Q2 2026 Light & Wonder Inc Earnings Call

August 4, 2026

Operator: Good day, and thank you for standing by. Welcome to Light & Wonder Q2 2026 Earnings Webcast and Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I'd like to hand the conference over to Rohan Gallagher, EVP of Corporate Affairs. Please go ahead, sir.

Operator: Good day, and thank you for standing by. Welcome to Light & Wonder Q2 2026 Earnings Webcast and Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I'd like to hand the conference over to Rohan Gallagher, EVP of Corporate Affairs. Please go ahead, sir.

Speaker #2: Good day, and thank you for standing by. Welcome to the Light & Wonder Q2 2026 earnings webcast and conference call. At this time, all participants are in listen-only mode.

Speaker #2: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #2: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded.

Speaker #2: And I'd like to hand the conference over to Rowan Gallagher, EVP of Corporate Affairs. Please go ahead, sir.

Speaker #3: Thank you, Operetta, and welcome, everyone, to our Q2 2026 earnings conference call. Joining me today are Matt Wilson, our President and CEO, and Oliver Chiao, our CFO.

Rohan Gallagher: Thank you, operator. Welcome everyone to our Q2 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 Q2 results and operating performance, where we will refer to our earnings presentation. This will 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 discussed during the call. For information regarding these risks and uncertainties, please refer to our earnings materials relating to this call posted in the Investors section of our website and our filings with the SEC and lodgements with the ASX. We will discuss certain non-GAAP financial measures.

Rohan Gallagher: Thank you, operator. Welcome everyone to our Q2 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 Q2 results and operating performance, where we will refer to our earnings presentation. This will 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 discussed during the call. For information regarding these risks and uncertainties, please refer to our earnings materials relating to this call posted in the Investors section of our website and our filings with the SEC and lodgements with the ASX. We will discuss certain non-GAAP financial measures.

Speaker #3: During today's call, we will discuss our Q2 results and operating performance, referring to our earnings presentation. This will then be followed by a question-and-answer session.

Speaker #3: 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 discussed during the call.

Speaker #3: For information regarding these risks and uncertainties, please refer to our earnings materials relating to this call, posted in the Investor section of our website, and our filings with the SEC and lodgments with the ASX.

Speaker #3: We will discuss certain non-GAAP financial measures. Further information regarding these non-GAAP measures, including a description of each non-GAAP measure and reconciliations of historical non-GAAP measures to the most directly comparable GAAP measures, can be found in our earnings release and earnings presentation located in the Investor section of our website.

Rohan Gallagher: Further information regarding these non-GAAP measures, including a description of each non-GAAP measure and reconciliations of historical non-GAAP measures to the most directly comparable GAAP measures, can be found in our earnings release and earnings presentation located in the Investors section of our website. With that, I will now turn the call over to Matt to discuss the Q2 results and operational highlights. Thank you, Matt.

Speaker #3: Now, with that, I will turn the call over to Matt to discuss the Q2 results and operational highlights. Thank you, Matt.

Speaker #4: Thanks, Rowan. Hello, everyone, and thank you for joining us today. The story of the Q2 is one we've told consistently over the past several quarters.

Matt Wilson: Thanks, Rohan. Hello, everyone. Thank you for joining us today. The story of the Q2 is one we've told consistently over the past several quarters. We have a diversified, high-margin portfolio supported by evergreen franchises that continues to perform. Land-based demand remains resilient, and game performance stayed strong across the portfolio. Let's turn to our key highlights on slide three. The results reflect our continued focus on recurring revenue, the enhanced profitability we've driven across the business, and the strength of our cash flow generation. We delivered another quarter of strong financial performance. Consolidated EBITDA came in at $383 million, up 9% year over year. Adjusted NPATA grew even faster, up 16% to $156 million. On the bottom line, EPSA was $1.99, a 26% increase year over year, outpacing both revenue and consolidated EBITDA growth.

Matt Wilson: Thanks, Rohan. Hello, everyone. Thank you for joining us today. The story of the Q2 is one we've told consistently over the past several quarters. We have a diversified, high-margin portfolio supported by evergreen franchises that continues to perform. Land-based demand remains resilient, and game performance stayed strong across the portfolio. Let's turn to our key highlights on slide three. The results reflect our continued focus on recurring revenue, the enhanced profitability we've driven across the business, and the strength of our cash flow generation. We delivered another quarter of strong financial performance. Consolidated EBITDA came in at $383 million, up 9% year-over-year. Adjusted NPATA grew even faster, up 16% to $156 million. On the bottom line, EPSA was $1.99, a 26% increase year-over-year, outpacing both revenue and consolidated EBITDA growth.

Speaker #4: We have a diversified, high-margin portfolio supported by evergreen franchises that continues to perform. Land-based demand remains resilient, and game performance stays strong across the portfolio.

Speaker #4: Let's turn to our key highlights on Slide 3. The results reflect our continued focus on recurring revenue, the enhanced profitability we've driven across the business, and the strength of our cash flow generation.

Speaker #4: We delivered another quarter of strong financial performance. Consolidated EBITDA came in at $383 million, up 9% year over year. Adjusted MPATA grew even faster, up 16% to $156 million.

Speaker #4: On the bottom line, EPSA was $1.99, a 26% increase year over year, outpacing both revenue and consolidated EBITDA growth. I'll also note that our adjusted free cash flow conversion of 41% was up 1,100 basis points from a year ago. That's a meaningful improvement, and speaks to the underlying cash-generative nature of our business.

Matt Wilson: I'll also note that our adjusted free cash flow conversion of 41% was up 1,100 basis points from a year ago. That's a meaningful improvement and speaks to the underlying cash generative nature of our business. Importantly, we're focused on reducing our net debt leverage ratio to below 3 times during H1 2027, with the intention of moving towards an investment-grade leverage profile underpinned by our attractive high cash flow business and focus on debt paydown. Moving on to slide four. We continue to grow our recurring revenue, which increased 6% year-over-year to $580 million and now represents around 70% of quarterly consolidated revenue. Recurring revenues provide stability and predictability around the quality of our earnings.

Matt Wilson: I'll also note that our adjusted free cash flow conversion of 41% was up 1,100 basis points from a year ago. That's a meaningful improvement and speaks to the underlying cash generative nature of our business. Importantly, we're focused on reducing our net debt leverage ratio to below 3x during H1 2027, with the intention of moving towards an investment-grade leverage profile underpinned by our attractive high cash flow business and focus on debt paydown. Moving on to slide four. We continue to grow our recurring revenue, which increased 6% year-over-year to $580 million and now represents around 70% of quarterly consolidated revenue. Recurring revenues provide stability and predictability around the quality of our earnings.

Speaker #4: Importantly, we’re focused on reducing our net debt leverage ratio to below 3x during the first half of 2027, with the intention of moving toward an investment-grade leverage profile. This is underpinned by our attractive, high-cash-flow business and our focus on debt paydown.

Speaker #4: Moving on to slide 4, we continue to grow our recurring revenue, which increased 6% year over year to $580 million, and now represents around 70% of quarterly consolidated revenue.

Speaker #4: Recurring revenues provide stability and predictability around the quality of our earnings. This was reinforced by growth in gaming operations, where we added over 900 units to our total North American install base sequentially, and saw double-digit growth from our iGaming segment.

Matt Wilson: This was reinforced by growth in gaming operations, where we added over 900 units to our total North American install base sequentially and double-digit growth from our iGaming segment. Our focus on high-quality earnings naturally enhances profitability, demonstrated by meaningful double-digit growth in net income, Adjusted NPATA, and amplified by our buyback program, further boosting related per-share metrics. Consolidated EBITDA grew with margin expansion across all business segments. Given our visibility to year-end, I have a high degree of confidence in achieving our targeted mid to high single-digit consolidated EBITDA growth outlook for 2026. Our cash generative business model, combined with our ongoing cash enhancement initiatives, delivered meaningful cash flow growth in the quarter, with adjusted free cash flow up 50% over the prior year period. Oliver will provide more color on this performance later on the call.

Matt Wilson: This was reinforced by growth in gaming operations, where we added over 900 units to our total North American install base sequentially and double-digit growth from our iGaming segment. Our focus on high-quality earnings naturally enhances profitability, demonstrated by meaningful double-digit growth in net income, adjusted NPATA, and amplified by our buyback program, further boosting related per-share metrics. Consolidated EBITDA grew with margin expansion across all business segments. Given our visibility to year-end, I have a high degree of confidence in achieving our targeted mid to high single-digit consolidated EBITDA growth outlook for 2026. Our cash generative business model, combined with our ongoing cash enhancement initiatives, delivered meaningful cash flow growth in the quarter, with adjusted free cash flow up 50% over the prior year period. Oliver will provide more color on this performance later on the call.

Speaker #4: Our focus on high-quality earnings naturally enhances profitability, demonstrated by meaningful double-digit growth in net income and adjusted MPATA, and amplified by our buyback program, further boosting related per-share metrics.

Speaker #4: Consolidated EBITDA grew, with margin expansion across all business segments. Given our visibility to year-end, I have a high degree of confidence in achieving our targeted mid- to high single-digit consolidated EBITDA growth outlook for 2026.

Speaker #4: Our cash-generative business model, combined with our ongoing cash enhancement initiatives, delivered meaningful cash flow growth in the quarter, with adjusted free cash flow up 50% over the prior-year period.

Speaker #4: Oliver will provide more color on this performance later on the call. During the quarter, we returned $134 million of capital to shareholders through share buybacks.

Matt Wilson: During the quarter, we returned $134 million of capital to shareholders through share buybacks. Despite this level of buyback activity, we remain within our targeted leverage range. Our focus is now to rapidly de-lever our balance sheet through the remainder of this year, with the intention to move towards an investment-grade level leverage profile, as I mentioned at the opening. Our progression on recurring revenue is by design, as you see here on slide five. Consolidated revenue has grown from $2.9 billion in 2022 to $3.3 billion in 2025. What I want to highlight is the mix shift within that growth as recurring revenue becoming a larger piece of the pie, from 63% of total revenue in 2022 to 67% in 2025. Looking at H1 this year specifically, it represented 71% of the total revenue, or approximately $1.2 billion.

Speaker #4: Despite this level of buyback activity, we remain within our targeted leverage range. Our focus is now to rapidly delever our balance sheet through the remainder of this year, with the intention to move towards an investment-grade level leverage profile, as I mentioned at the opening.

Speaker #4: Our progression on recurring revenue is by design, as you see here on slide 5. Consolidated revenue has grown from $2.9 billion in 2022 to $3.3 billion in 2025. What I want to highlight is the mix shift within that growth, as recurring revenue is becoming a larger piece of the pie.

Speaker #4: From 63% of total revenue in 2022 to 67% in 2025. Looking at the first half of this year specifically, it represented 71% of total revenue, or approximately $1.2 billion.

Speaker #4: Our continued focus on building recurring revenue streams is aimed at improving the quality of our overall revenue base, expanding margins, and increasing the predictability of our earnings—all of which further strengthen our free cash flow profile going forward.

Matt Wilson: Our continued focus on building recurring revenue streams is aimed at improving the quality of our overall revenue base, expanding margins, and increasing the predictability of our earnings, all of which further strengthens our free cash flow profile going forward. Now let's turn to our consolidated and segment results on slide six. Consolidated revenue for Q2 was $828 million, up 2% year-over-year, driven by growth in gaming and iGaming, which more than offset softness in SciPlay. Consolidated EBITDA grew, with consolidated EBITDA margin expanding 200 basis points to 46%. This growth was broad-based across the organization, reflecting favorable product mix and importantly, disciplined cost management within the business segments. For H1 the year, consolidated revenue was over $1.6 billion, up 2%, and consolidated EBITDA grew 7% to $710 million, with consolidated EBITDA margin expansion of 200 basis points to 44%.

Speaker #4: Now let's turn to our consolidated and segment results on slide 6. Consolidated revenue for Q2 was $828 million, up 2% year over year, driven by growth in gaming and iGaming, which more than offset softness in SciPlay.

Speaker #4: Consolidated EBITDA grew, with consolidated EBITDA margin expanding 200 basis points to 46%. This growth was broad-based across the organization, reflecting favorable product mix and, importantly, disciplined cost management within the business segments.

Speaker #4: For the first half of the year, consolidated revenue was over $1.6 billion, up 2%, and consolidated EBITDA grew 7% to $710 million, with consolidated EBITDA margin expansion of 200 basis points to 44%.

Speaker #4: As previously mentioned, we expect the shape of earnings for the rest of 2026 to trend in line with prior years, weighted towards the second half, with each quarter stepping up sequentially from the last—which is typical for a scaling, recurring revenue business.

Matt Wilson: As previously mentioned, we expect the shape of earnings for the rest of 2026 to trend in line with prior years, weighted towards the H2, with each quarter stepping up sequentially from the last, which is typical for a scaling recurring revenue business. Our disciplined focus on profitability is underpinned by a streamlined and complementary business, enabling efficiency across the organization. This enables us to self-fund growth, scale the business, optimize cost structures, and therefore enhance returns. Importantly, we've optimized our operational foundation, setting us up nicely for growth in the H2 of the year with a solidified product roadmap. Moving on to gaming on slide eight, where we continue to grow the recurring revenue base. These results, again, reflect the quality and diversity of our portfolio, fueling another quarter of growth, with revenue up 5% to $554 million, and EBITDA growing 10% to $307 million.

