Light & Wonder Q4 2024 Earnings Report

Light & Wonder EPS Results

• Actual EPS: N/A
• Consensus EPS: $1.08
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Light & Wonder Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $798.86 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Light & Wonder Announcement Details

• Quarter: Q4 2024
• Date: 2/25/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, February 25, 2025
• Conference Call Time: 4:30PM ET

Light & Wonder (NASDAQ:LNW) is a cross-platform global games company, which engages in the development of content and digital markets. It operates through the following segments: Gaming, SciPlay, and iGaming. The Gaming segment includes the design, manufacture, marketing, and distribution of portfolio of gaming products and services. The SciPlay segment involves the development and publishing of digital games on mobile and web platforms. The iGaming segment focuses on the provision of digital gaming content, distribution platforms, player account management systems, and services. The company was founded on July 2, 1984 and is headquartered in Las Vegas, NV.

Light & Wonder Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Welcome to the Light and Wonder twenty twenty four Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. I'll now turn the call over to Nick Zangari, Senior Vice President of Investor Relations and Treasury.

[Nick Zangari, Senior Vice President-Investor Relations at Light & Wonder]

Thank you, operator, and welcome, everyone, to our fourth quarter and full year twenty twenty four earnings conference call. With me today are Matt Wilson, our President and CEO and Oliver Chow, our CFO. During today's call, we will discuss our fourth quarter and full year results and operating performance followed by a question and answer session. Today's call will contain forward looking statements that 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 on our website and our filings with the SEC.

[Nick Zangari, Senior Vice President-Investor Relations at Light & Wonder]

We will also discuss certain non GAAP financial measures. A description of each non GAAP measure and a reconciliation of each non GAAP measure to the most directly comparable GAAP measure can be found in our earnings release and earnings presentation located in the Investors section of our website. We will also discuss certain combined financial information calculated as the historical results of the company plus the preliminary unaudited historical results of Grover Charitable Gaming for the period stated as well as run rate financial information. This information is for informational purposes only and does not purport to represent what the company's financial position and results of operations would have been if the transactions had occurred at specified dates or maybe in the future after giving effect to the acquisition. As a reminder, this conference call is being recorded.

[Nick Zangari, Senior Vice President-Investor Relations at Light & Wonder]

A replay of this webcast and accompanying materials will be archived in the Investors section of our website. With that, I will now turn the call over to Matt.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Thanks, Nick, and hello, everyone. Happy to have you on the call today. 2024 was another year of significant progress here at Light and Wonder as we once again achieved double digit consolidated revenue and EBITDA growth year over year with record revenues and profitability across all three businesses, cementing our commitment to deliver sustainable growth underpinned by our differentiated strategy and product roadmap. In fact, our team and products are stronger and better than ever as evidenced by our consistent execution and focus on operational excellence, highlighted by growth and share gains across the key segments of our business throughout the year. We will continue to focus on top and bottom line growth without compromising investments for future growth.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

As As we shared last week, we have reached a definitive agreement to acquire Grover Gaming's charitable gaming business for an upfront purchase price of $850,000,000 equating to a multiple of 7.7 times Grover adjusted EBITDA for 2024 and a 7.1 times multiple based on Grover run rate adjusted EBITDA with the purchase multiple expected to only further be reduced if we achieve the up to $200,000,000 earn out provision in the agreement. Charitable gaming is a form of regulated gaming, where a portion of the proceeds are given to charity. This is a compelling market with high barriers to entry, providing a formidable competitive advantage while benefiting worthy calls. Grover is one of the leading suppliers in charitable gaming with an attractive financial profile, strong customer relationships and an appealing growth outlook. We value the enviable economics of our installed base business and will continue to invest organically and inorganically to further expand the fleet.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Grover has an attractive recurring revenue model with a loyal and sticky customer base that is core to our strategy. This will be the newest adjacency where we intend to deploy our robust R and D engine and more broadly distribute our variety of hit franchises and games along with creating further expected synergies. Grover has over 10,000 installed base units deployed over 1,500 locations in five states. This presented a compelling opportunity to further enhance our cost platform offering and more broadly diversify our operations with a quality complementary business that will allow us to distribute our proven content across wider customer and player segments where we are currently not represented in North America. With that, I'd like to turn our attention back to the operational highlights noting that we executed and delivered on the year on year consolidated EBITDA growth guidance we provided last quarter.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Gaming continues to deliver exceptional results demonstrating strong growth from our broad array of franchises and well rounded gaming portfolio. Throughout the year we made significant progress in expanding our installed base footprint. During the quarter we added more than eight fifty units in North America on a sequential basis marking the eighteenth consecutive quarter of premium installed base growth which continues to be north of 50% of the total North American installed base. Importantly we demonstrated the ability to not only preserve the impact of Dragon Train fleet but also put up strong numbers more broadly and in other segments outside of premium such as Class II among others. In fact we index in 11 of the top 25 new premium leased and WAP gains in Iowa's most recent gain performance report.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

As mentioned in our prior earnings call North American revenue per day would be impacted in the fourth quarter. However we are seeing strong performance out of the gate from half and even more hard hat which was deployed on the Cascada dual screen cabinet and is now indexing well above the game it largely replaced on a same store basis in many key markets. This reflects the team's dedication to build great franchise extensions and we expect to do the same across all of our brands. I'm encouraged and expect gaming operations to return to normalized growth in 2025 underpinned by the robust roadmap we have in place. Another key highlight for the year is the leaps and bounds progress we've made in game sales with expansion into new adjacencies including Oregon State and Canadian Video Lottery terminal and continued momentum internationally.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

In North America, we held number one ship share in both the second and third quarters, continuing the momentum in the fourth quarter with the year over year growth in North American replacement units. In fact, we continue to hold number one position in the fourth quarter according to Eiler's newly released U. S. And Canada cabinet sales and lease report. Similarly, we continue to maintain the traction we gained in Australia as the number one ship in 2024, our first tier for Light and Wonder as we continue to broaden our international presence with a wide range of upcoming opportunities.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

