remains focused on enhancing the liquidity and market capitalization of its ASX listing, and as part of this will be considering both a dual primary and a sole listing on the ASX. L&W has engaged advisors (Jarden Australia and Goldman Sachs) to evaluate potential strategies to achieve this objective. L&W will be seeking feedback from key stakeholders to ensure an optimal outcome for L&W shareholders.

"The ASX is a premier exchange with a strong history of supporting global gaming companies, offering access to a deep and liquid market of sophisticated investors and industry participants with a comprehensive understanding of the gaming sector. We look forward to engaging with the market and our existing shareholders to further elevate the profile of our ASX listing," said Jamie Odell, Chair of the Light & Wonder Board of Directors.

SUMMARY RESULTS

Fourth Quarter 2024 Financial Highlights

• Fourth quarter consolidated revenue was $797 million compared to $770 million, a 4% increase compared to the prior year period, and our 15^th consecutive quarter of year-over-year growth, driven by strong performance across all three businesses. Gaming revenue increased 4%, primarily led by continued growth in Gaming systems and Table products, which grew by 24% and 10% year-over-year, respectively, as well as 4% growth in Gaming operations revenue. iGaming revenue grew by 11%, while SciPlay revenue remained flat as compared to the prior year period.
• Net income increased to $107 million from $67 million in the prior year period, primarily due to higher revenue and operating income and a $28 million gain on sale of assets included in other income. Net income attributable to L&W per share⁽¹⁾ increased by 64% to $1.20 compared to $0.73 in the prior year period.
• Consolidated AEBITDA⁽²⁾ was $315 million compared to $302 million in the prior year period, a 4% increase driven by revenue growth and healthy margins across our businesses.
• Adjusted NPATA⁽²⁾ increased 17% to $127 million as compared to $109 million in the prior year period, primarily due to revenue growth across all businesses. Adjusted NPATA per share⁽¹⁾⁽²⁾ increased 19% to $1.42 compared to $1.19 in the prior year period.
• Net cash provided by operating activities was $202 million compared to $167 million in the prior year period, with the current year period primarily benefiting from earnings growth and favorable changes in working capital.
• Free cash flow⁽²⁾ was $74 million compared to $70 million in the prior year period. The increase was reflective of strong earnings and favorable changes in working capital, partially offset by higher capital expenditures.

Full Year 2024 Financial Highlights

• Consolidated revenue was a record $3.2 billion compared to $2.9 billion in the prior year, a 10% increase. Growth was driven by strong performance across all of our businesses. Our Gaming business demonstrated continued momentum with Gaming machine sales growing 22%, Systems revenue growing 13% and Gaming operations revenue growing by 4%, primarily driven by record expansion of the North American installed base. Consolidated revenue also benefited from SciPlay's social casino business growing faster than the market, while iGaming demonstrated strong performance in North American and European markets.
• Net income was $336 million compared to $180 million in the prior year, primarily due to higher revenue and lower other expense, including a $28 million gain on sale of assets included in other income, partially offset by higher operating expenses. Net income attributable to L&W per share⁽¹⁾ increased by 110% to $3.68 compared to $1.75 in the prior year period.
• Consolidated AEBITDA⁽²⁾ was $1.24 billion compared to $1.12 billion in the prior year, a $126 million or 11% increase, primarily due to continued revenue growth and margin strength across all businesses.
• Adjusted NPATA⁽²⁾ increased 24% to $480 million as compared to $388 million in the prior year period, primarily due to continued revenue growth and margin strength across all our businesses. Adjusted NPATA per share⁽¹⁾⁽²⁾ increased 26% to $5.27 compared to $4.18 in the prior year period.
• Net cash provided by operating activities was $632 million compared to $590 million in the prior year. The current year benefited from earnings growth, partially offset by unfavorable changes in working capital, including the timing of collection of receivables.
• Free cash flow⁽²⁾ was $318 million compared to $291 million in the prior year. The increase was reflective of strong earnings, partially offset by changes in working capital, including certain financing arrangements, and higher capital expenditures supporting our Gaming operations installed based growth and investments.