Speaker #4: Our disciplined focus on profitability is underpinned by a streamlined and complementary business, enabling efficiency across the organization. This allows us to self-fund growth, scale the business, optimize cost structures, and therefore enhance returns.

Speaker #4: Importantly, we've optimized our operational foundation, setting us up nicely for growth in the second half of the year with a solidified product roadmap. Moving on to Gaming on slide 8, where we continue to grow the recurring revenue base.

Speaker #4: These results again reflect the quality and diversity of our portfolio, fueling another quarter of growth with revenue up 5% to $554 million and EBITDA growing 10% to $307 million.

Speaker #4: EBITDA margin increased 200 basis points year over year to 55% on recurring revenue expansion and favorable product mix. Gaming operations grew 18% year over year, up to $247 million, driven by continued expansion of our North American premium install base, increased average daily revenue per unit, as well as contributions from Grover.

Matt Wilson: EBITDA margin increased 200 basis points year over year to 55% on recurring revenue expansion and favorable product mix. Gaming Operations grew 18% year over year, up to $247 million, driven by continued expansion of our North American premium install base, increased average daily revenue per unit, as well as contributions from Grover. I'd like to provide a bit more color behind some of the sale numbers in gaming this quarter. As we know, operator CapEx timing, product launch timelines, and seasonality can impact quarterly numbers from time to time. The 4% decline in gaming machine sales is largely on timing of sales, which is expected to be deferred into the H2 of the year, weighted towards the Q4.

Matt Wilson: EBITDA margin increased 200 basis points year-over-year to 55% on recurring revenue expansion and favorable product mix. Gaming Operations grew 18% year-over-year, up to $247 million, driven by continued expansion of our North American premium install base, increased average daily revenue per unit, as well as contributions from Grover. I'd like to provide a bit more color behind some of the sale numbers in gaming this quarter. As we know, operator CapEx timing, product launch timelines, and seasonality can impact quarterly numbers from time to time. The 4% decline in gaming machine sales is largely on timing of sales, which is expected to be deferred into the H2 of the year, weighted towards the Q4.

Speaker #4: I'd like to provide a bit more color behind some of the sales numbers in gaming this quarter. As we know, operator CapEx timing, product launch timelines, and seasonality can impact quarterly numbers from time to time.

Speaker #4: The 4% decline in gaming machine sales is largely due to the timing of sales, which is expected to be deferred into the second half of the year, weighted towards the fourth quarter.

Speaker #4: We expect this will be further supported with the introduction of new games and cabinets at upcoming trade shows, helping to extend the global game sales momentum we've built over the years.

Matt Wilson: We expect this will be further supported with the introduction of new games and cabinets at upcoming trade shows to extend the global game sales momentum we've built over the years. On the same note, regarding timing of sales, Gaming Systems were down 16% year over year, driven by elevated hardware sales to international customers in the prior year. Table Products increased 13% on strong utility sales in North America, and our progressive tables operations grew year over year in the quarter. It's worth noting that our underlying gaming business remains fundamentally strong, with year over year increases across the recurring revenue lines of Gaming Operations, Systems, and Tables. Together, the collection of these businesses makes us unique, driving commercial advantages as the sole one-stop-shop provider of gaming solutions. Shifting to our gaming KPIs on slide nine.

Matt Wilson: We expect this will be further supported with the introduction of new games and cabinets at upcoming trade shows to extend the global game sales momentum we've built over the years. On the same note, regarding timing of sales, Gaming Systems were down 16% year-over-year, driven by elevated hardware sales to international customers in the prior year. Table Products increased 13% on strong utility sales in North America, and our progressive tables operations grew year-over-year in the quarter. It's worth noting that our underlying gaming business remains fundamentally strong, with year-over-year increases across the recurring revenue lines of Gaming Operations, Systems, and Tables. Together, the collection of these businesses makes us unique, driving commercial advantages as the sole one-stop-shop provider of gaming solutions. Shifting to our gaming KPIs on slide nine.

Speaker #4: On the same note, regarding timing of sales, gaming systems were down 16% year over year, driven by elevated hardware sales to international customers in the prior year.

Speaker #4: Table products increased 13% on strong utility sales in North America, and our progressive tables operations grew year over year in the quarter. It's worth noting that our underlying gaming business remains fundamentally strong, with year-over-year increases across the recurring revenue lines of gaming operations, systems, and tables. Together, the collection of these businesses makes us unique, driving commercial advantages as the sole one-stop shop provider of gaming solutions.

Speaker #4: Shifting to our gaming KPIs on slide 9. Our North American install base of 48,639 units grew 5% year over year, inclusive of 12,550 Grover units.

Matt Wilson: Our North American install base of 48,639 units grew 5% year over year, inclusive of 12,550 Grover units. Notably, our premium Gaming Operations segment delivered a 24th consecutive Q of install base growth, adding over 650 units sequentially and 2,500 year over year. Excluding Grover, premium now represents 58% of our total North American install base. Including Grover, average daily revenue per unit grew 6% over the prior year, approaching $49 across the portfolio, reflective of strong player engagement and game performance across North America. As we continue to integrate R&D across the portfolio, past the one-year anniversary of the Grover acquisition, our internal evaluation on game performance and revenue economics will be focused on the entire fleet, regardless of the vertical.

Matt Wilson: Our North American install base of 48,639 units grew 5% year-over-year, inclusive of 12,550 Grover units. Notably, our premium Gaming Operations segment delivered a 24th consecutive Q of install base growth, adding over 650 units sequentially and 2,500 year-over-year. Excluding Grover, premium now represents 58% of our total North American install base. Including Grover, average daily revenue per unit grew 6% over the prior year, approaching $49 across the portfolio, reflective of strong player engagement and game performance across North America. As we continue to integrate R&D across the portfolio, past the one-year anniversary of the Grover acquisition, our internal evaluation on game performance and revenue economics will be focused on the entire fleet, regardless of the vertical.

Speaker #4: Notably, our Premium Gaming Operations segment delivered a 24th consecutive quarter of install base growth, adding over 650 units sequentially and 2,500 year over year.

Speaker #4: Excluding Grover, premium now represents 58% of our total North American install base. Including Grover, average daily revenue per unit grew 6% over the prior year, approaching $49 across the portfolio.

Speaker #4: Reflective of strong player engagement and game performance across North America. As we continue to integrate R&D across the portfolio, past the one-year anniversary of the Grover acquisition, our internal evaluation of game performance and revenue economics will be focused on the entire fleet, regardless of the vertical.

Speaker #4: For the remainder, per unit in North America is expected to grow year over year, tracking in line with CPI to reflect the broader economic environment.

Matt Wilson: For the remainder of 2026, we expect daily average revenue per unit in North America to grow year-over-year, tracking in line with CPI to reflect the broader economic environment. We will continue to build on our proprietary and licensed games to bring to the market with Ultimate Fire Link, Rampage, Monstas, Dancing Drums, and Huff N' Puff franchises all performing above expectations. Focus on longevity of these games providing further revenue upside. Game sales remain solid, with approximately 8,800 new units shipped globally this quarter. As previously mentioned, the timing of request for proposal or RFP-based adjacencies, new and expansion units, cadence of product launch, and operator CapEx can significantly impact sales each quarter. In contrast, Australian share rebounded back to above 20% in the quarter off the back of the COSMIC DUAL cabinet launch late in the quarter.

Speaker #4: We will continue to build on our proprietary and licensed games to bring to the market, with Ultimate Fire Link, Rampage, Monsters, Dancing Drums, and Huff & Puff franchises all performing above expectations.

Speaker #4: And focus on the longevity of these games, providing further revenue upsides. Game sales remain solid, with approximately 8,800 new units shipped globally this quarter. As previously mentioned, the timing of requests for proposal, or RFP-based adjacencies, new and expansion units, cadence of product launch, and operator CapEx can significantly impact sales each quarter.

Speaker #4: In contrast, Australian share rebounded back to above 20% in the quarter, off the back of the Cosmic Jewel cabinet launch late in the quarter.

Speaker #4: The average selling price of our global units continues to validate the strong pricing power our new cabinets command, reaching nearly $19,000 per unit in the quarter.

Matt Wilson: The average selling price of our global units continues to validate the strong pricing power our new cabinets command, reaching nearly 19,000 per unit in the quarter. Looking ahead, we expect game sales to accelerate into H2 of the year, weighted towards Q4, with Q3 game sales to trend between 8,500 and 9,000 units globally, driven by our Cosmic Dual Screen and Lightwave Solar cabinet launches. Underpinned by new games such as Fiesta Caliente and core franchises such as Big Hot Flaming Pots, Lion Link, and Piggy Bankin' Break In that are consistently featured on the iOS charts. Moving on to Grover, where our business is extending our recurring revenue model into an adjacent, under-penetrated, and well-structured market. You can see on slide 10 that Grover continues to scale on product launch, new market entry, and integration initiatives. Revenue was $45 million in the quarter.

Speaker #4: Looking ahead, we expect game sales to accelerate into the second half of the year, weighted towards the fourth quarter. We expect third-quarter game sales to trend between 8,500 and 9,000 units globally, driven by our Cosmic Jewel screen and LightWave solar cabinet launches.

Speaker #4: Underpinned by new games such as Fiesta Caliente and core franchises such as Big Hot Flaming Pots, Lion Link, and Piggy Banking Break In, which are consistently featured on the Ireland charts.

Speaker #4: Moving on to Grover, where our business is extending our recurring revenue model into an adjacent, under-penetrated, and well-structured market. You can see on slide 10 that Grover continues to scale on product launches, new market entry, and integration initiatives.

Speaker #4: Revenue was $45 million in the quarter. We now have more than 12,550 units installed, up 14% year-over-year, with 277 units added in the second quarter and over 1,500 units added since we closed the deal.

Matt Wilson: We now have more than 12,550 units installed, up 14% year-over-year, with 277 units added in Q2 and over 1,500 units added since we closed the deal. Our existing markets have expanded at the same consistent rates since we've owned the business. Most importantly, we continue to focus on winning game performance, service, and improving unit economics in our newest market, Indiana, so we can build the business sustainably the same way we do in our other markets. Our content thesis is starting to prove out. Tank Blast, featuring Light & Wonder Game Math, launched in Indiana and is our highest first 14-day performer in the state. Eureka Treasure Train has continued its strong early performance as we plan for this game to ramp across two more states.

Speaker #4: Our existing markets have expanded at the same consistent rates since we've owned the business. Most importantly, we continue to focus on winning game performance, service, and improving unit economics in our newest market, Indiana, so we can build the business sustainably, the same way we do in our other markets.

Speaker #4: Our content thesis is starting to prove out. Tank Blast, featuring Light & Wonder game math, launched in Indiana as our highest first 14-day performer in the state.

Speaker #4: Eureka Treasure Trainers continue to show strong early performance as we plan for this game to ramp across two more states. We have an accelerating cadence of Light & Wonder hardware and content in the second half.

Matt Wilson: We have an accelerating cadence of Light & Wonder hardware and content in H2, planning for at least 30 current game titles to be launched across the six jurisdictions we are live in. Additionally, we are looking to debut our Kascada K43 cabinets in Kentucky and Ohio towards the end of the year. Integration remains on track and highly synergistic with Maryland and Minnesota as active priorities and additional markets under assessment. The growth runway here is long. We will continue to invest in a disciplined manner to expand the business and drive ongoing success. We are delivering on our strategy to scale high-quality recurring revenue and have provided a chart here on slide 11 to give you a visual on how the North American install base has trended over the years.

Speaker #4: We are planning for at least 30 current game titles to be launched across the six jurisdictions where we are live. Additionally, we are looking to debut our Cascada K43 cabinets in Kentucky and Ohio towards the end of the year.

Speaker #4: Integration remains on track and highly synergistic, with Maryland and Minnesota as active priorities, and additional markets under assessment. The growth runway here is long.

Speaker #4: We will continue to invest in a disciplined manner to expand the business and drive ongoing success. We are delivering on our strategy to scale high-quality recurring revenue, and have provided a chart here on slide 11 to give you a visual of how the North American install base has trended over the years.

Speaker #4: So far in 2026, we continue to see solid progress outside of the regulatory conversion impacting the non-premium units of our fleet at Resorts World in New York.

Matt Wilson: In 2026, we continue to see solid progress outside of the regulatory conversion impacting the non-premium units of our fleet at Resorts World in New York. Our premium install base is growing at the fastest in comparison to the other segments of the fleet and has enabled us to sustainably scale our revenue per day. We are making strategic and deliberate investments targeting continued growth in our North American premium and Grover install base, maximizing economics and greenfield opportunities. We expect overall momentum to continue, underpinned by our high-performing cabinets and franchises. Turning to SciPlay on slide 12. Broader industry softness impacted social casino operators' performance across the board. Revenue and user metrics were negatively impacted, with revenue coming in at $182 million this quarter, a 9% decline compared to the prior year.

Speaker #4: Our premium install base is growing at the fastest rate in comparison to the other segments of the fleet, and has enabled us to sustainably scale our revenue per day.

Speaker #4: We are making strategic and deliberate investments targeting continued growth in our North American Premium and Grover install base, maximizing economics and greenfield opportunities. We expect overall momentum to continue.