As one of the leading end to end gaming solutions provider, we have an equally attractive systems and table products portfolio, which further enhance our offerings to operator partners to serve and optimize casino floors. In addition to our industry leading casino management systems and hardware, we've also bolstered our software capabilities through innovation and partnerships which led to over $300,000,000 in systems revenue for the year, a 13% increase year over year. The ability to execute our gaming strategy continues to be a key driver of our success in share gains. In fact, the power of our franchises and global scale gives me confidence that that we can continue to grow the business sustainably in the near future given the many opportunities on the horizon. On to Slide Play, where it was another record breaking year on several fronts as the business surpassed $820,000,000 in revenues underpinned by healthy engagement and monetization.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

The investment we made in Sideplay is bearing fruit and the teams are collaborating cohesively on game development and data analytics leading to several successful game launches across the organization. Our four largest games all delivered record revenues for the year with QuickHit and 88 fortunes continuing that trend in the fourth quarter. Since Light and Wonder's buyout of Fly Play in late twenty twenty three, our social casino business has outpaced the broader market, extending its run of outperformance over the past two years. During this stretch, we refined the site plan engine, enhanced the monetization blueprint diligently to align with our growth trajectory. Throughout the course of the year, we've also crafted a viable path to prudently grow our direct to consumer platform sustainably.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

I'm happy to share that we grew DTC to over 13% of revenue in the quarter as we continue to roll out this offering in phases and eventually to the games that don't currently offer the DTC platform. Monetization continues to be a key focus, driving record levels of average revenue per daily active user and average monthly revenue per paying user for the quarter and the year. Updau is trending steadily over $1 as projected, reflecting our shift towards engaging higher quality payers. Importantly, we are committed to maintaining the momentum of our flywheel and continue to give the team the opportunity to engage in prudent incremental user acquisition spend as you will likely see sequentially in the first quarter where we typically see better returns versus higher acquisition costs around the holidays. Slide five continues to be a vital piece of our cross platform strategy as we focus on the pollination of key learnings across the businesses.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

We are constantly evolving the engaging features our platform has to offer. Our team has done a great job of staying nimble and adapted to changing player dynamics. One of our biggest strengths lies with the real time feedback that we get from our various live ops and metagame deployments to test the viability of these features which has been a major contributor to our outperformance over the past two years. On rare occasions, the end result of these trials do not meet our internal expectations as we experienced a jackpot party in the quarter. However, the valuable insight that we gained during the process enables us to share these findings across our games to optimize the portfolio.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Overall, I'm pleased with the execution of the team and expect to see healthy growth in 2025 as we execute on the different phases of our strategic initiatives. Turning to iGaming, where Light and Wonder's proven OGS content aggregator and the North American market continue to expand and grow to record GGR volumes in the quarter and 2024. Our strategy is simple yet effective and that is to leverage our experience and aggregation platform to offer content studios and operator partners on our network the ability to scale meaningfully alongside our best in class first party content. In fact, we executed a plan with several key launches and released over 1,000 games on the OGS, surpassing this milestone for the first time in 2024. Most recently, we launched our chart topping Huff and Mall Puff game with FanDuel across North America, our best ever game release expanding the omnichannel releases of our proven franchises as the brand continues to gain momentum and exposure in both the land based and digital markets.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

We plan on the continued proliferation of our R and D engine across the digital domain on our content first strategy with accelerating releases of first party content in the future. Lightning Box continues its run with strong launches from the Thundering Series and Egg Link with 35% year over year GGR growth in the quarter. We also launched Rainbow Riches Dreampots, a wide area progressive jackpot game into The UK market as we continue to focus on driving further success of market attuned game content development. Additionally, we expanded our adjacent offering of the first cross platform marketing jackpot product Super Kenya, which launched in Quebec with WonderDrop, another new marketing jackpot offering which spans across twenty first party content games with Penn in Michigan. Separately, following a thorough strategic review, we've made the decision to discontinue and divest our live casino business.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

This reflects our commitment to allocating resources to the most impactful parts of the business where we have good line of sight to meaningful returns on our investment. While we're still in the relatively early days of investing in the business, we strive to stay nimble as an organization and are thus focusing on the risk reward profile of our other businesses which have better visibility to superior returns relative to live casino. You may have seen our recent announcement that we've appointed Simon Johnson to lead the iGaming business. His extensive experience as a seasoned gaming executive and most recently as the Managing Director of our international gaming business offers us a fresh perspective on our gaming operations and strategy. Sarma's familiarity with the fragmented yet growing global gaming market provides us with insights to help devise regionalized plans for both mature and emerging markets.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

This includes Brazil where iGaming was recently legalized. As I reflect upon 2024, the R and D investments that we've made were vital to the success and share gains of our business. Importantly, we continue to build our talent pool adding more designers and expanding our studios as we onboarded key hires in North America and Australia. Our bench strength is a key differentiator as we were able to fill key executive roles from within the company.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

To that extent, I'd also like

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

to congratulate Nathan Drain on his promotion to Chief Product Officer of Light and Wonder. Nathan is a tremendous asset to the company and a great leader for our critical R and D function. He has a clear and robust content roadmap and will ensure our continued success, positioning us for growth in the near and long term. Additionally, Rich Schneider will move into the role of senior advisor to the business. Rich was instrumental in orchestrating the product roadmap and R and D structure at Light and Wonder during the transformational year.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

And I'm very excited for us to continue on this growth journey together. Importantly, Nathan's appointment to manage the global product portfolio across all segments will further enhance our cross platform strategy enabling continuous integration of our content to drive efficiency and enhancement to the quality of our offerings. Our R and D engine will be further amplified, driving sustainable growth through our businesses including charitable gaming, generating outsized returns on our investment. In summary, our execution and performance last year gives me great confidence in achieving our target. I want to thank our team, the board and our shareholders for their unwavering support as we kick off 2025.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

