LNW: +3.96%: delivered a mixed but ultimately encouraging second-quarter result, with revenue missing expectations but earnings, margins and adjusted EPS all coming in ahead. Shares were higher, though they lost some of their early gains. Important to note LNW is also coming off a low base, confirmation that the group remains on track for its 2028 targets should help to support the shares moving forward.
2Q Highlights:
- Revenue of US$828 million, around 2% below the US$845 million expected, but up from US$809 million a year ago.
- Adjusted EBITDA of US$383 million, around 4% ahead of the US$367 million expected.
- Adjusted EBITDA margin of 46%, comfortably ahead of the 43.7% expected.
- Adjusted EPS of US$1.99, ahead of the US$1.73 FactSet consensus and up from US$1.58 a year ago.
- Gaming revenue of US$554 million, below the US$564 million expected.
- Gaming EBITDA of US$307 million, slightly ahead of the US$302 million expected.
- SciPlay revenue of US$182 million, below the US$187 million expected.
- iGaming revenue of US$92 million, broadly in line with expectations.
The key positive was operating leverage. Despite a softer top line, Light & Wonder converted revenue into earnings more efficiently, with margins materially ahead of expectations. That suggests cost discipline and business mix are helping offset more subdued revenue growth across Gaming and SciPlay.
Management continues to expect mid-to-high single-digit growth in consolidated adjusted EBITDA in 2026 and reaffirmed its 2028 targets of more than US$10.55 in adjusted EPS and US$2 billion in consolidated adjusted EBITDA.
MM’s view: This was a better result than the headline revenue miss suggests. The strong margin outcome and EPS beat show the business is extracting more earnings from each dollar of revenue, while reaffirmed 2028 targets provide confidence in the medium-term trajectory. The next step is to see revenue growth reaccelerate, particularly across Gaming and SciPlay, but for now the quality of the earnings beat supports the positive share-price reaction.
MM remains bullish LNW ~$118
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