Speaker #4: Underpinned by our high-performing cabinets and franchises. Turning to Slide 12, broader industry softness impacted social casino operators' performance across the board.

Speaker #4: Revenue and user metrics were negatively impacted, with revenue coming in at $182 million this quarter, a 9% decline compared to the prior year. Our monetization strategy remains focused on prioritizing high-value players, with average monthly revenue per paying user up 4% year over year, approaching $134.

Matt Wilson: Our monetization strategy remains focused on prioritizing high-value players, with average monthly revenue per paying user up 4% year over year, approaching $134. Importantly, direct-to-consumer or DTC revenue reached a record $53 million, up 51% year over year, and now represents 29% of SciPlay's revenue, up from 18% a year ago. Every point of DTC's mix is structurally accretive in margin, and there's still runway from here. Our EBITDA for the quarter was $72 million, down 3% on lower revenue flow-through, partially offset by continued margin enhancement initiatives. This includes scaling of DTC, cost-based optimization, and prudent user acquisition or UA spend, as reflected in the 300-basis point EBITDA margin uplift year over year to a record 40%. We experienced an incredible period of growth in SciPlay from 2023 to early 2025 following the divestiture of our lottery and sports betting businesses, as you can see here on slide 13.

Matt Wilson: Our monetization strategy remains focused on prioritizing high-value players, with average monthly revenue per paying user up 4% year-over-year, approaching $134. Importantly, direct-to-consumer or DTC revenue reached a record $53 million, up 51% year-over-year, and now represents 29% of SciPlay's revenue, up from 18% a year ago. Every point of DTC's mix is structurally accretive in margin, and there's still runway from here. Our EBITDA for the quarter was $72 million, down 3% on lower revenue flow-through, partially offset by continued margin enhancement initiatives. This includes scaling of DTC, cost-based optimization, and prudent user acquisition or UA spend, as reflected in the 300-basis point EBITDA margin uplift year-over-year to a record 40%. We experienced an incredible period of growth in SciPlay from 2023 to early 2025 following the divestiture of our lottery and sports betting businesses, as you can see here on slide 13.

Speaker #4: Importantly, direct-to-consumer, or DTC, revenue reached a record $53 million, up 51% year over year, and now represents 29% of SciPlay's revenue, up from 18% a year ago.

Speaker #4: Every point of DTC's mix is structurally accretive in margin, and there's still runway from here. Our EBITDA for the quarter was $72 million, down 3% on lower revenue flow-through, partially offset by continued margin enhancement initiatives.

Speaker #4: This includes scaling of DTC, cost base optimization, and prudent user acquisition, or UA, spend, as reflected in the 300 basis point EBITDA margin uplift year over year to a record 40%.

Speaker #4: We experienced an incredible period of growth in side play, from 2023 to early 2025, following the divestiture of our lottery and sports betting businesses, as you can see here on slide 13.

Speaker #4: During the same timeframe, the rise of sweepstakes prompted a change in our game economy and UA strategy to invest and monetize as cost per installs increased.

Matt Wilson: During the same time frame, the rise of sweepstakes prompted a change in our game economy and UA strategy to invest and monetize as cost per installs increased. This pivot led to an unintentional shift in performance to which we have implemented a multi-step process to get back on track. We are encouraged that player acquisition, engagement, and monetization are all slowly moving back into balance as game economy continues to improve. It's worth noting that the irrational marketing spend from competitors we are seeing outside of the social casino industry has disconnected cost per install from return, making UA investment less attractive, which we constantly weigh against competing growth priorities. Encouragingly, the legal actions against sweepstake operators across a handful of states gives us comfort that there will be opportunities to increase UA spend. Monetization is a gradual process and takes longer than expected.

Speaker #4: This pivot led to an unintentional shift in performance, to which we've implemented a multi-step process to get back on track. We are encouraged that player acquisition, engagement, and monetization are all slowly moving back into balance as the game economy continues to improve.

Speaker #4: It's worth noting that the irrational marketing spend from competitors we are seeing outside of the social casino industry has disconnected cost per install from return, making UA investment less attractive. We constantly weigh this against competing growth priorities.

Speaker #4: Encouragingly, the legal actions against sweepstakes operators across a handful of states give us comfort that there will be opportunities to increase UA spend. Monetization is a gradual process and takes longer than expected.

Speaker #4: While the game economy is being optimized for sustainable growth, we are prudent in ensuring our flywheel is being carefully considered, as acquisition, engagement, retention, and monetization reach an equilibrium.

Matt Wilson: While the game economy is being optimized for sustainable growth, we are prudent in ensuring our flywheel is being carefully considered as acquisition, engagement, retention, and monetization reaches at an equilibrium. We are confident in our portfolio with strong affinity tied to our land-based game franchises reflected in gameplay. SciPlay continues to be an integral part of the business as a complementary channel, not only for A/B testing, but also for franchise exposure to a broader audience. Moving to iGaming on slide 14. We achieved another quarter of double-digit year over year growth in both revenue and EBITDA, driven by continued momentum in North America. This is underpinned by our first-party content proliferation and the expansion of our partner network.

Matt Wilson: While the game economy is being optimized for sustainable growth, we are prudent in ensuring our flywheel is being carefully considered as acquisition, engagement, retention, and monetization reaches at an equilibrium. We are confident in our portfolio with strong affinity tied to our land-based game franchises reflected in gameplay. SciPlay continues to be an integral part of the business as a complementary channel, not only for A/B testing, but also for franchise exposure to a broader audience. Moving to iGaming on slide 14. We achieved another quarter of double-digit year-over-year growth in both revenue and EBITDA, driven by continued momentum in North America. This is underpinned by our first-party content proliferation and the expansion of our partner network.

Speaker #4: We are confident in our portfolio, with strong affinity tied to our land-based game franchises, reflected in gameplay. Side play continues to be an integral part of the business as a complementary channel—not only for A/B testing, but also for franchise exposure to a broader audience.

Speaker #4: Moving to iGaming on slide 14, we achieved another quarter of double-digit year-over-year growth in both revenue and EBITDA, driven by continued momentum in North America.

Speaker #4: This has been underpinned by our first-party content proliferation and the expansion of our partner network. Revenue grew 14% year over year to $92 million, and EBITDA grew 18% year over year to $33 million, with margin expansion of around 100 basis points to 36% on strong flow-through of first-party content performance and operational efficiencies.

Matt Wilson: Revenue grew 14% year over year to $92 million, and EBITDA grew 18% year over year to $33 million, with margin expansion of around 100 basis points to 36% on strong flow-through of first-party content performance and operational efficiencies. The scale of our network and content offering continues to provide first-party and third-party growth. In fact, we saw the sixth and 15th consecutive quarter of 1PP and 3PP GGR growth across our OGS content aggregation network, respectively. Our 1PP content was particularly strong, taking eight of the top 10 games with the Huff N' Puff and Pirots franchises as key standouts. In fact, Eilers' new US online game ranking has two Huff N' Puff franchise games in the top five, with HUFF N' EVEN MORE PUFF GRAND taking the top spot on the chart.

Matt Wilson: Revenue grew 14% year-over-year to $92 million, and EBITDA grew 18% year-over-year to $33 million, with margin expansion of around 100 basis points to 36% on strong flow-through of first-party content performance and operational efficiencies. The scale of our network and content offering continues to provide first-party and third-party growth. In fact, we saw the sixth and 15th consecutive quarter of 1PP and 3PP GGR growth across our OGS content aggregation network, respectively. Our 1PP content was particularly strong, taking eight of the top 10 games with the Huff N' Puff and Pirots franchises as key standouts. In fact, Eilers' new US online game ranking has two Huff N' Puff franchise games in the top five, with HUFF N' EVEN MORE PUFF GRAND taking the top spot on the chart.

Speaker #4: The scale of our network and content offering continues to provide first-party and third-party growth. In fact, we saw the sixth and fifteenth consecutive quarter of 1PP and 3PP GGR growth across our OGS content aggregation network, respectively.

Speaker #4: Our 1PP content was particularly strong, taking eight of the top ten games, with the Huff & Puff and Pirates franchises as key standouts. In fact, Eilers' new U.S. online game ranking has two Huff & Puff franchise games in the top five, with Huff and Even More Puff Grand taking the top spot on the chart.

Speaker #4: Looking ahead, we anticipate year-over-year growth rates to moderate in the second half of the year due to the previously mentioned U.K. tax increases, which took effect during the quarter.

Matt Wilson: Looking ahead, we anticipate year-over-year growth rates to moderate in the second half of the year due to the previously mentioned UK tax increases, which took effect during the quarter, and stronger comparables in the prior year. We expect this to be partially offset by the continued performance and launch of our 1PP proprietary games. This next page on slide 15 highlights our global presence and our deep content library, which serves these markets. Across the Americas, the Huff N' Puff family continues to drive market share gains in the US and Canada, and we expect the same from our Ultimate Fire Link franchise. We also went live in Alberta on 1 July, where we believe our content should resonate with players as it does in Ontario. In the UK, Rainbow Riches and Huff N' Puff are leading the pack.

Speaker #4: And stronger comparables in the prior year. We expect this to be partially offset by the continued performance and launch of our 1PP proprietary games.

Speaker #4: This next page, on slide 15, highlights our global presence and our deep content library, which serves these markets. Across the Americas, the Huff & Puff family continues to drive market share gains in the US and Canada, and we expect the same from our Ultimate Fire Link franchise.

Speaker #4: We also went live in Alberta on July 1st, where we believe our content should resonate with players as it does in Ontario. In the UK, Rainbow Riches and Huff & Puff are leading the pack.

Speaker #4: Additionally, the Elks Pirates franchise continues to build, with Pirates 5 launched across the network in July. We're also ramping up in newer markets, with South Africa growing off the back of our Elk games being launched this last quarter.

Matt Wilson: Additionally, Elk's Pirots franchise continues to build, with Pirots 5 launching across the network in July. We're also ramping in newer markets, with South Africa growing off the back of our Elk games being launched this last quarter. Newer markets such as Brazil and the Philippines remain early stage, where we continue to assess and deploy the right content in what are highly competitive markets. Importantly, we are committed to investing in the content engine with Gale Force, our new first-party studio in Bulgaria. We've also bolstered our studio capabilities by expanding Chimera, which spans Montreal and Bangalore. iGaming is executing well with proprietary content that is deployed globally and compounds across an expanding footprint. We remain confident in our iGaming roadmap and growth trajectory, supported by our decades of experience and mature platform.

Speaker #4: Newer markets such as Brazil and the Philippines remain early stage, where we continue to assess and deploy the right content in what are highly competitive markets.

Speaker #4: Importantly, we are committed to investing in the content engine with Gale Force, our new first-party studio in Bulgaria. We've also bolstered our studio capabilities by expanding Chimera, which spans Montreal and Bangalore.

Speaker #4: iGaming is executing well, with proprietary content that is deployed globally and compounds across an expanding footprint. We remain confident in our iGaming roadmap and growth trajectory, supported by our decades of experience and mature platform.

Speaker #4: With that, I'll turn it over to Oliver to go through the financial highlights for the quarter. Oliver.

Matt Wilson: With that, I'll turn it over to Oliver to go through the financial highlights for the quarter. Oliver.

Speaker #2: Thanks, Matt. This quarter reflects the team's commitment to enhancing profitability and cash flow through the quality of our earnings. As you can see on slide 17, consolidated revenue grew 2% year-over-year to $828 million.

Oliver Chow: Thanks, Matt. This quarter reflects the team's commitment to enhancing profitability and cash flow through the quality of our earnings. As you can see on slide 17, consolidated revenue grew 2% year-over-year to $828 million, driven by double-digit year-over-year revenue growth across gaming operations and iGaming, both highly cash generative recurring revenue streams. Net income for the quarter was $120 million, a 26% increase from the prior year period, driven by margin expansion across all three business segments on strong operational performance and ongoing efficiencies. Net income per share rose 38% to $1.53 compared to $1.11 in the prior year. This reflects the 26% net income growth and buyback benefits. Consolidated AEBITDA for the quarter was $383 million, compared to $352 million in the prior year period.

Speaker #2: Driven by double-digit year-over-year revenue growth across gaming operations and iGaming, both highly cash-generative, recurring revenue streams. Net income for the quarter was $120 million.

Speaker #2: A 26% increase from the prior-year period, driven by margin expansion across all three business segments on strong operational performance and ongoing efficiencies. Net income per share rose 38% to $1.53, compared to $1.11 in the prior year.

Speaker #2: This reflects the 26% net income growth and buyback benefits. Consolidated EBITDA for the quarter was $383 million, compared to $352 million in the prior year period.

Speaker #2: This 9% increase was driven by modest revenue growth, favorable product mix shifts, and ongoing operational efficiencies that led to consolidated EBITDA margin expansion of 200 basis points year over year to 46%.

Oliver Chow: This 9% increase was driven by modest revenue growth, favorable product mix shifts, and ongoing operational efficiencies that led to consolidated AEBITDA margin expansion of 200 basis points year-over-year to 46%. Our Adjusted MPADE for the quarter grew 16% year-over-year, up to $156 million, benefiting from modest revenue growth and expanded segment AEBITDA margins across all businesses, partially offset by higher interest expense related to Grover and buybacks, as well as depreciation and amortization expense. Adjusted MPADE per share grew 26% to $1.99, reflective of strong underlying earnings growth and our share repurchases in the quarter. On slide 18, we've provided a couple of bridges to show you how profitability trended year-over-year. The $31 million consolidated AEBITDA increase was led by gaming, delivering a $27 million year-over-year increase driven by revenue growth and favorable product mix, supported by operational efficiencies and Grover's contribution.