We are fortunate to have a very supportive shareholder base that embraces our vision as a global gains company. As we approach the second anniversary of our successful secondary listing on the ASX with ongoing collaboration with our global shareholders, we are continuing to explore ways to refine our U. S. And Australian capital structure. The company remains focused on enhancing the liquidity and market capitalization of its ASX listing.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

And as part of this, we'll be considering a dual primary or a sole listing on the ASX. Accordingly, we've engaged advisors to evaluate potential strategies to achieve this objective and we'll be seeking feedback from key stakeholders to ensure an optimum outcome for Light and Wonder shareholders. With that, I'll turn it over to Oliver to go through the financials.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Thanks, Matt. Glad to be here today with you all to share our fourth quarter and full year '20 '20 '4 results. The performance we delivered reflects the sound financial and operational foundation that we have built and the execution prowess we pride ourselves on as we experience a fourth straight year of double digit consolidated AEBITDA growth. The fourth quarter also represented the fifteenth consecutive period of year over year consolidated revenue growth as we continue to execute on our key initiatives. Consolidated revenue for the year was $3,200,000,000 a 10% increase from the prior year period on strong performance across our business units.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Fourth quarter consolidated revenue was $797,000,000 up 4% year over year, driving outperformance to the consolidated A EBITDA guidance we previewed on the last earnings call. Full year operating income was $668,000,000 a 29% increase year over year primarily on higher revenue. Fourth quarter operating income grew 8% to $168,000,000 translating into a diluted net income per share of $1.2 for the quarter, up from the $0.73 in the prior year period. Similarly, we saw strong growth in the full year period as diluted net income per share more than doubled from $1.75 in 2023 to $3.68 in 2024. Consolidated AEBITDA for 2024 was $1,240,000,000 an 11% increase from 2023.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Of this, dollars $315,000,000 came in the fourth quarter, a 4% increase compared to the prior period and above the low single digit year over year growth previewed last quarter. Adjusted MPAD A for 2024 totaled $480,000,000 representing a full year growth rate of 24%. The fourth quarter contributed $127,000,000 to this result as we track positively towards our 2025 targeted adjusted MPAD A range. Operating cash flow for the full year was $632,000,000 with the quarter generating $2.00 $2,000,000 The fourth quarter results was driven by an increase in earnings and favorable changes in working capital. As we close the chapter on another exceptional year for Light and Wonder, we are executing towards our consolidated EBITDA target of $1,400,000,000 with focus and planning centered around future financial and operational success as we continue to be a compounder of growth for years to come.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Turning to the business units. In gaming, revenue in the quarter was $515,000,000 an increase of 4% year over year, primarily led by systems growth of 24%. Cable products and gaming operations also grew 104% respectively, highlighting the strength of our overall portfolio. EBITDA was up five percent to $257,000,000 on revenue growth and a EBITDA margin expansion with margins up 100 basis points year over year to 50% in the quarter as we continue to focus on business optimization initiatives while investing for future growth. Importantly, we delivered 12% year on year annual growth in both revenue and AEBITDA and expect this momentum to continue in the new year.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

We made significant strides in gaming operations given the quality of our product offering and ended the year with over 34,000 installed base units in North America with approximately 2,800 units added throughout the year. Overall, North America revenue per day grew 2% for the year with impact from the injunction largely confined to the fourth quarter as discussed, demonstrating the power and diversity of our global game franchises. Global gaming machine sales were $195,000,000 in the quarter on continued North America momentum with unit shipments up 25% year over year in the quarter as we further capitalize on the coveted number one ship share position in North America that we've held over the prior two quarters. For the year, we delivered $865,000,000 in revenue on over 43,600 unit sales, an increase of 16% in units shipped globally compared to the prior year. Additionally, the quality of our offering remains strong as our cabinets continue to command a healthy average sales price of approximately $18,400 both in the quarter and for the year.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Systems realized $88,000,000 of revenue in the quarter, which contributed to the full year revenue of $3.00 $2,000,000 These are 2413% increases compared to the respective prior year periods, unhealthy market demand for our hardware and software services, evidenced by a number of landmark contracts signed in the year. Separately, tables delivered a 10% revenue gain in the quarter to $57,000,000 on timing of utility sales in North America and Asia. We continue to maintain our market leading position in the business with $211,000,000 in full year revenue as we progress on innovations with the enhanced product offerings in this segment. Our gaming performance truly illustrates the breadth and depth of our product portfolio, an embodiment of the returns that we're seeing from continued investments in CapEx and R and D as we expect to return to normalized above market growth levels in 2025, while we expect meaningful game sales opportunities scaling throughout the year as compared to 2024, where we had concentrated new and expansion sales in the first quarter in Asia. Moving on to SciPlay.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Full year revenue grew 6% to $821,000,000 of which $2.00 $4,000,000 was realized in the fourth quarter, underpinned by a diverse portfolio supported by our advanced SciPlay engine. EBITDA increased 7% year over year to a record $74,000,000 with margin increasing by 200 basis points to 36% in the quarter. This was largely driven by strategic user acquisition spend and the expansion of our direct to consumer platform. Our continued focus on our refined UA strategy and phased DTC deployment throughout the year enabled us to deliver $272,000,000 in EBITDA for the year, an increase of 12% compared to the prior period. The commitment to scaling the business in a measured manner has proven beneficial as reflected in our various monetization metrics.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Average revenue per daily active user grew 6% year over year to a record $1.06 in the quarter. And average monthly revenue per paying user scaled 3% to just over $117 Furthermore, payer conversion increased to 10.9% as we continue to focus on payer monetization. The quarter's trend mirrors the full year momentum of KPIs, where we grew average revenue per daily active user by 11% and average monthly revenue per paying user by 10 against 2023. Sciplay's outperformance can be largely attributed to the investments we've made in the business. Whether it's a site play engine, DTC, talent or UA spend, our team continues to execute at a high level and to further enhance the monetization flywheel sustainably over time.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

