Light & Wonder Statement on Dragon Train Litigation

Rhea-AI Summary

Light & Wonder (NASDAQ and ASX: LNW) received a preliminary injunction from the U.S. District Court for the District of Nevada regarding its Dragon Train game in a lawsuit with Aristocrat. The company disagrees with the decision and plans to appeal. Despite this setback, Light & Wonder reaffirms its 2025 $1.4 billion Targeted Consolidated AEBITDA and expects continued strong growth across all businesses.

The company emphasizes its diversified portfolio of successful game franchises, with Dragon Train estimated to contribute less than 5% to the 2025 Consolidated AEBITDA. Light & Wonder highlights its #1 market share and performance position for top new sold games in North America, with 8 of the top 25 premium leased and wide-area progressive parent theme games. The company is already working on new iterations of the Dragon Train franchise consistent with the court's ruling.

Positive

• Reaffirmation of 2025 $1.4 billion Targeted Consolidated AEBITDA despite legal setback
• #1 market share and performance position for top new sold games in North America
• 8 of the top 25 premium leased and wide-area progressive parent theme games
• Diversified portfolio of successful game franchises mitigating impact of Dragon Train injunction
• Continued strong growth expected across all businesses
• Ongoing $1 billion share repurchase program

Negative

• Preliminary injunction granted against Dragon Train game
• Potential business disruption from court order
• Legal costs associated with appeal and ongoing litigation

Insights

Financial Analyst

Light & Wonder's statement on the Dragon Train litigation reveals some significant implications for investors. The court's preliminary injunction against L&W's Dragon Train game is a setback, but the company's response indicates resilience:

• L&W is appealing the decision and plans to defend against Aristocrat's claims at trial.
• The company reaffirms its 2025 Targeted Consolidated AEBITDA of $1.4 billion, suggesting confidence in its overall business strategy.
• Dragon Train's contribution to the 2025 AEBITDA target was estimated at less than 5%, limiting the potential impact.
• L&W emphasizes its diversified portfolio and strong market position, with the #1 share and performance for top new sold games in North America.

The company's focus on R&D, multiple successful game franchises and plans for new Dragon Train iterations aligned with the court's ruling demonstrate adaptability. The unchanged $1 billion share repurchase program and capital allocation strategy further reinforce investor confidence. While the litigation poses some risk, L&W's strong market position and diversified revenue streams suggest the long-term impact may be

Legal Expert

The court's decision to grant Aristocrat a preliminary injunction against Light & Wonder's Dragon Train game is a significant legal development with potential ramifications for the gaming industry. Key points to consider:

• Preliminary injunctions are typically granted when the court believes the plaintiff has a strong likelihood of success on the merits of their case.
• L&W's immediate appeal and plans to defend at trial indicate a protracted legal battle ahead.
• The company's statement about developing new iterations of Dragon Train "consistent with the terms of the Court's ruling" suggests they are already strategizing ways to mitigate the impact of the injunction.
• This case could set important precedents for intellectual property rights in the gaming industry, particularly regarding game mechanics and features.

Investors should monitor the progress of the appeal and any subsequent trial, as the outcome could influence future game development strategies and industry practices. The legal proceedings may also impact L&W's R&D costs and potentially lead to licensing agreements or further litigation in the sector.

Reaffirms 2025 $1.4 Billion Targeted Consolidated AEBITDA⁽¹⁾

LAS VEGAS--(BUSINESS WIRE)-- Light & Wonder, Inc. (NASDAQ and ASX: LNW) (together with its subsidiaries “Light & Wonder,” “L&W” or the “Company”) today received an order from the U.S. District Court for the District of Nevada granting Aristocrat a preliminary injunction relating to L&W’s Dragon Train game. We respectfully disagree with the judge’s decision and will promptly file an appeal. We will continue to vigorously defend against Aristocrat’s claims, including presenting our defenses to a jury at a trial.

Light & Wonder reaffirms its 2025 $1.4 billion Targeted Consolidated AEBITDA⁽¹⁾. We expect continued strong growth across all our businesses. The Company is moving forward on a number of key initiatives to mitigate the immediate impact and any continuing business disruption from today’s order. Our pre-ruling estimate of 2025 Consolidated AEBITDA⁽¹⁾ for Dragon Train was less than 5%⁽²⁾ of the $1.4 billion.

We have a diversified portfolio of successful game franchises that are driving our strong performance and growth, of which Dragon Train is only one. Increased investment in our R&D engine has and continues to deliver innovative, engaging content that gives us a continuing competitive advantage not tied to any one game or franchise.

