Q1 2025 Light & Wonder Inc Earnings Call
Yeah.
Speaker Change: Welcome to the Light & Wonder 2025, third quarter earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.
Speaker Change: If you would like to ask a question during the Q&A session, please press the star followed by one on your telephone keypad.
Speaker Change: If any reason you would like to remove that question, please press star then two [inaudible]
Speaker Change: And should you need to operate to assistance any point during the call today, you can press star then zero. Thank you. I will now turn the call over to Nick Zangari, Senior Vice President Investor Relations and Treasury. Please go ahead.
Nick Zangari: Thank you, Operator, and welcome everyone to our first quarter, 2025 Earnings Conference Golf. With me today, our Matt Wilson, our President and CEO , and Oliver Chow, our CSO.
Speaker Change: During today's call we will discuss our first quarter results in operating performance followed by a question and answer session.
Speaker Change: Today's call will contain four looking statements that may involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call.
Speaker Change: For information regarding these risks and uncertainties, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC.
who also discussed certain non-GAAP financial measures. [inaudible]
Speaker Change: A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable gap measure can be found in our earnings release and earnings presentation located in the investor's section of our website.
Matt Wilson: With that, I will now turn the call over to Matt.
Matt Wilson: Thanks, Nick, and thank you all for joining us today to discuss our first quarter results.
Matt Wilson: Our focus on a comprehensive product roadmap, operational excellence, and cross-platform strategy has enabled us to return to double digit consolidated A.E.B.Duggrohe, pacing us towards our year end target.
Matt Wilson: I would like to recognize our team so their performance and relentless efforts to execute toward our financial and operational goals.
Matt Wilson: As we outlined in the previous earnings call, Rohan 2025 is expected to progress and way towards the second half of the year, based on our visibility into the game sales funnel. We are focused on what we can control and the teams are working diligently to adapt to the rapid shifts in the broader economic environment. [inaudible]
Matt Wilson: Importantly, our game performance is reflected in industry charts and supported by our customers.
Sean, we are on the right path.
Matt Wilson: With uncertainty in the current markets, we will stay the course to reinvest into R&D for sustainable growth in the future. While this industry has proven to be resilient time after time, we are not immune to ripple effects from operators and the end consumers. Should we see a long-term structural shift in policies resulting in a softer macroeconomic environment? We are not immune to ripple effects, we are not immune to ripple effects from operators and the end consumers.
Matt Wilson: However, I remain optimistic about the future of the gaming industry and our position of capitalise on the opportunities with our product portfolio which continues to be a key driver of our performance.
Matt Wilson: Let's turn now to the operational highlight. Our gaming team continues to leverage our products of folio and content roadmap, driving yet another quarter of growth across all lines of
For more information, visit www.FEMA.gov
Matt Wilson: During the quarter, we added approximately 500 units sequentially to our North American install base bringing the number of added machines to over 2,900 units year over year and North American gaming operations footprint is now over 34,000 units with 51% of the fleet is premium
Matt Wilson: The diversity of our franchises came dividends, and the most recent isle of charts reflects this, with Light & Wonder holding 40% of the top 25 new premium and WAP games in the first quarter of 2025.
Matt Wilson: James Fales continues to be a highlight, with over 9,700 global units shipped in the quarter driven by sharegames that was made since we started on this journey.
Matt Wilson: We exited 2024 as the number one ship share supply globally.
Matt Wilson: and carried that momentum into the first quarter, regaining the number one position in Australia underpinned by the variety of game franchises we have to offer, such as Shen Long Unleashed and Lightingong, as well as Huff and even more pub, which David is number one in Queensland Club.
Matt Wilson: In North America, games from proven Evergreen franchises such as Super Hot Flaming Pot, Mr Lee and Mrs Long, both ranked in the top five of new core games and the cosmic upright cabinet, the top performing portrait upright cabinet are prime examples of great performers during the quarter. David Katz, John DeCree, John DeCree, John DeCree,
Matt Wilson: This improved game and hardware performance is evidenced through a 400 basis point share game for North American game 1000, 2024, year over year to 24%.
Matt Wilson: Our systems and table business continue to deliver healthy results as the result of a strong portfolio. We expect to drive further innovation through our experience and leadership position into sustainable growth across these product lines.
Speaker Change: Since the beginning of the year, our Chief Product Officer Nathan Drain has also turbocharged our game launches with a robust road map of games coming across Cadness on both the gaming operations and game sales categories globally.
Speaker Change: We anticipate the top line to continue to build a points bill and propel up forward as we execute our strategy to further upslide in the gaming business.
Speaker Change: On the side play where we continue the trend of outperformance relative to the broader social casino market year over year for three years in county [inaudible]
Speaker Change: Moghwagami is a large market and we continue to find avenues to grow our portfolio sustainably.
Speaker Change: This quarter was impacted by a late quarter re-acceleration from the jackpot party updated game economy highlighted in our previous earnings call.
For more information, visit www.FEMA.gov
Speaker Change: We have seen continued positive signs of player engagement with the new economy in March.
Bill Compton and his growth trajectory.
Speaker Change: as a return for growth in the second half of the year. Importantly, the significant insight is the performance and information we gathered enables further opportunity to drive efficiency and leverage the learning to crop up again.
