Light & Wonder (LNW) has reaffirmed its outlook for 2026 following a strong performance in its Gaming and iGaming sectors, which helped to balance out a challenging quarter for SciPlay.
In the second quarter, LNW reported a significant increase in profits, outpacing revenue growth. While revenue saw a modest rise of 2% year-on-year, reaching $828 million, the consolidated Adjusted EBITDA surged by 9% to $383 million. Additionally, net income rose by 26% to $120 million, and adjusted net profit after tax and amortization climbed 16% to $156 million.
The company continues to project mid- to high-single-digit growth in Adjusted EBITDA for 2026, anticipating that results will mirror those of 2025, with stronger earnings expected in the latter half of the year, particularly in the fourth quarter.
CEO Matt Wilson emphasized during the earnings call that the narrative of the second quarter aligns with their previous reports, highlighting a diverse, high-margin portfolio bolstered by enduring franchises that consistently deliver results.
Recurring revenue played a key role in enhancing margins, increasing by 6% year-over-year to $580 million, which constituted about 70% of the quarterly revenue. This growth contributed to a 200 basis point improvement in LNW’s consolidated Adjusted EBITDA margin, now at 46%.
Gaming revenue rose by 5% to $554 million, with Gaming Operations revenue climbing 18% to $247 million. The company successfully added 652 premium units, marking 24 consecutive quarters of growth in premium installations, which now account for over 58% of the North American installed base, excluding Grover.
Wilson noted that the improved profitability reflects a strategic shift towards higher-quality revenue rather than merely cutting costs, stating, “It’s less about cost reduction and more about intentionally focusing on recurring revenue.”
Looking ahead, LNW anticipates a rebound in gaming machine sales in the latter half of the year. Although sales revenue for gaming machines decreased by 4% to $184 million, the decline was attributed to the timing of casino openings and expansions rather than a drop in demand. Wilson assured that new openings that were postponed from the second quarter will take place as contracted.
Additionally, the regulatory conversion at Resorts World New York City has been completed, ending the removal of non-premium machines that had impacted growth in the previous quarters. CFO Oliver Chow mentioned that without the effects from Resorts World, LNW would have seen over 1,000 net additions in installed units this quarter.
However, SciPlay continues to face challenges, with segment revenue falling 9% to $182 million due to a downturn in the social casino market. Average monthly active users dropped by 12% to 4.6 million, and the number of monthly paying users fell by 13%. Despite this, average monthly revenue per paying user increased by 4% to $133.80, and direct-to-consumer revenue soared by 51% to a record $53 million, making up 29% of SciPlay's total revenue.
Management has acknowledged that SciPlay is not meeting performance expectations.