Scientific Games Corporation Aktie

Good day, and thank you for standing by. Welcome to Light & Wonder Second Quarter 2026 Earnings Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to Rohan Gallagher, EVP of Corporate Affairs. Please go ahead, sir.

Thank you, operator, and welcome, everyone, to our second quarter 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 second quarter results and operating performance, where we will refer to our earnings presentation. This will be then 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 lodgments with the ASX.

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 Investors section of our website.

Now with that, I will now turn the call over to Matt to discuss the second quarter results and operational highlights. Thank you, Matt.

Thanks, Rohan. Hello, everyone, and thank you for joining us today. The story of the second quarter is one we've told consistently over the past several quarters. We have a diversified high-margin portfolio supported by evergreen franchises that continue to perform. Land-based demand remains resilient and game performance stayed strong across the portfolio.

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. We delivered another quarter of strong financial performance. Consolidated AEBITDA 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 AEBITDA 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.

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 towards an investment-grade leverage profile, underpinned by our attractive high cash flow business and focus on debt paydown.

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. 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 installed 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 AEBITDA 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.

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 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.

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 becoming a larger piece of the pie from 63% of total revenue in 2022 to 67% in 2025. Looking at the first half of this year specifically, it represented 71% of the total revenue or approximately $1.2 billion.

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 6. Consolidated revenue for the second quarter was $828 million, up 2% year-over-year, driven by growth in gaming and iGaming, which more than offset softness in SciPlay. Consolidated AEBITDA grew with consolidated AEBITDA 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 the first half of the year, consolidated revenue was over $1.6 billion, up 2% and consolidated AEBITDA grew 7% to $710 million, with consolidated AEBITDA margin expansion of 200 basis points to 44%. 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.

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 second half of the year with a solidified product road map.

Moving on to gaming on Slide 8, 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. Our 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 installed 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 second half of the year weighted towards the fourth quarter. 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 9. Our North American installed 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 quarter of installed base growth, adding over 650 units sequentially and 2,500 year-over-year. Excluding Grover, Premium now represents 58% of our total North American installed 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 1-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.

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, Monsters, Dancing Drums and Huff N' Puff franchises all performing above expectations and focus on longevity of these games providing further revenue upside.

Game sales remained 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. The average selling price of our global units continues to validate the strong pricing power and new cabinets command, reaching nearly $19,000 per unit in the quarter.

Looking ahead, we expect game sales to accelerate into the second half of the year, weighted towards the fourth quarter, with third quarter game sales to trend between 8,500 and 9,000 units globally, driven by our COSMIC DUAL screen and lightweight 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 Eilers chart.

Moving on to Grover, where our business is extending our recurring revenue model into an adjacent underpenetrated 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. 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. 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. We have an accelerating cadence of Light & Wonder hardware and content in the second half, 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 provided a chart here on Slide 11 to give you a visual on how the North American installed base has trended over the years. 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.

Our premium installed 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 installed 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. 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 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 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%.

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. 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've implemented a multistep 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 sweep stake 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. 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 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 AB 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. Revenue grew 14% year-over-year to $92 million, and our 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 8 of the top 10 games with the Huff N' Puff and Pirots franchises as key standouts. In fact, Eilers new U.S. online game ranking has two Huff N' Puff franchise games in the top 5 with Huff N' Even More Puff Grand taking the top spot on the chart.

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 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 U.S. and Canada, and we expect the same from our Ultimate Fire Link franchise. We also went live in Alberta on July 1, where we believe our content should resonate with players as it does in Ontario.

In the U.K., Rainbow Riches and Huff N' Puff are leading the pack. Additionally, ELK's Pirots franchise continues to build with Pirots 5 launched 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 Galeforce, our new first-party studio in Bulgaria. We've also bolstered our studio capabilities by expanding Kimura, 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 road map and growth trajectory, supported by our decades of experience and mature platform.

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

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. 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 NPATA 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 NPATA 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.

SciPlay 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, 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 U.K. 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 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 range per quarter for the remainder of the year.

Moving on to adjusted NPATA. Consolidated EBITDA was the primary driver in delivering $21 million of adjusted NPATA 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 installed 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 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. 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, 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 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 operations fleets. 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.

Our adjusted free cash flow conversion has steadily improved over the years. Adjusted free cash flow conversion rates versus consolidated AEBITDA and adjusted NPATA 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 and 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. Our net debt leverage ratio at the end of June remained at 3.4x 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 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.

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. 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 delever 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've 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 2x leverage under a different capital allocation scenario, underscoring the cash flow generation that continues to fund our capital allocation priorities.

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 3x 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. 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.

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 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. 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. But as previously mentioned, the focus will be to rapidly delever our balance sheet through the remainder of the year and into the first half of 2027.

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 U.S. tariffs and changes in U.K. iGaming taxes. In addition, we expect to deploy discipline 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 were predominantly weighted towards the first half of the year. From a capital management perspective, we remain committed to rapidly delever the balance sheet.

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

[Operator Instructions]

The first question comes from the line of Andre Fromyhr of UBS.

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. Just curious if you could talk through some of the drivers sitting behind that because if you take out the Grover mix that's showing up year-to-date, the otherwise underlying revenue per day has been much stronger than that rate.

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 yes, just curious to understand whether there are commercial things behind that or if it's just mix that's going on?

Yes. I mean the Huff N' Puff business continues to perform very well, scaling our installed base nicely, again, beat that guide we gave to you of 500 units. So very happy with the team's performance there. We've had industry-leading yield expansion.

Our competitors just are 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 installed 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 is -- 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. We still have ambitions to drive that line item in the P&L very aggressively through new content, new commercial models. So not signaling anything significant in the way we approach the market, just moderating expectations at 7%. I think it was 8% in the prior period. 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 installed base. So very impressed and satisfied with the team's performance when it comes to gaming operations.

And our next question comes from the line of Barry Jonas of Truist.

There's been a lot of M&A activity or there is a lot of M&A activity going on in the U.S. there 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?

Yes, it's a great question, a great observation. There's been a lot of kind of take private activity in the market, both on the supply side in the last year with IGT and Everi and AGS, among others. And then that's kind of spilled over now into the operator landscape with interesting deals, proposed deals with Caesars and MGM.

I don't -- 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 philosophy around the amount of investment they put into the slot CapEx -- into OpEx as it relates to gaming operations product. T

he market has never been more competitive when it comes to the operator landscape. Just think about Las Vegas and the dynamic 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. You've got the Seminole's about to open Hard Rock who are a prolific spender when it comes to CapEx and OpEx as it relates to slot product. You've got Apollo with the Venetian property spending a good amount of money refreshing their floor. You've got Yaamava, who they 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. And then you've got MGM and Caesars who have been long-standing great customers of ours.

And I think if you look at the forward predictions in the Eilers survey, they're still very healthy from a CapEx investment from a percentage of the floor that's premium leased. And 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 kind of as I zoom in on it, I don't really think it has any material implications for the supplier space, 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, and that's really just following what these operators need to be successful, which is the most engaging and entertaining slot games on the floor.

And the next question comes from the line of Matt Ryan of Barrenjoey.

I had a question on the full year EBITDA guidance. And I'm interested in whether anything has 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 costs?

Yes. 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. 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. So when you think about gaining of scaling the installed base, scaling the RPDs, that just naturally has this kind of compounding effect throughout the year. The same is true for Grover.

So 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, but no significant changes. I thought the mix -- sorry, the margin uplift was a key feature of this result. 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 Huff N' Puff, which is a high-margin business, scaling 1PP content and iGaming, high-margin business.

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 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, and that's what we'll continue to do.

Yes. And maybe just want to add to that. We're really excited about our portfolio here in the second half. We have AGE coming up next week. We have G2E coming up, obviously, in late September. So as we start to show some of the new games and content hardware across the portfolio, that's going to support kind of the growing aspects of our business here as we head into fourth quarter, but also into the first part of next year.

And our next question comes from the line of Rohan Sundram of MST Financial.

Just one for me. Around the Huff N' Puff net installs performance, I appreciate the strong growth in premium units. But can you just clarify where you saw the churn that quarter? And was there any residual impact from the Resorts World conversion?

Yes. I mean 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 permits far and wide. So there shouldn't have been any shock that, that continued into the second quarter. It's done now. So there's no further removals from that VLT market.

In fact, you may see some incremental as in the New York VLT market down the line as we see some new properties coming online. So there could be a net tailwind there. But that's really there's nothing more to see there in terms of resort, that's all played out. And we've had some great commercial opportunities off the back of that. We've added a premium Huff N' Puff sold product in there. We have big tables lease business. 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. The regulator out there awarded the license. And so it was always going to happen. It just happened in these first two quarters. So it shouldn't be a shock to the market that, that was kind of well foreshadowed.

Yes. And I'll 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 installed 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. 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 have on the premium side as well as the game sales and ETG side.

That's very clear. So just to confirm, were any outright shipments booked in Q2 related to that? Or is that to come through?

Yes. That's partial and then that will ship throughout the rest of this year.

And our next question comes from the line of Justin Barratt of CLSA.

I guess I had just a bit more of an encompassing question on SciPlay. Obviously, margin performance there really, really strong and supported by your DTC penetration. And I 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 reengage that customer base and drive sort of revenue growth again. How should we sort of think about 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?

Yes, 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. If 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, but we're not happy with the results of SciPlay and where we're at, and we take accountability for that. And we've got some very specific things that we're working on to stabilize and return that part of the business to growth.

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 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%. So really good execution on the DTC side that helps at the margin line. But really, there's two drivers on the margin side of the equation. It's really that DTC mix and 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. So it makes ROIs a little tougher on the social casino side.

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

Yes. No, that's exactly the long-term strategy for us as we kind of look at this from a capital allocation perspective is 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.

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.

And our next question comes from the line of Jeff Stantial from Stifel.

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, what's your latest expectation for shift share recovery in the market in the back half of the year?

Yes, 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 that. Not our ambient share level in the Australian market. We aspire to something much higher than that. We're in the 20s now. So we didn't get a full quarter reporting period for the COSMIC DUAL screen. So 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 will 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 Hus&puff game launching in the Australian market, which is very highly anticipated. We've got a product called BIG STEAM, which we on the 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 Element Studio, Drums Link, which is exciting. And then we've got Nate MacGregor's first game. As you know, Nate McGregor is a new game design with us that we invested in down there called GRAND LEGION, which we're very excited about.

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. So it will be about that combination of exciting new hardware and this content lineup that we have laid out for the back half of the year. 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, is we're launching that same cabinet in Asia this quarter. So we're excited about the opportunity for COSMIC DUAL Screen up there up there, too.

And the next question comes from the line of Kai Erman of Jefferies.

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 first half, but you obviously had a very strong second quarter margin outcome given the Huff N' Puff mix and you're expecting a greater mix to outright sale in the second half. How should we think about the direction of the gaming margin?

Yes, perfect. I think you actually answered the question for me, which is fantastic. So yes, I mean, listen, I think across the board, we obviously saw strong expansion, 200 basis points across the enterprise. And it's really that and I kind of hammer this point home quite frequently on the call here is the 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.

You're exactly right. In the second half, I would expect the mix effect to have, I'd say, a moderate impact on margins. So as game sales scales in the third and then into the fourth quarter, that will have some impact. But that's also -- you think about U.K. taxes, think about some of the corporate expenses that we've kind of guided to here, the $35 million to $40 million mark. 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. But yes, that's kind of our goal and a game plan here.

Our next question comes from the line of David Fabris of Macquarie.

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? 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.

Yes. We're going to try to keep our powder dry a little bit here. We've got a presentation next. Hopefully, you'll join us, David. You'll hear from kind of our AI expert, Victor Blanco, who's a bit of an industry guru as it relates to AI transformation. Michael Lorelli, Head of Strategy; and then importantly, Nathan on the content -- Nathan Drane on the content side. So we've got to come with a lot of interesting use cases to give you like real tangible examples about how this is playing through. So I don't want to steal their thunder. Come and see us next week, it will be an interesting conversation.

But I would say we're at the very early stages of AI adoption. We're making 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'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. I know there's a lot of companies out there we're 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 are going to drive real-world examples.

But the things I've mentioned in the past, it's 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. 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. As an example, there's 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 and manpower can now be done with tokens and agents.

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 no real signs of that AI cost efficiency in our numbers yet. 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 for the role that, that can play on that spread between revenues and EBITDA over time. So more to come next week, but we're excited about the opportunity that AI presents for us, but we're doing it in a very measured way.

Yes. Perfect. Appreciate those. 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. Should we expect that to trend down then with the benefits of AI?

Potentially. Potentially. I don't want to put out any firm guidance on that now. But as logic stands, if there's efficiencies there, 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, but nothing in terms of more formal guidance about that.

And our next question comes from the line of Adrian Lemme of Citi.

I just want to get my head around the corporate costs. They have been looking around a little bit. They were at $43 million in the first quarter and $29 million this quarter. Is that mostly just lower legal costs this quarter bringing it down? And what gets you back up to sort of $35 million to $40 million over the next two quarters, please?

Yes, 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 million to $40 million range.

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. 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. But by and large, I would imagine that we're in this kind of 35% to 40% range as we move forward. 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? That's going to be a journey that we take over the next several years.

We will now take our next question from the line of Liam Robertson of Jarden.

Just quickly on the U.K. 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 price changes moving forward?

Yes. 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 second half. 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. So yes, I would expect the same level of cost impacts here, both at the top line and EBITDA that we had talked about -- previously. So no major changes at this point. We'll continue to kind of monitor it as we head into the second half.

And our next question comes from Mark Wilson of RBC.

Matt, I note your comments about the timing of gaming machine sales, which can be quite volatile and lumpy. 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 you are expecting to occur in Q3 and Q4?

Yes. No relation, Mr. Wilson. Yes. 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. They're contracted. We know they're going to happen. So there's good line of sight there. We also had some deferrals of some adjacency sales. So these are just things that are moving across that invisible calendar line from quarter-to-quarter. So again, contracted deals that are signed up that are high conviction that will ship. So, yes those things bolster the second half. So we have high conviction around those set of deals.

Yes, that's great. And just on systems, again, a very volatile from year-to-year, but 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?

Yes. You know this part of the business well. There's some like 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. 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 will 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 will inflect higher over time. So it's unusually soft at the moment, but basically, we expect that to rebound.

Yes. And I think my one add there is the recurring revenue in systems remains very strong. It's over $100 million plus in recurring revenue. So that's a great foundation for us as we look to innovate on both hardware and software.

The next question comes from Andre Fromyhr of UBS.

I just want to follow up perhaps with Oliver on the leverage strategy. I understand the reiteration for going below 3x mid next year. 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? 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? Or are you just more willing to sort of go materially below that level if that's the way that the market plays out?

Yes. 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. And we always kind of reassess kind of 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.

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. 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. 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.

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.

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. And for those on the call, we appreciate your interest on the second quarter results. 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.

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

Good day, and thank you for standing by. Welcome to Light & Wonder First Quarter 2026 Earnings Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to Rowan Gallagher, EVP of Corporate Affairs. Please go ahead, sir.

Thank you, operator, and welcome, everyone, to our first quarter 2026 earnings conference call. Joining me today in Sydney are Matt Wilson, our President and CEO; and Oliver Chow, our CFO.

During today's call, we will discuss our first quarter results and operating performance, where we will refer to our earnings presentation. This will then be followed by a question-and-answer session. Today's call will contain forward-looking statements that may involve certain risks and uncertainties and 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 the ASX. We'll 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.

With that, I'll now turn the call over to Matt to discuss the first quarter results and operational highlights on Slide 3. Thanks, Matt.

Thanks, Rowan. Hello, everyone, and thank you for joining the call today. Light & Wonder has proven to be adaptive and nimble, capitalizing on new opportunities through our cross-platform strategy. Importantly, we understand we remain focused on what fundamentally drives value in our business, and that is game performance. The evidence is clear. We continue to progress and execute at a high level based on internal and industry data we are seeing.

Over the past several months, we have faced a number of external headwinds, including tariff pressures and more recently, geopolitical and macroeconomic uncertainty affecting end consumers. These are factors largely outside of our control, and we've managed through them with discipline.

Despite some softness in the numbers, a more cautious consumer sentiment, uptick in inflation and the tariff impact, we were able to keep our margin steady and still expect a stronger back half performance.

To summarize our results for the quarter, consolidated revenue and consolidated AEBITDA both grew year-over-year, and margins expanded across every business segment. The combination of top line growth, margin expansion and improving revenue quality is the financial profile we are building towards.

Our recurring revenue, which represented 73% of total consolidated revenue grew 13% year-over-year, reinforcing the quality of our earnings base. North American installed base, excluding Grover, added over 2,550 premium units year-over-year, underscoring the continued momentum in gaming operations. Our unwavering commitment to cash enhancement and value remains with adjusted free cash flow of $207 million in the quarter, up 86% year-over-year, demonstrating the cash-generative power of our business as it scales.

EPSA or adjusted earnings per share grew 7% to $1.45, reflecting continued cost discipline and the benefit of our ongoing share repurchase program.

Across the enterprise, our business continues to benefit from a balanced mix of land and digital-based solutions, reflecting the strength and diversity of Light & Wonder's business model, high-margin, cash-generative and omnichannel.

Turning to Slide 4 for a high-level view of our consolidated results. You can see a business that is growing and generating more of its revenue from high-quality flow-through businesses. Gaming and iGaming drove the top line growth this quarter, underpinned by the strength of our content engine and continued operational momentum.

AEBITDA margins expanded across every single business segment year-over-year. This reflects the executional prowess and disciplined focus on efficiency we have embedded across the organization.