Speaker Change: Importantly, we saw growth in other games as quick hit slots were that we achieved a 13th consecutive record revenue with 15 consecutive quarters of growth, while 88 fortunes also reached 3 consecutive quarters of record revenues.
Speaker Change: More broadly, we are focused on the key Fireplay Initiative, which includes user acquisition, monetization and direct consumer.
Speaker Change: Regarding UA, our team is committed to staying fluid and maximizing the opportunity when it counts.
Speaker Change: We continue the scale monetisation by leveraging dynamic live-up through the site play engine with the year of a year growth reflected in average revenue per daily active user and average monthly revenue for paying the user metrics.
Speaker Change: We also have exciting updates to share on our DTC platform.
Speaker Change: And how we plan to grow, which will further unpack it our upcoming best today.
Speaker Change: More than a year ago, we introduced BTC to our players and have received very positive feedback since then. We've been cultivating the platform to ensure seamless and optimized customer experience and we'll continue rolling out this offering in phases and eventually onto our other games in the 5-Play portfolio.
Speaker Change: Looking forward, our team is committed to the fundamentals of the business and to the long-term sustainable growth.
Speaker Change: We will continue to focus on a high return prudent US spend while improving monetization in the core portfolio title. This growth will be compounded by the methodical scaling of our DTC platform supporting margin expansion in the business for years to come.
Speaker Change: Turning to eye gaming, where we see continue success in both first party and third party content mortgages, as well as added service capabilities which further enhance the value proposition of our offering.
Speaker Change: Additionally, growth was accentuated and evidence in all markets, led by market GDI increase of 30% and 11% in the U.S. and Canada markets respectively Euro years.
Speaker Change: Content creation and cross-platform deployment is called to our strategy. We are building on the momentum in the US supported by strong new first-party game watches including Huff and more puffs and Wizard of Oz over the rainbow in the quarter. [inaudible]
Speaker Change: These are exclusive launches with Fandall and Betty NGM respectively and they've set new single-game GGR records for both operators since their release. We expect these games to be more widely distributed as they come off exclusivity shortly.
Speaker Change: Additionally, Lambate Stan Favourite Huff & More Puff achieved record North American GGR volume across the OGS on its initial 60-day release, a testament to the power of our game portfolio and brand exposure of a tested proven franchise.
Speaker Change: We expect the runway for our first party content to continue to broaden as the overall eye-gaming market grows and as we expand our presence with the introduction of Elf Games in the fast growing Ontario market. [inaudible]
Speaker Change: In terms of our service offerings, we continue to see a proliferation of that business with operators.
Speaker Change: Recently, we launched marketing jackpot in New Jersey, an additional rollout plan. Furthermore, we see validation that our product provides substantial value to customers through securing the player account management and aggregation platform for the finished lottery.
Speaker Change: Overall, I'm pleased with the vision, strategy, execution and leadership Simon Johnson has brought to the business.
Speaker Change: We've made some important strategic decisions under his leadership that will ultimately bear fruit in the long term [inaudible]
Speaker Change: The renewed focus on high-return initiatives such as cultivating first-party content and leveraging our deep pool of diversified game franchises is expected to drive share games moving forward.
Speaker Change: Back in February , we announced the strategic acquisition of Grover Gaming's charitable gaming outfit, which is expected to enhance our role as a leading cross-platform global games company by adding another growing regulated market to our portfolio.
Speaker Change: Light and finger approvals are on track, and the transaction is anticipated to close by the end of the second quarter. [inaudible]
Speaker Change: preliminary integration and planning efforts are proceeding as planned and we are preparing to bring the team on board.
Speaker Change: We view this as a strategic growth driver for Light & Wonder. Just recently the state of Indiana legalized e-pool times effective July 1 of this year. This is a welcome tailwind and incremental to our bad Katz dispersion.
Speaker Change: We're excited about the size of the opportunity and intend to be competitive in the state with our R&D supported games and hardware [inaudible]
Speaker Change: You will have more from us on our integration and growth plans to grow with the upcoming capital markets update.
Speaker Change: As it relates to an update on our ongoing litigation, back in early April , we engaged a third-party expert who conducted an audit of Holden Spin Games released after mid-2021 to determine whether any of those games presented similar issues to those identified with Dragon Train and Jewel of the Dragon
Speaker Change: He found no evidence of risk-trapped mass values being used in any of those games.
Speaker Change: We expanded our review to include hold and spin games released before mid-2021. We have now completed searches of math models for hold and spin games released between 2015 and mid-2021 and found no evidence that aristocrat math values were used in any of those games.
Speaker Change: Inclosing, I'm very excited to be hosting our Investor Day in less than two weeks time. We will use the event as an opportunity to dig into the fundamentals of our business and strategy to help propel our growth in the coming years. We look forward to seeing many of you in New York on the 20th. With that, I'll now turn it over to Oliver for a discussion on our financials.
Oliver Chow: Thanks, Matt. Our commitment to operational excellence and continuous improvement is reflected in our first quarter performance and we expect it to continue as we execute towards our 2025 targets.
Speaker Change: The initiative and processes we have in place enable us to remain adaptable to changes.
Speaker Change: While the uncertainty in the current environment persists, we are focused on execution and sustainability in the moment.
Speaker Change: This quarter marked our 16th consecutive quarter of consolidated revenue growth, a 2% increase to $774 million compared to the prior year, driven by our gaming and eye gaming businesses.
Net income was $82 million dollars.
