“We continue to progress and execute at a high level,” said Light & Wonder CEO Matt Wilson, kicking off the company’s first-quarter earnings call.
He said that the quarter suffered from softness that he attributed to tariff pressures, “a more-cautious consumer,” and geopolitical complications. Even so, “We continue to see strong gross gaming revenue this year.”
Wilson pointed to new revenue from the company’s gaming and igaming divisions. He also praised subsidiary Grover Gaming for a $43 million input, saying Grover was “contributing as a high-margin revenue stream.” By way of Grover, Light & Wonder launched its Eureka Treasure Train game in Indiana, to be followed “by a steady flow of content.”
The CEO talked about growth opportunities for Light & Wonder in Minnesota, Maryland, and New Mexico. He noted that Alaska was also “an exciting opportunity, pending legislation.”
Wilson said that Light & Wonder had lost some VLT placements in New York City when Resort World went to Class III gambling. But he had expected that to happen much sooner and Resorts World was “a big tables customer for us.” The problem, he added, was not unique to Light & Wonder.
“We always expected clawing back 500-plus units from a premium point of view,” Wilson elaborated. “We’re going to continue to scale up as we move through the rest of the year.”
North American growth was “a little bit softer than you’ve come to expect from us,” Wilson said. “We’re comfortable where we’re going to be,” but the loss of VLT positions in New York state and Canada had a dampening effect.
North American revenue per day “continues to trend positively,” Wilson said, propelled by wide-area progressive games. But the company’s SciPlay and social-casino operations had been “flagged as seeing some softness. The team is hoping that this will continue to trend positively.”
Nonetheless, business-to-consumer sales in the digital sphere continued to grow, driven by games like Quick Hit and 88 Fortunes. Jackpot Party, long a weak spot, was described as stabilizing and “moving in the right direction.”
Machine sales fell 25 percent in the quarter and system sales dropped 14 percent. Wilson called this consistent “with the reset that follows a strong fourth quarter.” Revenue minus Grover’s contribution was up eight percent, which Wilson called “a meaningful indicator of the underlying business momentum.”
International sales, though, were down. This was attributed to a lack of recurring sales in the Philippines and a drop-off in the Australian market. Even so, “We believe that the setup for the second-half unit sales is compelling.
“International sales were a drag,” Wilson continued. “Australia has fallen off a cliff.” Still, Wilson believed a new-product launch in New South Wales would be a second-half catalyst and that Asia was overdue for a new cabinet product.
Igaming revenue was up 18 percent and its cash flow rose 22 percent, “driven by the proliferation of first-party content across our network,” especially the Pirates series of games and Huff ’n Puff. Third-party content was growing by dint of territorial expansion, by comparison.
Taxes were both a tailwind and headwind for Light & Wonder. CFO Oliver Chow said they were a “slight” impediment in the United Kingdom, but that the company was seeing a $7 million reduced-tax benefit in the United States. “The stellar first-quarter results should moderate into the second quarter,” he added.
Chow noted that Light & Wonder’s credit rating had recently been upgraded to DD and that the company had $927 million cash on hand for “inflation risks” and other imponderables. He committed the company to getting its leverage beneath three times cash flow by the first half of 2027.
In addition to reinvesting 17.8 percent of revenues in research and development, Light & Wonder committed $22 million to share repurchases in the first quarter. Chow called it “a balanced and disciplined approach to capital allocation.”
Wilson ended by describing a “meaningful and exciting” artificial intelligence (AI) initiative. “We want to take a leadership position,” he said, and have invested significantly in 43 different applications. “We think it can make a very meaningful impact,” Wilson concluded.