Additionally, Grover is also contributing as a high-margin recurring revenue stream within the gaming segment of our portfolio, which will improve over time as we continue to integrate and ramp up the charitable gaming business. The results we delivered reflect an omnichannel business with a strong structural moat, a content and R&D engine that continues to compound in an increasingly recurring revenue base. Those are the characteristics of a business built for durable long-term growth.

Last quarter, we introduced a dashboard to present an annual update on the path towards our long-term targets. We've received overwhelmingly positive feedback on our transparency in assessing the health of the business, and therefore, are providing this assessment you see here on Slide 5, for a quarterly status check on the business.

As you can see, green reflects strong execution and performance on track or exceeding what we've guided to. Yellow indicates solid progress, but a potential watch point and red flagging areas where we are being transparent about a gap and have a clear plan to address it. Additionally, we split the metrics up into gray and green highlighted section with the gray performance metrics highlighting the building blocks we've directionally guided to for our 2028 goals. The 2 new green roads introduced here are what we deemed essential to monitor this quarter. North American revenue per day, a metric that is critical in overall game performance and broader macroeconomic environment continues to trend positively, evidence that the significant investments and commitment we've made in developing our games and franchises are bearing fruit.

Candidly, we're also flagging the SciPlay and the social casino industry are seeing some softness and some of the metrics are not where we need them to be. However, we are seeing a modest improvement in our daily active users sequentially, which is a positive sign in the initial stage of stabilization with players returning to our platform. The team is hopeful that this will trend positively as we continue to invest in this important part of our cross-platform engine.

Overall, most of this scorecard shows positive results. We recognize that there is still room for improvement across the organization and our teams are working collectively to adjust them diligently and effectively with well-defined plans. This is the kind of business we are building, 1 that executes with discipline, communicates with clarity and stays focused on the long-term targets we've set.

I will now go into the highlights and details of each of the businesses for the quarter. Turning to gaming on Slide 7. The results reflect the quality and diversity of what we built with our R&D engine. Revenue grew 3% to $512 million and AEBITDA increased 7% to $271 million year-over-year, with margins up 200 basis points to 53%. The margin expansion also reflects a richer revenue mix towards recurring revenue units in the absence of Grover in the prior period.

Gaming operations grew 38% year-over-year, driven by continued premium installed base expansion on improved game performance within the portfolio as we continue to see strong coin in trends and $43 million of contribution from Grover.

Tables grew 24% with strong utility sales in North America and solid product sales across EMEA and Asia. I'm pleased with the progress we've made here with our revamped product road map and commercial strategy. we are well positioned to capture the global opportunity that will be available to us in this space.

Gaming machine sales were down 25% and gaming systems declined 14%. These are largely timing and not demand driven with the seasonal sequential volume reset that follows a strong fourth quarter, underscoring the quality and durability of this business. Our pipeline is healthy, and we expect both to normalize as we move through the year into the second half when we ramp up the product launches.

Pleasingly, we secured a number of systems contract wins recently, both in competitive replacements and long-term renewals across travel, commercial and state regulated gaming operators, a true testament to our expanded suite of capabilities and offerings driving the systems business.

Let's now turn to KPIs on Slide 8. Gaming continues to build on a strong recurring revenue foundation with our North American installed base up 41% year-over-year to 48,600 units at the quarter end. This also reflects 12,200 grower units added to the footprint. Importantly, premium units have increased for 23 consecutive quarters and is now 56% of the total North American installed base with over 2,550 net adds year-over-year.

It's worth noting that an operator specific VLT to Class III conversion affected our nonpremium unit count this quarter. Adjusting for that conversion, our premium installed base grew in excess of the 500 unit quarterly growth we have previously guided.

Our blended average daily revenue per unit in North America grew 3% to over $48, inclusive of over units, driven by strong wide-area progressive performance and coin-in against the backdrop of continued strength in industry-wide gross gaming revenue. Excluding Grover, North American installed base revenue per day was up 8% year-over-year, a meaningful indicator of the underlying business momentum. This is further reflected in our presence across multiple categories on the Isles WAP and premium lease charts with franchises such as Ultimate Filing, Huff N' Puff, Dancing drums, among others continuing to perform well.

Globally, we shipped 7,200 of game sales units in the quarter. We continue to see strong momentum from non adjacency replacements in North America with solid performance from our piggy banking break-in and super hot flaming pop franchises.

International sales were lower year-over-year due to the timing of shipments and hardware cycle in Australia as well as new and expansion units in the Philippines in the prior year. Our international pipeline remains robust, and we expect growth in this segment as orders are fulfilled later in the year with the launch of the Cosmic dual screen cabinet in late Q2 and the regionalized road maps tailored for each of these regions.

Average selling price held essentially flat at approximately $19,700 reflecting the pricing discipline and premium positioning of our portfolio.

Looking ahead, we believe the setup for the second half unit sales is compelling. A strong content calendar, hardware refreshes at the market has been anticipating and the global pipeline we have high confidence in converting.

Moving on to Slide 9 for an update on Grover. What you see here is an acquisition that is performing and benefiting from the established infrastructure we have here at Light & Wonder. Grover delivered $43 million in revenue for the quarter, driven by strong performance across existing markets and our entry into Indiana. We ended the quarter with over 12,200 units installed, up 660 units sequentially. We have added over 1,200 units to the Grover installed base since we closed the deal in the second quarter last year. That growth rate directly reflects demand for this product and the strength of Grover's local market relationships with the charities and end customers.

Indiana is exciting in a market that's still in its early innings. Encouragingly, we saw unit economic scale and improved progressively throughout the quarter, similar to our prior experience entering new markets. Our strategy here is clear. We adopt an effective and prudent commercial approach by pricing our business reflective of our game content and customer service value points of differentiation.

Historically, that has served us well as we've progressively grown the market and share over time across established markets.

From an integration standpoint, we remain focused on deepening the alignment of L&W content, hardware and brands within Grover. Our first Light & Wonder title, Eureka Treasure Train was launched in Indiana with exceptional early results supported by strong player engagement across all denomination play, reflecting the broad appeal across our player base. We expect to bring a steady flow of Light & Wonder hardware and content to the market throughout the remainder of 2026. The Content integration is at the core of our value creation thesis for this acquisition, bringing our world-class game development capability to a recurring revenue platform with exceptional unit economics.

Looking at the map on this slide, you can see the growth opportunity in front of us. Minnesota and Maryland remain clarities, and we're actively engaged in both. New Mexico is also a market that we are assessing while Alaska presents as an attractive opportunity pending legislation. The combination of Light & Wonder's content strength and growers operational reach creates a compelling growth platform, 1 that evolves our charitable gaming businesses into a single unified content and hardware ecosystem with significant potential across both current and future markets.

Turning to SciPlay on Slide 10. We continue to see the social casino market under pressure in the quarter with preliminary industry estimates indicating a mid-single-digit year-over-year decline as reflected in SciPlay's lower revenue.

Despite the softness, we delivered growth in the direct-to-consumer platform, posting a record $50 million and a 27% of SciPlay's revenue, up from 13% in the first quarter of last year. The diversity of our portfolio was also evident across several titles. Quick Hit and 88 Fortunes both grew year-over-year and MONOPOLY achieved its sixth consecutive quarter of revenue growth. The sustained performance of these franchises reflects the quality of our Live OS engine and the depth of our meter capabilities across SciPlay.

As for Jackpot Party, we are seeing the engagement improvements that we've been working towards. Play rates are tracking above the prior year. And importantly, our daily active users have stabilized and grew modestly quarter-over-quarter. The trajectory is moving in the right direction, giving us the confidence to lean back into UA investments as we move through the year.

Engagement and monetization across the portfolio remain key focuses. We saw sequential growth in monthly paying users driven by the new game economies we have deployed and targeted marketing investment and average monthly revenue per paying user grew 8% year-over-year to $126.

Going forward, we remain committed to the initiatives that will return SciPlay to revenue growth including launching new game features such as side bets and MetaQuest, which are expected to further improve our monetization flywheel.

Now on to Slide 11, where we delivered another strong quarter of revenue and our AEBITDA growth in iGaming, extending double-digit momentum across the segment. Revenue grew 18% year-over-year to $91 million and our EBITDA grew 22% to $33 million, with margins expanding year-over-year to 36%. These results were driven by the proliferation of first-party content across our platform and the ongoing expansion of our partner network.

Wages process on our content aggregation platform, OGS grew 19% year-over-year to a record $29.9 billion. This quarter also marked the fifth sequential period of global first-party content GGR growth on OGS. Third-party growth was led by the Huff N' Puff and Pirate series with Huff N'Puff ranking first and Pirates 4 ranking second globally. Additionally, 8 of the top 10 games across our network in the quarter were first-party titles, reflecting the durability of our franchise strategy and the strength of our omnichannel approach to content deployment.

Third-party content growth was driven by Canada expansion, new market entries and continued momentum in Europe. The reliability and scale of our platform remains central to that growth, enabling us to connect an expanding network of studios to operate across the markets.

You can see on Slide 12 that iGaming presents a compelling story with key growth opportunities as jurisdictions open up. The upcoming Alberta commercial launch represents a key expansion milestone, and Elk Studios is on track to receive licensing in Pennsylvania with launch expected in the back half of the year. We're also encouraged by Elk's strong early performance in South Africa, which reinforces our confidence in the new market entries.

New market development remains a strategic priority with continued focus on South Africa, Brazil and the Philippines as we solidify our foot in the regions.

On the content side, first-party momentum continues to build. The success of our Huff N' Puff and our Pirates franchises provides a strong foundation, and we have a robust slate of franchise extensions and new games, including titles from our Wizard of Oz, Wonka and Big Hot Flaming Pop Series slated for the launch this quarter.

The road map you've seen here reflects the breadth of the content pipeline across both our North American and European markets.

Looking ahead, I'd like to note that recently announced a U.K. tax change will begin to pressure our growth trajectory starting in the second quarter and is expected to continue through the end of the year. We are actively managing through this with operators, and we believe new market opportunities will offset that pressure over time.

Overall, we remain confident in our iGaming road map and the long-term growth potential this segment represents for the business.

Before I hand to Oliver, I'd like to turn your attention to some of the slides we provided in the appendix. The gaming industry continues to demonstrate resilience, growing at mid-single-digit CAGR over the past 2 decades despite macro events. We continue to be a strong GGR this quarter and the geopolitical uncertainty, and we are well positioned to capitalize on opportunities with a robust global road map. Additionally, the progression of our financial profile reflects the kind of recurring revenue business earnings base we are intentionally building, which is further accentuated through our buybacks, delivering significant value to shareholders.

Importantly, we are staying ahead of the trend, working through our AI enablement program across technology, content and business operations. Our IP data, regulatory approvals, customer relationships and proprietary platforms gives us a structural moat that I believe is genuinely difficult to replicate. We'll share more about the AI enablement programs around second quarter earnings in conjunction with AGE as we complete the foundational work.

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

Thanks, Matt. This quarter once again demonstrates the disciplined execution of our strategic and operational initiatives across the organization.

Turning to Slide 14 for the financial results. Consolidated revenue of $790 million was up 2% year-over-year, supported by growth in our recurring revenue businesses, creating earnings durability and meaningful margin enhancement.

Net income was $52 million compared to $82 million in the prior year, primarily reflecting the following 2 items. First, Restructuring and other costs were $54 million in the quarter, up $34 million, inclusive of $50 million of legal reserve contingencies which impacted net income year-over-year growth by approximately 61%. Second, depreciation and amortization was $108 million, up $17 million year-over-year, reflecting the addition of Grover assets following the acquisition.

Net income per share was $0.66 against $0.94 a year ago, reflecting the aforementioned legal reserve contingencies, which impacted growth by approximately 67%.

From an adjusted NPATA perspective, the quarter came in at $115 million, primarily reflecting higher depreciation and interest expense associated with the Grover acquisition, partially offset by AEBITDA growth and margin expansion across all businesses.

On a per share basis, adjusted NPATA per share grew 7% to $1.45, reflecting the continued benefit of our share repurchase program.

Consolidated AEBITDA was $327 million, up 5%, which I'll walk through on Slide 15. The $16 million year-over-year increase is primarily driven by gaming, which contributed $17 million of growth, driven by North American gaming operations unit installs and revenue per day performance inclusive of Grover. As mentioned, our upcoming hardware and content launch is expected to be a meaningful catalyst for second half performance.

SciPlay AEBITDA was up $2 million, driven by continued DTC expansion and player-based monetization with stabilization in our player base, we will continue to target UA investments prudently to drive monetization.

iGaming added $6 million of AEBITDA, driven by the continued expansion of first-party content margins and revenue growth. The U.K. tax increase will be a slight headwind to our iGaming AEBITDA margins in the second half of the year in addition to a moderated top line growth.

Corporate was a $9 million headwind year-over-year, primarily driven by incremental investments to support our initial AI infrastructure build-out as well as elevated legal legacy costs that I mentioned last quarter. Moving forward, corporate costs should be in line with our historical run rate.

From an adjusted NPATA perspective, the $6 million AEBITDA flow-through is the primary positive driver. Against that, higher depreciation and amortization of $7 million and interest expense of $3 million are largely associated with the accretive Grover acquisition.

As Grover's earnings contribution scales and we continue to delever, we expect those headwinds to be more than offset over time.

Lastly, Income tax was a $7 million benefit on lower effective tax rate, driven by lower taxes on foreign earnings and reduced global withholding taxes.

Turning to Slide 16 on cash flow, which speaks to the strength of our cash flow generation this quarter.

Net cash provided by operating activities was $139 million compared to $185 million in the prior year period. The year-over-year variance is primarily attributable to the $137 million in payments to resolve legal matters and importantly, is not reflective of any change in the underlying operators of the business.

Adjusted free cash flow for the quarter was $207 million, up 86% year-over-year, driven by the highly cash-generative nature of our business model, favorable timing of receivable collections and lower tax payments.

Recognizing the timing around receivables as well as tax and interest cash payments associated with a quarterly reporting company. The stronger first quarter results should moderate into the second quarter.

We remain focused on a trailing 12-month basis to assess the health of our free cash flow which has improved progressively since the implementation of our cash enhancement initiatives.

Capital expenditures in the quarter were $74 million, deployed effectively and strategically to drive long-term free cash flow growth. consistent with our focus on scaling recurring revenue across the business, including over growth investments.

Turning to cash conversion. We achieved consolidated AEBITDA and adjusted NPATA to adjusted free cash flow conversion rates of 63% and 180%, respectively, in the quarter. a meaningful step-up from 36% and 95% in the prior year period. This improvement reflects both strong earnings growth and the continued execution of our cash generation initiatives, which will be a continued focus for us here at Light & Wonder.

Moving on to our capital structure on Slide 17. Our net debt leverage ratio at the end of March stood at 3.4x, and remaining within our targeted range on a combined basis. Notably, this was achieved despite the $137 million litigation settlement payments made during the quarter as well as ongoing purchases under our share repurchase program. This is a direct reflection of the continued margin expansion and strong free cash flow generation we delivered throughout the quarter. We're also pleased to see our improved credit profile recognized by S&P., who upgraded our corporate credit rating by 1 notch to BB in March.

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% and generating approximately $5 million in annual interest savings. Our debt maturity profile remains long-dated with an average tenor of 4.1 years, and our effective net interest rate for the quarter was approximately 6.32%, with a 53% fixed and 47% floating debt mix.

We continue to maintain ample balance sheet flexibility with $927 million in available liquidity and to support growth initiatives and navigate uncertainties with the geopolitical conflict and inflation risks.

As we look ahead, we remain actively engaged in evaluating opportunities to further optimize our capital structure should favorable market conditions arise.

Shifting to our capital allocation framework on Slide 18. This speaks to how we are thinking about capital deployment as we move through 2026. Our approach remains consistent and anchored around the 3 pillars of our blueprint, optimizing our capital structure, returning capital to shareholders and investing with discipline and growth opportunities that will define our long-term trajectory. We remain committed to reducing leverage to below 3x during the first half of 2027. In parallel, we intend to accelerate share repurchases meaningfully in Q2, reflecting strong conviction that our stock is undervalued given the share price dislocation.

With our robust underlying business and cash generation profile, we see a compelling opportunity to deploy free cash flow on share buybacks while reducing our leverage and remaining within our targeted range.

Turning to shareholder returns. We bought back $22 million of shares in the quarter after strong buyback activity in the fourth quarter as we stay prudent, navigating potential broader environment risks.

Since the inception of our 2 share repurchase programs, we have returned a total of $1.9 billion to shareholders with a repurchase of 24.6 million shares and CDIs representing 25% of total outstanding shares prior to the program commencement. We have $340 million of remaining capacity under our current authorization and our flexible capital structure enables us to deploy that balance sheet capacity in a way that balances both near and long-term shareholder value.

Lastly, on investments. We continue to allocate capital strategically across R&D and content development and growth initiatives spanning across our platforms. R&D and CapEx investments in the first quarter came in at 17.8% of consolidated revenue. Importantly, we continue to lay out the foundation of our AI infrastructure, which is expected to be a meaningful driver of efficiency and capability going forward.

Taken together, these 3 pillars reflect a balanced and disciplined approach to capital allocation, 1 that supports both near-term financial performance and long-term value creation to our shareholders.

Before we move to Q&A, I'd like to provide further clarification of how 2026 is going to shape up in addition to the guidance and modeling parameters provided at the beginning of the year on Slide 20. Subject to external uncertainties, including geopolitical developments and potential regulatory changes, we are forecasting mid- to high single-digit consolidated EBITDA growth for 2026.