Speaker Change: As increased revenue margins were offset by higher restructuring and other expenses primarily related to costs associated with pending acquisitions and discontinuation of live casino operations.
Speaker Change: This resulted in diluted net income per share of 94 cents compared with 88 cents in the prior year period.
Thank you.
Speaker Change: In line with guidance provided in the last earnings call, consolidated AEBATA in the first quarter group double digits, increasing by 11% to $311 million compared to $281 million in the prior year.
Speaker Change: Our continued business optimization led to increased revenue and expanded margins across all businesses, resulting in a consolidated Aepadal margin of 40%, a 300 basis point increase over the prior year period.
Thank you.
Speaker Change: Adjusted ampatate foot quarter was up 11% year-of-year to $117 million on revenue growth and margin expansion, partially offset by higher income taxes.
Speaker Change: and Justin Empaday-Per-Share, or EPSA, increased 21% to $1.35 compared to $1.12 in the prior year period.
Speaker Change: Operating cashflow increased 8% to $185 million in the quarter, leading to a 19% increase in free cashflow to $111 million.
Speaker Change: Reflective of Strong Earnings, and Lower Cap-X, partially offset by unfavorable changes in working capital, inclusive of higher cash income taxes paid of $24 million.
Turning to our business segment performance.
Yeah.
Speaker Change: This quarter is another example of the efficacy of our core strategy of creating great content and a diverse product offering.
Speaker Change: Gaming revenue was $495 million in the quarter, a 4% uplift bolstered by a growth across all business lines with particular strengths and tables, gaming operations and systems.
Speaker Change: A EBITDA grew 9% to $254 million, a result of an improving top line in conjunction with margin expansion of 200 basis points to 51%, demonstrating our ability to increase margin while investing back into the business.
Speaker Change: Gaming Operations delivered $173 million of revenue in the quarter, a 5% increase year of year.
Speaker Change: All North American install base increased by approximately 500 units sequentially, while maintaining an average revenue per day of over $48, which was inversely impacted by weather, primarily in the northeast.
Speaker Change: Internationally, the sequential install base impact was attributed to least the sale conversions mainly in the Latin region.
Speaker Change: Global gaming machine sales were $208 million in the quarter of 1% year of a year, primarily from strong performance in the North American replacement market, where we shift 26% more units compared to the prior year period, clothing in 50-400 units.
Speaker Change: Internationally, units were impacted by elevated sales in both AMZ and Asia in the prior year. As Matt mentioned earlier, we expect game sales this year to be back half-weighted with ample opportunities for us to commercialize our expansive library of content and hardware.
Speaker Change: Importantly, our global average selling price of nearly $20,000 reflects the value and premium on our cabinets and games.
Speaker Change: Systems Revenue Group 5% year-to-year to $63 million on increased hardware sales in North America.
Speaker Change: We expect numerous opportunities in this line of business and will be a critical component of our future growth as our enhanced software modules continue to drive meaningful hardware upgrades.
and Matthew Wilson. I'm Matthew Wilson. I'm Nick Zangari.
Speaker Change: Table products grew 9% compared to the prior year to $51 million on higher utility sales as we continue to develop and grow our pipeline of innovative products.
Speaker Change: Overall, I am pleased with the continued execution of our strategy supported by the broad portfolio of games and products we have in our disposal.
and Nick Zangari. Thank you. Have a great day.
Speaker Change: Turning to side play, revenue for the quarter was $202 million on record performance by quick hits loss and 88 fortunes. Games that grew 16% and 31% respectively within our expansive portfolio as we continue to outperform the broader social casino market.
and Nick Zangari.
Speaker Change: Ayupad Aguil is 3% compared to the prior year period of $64 million, representing a margin of 32% or 200 basis point increase.
Speaker Change: Underlying this expansion is our direct to consumer platform, which generated $27 million over 13% of revenue in the quarter.
Speaker Change: This 750 basis point increase across the past 12 months is a testament to our commitment to scale this offer sustainably and prudently over time.
Speaker Change: Importantly, we remain true to our principles and user acquisition spend.
Speaker Change: Deploying in a responsible manner to enhance our acquisition, engagement, and monetization flywheel opportunistically.
Speaker Change: We will continue to invest in UI spend as needed, and reassess if we are not seeing the returns above our thresholds with current industry dynamics.
Speaker Change: Monitization continues to be a key focus and remains strong during the quarter as various key metrics grew meaningfully, compared to the prior year.
Adred Revenue for daily active user increased 5% to $1.06.
Speaker Change: An average monthly revenue per paying user was up 3% and approaching $117.
Speaker Change: Through this activity, pay or conversion increased by roughly 20 basis points to 10.4%
Speaker Change: The underlying foundation of the KPIs and performance in our broader portfolio reflects a business that can grow sustainably as we have stabilized jack pop party and see a return to growth with and sold.
For more information, visit www.fema.gov
Speaker Change: I'm confident in the strategy and execution of our side plate team as we successfully navigated complex industry changes in the past which has driven out performance relative to the market year after year.
Speaker Change: We will continue to leverage our best in class side play engine across the array of games with a focus on sustainable growth.
Speaker Change: On to eye gaming, revenue increased 4% year-over-year to $77 million, largely driven by continued market expansion and content launches.