Fourth Quarter 2024 Business Segments Key Highlights

• Gaming revenue increased to $515 million, up 4% compared to the prior year period, primarily driven by global Gaming systems growth of 24%, Table products growth of 10% and Gaming operations growth of 4%, which benefited from 9% year-over-year growth in our North American installed base to 34,004 units, as well as elevated average daily revenue per unit at $47.25. Our North American premium installed base grew for the 18^th consecutive quarter, representing 50% of our total North American installed base mix. Gaming systems growth was driven by increased global hardware sales. Our diversified portfolio of successful game franchises and the success of our COSMIC^®, MURAL^® and HORIZON^® cabinets continue to drive growth and strong performance in our Gaming business. Gaming AEBITDA was $257 million, up 5% compared to the prior year period, primarily driven by revenue growth in the period, as well as margin improvement of 100 basis points.
• SciPlay revenue was $204 million, flat when compared to the prior year period, while AEBITDA increased 7% to $74 million, reflecting margin expansion. Stable revenue was primarily driven by the social casino business, which continued to deliver consistently high player engagement and monetization, leveraging game content, dynamic Live Ops through the SciPlay Engine and effective marketing strategies. Our growing direct-to-consumer platform, which generated $27 million, or 13% of the total SciPlay revenue for the quarter, was a key driver of AEBITDA growth and margin expansion. SciPlay maintained its number of payers at 0.6 million and elevated AMRPPU⁽¹⁾ to $117.15, enabling SciPlay to grow ARPDAU⁽²⁾ by 6% year-over-year to $1.06 and payer conversion to 10.9%.
• iGaming revenue increased by 11% to $78 million, and AEBITDA increased 9% to $25 million for the current year period. Revenue growth for the period reflected continued momentum in North America and Europe driven by strong content launches. Wagers processed through our iGaming platform totaled $24.0 billion during the quarter.
• Capital expenditures were $70 million in the fourth quarter of 2024 as compared to $60 million in the prior year period, primarily due to ongoing investments made to support our Gaming operations growth.

Earnings Conference Call

As previously announced, Light & Wonder executive leadership will host a conference call on Tuesday, February 25, 2025 at 4:30 p.m. EST to review the Company's fourth quarter results. To access the call, live via a listen-only webcast and presentation, please visit explore.investors.lnw.com and click on the webcast link under the Events and Presentations section. To access the call by telephone, please dial: +1 (833) 470-1428 for U.S., +61 2 7908-3093 for Australia or +1 (404) 975-4839 for International and ask to join the Light & Wonder call using conference ID: 690757. A replay of the webcast will be archived in the Investors section on www.lnw.com.

About Light & Wonder

Light & Wonder, Inc. is the leading cross-platform global games company. Through our three unique, yet highly complementary businesses, we deliver unforgettable experiences by combining the exceptional talents of our 6,000+ member team, with a deep understanding of our customers and players. We create immersive content that forges lasting connections with players, wherever they choose to engage. At Light & Wonder, it's all about the games. The Company is committed to the highest standards of integrity, from promoting player responsibility to implementing sustainable practices. To learn more visit www.lnw.com.

You can access our filings with the Securities Exchange Commission ("SEC") through the SEC website at www.sec.gov, with the Australian Securities Exchange ("ASX") through the ASX website at www.asx.com.au or through our website, and we strongly encourage you to do so. We routinely post information that may be important to investors on our website at explore.investors.lnw.com, and we use our website as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC's Regulation Fair Disclosure.

The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document, and shall not be deemed "filed" under the Securities Exchange Act of 1934, as amended.

All ® notices signify marks registered in the United States. © 2025 Light & Wonder, Inc. All Rights Reserved.

Forward-Looking Statements

In this press release, Light & Wonder makes "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as "may," "will," "estimate," "intend," "plan," "continue," "believe," "expect," "anticipate," "target," "should," "could," "potential," "opportunity," "goal," or similar terminology. These statements are based upon current Company management ("Management") expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties and other factors, including, among other things:

• our inability to successfully execute our strategy;
• slow growth of new gaming jurisdictions, slow addition of casinos in existing jurisdictions and declines in the replacement cycle of gaming machines;
• risks relating to foreign operations, including anti-corruption laws, fluctuations in currency rates, restrictions on the payment of dividends from earnings, restrictions on the import of products and financial instability;
• difficulty predicting what impact, if any, new tariffs imposed by and other trade actions taken by the U.S. and foreign jurisdictions could have on our business;
• U.S. and international economic and industry conditions, including increases in benchmark interest rates and the effects of inflation;
• public perception of our response to environmental, social and governance issues;
• the effects of health epidemics, contagious disease outbreaks and public perception thereof;
• changes in, or the elimination of, our share repurchase program;
• resulting pricing variations and other impacts of our common stock being listed to trade on more than one stock exchange;
• level of our indebtedness, higher interest rates, availability or adequacy of cash flows and liquidity to satisfy indebtedness, other obligations or future cash needs;
• inability to further reduce or refinance our indebtedness;
• restrictions and covenants in debt agreements, including those that could result in acceleration of the maturity of our indebtedness;
• competition;
• inability to win, retain or renew, or unfavorable revisions of, existing contracts, and the inability to enter into new contracts;
• risks and uncertainties of ongoing changes in U.K. gaming legislation, including any new or revised licensing and taxation regimes, responsible gambling requirements and/or sanctions on unlicensed providers;
• inability to adapt to, and offer products that keep pace with, evolving technology, including any failure of our investment of significant resources in our R&D efforts;
• failure to retain key Management and employees;
• unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, war, armed conflicts or hostilities, the impact such events may have on our customers, suppliers, employees, consultants, business partners or operations, as well as Management's response to any of the aforementioned factors;
• changes in demand for our products and services;
• dependence on suppliers and manufacturers;
• SciPlay's dependence on certain key providers;
• ownership changes and consolidation in the gaming industry;
• fluctuations in our results due to seasonality and other factors;
• the risk that the conditions to the closing of the proposed Grover Gaming charitable business ("Grover Charitable Gaming") acquisition, including the receipt of regulatory and gaming approvals, may not be satisfied;
• the risk that a material adverse change, event or occurrence may affect the Company and Grover Charitable Gaming prior to the closing of the proposed Grover Charitable Gaming acquisition and may delay the proposed transaction or cause the companies to abandon the proposed transaction;
• the risk that the proposed Grover Charitable Gaming acquisition may involve unexpected costs, liabilities or delays;
• the risk that the businesses of the Company and Grover Charitable Gaming may suffer as a result of uncertainty surrounding the proposed Grover Charitable Gaming acquisition;
• the risk that disruptions from the proposed Grover Charitable Gaming acquisition will harm relationships with customers, employees and suppliers;
• the possibility that the Company may be unable to achieve expected financial, operational and strategic benefits of the proposed Grover Charitable Gaming acquisition and may not be able to successfully integrate Grover Charitable Gaming into the Company's operations;
• risks as a result of being publicly traded in the United States and Australia, including price variations and other impacts relating to the secondary listing of the Company's common stock on the Australian Securities Exchange;
• risks relating to consideration of a dual primary listing on both the NASDAQ and the ASX or sole primary listing on the ASX, including delisting our securities from NASDAQ, which could negatively affect the liquidity and trading prices of our common stock and could result in less disclosure about the Company;
• the possibility that we may be unable to achieve expected operational, strategic and financial benefits of the SciPlay merger;
• security and integrity of our products and systems, including the impact of any security breaches or cyber-attacks;
• protection of our intellectual property, inability to license third-party intellectual property and the intellectual property rights of others;
• reliance on or failures in information technology and other systems;
• litigation and other liabilities relating to our business, including litigation and liabilities relating to our contracts and licenses, our products and systems (including further developments in the Dragon Train litigation described under "Aristocrat Matters" in Note 19 of our annual report on Form 10-K filed with the SEC for the year ended December 31, 2024), our employees (including labor disputes), intellectual property, environmental laws and our strategic relationships;
• reliance on technological blocking systems;
• challenges or disruptions relating to the completion of the domestic migration to our enterprise resource planning system;
• laws, government regulation and potential trade tariffs, both foreign and domestic, including those relating to gaming, data privacy and security, including with respect to the collection, storage, use, transmission and protection of personal information and other consumer data, and environmental laws, and those laws and regulations that affect companies conducting business on the internet, including online gambling;
• legislative interpretation and enforcement, regulatory perception and regulatory risks with respect to gaming, including internet wagering, social gaming and sweep-stakes;
• changes in tax laws or tax rulings, or the examination of our tax positions;
• opposition to legalized gaming or the expansion thereof and potential restrictions on internet wagering;
• significant opposition in some jurisdictions to interactive social gaming, including social casino gaming and how such opposition could lead these jurisdictions to adopt legislation or impose a regulatory framework to govern interactive social gaming or social casino gaming specifically, and how this could result in a prohibition on interactive social gaming or social casino gaming altogether, restrict our ability to advertise our games, or substantially increase our costs to comply with these regulations;
• expectations of shift to regulated digital gaming;
• inability to develop successful products and services and capitalize on trends and changes in our industries, including the expansion of internet and other forms of digital gaming;
• the continuing evolution of the scope of data privacy and security regulations, and our belief that the adoption of increasingly restrictive regulations in this area is likely within the U.S. and other jurisdictions;
• incurrence of restructuring costs;
• goodwill impairment charges including changes in estimates or judgments related to our impairment analysis of goodwill or other intangible assets;
• stock price volatility;
• failure to maintain adequate internal control over financial reporting;
• dependence on key executives;
• natural events that disrupt our operations, or those of our customers, suppliers or regulators; and
• expectations of growth in total consumer spending on social casino gaming.

Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the SEC, including the Company's current reports on Form 8-K, quarterly reports on Form 10-Q and its latest annual report on Form 10-K filed with the SEC for the year ended December 31, 2024 on February 25, 2025 (including under the headings "Forward-Looking Statements" and "Risk Factors"). Forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no and expressly disclaim any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

You should also note that this press release may contain references to industry market data and certain industry forecasts. Industry market data and industry forecasts are obtained from publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. Although we believe industry information to be accurate, it is not independently verified by us and we do not make any representation as to the accuracy of that information. In general, we believe there is less publicly available information concerning the international gaming, social and digital gaming industries than the same industries in the U.S.

Due to rounding, certain numbers presented herein may not precisely recalculate.