I want to take a moment to walk through the key factors embedded in this guidance. We are absorbing approximately $40 million in headwinds from external factors outside our control. Principally, U.S. tariffs and the recently enacted U.K. iGaming tax changes. Additionally, we are carrying an estimated $20 million of impact on planned investment spend related to AI infrastructure and new market openings, including Grover in Indiana. These investments will support not only our 2028 targets, but also set us up for the long run.

Lastly, we also anticipate approximately $10 million in legacy legal costs. Against that backdrop, we believe delivering mid- to high single-digit consolidated AEBITDA growth is a strong outcome and 1 that translates into another year of meaningful adjusted NPATA and adjusted earnings per share growth. On the shape of earnings through the year, we continue to expect the cadence to be broadly in line with 2025. This reflects the natural cyclicality of our industry and our customer CapEx intentions.

Underpinning all of this is our growing recurring revenue base, which continues to provide resilience and visibility across the business. We remain committed to our long-term targets as referenced in the appendix as we navigate this ever evolving macro and industry landscape diligently for sustainable growth.

And now with that, I'll turn it over to the operator for your questions. Operator?

[Operator Instructions] And our first question comes from the line of Andre Fromyhr from of UBS.

Just wondering if we could start talking about the drivers of the ops business, so from an install and fee per day perspective. So in terms of reconciling what we've seen in the quarter, we've seen 650 Premium, 660 Grover. But maybe you could talk through the drivers of the nonpremium. Is that solely explained by New York VLTs coming out? And then with reference to the outlook, you've held the 500 per quarter guidance. Is that true every quarter? Or is that something we should think about as sort of the average through the year?

Yes, a fair bit to unpack there. I thought the underlying gaming ops performance by premium gaming of was another solid quarter for us, like you said, 650 net adds feet per day, up 8% year-on-year. So I thought that continues to be a powerhouse of the business and performing very well. We've guided to more than 500 a quarter throughout the year. And you can expect that from us. It will be a fairly consistent cadence of delivery from that business. It's all underpinned by the number of great performing titles we have that you can see on the ILS chart. So yes, that's -- I would say that from all the businesses, the best performing business we have is the gaming ops premiumly. So we're very happy with that.

Grover's had another great quarter, both organically in existing states and then we're in Indiana now, as you know, and scaling there nicely. We just launched our first Light & Wonder on the Grover platform and it's off to a very good start. That's kind of a so or force tier brand for us. So kind of plays through on the thesis that our content on the Grover platform is a recipe for success. So you'll see that playing through.

Yes, the noise in the number, candidly, was completely New York Lottery. That was a casino that switched from a VLT market has been a VLT market for over a decade. We knew this was coming. We actually thought it was going to come 2, 3, 4, 5 years ago. It finally happened. So they finally have Class 3 casinos in New York.

So puts and takes there, obviously, a good thing for us on the sales side. They're a big tables customer for us going forward. So opportunities on both premium leased for sale tables, but a net drag on that nonpremium lease footprint, obviously lower -- much lower fee per day. So the revenue flow through is not as dramatic as the loss in units. But something we've forecasted, something we knew was coming, something that's kind of in our plan, it's in our guide. It's in our full year guidance number.

So yes, I'd say that's the best way to kind of frame up the leasing footprint and the noise that you see in the number, it is that specific New York Water transfer over to Class 3.

And just a follow-up on that. So the loss of those VLT units, you said that was supportive for your outright sales. Did you pick up any Class III ops installs in what replace those? Or was it all outright?

Yes. There were some premium gaming ops in stores and there'll likely be more down the line. Some of those VLTs will be kind of repurposed into other locations in the market. So yes, it's an evolving cap. Yes, something that's not unique to us. All of our major competitors had the same set of removals and conversions to Class III typical casinos. So yes, that's opportunity in that market going forward, notwithstanding that we didn't see that reduction from a VLT perspective.

Yes. And just 1 add to that is about it from a '26 perspective, it will be the positive from us in that specific customer. Remember, this is just 1 customer across 700 plus that we have across the entire U.S., but it should be a net positive for us of '26.

Yes. And Matt, you mentioned the 8% underlying yield growth. Just wondering if you could unpack the drivers of that. How much was a mix effect versus the underlying GGR performance or the commercial side of things as well?

Yes. A combination of better performing products, and that's evidenced by the isles charge. You see that coming through month after month. That's really 2 major suppliers that dominate that category at the moment, which is which is fantastic. And then yes, GGR is holding up nicely in the face of a lot of geopolitical risk, surge in gas prices, a number of different factors that could be hitting the U.S. consumer, but they're powering right through it at the moment. It's something to watch closely. But you look at the fee per day numbers, you look at the reported GGR, it looks like the markets holding on very well in the face, and we have pretty challenging headwinds from a geopolitical perspective.

[Operator Instructions] We will now take -- and our next question comes from the line of Barry Jonas of Truist.

I was hoping you could talk more about the visibility you have in terms of the top line environment today? And maybe just how you're thinking about the top line growth necessary hit your '26 and for that mounter '28 AEBITDA targets?

Yes. Obviously, you're a little softer quarter than you have come to expect from us. And I would say that 1 quarter doesn't make a full year guidance certainly doesn't make a 3-year guide. So if I kind of go down the line in terms of unpacking the businesses, and I'll give you like an honest assessment of kind of where we're at and what drove some of the softness in the quarter. Like we said, I think the powerhouse of the businesses continues to be gaming ops, which is if you could pick 1 to perform at peak that's the 1 you'd pick. It's the 1 you ascribe the highest valuations to it's the part of the business, we've been really focused on growing over time. So comfortable with where gaming ops is. I think from a U.S. for-sale perspective, I'd say like in the core Class III replacement market, we had a great result in the first quarter. It looks like a 25% share number in that category was a little softer on adjacencies. Those things can be quite cyclical, as you know. So lower Canadian VLT and Oregon VLTs. These are large kind of RFP-driven parts of our business that can drive some cyclicality. So I'd say in U.S. for sale, comfortable with where the Class III replacement number is, but then you'll likely see a pickup in adjacency sales throughout the remainder of the year. International sales was really the drag in the quarter, as you can probably see in the numbers. Obviously, Australia share has really fall off the cliff leading into the launch of a new cabinet. This is pretty typical in markets. The customers don't want to be buying the old cabinet with the new ones on the horizon and we try to be transparent with customers when new cabinets are coming. Fortunately, the cavalry has arrived. It launched the COSMIC dual screen launched earlier this week actually in New South Wales. So that will be the catalyst for us to return to normalized share levels in Australia. We had a really good product line up there. And we were probably well overdue for a new cabinet refresh in this market in side at the moment, but this market, you really see a surgeon share when you launch a new cabinet.

The good news is we launched the COSMIC dual screen in the U.S. in November last year, a doctor a great start. It's lighting up the chart in the U.S. So we're confident that, that cabinet is of a quality that can really drive share in the Australian market.

The same is true in Asia. We were overdue for a cabinet launch there. It launches next week at the Macau gaming show. So again, that should be a catalyst for the international sales segment to pick up and make a solid contribution throughout the remainder of the year.

If I look at Grover, it's a nice scaling recurring revenue business. It's added another units. We've added the new games from under on the platform. So you'll see that continuing to grow throughout the year. That will be a great top line driver for us. I mean, the iGaming business had a great quarter, I thought, and that's a business that continues to scale over time, notwithstanding there's some tax implications there from a U.K. perspective, which I think Oliver spoke about in the prerecorded remarks.

And then probably the other drag on the top line at the moment is has been SciPlay. We'll be honest about that. I mean the entire category was down kind of mid-single digits in 2025. It's a market that's in maturity, I would say, we don't make excuses for that. We intend to drive growth through that business over time. That's what the team has signed up to do. And I think you can see at the AEBITDA line a nice tick up in the direct-to-consumer composition.

So all I have to say in aggregate gave us confidence notwithstanding quite a dramatic global backdrop to come out and say, you can expect from us mid- to single -- mid- to high single-digit AEBITDA growth over time. But hopefully, that color commentary gave you a bit of context about the different operating parts of the business.

Yes. And maybe, Barry, just to add to that, if you look at -- we said this on the prepared remarks, when we look at the shape of '26, we expect that again, to be very similar to '25. So if you look at '25, 22%, '24, 26% to 28%. From a quarterly phasing perspective, I expect that to be smaller.

And then to Matt's point, I mean, obviously, the headwinds that we're working through in the U.K. tax is the tariff pieces that we've been very open about in terms of some of the details there, some of the investments that we're going to make in terms of AI to get us to stronger outputs here over the next 3-plus years. Those are areas that we'll focus in on and obviously try to mitigate as we move through.

We will now take our next question from the line of Matt Ryan of Barrenjoey.

I was just picking up on some of the comments. I think all of you are making about the acceleration in the buyback in Q2. And just sort of wanting to bring that back, I believe, to maybe Barry's question about visibility and whether those things are tied together. In other words, as you're ramping your recurring revenue base, presumably your confidence levels through the next few quarters is going up. So just if you could comment on whether that's correct and whether that's possibly a motivated behind being a little bit more aggressive on the buyback?

Yes. I think -- thanks, Matt. We position ourselves really well here over the past couple of years from a capital allocation perspective, if you look at the free cash flow outcomes that we've provided over the last, I would say, a couple of years skilled every single quarter on a trailing 12 months. And that's kind of the commitment that we've made. And that certainly gives us a lot of flexibility as we head into first, I think, first and foremost, to just given the dynamic global environment that Matt could have mentioned is on will continue to focus on are going to drive outcomes for us. So obviously, the organic investments will be critical for us will continue to [indiscernible] question here, given the [indiscernible] where the price is [indiscernible]. I think as we think about the next 3 quarters, in impressive Q2 number we still believe we can do both [indiscernible] and delever at the same time. And so our commitment is [indiscernible] the range by the end of this year and the below the middle end of the range by the first half of next year. So we think we can do both of them [indiscernible] generations that we've proven to support that.

We will now take our next question from the line of Rohan Sundram of MST Financial.

Yes. Just the 1 for me, Oliver, just tying into Matt's question around debt. Sorry, you're cutting out that I appreciate the commitment towards lowering the gearing less than 3x by first half '27. But can I confirm, is there an outlook for debt reduction in that period? And are you able to give an ETA for when you would like for group to be at the low end of the target range?

Cash operation perspective. Obviously, as we move to drive the outcomes we will -- our expectation right now, and this is where we are [indiscernible] then we will reevaluate. I think gives us a lot of given the cash generation to get [indiscernible] nature of our business. So 3.5% range. I think if you apply [indiscernible] outputs are going to be from a '28 perspective, that's a lot of cash. That's going to be a lot of dry powder. That will certainly gives us a lot of flexibility as we look to be to the 3-year guidance.

And our next question comes from the line of Justin Barratt, of CLSA.

I just wondered if you could go back to the Gaming Ops business, Matt and Oliver, and in particular, Grover, a really strong quarter there. I was wondering if you're willing to break out I guess, the net adds that you got in Indiana versus, I guess, non-Indiana. Talk a little bit more about the competitive intensity in Indiana. And then I guess the broader question is, can we expect 600-plus net adds from your growth of business per quarter going forward?

Yes. A business that we're really happy to talk about. Obviously, it's proving to be a fantastic bit of M&A. And we seem to be the rightful owner of that. The team is doing a fantastic job has not missed a beat since joining Light & Wonder in terms of operational prowess, but then you add that the context of our content on their platform. It's just it's proven to be a great combustible combination. I would say the underlying business is adding games at the same rate it has since we've owned it, and then Indiana has been incremental. We haven't given the exact breakout of Indiana versus the core operating markets. But I would say the underlying organic markets are performing at the same level. And with early innings in Indiana, we see the ability to scale the over time, both placing more games in these existing locations. We've had a few competitive replacements already just off the back of our strong service, the locations that haven't added games yet. So that will continue. We've guided it not quite 600 level, but I think we've said we can do more than 300 units a quarter for Indiana, that will kind of ebb and flow, but it will be a consistent repeatable set of net adds quarter after quarter. There's still lots of runway in existing markets. and in Indiana. And then I said in the prerecorded remarks, New Mexico as a market is coming online. We've got New York as a potential market. We've got Maryland, we've got Minnesota. There's some legislative activity in Alaska. So I mean lot of all kind of vectors of growth for us with Grover. We're just 3 part of the portfolio and lots of growth revenue would be [indiscernible].

Some [indiscernible] broken record here. But clearly, just given the kind of the cash or nature of our own businesses, we will -- our intention is to move towards the middle end of the range by the end of this year. Again, below the range by the mid part of next year. First, we'll continue to kind of evaluate our debt structures here. I think broadly speaking, I'm very happy with how we've improved our capital structure over the last couple of years. If you look at what S&P did in upgrading us to a BB rating. Obviously, there's still a lot of work to be done, but I think there's and we have a good balance of us being very interesting below the end of the range by kind of mid next year and then we'll reevaluate the business from that.

We will now take our next continue on the line of David Fabris of Macquarie.

Just to follow-up on Grover, I'd be really keen to understand what's happening within Indiana. I mean there's articles out there quoting the Indiana Gaming Commission suggesting there's 2,500 pools the market since it opened. So I'm curious if that market number is correct, and let's presume half your installs of the 60 wins that market. Your competitor has significantly more market share. So curious to understand whether that are is correct and whether you can improve market share from here or what's happening within Indiana specifically?

Yes. Look, great question. We're off to a good start there. It is early innings. I would say, we're a little bit below where we typically would be when the market gets to full stabilization in terms of share. This has happened in what the market that we operate in. our view and Grover's view has been over time is to win off the back of great game performance and great service and not off deteriorating unit economics. So we want to make sure we're maintaining the right fee per day, and we're making the appropriate investments for the appropriate returns. So over time, in markets like Ohio, Kentucky, we've really gotten to a reasonable market share position over time by playing the long game on game performance and service. So I don't know if that market -- that not said is completely accurate, but we're a little bit below where we would be once the market gets to full maturity, but we've got a plan to get back to where we have been consistently and doing it in a way that protects unit economics.

Got it. But you wouldn't be -- I mean, is it easy to displace units by the competitor? It takes a while -- I mean that's committed the capital to put those machines into their venues. It's not like you can walk in there and start displacing them pretty quickly?

We've already done it, David. So it's happening right now, not 2 months into the market being live. So it's active. These are charitable locations. So you have to protect the relationship through the way that you service them as opposed to legal actions and these are veterans organizations. So it's really about the level of service and game performance you deliver as opposed to long-term contracts that lock things in.

And David, just to add to that, it's not necessarily capital intensive for these customers. It's a recurring revenue business. And so for those that don't have those long-term contracts, we certainly have the ability to go in with our customer service with our high-quality content to go and convert like we've done in the states that we participate in today.

And our next question comes from the line of Kai Erman of Jefferies.

Just following up from Andre's earlier question on the impact of the VLT change in New York. Could you please help give us a steer on the kind of underlying results in gaming ops in stores and outright sales in the U.S. kind of excluding the sort of benefit from that 1 location. And as a follow-on to that, given the lower fee per day units dropping out, you're gaining margin at 53% tends to be better than kind of expected in that low 50s. Could you talk about maybe the drivers of that and your outlook for gaming margins for the rest of the year?

Yes. So I think, broadly speaking, we continue to show, and this is why we introduced kind of a more specific premium KPI to kind of bifurcate some of the noise that's going to be inevitable in this print. And Resort's World is still kind of working through their transition, and there's still some to go. So I think broadly speaking, I think Matt made this comment earlier, we always expect, call it, that 500-plus units from a premium point of view. That clearly has given us ample in growth in our RPDs. And we expect that to trend in those directions for the balance of this year. And then if you think about premium right now, that's about 56% of our North American installed base, and that's going to continue to kind of scale up here as we move through the rest of the year. I don't know is there anything else, Matt that you would add to that? Does that answer your question? I'm happy to...

Yes. I think just is understanding obviously, you've put the fee per day benefit of those coming out. But just the outlook for margins going forward? Like do you think there's going to be more seed benefits throughout the year? Or are there any other things that's going to be driving that gaming margin as we move throughout the rest of the year.

Thanks for the reminder. Yes. No, I was very pleased with, obviously, our margin execution broadly speaking, across the business. Gaming specifically obviously, with the recurring revenue mix this quarter, obviously, we're going to have a bit of an uplift relative to the guide that we provided. As we kind of get into the second, third, fourth quarter and game sales become a bit more prevalent, Obviously, we're working through things like tariffs, et cetera, that should, I would say, normalize. But our expectation is to scale gaming margins stay as we move forward. And that's all part of the margin enhancement initiatives that we put forward. A lot of the things that Anthony for mining, the team are working towards those areas will continue to kind of on the manufacturing side to get [indiscernible]. So yes, I would expect margins to continue to move sustainably north from here, and that's going to be the expectation that we have as a prior company.

And our next question comes from the line of Adrian Lemme of Citi.

Oliver, just wanted to focus on SciPlay. We've seen a material slowdown here in earnings growth this quarter compared to prior quarters, and that's despite D2C penetration, again, increasing very strongly. Looks to me it's partly due to higher costs. So my question is 2 parts. Is the higher cost simply due to the higher UA investment you mentioned earlier? And secondly, is this UA needed just to minimize the loss of revenue? Or do you think you can actually flatten out or even get back to some top line growth in this business, please?