Speaker Change: A EBITDAQ who 8% compared to the prior year to a record 27 million dollars on higher revenue flow through, and a EBITDAQ benefit from the discontinuation of the live casino business
Speaker Change: Our focus on investment reallocation and first party content is expected to sustain this margin uplift over time.
Thank you.
Speaker Change: Importantly, we achieved another record quarter of GGR on our OGS with $25.2 billion of wages processed through the content aggregation platform, a 13% increase year over year.
Thank you. Thank you. Thank you.
Speaker Change: Our studio is continued to benefit from the scale of the network, with Lightning Box and LGDR up 15% and 9% respectively driven by strong franchise performance from Thundering, Egg Link and Pirates.
Speaker Change: Our first party content deployment strategy is further enhanced with key game launches in the quarter, such as Thunder and Tiger from Mighty Box and Sigma 5 from Elk.
Speaker Change: With our resources now realigned, aimed at building high-margin first-party content, we expect to drive significant value under good by continued market growth and long-term expansion opportunities for years to come.
Speaker Change: As evidenced through my commentary on the business units, we continue to demonstrate a commitment to optimizing operations across the enterprise, ensuring every dollar spent impacts the bottom line.
Speaker Change: Over the past year, margins have consistently improved, reaching a consolidated Aepadal margin of 40% in the quarter.
Speaker Change: While some of this is attributed to positive changes in the mixed shift of our business, we have also been executed in an in-depth analysis of our business and relevant costs over the past couple of years [inaudible]
Speaker Change: This includes ongoing business reviews around margin enhancement, as well as the right shortening of resources and optimizing supply chain to ensure the most efficient and effective processes are in place.
Speaker Change: We expect to see the either justice continuing over the coming years, which will ultimately set us out well for the long run.
Speaker Change: On the topic of our supply chain and the uncertainty of where tariffs will land, it's important to note that we are a global company that operates numerous product lines and business models, which are impacted to varying degrees by changing policies.
Thank you for tuning in.
Speaker Change: For the applicable parts of our business, we are largely in line with the industry in terms of the magnitude of impact. Thank you very much.
Speaker Change: This thing said, this is a dynamic environment we are navigating and the plan that was previously implemented is absolutely crucial to our mitigation efforts.
Speaker Change: We have been executing the longer-term plans to enhance our supply chain and operational efficiency.
Speaker Change: This ranges from on-shorting of production, relocation of sourcing, and utilization of agreements such as the USMCA.
Speaker Change: As we progress forward, we will remain nimble and reacted to the environment and continue consistent reevaluation of our supply chain and operational business.
Speaker Change: Our margin enhancement initiatives were implemented with the purpose of capital accretion to further enhance our cash conversion and reinvestment.
Speaker Change: We are well positioned to mitigate risks that could potentially pose disruptions so that the team can continue to execute and sustain our strategy and roadmap.
Speaker Change: We will continue to monitor the situation closely as we get further clarity over the coming months.
Speaker Change: We remain on track to deliver our 2025 Consolidate $80,000 financial target of $1.4 billion and associated with the United Justice MPATA Rage, despite the tariff headwinds, giving favorable trends in the business and our broader margin enhancement initiatives.
Speaker Change: As a reminder, this is excluding the contribution from our proposed global transaction.
Speaker Change: In terms of free cash flow for the quarter, we delivered $111 million, a 19% increase compared to the first quarter of 2024, while we continue to work through initiatives to scale our cash conversion on an annual basis.
We see this quarter as a sign of progress.
Speaker Change: An indication that our business is capable of generating more meaningful free cash flow over the long term.
Speaker Change: The commitments from our lender group far exceeded the $800 million request. Attempt them into the strength of our relationships with our bank partners and stability of our business.
Speaker Change: Upon full realization of the benefits of the acquisition, we do not anticipate this incremental debt to move us outside of our targeted net leverage range of two and a half to three and a half times on a pro-former basis.
Thank you.
Speaker Change: One of the primary uses of capital during this order was our share of purchase program. We completed an additional 17% of our authorized $1 billion program, having purchased $1.9 million shares totaling $166 million.
Speaker Change: We will continue to monitor the market and execute on share of purchase within the context of our capital allocation blueprint, while I'll say mindful that preserving the quantities often been beneficial in a fluid market.
Thank you.
Speaker Change: I'd like to close by reflecting on the foundation of excellence established here at Light & Wonder, scaling our business units and generating incremental shareholder value over the long run can be accomplished by our focus and building sustainable and creative business operations.
We will now open up the call for questions. Operator?
Thank you.
Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question please press the star followed by one on your telephone keypad.
Speaker Change: If, for any reason, you would like to remove that question, you can do so by pressing star for the project.
Speaker Change: Please note, to allow everyone to ask a question, we do ask you to please limit yourself to one question. And again, better start for a bit by one.
Speaker Change: The first question on the line comes from Barry Jonas with Truist. Please go ahead.
and John DeCree. Thank you.
Barry Jonas: Big guys, I was hoping you could talk a little bit more about how tariffs are impacting the business, that's both on the cost side but I'm also interested to hear any thoughts on what you're seeing from customers around the replacement cycle or game ups trends. Thanks.
Thank you. Thank you.
are from in Australia.
