Q2 2026 Light & Wonder Inc Earnings Call Transcript
Key Points
- Consolidated EBITDA grew 9% year-over-year to $383 million, with margin expansion of 200 basis points to 46%.
- Adjusted NPATA increased 16% to $156 million, and EPSA rose 26% to $1.00, outpacing revenue growth.
- Recurring revenue grew 6% to $580 million, now representing 70% of total revenue, enhancing earnings predictability.
- Gaming operations revenue grew 18% year-over-year, driven by a 5% increase in North American installed base and a 6% rise in average daily revenue per unit.
- iGaming segment delivered double-digit growth, with revenue up 14% and EBITDA up 18%, supported by strong first-party content performance.
- Adjusted free cash flow surged 50% to $156 million, with conversion rate improving 1,100 basis points to 41%.
- Grover continues to scale, with revenue of $45 million and over 12,550 units installed, up 14% year-over-year.
- Company reaffirmed 2026 outlook of mid-to-high single-digit consolidated EBITDA growth, with confidence in second-half acceleration.
- Direct-to-consumer revenue in SciPlay reached a record $53 million, up 51% year-over-year, improving margins.
- Net debt leverage remains within target at 3.4x, with a clear plan to delever below 3x by first half of 2027.
- SciPlay revenue declined 9% year-over-year to $182 million due to broader industry softness and lower player base.
- Gaming machine sales fell 4% year-over-year due to timing of sales, with some deferrals into the second half.
- Gaming systems revenue dropped 16% year-over-year, impacted by elevated hardware sales to international customers in the prior year.
- UK iGaming tax increases are expected to moderate growth rates in the second half of 2026.
- Corporate costs are expected to trend in the mid-to-high $30 million range per quarter, with potential timing fluctuations.
- The company faces headwinds from irrational marketing spend by competitors in the social casino space, making user acquisition less attractive.
- Net debt leverage remains at 3.4x, and the company plans to reduce buyback activity to focus on debt paydown.
- The Resorts World conversion in New York impacted non-premium installed base, though it is now complete.
- Interest expense increased $4 million year-over-year due to Grover acquisition and buybacks, partially offsetting EBITDA growth.
- Depreciation and amortization increased $6 million year-over-year, reflecting continued investment in gaming operations fleet.
Good day, and thank you for standing by. Welcome to Light & Wonder second-quarter 2026 earnings webcast and conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I now like to hand the conference over to Rohan Gallagher, EVP of Corporate Affairs. Please go ahead, sir.
Thank you, operator, and welcome, everyone, to our second-quarter 2026 earnings conference call. Joining me today are Matt Wilson, our President and CEO; and Oliver Chow, our CFO.
During today's call, we will discuss our second-quarter results and operating performance, where we will refer to our earnings presentation. This will then be followed by a question-and-answer session. Today's call will contain forward-looking statements, including statements regarding our future operations, strategy, and financial results. These statements may involve certain risks and uncertainties that could cause actual results to differ materially from those
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