Yes. Great question. Maybe I'll kick it off, and then Matt, maybe you can add to that. I think from our point of view, and Matt made some comments on this earlier, when you look at some of the underlying KPIs gives us a bit of comfort that we are stabilizing and moving in the right direction. If you look at KPS such as Dow, we had with slight growth sequentially quarter as well until growth set growth. We saw [indiscernible] grow nicely year-over-year. And so when you start to see those levels of KPIs and engagement, that's when we start to drive a little bit more, I would say, high return UA spend. And that's what we saw in Q1. Q4 is obviously a seasonally lower quarter for us in terms of that investment just given the CPIs during the holidays. So Q1 is typically when you would turn that on. And so as we start to see that momentum go, we want to be able to top of the funnel in terms of Dow, and that's what the teams are starting to kind of work through the balance of this year.

And our next question comes from the line of Liam Roberson of Jarden.

Just quickly, 1 on the mid- to high single-digit AEBITDA growth outlook. Obviously, you've called out 500 bps of adverse impacts on external factors, strategic investments in the legacy costs. appreciate the color there. Just within that, I'm keen to look at some of the aspects that you might not repeat beyond FY '26. I mean it looks like legacy costs, they obviously won't repeat into FY '27. But then can you give us a sense of what else you expect to reverse in either FY '27 or '28, particularly maybe just within that strategic investment bucket?

I think the onetime pieces that you look at is obviously, to your point, the legacy legals, that we should start to lap over I think some of the other investments in terms of AI, we're going to continue to kind of evaluate what the right investment levels are to drive the outcome. I think we're going to come back to the broader market here in the near term to give a little bit more detail on what we're going to be executing against and committing to from that program perspective here later this year. But I would expect we'll continue to kind of evaluate that. I think the 1 piece that you'll start to look at is the U.K. tax implications I think that's once you lapse that into next year, you'll start to get back to normalized growth that we would expect both at the top and bottom line from a high iGaming point of view. So I think there are going to be some puts and takes this year. I think what I mentioned early in terms of margin hold true. Our expectation is to sustainably grow this margin here over not only this year but through the '28 guide and beyond. And so that -- those are the areas that we'll continue to focus in on over the next couple of periods.

And our next question comes from the line of Mark Wilson of RBC. Mark? Please proceed with your question.

So we have now come to the end of the question-and-answer session. I'll now turn the conference back to Matt Wilson for his closing comments.

Yes, I'd like to take the opportunity just to give a bit more context around the AI program that we've been working on, which we think is really exciting, and we think it's going to take a more meaningful and growing part of our investment thesis going forward, we were approaching this with urgency and discipline. We kicked off the AI initiative in 2025, really spearheaded by our CSO as the Chief Strategy Officer [indiscernible] some outside thinking as well to kind of really validate some of our assumptions about what this could mean for our organization. We want to take a leadership position here. We spent hundreds of hours working on this program of work. That's been board sponsored. We've made a significant investment in Q1, and we've found capacity this year to invest within that envelope of the guide that we mentioned earlier throughout this call. It's very exciting. We've got 43 initiatives and work streams that we're working on across technology, content, side play in our operations. And we think it can make a very meaningful impact on our organization over time. We're really excited to share more about that with you around the Q2 earnings when it come together in August around the AGA show, and you'll have our entire leadership group there talk [indiscernible].

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

Good day, and thank you for standing by. Welcome to the Light & Wonder Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Rohan Gallagher, you may begin.

Thank you, operator, and welcome, everyone, to our fourth quarter and full year 2025 Earnings Conference Call.

Joining me today in Las Vegas 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, where we will refer to our earnings presentation. This will then be 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 in the Investors section of our website and our filings with the SEC and the ASX. 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.

With that, I will now turn the call over to Matt to discuss the fourth quarter and full year results and operational highlights on Slide 3. Thank you, Matt.

Thanks, Rohan. Hello, everyone. Thank you all for joining us.

2025 was a pivotal year for Light & Wonder. In May, we completed the acquisition of Grover charitable gaming. A highly synergistic and complementary business with meaningful greenfield growth opportunities. At our second Investor Day since rebranding as Light & Wonder, we announced our long-term targets of $2 billion in consolidated AEBITDA and EPSa exceeding $10.55 by 2028. In November, we completed our transition to a sole ASX listing, and early market feedback has been encouraging. Importantly, we also resolved the peer dispute earlier this year, removing any unnecessary distraction and allowing the organization to remain focused on execution.

Our results reflect the team's execution and resilience. Despite challenges along the way, we delivered within our previously guided 2025 consolidated AEBITDA and adjusted NPATA target ranges. Over the year, we strengthened our operating foundation and further positioned the business financially for long-term sustainable growth. The quality of earnings continues to improve, supported by consistent net adds in the gaming operations installed base and $2.2 billion of recurring revenue with margin and cash flow expansion evident throughout the year. Consolidated AEBITDA and adjusted NPATA both grew in the high teens year-over-year, and EPSa increased 27% to $6.69 to close out 2025.

We remain committed to advancing our growth initiatives while returning capital to shareholders. During the year, we repurchased $877 million worth of shares and have now completed 78% of our second share repurchase program. In total, we have returned $1.9 billion to shareholders since launching our initial program in 2022. Together, these highlights demonstrate strong performance and reinforce our commitment to continuous improvement across financial and operational metrics.

Turning to a high-level overview of our performance on Slide 4. Consolidated revenue growth was driven by Gaming, including the contribution from Grover and record results in iGaming, both in the fourth quarter and for the year. That strength was partially offset by modest declines at SciPlay.

Just as important, our continued focus on profitability translated into meaningful AEBITDA growth across all 3 businesses, with 29% consolidated AEBITDA growth in the fourth quarter and 16% for the year compared to 2024. Our commitment to the comprehensive margin enhancement initiatives remained intact as we grew consolidated AEBITDA margins 500 basis points in the fourth quarter and full year 2025.

The margin uplift across the organization is expected to remain largely sustainable as we continue to identify and execute key efficiency projects and further optimize our corporate cost structure. With a streamlined set of complementary businesses, we are well positioned to generate sustained top and bottom line growth, supported by an efficient R&D engine, which enables us to innovate, scale and leverage capabilities across the enterprise.

As many of you may have observed from recent headlines, AI is at the center of debate across many industries, including gaming. At Light & Wonder, we see AI as a growth enabler, another lever in creating value and helping us achieve our full year '28 financial targets. Through our strategic transformation and track record with margin enhancement initiatives, we have demonstrated the ability to adapt and capitalize on changes, and we believe we can leverage AI to further enhance our existing capabilities.

You can see here on Slide 5 that we are well positioned, courtesy of our global scale, which provides us with unique proprietary data sets. By leaning into AI, we can further improve both the quality and quantum of games in a more productive manner and distribute across multiple channels where we already hold leadership positions. Furthermore, our sizable R&D, customer relationships and incumbency in highly regulated markets is underpinned by a collaborative culture fostered by an aligned Board and leadership team, which will only further strengthen our structural mode.

AI presents a significant opportunity for Light & Wonder. In fact, we have embraced this technology and commenced on our AI transformation program to drive both growth and efficiency. We are excited to be taking a leadership role in this arena and will provide further details as our AI journey evolves.

With that, let's turn to our business unit highlights. On Slide 7, Gaming revenue was up 17% to $602 million in the quarter, primarily driven by higher gaming operations revenue which increased 35% year-over-year to $237 million. Drivers included higher North American installs, specifically in the premium segment and a $41 million contribution from Grover. Growth was fueled by strong launches of our COSMIC Upright and LIGHTWAVE cabinets and other key games in hardware as showcased at AGE and G2E last year.

Gaming machine sales also delivered a record quarter of $234 million, a 20% increase year-over-year on a record of 7,000 units shipped in North America. International shipments remained solid, supported by a sizable order of our SSBTs in the U.K. as [ previous ]. Our systems and tables businesses both saw timing-related sales declines in the quarter, with systems impacted by higher sales in the prior year and tables on lower utility sales in Asia, partially offset by North American sales. We firmly expect both businesses to return to growth underpinned by targeted near-term investments and commercial strategy.

Gaming AEBITDA rose 26% year-over-year to $323 million, driven by a record game sales and strong gaming operations revenue growth. Our AEBITDA margins increased to 54% on a higher mix of gaming operations units and cost efficiencies, reflecting the team's continued execution on quality of earnings enhancement through recurring revenue and streamlined cost structures.

Now from in-depth look at our Gaming KPIs on Slide 8. Our North American installed base increased 42% year-over-year to over 48,300 units. Excluding Grover's installed base of over 11,600 units, Gaming operations grew over 700 units sequentially and over 2,600 units year-over-year, marking our 22nd consecutive quarter of North American premium installed base increases, which now accounts for over 53% of the total North American installed base. This strong growth was driven by the successful launch of LIGHTWAVE and the continued momentum of our COSMIC Series cabinets.

Average daily revenue per unit in North America increased to $47, up 4% year-over-year, driven by a richer product mix, offset by the inclusion of Grover units. Excluding Grover, our North American installed base revenue per day grew 9% year-over-year, driven primarily by stronger performance in premium and wide-area progressives. In fact, we continue to excel across multiple game categories on the Eilers chart, with 11 of the top 25 index new premium leased and [ WAP ] games featuring our HUFF N' PUFF and ULTIMATE FIRE LINK titles. This continued momentum is a testament to the quality of our diversified game franchises with demonstrated performance not just in premium, but also in Class 2, among others.

Global gaming machine sales recorded another strong quarter, up 29% in unit shipments year-over-year to over 12,300 units. Replacement shipments remain strong, and our array of products enabled us to expand our presence in rolling replacement and RFP markets such as the Canadian VLTs as well as entries into the Nebraska skill-based market and Eastern European dynamic multigame market.

We continue to see progress in the latest Eilers report where HUFF N' TRIPLE PUFF debuted at #2 in the new core video real game index, while PIGGY BANKIN' BREAK IN remained at #3 with 3 other [ LIGHTWAVE ] titles in the top 10. We have an expanded and robust global hardware and content road map planned for 2026, as shown on Slide 9, driven by continued investments in our studios.

2025 was an incredible year for gaming operations as we launched the LIGHTWAVE cabinet and introduced COSMIC SKY and our [ step-up ] LANDMARK 7000 JACKPOT WHEEL, both of which will be available to our customers shortly. Additionally, we are looking to further solidify our game sales market share with COSMIC DUAL SCREEN and LIGHTWAVE SOLAR, with new game titles such as JIN CHAN and FIESTA CALIENTE. We've also planned for expanded regionalized road map for our Australia and Asia customers on Slide 10 to support and extend the momentum we've built over the past few years in these markets.

Moving along to Slide 11 for an update on our prior acquisition, Grover. Since closing the deal in May, Grover has contributed $102 million of revenue, reinforcing the attractive recurring nature of the charitable gaming model. Operationally, we're seeing strong momentum in the installed base. We've added over 1,000 units since the announcement and exited 2025 with over 11,600 units installed. In the fourth quarter alone, we added 345 units sequentially across our existing operating markets, demonstrating continued demand and solid execution.

We also expanded our footprint into Indiana with the successful launch in late December and are in the early stages of a disciplined deployment strategy. Initial installed locations are demonstrating strong performance consistent with our expectations, and we are continuing to see strong demand from qualified charitable partners. We are well positioned operationally to support continued expansion and remain confident in achieving our fair share in Indiana, consistent with our performance in the jurisdictions we currently operate in over the long term.

From an integration standpoint, we're actively optimizing game floors by bringing Light & Wonder game mechanics, cabinets and brands into the Grover footprint. At the same time, we're investing to ensure best-in-class service and to build share as we enter new markets, including existing ones like Maryland, where we currently do not operate in and potential future openings such as New York. Overall, Grover is performing well, scaling quickly and building a meaningful runway for profitable growth that is akin to our core gaming operations business.

Turning to Slide 12. SciPlay revenue was $195 million for the quarter, with QUICK HIT Slots and 88 FORTUNES once again reaching record quarterly revenues, their 16th and 6th, respectively. The strong performance of these and other portfolio gains was offset by a decrease in average monthly payers at JACKPOT PARTY. I'd like to share that underlying metrics is becoming more consistent starting in December of 2025 and into the new year, with engagement and retention rates returning to normal. This stability gives us confidence to lean back into UA investments, which is vital to sustainable growth. While the revamp of this magnitude takes time, we are confident in a return to prior performance levels.

Player monetization remains a key focus and an integral part of the flywheel, with average revenue per daily active user up 4% year-over-year to $1.10, and average monthly revenue per paying user increased 14% to over $133 in the quarter. Importantly, we continue to see significant progress in our direct-to-consumer offering, which now has grown to over 25% of the total fourth quarter SciPlay revenue or $48 million, up from just 13% at the end of 2024. We will cultivate the DTC runway as it has been a primary driver of SciPlay's AEBITDA growth, which is up 8% to $80 million year-over-year. SciPlay is an integral part of our omni-channel strategy, and we remain committed to the initiatives that we expect to drive above-market performance going forward.

Moving to iGaming on Slide 13. We delivered a third consecutive quarter of record revenue of $94 million, up 21% year-over-year on continued strong momentum in North America, underpinned by first-party content proliferation in the U.S. and the expansion of our partner network. This quarter marked the fourth sequential period of global first-party content GGR growth on our content aggregation platform, OGS, underpinned by solid game performance across the HUFF N' PUFF franchise in the U.S. and the PIROTS franchise in Europe. In fact, 8 out of the top 10 games across our content aggregation network in the quarter were first-party titles with [ HUFF N' PUFF ] ranking first, PIROTS 4 ranking second and 3 other HUFF N' PUFF family titles rounding out the top 10.

iGaming AEBITDA of $36 million was up 44% year-over-year at record levels, reflecting continued first-party and third-party content growth, with margins up 600 basis points versus the prior period. This margin expansion was driven primarily by profit flow-through from increased revenue and cost realignment associated with the discontinuation of our live casino business. Wagers process through OGS grew 22% year-over-year to $29.2 billion, with record volumes across all regions and content types reflecting the platform's global reach and growth potential.

In addition to our aforementioned successful game franchises, we have more land-based favorites in our road map, such as BIG HOT FLAMING POTS TASTY TREASURES and PIGGY BANKIN' SUPERLOCK as you see on Slide 14. Our network scale has enabled games from various studios to reach wider audiences across North America. In fact, Elk Studio is now live in Michigan and New Jersey with Pennsylvania expected to follow.

We're also excited about the recent legalization of iGaming in Maine, which is a welcome site to the industry. With the recently passed bill in the U.K. increasing online gaming taxes to 40%, we expect an adverse impact to the business beginning in the second quarter of this year, given our meaningful presence there. We will continue to explore mitigation initiatives with key operating partners as the industry adapts to the change.

International expansion continues to be an opportunity for growth. Just last quarter, we received approval to operate in the Philippines as the first licensed iGaming supplier, and we're excited to share that we are now live. We have a strong presence as a leading land-based slot supplier, and we look forward to launching our popular games in the market soon.

Similar to the Philippines, we have now received approval to operate in the UAE with a launch expected later this year. This is another sizable market opportunity we're excited to pursue. Our investments in robust regionalized road maps will continue to support our team's execution in nascent and international markets, further extending our current iGaming market momentum and global presence.

With that, I will now hand over to Oliver to go through our financials. Oliver?

Thanks, Matt. 2025 marked a year of strong earnings growth across all 3 businesses. driven by continued disciplined execution of our strategic and operational initiatives across all 4 quarters. I'm very proud of our team's accomplishments.

Let me walk you through our results, starting with Slide 16. In the fourth quarter of 2025, we delivered consolidated revenue of $891 million, up 12% year-over-year, driven primarily by 17% growth in Gaming revenue including $41 million on Grover and record iGaming revenue, up 21% year-over-year.

Recurring revenue continues to perform well, supporting earnings durability and driving strong incremental margin flow through. For the full year, consolidated revenue was $3.3 billion, up 4% from 2024. Gaming operations increased by $170 million driven by $102 million Grover contribution and a $68 million contribution from our diversified game portfolio.

iGaming also reported revenue growth of 13% or $38 million compared with the prior year period. Given the recent successful resolution of a pure dispute, the fourth quarter reflects a $128 million settlement along with other charges of $49 million, which includes $25 million in contingent acquisition consideration fair value adjustment related to Grover. [ $18 ] million in costs related to the ASX transition and other costs, totaling $177 million under restructuring and other. As a result, we reported a net loss of $15 million in the quarter. Absent these charges, profitability was strong driven by consolidated revenue growth and record AEBITDA margins across all businesses.

Net income for the year decreased 18% year-over-year, impacted by $219 million of restructuring and other charges described earlier. Absent the previously mentioned settlement, business segment growth was driven by strong execution of operational efficiencies throughout the year. Fourth quarter consolidated AEBITDA grew 29% year-over-year to $405 million, reflecting [ both ] top line growth and margin expansion across the portfolio, including contributions from Grover.

Our consolidated AEBITDA for the year was $1.44 billion, well within our guided range, reflecting solid operational performance. Adjusted NPATA for the quarter grew 27% to $161 million, and adjusted NPATA for the year grew 18% year-over-year to $567 million. Growth was largely driven by an AEBITDA increase with record margin across all businesses.

On a per share basis for the year, and given our restructuring and other charges described earlier, net income per share on a diluted basis decreased by 11% to $3.26 compared to $3.68 in the prior year period. Adjusted NPATA per share or EPSa, increased 27% to $6.69 compared to $5.27 in the prior year period. The full year EPSa does not reflect the full impact of significantly higher share repurchases we made in the fourth quarter as the metric is based on an average share calculation.

Our outstanding shares as of February 18, 2026 were approximately 77.1 million shares, in line with our year-end position. If you were to take our period-ending outstanding share count, our EPSa would have been meaningfully higher and sets us up nicely as we move into 2026.