Speaker #2: Our adjusted MPATE for the quarter grew 16% year over year, up to $156 million, benefiting from modest revenue growth and expanded segment EBITDA margins across all businesses.

Speaker #2: Partially offset by higher interest expense related to Grover and buybacks, as well as depreciation and amortization expense. Adjusted MPATE per share grew 26% to $1.99.

Speaker #2: Reflective of strong underlying earnings growth and our share repurchases in the quarter. On slide 18, we provided a couple of bridges to show you how profitability trended year over year.

Speaker #2: The $31 million consolidated EBITDA increase was led by Gaming, delivering a $27 million year-over-year increase driven by revenue growth and favorable product mix, supported by operational efficiencies and Grover's contribution.

Speaker #2: Our EBITDA was a $2 million year-over-year decrease, primarily reflective of industry softness and a lower player base. This was partially offset by continued margin expansion initiatives such as DTC expansion, as we look to optimize our cost structure and seek a long-term, sustainable turnaround.

Oliver Chow: SciPlay AEBITDA was a $2 million year-over-year decrease, primarily reflective of industry softness and a lower player base. This was partially offset by continued margin expansion initiatives such as DTC expansion as we look to optimize our cost structure, seeking a long-term sustainable turnaround. iGaming delivered a $5 million year-over-year increase on continued momentum in North America, underpinned by first-party content proliferation and the expansion of our partner network, offsetting the UK tax impact. Corporate costs decreased modestly, reflective of continued margin enhancement initiatives, partially offset by investments in AI as we continue to build tools and technology for our team. As we look into the H2, we will be opportunistic with investments back into the business. We expect corporate costs to trend in line with our historic range of mid to high $30 million range per quarter for the remainder of the year. Moving on to Adjusted MPADE.

Speaker #2: iGaming delivered a $5 million year-over-year increase on continued momentum in North America, underpinned by first-party content proliferation and the expansion of our partner network.

Speaker #2: Offsetting the UK tax impact, corporate costs decreased modestly, reflective of continued margin enhancement initiatives—partially offset by investments in AI as we continue to build tools and technology for our team.

Speaker #2: As we look into the second half, we will be opportunistic with investments back into the business. We expect corporate costs to trend in line with our historic range of mid to high $30 million per quarter for the remainder of the year.

Speaker #2: Moving on to adjusted MPATE. Consolidated EBITDA was the primary driver in delivering $21 million of adjusted MPATE growth, up to $156 million in the quarter.

Oliver Chow: Consolidated AEBITDA was the primary driver in delivering $21 million of Adjusted MPADE growth, up to $156 million in the quarter. Partially offsetting our consolidated AEBITDA growth was a depreciation and amortization increase of $6 million and an interest expense increase of $4 million compared to prior year. These expense increases are reflective of continued gaming operations install base growth and the accretive Grover acquisition. Lastly, income tax was a $2 million tailwind in the quarter, benefiting from favorable international tax rates in certain operating jurisdictions. For the H1 comparisons, I will refer you to slide 19 for more information with commentary on the performance drivers. Now let's turn to slide 20, where we continue to focus on building a highly cash-generative financial profile. In Q2, we delivered another solid quarter of free cash flow, reflecting the cash enhancement initiatives discussed during our 2025 Investor Day.

Speaker #2: Partially offsetting our consolidated EBITDA growth was a depreciation and amortization increase of $6 million and an interest expense increase of $4 million compared to the prior year.

Speaker #2: These expense increases are reflective of continued gaming operations in stall-based growth and the accretive Grover acquisition. Lastly, income tax was a $2 million tailwind in the quarter, benefiting from favorable international tax rates and certain operating jurisdictions.

Speaker #2: For the first-half comparisons, I will refer you to slide 19 for more information, with commentary on the performance drivers. Now, let's turn to slide 20, where we continue to focus on building a highly cash-generative financial profile.

Speaker #2: In Q2, we delivered another solid quarter of free cash flow, reflecting the cash enhancement initiatives discussed during our 2025 Investor Day. Net cash provided by operating activities was $241 million.

Oliver Chow: Net cash provided by operating activities was $241 million, a meaningful increase from $106 million in the prior year period. This increase was largely driven by strong earnings generation, lower cash taxes, expansion of our recurring revenue, and the prior year period adversely impacted by $73 million in legal settlement payments. Adjusted free cash flow for the quarter came at $156 million, a 50% increase from the prior year period. This reflects ongoing expansion of our recurring revenue streams, as well as favorable receivable collections, lower tax payments, and a full quarter of Grover cash earnings. Capital expenditure for the quarter was $83 million, compared to $78 million in the prior year, and represents roughly 10% of consolidated revenue. The increase is largely driven by investments in our North American and charitable gaming operation suites. We remain committed to expanding our highly cash-generative business model.

Speaker #2: A meaningful increase from $106 million in the prior-year period. This increase was largely driven by strong earnings generation, lower cash taxes, expansion of recurring revenue, and the prior-year period being adversely impacted by $73 million in legal settlement payments.

Speaker #2: Adjusted free cash flow for the quarter came in at $156 million, a 50% increase from the prior-year period. This reflects ongoing expansion of our recurring revenue streams, as well as favorable receivable collections, lower tax payments, and a full quarter of Grover cash earnings.

Speaker #2: Capital expenditure for the quarter was $83 million, compared to $78 million in the prior year, and represents roughly 10% of consolidated revenue. The increase is largely driven by investments in our North American and charitable gaming operations suites.

Speaker #2: We remain committed to expanding our highly cash-generative business model. This increases our financial flexibility to support capital allocation priorities, including the ability to self-fund our future growth, retire debt, and/or repurchase shares.

Oliver Chow: This increases our financial flexibility to support capital allocation priorities, including the ability to self-fund our future growth, retire debt, and/or repurchase shares. Our adjusted free cash flow conversion has steadily improved over the years. Adjusted free cash flow conversion rates versus consolidated AEBITDA and adjusted MPAD were 41% and 100% respectively, meaningful increases from 30% and 77% in the prior year period. These improvements were driven by strong earnings growth and continued focus on cash enhancements across the organization. As a reminder, our free cash flow will fluctuate quarter to quarter in timing of tax, interest payments, and working capital. Our cash enhancement initiatives are in place for us to regularly assess our progress and position on an annual trailing 12-month basis. That said, this quarter validates our strategy to improve our cash conversion through highly profitable recurring revenue growth. On to our capital structure on slide 21.

Speaker #2: Our adjusted free cash flow conversion has steadily improved over the years. Adjusted free cash flow conversion rates versus consolidated EBITDA and adjusted MPATE were 41% and 100%, respectively.

Speaker #2: Meaningful increases from 30% and 77% in the prior-year period. These improvements were driven by strong earnings growth and a continued focus on cash enhancements across the organization.

Speaker #2: As a reminder, our free cash flow will fluctuate quarter to quarter with the timing of tax payments, interest payments, and working capital. Our cash enhancement initiatives are in place, allowing us to regularly assess our progress and position on an annual trailing 12-month basis.

Speaker #2: That said, this quarter validates our strategy to improve our cash conversion through highly profitable recurring revenue growth. On to our capital structure on slide 21.

Speaker #2: Our net debt leverage ratio at the end of June remained at 3.4 times, within our targeted range. Turning to our debt profile, the principal face value of our debt at period end was $5.2 billion.

Oliver Chow: Our net debt leverage ratio at the end of June remained at 3.4 times, within our targeted range. Turning to our debt profile, the principal face value of our debt at period end was $5.2 billion. As previously referenced, we successfully repriced our $2.1 billion term loan in January, reducing the margin by 25 basis points to 2% above SOFR and generating approximately $5 million in annual interest savings. The maturity profile of our debt remains elongated, averaging around 3.9 years, with no maturities until 2028. The effective interest cost on our debt for the quarter was a competitive 6.30%, with a relatively balanced 53% fixed to 47% floating debt mix. We continue to preserve significant balance sheet flexibility with $928 million of available liquidity maintained to support our various growth initiatives and navigate any macro uncertainties that may arise.

Speaker #2: As previously referenced, we successfully repriced our $2.1 billion term loan in January, reducing the margin by 25 basis points to 2% above SOFR, and generating approximately $5 million in annual interest savings.

Speaker #2: Our debt maturity profile remains long-dated, averaging around 3.9 years, with no maturities until 2028. The effective interest cost on our debt for the quarter was a competitive 6.30%, with a relatively balanced 53% fixed to 47% floating debt mix.

Speaker #2: We continue to preserve significant balance sheet flexibility, with $928 million of available liquidity maintained to support our various gross spend initiatives and navigate any macro uncertainties that may arise.

Speaker #2: Our team regularly evaluates further opportunities to optimize our capital structure should favorable market conditions arise. We boast an attractive business profile, which enables us to deleverage organically.

Oliver Chow: Our team regularly evaluates further opportunities to optimize our capital structure should favorable market conditions arise. We boast an attractive business profile, which enables us to de-lever organically. This is best illustrated on slide 22, reflecting leverage reduction over the years. The company is highly cash generative, delivering adjusted free cash flow of $692 million over the last 12 months. We have applied a disciplined approach to capital management. Since 2022, we allocated circa $2.1 billion of capital to our share buyback program. These decisions reflect our commitment to long-term value creation for the company and its shareholders. This represents roughly 1.4 turns of net debt leverage driven by capital returns relative to our current net debt leverage ratio of 3.4 turns, translating to approximately two times leverage under a different capital allocation scenario, underscoring the cash flow generation that continues to fund our capital allocation priorities.

Speaker #2: This is best illustrated on slide 22, reflecting leverage reduction over the years. The company is highly cash-generative, delivering adjusted free cash flow of $692 million over the last 12 months.

Speaker #2: We've applied a disciplined approach to capital management. Since 2022, we have allocated approximately $2.1 billion of capital to our share buyback program. These decisions reflect our commitment to long-term value creation for the company and its shareholders.

Speaker #2: This represents roughly 1.4 turns of net debt leverage driven by capital returns. Relative to our current net debt leverage ratio of 3.4 turns, this translates to approximately 2 times leverage under a different capital allocation scenario, underscoring the cash flow generation that continues to fund our capital allocation priorities.

Speaker #2: What we've proven over the last five years is that we constantly evaluate our capital allocation strategy and remain nimble to drive sustainable, long-term shareholder value.

Oliver Chow: What we've proven over the last five years is that we constantly evaluate our capital allocation strategy and remain nimble to drive sustainable long-term shareholder value. Given broader market dynamics, the company is committed to deleveraging our balance sheet towards the midpoint of our targeted net debt leverage ratio range over the course of 2026 and below three times during the first half of 2027, with the intention to move toward an investment-grade level leverage profile while preserving optimal flexibility to fuel sustainable growth. As we prioritize debt paydown, you can see that our capital allocation pillars remain intact on slide 23. With technology and content as important as ever, we invest deliberately, sizing up the potential return to ensure we maximize the value of every dollar.

Speaker #2: Given broader market dynamics, the company is committed to leveraging our balance sheet towards the midpoint of our targeted net debt leverage ratio range over the course of 2026, and below 3x during the first half of 2027.

Speaker #2: With the intention to move toward an investment-grade level leverage profile, while preserving optimal flexibility to fuel sustainable growth. As we prioritize debt paydown, you can see that our capital allocation pillars remain intact on slide 23.

Speaker #2: With technology and content as important as ever, we invest deliberately—sizing up the potential return to ensure we maximize the value of every dollar.

Speaker #2: While AI will increase R&D efficiencies over time, we continue to target an annual R&D and CapEx spend of roughly 17%, which can range between 15% and 20% in any given quarter depending on timing.

Oliver Chow: AI will increase R&D efficiencies over time, we continue to target an annual R&D and CapEx spend of roughly 17%, which can range between 15% and 20% in any given quarter, depending on timing. As previously flagged, Q2 featured an accelerated period of buyback activity with $134 million, or 1.6 million CDIs repurchased. This leaves $180 million of our approved buyback program available. Buybacks will remain a permanent feature of how we effectively return capital to shareholders. Since the inception of our first-ever share purchase program back in 2022, we have returned $2.1 billion to shareholders. This represents roughly 27% of total outstanding shares prior to the commencement of the program. As previously mentioned, the focus will be to rapidly delever our balance sheet to the remainder of the year and into the H1 of 2027.

Speaker #2: As previously flagged, Q2 featured an accelerated period of buyback activity, with $134 million, or 1.6 million CDIs, repurchased. This leaves $180 million of our approved buyback program available.

Speaker #2: Buybacks remain a permanent feature of how we effectively return capital to shareholders. Since the inception of our first-ever share repurchase program back in 2022, we have returned $2.1 billion to shareholders.

Speaker #2: This represents roughly 27% of total outstanding shares prior to the commencement of the program. Going forward, we will continue to monitor the market for opportunities.

Speaker #2: But as previously mentioned, the focus will be to rapidly de-lever our balance sheet through the remainder of the year and into the first half of 2027.