Barry Jonas: I would say from a tariff perspective, it's a burden that the entire industry is going to have to manage through. It starts with what we can control and managing our cost basis as effectively as possible. I think secondly it's about suppliers really stepping up to the plate and sheltering their burden of those increased tariff costs. And then finally, as we saw with COVID passing through what we can to customers, largely we're going to try to mitigate that ourselves and through the supply base. But we saw an ability to pass through some costs to customers through that COVID experience. Let's go. Let's go.
Barry Jonas: We see this as being no different, but it starts with us and I'm mitigating our costs.
Speaker Change: as effectively as possible, but all vanity to add that. Yeah, just a couple of ads there. I think just, we spoke about this that the 4Q earnings call, you know, what will continue to be diligent in implementing the measures that Matt mentioned, and it's really the diversification of the supply chain that we've been working on over the last couple of years. So to Matt's point, this is a moving target, and we've seen that over the past month. This current state is likely what we would kind of consider as worst-case scenario, and we believe [inaudible]
Speaker Change: It will improve as negotiations takes place with this current administration and the various different countries but I think importantly we are taking a very balanced approach to mitigating this more not.
Speaker Change: overreacting to kind of the ever changing policy and uncertainties that we see. So the focus for us will continue to be prioritizing the investments to support the achievement of 1.4 and then also supporting future growth. Thank you very much.
Thank you. Thank you.
Okay, thanks guys.
Thanks, Barry.
Speaker Change: The next wedding comes from Matt Ryan with Iron Joe, Joey, please go ahead.
Speaker Change: Thank you. I had a question on the US gaming up field in the first quarter and maybe if you could just share some color on how we should read that in regards to the impact from macro or sort of coin in versus what you might have seen from mix through the portfolio. What?
Thank you for watching!
Yeah, Matt.
Speaker Change: It's kind of a multi-part question there. I would say what we had committed to in Q1 was reversing a lot of the discounting we had seen in Q4 as a consequence of the drag and trans situation. That has happened. That's actually unwound those discounts. So we see that that base back to...
Normalization, I think what you're saying. [inaudible]
Speaker Change: in the number in Q1 was really weather-related and mostly on our web.
Oliver Chow: Product in the North East specifically. I think Oliver touched on that on the pre-recorded remarks, consisting with what we've heard from operators and we've heard from competitors in the marketplace. We also saw some of that in the Grover install base.
Oliver Chow: So kind of seasonal weather-related issues that have reversed themselves and we're back to normal trading at the moment. So I would say what you're seeing in that is really weather-related and a one-time isolated event.
Thank you.
Thanks. You're most welcome.
Thank you. Bye-bye.
We now have a question from Chad Bennion with Macquarie.
Chad Bennion: with Apple, related to alternative payment methods which could play into your DTC strategy it could be.
Chad Bennion: I believe a positive. Wondering if you could touch on how this can affect the business going forward when we could expect to see some change and if there's any updated goals in terms of what that DTC percentage could get to for the business. Thank you.
Speaker Change: We're excited to see that ruling be favourable. It does create a great tailwind from a margin perspective and I feel the social casino industry. We've gone from 0% DTC just a few short quarters ago to over 13%. We've been ramping that up in line with the rules and regulations related to Apple and Google. This does seem to give us a bit more oxygen in terms of pushing the agenda on direct consumer so you should
Expect that from us.
Speaker Change: Through the remainder of the year. We're actually going to share some targets around that at the investor day in New York in a few days time. So timely we got that ruling. It was always going to be a driver of our long-term growth prospects of the A.E. Bada line.
Speaker Change: But I think this ruling gives us the opportunity to be, you know, a little bit more aggressive on the accelerator as it relates to direct to consumer. So we see that as a really nice tailwind from a margin perspective for the social center business.
Great. Thank you very much.
Welcome.
Thank you.
Speaker Change: We have another question from Andre Fromyhr, with UBS, please go ahead when you're ready.
Speaker Change: Thank you. I just want to ask about the international gaming business. We can see at least on the volume perspective.
Speaker Change: The install base has declined a little bit sequentially, it's down 10% year in year, and the overall volume of unit sales has also slide down a last couple of quarters, can you talk through what's going on in your international markets and what the prospects for the rest of the year look like? [inaudible]
and Bruce Roddick.
Bruce Roddick: We still see it as being a really strong contributor to our overall business momentum, you know, we're seeing our product portfolio line up really nicely to the Australian market, you can see that with all the releases we've had it actually, often even more past the our number one game in the US with the number one in Queensland clubs.
in Australia, which just speaks to the depth and breadth.
Speaker Change: of Apple Follower, and also the feasibility of taking U.S. style product into the Australian market, which hasn't always been the case, but we still see strong momentum in that part of Apple Follower go forward. Do you want to just touch on Gamelp's? Yeah, this one is a pretty straightforward one from an international install based perspective. There were some conversion to sales for least units that primarily happened in the Latin markets. It's...
Speaker Change: This is just a commercial model that happens from time to time. This is not, I would say, a regular kind of occurrence, but will happen from time to time. So, this was, I would call a one time event here at the moment and we'll continue to evaluate those opportunities as we move forward.
John DeCree, John DeCree, John DeCree,
Okay, thank you.
http://TheBusinessProfessor.com
Thank you. Thank you.
Speaker Change: You now have David Katz with Jeffree. He may proceed for your question.
Speaker Change: and John DeCree. And thank you for watching. I'm Nick Zangari.
Good evening, everybody.