This along with our upcoming game rollouts are expected to provide ample runway for growth and profitability and expect SciPlay to further contribute and deliver considerable value to the cross platform ecosystem that we have fostered here at Knight and Wonder. Turning to iGaming, revenue grew 11% year over year to $78,000,000 in the quarter and AEBITDA increased 9% to $25,000,000 compared to the prior year period on 32% AEBITDA margin. This was driven by continued momentum in North America and Europe as well as strong content launches. Full year revenue was up 9% to $299,000,000 and AEBITDA was up 3% to $98,000,000 Revenue and AEBITDA growth were impacted by 26% respectively, factoring the breakage fees that were recognized in the second through fourth quarters of twenty twenty three, which amounted to $6,000,000 in total flowing through to the bottom line. Our growing presence in iGaming is reflected through another record quarter of OGS GGR volumes with over $24,000,000,000 of wages processed through our platform.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

More broadly, we saw the best ever quarter of US TGR growth of 30% against the prior year. Importantly, in the iGaming business, we are focusing on high return initiatives with a strong growth trajectory across the industry and on our OGS. Our planned divestiture of Live Casino was decision to allow for the reallocation of resources to other parts of the business, supported by strategic reviews that are conducted consistently across the enterprise to maximize our return on investments. Given we were in the investment stage of this business, we expect to see modest uplift in AEBITDA due to the discontinuing of these operations. This decision reflects the rigor with which we make capital allocation decisions and the willingness of our team to be objective in our decision making to create the best long term outcome for our shareholders.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

As we focus the business on our content and aggregator offerings going forward, our scale, best in class first party and digital native content will be critical to our success. With Nathan leading our global product portfolio, we can further develop cohesive strategies and content roadmap to serve existing markets and new jurisdictions as they come online. For example, with the market opening in Brazil, we launched approximately 50 game titles with a range of operators, of which more than half are digital native offerings. Overall, we are pleased with how iGaming has progressed through 2024 and see compelling value as we're excited to bring more first party content to consumers, further ingraining the business in our cross platform strategy, which is supported by strong market tailwinds and the expectation of wide range of compelling global growth opportunities for many years to come. Our priorities remain the same as we continue on this growth journey that you've seen over the past two plus years.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Our strategy to optimize growth, competitiveness and profitability to maximize the performance of our company remains intact. Through a focus on operational excellence, we have seen continuous improvement across the business and identified ways to refine operational processes through shared services and right shoring of resources, which has improved productivity across the organization. In fact, our philosophy to think and act like owners is widely adopted across the company as we extensively review processes, capabilities and vendor contracts that are critical to the business and proactively optimize our supply chain to the changing market conditions. This culture of accountability has resonated across the organization and is deeply rooted in our planning processes, enabling us to stay nimble and retain flexibility to navigate dynamic environments, driving positive outcomes. We will continue to reinvest back into the business, which as a content driven company is all about the games that we develop, all while staying committed to margin preservation expansion, driving sustainable long term profitability through value enhancing initiatives.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Our balance sheet is now one of the key assets Light and Wander is equipped with to take the business to the next level. With a net debt leverage ratio of three times the end of the year, we are staying nimble and within our targeted range of 2.5 times and 3.5 times to capitalize on opportunities for further value creation. Additionally, our liquidity profile was further enhanced with a recent extension, repricing and expansion of our revolver from seven fifty million dollars to $1,000,000,000 allowing further flexibility and capital allocation as we prepare for continued growth at Lenten Wonder. As you will have seen in our release, we have settled and agreed to pay $72,500,000 to resolve the TCS Huxley antitrust claims filed in 2019 related to our automatic card shuffler business as we put this legacy litigation behind us and focus on delivering on our strategic priorities. Free cash flow was $74,000,000 in the quarter and $318,000,000 for the year, reflective of our strong earnings, partially offset by changes in working capital and higher capital expenditures.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

We are in a very fortunate position where our products are in high demand and our teams are diligent on balancing the long term economics of business with strong momentum, which requires upfront investments on high returns to assess based capital expenditures and leveraging working capital for compelling sizable orders. Ultimately, we expect these uses of working capital and capital expenditures to drive growth and long term free cash flow generation into the future. Overall, as we continue to focus on business optimization and operational excellence, we expect to generate incremental free cash flow to fuel our capital allocation priorities. We will continue to invest in our core capabilities to support leadership positions across the business with commitment to driving high ROI, which exceeds our return thresholds. A great example where our conviction is high is in the charitable gaming space.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

The Grover acquisition is highly complementary to our core businesses and we expect this to be a high single digit accretive acquisition on an adjusted AMPEDE basis in the first full calendar year of L and W ownership in 2026 with synergies to be realized as we develop and integrate the business over time. We expect to move quickly and will look to close the Grover acquisition during the second quarter of twenty twenty five subject to customary closing conditions. This transaction is expected to be funded primarily with debt with pro form a net leverage expected to stay within our target range. Separately, we continue to be opportunistic as we see value dislocations in the market with regards to share repurchases. We bought back a total of $462,000,000 of shares during 2024, with $243,000,000 occurring in the fourth quarter as we saw value creation opportunity with the program during the period.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

We are committed to returning capital to shareholders through our $1,000,000,000 program, continuing in an opportunistic manner and in the context of a healthy balance sheet. As we move into 2025, I anticipate a return to normalized growth underpinned by our execution on commercial strategy and robust product roadmap. Our team continues to deliver exciting engaging new games, utilizing the latest technologies and creating exceptional customer experience. Based on the timing dynamics of game sales and high return investment opportunities in SciPlay's UA spend discussed earlier, we expect first quarter year over year consolidated EBITDA growth to be in the low double digits, noting that our continued investments will drive enhanced organic growth as the year proceeds. With that, we'll turn it over to the operator for your questions.

[Operator]

Our first question will be from Barry Jonas with Truist.