Speaker #2: Before we take questions from the call, let's move to our outlook on slide 25. We reaffirm our outlook of mid- to high-single-digit consolidated EBITDA growth in full year 2026.

Oliver Chow: Before we take questions from the call, let's move to our outlook on slide 25. We reaffirm our outlook of mid to high single-digit consolidated AEBITDA growth in full year 2026. This takes into consideration external factors beyond our control, including US tariffs and changes in UK iGaming taxes. In addition, we expect to deploy disciplined and strategic investments, providing the necessary infrastructure and foundation for sustained growth in Grover, as well as ongoing AI initiatives and costs related to legal matters. We continue to anticipate the shape of earnings for 2026 to be broadly in line with 2025. This reflects industry cyclicality and our customer CapEx intentions, our growing recurring revenue base, and investments that we predominantly weighted towards the H1 of the year. From a capital management perspective, we remain committed to rapidly delevering the balance sheet.

Speaker #2: This takes into consideration external factors beyond our control, including U.S. tariffs and changes in U.K. iGaming taxes. In addition, we expect to deploy disciplined and strategic investments, providing the necessary infrastructure and foundation for sustained growth in Grover, as well as ongoing AI initiatives and costs related to legal matters.

Speaker #2: We continue to anticipate that the shape of earnings for 2026 will be broadly in line with 2025. This reflects industry cyclicality and our customers' capex intentions.

Speaker #2: Our growing recurring revenue base and investments were predominantly weighted towards the first half of the year. From a capital management perspective, we remain committed to rapidly de-levering the balance sheet.

Speaker #2: As we mentioned a few times on this call, we anticipate being toward the midpoint by year-end and going below 3x leverage during the first half of 2027, with the intention to move toward an investment-grade-level profile.

Oliver Chow: As we mentioned a few times on this call, we anticipate being towards the midpoint by year-end and go below three times leverage during the H1 of 2027, with the intention to move toward an investment-grade level profile. While we continue to monitor the market for buyback opportunities, we expect the level of buyback activity should be well below the H1 level of circa $150 million, as we've accelerated our full-year buyback allotment in this quarter. On slide 26, you will see several operational and financial assumptions to assist for modeling purposes. Most importantly, Light & Wonder remains focused on our full-year 2028 financial targets. This concludes our prepared remarks. We will now open the session for Q&A. Operator?

Speaker #2: Consequently, while we continue to monitor the market for buyback opportunities, we expect the level of buyback activity should be well below the first half level of approximately $150 million, as we've accelerated our full-year buyback allotment in this quarter.

Speaker #2: On slide 26, you will see several operational and financial assumptions to assist for modeling purposes. Most importantly, Light & Wonder remains focused on our full-year 2028 financial targets.

Speaker #2: This concludes our prepared remarks. We will now open the session for Q&A. Operator?

Speaker #1: To ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again.

Operator: To ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. In the interest of time, please limit to one question at a time. If you have follow-up questions, please request to rejoin the queue. A moment for our first question. Your first question comes from the line of Andre Fromyhr of UBS. Please ask your question. Andre, your line is open.

Speaker #1: In the interest of time, please limit to one question at a time. If you have follow-up questions, please request to rejoin the queue. A moment for the first question.

Speaker #1: Your first question comes from the line of Andre Fromier of UBS. Please ask your question. Andre, your line is open.

Speaker #3: Thank you, good morning. I just want to ask about the guidance commentary around the ops revenue per day, indicating it's sort of in line with CPI for the year.

Andre Fromyhr: Thank you. Good morning. I just want to ask about the guidance commentary around the ops revenue per day, indicating at sort of in line with CPI for the year. I'm just curious if you could talk through some of the drivers sitting behind that. If you take out the Grover mix that's shown up year to date, the otherwise underlying revenue per day has been much stronger than that rate. Of course, you're also getting some mix towards premium as you remove the non-premiums that we've seen year to date. Yeah, just curious to understand whether there are commercial things behind that or if it's just mix that's going on.

Speaker #3: I'm just curious if you could talk through some of the drivers sitting behind that, because if you take out the Grover mix that's shown up year-to-date, the underlying revenue per day has been much stronger than that rate.

Speaker #3: But of course, you're also getting some mix towards premium as you remove the non-premiums that we've seen year-to-date. So, yeah, just curious to understand whether there are commercial things behind that, or if it's just mix that's going on.

Speaker #2: Yeah, I mean, the gaming ops business continues to perform very well, scaling our install base nicely. Again, we beat that guide we gave you of 500 units, so very happy with the team's performance there.

Matt Wilson: Yeah, I mean, the gaming ops business continues to perform very well, scaling our install base nicely. Again, beat that guide we gave to you of 500 units. Very happy with the team's performance there. We've had industry-leading yield expansion. Our competitors just aren't seeing what we're seeing from an increase in RPDs year on year. It's been very solid for us the last few quarters. It was 7% again this quarter, which I think is an exceptional combination of scaling install base and scaling RPDs. That really points back to the predictability, stability in our earnings. I thought that point in the presentation, about 71% of our revenues are now recurring, should be well understood by investors. This is a very predictable set of earnings. We've suggested a moderation in terms of the yield increase. Again, we want to set expectations appropriately here.

Speaker #2: We've had industry-leading yield expansion. Our competitors just aren't seeing what we're seeing from an increase in RPDs year on year. It's been very solid for us the last few quarters.

Speaker #2: It was 7% again this quarter, which I think is an exceptional combination of scaling install base and scaling RPDs. That really points back to the predictability and stability in our earnings.

Speaker #2: I thought that point in the presentation—that 71% of our revenues are now recurring—should be well understood by investors. This is a very predictable set of earnings.

Speaker #2: Yeah, we've suggested a moderation in terms of the yield increase. Again, we want to set expectations appropriately here. We still have ambitions to drive that line item in the P&L very aggressively through new content and new commercial models.

Matt Wilson: We still have ambitions to drive that line item in the P&L very aggressively through new content, new commercial models. Not signaling anything significant in the way we approach the market, just moderating expectations. 7%, I think it was 8% in the prior period. That's exceptional industry-leading yield expansion. Just trying to moderate expectations a little bit on that line as we continue to scale the install base. Very impressed and satisfied with the team's performance when it comes to gaming operations.

Speaker #2: So, not signaling anything significant in the way we approach the market—just moderating expectations. Seven percent; I think it was eight percent in the prior period.

Speaker #2: That's exceptional, industry-leading yield expansion. So just trying to moderate expectations a little bit on that line, as we continue to scale the install base.

Speaker #2: I'm very impressed and satisfied with the team's performance when it comes to gaming operations.

Speaker #3: Okay, thank you.

Andre Fromyhr: Okay. Thank you.

Speaker #1: Thank you. And our next question comes from the line of Barry Jonas of Truist. Please ask your question. Barry, your line is open.

Operator: Thank you. Our next question comes from the line of Barry Jonas of Truist. Please ask your question. Barry, your line is open.

Barry Jonas: Great. Thank you. Hey, guys. There's been a lot of M&A activity, or there is a lot of M&A activity going on in the US here for gaming operators. How should we think about the potential ramifications, if any, for Light & Wonder and I guess the gaming tech sector in general? Thank you.

Speaker #4: Great, thank you. Hey guys, there's been a lot of M&A activity—or there is a lot of M&A activity—going on in the US here for gaming operators.

Speaker #4: How should we think about the potential ramifications, if any, for Light & Wonder? And I guess the gaming tech sector in general. Thank you.

Speaker #2: Yeah, it's a great question and a great observation. There's been a lot of take-private activity in the market, both on the supply side in the last year, with IGT, Everi, and AGS.

Matt Wilson: Yeah, it's a great question, a great observation. There's been a lot of take private activity in the market, both on the supply side in the last year with IGT and Everi and AGS, among others. Then that's kind of spilled over now into the operator landscape with interesting deals, proposed deals with Caesars and MGM. As I think through that, I don't think it has any major implications for the supply side of the industry. The management teams in those two deals sound like they'll stay intact, and they have an ideology or a philosophy around the amount of investment they put into slot CapEx and into OpEx as it relates to gaming operations product. The market's never been more competitive when it comes to the operator landscape. Just think about Las Vegas and the dynamic playing out here.

Speaker #2: Among others. And then that's kind of spilled over now into the operator landscape, with interesting proposed deals with Caesars and MGM. As I think through that, I don't think it has any major implications for the supply side of the industry.

Speaker #2: The management teams in those two deals sound like they'll stay intact, and they have an ideology or a philosophy around the amount of investment they've put into slot capex and into opex as it relates to gaming operations product.

Speaker #2: The market's never been more competitive when it comes to the operator landscape. Just think about Las Vegas and the dynamics playing out here. You've got Wynn, which has one of the freshest floors, I'd say, on the planet in terms of their reinvestment rates.

Matt Wilson: You've got Wynn, which has one of the freshest floors, I'd say, on the planet in terms of their reinvestment rates. You've got the Seminoles about to open Hard Rock, who are a prolific spender when it comes to CapEx and OpEx as it relates to slot products. You've got Apollo, with The Venetian property, spending a good amount of money refreshing their floor. You've got Yaamava', who have some of the freshest floors on the planet as well when it relates to their California property, but then also owning the Palms here. You've got MGM and Caesars, who have been longstanding great customers of ours. I think if you look at the forward predictions in the ILS survey, they're still very healthy from a CapEx investment, from a percentage of the floor that's premium leased.

Speaker #2: You've got the Seminoles about to open Hard Rock, who are prolific spenders when it comes to capex and opex as it relates to slot products.

Speaker #2: You've got Apollo, with the Venetian property spending a good amount of money refreshing their floor. You've got Yamava, who have some of the freshest floors on the planet as well when it relates to their California properties, but then also owning the Palms here.

Speaker #2: And then you've got MGM and Caesars, who have been longstanding, great customers of ours. And I think if you look at the forward predictions in the ILS survey, they're still very healthy from a CapEx investment standpoint, and from the percentage of the floor that's premium leased.

Speaker #2: And I think this just points to players demanding the best and freshest product, and that's what drives the investment rates from these operators. So it's an interesting thing to see play out in the operator space.

Matt Wilson: I think this just points to players demand the best and freshest product, and that's what drives the investment rates from these operators. So it's an interesting thing to see play out in the operator space. We watch it closely, but as I zoom in on it, I don't really think it has any material implications for the supplier space. We'll watch it closely and we continue to invest heavily, both on the R&D line and the CapEx line to build the world's best games. That's really just following what these operators need to be successful, which is the most engaging and entertaining slot games on their floor.

Speaker #2: We watch it closely, but as I zoom in on it, I don't really think it has any material implications for the supply space.

Speaker #2: But we'll watch it closely, and we continue to invest heavily, both on the R&D line and the capex line, to build the world's best games.

Speaker #2: And that's really just following what these operators need to be successful, which is the most engaging and entertaining slot games on their floor.

Speaker #4: Thanks Matt.

Barry Jonas: Thanks, Matt.

Speaker #1: Thank you. And the next question comes from the line of Matt Ryan of Barrenjoey. Please ask your question, Matt. Your line is open.

Operator: Thank you. The next question comes from the line of Matt Ryan of Barrenjoey. Please ask your question, Matt. Your line is open.

Speaker #3: Well, thank you. I had a question on the full-year EBITDA guidance, and I'm interested in whether anything's changed since the start of the year in regard to how much that second-half EBITDA skew is going to be driven by revenue versus cost.

Matt Ryan: Well, thank you. I had a question on the full-year EBITDA guidance, and I'm interested in whether anything's changed since the start of the year in regard to how much that H2 EBITDA SKU is going to be driven by revenue versus costs.

Matt Wilson: Yeah. We've reaffirmed that guidance today. We feel very comfortable in that range of mid to high single-digit EBITDA growth. There's a few things that play into that. There's seasonality around the holiday periods. There's kind of the underlying investments we're making into the recurring revenue profile. When you think about gaming ops, scaling the install base, scaling the RPDs, that just naturally has this kind of compounding effect throughout the year. The same is true for Grover. There's those two dimensions. I wouldn't suggest there's any major changes to the top and bottom line. Obviously, we didn't guide to the revenue line. We guided to the EBITDA line. No significant changes. I thought the margin uplift was a key feature of this result.

Speaker #2: Yeah, so I mean, we've reaffirmed that guidance today. We feel very comfortable in that range of mid- to high-single-digit EBITDA growth. The natural shape of our business has always been heavily skewed towards the second half.

Speaker #2: There are a few things that play into that. There's seasonality around the holiday periods. There's the underlying investments we're making into the recurring revenue profile.

Speaker #2: So, when you think about gaming ops—scaling the install base, scaling the RPDs—that just naturally has this kind of compounding effect throughout the year.

Speaker #2: The same is true for Grover. So there are those two dimensions. I wouldn't suggest there's any major changes to the top and bottom line. Obviously, it wouldn't guide to the revenue line.

Speaker #2: We guide it to the EBITDA line, but no significant changes. I thought the mix—sorry, the margin uplift—was a key feature of this result.

Speaker #2: That was less about cost-out and more about an intentional mix shift towards recurring revenue. Adding Grover, which is a high margin business; scaling gaming ops, which is a high margin business; scaling One PP content and iGaming—both high margin businesses.