On Slide 17, you'll see our fourth quarter consolidated AEBITDA and adjusted NPATA bridges, which reflect broad-based growth. Gaming AEBITDA increased $66 million year-over-year. Margin expansion for the fourth quarter was primarily driven by strong North American gaming operations installs, higher revenue per day led by the performance of our premium and wide-area progressive units, contributions from Grover, and record North American gaming machine sales. Going forward, we expect continued growth in our premium North American installed base, which we forecast to be over 500 units a quarter this year. Importantly, we anticipate another year of net installed growth in our North American installed base, coupled with the incremental benefit from Grover.

I would also like to note that we have substantial domestic and international new openings and expansions as well as VLT units in the first quarter of 2025, which will impact comparability in the coming period. As Matt mentioned earlier, our planned harbor launch in the coming months is expected to drive performance in the second half of the year.

Looking ahead, we expect our Gaming AEBITDA margin to be around [ 50% ] in the first quarter on product mix and tariff impact. SciPlay AEBITDA increased $6 million, primarily supported by increased direct-to-consumer revenue mix of 25%, with strategic and targeted UA investments. Going forward in 2026, we expect UA spend to ramp up, further increases in DTC mix and stabilization for JACKPOT PARTY as we continue to invest back into the business.

iGaming reached new records for revenue and EBITDA, driven by growth in first-party content and the discontinuation of [ Live Casino ]. Based on our road map, we believe there is ample runway to scale this business despite some headwinds related to the U.K. tax changes starting in the second quarter of 2026. Corporate and other improved by $7 million through margin expansion initiatives and cost efficiencies.

Looking at adjusted NPATA, we delivered a $90 million year-over-year increase in consolidated EBITDA, driven by strong revenue growth and record margins across every business segment. This improvement was partially offset by several cost and expense dynamics. Depreciation and amortization increased by $8 million year-over-year, reflecting the addition of Grover units and higher success-based capital expenditures within Gaming operations.

Interest expense increased by $13 million, primarily due to the higher debt levels associated with the Grover acquisition and ongoing share repurchases. These repurchases mitigated uncertainty and volatility during the fourth quarter as we transition to a sole ASX listed. Additionally, income tax expense increased by $32 million, primarily resulting from a higher effective tax rate in the fourth quarter of 2025. From a tax perspective, our effective tax rate was approximately 24% in 2025 and is expected to range between 22% and 24% for the coming year.

Turning to cash generation on Slide 18. We delivered another strong quarter and year of cash flow, in line with our commitment to our cash enhancement initiatives. Operating cash flow was $319 million in the quarter, up 58% year-over-year. Over the same period, free cash flow increased 138% to $176 million, driven by earnings growth, lower cash tax payments and lower cash interest following our third quarter financing actions.

For the full year, operating cash flow was $794 million, an increase of 26% year-over-year. And free cash flow was $452 million, up 42%, reflecting the underlying strength and resilience of our cash-generative model and lower cash taxes.

Importantly, cash conversion improved year-over-year progressively. Conversion rate in the quarter nearly doubled on both AEBITDA and NPATA basis to 43% and 109%, respectively. For the year, free cash flow conversion was 31% of consolidated AEBITDA, up from 26% in 2024 and 80% of adjusted NPATA, up from 66% last year. It is important to note that these figures include onetime costs of $18 million in professional services related to the ASX transition and the Grover acquisition and $75 million in litigation settlements. We continue to focus on strengthening the working capital cycles, optimizing inventory levels and maximizing capital expenditures to enhance our quality of earnings and cash conversion over time.

Moving on to our capital structure on Slide 19. Our net debt leverage ratio at year-end of 3.4x remained within the targeted range on a combined basis, as previously discussed. This was despite the accelerated pace of our share repurchases during Q4 as we transition to a sole ASX listing back in November of 2025.

Given the strength of our operating model and cash generation, we expect to delever organically through 2026. The principal value of our debt at period end was $5.2 billion. Last month, we successfully repriced our $2.1 billion term loan, reducing the applicable margin by 25 basis points to 2%, which reflects our strong credit profile. This repricing is expected to generate approximately $5 million of annual interest savings.

Our debt maturity profile remains long dated and well levered, with an average tenor of roughly 4.4 years. We also extended bond maturities from 2028 to 2033 at lower rates last year. Our effective net interest rate is approximately 6.65%, with a 53% fixed and 47% floating debt mix. We also maintained meaningful flexibility, ending the period with $927 million of available liquidity to support growth initiatives. As previously noted, we will continue to evaluate opportunities to optimize our capital structure as favorable market conditions arise.

I will now go through our capital allocation framework on Slide 20, which remains consistent and execution focused across our key priorities. First, we will continue to reinvest in the business in a targeted and efficient manner in line with sales growth consistent with prior years. We continue to target combined R&D and CapEx at around 17% of consolidated revenue. which may vary quarter-to-quarter given timing of investments. That said, you will see ongoing investments weighted towards the first half of the year and the first quarter in particular related to Grover [ ramp ] and Indiana entry as well as other value initiatives.

We aim to retain a flexible balance sheet, which gives us the ability to deploy capital opportunistically under the right circumstances. Over the long run and absent major capital allocation opportunities, we expect to naturally gravitate towards the lower end of the 2.5 to 3.5x leverage range. over the long run on our strong operating model and highly cash-generative business.

Importantly, we remain focused on capital returns. In the fourth quarter, we stepped up share and CDI repurchases to $500 million and returned $877 million at an average price of $86.80, utilizing 78% of the $1.5 billion authorization in 2025. Looking ahead, we will remain opportunistic regarding the use of buyback with consideration to our capital allocation priorities.

Since the initiation of our share repurchase program back in 2022, we have returned $1.9 billion to shareholders. That equates to about 25% of the total outstanding shares prior to the commencement of our burner program.

Overall, our framework continues to balance disciplined reinvestment, financial flexibility and shareholder return anchored by a strong cash-generative model.

With that, I'll pass it back to Matt to provide you an update on our 2026 outlook.

Thank you, Oliver. In conclusion, I'd like to provide a summary of the shape and growth trajectory of 2026.

You can see here on Slide 22 that we anticipate another year of strong adjusted NPATA and EPSa growth with the shape of earnings to be broadly similar to 2025, reflective of our growing recurring revenue base and industry cyclicality. Importantly, strategic investments, tariff costs in gaming and legacy cost pertaining to legal matters are anticipated in the first half of the year and the first quarter in particular.

Operationally, we expect all business units to continue targeting above-market growth with a particular focus on the recurring revenue part of our business. As mentioned earlier, we expect continued installs across North American premium gaming operations and Grover, with continued game sales momentum in North America off a record fourth quarter as well as improved performance in Australia pending the cabinet launch in the second quarter. On the digital side, SciPlay is expected to continue its DTC expansion and iGaming to further expand its 1PP content.

Whilst we continue to be opportunistic regarding share repurchases, from a capital management perspective, we plan to naturally delever our balance sheet over the course of the year. Lastly, we've also guided to some key financial metrics for modeling purposes and provided commentary pertaining to our business verticals in addition to an update on our progress to the various 2028 targets in the appendix.

And now we'll turn it over to the operator for your questions. Operator?

[Operator Instructions] Our first question will be coming from the line of Matt Ryan of Barrenjoey.

Appreciate the slide that you've got on Page 5 around artificial intelligence. Obviously, it's been a huge talking point around the sector of late. I was just hoping if you could focus a little bit on the right-hand side and the structural moat that your business has. And maybe you could just talk about how that, I guess, keeps you in good stead around any competitive risks that people might be concerned about at the moment?

Yes. Thanks for your question, Matt. I'll address that directly, and then I've got Victor Blanco, the CTO of Light & Wonder, here to kind of cover off kind of the practical application of what we're doing around AI in the business.

Clearly, a hot topic in the market at the moment. So let me give you L&W's perspective on AI. We see AI as a significant growth enabler for our business. There's probably 2 things to understand about AI at L&W on through that kind of defensive moat land and the other through that offensive land. So I'll step through the moats. We do have strong and durable structural moats around this industry and around our business. We have strong established market positions. We've been building these positions for decades. We're either #1 or #2 in all the markets that we operate in. It's a highly regulated market, the gaming market. We have over 500 licenses in jurisdictions all over the world. These are developed through personal one-to-one relationships with regulators in each of those markets. So it takes time to build that scale into your business.

Importantly, we've got scale and incumbency. We spent just in '25 alone, over $562 million in R&D and CapEx. That's a huge base for us to optimize over time, and we think these AI tools will allow us to do that. If you think about our team's ability to drive these margin enhancement initiatives, a lot of that was outside of the R&D organization, but these AI tools kind of really directly help us optimize that spend. So it's a massive base that we can continue to optimize over time.

We've got valuable IP and brands, I think HUFF N' PUFF, ULTIMATE FIRE LINK, DANCING DRUMS, Journey to Planet Moolah, just to name a few of the games that we have in our portfolio. These are the Coca-Colas of the gaming industry. Players love them. They trust them. They want to play the next variation. That's why every next version of HUFF N' PUFF that we launch ends up on the Eilers charts, players trust these and they're unique to us. That they can't be leveraged by competitors or start-ups entering the space.

I think importantly, we have unique data sets. So we have decades of certified math models on our archive that we use to develop games. We've got the ability to leverage OGS player session data to help inform the way we create games. We've been leveraging AB testing in SciPlay. I think that's one of the factors that's really driven the incremental success as you've seen in our portfolio. And importantly, all of these data sets are within the 4 walls of Light & Wonder, they can't be crawled by an LLM that's unique to us specifically.

I think one of the big things that's overlooked by the market as it relates to gaming is we're not a SaaS company at all. We're really this beautiful intersection between hardware and content. We launched 5 to 7 proprietary cabinets every year. We launched 7 in the last 12 months. And those things are unique and they take time to develop. So you combine that with the signage and merchandising we build, multiply that by the 500 jurisdictions we're in. That's a huge matrix of configurations and complexity that you have to deal with. And when it comes to hardware, that's really supply chains, it's procurement, it's logistics, it's storage, it's deployment, it's servicing those games in the market. This is massive established infrastructure that takes time to build. It cannot be replicated by 2 [ quants and an LLM ] in a garage somewhere, these are things that are built over time. So yes, through my perspective, we have massive structural moats around the gaming business, and that will persist over time, and I will be a massive opportunity for us.

From a growth and productivity standpoint, this is really when we go on the offense around AI. There's kind of really 3 different areas that we're looking to leverage this. It's through technology, so accelerating new platform development AI architecture, code generation, test automation, there's lots of opportunity with code and some of the tools that Victor will speak to that allow us to drive some efficiencies in that space.

From a content perspective, it's really nascent targeting improving our quality and hit rate of games by really taking a lot of the noncreative elements of the process off the table through the use of AI tools. So there's lots of opportunity there. And then finally, like every business and every industry is leveraging AI to drive business operations and the efficiencies around that.

I think importantly to note for investors, we launched an AI transformation program in 2025. We intended to come to market and explain that to our investor base sometime in 2026, but we thought, just given a lot of the anxiety in the market today, we want to give you a bit of a precursor to that. The Board is aligned around that transformation program as is the management team, and we see significant opportunities.

But I'll hand to Victor to speak about AI in practical terms.

Thanks, Matt. I'm happy to share how we're advancing AI here at Light & Wonder from the technology organization. One of our key initiatives that I'm personally driving is our carbon game development kit. A new development in September of last year, we made the strategic decision to restart Carbon as a completely AI-led platform development initiative. This means leveraging coding assistants like Claude as our primary development methodology. We did a comprehensive reset of all of our Carbon architecture decisions. We evaluated all the latest technologies, and we looked at our current future business goals.

Now building Carbon on this AI-led approach, we've effectively surpassed our prior Carbon development progress. We delivered on a new development language. We have a brand-new game engine and an authoring experience all done in just over 4 months. Carbon is now delivering 100% game portability across land, social and web where before we were just sitting at around 70%. So a huge difference. Our first Carbon land-based game is still on track for launch this year, and we've aggressively pulled in our first iGaming Carbon game into '26 as well, just given the confidence of what we're seeing.

And now finally, because Carbon was developed entirely through AI-led methodologies, the same tools, the workflows and all the productivity gains that we're seeing in the platform are going to carry forward directly into our studios as they adopt Carbon as their basis for building games.

Now with all these benefits that we walk through that we're already seeing in Carbon and many other platforms in our business, there are elements of the game design that we just can't simply replace. The first is our player experience, we know that most of our successful games are built on this intuitive understanding of that player experience. It's built up over decades of observing real player behavior across our market and demographics, while AI is able to analyze this engagement data at scale, we've struggled to figure out how to originate that creative instinct that makes that game experience feels so compelling for our players. This is still a very human-led process.

Another AI challenge is creating those creative breakthroughs. AI is great at recombining patterns from existing data, but it's our game designers that are still creating the genuinely novel mechanics. All of our new bonus structures, our unique feature configurations and our progressive systems, these are the hit games that are driving our market share through these breakthrough concepts, not through that kind of pattern recombination. We're still using AI to accelerate the iteration and execution, but it's still our studio heads that are driving that [ spark ], that's making successful content. So I'm excited the way our games and teams are adopting this technology, and I do believe that AI is going to continue to amplify our process for years to come.

Yes. I mean, Victor is right at the tip of the spear of this initiative. So we're excited to cultivate this more and then share more with investors throughout the course of 2026, but I thought it was timely to give you that update. So thanks for the question, Matt.

Our next question will be coming from the line of Barry Jonas of Truist.

There's been a lot of legislative activity we've seen recently in states like Pennsylvania and Missouri, which could involve VLT expansion just hopeful you can maybe frame the potential opportunity and likelihood of seeing that VLT expansion.

Yes. Look, we're very encouraged to see the progress here. Unregulated gray markets are a significant problem for our industry. There's tens of thousands of these skill-based games right across the states in the U.S. So it's nice to see that level of activity at the legislature around potential VLT expansion. We're very well positioned. As you know, we're a market leader in Illinois. And so to the extent that those regulations are replicated in either Pennsylvania or Missouri, our whole product suite is set up and ready for deployment.

We try not to get ahead of ourselves in these markets. There's a lot of twist and turns when it comes to legislative progress. So -- but it is exciting to see [ that ] spoken about, I think the [ AGA ] has spoken at length about the dearth of gray market, skill-based games across the U.S., they're not taxed effectively, they're not regulated. And I think if you look at the Illinois example, regulating taxing it can lead to great outcomes at a state revenu level.

So we're excited for that. We'll be ready to activate it. various different suggestions about market size of Pennsylvania, I think, is predicted as a 40,000-unit potential market, Missouri, not quite that high, but still both very significant. But we're seeing a lot of activity across the legislative front on multiple dimensions we heard over the holiday break that New York's legislating charitable gaming. So that's an interesting incremental market for us. There's activity in Maine as it relates to charitable gaming. So positive to see some potential expansion opportunities.

I'll just remind you that none of those new market opportunities sit inside our long-term guidance out to 2028. These are all discrete unique opportunities that would be kind of incremental to our plan. So watching it closely, preparing as best we can, but ready to ride the twist and turns as it relates to legislative progress.

And our next question will be coming from David Fabris of Macquarie.

Can we just focus on the Grover acquisition, and just a couple of questions here. I mean if we think about the growth prospects in your legacy jurisdiction, it looks like you're tracking kind of 300 quarterly net installs based on the 3Q and 4Q trends. Is that something we can extrapolate into '26, excluding Indiana? And then if we think about Indiana, you've started installing machines in the 1Q. So that's post balance date, obviously. Can you give us any insights into how you've been tracking for that near 2 months? And if we're thinking about [ sleeper day ] as well, it looks like Grover reports about $39 per day. Is Indiana accretive, dilutive or broadly in line with that $39 trend?

Yes. Thanks for the question. Yes. We're thrilled about the Grover acquisition going very, very well. I mean, pacing well ahead of our expectations so far. I think one of the exciting things, we saw unit growth across all of our markets in the fourth quarter. So it just shows you the organic growth potential within existing markets.

We entered Indiana. The market was regulated on December 30. So not our favorite time to be activating a new market. The team has worked hard over the new year, but really leaned into that. So we're, I'd say, 6 weeks into that market being live. We're going kind of door-to-door looking at the opportunities. And Grover's always won off the back of great game performance and great service, and that's how we're going to win in Indiana, too. We're not going to chase discounting or deals in that marketplace. We want to win the right way, and that's how the team's kind of focusing themselves.

We think over time, we'll get similar share to other existing markets. New markets have opened over the years. There's the initial rollout and you get the optimization from a game performance and service perspective. So we think over the long term, we'll have similar share in that market to the existing markets. I think your fee today is around where we are from a Grover contribution standpoint, very similar to a Class 2 type fee per day, which you're very familiar with.

Yes, we expect Indiana just given kind of the economic dimensions in that market to be reasonably consistent with what we see across the board. So I think that's probably the best way to frame up the ARPDAU opportunity in Indiana.

And David, just one other add to that. I think if you remember some of the conversations we've had in previous quarters at a base kind of run rate perspective, I think 150 to 200 units ongoing is a good starting point from a model perspective. And then yes, you'll start to see incremental adds for Indiana as that ramps up. So I think from a modeling point of view, that's how I would think about that.

Our next question will be coming from Andre Fromyhr of UBS.