[Barry Jonas, Managing Director at Truist Securities]

As we enter the year where you've guided to hit $1,400,000,000 in EBITDA, can you talk through how you see the cadence in getting there this year? Thank you.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Yes. Thank you, Barry. I think, really solid 2024 campaign, proud of what the team's achieved throughout 2024. And we've got good momentum leading into 2025. So I feel encouraged about that great product lineup, coming across all three of our businesses and potentially our fourth business is Grover Closes later in the year.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

And we see clear light of sight to get to the $1,400,000,000 guidance and confident we can deliver on what has been a long standing guidance for $1,400,000,000 in EBITDA by 2025. Oliver, do you want to just build on some of the building blocks? Blocks?

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Yes. Just to expand on that to Matt.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

In gaming, we continue to see our North American installed base grow quarter over quarter. And given that RPDs are now normalizing back to year over year growth rates, we see plenty of runway from a gaming ops perspective to be growing for us here sustainably, not only in this year, but into 'twenty six and beyond. From a game sales perspective, we do see, as Matt mentioned, strong momentum from a 2024 perspective. Number one ship share in North America in both Q2, Q3 and Q4, as well as Australia number one share for the entire year. And we'll see cadence growth throughout 2025 as we expect meaningful second half replacements and new opening opportunities in markets where we have leadership positions in.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

So that's in Europe, that's in Asia, as well as kind of healthy North American replacement trends, as we continue to also proliferate into adjacent markets. I think from a SciPlay point of view, we expect to continue to leverage the SciPlay engine and we further scale not only our largest games, but also introducing and scaling organic new games in this space and they've shown very promising KPIs thus far. I'm really excited about what that means for us from a long term growth perspective. We'll also lean into UA, an incremental UA here, especially in the first half, just high ROAS return on ad spend capabilities for us as well as DTC expansion. That's going to contribute growth for us well beyond Q1.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

In terms of iGaming, we see continued expansion in global markets, particularly here in North America. We see states that have been legalized for over a decade now still driving significant growth. So we see plenty of tailwinds from that point of view. But also the investments that we've made in this R and D engine really driving our 1PP content execution, that's going to be supported by the market tailwinds that we see. So as evidenced by Huff and Puff, which was one of our best well, actually our best ever launch, we're going to continue to scale and build on that as we move forward.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

So across all of the BUs, including margin enhancement opportunities, we see clear line of sight to the 1.4 to Mats point and then Grover will be accretive to the 1.4 day one at both the EBITDA and the cash flow perspective. So yes, we feel pretty convicted on the 1.4.

[Barry Jonas, Managing Director at Truist Securities]

Perfect. Thank you so much guys. Appreciate it.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Thanks Brent.

[Operator]

Our next question is from Matt Ryan with Barren Joey. Your line is now open.

[Matt Ryan, Founding Partner, Equity Research at Barrenjoey]

Thank you. Just had a question on gaming ops. We saw some really strong additions in Q4 and I think we're seeing some pretty good numbers from some of the newer releases, Monopoly Express and Hard Hat Edition. I'm just trying to think about how we think that installed base might change in Q1 in light of some of the conversions that you might be seeing on the Cascada Dual Screen and also that strength that's coming through from new product?

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Yeah. Hey, Matt. Really proud of the gaming team's ability to maintain that ex Dragon Train fleet in the fourth quarter and add so many additional gaming ops units. I think it was really one of the outstanding highlights of the quarter amidst that headwind and the drama that we had to manage through, they were able to put up a fantastic set of results. I think what you'll see as we get back into Q1 is you'll see the fee, degradation that you saw in Q4 because of the Dragon Train impact really reversed itself.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

So you'll see that fee per day coming back strongly in the first quarter and throughout the year. I think this again is a real testament to the teams really mitigating the Dragon Train situation very effectively. The way I like to think about that situation now is we have 7,000 employees across the globe, 6,995 of them are thinking about the future, operating the business, building great games, and really servicing our customers. There's a handful of us that are thinking about this Dragon Train situation now, which is largely behind us and almost completely behind us from an operating perspective. So feeling good about that.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

I think the lineup leading into 2025 is completely stacked. We're just scaling a new cabinet in Cosmic Upright at the moment going out in good volumes, with all of our brands we're really leaning into. So a new Dancing Drums game, a new Invader the Planet Muir game, more Huff and Puff games. We've got a Wizard of Oz game coming back. So really strong lineup of games that players want to play and customers want to buy.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

So we're just leaning into the really obvious brand extension. So I think you'll see good sequential momentum in Gaming Health as we move throughout the year. But Olive, anything you'd add or subtract?

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

No.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

I think that's exactly right.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

And to

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

your point from an RPD perspective, I expect that to scale nicely here through the year, which will obviously give us tailwinds well beyond 2025 and help us sustain growth well past that. So yes, we're excited to also share some updates in May at our Investor Day.

[Matt Ryan, Founding Partner, Equity Research at Barrenjoey]

Thanks guys.

[Operator]

We have a question from Chad Beynon with Macquarie.

[Chad Beynon, Managing Director, Analyst at Macquarie Group]

Wanted to ask a two parter on margin. So the first part on Q4 margin for the Gaming segment, nice growth year over year. Wondering if you could talk about that in terms of if the growth came from mix or controllables that you made within the organization? And then the segue from that is for '25, given some of the decisions that you made around live dealer and cost containment comments in the past, how are you thinking about margins overall for the company in 2025? Thanks.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Yes. Thanks, Chad. Appreciate the question. I think from a gaming perspective, if you actually look at it broadly from a total business point of view, we've been scaling margins here quite nicely quarter after quarter over the last several years. We expected even with some of the fee or RPD impacts that Matt mentioned earlier from a gaming ops perspective, we're able through margin enhancement initiatives, through just the great work that our manufacturing teams have done over the last couple of years to put us in position to be able to scale margin through any type of headwinds that we face from a business perspective.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