Matt Wilson: That was less about cost out and more about an intentional mix shift towards recurring revenue, adding Grover, which is a high-margin business, scaling gaming ops, which is a high-margin business, scaling 1PP content and iGaming, high-margin business. It's as much about a natural mix effect on that margin line as it is about cost containment. Although, we are very deliberate about the way we manage costs in this business, and any owners on the line should wish that we were. That's the way to operate a business effectively, spend money, invest dollars in the areas that can propel us forward, and minimize costs in areas that don't drive our growth. That's what we'll continue to do.

Speaker #2: So it's as much about a natural mix effect on that margin line as it is about cost containment. Although we are very deliberate about the way we manage cost in this business.

Speaker #2: And any owners on the line should wish that we were. That's the way to operate a business effectively: spend money, invest dollars in the areas that can propel us forward.

Speaker #2: and minimize costs in areas that don't drive our growth. And that's what we'll continue to do. Yeah, and maybe just—

Oliver Chow: Yeah. Maybe just want to add to that. We're really excited about our portfolio here in the H2. We have AGE coming up next week. We have G2E coming up, obviously, in late September. As we start to show some of the new games and content hardware across the portfolio, that's going to support the growing aspects of our business here as we head into Q4, but also into the first part of next year.

Speaker #5: One add to that—we're really excited about our portfolio here in the second half. We have AGE coming up next week, and we have Q2 coming up.

Speaker #5: Obviously, late September. So, as we start to show some of the new games and concept hardware across the portfolio, that's going to support the growing aspects of our business here as we head into the fourth quarter, but also into the first part of next year.

Speaker #3: That's really clear. Thanks, guys.

Matt Ryan: That's really clear. Thanks, guys.

Speaker #5: Thank you.

Oliver Chow: Thank you.

Speaker #2: Thanks.

Matt Wilson: Thanks.

Speaker #1: Thank you. And our next question comes from the line of Rowan Sundrum of MSC Financial. Please ask your question, Rowan. Your line is open.

Operator: Thank you. Our next question comes from the line of Rohan Sundram of MST Financial. Please ask your question, Rohan. Your line is open.

Speaker #6: Thank you. Hi Nat and everyone. I just saw one for me. Regarding the gaming ops net installs performance, I appreciate the strong growth in premium units, but can you clarify where you saw the churn that quarter?

Rohan Sundram: Thank you. Hi, Matt and Oliver. Just the one from me. Around the gaming ops net installs performance, I appreciate the strong growth in premium units, can you just clarify where you saw the churn that quarter, and was there any residual impact from the Resorts World conversion?

Speaker #6: And was there any residual impact from the Resorts World conversion?

Speaker #2: Yeah, I mean, we were very deliberate about informing the market last quarter about that resource world shift. It's something that's been out in the industry.

Matt Wilson: Yeah, we were very deliberate about informing the market last quarter about that Resorts World shift. It's something that's been out in the industry. It's the worst-kept secret across both the sell side and all industry pundits far and wide. There shouldn't have been any shock that that continued into Q2. It's done now, there's no further removals from that VLT market. In fact, you may see some incremental adds in the New York VLT market down the line as we see some new properties coming online. There could be a net tailwind there. There's nothing more to see there in terms of Resorts World. That's all played out. We've had some great commercial opportunities off the back of that. We've added premium gaming ops with a sole product in there. We have big tables lease business.

Speaker #2: It's the worst-kept secret across both the sell side and all industry partners, far and wide. So there shouldn't have been any shock that that continued into the second quarter.

Speaker #2: It's done now, so there's no further removals from that VLT market. In fact, you may see some incremental adds in the New York VLT market down the line as we see some new properties coming online.

Speaker #2: So there could be a net tailwind there. But really, there's nothing more to see there in terms of resource world. That's all played out.

Speaker #2: And we've had some great commercial opportunities off the back of that. We've added premium gaming ops. We've sold product in there. We have a big tables lease business.

Speaker #2: So it's been a commercial success for us, that shift. It's something we've known about for five years—since I joined the company—that this was happening.

Matt Wilson: It's been a commercial success for us, that shift. It's something we've known about for 5 years since I joined the company that this was happening. The regulator out there awarded the license, it was always going to happen. It just happened these first two quarters, it shouldn't be a shock to the market. That was kind of well foreshadowed.

Speaker #2: The regulator out there awarded the license, and so it was always going to happen. It just happened these first two quarters, so it shouldn't be a shock to the market—that was kind of well foreshadowed.

Speaker #5: Yeah, and I would just add to that: if you remove the kind of public KPI impact, we would be over 1,000 units net adds for the quarter.

Oliver Chow: Yeah. I would just add to that is if you kind of remove the kind of public KPI impact, we will be over 1,000 units net adds for the quarter. Our premium install base plus 652, that's the main focus for us as we drive better content across the portfolio that drives the RPD that Matt mentioned earlier. We feel really good about our position. The last point I'd make is, if you think about the total addressable revenue in that space, we're actually going to be benefiting from that in 2026, just based on the net adds that we're going to add on premium side as well as the game sales and ETG side.

Speaker #5: Our premium install base plus 652—that's the main focus for us as we drive better content across the portfolio that drives the RPD that Matt mentioned earlier.

Speaker #5: So, we feel really good about our position. And then, the last point I'd make is, if you think about the total addressable revenue in that space, we're actually going to be benefiting from that in 2026, just based on the net adds that we're going to add on the premium side, as well as the game sales and ETG side.

Speaker #6: Thanks, that's very clear. So, just to confirm, were any outright shipments booked in Q2 relating to that, or is that to come through?

Rohan Sundram: Thanks. That's very clear. Just to confirm, were any outright shipments booked in Q2 relating to that, or is that to come through?

Speaker #5: Yeah, that's partial, and that will ship throughout the rest of this year.

Oliver Chow: Yeah. That's partial, and that'll ship throughout the rest of this year.

Speaker #6: Okay. Thanks, guys.

Rohan Sundram: Okay. Thanks, guys.

Speaker #1: Thank you. And our next question comes from the line of Justin Bird of CLSA. Please ask your question, Justin. Your line is open.

Operator: Thank you. Our next question comes from the line of Justin Barratt of CLSA. Please ask your question, Justin. Your line is open.

Speaker #7: Hey, guys. Thanks for the opportunity. I guess I had just a bit more of an encompassing question on SciPlay. Obviously, margin performance there is really, really strong and supported by your DTC penetration.

Justin Barratt: Hey, guys. Thanks for the opportunity. I guess I had just a bit more of a encompassing question on SciPlay. Obviously, margin performance there are really strong and supported by your DTC penetration. Appreciate your commentary around sweepstakes and potential regulation. Just thinking about, I guess, the timing of expected UA spend as you look to, I guess, really reengage that customer base and drive sort of revenue growth again. How should we sort of think about that and that timing of UA spend uplift and, I guess, more importantly, how we should think about margins for that business, going forward over the remainder of this year and potentially into next?

Speaker #7: And appreciate your commentary around sweep stakes and potential regulation. But just thinking about, I guess, the timing of expected UA spend as you look to, I guess, really re-engage that customer base and drive sort of revenue growth again.

Speaker #7: How should we think about the timing of UA spend uplift and, more importantly, how should we think about margins for that business going forward over the remainder of this year and potentially into next year?

Speaker #2: Yeah, I'll give some broad commentary, and I'll let you kind of pick up on you and margins. There's no hiding from the fact that this part of the portfolio, and this part of the industry, is under pressure.

Matt Wilson: Yeah, I'll give some broad commentary and I'll let you kind of pick up on UA and margins. There's no hiding from the fact that this part of the portfolio and this part of the industry is under pressure. You look at the Eilers numbers, it was down as a sector 6% year over year. I guess one glimmer of hope for us is we held share sequentially in what was a tough market quarter-on-quarter. We're not happy with the results of SciPlay and where we're at, and we take accountability for that. We've got some very specific things that we're working on to stabilize and return that part of the business to growth.

Matt Wilson: Yeah, I'll give some broad commentary and I'll let you kind of pick up on UA and margins. There's no hiding from the fact that this part of the portfolio and this part of the industry is under pressure. You look at the Eilers numbers, it was down as a sector 6% year-over-year. I guess one glimmer of hope for us is we held share sequentially in what was a tough market quarter-on-quarter. We're not happy with the results of SciPlay and where we're at, and we take accountability for that. We've got some very specific things that we're working on to stabilize and return that part of the business to growth.

Speaker #2: If you look at the island numbers, it was down as a sector—6% year over year. I guess one glimmer of hope for us is we held share sequentially in what was a tough market, quarter on quarter.

Speaker #2: But we're not happy with the results of SciPlay and where we're at, and we take accountability for that. We've got some very specific things that we're working on to stabilize and return that part of the business to growth.

Speaker #2: We talk a lot about controlling the controllables, and that really comes back to a focus on engagement—making sure these games are fun, and that we create great, rewarding experiences for the players that are part of our ecosystem.

Matt Wilson: We talk a lot about controlling the controllables, and that really comes back to a focus on engagement, making sure these games are fun and we get great rewarding experiences for the players that are part of our ecosystem. Then appropriately monetizing those players over time. That's the recipe for long-term success. We are benefiting from that DTC mix shift. I think it's up from 18% to 29%. Yeah, really good execution on the DTC side that helps at the margin line. Really, there's two drivers on the margin side of the equation. It's really that DTC mix, also UA. One of the unfortunate implications for this category with the rise of illegal sweepstakes offerings is an inflection higher on CPIs. They've been spending a lot of marketing dollars, which pushes CPIs higher. It makes ROIs a little tougher on the social casino side.

Speaker #2: And then appropriately monetizing those players over time—that's the recipe for long-term success. We are benefiting from that DTC mix shift. I think it's up from 18% to 29%.

Speaker #2: So, really good execution on the DTC side—that helps at the margin, margin line. But really, there are two drivers on the margin side of the equation.

Speaker #2: It's really that DTC mix, that also UA. One of the unfortunate implications for this category with the rise of illegal sweepstakes offerings is an inflection higher on CPIs.

Speaker #2: They've been spending a lot of marketing dollars, which pushes CPIs higher, so it makes ROIs a little tougher on the social casino side. We've always been good about being prudent as it relates to the UA spend.

Matt Wilson: We've always been good about being prudent as it relates to UA spend. We only spend when we see the returns. We're not chasing rainbows as it relates to our LTV curve. We're going to be prudent. That was part of the margin result here. We are starting to see opportunities to push more UA into these games. Oliver, maybe you want to kind of build on that.

Speaker #2: We only spend when we see the returns. We're not chasing rainbows as it relates to LTV curves, so we're going to be prudent. That was part of the margin result here.

Speaker #2: But we are starting to see opportunities to push more UA into these games, although maybe you want to kind of build on that.

Speaker #5: Yeah, no, no, that's exactly the long-term strategy for us. We kind of look at this from a capital allocation perspective—how do we drive every dollar of investment to the highest ROI return?

Oliver Chow: Yeah, that's exactly the long-term strategy for us, is we kind of look at this from a capital allocation perspective as how do we drive every dollar of investment to the highest ROI return? That wasn't the case last year as we saw some of the challenges that we had in Jackpot Party, as an example. We're clearly not going to declare victory here, but we're starting to see green shoots here. To Matt's point, we are seeing those ROI calculations start to turn positive, and now it's starting to become a place that we can invest back into to really bring players back into the top of the funnel. That's going to be important for us over the next several years to rebuild the DAU and then ultimately, as Matt mentioned, continue to kind of monetize that off of that base.

Speaker #5: That wasn't the case last year, as we saw some of the challenges that we had in Jackpot Parties, as an example. We're clearly not going to declare victory here, but we're starting to see green shoots here, to Matt's point.

Speaker #5: We are seeing those ROI calculations start to turn positive, and now it's starting to become a place that we can invest back into to really bring players back into the top of the funnel.

Speaker #5: That's going to be important for us over the next several years to rebuild the DAO and then ultimately, as Matt mentioned, continue to kind of monetize off of that base.

Speaker #5: So right now, I think we see the green shoots. We are going to start to look at these investment opportunities here in the second half, and we'll continue to kind of monitor that on a weekly basis.

Oliver Chow: Right now, I think we see the green shoots. We are going to start to look at these investment opportunities here in H2, and we'll continue to kind of monitor that on a weekly basis.

Speaker #7: Thank you.

Justin Barratt: Thank you.

Speaker #1: Thank you. And our next question comes from the line of Jeff Stanchel from Seafold. Please ask your question, Jeff; your line is open.

Operator: Thank you. Our next question comes from the line of Jeff Stantial from Stifel. Please ask your question, Jeff. Your line is open.

Speaker #6: Hey, good afternoon, Matt. Oliver, thanks for taking our question. Matt, can you just share some of the feedback that you've been getting on the Cosmic Dual Cabinet since you launched in Australia and, to that end?

Jeff Stantial: Hey, good afternoon, Matt, Oliver. Thanks for taking our question. Matt, can you just share some of the feedback that you've been getting on the Cosmic Dual cabinet since you launched in Australia? To that end, what's your latest expectation for shift share recovery in the market for H2?

Speaker #6: What's your latest expectation for ship share recovery in the market through the back half of the year?

