Light & Wonder, Inc.

Good day and thank you for standing by. Welcome to Light and Wonder second quarter 2026 earnings webcast and conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, Please press star 11 again. Please be advised that today's conference is being recorded. And I'd 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 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 investor section of our website and our filings with the SEC and lodgements 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, Rowan. 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 continues to perform. Land-based demand remains resilient, and game performance stays strong across the portfolio. Let's turn to our key highlights on slide three. 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 EBITDA came in at $383 million, up 9% year over year. Adjusted MPAD-A 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 EBITDA 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 three times 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 pay down. Moving on to slide four, 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 install 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 MPAD-A, and amplified by our buyback program, further boosting related per-share metrics. Consolidated EBITDA 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 generated business model, combined with our ongoing cash enhancement initiative, 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 deliver 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 five. Consolidated revenue has grown from 2.9 billion in 2022 to 3.3 billion in 2025. What I want to highlight is the mixed 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 forwards. 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 and side play. Consolidated EBITDA grew, with consolidated EBITDA margin expanding 200 basis points to 46%. This growth was broad-based across the organisation, reflecting favourable 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 EBITDA grew 7% to $710 million, with consolidated EBITDA 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 discipline focus on profitability is underpinned by a streamlined and complementary business, enabling efficiency across the organisation. This enables us to sell fund growth, scale the business, optimise cost structures, and therefore enhance returns. Importantly, we've optimised our operational foundation, setting us up nicely for growth in the second half of the year with a solidified product roadmap. Moving on to gaming on slide eight, 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. 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 install base increased average daily revenue per unit, as well as contributions from Grover. I'd like to provide a bit more colour 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 install 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 install-based growth, adding over 650 units sequentially and 2,500 year-over-year. Excluding Grover, premium now represents 58% of our total North American install 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 gain performance across North America. As we continue to integrate R&D across the portfolio past the one-year anniversary of the Grover acquisition, our internal evaluation on gain 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 Firelink, Rampage, Monsters, Dancing Drums and Huff and Puff franchises all performing above expectations and focus on longevity of these games providing further revenue upside. Game sales remain 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 The 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 Jewel 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 Pops, Lion Link and piggy banking break-in that are consistently featured on the ILS charts. Moving on to Grover, where our business is extending our recurring revenue model into an adjacent, under-penetrated 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 and 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 and Wonder hardware and content in the second half. are 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 Cascada 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 install 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 Wells in New York. Our premium install 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 install base, maximizing economics and greenfield opportunities. We expect overall momentum to continue, underpinned by our high performing cabinets and franchises. Turning to side play 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 Sideplay's revenue, up from 18% a year ago. Every point of DTC's mix is structurally accreted in margin, and they're still one way from here. 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-based 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 site play 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 timeframe, 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 multi-step 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 sweepstake operators across a handful of states gives us comfort there will be opportunities to increase UA spend. Monetisation is a gradual process and takes longer than expected. While the game economy is being optimised for sustainable growth, we are prudent in ensuring our flywheel is being carefully considered as acquisition, engagement, retention and monetisation reaches an equilibrium. We are confident in our portfolio with strong affinity tied to our land-based game franchises, reflected in gameplay. Sightplay continues to be an integral part of the business as a complementary channel, not only for A-B 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 Aebitda 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 and Puff and Pirates franchises as key standouts. In fact, Isla's new US online game ranking has two Huff and Puff franchise games in the top 5, with Huff and 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 UK 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 & Puff family continues to drive market share gains in the US and Canada, and we expect the same from our ultimate Firelink franchise. We also went live in Alberta on July 1st, where we believe our content should resonate with players as it does in Ontario. In the UK, Rainbow Richards and Hufflepuff are leading the pack. Additionally, Elk's Pirates franchise continues to build, with Pirates 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, and our new first party studio in Bulgaria. We've also bolstered our studio capabilities by expanding Chimera, 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 roadmap 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.