So long term, I expect gaming to continue down this path, just given the work and the initiatives that we've put forth. And really across the board, we see from Sciplay, from iGaming, just multiple opportunities for us to continue to drive margin uplift. So whether that's incremental UA spend offset by the DTC initiatives that we put forward, that's going to provide margin tailwinds for us. You kind of touched on kind of live casino on the iGaming side. That's expected from an iGaming perspective to drive positively here over the year.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

But more importantly, I think outside of the modest uplift that you'll see from a live casino perspective, it's really supported by just the increasing volume and the 1PP content that we're bringing to the market here. And so that's going to be able to help us sustain, again, margin increases here over time. But Mike Lorele and the team, they're still working through a plethora of opportunities for us. We've got years of runway here in terms of margin expansion. But I don't know, Matt, if there's anything else I might have missed.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

No. It's probably worth us touching on the Loire Casino decision more directly. So after a thorough strategic review, we identified there's been some changes to kind of the operator and supply dynamics in that category, which has resulted in some degradation in pricing. So we made the decision to divest of that set of assets and kind of refocus the business to higher ROI investments. I think it's an example of these strategies aren't set and forget.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

We review them periodically and just make sure they're working for us and we made the decision to divest and just focus on areas that we can see clearer line of sight to better returns.

[Operator]

We have a question from Andre Fromir with UBS. Your line is now open.

[Andre Fromyhr, Executive Director, Equity Research at UBS Group]

Thank you. Just a question or sort of a two part question around the drivers of your iGaming growth and outlook. You talked about Puff and Puff being your most successful launch into iGaming. I just wonder how you think about the game pipeline into that channel and how you trade that off against impacts it might be having on the land based business

[Andre Fromyhr, Executive Director, Equity Research at UBS Group]

as

[Andre Fromyhr, Executive Director, Equity Research at UBS Group]

you grow those franchises? And then just wondering if you could comment on any new feedback you've got on potential legalization further in The U. S?

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Yes. Thanks for your question. Yes. So Huff and Puff just launched in January into the iGaming channel. It's really ten years after we launched the first iteration of that game and probably five years after we launched kind of the latest incarnation of Huff and Puff.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

And we've launched several beyond that. I think this really illustrated the sense that we can tighten up the cadence of releases across land based and Endi Gaming. This is kind of one of the catalysts for us to shift to a new operating model around R and D. So you see Nathan Drain now leading all content for all channels going forward. So he's stood up a content leadership team.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

So the content creators across iGaming, Sciplay, Landbase and eventually Grover will all be part of the same organization, which will really look to streamline the releases, the focus, leverage the data and just be more efficient about the way we deploy our R and D resources. So we expect a kind of a heightened cadence of releases across all of those channels as we go forward. So we feel like we've set up a success this year. We're going to launch a range of half and puff games in iGaming. Content is king or queen as we like to say around here in all these categories.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

So the quality of our games will drive the success of iGaming over the long time horizon. I would say on the iGaming legalization path, we've learned over the years to control the controllables and legalization across states is a crystal ball type event and we've all got different variations of a crystal ball. So we don't see legalization happening in '25 in any U. S. States.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Lots of discussion, in certain markets about potential for new legalization of states in '26 and beyond, but we're not really building anything into our plans from a legalization standpoint. Really, what we can control is the quality and the cadence of our leases and just to position ourselves for expansion when it comes, and we'll be ready for that.

[Operator]

We have a question from David Katz with Jefferies.

[David Katz, Managing Director at Jefferies]

Oliver, can you give us just a little bit of color around we got the EBITDA, right, but there's a lot of sort of moving parts within the business and an expected acquisition. How are we thinking about growth in cash flow either on an operating basis or free cash flow? How do you think about those rolling forward the next year or two in the model?

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Yes. Thanks, David. How are you? Good to hear from you. Listen, free cash flow continues to be a key focus for Light and Wonder in terms of long term value creation.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Obviously, there's going to be some kind of seasonal factors that play into kind of the quarter to quarter movements that we've kind of talked about. But as of today, a couple of things that I just want to kind of reemphasize is really the investments that we're making in terms of CapEx, so success based CapEx. We spent, just to give you context, over $52,000,000 year over year in terms of incremental CapEx to fuel our gaming ops install base. We're going to continue to lean on that as we see that as a long term free cash flow yield there for us over time. The other component is long term financing deals.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

We will continue to look at opportunities, especially with our international customers, customers like Entane, Patkor, etcetera, that we called out here over the last couple of quarters. This not only gives us an yield incremental business over time. So being able to leverage some of our working capital here in this space gives us, I believe, long term benefit from a cash flow perspective. Now throw on Grover. And what we're really excited about is this is yet another business that has high margins, high cash flow and really that's going to enable us to not only stay within the targeted 2.5, three point five range that we have from a capital allocation perspective, but really start to drive incremental cash flow for us to then put that back into the business as we see fit or obviously do other capital allocation strategies that we have.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

So really the optionality remains here for us even post this acquisition and really puts us in a great position as we look towards the next couple of years.

[David Katz, Managing Director at Jefferies]

That's all I need. Thanks.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Thanks, David.

[Operator]

Our next question is from Rohan Gallagher with Jarden. Your line is now open.

[Rohan Gallagher, Managing Director at Jarden Group Ltd]

Thank you, Matt. Oliver, good afternoon. Hello, everyone. With respect to iGaming in FY 2024, you've obviously had payments that you had to make to third parties in terms of exit and then also you've been investing in live casino. If you were normalizing that to sort of set up a base for growth in FY 2025 what sort of impact would that be And associated with that, with the decision to exit Live Casino, what sort of addressable market reduction do you see as a result of that strategic decision place?

