Light & Wonder has successfully transformed into a leading cross-platform gaming content company, delivering impressive financial results across its Gaming, SciPlay, and iGaming segments. The company achieved balanced growth in 2024 with Gaming revenue increasing 12% to $2.068 billion, SciPlay growing 6% to $821 million, and iGaming expanding 9% to $299 million. This performance reflects successful execution of the company's strategic focus on content development and distribution across multiple channels.

The Gaming segment demonstrated exceptional strength with 22% growth in machine sales, driven by market share gains in North America and Australia. The premium installed base expanded for the 18th consecutive quarter, now representing 50% of the North American mix. SciPlay achieved a remarkable transformation with its direct-to-consumer platform growing from $9 million to $88 million, eliminating platform fees and significantly improving margins. The iGaming segment expanded its U.S. presence to seven states while processing $91 billion in wagers.

Management has demonstrated disciplined capital allocation, completing a $750 million share repurchase program while maintaining target leverage ratios and funding growth initiatives. The pending $850 million Grover Gaming acquisition represents a strategic expansion into regulated markets with recurring revenue characteristics. Despite challenges including Dragon Train litigation, the company's diversified business model and cross-platform strategy position it favorably for continued growth across multiple gaming verticals.

Light & Wonder, Inc. operates as a leading cross-platform global games company focused on content and digital markets through three complementary business segments. The Gaming segment supplies gaming machines, systems, and table products to casinos worldwide, generating revenue through both product sales and recurring participation agreements. SciPlay develops and operates social casino and casual mobile games, monetizing primarily through in-app purchases and a growing direct-to-consumer platform. The iGaming segment provides digital gaming content and platforms for online gambling operators, operating predominantly on a participation model.

Headquartered in Las Vegas, Nevada, the company underwent significant transformation in 2022 by divesting its Lottery and Sports Betting businesses to focus on core gaming operations. This strategic refocus has enabled L&W to establish a substantial global footprint with products in all major U.S. gaming jurisdictions and approximately 171 international markets. The company serves a diverse customer base including commercial casinos, Native American casinos, wide-area gaming operators, and online gambling platforms.

Under the leadership of CEO Matt Wilson and CFO Oliver Chow, L&W has pursued strategic initiatives including debt refinancing, share repurchase programs, expansion of game content portfolios, and targeted acquisitions. The management team has demonstrated disciplined execution with emphasis on high-return investments and capital return to shareholders, positioning the company for sustained growth across its diversified gaming platform.

Light & Wonder delivered exceptional financial performance in 2024, achieving double-digit growth across key metrics. Consolidated revenue increased 10% to $3.2 billion, with balanced contributions from all three business segments. The Gaming segment led growth with a 12% revenue increase to $2.068 billion, primarily driven by a remarkable 22% surge in gaming machine sales to $865 million. This growth reflects significant market share gains in North America and Australia, supported by the company's diverse portfolio of successful game franchises and popular cabinet offerings.

Gaming operations revenue grew 4% to $690 million, benefiting from a 9% expansion in the North American installed base to 34,004 units and improved yields per machine. The premium installed base grew for the 18th consecutive quarter, now representing 50% of the total North American mix. Gaming systems revenue increased 13% to $302 million, driven by increased global hardware sales and innovative software solutions.

The iGaming segment delivered 9% revenue growth to $299 million, driven by expansion in both North American and European markets. The segment processed $91.0 billion in wagers through its Open Gaming System, representing a 10% increase from 2023. During 2024, the company expanded its U.S. presence by going live in Rhode Island, increasing its footprint to seven states.

Profitability metrics showed significant improvement, with operating income surging 29% to $668 million and net income more than doubling to $336 million. This translated to a 110% increase in diluted EPS to $3.68. The company maintained its AEBITDA margin at 39% while growing AEBITDA by 11% to $1.24 billion, demonstrating operational efficiency and favorable revenue mix.

Our financial forecast projects Light & Wonder will maintain strong growth momentum with revenue increasing from $3.2 billion in 2024 to approximately $4.5 billion by 2029, representing a 7.5% compound annual growth rate. This growth trajectory incorporates initial acceleration from the Grover Gaming acquisition, expected to contribute $150-175 million annually beginning in mid-2025, followed by gradual moderation as the company approaches mature scale.

EBITDA margins are projected to expand gradually from 39.0% to 40.8% over the forecast period, driven by higher-margin digital revenue growth, scale efficiencies, and SciPlay's direct-to-consumer platform expansion. The Gaming segment is expected to grow at 8-10% CAGR, SciPlay at 7-9% CAGR, and iGaming at 10-12% CAGR, reflecting their respective market opportunities and competitive positions.

Free cash flow is projected to grow significantly from $318 million in 2024 to over $1.0 billion by 2029, benefiting from both margin expansion and improving capital efficiency. Capital expenditures are forecast to remain elevated initially at approximately 9.3% of revenue before gradually declining to 8.4% as efficiency improvements take hold. This results in free cash flow yield improving from 11.8% to 16.7% and FCF ROIC increasing from 10.3% to 12.1% over the forecast period.

Our DCF analysis yields a base case valuation of $126.45 per share, representing 25.6% upside from the current share price of $100.71. This valuation incorporates a 10.1% WACC and 3.5% terminal growth rate, resulting in an enterprise value of approximately $14.6 billion. The terminal value component represents approximately 75% of enterprise value, reflecting the perpetual nature of Light & Wonder's gaming franchises and technology platforms.

The valuation is supported by differentiated growth trajectories across L&W's three business segments, with Gaming expected to grow at 8-10% CAGR, SciPlay at 7-9% CAGR, and iGaming at 10-12% CAGR over the five-year forecast period. EBITDA margins are projected to expand from 39.0% to 41.0%, driven by higher-margin digital revenue growth and operational leverage.

Alternative valuation methodologies provide supporting evidence for our DCF-based valuation. EV/EBITDA multiple analysis using 9.0x NTM EBITDA yields $117.28 per share, while precedent transactions analysis suggests $131.65 per share. These methodologies align with our DCF-derived base case, providing cross-validation. We establish an implied valuation range of $95.00-$135.00, giving primary weight to the DCF analysis while acknowledging perspectives from multiple-based approaches.

The primary risk exposure centers on successful integration of the Grover Gaming acquisition, which could significantly impact growth projections and return on invested capital if execution challenges emerge. The Dragon Train litigation highlights ongoing intellectual property vulnerabilities in the content-driven gaming industry, though management's diversified portfolio provides some mitigation.

Competitive pressures across all segments require continued technological innovation and substantial R&D investment to maintain market position. However, L&W's cross-platform strategy creates unique advantages unavailable to single-segment competitors. Regulatory risks are well-managed through established compliance processes, while the company's diversified geographic and segment exposure provides natural hedging against localized challenges.