Just wanted to focus on the ops business. I see in your outlook commentary, you've talked about net installs in the premium space of 500-plus per quarter. And I was wondering if you could put that in perspective of the year ahead versus the year we just had 2025 sort of started with Dragon Train removed from your pipeline. But so how does the game pipeline compare as you start 2026 and add to that the demand that you've seen for the LIGHTWAVE cabinet?

Yes, it's a part of the business that we love. So happy to talk about it. That was the 22nd consecutive quarter of premium Gaming operations installed base growth. So it's almost metronomic, the results that [ Siobhan and Brian, Pierce ] and the whole team are delivering. It's our highest value part of the business to see that level of growth is very satisfying. We added 70 gaming units in the fourth quarter. It was 2,600 year-on-year. So we've guided to a bit more of a modest 500-plus. We want to give you numbers that we can meet and achieve. So I would expect the 500 million to be a baseline and the team will be pushing to capitalize on all the opportunities in front of us.

I think the other encouraging thing is not just about installed base growth, where we saw [ ARPDAUs ] expand 9% year-on-year. So it's that combination of installed base growth [ and ] doing it profitably. That's the best way to grow your business over time is to do it with property replacements. This is all underpinned by incremental improvements in game performance. So Nathan's leadership over the studio, it's [ still 11 ] of the top 25 top-performing Eilers games in the new premium segment, that's a mouthful, but that's a real data point that suggests the game that we've been producing over the last kind of 12 to 18 months are getting better and better, and that's really a good forward indicator for future success. So we're thrilled about that.

I'd say 3 new hardware catalysts in the portfolio in '26. So the LIGHTWAVE rollout. So that's been well received. We've got lots of games coming through on that platform that will optimize and continue to grow over time. We're about to launch COSMIC SKY, which is our kind of new vertical form factor with 3 very exciting games in the portfolio led by HUFF N' PUFF variant, which we're excited about. And then we've got a new version of our [ step-up ] L7000 with a wheel. So as I mentioned in that AI precursor, that combination between great brands and great hardware is a powerful combination.

So we think the setup is nice for '26 as it relates to gaming operations. If you look at the Eilers' future purchasing intentions that elevated percentage of the floor that goes to gaming operations is still intact, and we don't see that trend subsiding. So yes, we feel confident in the direction of [ travel ] for gaming ops.

Next question will be coming from Jeff Stantial of Stifel.

Just one from us on the quarter. So another quarter here where margins were better than expected across all 3 of the businesses. Similar to what we saw back at Q3. Oliver, you gave us a handful of sort of scattered data points just to help us think about the trajectory here into 2026 by segment, but maybe if we can just tie it all together, can you help us think about how this sort of all shakes out at the consolidated AEBITDA margin level and then even better just given the seasonality with some of these puts and takes? Just how to think about sort of quarterly cadence as we progress in the year.

Yes. Thanks, Jeff. Great to hear from you. So yes, obviously, we're very pleased with how we closed out the year for the quarter. But really, if you look at it from a full year point of view, it was just an outstanding result from the broader team.

If you look at Q4, to your point, it was a 500 basis point increase year-over-year. And you've heard me say this a lot over the last couple of years, which is kind of this margin enhancement kind of mentality just continues to be a key focus for us. So as I kind of unpack this by line of business, I think [ gaming markets ] in the quarter was really driven by, Matt said this, the continued scaling of our recurring revenue business. So if you start to look at gaming operations installed base scaling 700 units quarter-over-quarter. You saw a 9% increase in our base RPDs, driving strong performance. On top of that, you now have the inclusion of Grover, which is recurring revenue.

So certainly, as our recurring revenue scales over the period, we should expect to see kind of strong margin contributions from that point of view. To your point, there will be some quarters that there will be some mix effects associated with. So if you look at the fourth quarter as an example, you would have seen elevated global game sales in the previous year. So that mix effect will happen quarter-to-quarter. And obviously, we'll continue to kind of manage that kind of broadly speaking.

If you think about -- and we flagged this at the Q3 earnings call, if you think about the combined kind of gaming ops, Gaming and Grover, the combined margin will likely be in that 50% range. And that, again, based on mix, we'll have tariff impacts coming here that we talked about kind of mid- to high single-digit millions per quarter. That began in the fourth quarter, and that's going to be consistent here even with all the noise that we heard over the last week, 1.5 weeks. And so I think that's a good range for you to start to think about gaming margins as we move into next year.

SciPlay, I think the margin expansion was really driven by our DTC growth and really the prudent ROI-driven UA spend that we drove. As you know, kind of Q4 CPIs are generally lower, lower ROIs and CPIs are much higher during the holiday season. So I think as we look into '26, I would expect kind of to maintain these margin levels around kind of 2 corporate pools, right? One, the steady DTC progress. And then second, if we continue to see opportunity to scale UA, we'll do so. And that's going to really help us drive revenue growth across the portfolio.

And then lastly, I think from an iGaming point of view, I think it was a combination of a couple of things. We have some structural and operational levers. But what you saw was a favorable shift towards our first-party content, which obviously is a higher-margin business for us. And that's off the back of really great franchises like HUFF N' PUFF. I mean that was a monster game for us in the fourth quarter here in the U.S. and PIROTS is just a great global game for us. So looking forward, as Matt mentioned, we'll look to drive kind of 1PP share over time.

The one thing to note that we'll keep an eye on is the U.K. tax increases that start in the second quarter. We're going to work very closely with our operator partners to mitigate as much of that as possible, but we'll see how that unfolds here as we head into next quarter. But I think broadly speaking, if you look at it from a quarter-to-quarter basis, it will likely fluctuate a little bit, but this is the efficient kind of baseline of foundation that I would think about our business. And then our goal will be to then drive and enhance that profile as we move forward.

Our next question will be coming from Justin Barratt of CLSA.

My questions are probably more around SciPlay, just the top line result there. I just wanted to try and understand how much that potentially reflects the issues that you had with JACKPOT PARTY last year and I guess somewhat of an inability to get some of those customers back. But then conversely, DTC penetration continues to ramp up really, really nicely. You've got the 2028 target of 30%, but you're already at 25% in the fourth quarter. How should we think about your ability to meet that longer-term target and potentially exceed it quite nicely?

Yes, great question. I would think about SciPlay as a portfolio game. So we've got some very fast-growing games, Quick Hits, 88 FORTUNES, MONOPOLY being the best example, they're kind of industry-leading when it comes to growth rates. But we had a tough year with JACKPOT PARTY in 2025. There's no kind of skirting around that. It is a game at scale. So when JACKPOT PARTY wobbles, the entire SciPlay top line comes into question.

We've had a few false horizons through 2025, where we thought we have fixed the issue. But I don't want to set unrealistic expectations. We are seeing stronger engagement levels through the first couple of months of 2026, and that's what we need to see to allow us to invest behind that game through UA. That's what it's going to get us back to those peak levels. So Josh and the team have been working hard to kind of recalibrate the economy in that game. So you have players in those top tiers are seeing value in the purchasing activity.

So we've seen some stabilization there, but I would think about SciPlay more broadly as a portfolio game, some growing fast. Others in turnaround mode, and that's certainly where JACKPOT PARTY is. The team has done a fantastic job of driving that DTC mix, up from 19% to 25% in the fourth quarter and carrying that momentum through Q1. Yes, we are pacing well ahead of where we thought we'd be as it relates to that long-term guidance around direct-to-consumer. We set the target at 30% by '28. Yes, I'd say given where we're at logically, you could see upside to that over time. And we might come back in due course and reframe our guidance around that specific number, but testament to the team working hard. Clearly, they had a few challenging areas in 2025, I say it all the time. We've got a big and complex business. Some parts of our portfolio are fast charging and doing really well. There's others that need addressing and JACKPOT PARTY is one of those, but we've got the right team focused on the right things, and we'll get back to growth with that game in 2026.

And our next question will be coming from Kai Erman of Jefferies.

You guys have obviously flagged the margin impacts going into first quarter with some of those costs. But are there any other drivers that might sort of see any sort of quarterly difference in seasonality earnings cadence throughout FY '26?

Yes. Great question. And then I think just building on some of the comments that I mentioned on the prepared remarks, we will have some legacy costs that we'll work through here in corporate related to legal in the first quarter. I think it really does come down to kind of timing of kind of the broader CapEx cycle. If you look at kind of the overall mix quarter-to-quarter, it will vary in terms of tentative VLT versus the [ Class 3 ] kind of replacement cycle, which is a little bit more of a normalized cycle.

So I think, by and large, you will see, I think, a fairly similar shape kind of from a '26 perspective relative to and we'll kind of work through the puts and takes by quarter. But those are probably the key elements that we'll work through this year.

Just one thing about investments. We haven't been holding back investments in '25 and then adding costs back into 2026. We've got to spend R&D and CapEx at a similar percentage of revenue that we did in '25 and '24. So we think that's the optimum amount of investment this business requires. You do have to front run some CapEx in markets like Indiana, where you're scaling the installed base does take some incremental CapEx, that's just logical, but a very high conviction way for us to invest shareholders' capital. So I would say for the full year '26, think about investments, very similar to the way we invested on a percentage basis in '25 and '24.

And our next question will be coming from Liam Robertson of Jarden.

Just one really quickly for me on the outlook to '28. Obviously, those targets have been maintained, which is great. Can you just help us frame up the shape of how you're expecting to deliver that. Obviously, another strong period of margin expansion. I think you've already flagged AI allowing you to further optimize your cost base. I guess, how should we be thinking about the contribution from top line versus further operating leverage as you build your bridge out to '28?

Yes. Clearly, we were thrilled to deliver on that long-term guidance. Back in '22, we delivered $913 million in AEBITDA. We guided to $1.4 billion. We delivered [ $1.44 ] billion. So we had some different contributions, some twists and turns on that journey, but thrilled to get that chapter behind us. And now we're focused on operating momentum in '26 and getting to '28. We've built a really solid foundation. You think about gaming operations, we added another 2,600 units year-on-year. So you carry that installed base through into '26, you saw the fee per day increase year-over-year by 9%. So you carry that momentum into '26. Similar profile with Grover, same with iGaming. So we do expect all businesses to continue to perform ahead of market for their respective categories. That combination of growing installed base, [ the fee per day ] sets us up really nicely. We see expansion in 1PP. And we talked about SciPlay, stabilizing JACKPOT PARTY and kind of building from there.

But Oliver, anything you want to add from a [ contributions perspective ]?

No. I think actually, we've added a new slide in the presentation in the back that kind of refers to kind of a traffic light system that, to Matt's point, all the things that you just listed, all the key drivers, we'll kind of give a view on how we're progressing relative to those targets over the coming years. So I think that's been a consistent cadence of information that we can provide. But to Matt's point, a lot of it is in the core business growth, excluding all the market expenses that we would see that would be incremental. So that time I would think about it as we move forward.

Yes. But to reconfirm, strong growth at the AEBITDA line, NPATA and EPSa lines. I expect that in 2026 as we get on that trajectory towards 2028.

Next question will be coming from Rohan Sundram of MST Financial.

Just the one for me for Matt. How would you describe the slots demand environment at the moment? It looks buoyant and how would you compare it to, say, earlier in the year amid the tariff uncertainty and how are you assessing the potential tailwinds under the One Big Beautiful Bill, whether it be consumer tax cuts or business tax incentives?

Yes. Great question. You go back to the second quarter last year, Liberation Day. Obviously, the -- there was a bit of concern about what is the outlook -- I mean, for all of us, we -- everyone needed to digest what those tariffs mean for slot demand. We saw that rebound really quickly in the third and fourth quarters. And I think the '25 demand was really solid. I think the industry is holding up nicely. We're saying continued strength in [ GDR ], notwithstanding some softness in kind of those destination markets, but it's made up for more so in those regional markets and then the local high-frequency market.

So I think the best data point is that slot survey that Eilers and [ Banten ] put out. It's looking like a similar set up next year to -- sorry, this year to '25, so a similar market size. That's encouraging. I think the other interesting data point in that survey was 17% of respondents said the One Big Beautiful Bill will increase their replacement rate in '26. So that will be interesting to see how that plays through. We know a few of the large corporates, you probably know the ones we're talking about who are saying they've got a big step up in their annual spend. There's others that are saying they're going to spend consistent with '25.

So all of that to say, it looks like a very buoyant market in '26. So which means we just got to focus on how do we capture as much share as possible. I thought, again, that 7,000 units shipped in Q4 was enormous. And I think it speaks to the momentum and potential that we have. So kudos to Siobhan and Brian, [ Pierce ], the whole [ sales ] teams are making it happen -- for building the game. So yes, all that to say, it looks like the market is set up for another good year in '26.

And I would now like to turn the conference back to Matt Wilson for closing remarks.

Thank you. Back in 2022, the teams were galvanized by the 2025 targets and transform into what it is today, a global game company driven by content and supported by leading platforms to all of our employees, stakeholders on the journey. I sincerely securely thank you for all your support. Thanks for tuning in today.

And this concludes today's program. Thank you for participating. You may now disconnect.

Welcome to the Light & Wonder 2025 Third Quarter Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the call over to Rohan Gallagher, Executive Vice President, Global Chief Corporate Affairs. Please go ahead.

Thank you operator, and welcome, everyone, to our third quarter 2025 earnings conference call. Joining me today in Sydney are Matt Wilson, our President and CEO; and Oliver Chow, our CFO.

During today's call, we will discuss our third quarter results and operating performance, where we will refer to our earnings presentation. This will then be followed by a question-and-answer session. Today's call will contain forward-looking statements that may vile 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 the ASX.

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.

With that, I will now turn the call over to Matt to discuss the third quarter results and operational highlights on Slide 3.

Thank you, Rohan. Hello, everyone. Thank you all for tuning today for our third quarter results. I'm pleased to share that our strong execution on our product road map and game performance enabled us to deliver robust earnings growth and cash flow. Consolidated revenue for the quarter increased 3% year-over-year to $841 million. Importantly, consolidated EBITDA grew double digits year-over-year to $375 million, an 18% increase supported by record margin expansion across all 3 businesses. Additionally, adjusted NPATA for the quarter grew 25% year-over-year and adjusted NPATA per share or EPSA, increased 35% year-over-year to $1.81.

Pleasingly, we continue to improve our quality of earnings with gaming operations once again emerging as an area of strength. Our teams delivered meaningful sequential installed base growth of over 850 units, including Grover. Additionally, recurring revenue grew 14% year-over-year, which accounts for approximately 69% of our consolidated revenue in the quarter. This high flow-through business is a key driver of our cash flow flywheel, which we expect to further enhance through our continued investment and execution on our road map. We remain intentional and committed to our capital allocation strategies.

This quarter, we returned $111 million of capital to our shareholders through share repurchases remaining nimble in the face of any near-term opportunities as we transition to a sole standard listing on the ASX, scheduled to take effect on November 14 in Australia, where we have been listed since May of 2023. I want to thank all of our stakeholders and advisers for their hard work and support during this transition. We are confident our move to the ASX will provide significant shareholder value in the next step of our company's journey and enable us to enhance Light & Wonder's profile in a market that is attuned to the gaming industry.

Turning to Slide 4 for an update on our Grover Charitable Gaming integration. We have now seen a full quarter's worth of contribution from Grover with over $40 million in revenue and 229 incremental unit added sequentially. Since we announced the acquisition, over 830 units were added to the fleet, bringing the Grover install base to over 11,250 years. Our focus remains on the seamless integration of Grover into game development and technology platforms, and we are pleased with the progress the Grover team has made in building out its team in anticipation of the growth ahead.

Our new office and studio in Raleigh, North Carolina, which will serve as Grover's headquarters, soft opened in late October, and we expect to complete the build-out later this year. The Indiana market launch as our sixth operational state is progressing well, and importantly, build out a dedicated and experienced team locally to be fully prepared for launch needs. We remain incredibly excited about the vast potential of Grover and its contributions to our diversified business model and look forward to key Light & Wonder game launches into the charitable gaming market in early 2026.

Moving along to Slide 5. We've continued to deliver on our core strategy by leveraging and prioritizing our robust R&D engine across complementary channels to deliver engaging content experiences as one of the leading cross-platform global games companies. We foster a high-performance culture with talent and a deep bench led by a leadership team with a proven track record, a highly valued asset in this industry. Our financial profile is aggressive with high margins and cash generating recurring revenue streams that enable meaningful capital creation. We execute on a disciplined capital allocation blueprint to create sustainable shareholder value. We are truly unique among our peers in both structure and operations, operating across multiple industries that have high barriers to entry.

I will now take you through our segment results and highlights. On Slide 7, you will see that we provided a summary of our revenue and profitability by business. What are most impressed with in this quarter is the margin expansion across all verticals. Oliver will provide more details into the growth drivers and outlook later on the call.

Turning now to the gaming business performance on Slide 8. You will see that gaming revenue was primarily driven by strong gaming operations performance, which increased 38% year-over-year to $241 million on North American units installed and $40 million on growth contribution. Looking ahead, we expect momentum to continue in North America on strong game and hardware releases introduced at AGA and G2E as well as the continued expansion of the Charitable Gaming business with our entry into Indiana in the coming months. The decline in gaming machine sales was largely in the international market, which was adversely impacted by the large Entain order of 3,600 units in the prior year and our out-of-cycle hardware churn in Australia. Going to the fourth quarter, we expect a subtle order of SSBT or sports betting terminals in the U.K. as well as previously discussed Asia demand that has shifted in timing. Our systems and table businesses both saw modest growth in the quarter with systems supported by higher international outright sales. We expect the business to continue its growth trajectory underpinned by customer-centric innovation. Cables revenue increased on higher utility sales in North America as we continue to expand our product offerings and pipelines. We received strong feedback on our Obsidian offering and the new team led by John Hanlon is well equipped to capital on domestic and international electronic table games opportunities over the coming years.

