Light & Wonder’s Q1 2025: $774M Revenue and 11% AEBITDA Growth Fall Short

Mixed Results with Steady Growth

Light & Wonder posted Q1 2025 revenue of $774 million, up 2% year-over-year, marking its 16th straight quarter of consolidated revenue growth.

Consolidated AEBITDA rose 11% to $311 million, with a 40% margin, up 300 basis points. Operating cash flow climbed 8% to $185 million, and free cash flow jumped 19% to $111 million, driven by strong profits and lower capital spending.

But the numbers missed Wall Street’s mark. Revenue fell $32.04 million short of the $806.04 million forecast, and EPS of $0.94 lagged the expected $1.11, sparking a 2.52% stock drop after hours.

“As we outlined in the previous earnings call, growth in 2025 is expected to progress and weigh towards the second half of the year,” said CEO Matt Wilson, reaffirming a $1.4 billion AEBITDA target for 2025.

Segment Wins and Strategic Moves

The Gaming segment led with a 4% revenue increase to $495 million, reclaiming the top spot in Australia and holding global leadership in slot machine shipments.

North America’s premium slot base grew for the 19th consecutive quarter. The iGaming segment also rose 4% to $77 million, processing a record $25.2 billion in wagers via its OpenGaming System, up 13%, fueled by studios like Lightning Box.

SciPlay’s direct-to-consumer platform hit 13% of revenue, with Quick Hit Slots and 88 Fortunes setting revenue records. A key strategic win was the announced acquisition of Grover Gaming, a charitable gaming leader in five US states, set to close in Q2 2025 with $800 million in financing.

“We view this as a strategic growth driver for Light & Wonder,” Wilson said, noting its potential for “nice fast-growing recurring revenue.”

Tailwinds and Challenges

Beyond financials, Light & Wonder scored non-financial wins. A favorable Apple ruling on alternative payments boosted SciPlay’s social gaming margins, with Wilson calling it a “great tailwind.”

An audit of “Hold and Spin” games from 2015-2021 found no misuse of Aristocrat’s math models, easing legal concerns. “We found no evidence that Aristocrat math values were used,” Wilson confirmed.

However, challenges loomed. Tough Q1 2024 comps from an Asian deal, harsh Northeast US weather impacting WAP products, and Jackpot Party’s economy issues in SciPlay, now fixed, slowed growth. Tariffs and supply chain woes added pressure, with clients split on rushing or pausing orders.

Looking Ahead

Light & Wonder expects a stronger second half, banking on its game sales pipeline and Asian opportunities to hit the $1.4 billion AEBITDA goal.

The Grover acquisition, not factored into current guidance, could spark extra growth, especially with Indiana’s new e-pull tab law. “This is a welcome tailwind,” Wilson said.

Macro uncertainty and tariff risks persist, but the company’s adaptability shines. The May 20 Investor Day in New York will dive deeper into its three-platform strategy and “Carbon” platform.

“We’re excited to dig into the fundamentals of our business,” Wilson added.