Gaming products and services provider Light & Wonder (NASDAQ: LNW) missed Wall Street’s revenue expectations in Q2 CY2025, with sales falling 1.1% year on year to $809 million. Its non-GAAP profit of $1.11 per share was 20.8% below analysts’ consensus estimates.

Is now the time to buy LNW? Find out in our full research report (it’s free).

StockStory’s Take

Light & Wonder’s second quarter results fell short of Wall Street’s expectations, prompting a significant negative market reaction. Management attributed the revenue decline primarily to delayed game sales in international markets and cautious purchasing by North American operators. CEO Matthew Wilson noted, “We experienced some operator apprehension on slot purchases early in the quarter and saw a pushout of timing for some of our units sold into Canada.” The integration of Grover Charitable Gaming contributed positively, but these gains were offset by external factors, including macroeconomic uncertainty and evolving tariff policies, which created a more complex decision cycle for customers.

Looking ahead, Light & Wonder’s forward guidance is driven by anticipated momentum in North American markets, further integration of Grover, and expansion into new jurisdictions such as Indiana. Management highlighted ongoing investments in content development and production capabilities, aiming to accelerate growth in the second half of the year. CFO Oliver Chow emphasized, “We expect our momentum to continue in North America on the strong performance of our games and proliferation of Light & Wonder content into the charitable gaming business.” However, leadership also acknowledged risks from tariffs, regulatory changes, and the evolving landscape in both land-based and digital gaming.

Key Insights from Management’s Remarks

Management cited delayed international game sales, cautious slot purchasing, and ongoing integration of acquisitions as the main factors shaping the quarter’s performance and near-term outlook.

• International sales timing impact: Sales in Asia and Australia shifted to later in the year due to new cabinet launches and operator purchasing delays, which impacted quarterly revenue.
• Integration of Grover acquisition: The recently closed Grover Charitable Gaming acquisition provided early growth in active units and is expected to open new market opportunities, particularly with planned expansion into Indiana this fall.
• Growth in digital platforms: The direct-to-consumer segment within SciPlay saw material revenue growth, now representing 18% of revenue, with management projecting further gains as player engagement strategies evolve.
• Margin optimization initiatives: Consolidated adjusted EBITDA margin improved, aided by efficiency programs, a shift toward higher-margin digital content, and disciplined capital allocation, including supply chain and operational enhancements.
• Regulatory and competitive dynamics: Management pointed to the impact of unregulated sweepstakes gaming on social casino results, noting that regulatory crackdowns in certain states have led to improved performance, while ongoing legal and competitive pressures remain a watch point.

Drivers of Future Performance

Management expects growth to be driven by new content launches, increased North American demand, and expansion into additional markets, but highlights ongoing margin and regulatory risks.

• North American market momentum: The company anticipates continued growth in its North American installed base and recurring revenue streams, supported by new proprietary game launches and deeper penetration of the charitable gaming segment following the Grover acquisition.
• International market expansion: Planned market entries, including Indiana and potential moves in Asia and the Philippines, are expected to contribute to future revenue, with timing of hardware refresh cycles and regulatory approvals shaping the pace of growth.
• Margin and regulatory headwinds: While margin enhancement programs are ongoing, management cited risks from tariffs, evolving tax structures, and the expansion of unregulated gaming platforms, which may impact both operating performance and capital allocation priorities.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace of Grover integration and expansion into new markets like Indiana, (2) the rebound in international hardware sales and realization of delayed shipments, and (3) margin sustainability amid ongoing operational optimization. Additionally, we will watch regulatory developments affecting both land-based and digital gaming, as well as the execution on new content launches and digital platform growth.

Light & Wonder currently trades at $84.55, down from $90.98 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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