Light & Wonder Inc (ASX: LNW) shares are having a day to forget on Thursday.
In morning trade, the ASX 200 tech stock is down almost 14% to $125.61.
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Why is this ASX 200 tech stock sinking?
Investors have been selling this gaming technology company's shares following the release of its quarterly update.
During the first quarter of FY 2025, Light & Wonder achieved its 16th consecutive quarter of year-over-year consolidated revenue growth with expanding margins across all three of its businesses and strong cash flow generation.
Total revenue was up 2.8% to US$774 million for the quarter.
Gaming revenue increased to US$495 million, up 4% compared to the prior year period, primarily driven by growth across all lines of its businesses, including 9% growth in Table products and 5% growth in both Gaming systems and Gaming operations.
Management notes that this growth was fuelled by the success of its diversified portfolio of game franchises and gaming solutions, resulting in Gaming Operations North American premium installed base growing for 19 consecutive quarters.
Things weren't as positive for the SciPlay business, which recorded a 2% decline in revenue to US$202 million. Finally, iGaming revenue was up 4% to US$77 million.
Thanks to its stronger margins, consolidated AEBITDA (operating earnings) increased 10.7% to US$311 million for the three months.
Adjusted NPATA increased 11% to US$117 million primarily due to revenue growth and expanded margins, partially offset by higher income tax expense.
Management commentary
The ASX 200 tech stock's CEO, Matt Wilson, said:
Our R&D investment, vast array of product offerings and comprehensive content strategy continue to deliver success in game deployment and franchise expansions. We continue to see our omni-channel strategy prosper with enhanced game development and performance fueling our existing businesses, and further opportunity to extend this strategy with the pending Grover Charitable Gaming Acquisition.
We remain confident in the various avenues of growth that we see for 2025 with continued execution on our robust product roadmap driving performance across the business. We are committed to executing off the strong foundation of world class talent and game portfolio that we have built for longterm success.
Why the selling?
While this looks like a reasonably strong result on paper from the ASX 200 tech stock, it fell short of expectations.
For example, the consensus estimate was for revenue of US$805 million. The market may believe this is a sign of a slowdown, which could start getting worse if economic conditions worsen.
Though, management has reaffirmed its guidance for the year. It advised that it "remain[s] committed to US$1.4 billion 2025 Consolidated AEBITDA target."