Speaker Change: I covered a lot of ground, but I noticed one issue I don't think you mentioned is the conversation that started a quarter ago around your listing.
Speaker Change: I wonder if you have any updated thoughts about that or any timing and any sort of perspectives on how you're thinking about that given that since we last talked in a public call quite a bit his happened.
Thank you.
Speaker Change: It certainly has David. It certainly has. Yeah, last time we updated the investor base, I think was in the Q4 core we talked about exploring.
Speaker Change: The Avenues to accelerate the Australian listing. Our commitment was we'd go and engage. The Avenues to the Australian listing.
Speaker Change: We're all stakeholders, so we've done that now. We've spoken with major shareholders to get their perspective, potential shareholders to get their perspective. I would say largely supportive of the idea of pushing the envelope with the Australian listing. It's happening organically. We just printed our CDIs in Australia at 38.5% of our market cap, so to go from zero [inaudible]
Speaker Change: You know, approaching 40%, so quickly just speaks to the efficacy of this idea and pushing the agenda. I would say
Speaker Change: Given everything else for tapping in the world, we know there's a lot of investors' minds [inaudible]
Speaker Change: you know whether it's the macro or tariffs or any number of things and so in times of uncertainty it's probably worth kind of taking the foot off the accelerator with this initiative for a period of time but we're still interested in continuing to push the agenda with the dual listing like I said that's happening organically but yeah for the moment don't expect a big announcement from us and a change in direction in terms of our strategy just given
Speaker Change: All the uncertainty in the broader market. We still feel like it's the right thing to do, the right initiative, but we're going to be thoughtful of the pace at which we execute. Thank you.
Thank you.
John DeCree, John DeCree, John DeCree,
Chris, we now have.
David Katz,
Speaker Change: A question from Rowan Gallagher with John . Please go ahead when you're in the group.
Thank you.
Speaker Change: Thank you, Matt Oliver, a bit afternoon, I like everyone on the call.
Speaker Change: Matt Oliver, a lot's changed since you put out here, $1.4 billion, either day I got it three years ago.
Speaker Change: We've obviously got a lien where there are two particular aspects to achieve that result given the recent adversities. Can you just articulate in terms of what do you need to ensure that you get to that $1.4 billion in terms of?
Speaker Change: Where you see damning, obsolete internet, so where do you see DTC needing to get to cost optimization, margin expansion, etc. That would be super helpful. Thank you.
Thank you.
Yeah, thanks, Rowan and-
Speaker Change: 2022, the last investor day, we thought casual would play a big...
Speaker Change: I think it's part of the growth expansion. We didn't think international would be as big a part of the gaming story. There's this and multiple different things that have happened over the years that have changed the pathways. And like I said earlier, our obligation is just to continue to reforcaft.
Speaker Change: What's the opportunity set in front of us? And we do that on a very regular basis, so we've done that just very recently. Oliver might give you some of the building blocks, but to answer your questions directly, I'd say from a game-ops perspective, it's continuing this momentum of adding games in the range that we've been adding for the last few quarters. You've seen that kind of evidence flow between 500-digit print, 850 last print, I think it was maybe more like 1200, the one before that. I'd say continuation of the product momentum.
Speaker Change: Probably anticipated GGR is remaining very elevated, and we're seeing some strong momentum in our 1PP content with things like half and half coming to market. So, a number of different pathways to get there can't guide you on all the metrics. But, you know, we do see Lana thought we've done that refocus and we see a solid pathway to get there but all of it. Yeah, I just think to add on the top line, we do see solid momentum in the underlying business to match points. So we do have line of sight to top line growth to get us to the 1.4. I think you also saw this
Gordon Vocational Therapy.
Speaker Change: You know, we believe we can see sustained margins at the business unit line item just even with some of the ebb and flows of the potential kind of market volatility that you see. And so I think for us patrol we can control. I think cash flow is a strong result for us. We're going to continue to drive improved cash flow over time. And so we're going to continue to do that.
Speaker Change: And to be clear, we're not going to cut our way to prosperity here. We're going to ensure that we remain nimble obviously with this administration kind of weaving and bobbing here, but our goal is to continue to invest to support the 1.4 but more importantly, how do we invest for future growth aspirations that we'll talk to in a couple weeks? [inaudible]
Speaker Change: Yeah, and maybe just one build on that to address the first party of your question. Obviously, there is a lot of concern about the macroeconomic environment. I watched the same news that you do. It's all consuming, but I would say it's a reminder that the economy is not the gaming sector and the gaming sector is not light and wonder. You know, we've got to look at the specific situational drivers for our business. I think the one number for everyone to kind of stay focused on is GGR, like GGR is the fuel that drives the engine of the gaming ecosystem. And if you look at those numbers, they're holding up And if you look at those numbers, they're holding up
Speaker Change: We're really well in markets across the US, so that's the number to look for as a potential catalyst to the upside of the downside. We're watching it like hawks ourselves. I think operators are doing the same. Again, we're lucky that we go after many of our casino operator partners that publicly trade their saying, you know, constructive things about the consumer at this point in time, but it's something we watch very closely. Thank you very much.
and Nick Zangari.
Super helpful, thank you, gentlemen. [inaudible]
Thank you very much.
Thank you.
Speaker Change: Thank you, we now have just Stantial with Stephen on the line
and Nick Zangari. Thank you.
