L&W’s Q3 Remains Strong Despite Court Loss Against Aristocrat

Leading cross-platform game developer Light & Wonder has reported its Q3 financials, highlighting a strong balance sheet despite its court loss against Aristocrat. As the company’s surge continued, it recorded its 14^th consecutive quarter of year-on-year growth.

The Business Remained Strong

According to its Q3 report, Light & Wonder recorded Q3 revenue of $817 million, marking a 12% increase year-on-year. As mentioned, this was the 14^th quarter of YOY growth in a row and was driven by strong performance across all of Light & Wonder’s divisions (Gaming, iGaming and SciPlay).

Gaming revenue, for context, increased by 15% to $537 million, underpinned by strong gaming machine sales. SciPlay and iGaming, on the other hand, saw their revenues increase by 5% (to $206 million) and 6% (to $74 million) respectively.

In the meantime, the company’s net income experienced a drop to $64 million because of internal restructuring and legal costs. The company noted that the decrease from $80 million in net income in Q3 2023 was further exacerbated by the fact that last year’s result was boosted by a non-cash foreign currency transaction.

Light & Wonder’s consolidated adjusted EBITDA for Q3 stood at $319 million, up 12% year-on-year. The company said that this increase was due to revenue growth and sustained margin strength across its businesses.

Net cash from operating activities plummeted from $204 million in Q3 2023 to $119 million in Q3 2024 because of unfavorable changes in working capital. Free cash flow also experienced a decline, falling from $123 million to $83 million for the same reasons.

The company ended the quarter with an outstanding debt of $3.9 billion. The quarter also saw it return $44 million to shareholders by buying 400K shares back.

L&W Continues to Remove Dragon Train Machines

In September, Light & Wonder received a preliminary injunction relating to future sales and distribution of its Dragon Train game. For context, the company lost a legal battle in court against Aristocrat, which alleged that the Dragon Train game had infringed on its intellectual property.

In October, L&W highlighted a number of initiatives to mitigate the business disruption from the order. These included leveraging a diversified portfolio of successful game franchises and the development of new iterations of Dragon Train, as per the terms of the court’s ruling.

In an update on the matter, Light & Wonder noted that, as of the time of its Q3 update, it had successfully replaced or converted approximately 95% of the Dragon Train terminals.

Despite the significant setback, L&W reiterated its commitment to executing its long-term growth strategy and progressing toward its 2025 targets.

Executives Were Happy with the Results

Executives praised what was Light & Wonder’s 14^th quarter of YOY growth and 9^th quarter of double-digit consolidated revenue growth. Matt Wilson, the company’s president and CEO attributed the results to the collective efforts of the company team across all businesses and the diversity of Light & Wonder’s portfolio.

We will continue to execute on our cross-platform strategy focused on innovative content and products as a leading global end-to-end gaming technology solutions provider.

Matt Wilson, president & CEO, Light & Wonder

Oliver Chow, Light & Wonder’s chief financial officer, also commented on the matter, lauding the highly cash-generative nature of the company’s business. He noted that his team plans to further accelerate its value creation through continued R&D and capex investments and share buyback initiatives.

Chow reaffirmed a $1.4 billion consolidated adjusted EBITDA target for 2025.