Speaker #2: Yeah, we launched that cabinet midway through the reporting period, so we saw the share tick up. We were kind of sub-10 in Q1, which, again, we weren't comfortable with.

Matt Wilson: Yeah, we launched that cabinet midway through the reporting period. We saw the share tick up. We were kind of sub 10 in Q1, which again, we weren't comfortable with that. Not our ambient share level in the Australian market. We aspire to something much higher than that. We're in the 20s now. We didn't get a full quarter of reporting period for the Cosmic Dual Screen. We ticked up nicely. That's off the introduction of a new piece of hardware that always drives buyer activity. What we said at the last call was, that'll give us the impetus to take share higher, but to really get it higher sustainably, we need a portfolio of games coming through to drive that share number. Excited to say we've got a Huff N' Puff game launching in the Australian market, which is very highly anticipated.

Speaker #2: That's not our ambient share level in the Australian market. We aspire to something much higher than that—we're in the 20s now. We didn't get a full quarter reporting period for the Cosmic Dual Screen.

Speaker #2: So we ticked up nicely. That’s off the introduction of a new piece of hardware, which always drives buyer activity. What we said at the last call was that’ll give us the impetus to take share higher, but to really get it higher sustainably.

Speaker #2: We need a portfolio of games coming through to drive that share number. Excited to say we've got a Huff and Puff game launching in the Australian market, which is very highly anticipated.

Speaker #2: We've got a product called Big Steam, which we're going to debut at the AGE show next week. I'm on a plane with Oliver on Thursday night to go down there and see customers and investors.

Matt Wilson: We've got a product called BIG STEAM, which we're going to debut at the AGE show next week. I'm on a plane with Oliver on Thursday night to go down there and see customers and investors. Behind that, we've got a new game out of the Elements studio, Drums Link, which is exciting. Then we've got Nate McGregor's first game. If you know Nate McGregor, he's a new game designer with us that we invested in down there called Grand Legion, which we're very excited about. The H2 is very stacked from a content perspective. The hardware's doing its job. High quality. That cabinet's done very well for us globally. It'll be about that combination of exciting new hardware and this content lineup that we have laid out for the H2.

Speaker #2: Behind that, we've got a new game out of the Elements Studio, Drums Link, which is exciting. And then we've got Nate McGregor's first game. If you know, Nate McGregor's a new game designer with us that we invested in down there, called Grand Legion, which we're very excited about.

Speaker #2: So, the second half is very stacked from a content perspective. The hardware is doing its job—it's high quality. That cabinet has done very well for us globally.

Speaker #2: So, it will be about that combination of exciting new hardware and the content lineup that we have laid out for the back half of the year.

Speaker #2: So we feel like we can keep the share moving in the right direction in the Australian market. And then also, importantly—you didn't ask, but I'll tell you—we're launching that same cabinet in Asia this quarter.

Matt Wilson: We feel like we can keep the share moving in the right direction in the Australian market. Also importantly, you didn't ask, but I'll tell you, is we're launching that same cabinet in Asia this quarter. We're excited about the opportunity for Cosmic Dual Screen up there too.

Speaker #2: So we're excited about the opportunity for Cosmic Dual Screen up there, too.

Speaker #6: Thanks very much.

Jeff Stantial: Thanks very much.

Speaker #1: Thank you. And our next question comes from the line of Kai Urman of Jefferies. Please ask your question, Kai. Your line is open.

Operator: Thank you. The next question comes from the line of Kai Erman of Jefferies. Please ask your question, Kai. Your line is open.

Speaker #4: Good morning, guys. I just wanted to understand the direction of your gaming margin for the rest of the year, given some of the one-off costs that you incurred over the first half. You obviously had a very strong second-quarter margin outcome given the GameOps mix, and you're expecting a greater mix to outright sale in the second half.

Kai Erman: Morning, guys. Just keen to understand the direction of your gaming margin for the rest of the year, given some of the one-off costs that you guys sort of incurred over the H1. You obviously had a very strong Q2 margin outcome given the gaming ops mix, and you're expecting a greater mix to outright sale in the H2. How should we think about the direction of the gaming margin?

Speaker #4: How should we think about the direction of the gaming margin?

Speaker #2: Yeah, perfect. I think you actually answered the question for me, which is fantastic. So, yeah, I mean, listen, I think across the board, we obviously saw strong expansion, 200 basis points across the enterprise.

Oliver Chow: Yeah. Perfect. I think you actually answered the question for me, which is fantastic. Yeah, listen, I think across the board, we obviously saw strong expansion, 200 basis points, across the enterprise, and it's really Matt and I kind of hammered this point home quite frequently on the call here, is the scaling recurring revenue. I think that's going to be the first foundational piece is that as we move forward, the underlying fundamentals will support kind of scaling margins over time. You're exactly right. In the H2, I would expect the mix effect to have, let's say, a moderate impact on margins. As game sales scales in the Q3 and then into the Q4, that will have some impacts.

Speaker #2: And it's really Matt and I kind of hammered this point home. Quite frequently on the call here, it's a scaling recurring revenue. And so I think that's going to be the first foundational piece is that as we move forward, the underlying fundamentals will support kind of scaling margins over time.

Speaker #2: You're exactly right. In the second half, I would expect the mix effect to have, I would say, a moderate impact on margins. So, as game sales scale in the third and then into the fourth quarter, that will have some impacts.

Speaker #2: But let's also think about UK taxes, and some of the corporate expenses that we've kind of guided to here, to $35 to $40 million, RAC.

Oliver Chow: That's also, you think about UK taxes, think about some of the corporate expenses that we've kind of guided to here, the $35 to 40 million. I would say look at margins on a trailing 12-month basis. That's how I would envision this, and I would expect us to continue to scale gaming margins as well as margins across the organization sustainably over the next several years. Yeah, that's kind of our goal, and a game plan here.

Speaker #2: So, I would say look at margins on a trailing 12-month basis. That's how I would envision this. And I would expect us to continue to scale gaming margins, as well as margins across the organization, sustainably over the next several years.

Speaker #2: But yeah, that's kind of our goal and the game plan here.

Speaker #4: Totally. Thanks, Oliver.

Kai Erman: Thanks, Oliver.

Speaker #2: Thank you.

Oliver Chow: Thank you.

Speaker #1: Thank you. The next question comes from the line of David Febris of Macquarie. Please ask your question. David, your line is open.

Operator: Thank you. Next question comes from the line of David Fabris of Macquarie. Please ask your question, David. Your line is open.

Speaker #7: Well, hi Matt. Hi Oliver. I mean, just continuing that focus on costs, I'm just curious—with AI, have you got any examples you can share in the business where you've got automation happening or augmentation efficiencies?

David Fabris: Oh, hi, Matt. Hi, Oliver. Just continuing that focus on costs. I'm just curious with AI, have you got any examples you can share in the business where you've got automation happening or augmentation efficiencies? Then going forward, if that's occurring, should we be expecting the jaws between revenue growth and cost growth to widen, so you're getting operating leverage? I guess that question assumes no change in revenue mix.

Speaker #7: And then going forward, if that's occurring, should we be expecting the jaws between revenue growth and cost growth to widen? So you're getting operating leverage, and I guess that question assumes no change in revenue mix.

Speaker #2: Yeah, we're going to try to keep our powder dry a little bit here. We've got a presentation next week. Hopefully, you'll join us, David.

Matt Wilson: Yeah. We are going to try to keep our powder dry a little bit here. We got a presentation next week. Hopefully, you will join us, David. You will hear from kind of our AI expert, Victor Blanco, who is a bit of an industry guru as it relates to AI transformation. Michael Lorelli, our Head of Strategy, and importantly, Nathan on the content, Nathan Drane on the content side. We are going to come with a lot of interesting use cases to give you real tangible examples about how this is playing through. I don't want to steal their thunder. Come and see us next week. It will be an interesting conversation. I would say we are at the very early stages of AI adoption. We are making the appropriate investments. We found the capacity to make some pretty significant investments here in 2026 to set up our transformation program.

Speaker #2: You'll hear from kind of our AI experts, Victor Blanco, who's a bit of an instigator as it relates to AI transformation. Michael earlier ahead of strategy and then important Nathan on the content, Nathan Drain on the content side.

Speaker #2: So we've got to come up with a lot of interesting use cases to give you real, tangible examples about how this is playing through. So I don't want to steal their thunder.

Speaker #2: Come and see us next week. It'll be an interesting conversation. But I would say we're at the very early stages of AI adoption. We're making the appropriate investments. We've found the capacity to make some pretty significant investments here in 2026 to set up our transformation program.

Matt Wilson: I would say we are at the very early stages of AI adoption. We are making the appropriate investments. We found the capacity to make some pretty significant investments here in 2026 to set up our transformation program. We talked about this on the last call. We have been at this for a number of quarters now. We had some external help kind of guide us on what are real tangible areas that we should be exploring. I know there is a lot of companies out there who are taking a bit of a shotgun approach to AI initiatives, and not finding true efficiencies. We want to be targeted about that. We don't want to be, to use the chairman's line, busy fools as it relates to exploring investment areas that aren't going to drive real-world examples.

Speaker #2: We talked about this on the last call. We've been at this for a number of quarters now. We had some external help kind of guide us on what are real, tangible areas that we should be exploring.

Matt Wilson: We talked about this on the last call. We have been at this for a number of quarters now. We had some external help kind of guide us on what are real tangible areas that we should be exploring. I know there is a lot of companies out there who are taking a bit of a shotgun approach to AI initiatives, and not finding true efficiencies. We want to be targeted about that. We don't want to be, to use the chairman's line, busy fools as it relates to exploring investment areas that aren't going to drive real-world examples. The things I have mentioned in the past, if not to steal too much of the thunder for next week, is porting costs.

Speaker #2: I know there are a lot of companies out there who are taking a bit of a shotgun approach to AI initiatives and not finding true efficiencies.

Speaker #2: We want to be targeted about that. We don't want to, to use the Chairman's line, be busy fools as it relates to exploring investment areas that aren't going to drive real world examples.

Speaker #2: But the things I've mentioned in the past, it's not to steal too much of the thunder for next week. It's porting costs. A lot of our game designers, who are very well compensated for all the right reasons, spend a huge amount of time porting their games into other channels, which is really redundant-type work.

Matt Wilson: The things I have mentioned in the past, if not to steal too much of the thunder for next week, is porting costs. A lot of our game designers who are very well compensated for all the right reasons, spend a huge amount of time porting their games into other channels, which is really redundant type work. We want them to be focusing all of their high-powered energy on the next big creative, innovative ideas. There is cost benefits there. There is also the focus we get from the design talent to be able to think about the next batch of big games. As an example, there is lots of opportunities on our platform side.

Matt Wilson: A lot of our game designers who are very well compensated for all the right reasons, spend a huge amount of time porting their games into other channels, which is really redundant type work. We want them to be focusing all of their high-powered energy on the next big creative, innovative ideas. There is cost benefits there. There is also the focus we get from the design talent to be able to think about the next batch of big games. As an example, there is lots of opportunities on our platform side. These tools like QuadCode, as an example, are very well-designed to help you modernize existing platforms in your business. Things that took years and millions of dollars in manpower can now be done with tokens and agents. I don't want to say too much more about that because Victor has a lot to say about it next week.

Speaker #2: We want them to be focusing all of their high-powered energy on the next big, creative, innovative ideas. So there's cost benefits there. There's also the focus we get from the design talent, to be able to think about the next batch of big games.

Speaker #2: As an example, there are lots of opportunities on our platform side. These tools—like Claude Code, for example—are very well designed to help you modernize existing platforms in your business. Things that took years and millions of dollars in manpower can now be done with tokens and agents.

Matt Wilson: These tools like QuadCode, as an example, are very well-designed to help you modernize existing platforms in your business. Things that took years and millions of dollars in manpower can now be done with tokens and agents. I don't want to say too much more about that because Victor has a lot to say about it next week. I would say no real signs of that AI cost efficiency in our numbers yet. If anything, at the moment, it is a bit of a drag on the margins because of the investments we are making. We have high conviction for the role that that can play on that spread between revenues and EBITDA over time. More to come next week, we are excited about the opportunity that AI presents for us. We are doing it in a very measured way.

Speaker #2: And so I don't want to say too much more about that, because Victor has a lot to say about it next week. But I would say there are no real signs of that AI cost efficiency in our numbers yet.

Matt Wilson: I would say no real signs of that AI cost efficiency in our numbers yet. If anything, at the moment, it is a bit of a drag on the margins because of the investments we are making. We have high conviction for the role that that can play on that spread between revenues and EBITDA over time. More to come next week, we are excited about the opportunity that AI presents for us. We are doing it in a very measured way.

Speaker #2: If anything, at the moment, it's a bit of a drag on the margins because of the investments we're making. But we have high conviction in the role that can play in closing the spread between revenues and EBITDA over time.

Speaker #2: So, more to come next week, but we're excited about the opportunity that AI presents for us. We're doing it in a very measured way.

Speaker #5: Yeah, perfect. Appreciate those snippets. I guess just one thing to clarify then, and maybe we'll hear more next week—just when you think about that combined R&D and CapEx versus revenue, I know you've guided to 17-odd percent this year.

David Fabris: Yeah. Perfect. Appreciate those snippets. One thing to clarify, and maybe we'll hear more next week. When you think about that combined R&D and CapEx versus revenue, I know you've got it to 17% odd this year. Should we expect that to trend down then with the benefits of AI?

