Key Highlights

• Net Income was US$120 million, up 26%, and Diluted Earnings per Share were US$1.53, up 38%.

• Gaming, the largest segment, had Revenue of US$554 million, up 5%, and AEBITDA of US$307 million, up 10%, at a 55% margin.

• Principal Debt was about US$5.2 billion and net debt US$5,024 million at 30 June 2026.

• For context, the third-quarter 2025 result, issued on 5 November 2025, showed AEBITDA of US$375 million.

How does a gaming technology company keep growing earnings while moving to cut debt and slow its buy-backs? Light & Wonder, Inc. (ASX:LNW) set out its answer in the second-quarter 2026 results released on 4 August 2026 (US time). Consolidated AEBITDA rose 9% to US$383 million, the Margin widened to 46%, and net debt Leverage eased to 3.4 times at 30 June 2026 from 3.5 times at 31 December 2025. Management said it intends to pare back share repurchases to de-lever, with a target below 3.0 times during the first half of 2027. All figures below are in US dollars and come from the company's earnings release filed with the SEC.

Second-quarter 2026 results

Revenue was US$828 million, up 2%. Net income was US$120 million, up 26%, and diluted earnings per share were US$1.53, up 38%. Adjusted NPATA, which adds back acquisition-related Amortisation among other items, was US$156 million, up 16%, with adjusted earnings per share of US$1.99, up 26%. Operating Cash Flow was US$241 million and free cash flow US$156 million, compared with US$29 million a year earlier.

AEBITDA and adjusted earnings are non-statutory measures defined by the company, so readers should check the reconciliations in the release.

Segment performance

Gaming, the largest segment, had revenue of US$554 million, up 5%, and AEBITDA of US$307 million, up 10%, at a 55% margin. SciPlay, the social casino business, had revenue of US$182 million, down 9%, and AEBITDA of US$72 million, down 3%. iGaming, the online casino content and platform segment, had revenue of US$92 million, up 14%, and AEBITDA of US$33 million, up 18%. Corporate and other costs were US$29 million.

The mix tells a story. Land-based gaming, which includes slot machines, gaming operations (recurring revenue from leased machines) and table products, is the profit engine. iGaming is smaller but growing faster, while SciPlay is a mature mobile Business facing declining revenue.

Leverage and buy-backs

Principal debt was about US$5.2 billion and net debt US$5,024 million at 30 June 2026. Management is aiming to reduce leverage towards the midpoint of its target range during 2026 and below 3.0 times in the first half of 2027, with an intention to move towards an investment-grade profile. Buy-backs were US$134 million in the second quarter and US$156 million in the first half. Since March 2022 the company has repurchased 26.2 million shares for US$2.1 billion, about 27% of the shares then on issue. About US$180 million remains under the current program.

Purchases were paused from 29 June 2026 ahead of the quarterly blackout. The planned slowdown matters because buy-backs have been a major driver of per-share growth. If repurchases decline, earnings per share growth will depend more on underlying earnings. Lower debt should reduce interest costs over time.

Guidance

Full-year 2026 consolidated AEBITDA growth is expected in the mid- to high-single digits, with a profile similar to 2025, which implies a second-half weighting, according to the release. That outlook was maintained on 4 August 2026. Management earlier flagged risks including delivering earnings momentum in the second half, timing of investments, customer Capital Expenditure timing and possible changes to capital allocation.

For context, the third-quarter 2025 result, issued on 5 November 2025, showed AEBITDA of US$375 million.

Business position and listing

Light & Wonder competes with Aristocrat, International Game Technology and other slot suppliers, and in online gaming with a range of content providers. Its competitive strengths include its game library, installed base and a land-based product cycle.

Gaming machine revenue depends on casino operator capital spending and replacement cycles. When operators tighten budgets, unit sales slow, while recurring operations revenue is steadier. That is why the proportion of Recurring Revenue is a key quality indicator.

Cash flow was the most striking improvement. Operating cash flow more than doubled to US$241 million and free cash flow rose to US$156 million from US$29 million. Part of that swing probably reflects timing, since the prior-year quarter was unusually low, so one quarter should not be extrapolated. Still, higher free cash flow is what allows the company to reduce net debt while continuing capital expenditure of US$83 million in the quarter. Sustained conversion of AEBITDA into free cash flow would be the clearest evidence that the de-leveraging plan is achievable without relying on asset sales.

Risks and what to monitor

Risks include leverage and refinancing costs, regulatory and licensing changes in gaming and online gambling, customer capital spending, competition, SciPlay's declining revenue, integration of acquisitions, litigation and currency movements. Reduced buy-backs could weigh on per-share growth if earnings growth slows.

Dates to watch include the third-quarter 2026 release, usually in early November, updates on progress towards the 3.0 times leverage target, any refinancing activity, evidence of a more encouraging second half, and the full-year 2026 result, likely in February 2027. The pace of repurchases and iGaming growth will be useful indicators.

In summary, the second quarter showed higher margins and cash flow, while the strategic priority has shifted from repurchasing shares to reducing debt.