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Yes. So thanks, Rowan. Good to hear from you. I think the breakage fees that you kind of mentioned, I'm happy that this will be the last quarter that we have to kind of speak about those kind of year over year compares. I think if you kind of normalize that out, we would have been double digits or close double digits on both top and bottom line from an iGaming perspective.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

And so I think as we move forward from there, it would be a clean compare overall. In terms of just broader impacts to kind of addressable market, I don't see that being impactful really at the end of the day. So I don't know if that's not a

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

good idea.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Yes. I mean, so exiting large casino obviously shuts down a portion of the addressable market for iGaming. Based on our assumptions leading in, it's a smaller percentage of the market than we had originally anticipated. And the pricing dynamics in that category, have declined, since the investment that we've made.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

So we're really focusing the business around 1PP content, great aggregation, the tools that we can provide to operators to better monetize their gains. So really focusing the business around kind of our wheelhouse and our core competencies is where we're focusing the iGaming business go forward.

[Rohan Gallagher, Managing Director at Jarden Group Ltd]

I appreciate that. And if I'm just a bit cheeky to ask a follow-up question, obviously the supply chain under Anthony's the money's done a fantastic job. Here in Australia the only certainty is uncertainty around tariffs and steel etcetera. What are your early indications around supply chain potential challenges not just for the industry but for your good self? Thank you.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Yes. Thanks, Rowan. Yes, so this will absolutely be a very fluid and dynamic kind of situation here over the coming potentially days, weeks, months, etcetera. I think we've done Anthony and the team have done just an incredible job here over the last couple of years of really diversifying our supply chain and putting us in position to be able to mitigate any potential headwinds that we see here. Obviously, with some of the recent news coming out of the current administration, we have started kind of implementing efforts and we actually started that last year as we knew that some of this would come into play here.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

And we think if you think about China, Mexico, Canada from a tariff perspective, we think about that as probably a single digit million impact for us or headwind that we're going to look to obviously work through here between now and the end of the year. But we'll continue to kind of work with our customers in terms of just communications around any kind of pricing impacts. But at this point, that's why, by the way, margin enhancement becomes a very critical component and has been. We can either take that to the bottom line as we've done in certain respects over the last couple of years, gives us optionality to reinvest but also as a mitigation factor for us when we see headwinds in the marketplace.

[Rohan Gallagher, Managing Director at Jarden Group Ltd]

Thanks, Oliver. Thanks, Matt. Congratulations on the result.

[Operator]

We have a question from Ryan Sigdahl with Craig Hallum. Your line is now open.

[Ryan Sigdahl, Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC]

Hey, good afternoon, guys. I want to move down to Brazil. So launch at the start of this year, I know it's quite early there, but I guess anything you're seeing, anything you'd like to specifically call out? And then specifically, curious if there's more interest kind of where

[Ryan Sigdahl, Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC]

you're seeing better traction with

[Ryan Sigdahl, Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC]

on the technology side, platform side or for CI gaming content side? Thanks.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Hey, Ryan. Yes, excited to have Brazil come online. It was a gray market for many years, so pretty well established from a content perspective. Slightly different configuration of content that resonates with that local population than is traditional for our portfolio. So nice to see some operating momentum there for suppliers.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

We need to do a lot of work to tailor our offerings to that market to make sure that our 1PP content is going to resonate with that local player base. So we're doing that work now. It was always going to be interesting to see how the dynamics structure themselves as the market opened and now we have a lot of data points that we can leverage to optimize our portfolio going forward. We're an aggregator in the space too. So we have a lot of insight into what's working, what's not working and we can optimize as we go forward.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

This typically happens as new markets open whether it's their land based markets or digital markets. You have one view of the world when they open and then you have to optimize go forward. So we'll make sure we do that and we want to be a big participator in that market going forward and hope to see more markets come online over the future. I would say on the technology side, we launched marketing jackpots in the quarter. So that was an exciting new technology that we've built for operators.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

So we've seen that go live across Penn. We're going to look to deploy that more broadly across the sector. And this is really thinking about how do you overlay technology on top of content to really drive engagement with players and drive better outcomes from a 1PP and 3PP content perspective. So making the appropriate investments in that technology, we're going to scale it across a broader array of operators over time.

[Ryan Sigdahl, Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC]

Thanks, Matt. Good luck.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Thank you.

[Oliver Chow, Executive VP, CFO & Treasurer at Light & Wonder]

Thanks.

[Operator]

Our next question is from Rohan Sundaram with MST Marquis. Your line is now open.

[Rohan Sundram, Senior Analyst at MST Financial]

Thank you. Hi, Matt and Oliver. Just one from me. Matt, how would you describe the slots demand environment at present? And would your gaining results suggest any potential softness in that Q4 as what your major competitor called out?

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

I think we have the benefit of going after the our major operators have launched their earnings. And I think broadly you can see resiliency in the operator base. So we've seen that with the major corporates. We're still holding on to GGR levels well above where they were pre pandemic. So I think the sector dynamics still set up solidly.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Obviously, we had a few headwinds in the fourth quarter that I'm sure you're fully aware of. Although I would say we're proudest to highlight the fact that we were number one ship share provider in the fourth quarter according to Eiler. So very encouraging, kudos to the team, that's exceptional result. We also finished the year in Australia as number one ship share provider. So lots of strength there and things to be excited about.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

So I would say more broadly, if just looking at the operator dynamics, we see resiliency in the customer base.

[Operator]

We have a question from Jeff Stantil with Stifel. Your line is now open.

[Jeffrey Stantial, Managing Director - Gaming & Leisure at Stifel Institutional]

Hey, good afternoon, Matt, Oliver. Thanks for taking our question. And you both touched on some of the idiosyncratic tailwinds to ARPDAU growth in CyPlay, which grew again in a flat market during Q4. As you think about the puts and takes for growth here looking out to 2025 and beyond, I'm curious just how you think about sort of competitive intensity in the sector and that's both from the legacy providers as well as some of the newer tangential verticals such as sweepstakes that are growing rapidly in absence of regulation. And just as a corollary to that, are sweepstakes a vertical that you would consider entering given the similarities to call it core social in that freemium model?

