Light & Wonder Q4 2025: Revenue Climbs 12% as AI and Premium Segments Lead Growth

In its fourth-quarter financial report, Light & Wonder (LNW) announced a 12% annual increase in revenue, reaching $891 million. Additionally, the company achieved a 29% rise in consolidated AEBITDA, totaling $405 million, marking the end of fiscal 2025 with improved margins in every business division.

Although the quarter ended with a $15 million net loss—largely attributed to a $128 million payment to settle the legal battle with Aristocrat—leadership utilized the earnings presentation to emphasize operational execution, AI initiatives, and continued expansion in premium gaming as key priorities for 2026.

Financial Performance: Q4 And FY 2025

The double-digit surge in revenue during the quarter was fueled by gains in gaming operations, input from Grover Charitable Gaming, and an all-time high in iGaming income.

Adjusted EBITDA on a consolidated basis climbed 29% to hit $405 million, accompanied by a year-over-year margin improvement of 500 basis points. The recorded quarterly net loss of $15 million was mainly a consequence of the $128 million legal settlement paid to Aristocrat.

During the fourth quarter, gaming revenue jumped 17% compared to the previous year, driven by a 35% boost in gaming operations income and a 20% rise in the sale of gaming machines.

The iGaming sector achieved a historic quarter, growing by 21% annually. In contrast, SciPlay saw a 4% revenue drop, yet the social gaming division managed to sustain growth in its direct-to-consumer income streams.

For the entire 2025 fiscal year, Light & Wonder disclosed the following results:

- Total revenue reached $3.3 billion, a 4% increase from the prior year.
- Consolidated AEBITDA stood at $1.44 billion, aligning with earlier guidance.
- Adjusted NPATA grew by 18% to $567 million.
- Adjusted earnings per share (EPSa) rose 27% to $6.69.
- Net income fell 18% to $276 million, or $3.26 per share.

Annual recurring revenue amounted to roughly $2.2 billion, underscoring the resilience of the firm's installed base strategy. Free cash flow for the year amounted to $452 million, a 42% annual increase, while cash conversion rates improved to represent 31% of AEBITDA.

In 2025, the corporation bought back $877 million in stock, bringing the total returned to shareholders since 2022 to $1.9 billion, which fulfills 78% of its second buyback program. Net leverage closed the year at 3.4x, falling within the target range set by management.

Leadership reaffirmed their outlook for sustained growth in adjusted NPATA and EPS throughout 2026.

Leveraging AI for Strategic Gain

The earnings conference call placed considerable emphasis on artificial intelligence. CEO Matt Wilson described AI as a tool serving both protective and aggressive purposes for the enterprise, remarking:

“We view AI as a major catalyst for business expansion... utilizing it both to build a defensive moat and to drive offensive initiatives.”

Wilson contended that LNW's established presence in the regulated gaming sector provides unique benefits that are hard to copy. He highlighted the firm's possession of over 500 global gaming licenses and its accumulation of decades' worth of proprietary gaming data.

Furthermore, Wilson cited the $562 million spent on R&D and capital projects in 2025 as a foundation that AI can enhance even further.

Executives mentioned the initiation of an AI transformation scheme in 2025 aimed at boosting development velocity and efficiency, with more specifics to be revealed later in the year.

Victor Blanco, the Chief Technology Officer, stated that the Carbon development framework now allows for “100% game portability across land-based, social, and web channels,” an increase from roughly 70%, thanks to a revamp integrating AI-driven development utilities.

Nevertheless, he stressed that AI is not a substitute for creative design work:

“AI excels at restructuring patterns... but the truly innovative mechanics are still the product of our game designers.”

In summary, leadership portrayed AI as an instrument to bolster current capabilities rather than as a rival force.

Premium Gaming Ops Continue as Main Growth Driver

The expansion of the recurring premium installed base stood out as the most steady operational trend.

LNW marked its 22nd straight quarter of growth in the North American premium installed base, with a net addition of 2,600 units in 2025 compared to the prior year. For 2026, management forecasts adding over 500 net premium units each quarter.

Daily revenue in North America rose by 9% annually, leaving out Grover, which underscores the emphasis on securing high-quality locations.
On a global scale, shipments of gaming machine units climbed 29% from the previous year, exceeding 12,300 units.

Key hardware drivers for 2026 involve the ongoing deployment of the Lightwave cabinet, the Cosmic Sky vertical model, and the L7000 stepper featuring the Wheel.

Recurring premium operations were identified as the main engine propelling the company toward its long-term adjusted EBITDA goals for 2028.

SciPlay: Stabilizing the Portfolio and Growing DTC

In the social gaming realm, Quick Hit Slots and 88 Fortunes enjoyed another record-breaking quarter. Conversely, leadership was frank about Jackpot Party, which, mirroring the second and third quarters, negatively impacted the broader portfolio:

“2025 was a challenging year for Jackpot Party. There is no avoiding that fact.”

Officials pointed to better engagement and retention metrics in December 2025 and early 2026 as signs of a return to normalcy.

Just as in the third quarter, the growth of direct-to-consumer (DTC) revenue was a highlight. DTC made up 25% of SciPlay’s revenue in the fourth quarter—rising from 20% in Q3 and 13% at the close of 2024. Management noted that progress is exceeding the 30% goal set for 2028.

Interestingly, there was no mention of sweepstakes casinos during the call—a segment previously critiqued by the firm. Rather, the discussion around SciPlay focused on stabilization paired with better margin mix.

Regulatory Outlook: VLT Growth and Gray Market Action

The Q&A session also covered updates on regulatory matters.

Wilson characterized unregulated skill-based gaming devices as “a major issue.” He pointed to bills in Missouri and Pennsylvania that might broaden regulated VLT markets. Pennsylvania specifically was highlighted as offering a potential 40,000-unit opportunity.

The firm also mentioned talks regarding charitable gaming in Maine and New York, clarifying that any possible growth there is not factored into the long-term guidance through 2028.

Additionally, leadership identified the impending hike in the UK’s online gaming tax to 40% as a challenge starting in the second quarter of 2026.