Here is an in-depth look at our gaming KPIs on Slide 9. We now have 47,240 installed base units in North America. Excluding the 11,255 units at Grover, North American premium units have grown for 21 consecutive quarters and now accounts for 52% of the total North American installed base. This is a true testament to our game performance and pricing decision of our commercial strategy. In North America, average daily revenue per unit declined on a reported basis due to the inclusion of Grover units. However, including Grover, our North American installed base revenue per day increased 5% year-over-year, primarily driven by wide area progressive performance amid a resilient gaming backdrop and strong GGR. Importantly, we continue to lead in the new [indiscernible] game Index with 3 out of the top 5 indexing new premium leased and WAP games with our Ultimate Fire Link and Huff N' Puff franchises. North American gaming machine sales remained strong with over [ 2,000 ] units shipped in the quarter despite the difficult year-over-year comparison and softness within the International segment. Light & Wonder's scale and global presence enabled us to be a meaningful participant in all markets. Just recently, we entered the Nebraska skill in market and commenced trials in the Eastern European dynamic [indiscernible] market. We see ample opportunities for our products to reach new markets that will be coming online and available to us. In the latest sales report, we saw piggy banking break in debut at #1 as the top indexing new video real game and Dragon Spin Saga Fire and Water rounding out the top 5, reflecting our continued commitment to building greater sale gains.

We showcased an exciting lineup of Q2, as shown on Slide 10. The feedback and [indiscernible] games from our operator partners was encouragingly positive. I am thrilled with the launch of [indiscernible] and expect our Cosmic cabinet, along with our proven [indiscernible] extension to fuel our installed base and game sales growth, other player differentiated R&D engine.

Turning to Slide -- on Slide 11. Quickest slots and 88 Fortunes once again delivered record quarterly revenues, their fifth and -- fifth consecutive quarters, respectively, as they continue to ramp with exciting block content and features. The year-over-year revenue decline in the quarter was primarily attributed to the decreased number of average monthly payers at Jackpot Party. Despite the softness, we're able to grow the other games within this game portfolio, and we continue to invest in building and deploying engaging games through our omnichannel strategy. Monetization remains strong with average monthly revenue per paying user up 11% year-over-year to over $126 and average revenue per daily after user maintaining a record level at $1.08, with 4% year-over-year growth.

From a profitability perspective, we continue to see significant progress in our direct-to-consumer platform, which grew to 20% of site place revenue, up from just 12% a year ago and putting us well on track to reach our 30% target by 2028. There is continued runway for wider deployment and adoption, which we expect to further expand margins going forward. Regarding Jackpot Party, we have seen stabilization and opportunities to return to growth with a revamped game economy and increased efforts around unregulated switch-based gaming. There is reason to believe the general environment will improve as initial data from states where the banners in effect becomes available. At the same time, we'll return to our roots and execute on our success drivers over the past 3 years. Fine-tuning our acquisition, engagement and monetization flywheel, as you can see here on Slide 12, which will enable us to get back on track.

In terms of UA, we will remain efficient and continue to focus on ROI opportunities through innovative marketing efforts. Engagement will also be closely assessed and enhanced with meta features and more land-based games to drive cross-platform play. Ultimately, we plan to take a prudent approach to monetization while providing our players with a robust game experience they enjoy. This is a process we will continue to navigate over time. but we remain confident in our teams and the broader portfolio of great games to drive a return to sustainable growth.

Moving to iGaming on Slide 13. We delivered record revenue of $86 million in the quarter, up 16% year-over-year. driven by continued strong momentum in North America, underpinned by first-party content proliferation in the U.S. market and growth in our partner network. In fact, 7 out of the top 10 games across our OGS network were third-party game types, that by PAR4 in the #1 slot, followed by 3 Hukou games ranking second, third and fourth on the list, reflecting the strength of our omnichannel strategy and durability of our franchise expansion. Margin expansion was evident with the proliferation of first-party content as EBITDA increased 42% year-over-year to $34 million, with EBITDA margins up 800 basis points over the same period. This also accounted for our strategic initiatives and realignment of resources. Wages processed through ADS grew 23% over the prior period to $28 billion with record volumes across all regions and content type demonstrating the growth potential of our platform and the industry. We remain committed to capitalizing on our high gaming road map, as you can see on Slide 14. There is genuine player affinity for our game franchises, and we are committed to bringing those game into the iGaming platform broadly. We are slated to launch more player favorite land-based franchise extensions in the fourth quarter. such as big hot flaming tasty treasures, Huff N' Puff extra pass, ultimate filing, Cash Falls, flocer Gold and Rainbow Riches road to even more Riches to just to name a few. Our OGS is regarded as one of the most mature iGaming content aggregation platforms in the industry, connecting studios and operated in over 40 regulated markets and over 7,500 operated connections. Its reach has enabled studios to scale their games across various jurisdictions and then with Lightning Box, whose GGR has grown over the years. Elk Studios in the process of expanding its U.S. presence with a pending license in Michigan as we expand the audience for these digital native duty open gaps. International management remains an opportunity for growth. We recently received approval to go live in the Philippines as the first licensed iGaming supplier, and we are very exposed about the prospects given that we are one of the leading land-based slot suppliers in the region. We are confident that investments in the iGaming portfolio will be further accentuated with the support of our team's focused execution.

We will continue to leverage our leadership position and expand our robust portfolio to capitalize on the opportunities available to us. As we close out the year, I want to commend the team on their resilience and dedication as executed on several key operational and financial initiatives simultaneously. It's quite a foot to navigate the broader environment this year, but we're able to deliver growth and profitability supported by a solid business model underpinned by differentiated R&D mode.

I will now hand it over to Oliver to go over our financials. Oliver?

Thanks, Matt. First, I'd like to note that we've expanded our financial reporting this quarter to include a detailed reconciliation of non-GAAP profitability metrics aligned with the Australian market on Slide 16. We expect to provide this level detail on an ongoing basis as we transition to a sole standard listing on the ASX.

Turning to the results. This quarter reflected continued earnings growth driven by our disciplined execution. Consolidated revenue growth was driven by strong gaming revenue with contributions from Grover and another record iGaming quarter, fully demonstrating the performance of our game portfolio. Net income increased 78% year-over-year, primarily driven by revenue growth and continued focus on operating efficiencies as evidenced by an EBITDA margin expansion across all businesses. This led to consolidated EBITDA and adjusted NPATA growth of 18% and 25%, respectively, year-over-year. On a per share basis, net income per share on a diluted basis increased by 89% to $1.34 compared to $0.71 in the prior year period. Adjusted NPATA per share or EPSA increased 35% to $1.81 compared to $1.34 in the prior year period.

Our continued focus on operational excellence and disciplined execution once again drove meaningful year-over-year consolidated EBITDA and adjusted MDA growth you see here on Slide 17. In gaming, margin expansion in the quarter was primarily driven by North American gaming operations unit installs and higher revenue per day led by the performance of our wide-area progressive units as well as the contributions from Grover. Product mix was also a factor in the quarter on higher gaming machine sales in the prior year. Looking forward, we expect our gaining EBITDA margin inclusive of Grover to trend in the low 50% range based on product mix and currently estimated mid- to high single-digit million dollar range of quarterly tariff impact starting in the fourth quarter and into 2026.

Side flight continues to drive meaningful profitability, evidenced by DTC growth to 20% of the revenue in the quarter. The team has formulated a solid blueprint around our user acquisition initiatives and we'll deploy efforts prudently based on the potential ROI and seasonality. Historically, the fourth quarter is more of a competitive market for ad spend and therefore, it is likely we will ramp UA spend back up in 2026. We continue to see solid performance at iGaming as both revenue and EBITDA were at record levels for the quarter. Our decision to realign resources to the most import areas of the business is paying off with revenue and first-party content growth contributing to margin expansion.

I'd also like to note that the now discontinued live casino business had approximately $3 million of EBITDA impact in the prior year and will have a residual impact into the first quarter of 2026 from a comparability standpoint. Our corporate and other expenses are also realigned to better fit our business needs, and we expect this to scale proportionately as we continue to grow the business with some legal expense potentially shifting into 2026.

From an adjusted NPATA perspective, the 25% growth was largely driven by an EBITDA increase with record margins across all businesses. This was partially offset by increased depreciation and amortization from the inclusion of Grover units and success-based gaming operations capital expenditures as well as interest expense as a result of higher outstanding debt associated with the Grover acquisition and share buybacks.

I would like to provide some color on some of the nonoperational items that are expected to impact adjusted NPATA as we close out the year given the listing transition quarter. We expect amortization of intangibles and interest expense to continue to trend up year-over-year on the Grover acquisition with interest volatility also driven by our share buyback program in the fourth quarter as we transition to a sole listing on the ASX. From a tax perspective, our effective tax rate is expected to remain between the 21% to 24% range. Overall, we remain confident to land within both our full year 2025 targeted consolidated EBITDA and adjusted NPATA range accounting for Grover, which we provided on the previous call.

Turning to Slide 18. Cash flow continues to be a focus of the organization as we generated operating cash flows of $184 million in the quarter. Free cash flow was $136 million, a 64% year-on-year increase led by earnings growth and lower cash tax payments. Importantly, we intend to drive further improvement in our working capital cycles, inventory position and capital expenditures to improve cash conversion or time. In addition to growing our top line and managing our cash tax payments and interest efficiently in response to broader environmental changes. Our goal is to continuously improve free cash flow through the quality of earnings on growth of our recurring revenue business. amplified by continued execution on our key cash enhancement initiatives.

Here, you will see that we've trended positively over the past 9 months from a cash conversion perspective. and ended the quarter with a 36% conversion rate based on consolidated EBITDA, translating to an 89% cash conversion over adjusted M&A metric, both up significantly from the prior year. We remain committed to meaningful capital generation over the long term as we continue to scale and optimize efficiency across the company.

Moving to our capital structure on Slide 19. Our net debt leverage ratio for the quarter remained within the targeted range at 3.3x a combined basis following completion of the Grover acquisition was financed through our $800 million term loan A. We recently issued new $1 billion, 6.25% senior unsecured notes due in 2033. With the proceeds, we redeemed the 7% senior unsecured notes due in 2028. We paid our outstanding revolver credit facility borrowings with related fees and expenses and added cash to our balance sheet for general corporate purposes, which include providing available fund day for our share repurchase program as we maintained $1.2 billion of available liquidity. This enabled us to further optimize our existing debt structure with an average tenor of 5 years by extending bond maturity from 2028 to 2033, while also reducing the interest rate from 7% to 6.25%. Our effective net interest rate is approximately 7.2% with fixed versus floating debt mix at 55% versus 45%. We will continue to strategically look for avenues to optimize our capital structure through opportunities when available.

Our capital allocation framework remains the same, as you see here on Slide 20. R&D is the engine of our business, and we remain committed to investing in our growth initiatives with targeted R&D and CapEx allocation of 17% of our consolidated revenue. This enables us to continue developing our content across our verticals to drive sustainable growth over the long term without compromising our short-term targets. We also remain committed to returning capital to shareholders. with $111 million of shares repurchased or approximately 1.2 million shares during the quarter. Subsequent to the end of the third quarter, we repurchased an additional $101 million of shares with residual buyback capacity of $735 million remaining on our existing authorized program as of October 31, 2025. The company completed $765 million of its total authorized $1.5 billion share repurchase program as of the end of the third quarter. And since the initiation of the prior share repurchase program in March of 2022 through October 31, 2025.

Overall, the company has returned $1.5 billion to shareholders to the repurchase of approximately 19.9 million shares, representing approximately 21% of the total outstanding shares prior to the commencement of the programs. We retain discretion to accelerate purchase activity to capitalize on opportunities to deliver enduring value creation for shareholders and currently expect to utilize a meaningful share of the remaining available capacity prior to the end of 2025, while observing a healthy liquidity position. Pending the expense of the share repurchases, our leverage may move slightly above the high end of the range in the near term. However, we would expect to quickly return within our targeted range, underpinned by the strong cash generation of our business. Importantly, we maintain a highly flexible capital structure, which allows us to deploy balance sheet capacity opportunistically when appropriate, with flexibility to undertake buybacks on both the NASDAQ prior to the list and the ASX with intentions to be active, subject to regulatory approvals. Absent any capital allocation opportunities, we aim to position at the lower end of the target range over the long run.

Overall, our priorities will be thoroughly planned through a disciplined capital allocation approach, which we expect will create a sustainable long-term shareholder value. As we close 2025, I would like to thank our team for their continuous efforts executing on the various initiatives we have in place. We will continue to deliver exciting and engaging new games across our channels, leveraging the latest technologies and create an exceptional customer experience.

With that, I'll turn it over to the operator for your questions. Operator?

[Operator Instructions] The first question we have comes from Barry Jonas with Truist.

We are a bit over a month into the fourth quarter. Curious how you see the quarter shaping up to hit your 2025 guidance. What are the key building blocks or opportunities as you see them?

Yes. Thanks [Technical Difficulty] 2,800 year-on-year to coffers driving growth in the business. I think U.S. sale to as the highlight of the show to get contributions from the adjacent markets grow at looking like a thing. Now another [ 220 ] in quarter grew very high over that period and made a full contribution in the quarter of $40 million. I think margins [Technical Difficulty] business, and that all added up to a cap cash -- regarding Q3, it has [Technical Difficulty] with less work to do in the fourth quarter than we had. So yes, a I think third quarter, 60% of the business was renature, very predictable in terms of our earnings. But obviously, a few things to close down as we do the year over the next 8 weeks. Maybe I want to fill in a couple of the blanks there.

Yes. Thanks, Matt. And I think as you said, it kind of starts with our recurring revenue businesses. So that remains very strong in the with our gaming ops growth, the addition of Grover here. And we just continue to see momentum as we head into the fourth quarter. So great tailwinds there. I think North American outright sales performance remains strong for us, and that's really driven by the game performance that we've seen over the last several quarters, and we expect that to begin to the fourth quarter. You would have remembered very last quarter, we kind of preview that Canadian VLT workers are shifting into the second half. And so ultimately, that will help kind of drive the outcomes for us. International game sales, that's going to be, I would say, slightly impacted by timing of certain Asia NOE being into 2026 in the Philippines. But we still maintain kind of our share in Asia, and we expect our [indiscernible] share to get back to kind of its gains here as we head into 2026. And then I would say on the other side of the recurring revenue, we expect to continue scaling from a DTC perspective in SciPlay. We had very strong MPP share performances in the quarter. We expect that to continue as we close out the year. And then I think lastly, you heard me say this on the prepared remarks, but the tariff impact is expected to be call it mid- to high single digit, but that impact started in Q4 and something that we'll continue to kind of work here.

So that all said, we expect a strong fourth quarter with line of sight to '25 target range that Matt kind of mentioned, and it's going to drive another double-digit growth year for us. So that's going to be performance relative to the broader industry. And we certainly expect to continue to execute against our strategies. And lastly, what I'd say is -- and I want to be very latin this, we're not going to compromise the long-term growth of this business to hit short-term goals. So we're going to continue to invest into the business and to the quality of the earnings that we're going to be delivering over time. So still some work to be done, but the line of sight to a lot great momentum across this.

We have your next question from Matt Ryan with Barrenjoey.

I was just hoping to get an update on Grover. It looks like you've added some more boxes in the quarter. Just can you tell us about, I guess, the integration with the London content? And just also just more specifics on Indiana over launch.

Yes, I'll take that. Yes, I think, great quarter for Grover added 229 games for the period. The first full quarter of contribution from Grover in the third quarter, I think the team is doing a fantastic job integrating into the broader Light & Wonder, family that had a great showing at G2E. Matt, I know you were there and a number of other people in line where the business is performing very well. You'll start to see our game under game show up on the Grover installed base early in '26. And then we are getting ready for Indiana market entry. It looks like it may have shifted into the first quarter. Just the regulations taking a little bit longer than we had anticipated, but we don't see any issue to the long-term nature of that market. It's still going to be a big and vibrant market, and we'll start to scale the installed base over '26. We opened the Raleigh, North Carolina head office in the period, which is great. We're starting to staff up there, there's content and technology teams. -- going into that facility led by Brian Brown, obviously, we've opened up an integration center in the Indiana market. So things are set up really nicely as we turn the page to 2026. You're seeing that nice sequential addition of gains quarter-after-quarter Indiana will be a growth driver for us in the first quarter. So yes, looking like at this point, a great piece of M&A and a part of the portfolio, that belongs in the broader ecosystem of [indiscernible] really encouraged with where we stand with Grover. .

Your next question comes from Chad Beynon with Macquarie.

Matt and Oliver, I know the original guide for Q3 was for low double digits. So you clearly exceeded that. It looks like most of the -- or a lot of the beat came from the gaming margin, more in the mid-50s versus the low 50s. So can you double-click a little bit just to that flow through for Q3 in gaming. I know there's some noise, obviously, integrated integrating Grover, but anything to help there would be helpful for us?

Yes, I thought it was a fantastic quarter again from the entire team. We guided to low double digits in the third quarter. We delivered 18% growth. So clearly pacing ahead of our expectations and what we've committed to the market. And a big driver of that was gaming. And in particular, the gaming operations business, which was added a lot of games in the period, [ 639 ] in the period to over 2,800 year-on-year. So it's a powerhouse of a bid for us and great tailwinds there, driven by great gain performance. So we think that can continue in fourth quarter and beyond. We've got a lot of momentum there. But maybe, Oliver, you want to touch on the margins and the mix and maybe the fee per day [indiscernible].