Take it after in that, Oliver, thanks for taking our question. [inaudible]
I want to just-
Speaker Change: Follow-up in Diggin' Bit deeper on Barry's question from earlier Matt or Oliver, whoever want to take this can you just help us think a bit more about how we should think about timing for the current terror policies to start to impact your input call if I assume pricing is fixed at this point through the contracted pipeline but just how should we think about
Speaker Change: Input cost variability and the timing for a terrorist to be influenced by calls and capex, maybe that of some of the mitigation efforts that you talked to earlier in the call. Thanks
Yeah, obviously, when this news landed [inaudible]
Speaker Change: We activated the team very quickly to figure out what can we do to mitigate this as effectively as possible, so pulling forward inventory was a key part of that to make sure we get multiple quarters.
Speaker Change: of Inventory that's tariff unaffected. So we're in a solid position as it relates to that. We'll hit kind of the cash flows obviously because falling forward into Inventory, we'll do that. But we have a number of quarters here where we'll have unaffected Inventory from a tariff perspective. And that is really about the mitigation efforts. And so, dynamically reconfiguring the supply chain to circumvent the policies that are in place, bringing product through Mexico is one great example of that. I would say as an industry. Inventory is one of the most important things in the world.
Speaker Change: History, the big three suppliers, we know pretty intimately from a supply chain perspective. We're all very similar in the way we're configured. There's not a huge amount of suppliers that supply the types of things that we need to build slot machines. So, you do see a pretty homogenized supply chain when it comes to the pathways to being product into the US. I'd say multiple quarters where we don't have affected inventory. [inaudible]
and then walk us in in the opening remarks.
Speaker Change: You go back four weeks ago and it was a pretty scorched earth environment, you know you get tariffs in place and you get reciprocal tariffs and it felt like things were always moving against us but I would say for the last three to four weeks
Speaker Change: Kennedy seems to have prevailed and things have really calmed down and it's for us to make strategic decisions about how to reconfigure our supply chain to optimize it.
Speaker Change: We need to understand, you know, consistently what is the lay at the land? I think we're getting better inside into...
What is the forward-looking situation going to be like? So, um...
Matt Wilson: I think that's pretty comprehensive in and you want to add to that? Yeah, I mean I think that this is this is work that we've been we've been doing for the last couple of years and I probably mentioned this either in this call in the last call but you know Anthony from money that team have been focused on you know diversifying the supply chain to Matt's point we're looking at right-shoring operations whether that's to Mexico and other areas you know to kind of utilize the USMCA or just any other trade agreements that are out there that could redevere kind of terrible related impacts and so I think for us and I said this and I think for us and I think for us and I think for us and
Matt Wilson: We're not going to be knee-jerk in this, right? We want to make sure that we're not overacting that we understand kind of where this all settles and ultimately we'll come back to you all if there's an appropriate update to be provided to the proud market. Thank you.
Thank you. Thank you.
Great, take it both.
Thank you.
Speaker Change: Your next question comes from Rowan Sundram with MSP. Please go ahead.
and Nick Zangari. Thank you.
Speaker Change: Thank you. Hi, Matt and Oliver. Good afternoon. Just the one from me and I know you talk
Speaker Change: Thanks for the colour. I just wanted to just, and apologies if I missed this on the call earlier
Speaker Change: How do you see tariff impact impacting, not just, you talked about clogs but in terms of customer decision making and...
Speaker Change: Have you seen them pause or is there any reconsiderations temporarily on their behalf or do you feel like the casino results are so robust? Is it very much a business as usual but a bit more cautious type environment? Thanks.
Ram. David Katz, John DeCree, John DeCree, John DeCree,
Yeah, it kind of...
Speaker Change: Changes by range of different factors. So you do have some customers pulling forward orders, you've got some that are pausing to see what the situation looks like. So
Speaker Change: I don't think there's a one size fits all scenario, you know, I would point to the Isle of Survey that just came out with forward looking intentions, looking to tick down a little bit from a replacement perspective, but what I would say about that, the survey calls it out, is that was filled out four weeks ago, right in the middle of the storm, where things were very, very uncertain, I think if you repulsed the customer base again. [inaudible]
Speaker Change: Given what we know now, you might see a different result there, but yeah, I'd say…
Speaker Change: The customers are like snowflakes, they're all slightly different, with slightly different drivers, you know, you have...
Speaker Change: Publicly Traded Organizations that have a lot of scrutiny around their capex, you've got tribal budgets which are a bit more set and forget for the year so this is a range of different customers out there and I don't think they're all acting in units and they're all kind of managing through this.
Speaker Change: So to the extent that GGR holds up and the casino economy, which has proven to be resilient through the cycles of the last few decades, then I think that purchasing power will stay intact.
Speaker Change: Obviously, the markets are a function of price and quantity, so pricing has to go up as a consequence of tariff quantity is the offset there. I think the operators have infinite budgets, so like I said earlier, our obligation is to mitigate all the costs as best we can.
Speaker Change: And I've leveraged out supply partners to show to their part of the burden and try not to pass costs as much as we possibly can to customer so we keep the quantities where we want them to be. And I think my only add to that is obviously, if there are some puts and takes broadly speaking, we always say this, right? Content, best content always wins at the end of the day. If you look at even most recent Irish charts, you know, Light & Wonder still peppered all across.
