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Light & Wonder Inc. (NASDAQ:LNW) reported strong earnings growth in its third quarter 2025 presentation on November 5, despite a slight revenue miss against analyst expectations. The gaming technology company saw its stock rise 2.35% in aftermarket trading to $75.05, as investors focused on significant margin expansion and robust earnings per share growth.
Quarterly Performance Highlights
Light & Wonder delivered consolidated revenue of $841 million, representing a 3% year-over-year increase but falling short of the expected $866.79 million. However, the company’s adjusted earnings per share (EPSa) jumped 35% to $1.81, significantly beating the forecast of $1.39. This earnings beat was driven by an 18% increase in consolidated AEBITDA to $375 million and a 25% rise in Adjusted NPATA to $153 million.
As shown in the following summary of key financial metrics:
Recurring revenue, a key focus for the company, reached $580 million, accounting for approximately 69% of consolidated revenue and growing 14% year-over-year. The company also returned $111 million to shareholders through share repurchases during the quarter.
The performance across business segments showed mixed results, with Gaming and iGaming delivering strong growth while SciPlay experienced a revenue decline:
The Gaming segment, which represents the largest portion of Light & Wonder’s business, saw revenue increase by 4% year-over-year to $558 million. This growth was primarily driven by Gaming operations, which includes the recently acquired Grover Gaming business. Gaming AEBITDA rose 14% to $305 million, with margins expanding by 500 basis points to 55%.
The iGaming segment was the standout performer, with revenue growing 16% year-over-year to $86 million and AEBITDA surging 42% to $34 million. The company noted that seven out of the top ten games across its Open Gaming System (OGS) network were first-party titles, highlighting the success of its content strategy.
Meanwhile, SciPlay revenue declined 4% year-over-year to $197 million, though AEBITDA still increased 8% to $71 million due to margin expansion. The Direct-to-Consumer platform reached record revenues of $40 million, representing 20% of total SciPlay revenue.
Detailed Financial Analysis
Light & Wonder’s consolidated financial results showed significant improvement in profitability metrics, with net income increasing 78% year-over-year:
The company generated strong free cash flow of $136 million in the quarter, a 64% increase year-over-year, with an Adjusted NPATA cash conversion rate of 89%:
Light & Wonder maintained a net debt leverage ratio of 3.5x, at the upper end of its target range of 2.5x to 3.5x. The company reported available liquidity of $1.2 billion and an effective net interest rate of 7.2%.
Strategic Initiatives
The integration of Grover Gaming, a charitable gaming company that Light & Wonder recently acquired, is progressing well. Grover contributed $40 million to Light & Wonder’s Q3 revenue and added 229 units since Q2. The company is preparing to enter its sixth operational state (Indiana) and opened its Raleigh, NC headquarters in late October.
Light & Wonder is also transitioning from NASDAQ to a primary ASX listing, with the NASDAQ delisting expected to be effective on November 14, 2025. This strategic move aligns with the company’s global growth strategy and could potentially broaden its investor base.
The company provided an update on its ongoing litigation with Aristocrat in both the USA and Australia, outlining expected timelines for discovery, motions, and trial:
Forward-Looking Statements
Looking ahead, Light & Wonder has set ambitious financial targets for FY28, including consolidated AEBITDA of $2.0 billion and EPSa of $10.55. The company plans to achieve these targets by executing on growth pillars across its complementary verticals, investing in people and technology, optimizing operations, and enhancing its high-performance culture.
The company is focusing on growth across its four complementary verticals: Gaming, SciPlay, iGaming, and Charitable gaming:
During the earnings call, CEO Matt Wilson emphasized the company’s long-term growth strategy, stating, "We are not going to compromise the long-term growth of this business to hit short-term goals." CFO Oliver Chow highlighted the importance of research and development, noting, "R&D, CapEx, that’s the core of our business, the foundation of our business."
Despite the positive outlook, management acknowledged potential challenges, including tariff impacts that could affect profitability in Q4 2026. The revenue miss in Q3 also suggests some growth challenges that the company will need to address to meet its ambitious long-term targets.
Full presentation:
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