Yes. Thanks, Matt. So yes, I think broadly speaking, as we kind of head into the fourth quarter, the one thing I did miss actually in the last question is the sizable SSBT order that we're going to have in Europe. And so certainly, that's going to have a product mix impact, even though we're continuing to scale our recurring revenue businesses. So we grew our RPD 5% year-over-year. And so the quality of our recurring revenue business continues to be very strong. And so ultimately, product mix will play a part into kind of broader mix. But I think overall, with tariffs including kind of the gaming sales mix, I think you'll start to see a more normalized kind of gaming margin as we move forward.

We have Andre Fromyhr with UBS.

I was just wondering if you could talk about the level of demand that you're seeing at the moment and conversations you're having with customers as they build their budgets for next year. For example, tax incentives on accelerated depreciation entering those conversations, what's been the response and uptake on Lightwave, just curious to hear how that sort of demand environment is shaping up. .

Yes. lean to say the market is proven to be very resilient. I think it wobbled a little bit there in the second quarter after liberation data for obvious reasons. But given where GGR levels are at, the reinvestment levels seem really high from a customer perspective. I saw the islands not out today just talking about forward-looking intentions for replacement cycle ticking up. I think that's just a function of the quality of games that the market is producing. And I think operators know to compete, you got to have the best games on your floor. So we're seeing that through a solid replacement rate across the market. And then I think you're also saying that constant tick up of the percentage of the float is premium. So I think that ticked up to 15% or 16% in this latest slot survey. So I mean that's a great tailwind for the industry. We continue to put our best games into that category. And I think customers know that the best players want to play best games and so having those available on the floor is a great thing.

So I think all in all, where we stand today, the consumer looks resilient, particularly in the gaming consumer looks resilient. That's flowing through into GGR and the good forward intentions for purchasing demand. So I think as we turn the page into '26, we intend to see if that flows through the one big beautiful bill, accelerated depreciation dynamic flow through in the budgets. We've heard from a number of customers that they're thinking about how do they best take advantage of that to maybe potentially accelerate some of the replacement market. But each customer is different, and they're thinking about it differently. So we'll monitor that closely as we on the page here into 2026 for us. It's really focus on the controllables, build great gain to take share in the market. I think it looks like we did take share again here in the third quarter, which was fantastic with over 6,000 units ships. So a testament to [indiscernible] entire gaming team. Anything to add, Oliver?

No. I think you said we spent some time with customers at G2E and exactly to your point, Matt. Some kind of indicated opportunities for accelerated depreciation such as some of the bigger regionals we'll continue to kind of work with our customer base to ensure they understand kind of the benefits of those components. But also to your point, Matt, product road map, not only just on the software side, but also the hardware that we're coming up with will continue to spur kind of opportunities for us to gain share.

We have David Katz with Jefferies on the line.

I wanted to ask about iGaming and side play both -- when we look at the setup, right, with revenues that aren't growing, but there is a benefit of DTC mix in there that's driving some profitability with it. How far does that really go? I know you've talked about a DTC target mix, but can, at some point, the revenues start to grow again? Or how are we thinking about that longer term?

Yes. So I'll address the side play question that you laid out there. Yes, it was a quarter where we didn't grow the top line to our expectations. And it's a portfolio of games, David, as you know. We've got some very fast-growing games, Quickits 88 Fortunes monopoly all grew nicely in the quarter. Really, the drag on the portfolio has been Jackpot Party and Gold Fish. These are big mature games that have been in the portfolio for over a decade, have been growing ahead of market for the last 10 years. The good news is we've stabilized those gains. And so as we can get those back into growth mode, it kind of lifts the time for the entire portfolio across social center. But I'll say it from the outset, Jackpot Party particular where we want it to be, and we need to work hard to get that back in the growth mode, and Josh is doing a lot of work to focus on that. We've been fairly public about the impact of sweeps on this category. We see some data in markets where sweeps is being eliminated, and we're seeing subsequent uptick in the social casino market. So we think that manifest over time and the deregulation of the sweepstacks, I guess, happens over time, and that will be a tailwind for the social casino sector. We don't really control that. So what we can control is the economies that we can optimize in our game. So we do think we get revenue back to growth mode in 2026 as we get those games dive in, and we have the benefit from St. The direct-to-consumer benefit is real. A year ago, we were at 12% of revenues were direct-to-consumer, it's 20% now. In May, we guided to 30% by 2028. So clearly, we're pacing well ahead of the direct-to-consumer mix and we feel like we can accelerate beyond that target over time. So there's a real tailwind from a margin perspective on direct-to-consumer. We've got to focus on getting the top line growing again, and that is like for the team at the moment.

Yes. And maybe just one quick add just from a monetization perspective. I mean that continues to improve year-over-year. So David, I think the fundamentals seem to still be there, which is growing and Josh didn't know how to run and grow games to Matt's point. So if you look at ARPDAU, that grew 4%, almost 4% year-over-year. Our Amap grew almost 11%. So if you look and just peel the onion back, there's certainly some favorable trends that we're going to continue to try to build on. But I mean you called it, I mean, that's going to be an area that we're going to continue to focus to drive this back to growth over time.

Your next question comes from Rohan Sundram with MST America.

Just the one for me. Oliver, can we please just revisit your commentary around the gaming EBITDA margins where the expectation is to trend towards 50%. Just the timing of that. And within that, you mentioned Grover, are you saying that Grover is a negative mix shift? Or did I get that wrong? And on the tariff side of it, where do you see scope for mitigations, if not already?

Yes. Yes, I think the benefit that we got in the quarter. Certainly, as Matt mentioned before, was product mix. And so as we go to the fourth proven sorry, get a little feedback. With the SSBT orders and game sales, probably a bit more prominent in the quarter, we should see a more normalized kind of ex-Grover gaming is not a detriment to our margins. In fact, it's a margin enhancer for us is a free cash flow driver for us at the end of the day. And so as our recurring revenue, and I think Matt mentioned it a in Q3 of mix of recurring revenue as that continues to kind of scale over time, that's just going to drive even better margin and free cash flow outcomes for us. So yes, I would expect that to condo over the coming periods. And then it will just be kind of timing of game sales international, et cetera, that will kind of fluctuate margins from time on.

To your question regarding tariffs, yes, listen, I think Anthony Fromyhr and the team have just done an incredible job of mitigating our way through most of this year. The reality is we've kind of worked through the majority of the pre-tariff inventory at this point. And so we will now start to see [indiscernible] of that mid- to low -- sorry, mid- to high single-digit millions as we go forward. That's something that we and the team are going to continue to look at through the margin enhancement initiatives to see what we can mitigate. But we wanted to just be open to fourth right with you all about what we see at the moment.

We have Ryan Sigdahl with Craig Hallum.

To ask about iGaming. You organized the business a little bit. I think you saw the best growth in nearly 2 years. What do you think is going to be the major driver for this going forward? And how do you feel about your positioning now versus where it might have been a few years ago?

Yes. Great question. A real bright spot for the quarter. Actually, they grew 18% revenue, 42% EBITDA. So great translation of the operating momentum in the financial results. It's really about the simplification of the business. We went back to basics. This business has really driven off great content, great 1 PP content in particular. That's what drives the lion's share of margin in this business, and we've really focused on that. We saw the launch of Huff N' Puff family into the channel in the U.S. It's got a 5% of the entire market in the U.S. is Huff N' Puff in the period, which just is a testament to how great high-quality land-based games can translate into great success in the digital gaming market. So very encouraged by that. We've reorganized the business into one team across all the channels, led by Nathan Dan, they're really ticking up all of those content teams across the globe to bring that content to bear on the iGaming market. So great performance from Huff N' Puff in the U.S. And then one of our digital native products called Pirates 4 had a record result in the period as well. That's kind of in the European market. So just a testament to the quality of games and what that can do for the portfolio. So simplification of the strategy, I think, is really about charging iGaming, really pleased with that result and the team's delivery.

We have Justin Barrett with CLSA.

Just noting your comments, I guess, around that mid- to high single-digit millions of increase in terms of costs due to directly to tariffs. I want to understand what you think you can do to mitigate those costs? And particularly, I guess, from the pricing side of things, should we sort of see a subsequent or a partially offsetting increase in ASPs to help there?

Yes. Thanks for the question. Yes, I think we're kind of evaluating as we kind of move into 2026. Part of that is our kind of pricing structure, but also our hardware strategy and content strategy. So putting out new content, new hardware that gives us ability to price up as well as some of our existing kind of legacy cabinets. I think we'll work with our partners and our customers to make sure that we have an optimal outcome for the industry, first and foremost. This is not a light and wonder specific issue. This is going to be an issue that many industries and many companies within gaming as well we'll have to deal with them. And we've got the best team kind of working through that led by Anthony for money led by Michael [indiscernible] the strategy team as we kind of navigate through other opportunities to drive margin enhancement. We're doing this for now several years, right? And so I think we've proven that this is a strong skill set for us as an organization, and we'll continue to find ways to try and mitigate that. But again, as I said earlier, we just wanted to provide that visibility all. And yes, Matt and I are going to charge the team hard to figure out ways to compensate for these increases, whether that's the pricing or whether that's through cost opportunities.

Your next question comes from Jeff Stantial with Stifel.

I wanted to double click on David's question from earlier on SciPlay. Matt or Oliver, can you just maybe unpack for us or explain for us a little bit more some of the actual blocking and tackling that goes in, in terms of stabilizing Jackpot Party, the monetization gets disrupted, some players on that experience? How do you actually go back out and sort of bring them back in after reverting some of those changes. And that's a corollary to this, are there sort of learnings going to this experience that you could take kind of moving forward?

Yes. So it's really a jackpot party specific issue. Like you can see quick hits, 88 Fortunes Monopoly all growing really well in the period. So it's not about the team's inability to drive games at specific jackpot party, which is a very mature game with a pretty complicated otomy that's been built over time with the kind of laddering up of live ops fees. And so what this is really about is getting kind of our large players reengaging and spending at the levels that's spent out previously. So Josh is driving changes to all logic, and some of the live ops to just get that reengagement back to levels that we've seen previously. Like I said, it's a pretty convoluted set of live off that kind of entangled into the economy. So it's really about making sure as we change one thing, we're not breaking another. Josh is working on this specifically. And we're seeing stabilization of that game over time. So we're going to continue to work on optimizing the store logic to kind of reengage those players the way that I mentioned earlier. But again, also taking some of these learnings into our other games, Quicks it and [indiscernible] Fortune Monopoly and making sure that the simplicity of the way we design these things is the most important thing. So I guess to say all that game has stabilized. It's set to return to growth in 2026, but we've got a portfolio of games like everyone does in the space. Some are growing at faster levels than others. So this is really a kind of a Jackpot specific issue that we're facing. .

We have Ellen with City Group.

Matt and Oliver, very strong margin improvement across the businesses. I was interested in the R&D spending being down 6% to $62 million in the quarter. Can you talk to what drove this and where we should expect to see that in future quarters and whether you see any impact on the future pipeline, please?

Yes. No. Like I said earlier, R&D, CapEx, that's the core of our business, the foundation of our business. If you actually look at what we've cost guided to say 17% of our revenues going to R&D and CapEx. Some of that will flow between the 2. So if you actually take the 2 pieces and add those together, pretty much right at 17% actually for Q3. So it's going to be an area that we continue to lean in on. Nathan continues to kind of reevaluate kind of his structure, what he needs to be able to sustain growth in all segments of the business. So -- and I don't think Matt and I have said now a Nathan yet as he's brought really strong high ROI investment assets over the years, and we'll continue to kind of work through really just efficient capital allocation strategy, which hasn't really shifted. So CapEx, R&D, 17%. We're going to continue to kind of drive to that and as our revenue grows every single year through this kind of 2028 period and beyond, that just gives the teams much more ammunition to be able to execute on our long-term strategy.

We have Liam Robinson with Jon on the line now.

Just quickly on the quantum and velocity of bringing new games to market. It sounds like you've got plenty of confidence moving forward from what I understand, your new carbon platform has been operational for about 3 months. Can you just talk to how that improves your ability to deliver new games across both land-based and iGaming?

Yes. Yes, Carbon is an initiative we've been working on for some time, really kind of the catalyst for us to accelerate that was grow a be able to get our games onto the Grover platform very quickly. And so Victor [indiscernible], who I think is the best CTO in the industry is driving that initiative. But it's more broadly just getting on the driver, building it once and then being able to deploy it. across all the channels that we operate in. I'd say we're still very early innings. There's been a bit of a rebuild of the carbon platform to adopt some best-in-class AI tools. they're going to help us go faster and further with carbon. So yes, that will manifest over time. I think the lineup again is stronger than it's ever been. We launched more games this year than we have in our history. We also launched 4 new variants and hardware at the G2E show. So yes, the R&D teams are bringing a very great game content across all channels, great hardware. You're seeing that show up in the ILS charts. We had a record level of number of high-performing gain on the premium charts as an example, we took the #1 spot call for sale, this chart. So yes, really comfortable with the quality of the games coming out of the R&D organization. And then the efficiencies we'll get as Victor scales the Carbon platform over time will really play very nicely across all those channels. So thanks for the question.

[Operator Instructions] And we now have Sriharsh Singh with Bank of America.

A couple of questions from my side. One, can you talk about the sustainable margin levels in iGaming. Do you think it's issuing above the 40% levels in future as well or close to that? And secondly, can we -- can you help us update on the international business outlook into Q4 and next year? And what's the pipeline looking for Australia?

I'll take the iGaming margin question. So I think the iGaming margin that we referenced earlier was really a combination of kind of structural as well as operational levers. We did -- and I believe I called this out in the prepared remarks, but we did benefit from the live dealer business and exiting that life business dealers. So the comp kind of from a year-over-year perspective helped us, I think there was about a $3 million drag in the prior year. So if you kind of normalize that out. Yes. The 1 PP share aspirations that we have over the next several years will help us sustain those kind of normalized margins as we move forward. And that's obviously a focus of ours, as Matt mentioned, in terms of getting the right content in place and then proliferating those across the region. Matt, I don't know if you want to touch on the other items .

Yes. International sales, yes, this is a tough thing for analysts on pack compliance because you don't get the same visibility in the international markets as you do in the aisles analysis in the U.S. So probably 3 parts of the international story. The first one being the EMEA region. And there's a little bit of noise in that result in the prior corresponding period, we had a large Entain order, which we've spoken about a number of times in that period in the prior year, which we didn't get in this period, although we do get this SSBT order in the fourth quarter, in the EMEA region. So I think that's a little bit of the kind of the building blocks to how to think about the EMEA region. I think from an ANZ perspective, we're cycling over a very tough corresponding period last year. We were recurrent elevated share levels in the PCP. We -- our share level is a little bit renin Australia at the moment. It's really a function of getting kind of the content and hard line up dialed in. And we showed that at AGA. We've got a lot of strong feedback on the lineup for A&D. So I think as we turn the quarter into '26. We set up to kind of grow share in that market again over time, the team is excited to get their hands on those new games coming through. And then thirdly, all the biggest impact is the cyclicality of the Asia region. As you know, over the years, it's been very kind of new openings and expansion driven, but there was a bit of noise in the calendar year and some things pushed out into 2026. -- not a share issue. We're holding share nicely in that market. It's just really a function of the cycle. So there are a few of the building blocks around international to help you kind of think about how to model that.

I can confirm that does conclude the question-and-answer session. And now I would like to hand it back to Matt Wilson for some final closing comments.

I might actually just go back to Barry Jonas' question earlier on. I know there was an audio issue that came through the line. So apology for that. Let's readdress that one. So Barry asked a question about Q4 and the building blocks to get there. So I guess starting there, Q3 was a fantastic result by the team. We grew 18% EBITDA for the quarter. We guided the market to low double digits. So clearly, the team outperformed our expectations in the period, which leaves kind of need a glide path into the fourth quarter. So we've reiterated guidance both at the EBITDA and NPATA line. Like Oliver said earlier, 69% of our revenues in this period were recurring. So good predictability as we turn into the fourth quarter. We've got 2 months to go. So there are some big items we need to get over the finish line SSBT or order is a good example of that. But Oliver, do you want to just give us some of the puts and takes and building blocks to think about that Q4 results.

Yes. Yes. We'll try to -- [indiscernible] you guys can hear me. But yes, I think to Matt's point, it is the recurring revenue scaling. That's going to give us tailwinds as we head into the fourth quarter. I think RPDs grew 5% year-over-year. So again, we go to bed and wake up in the morning, and that's incremental revenues every single day. The North American outright sales, we continue to have great momentum in that space over 6,000 units. I would expect that momentum to continue into the fourth quarter. We had talked about this Canada VLT order shifting from the first half now into the second half, so that will provide, again, some opportunities for us. And that kind of just talked about the international markets, the SSBT orders. And then it's really DTC and then scaling 1 PP share from an iGaming perspective. So I think those are the kind of the building blocks that we're working to get to get another double-digit growth for us and which will be outperforming the broader market. So we're really excited about what's to come.

Yes. Thanks, Oliver. And a bearing with us with some of the audio we're in City doing this for the first time for down here. So we'll dial this in as we move forward. Once again, I'd like to express my sincere gratitude to all of our employees and day covers across the globe, we wouldn't be here without the collective efforts of all of you and the flawless execution and our support from all of you. our U.S. shareholders, this is not the end. We would love to have you continue on this journey with -- on the ASX moving forward. And looking ahead, and we're looking forward to speaking to all of you in the near future. So thank you again for tuning in, and have a great day.

Thank you all for joining today's conference call with Light & Wonder. I can confirm today's call has now concluded. Thank you all for your participation. You may now disconnect, and please enjoy the rest of your day.