Speaker #5: Should we expect that to trend down, then, with the benefits of AI?

Speaker #2: Potentially. Potentially. I don't want to put out any firm guidance on that now, but as logic stands, if there are efficiencies there, it's either you trim your investment or you reinvest that into more incremental productive capacity, more embedded games.

Matt Wilson: Potentially. Potentially. I don't want to put out any firm guidance on that now, but as logic stands, if there's efficiencies there, it's either you trim your investment or you reinvest that into more incremental productive capacity, more and better games. That's a decision for the business to make down the line. Yeah, nothing in terms of more formal guidance about that.

Speaker #2: That's a decision for the business to make down the line. But yeah, nothing in terms of more formal guidance about that.

Speaker #5: Perfect. Thank you.

David Fabris: Perfect. Thank you.

Speaker #1: Thank you. And our next question comes from the line of Adrian Lammy of Citi. Please ask your question. Adrian, your line is open.

Operator: Thank you. Our next question comes from the line of Adrian Lemme of Citi. Please ask your question. Adrian, your line is open.

Speaker #6: Good morning, Matt and Oliver. I just wanted to get my head around the corporate costs. They have been whipping around a little bit. They were $43 million in the first quarter of '29.

Adrian Lemme: Good morning, Matt and Oliver. I just want to get my head around the corporate costs. They have been whipping around a little bit. They were $43 million in Q1 and $29 million this Q2. Is that mostly just lower legal costs Q2 bringing it down? What gets you back up to sort of $35 million to $40 million over the next 2 quarters, please?

Speaker #6: This quarter—is that mostly just lower legal costs this quarter bringing it down? And what gets you back up to sort of $35 to $40 million over the next two quarters, please?

Speaker #2: Yeah, great question. I know there's been a lot of focus on corporate costs here coming out of this print. I've been pretty clear about kind of the range that we're going to participate in—roughly, call it that $35 to $40 million range.

Oliver Chow: Yeah. Great question. I know there's been a lot of focus on corporate costs here coming out of this print. I've been pretty clear about kind of the range that we're going to participate in. Roughly, I'd call it that $35 million to $40 million range. If you look at Q1, that kind of skewed a little heavier. Then Q2 it came down. On average, you're still kind of in that mid-30s range. As we kind of move forward, there's always going to be timing of investments that Matt kind of mentioned. There's going to be obviously timing of legal costs. By and large, I would imagine that we're in this kind of 35 to 40 range as we move forward. We'll always kind of evaluate again, what the right level of investments are across. Is it driving high returns?

Speaker #2: If you look at the first quarter, that kind of skewed a little heavier. And then second quarter, it came down. But on average, you're still kind of in that mid-30s range.

Speaker #2: As we kind of move forward, there's always going to be timing of investments, as Matt kind of mentioned. By and large, I would imagine that we're in this kind of 35 to 40 range as we move forward.

Speaker #2: And we'll always kind of evaluate again what the right level of investments are across. Is it driving high returns? Are there other efficiency opportunities over time?

Oliver Chow: Are there other efficiency opportunities over time? That's going to be a journey that we take over the next several years.

Speaker #2: That's going to be a journey that we take over the next several years.

Speaker #6: Thank you.

Adrian Lemme: Thank you.

Speaker #1: We will now take our next question from the line of Liam Robertson of Jordan. Please ask your question, Liam. Your line is open.

Operator: We will now take our next question from the line of Liam Robertson of Jarden. Please ask your question, Liam. Your line is open.

Speaker #4: Thanks. Morning, guys. Just quickly on the UK tax increases—are you able to help us quantify the annualized EBITDA drag? And then, just keen to get a sense of how much you might be able to offset from fast changes moving forward.

Liam Robertson: Thanks. Morning, guys. Just quickly on the UK tax increases, are you able to help us quantify the annualized EBITDA drag? Just keen to get a sense of how much you might be able to offset from price changes moving forward. Thanks.

Speaker #4: Thanks.

Speaker #2: Yeah, I think that's actually kind of played out exactly how we had anticipated. Right now, it's currently a mathematical formula in terms of the increase in the tax percentage.

Oliver Chow: Yeah, I think that's actually kind of played out exactly how we had anticipated. Right now, it's currently a mathematical formula in terms of the increase in the tax percentage. We'll continue to kind of see how that plays out here in the H2. As I kind of mentioned on the call earlier, we do expect that to have some level of impact here through the rest of this year, and then we'll lap that next year to get back to our requisite growth rates. The one thing we are doing is we are working with our customers and our partners to figure out how we can best move forward together in this new dynamic regime. Yeah, I would expect the same level of cost impacts here, both at the top line and EBITDA that we had talked about briefly previously. No major changes at this point.

Speaker #2: We'll continue to kind of see how that plays out here in the second half, as I mentioned on the call earlier. We do expect that to have some level of impact here through the rest of this year, and then we'll lap that next year to get back to our requisite growth rates.

Speaker #2: The one thing we are doing is working with our customers and our partners to figure out how we can best move forward together in this new, dynamic regime.

Speaker #2: So yeah, I would expect the same level of cost impacts here, both at the top line and at EBITDA, that we had talked about briefly previously.

Speaker #2: So, no major changes at this point. We'll continue to monitor it as we head into the second half.

Oliver Chow: We'll continue to kind of monitor it as we head into the H2.

Speaker #4: Thanks.

Liam Robertson: Thanks.

Speaker #1: Thank you. And our next question comes from Mark Wilson of RBC. Please ask your question, Mark. Your line is open.

Operator: Thank you. Our next question comes from Mark Wilson of RBC. Please ask your question, Mark. Your line is open.

Speaker #5: Yeah, thanks very much, Matt and Oliver. Matt, I noted your comments about the timing of gaming machine sales, which can be quite volatile and lumpy.

Mark Wilson: Yeah, thanks very much, Matt and Oliver. Matt, I note your comments about the timing of gaming machine sales, which can be quite volatile and lumpy. You said with some degree of certainty that there was a deferral in the period. Can you just sort of elaborate on that? What has actually happened and what you are expecting to occur in Q3 and Q4?

Speaker #5: But you said, with some degree of certainty, that there was a deferral in the period. Can you just sort of elaborate on that? What has actually happened, and what are you expecting to occur in Q3 and Q4?

Speaker #2: Yes. No relation, Mr. Wilson. Yeah, so there was some deferral of new openings from the second quarter into the second half. So we've got line of sight on those.

Matt Wilson: Yes. No relation, Mr. Wilson. Yeah, there was some deferral of new openings from Q2 into H2. We've got line of sight on those. They're contracted. We know they're going to happen. There's good line of sight there. We also had some deferral of some adjacency sales. These are just things that are moving across that invisible calendar line from quarter to quarter. Again, contracted deals that are signed up, that are high conviction that will ship. Yeah, those things bolster H2. We have high conviction around those set of deals.

Speaker #2: They're contracted. We know they're going to happen, so there's good line of sight there. We also had some deferral of some adjacency sales, so these are just things that are moving across that invisible calendar line from quarter to quarter.

Speaker #2: So again, contracted deals that are signed up, that are high conviction, that will ship. So, yeah, those things bolster the second half. So we have high conviction around that set of deals.

Speaker #5: Yeah, that's great, thanks. And just on systems again, they're very volatile from year to year, but it does look as though it was—should we consider last year as just being abnormally strong and this year abnormally weak, and expect to normalize over time?

Mark Wilson: Yeah, that's great. Thanks. Just on systems, again, are very volatile from year to year, it does look as though, should we consider last year as just being abnormally strong and this year abnormally weak and expect to normalize over time?

Speaker #2: Yeah, and you know, this part of the business world—there are some really nice recurring parts to that part of our portfolio: the maintenance deals, the Illinois monitoring system, software sales—nice recurring parts of the business that are very predictable.

Matt Wilson: Yeah, you know this part of the business well. There's some really nice recurring parts of our portfolio, the maintenance deals, the Illinois monitoring system, software sales, nice recurring parts of the business that are very predictable. The kind of cyclicality comes with hardware sales, and we had a huge amount of activity last year with some major accounts upgrading their floor. That'll bounce back over time. It's similar to the CapEx cycle on machine sales. As we introduce new technology, new feature sets, new kind of software modules that will live and run on these hardware sales, that'll inflect higher over time. It's unusually soft at the moment, but we expect that to rebound.

Speaker #2: That kind of cyclicality comes with hardware sales. We had a huge amount of activity last year, with some major accounts upgrading their floor.

Speaker #2: That all bounced back over time. It's similar to the CapEx cycle on machine sales. As we introduced new technology, new feature sets, new kinds of software modules that live and run on these hardware sales, that'll inflect higher over time.

Speaker #2: So it's just unusually soft at the moment, but we expect that to rebound. Yeah, and I think—

Oliver Chow: Yeah. I think my one add there is the recurring revenue in systems remains very strong. It's over $100 million-plus in recurring revenue. That's a great foundation for us as we look to innovate on both hardware and software.

Speaker #3: My one add there is the recurring revenue in Systems remains very strong. It's over $100 million in recurring revenue, so that's a great foundation for us as we look to innovate on both hardware and software.

Speaker #5: That's great. Thanks very much.

Mark Wilson: That's great. Thanks very much.

Speaker #1: Thank you. The next question comes from Andre Vermeer of UBS. Please ask your question, Andre. Your line is open.

Operator: Thank you. The next question comes from Andre Fromyhr of UBS. Please ask your question, Andre. Your line is open.

Speaker #6: Thanks for giving me an opportunity for another one. I just want to follow up, perhaps with Oliver, on the leverage strategy and understand the reiteration for going below 3 times by mid next year.

Andre Fromyhr: Thanks for giving me an opportunity for another one. I just wanted to follow up perhaps with Oliver on the leverage strategy. Understand the reiteration for going below 3x mid-2025. From a mathematical perspective on how that is calculated, am I right in thinking that if you're on track to eventually get to your 2028 targets, that the growth in EBITDA is going to do most of the work there? In which case, is there a point where you end up having enough capacity to go hard again on the buyback or alternative uses of capital? Are you just more willing to sort of go materially below that level, if that's the way that the market plays out?

Speaker #6: But from a, I guess, a mathematical perspective on how that is calculated, am I right in thinking that if you're on track to eventually get to your 2028 targets, that the growth in EBITDA is going to do most of the work there?

Speaker #6: In which case, is there a point where you end up having enough capacity to go hard again on the buyback or alternative uses of capital?

Speaker #6: Or are you just more willing to sort of go materially below that level if that's the way that the market plays out?

Speaker #2: Yeah, great question. I think what we've proved over the last five years is that we remain flexible in how we execute our capital allocation strategy.

Oliver Chow: Great question. I think what we've proved over the last five years is that we remain flexible in how we execute our capital allocation strategy. We always kind of reassess market dynamics on a quarterly, monthly, really daily basis. At this point, we've provided a guidance range from a leverage point of view that we're convicted to. Matt kind of mentioned that earlier. I did as well. Buybacks will continue to be a capital allocation pillar for us. There's no doubt about it. If you saw what we did in this past quarter, $134 million of buyback. A lot of that was just acceleration of buybacks that we've kind of forecasted on an annualized basis.

Speaker #2: And we always kind of reassess market dynamics on a quarterly, monthly, really daily basis. And so, at this point, we provided a guidance range from a leverage point of view that we're convicted to.

Speaker #2: So, Matt kind of mentioned that earlier. I did as well. Buybacks will continue to be a capital allocation pillar for us—there's no doubt about it.

Speaker #2: If you saw what we did in this past quarter—$134 million of buyback—a lot of that was just acceleration of buybacks that we've kind of forecasted on an annualized basis.

Speaker #2: And so right now, our focus at the moment is to delever and pay down debt here over the next several quarters, get to that IG-level kind of leverage profile that we mentioned on the call several times. That's going to be the focus in the near term.

Oliver Chow: Right now our focus at the moment is to delever and pay down debt here over the next several quarters, get to that IG level kind of leverage profile that we mentioned on the call several times. That's going to be the focus in the near term.

Speaker #6: Okay, thank you.

Andre Fromyhr: Thank you.

Speaker #1: Thank you. That is the end of the question and answer session today. I'd now like to turn the conference back to Matt for his closing comments.

Operator: Thank you. That is the end of the question and answer session today. I'd now like to turn the conference back to Matt for his closing comments.

Speaker #2: On behalf of the leadership team, I'd just like to take this opportunity to thank our employees globally for their ongoing hard work and dedication.

Matt Wilson: On behalf of the leadership team, I'd just like to take this opportunity to thank our employees globally for their ongoing hard work and dedication. You are awesome. It's a privilege to represent you on this call. For those on the call, we appreciate your interest on this Q2 results, for those traveling to Sydney for the AGE show, we look forward to seeing you there to show you our product lineup and our AI enhancements. Thanks for dialing in.

Speaker #2: You are awesome. It's a privilege to represent you on this call. And for those on the call, we appreciate your interest in these second quarter results.

Speaker #2: And for those traveling to Sydney for the AGE show, we look forward to seeing you there to show our product lineup and our AI enhancements. Thanks for dialing in.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

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Q2 2026 Light & Wonder Inc Earnings Call

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