Speaker Change: Both the four sale market as well as the premium recurring revenue list. So I think for us the position is really well to be able to be dynamic and nimble whatever this market kind of comes to bear. Thank you very much.
Thanks God.
Thank you.
Speaker Change: We have a question from Adrian Lemme with Citigroup, you may proceed when you're ready.
Thank you.
Adrian Lem: Hi Matt and Oliver, I just wanted to know the revenue growth in the last two quarters seems to have really slowed and I know you've talked about some impacts with wetter and other stuff in terms of cycling some tough comps but
Adrian Lem: Dean, are you expecting to see that revenue goes really accelerate through the rest of this year to get to that, that guidance target? It just seems like in the first quarter there's a lot relying on margin extension, so if you could just talk to that please.
Thank you.
Adrian Lem: I mentioned this on the Q4 earnings call that we had done that and it started to trend positively. I would say since then we're seeing the game really react the way it should and the way it has over the years and so we see that rebounding throughout the remainder of the year. I would say Jack Popati had really strong Q1 and Q2 of 24 so it's having to cycle over a tough comp from a revenue perspective to get back to where it was but we see the second half given the trajectory of the game now on given the
and Matthew Wilson.
that we're locking on. Thank you.
Adrian Lem: Yeah, I said this earlier. I think the underlying parts of our business remain strong. Look at the recurring revenue piece of it. So we did grow 5% top line from gaming us percent. We added 500 units to our install base. You're seeing the premium mix continue to kind of shift up. We had contributions from systems and tables and other parts of our businesses to help kind of bolster sales. And I think the other piece, again, I've got to get [inaudible]
Adrian Lem: You know, kind of unnoticed here, is that we shipped over 5,700 units of North America from our four-stellar perspective So, so that's strong growth every year. We have momentum in North America. We have strong execution from Brian Pierce and the teams there and so like I said, we're confident in the execution of kind of returning back to normalized growth here as we move through this year. So, so, so, so, so, so
Thank you very much.
John DeCree, John DeCree, John DeCree
Speaker Change: We now have Justin Barratt with CNSA. Your line is open.
Thank you.
Justin Barrett: Hi Matt, hi Oliver, thanks for your time and so just following up on that last question then I guess as we sort of think about more broadly the remainder of calendar year 25 should we expect you know more broadly I guess even contributions from revenue growth and and I guess margin expansion as you push towards at one point for bill target.
Justin Barrett: Yeah, I'm not going to give specific guidance when it comes to revenue contribution and EBITDA. I would say you should expect to tick up in terms of the revenue growth throughout the remainder of the year for the reasons that I just mentioned. I'll also just take an opportunity to mention this because no one's asked yet, but you know, in a matter of weeks, we will have an execute on the Grover transaction. And while we said that's not part of our $1.4 billion guide, it's a nice fast growing, recurring revenue business that'll start to make a meaningful contribution.
Justin Barrett: Over the remainder of the year, the business was performing at all time records, performing better today than when we signed the contract to acquire the grove of gaining assets.
Justin Barrett: Indiana just got approved, which was not in any of our base case assumptions, given what we've experienced with eye gaming and the kind of the slowness of regulations and markets opening up, we've learnt not to put those things into our base case and so Indiana coming on which is a very sizable market, just another tailwind for revenue so...
Justin Barrett: I think to the extent that you follow the company you need to start to think about how to grow a factor into forward looking forecast because it's going to be a nice growth piece of recurring revenue for us.
Thank you [inaudible]
Speaker Change: We have the final question on the line from Paul Mason with Evans and Partners. Please go ahead.
Thank you.
Hey team, um, just wanted to get some comments on the, um...
Speaker Change: 3 platform strategy and carbon platform and sort of whether that I know you're going to do more of the investor day but just in a lot of lots of questions around sort of costs and things like that. Where are you guys at on sort of the efficiency that's meant to be coming from that around being able to deliver games across platforms simultaneously and if you sort of already got a lot of the cost efficiencies from carbon and like simultaneous release or that sort of something that's still coming. Thank you.
Thank you. Thank you.
Speaker Change: I'm not here to steal Victor Blanco's thunder from the invested in a matter of days he's going to give you a very detailed explanation of where we stand relating to carbon. Grover has accelerated our carbon investment that gave us a really good use case for us to build games on a new platform for that market. Given that Grover has his own satellite platform so the carbon will sit across Grover and then it will give us that kind of Trojan horse to take that platform then across all
Speaker Change: All the other three verticals. So I would say we're building it now, the only area that it shows up in, our PNL is in the cost line, so we haven't really gotten to any of the synergies yet. Grover will be really the first game to go out, built specifically on the carbon platform, but gave us a really good...
Speaker Change: You're having the Trojan Horse in Grover to build this boat platform that we can take to the other businesses, it's just um...
Speaker Change: You know, it was just another great reason why I grew over the grow of our position just made a huge amount of sense for us across the financial contribution, the cultural and value alignment, but also this kind of tech initiative gave us the reason to accelerate that. So, again, that's all in front of us from an efficiency perspective. Thank you.
Matt Wilson: Thank you. A tangible environment of food, the Q&A session I would like to hand it back to Matt for his final closing comment.
Matt Wilson: In closing, I'd like to again thank everyone for joining our call today. But look forward to seeing many of you at the Investor Day New York. For those who cannot attend, we'll be livestreaming the event and recording it for replay purposes. Have a great week and thanks for joining us.