[Jeffrey Stantial, Managing Director - Gaming & Leisure at Stifel Institutional]

Just any color there would be great. Thanks.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Yeah, great question. I think we had a great 2024 campaign. All four of our games delivered record revenue. So I'm thrilled with that and congratulations to the SciFlight team. Most of that growth is driven by LiveOps in our existing customer base.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

So really layering in, reward mechanisms into these games to make them engaging and make them monetize better. From time to time when you layer in incremental LiveOps, you can attract headwinds. One we saw in Jackpot Party Social Casino, if we're honest and you can see that through the third party data, is we had an economy issue in the second half in Jackpot Party. We've resolved that now early in 2025. So I think you'll see that gain, our biggest gain get back to growth throughout 2025 and we're excited to see that.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

But in full transparency, we had a little monetization issue in the second half with Jackpot Party Social Casino and we'll see that reaccelerating into 2025. I would say on sweeps, we are pro regulated and taxable gaming in all its formats. Charitable gaming is a great example of that highly regulated, another vertical we can get into. We see suites at the moment as being unregulated and so against our vision and strategy. If they were to regulate at some point down the path and tax it in the same accordance as our other markets, then we'd be willing to explore that.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

But we don't see a pathway to that happening anytime soon. In fact, we see regulation actually going the other way, and many AGs in different states are putting cease and desist out against sweepstakes operators. So at the moment, we're watching it closely. Obviously, it's a fast growing category, but doesn't face the same regulations and taxes that our operator partners do, across The U. S.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Market.

[Jeffrey Stantial, Managing Director - Gaming & Leisure at Stifel Institutional]

Great. Thanks very much.

[Operator]

Our next question is from Adrian Lemie with Citigroup. Your line is now open.

[Adrian Lemme, Director at Citi]

Hi, Matt and Oliver. Look, I just had a question on the North American lease market. My understanding is it grew by about 8,500 units last year or about 5%. Can you give us some thoughts on how you're thinking that it will grow this year considering the outlook for casino openings as well as how you think customers are thinking about the mix of leased first owned? Thanks.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Yes, we're very encouraged by this. And we think the dynamics come from operators being aware that putting a limitation on the amount of the best games that you have on your floor is a bit of a false economy. Your best players want to play your best games, so giving them access seems to be the logical path to growing earnings. And so I think that's what's really been driving the expansion in the lease footprint. I think it's more of a same store basis for growth in 2024, not as much about new kind of expansions coming online, but actually operators adding more recurring revenue units.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

So we don't see that trend, normalizing back to where it was. In fact, we see in fact probably it being a continuation of 2024. We think that the dynamics are set up for favorable continued expansion and really off the back of us releasing our best gains in that category and our competitors doing the same.

[Operator]

We have a question from Justin Barrett with CLSA.

[Justin Barratt, Equity Analyst at CLSA Limited]

The question I just wanted to ask you made a couple of opening comments, Matt, around your potential decision around where you're listed and potentially doing a more formal dual listing or even a solo listing on the ASX. Just wanted to understand your considerations in making that decisions and roughly when you think you might have a final decision on that buy?

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Yes, great question and a strategic opportunity we've been considering internally. This the real the genesis for this was investors asking us potentially about looking for a dual primary listing on the ASX. I think maybe that stems from a lot of The U. S. Listed peers have been taken private or in the process of being taken private, whether that's IGT, EVRI or AGS, kind of leaves us without a U.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

S. Listed peer. And so the inbound that we've had from both kind of sell side and also investors and potential investors, is there more that we can be doing to accelerate the adoption of our listing in Australia? We're currently at 30% of our market cap listed on the ASX. And so we just want to open up the opportunity to have a dialogue about that, what that could look like for investors and potential investors.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

To be clear, no decisions have been made, but this is really exploratory and in consultation with investors. We've engaged capital markets advisors to look at this very closely. And I think you can just consider this another way of us looking to optimize shareholder value. We won't stop. It's a key focus of the board and the management team is to continue to look for creative ways to optimize shareholder value.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

And then from a timing perspective, I think it would be sorry, in the next few months, we'll engage with investors and consider that feedback and make a formal decision, but no decisions made at this time.

[Justin Barratt, Equity Analyst at CLSA Limited]

Thank you.

[Operator]

We have no further questions in the queue, so I'll pass it back to Matt for any closing remarks.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Before we wrap up today's call, I'd like to share some closing thoughts. First, I wish to extend my gratitude to our key shareholders and stakeholders who continue to support Light and Wonder. We have a dedicated team and are always seeking new talent to add to our workplace. Operators can expect top quality gaming machines and technology, while players enjoy exceptional digital experiences and investors should anticipate continued efforts to sustainably increase shareholder value. Finally, I'm happy to share that we'll be hosting an Investor Day in New York on May 20, during which we'll share some of all Light and Wonder's growth initiatives and future plans and we hope to see many of you there.

[Matt Wilson, President and Chief Executive Officer at Light & Wonder]

Thank you for participating in today's call and I hope you have a great day.

[Operator]

That concludes today's call. Thank you all for your participation. You may now disconnect your line.

Participants

Executives

• Nick Zangari, Senior Vice President-Investor Relations
• Matt Wilson, President and Chief Executive Officer
• Oliver Chow, Executive VP, CFO & Treasurer

Analysts

• Barry Jonas, Managing Director at Truist Securities
• Matt Ryan, Founding Partner, Equity Research at Barrenjoey
• Chad Beynon, Managing Director, Analyst at Macquarie Group
• Andre Fromyhr, Executive Director, Equity Research at UBS Group
• David Katz, Managing Director at Jefferies
• Rohan Gallagher, Managing Director at Jarden Group Ltd
• Ryan Sigdahl, Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC
• Rohan Sundram, Senior Analyst at MST Financial
• Jeffrey Stantial, Managing Director - Gaming & Leisure at Stifel Institutional
• Adrian Lemme, Director at Citi
• Justin Barratt, Equity Analyst at CLSA Limited