Light & Wonder has the #1 share⁽³⁾ and #1 performance position overall for top new sold games and has the top performing game in all 5 for sale categories in North America⁽⁴⁾. Additionally, Light & Wonder has 8 of the top 25 premium leased and wide-area progressive parent theme games⁽⁴⁾. Our chart-topping game performance continues to be underpinned by our franchises such as ULTIMATE FIRE LINK™, INVADERS, our hit Asian-themed games 88 FORTUNES® and DANCING DRUMS®, stepper favorites QUICK HIT™ and TRIPLE BLAZING 7s™, and Huff N’ Puff®, where we recently launched a new game extension Huff N’ Puff Money Mansion® as a leased game. Our market-leading game franchises will continue to drive our Company’s strong growth over the long term. We are also already working on new iterations of the Dragon Train franchise consistent with the terms of the Court’s ruling.

“We have the best game design talent in the industry, and they are creating great games across all our channels,” said Matt Wilson, President and CEO of Light & Wonder. “We are excited about the new games we will be featuring at the Global Gaming Expo in October. We expect our strong growth trajectory to continue, notwithstanding this decision. We have built an amazing business and a solid financial foundation over the last several years with great teams driving our success and are highly confident in our future of continuing innovation and ability to achieve our stated 2025 $1.4 billion Targeted Consolidated AEBITDA⁽¹⁾.”

Our robust capital management strategy remains unchanged. We continue to allocate capital where we can achieve the best shareholder returns, including share repurchases pursuant to our recently approved $1 billion program along with value accretive organic and inorganic investments.

(1) - Denotes a non-GAAP financial measure, which is defined in our earnings release furnished to the U.S. Securities and Exchange Commission (“SEC") on August 7, 2024. We are not providing a forward-looking quantitative reconciliation of targeted Consolidated AEBITDA to the most directly comparable GAAP measure because we are unable to do so without unreasonable efforts or to reasonably estimate the projected outcome of certain significant items. These items are uncertain, depend on various factors out of our control and could have a material impact on the corresponding measures calculated in accordance with GAAP.

(2) - This estimate was based on revenue key performance indicators (“KPIs”) and historical contribution margins.

(3) - Eilers & Krejcik – Gaming Supplier KPIs (June 2024).

(4) - Eilers & Krejcik – Game Performance Report (August 2024).

All ® and ™ notices signify marks registered by Light & Wonder, Inc., or one of its subsidiaries.

About Light & Wonder, Inc.

Light & Wonder, Inc. is the leading cross-platform global games company. Through our three unique, yet highly complementary businesses, we deliver unforgettable experiences by combining the exceptional talents of our 6,000+ member team, with a deep understanding of our customers and players. We create immersive content that forges lasting connections with players, wherever they choose to engage. At Light & Wonder, it’s all about the games. The Company is committed to the highest standards of integrity, from promoting player responsibility to implementing sustainable practices. To learn more visit www.lnw.com.

Forward-Looking Statements

In this press release, Light & Wonder makes "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often by identified by the use of terminology such as "will," "may," “estimate,” “intend,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “target,” "should," “could,” “potential,” “opportunity,” “goal,” or similar terminology. These statements are based upon current Company management expectations, assumptions and estimates and are not guarantees of timing, future results, or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks, uncertainties and other factors, including those factors described in our filings with the Securities and Exchange Commission (the “SEC”) and the Australian Securities Exchange (“ASX”). Additional information regarding risks and uncertainties and factors that could cause results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the SEC and ASX, including the Company’s current reports on Form 8-K, quarterly reports on Form 10-Q and its latest annual report on Form 10-K filed with the SEC and ASX for the year ended December 31, 2023 on February 27, 2024 (including under the headings "Forward-Looking Statements" and "Risk Factors"). Forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no and expressly disclaim any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240923020206/en/

Media Relations

Andy Fouché +1 206-697-3678

Vice President, Corporate Communications

media@lnw.com

Investor Relations

Nick Zangari +1 702-301-4378

Senior Vice President, Investor Relations

ir@lnw.com

Source: Light & Wonder, Inc.

FAQ

What is the impact of the Dragon Train litigation on Light & Wonder's (LNW) financial targets?

Despite the preliminary injunction on Dragon Train, Light & Wonder reaffirms its 2025 $1.4 billion Targeted Consolidated AEBITDA. The company estimates Dragon Train's contribution to be less than 5% of this target.

How is Light & Wonder (LNW) responding to the court's decision on Dragon Train?

Light & Wonder disagrees with the decision and plans to promptly file an appeal. The company will continue to vigorously defend against Aristocrat's claims, including presenting defenses to a jury at trial.

What is Light & Wonder's (LNW) market position in the gaming industry?

Light & Wonder holds the #1 share and performance position for top new sold games in North America. The company also has 8 of the top 25 premium leased and wide-area progressive parent theme games.

How does Light & Wonder (LNW) plan to mitigate the impact of the Dragon Train injunction?

Light & Wonder is moving forward on key initiatives to mitigate the immediate impact and any continuing business disruption. The company emphasizes its diversified portfolio of successful game franchises and is already working on new iterations of Dragon Train consistent with the court's ruling.