L&W Dragon Train lost earnings maybe underplayed: JPM
L&W Dragon Train lost earnings maybe underplayed: JPM
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Gaming technology supplier Light & Wonder Inc’s (L&W’s) 2024 financial-year earnings before interest, taxation, depreciation and amortisation (EBITDA) are likely to be 4.2 percent lower than previously estimated, at just over US$1.21 billion, assuming the absence of earnings from its “Dragon Train” slot product.
That is according to a Tuesday note from JP Morgan Securities Australia Ltd, referring to a preliminary injunction granted to Light & Wonder’s market rival Aristocrat Technologies Inc by a court in the United States. Aristocrat alleged Dragon Train breached its trade secrets, and the court ruling for now bars Light & Wonder from commercial exploitation of the Dragon Train product in the United States.
Light & Wonder had launched the Dragon Train title in Australia last year, and in the U.S. market in early March.
“Our revisions reflect the removal of Dragon Train from 카지노사이트 sales and earnings,” stated JP Morgan analysts Don Carducci and Michael James.
For 2025, JP Morgan puts the absence of Dragon Train from Light & Wonder earnings as reducing EBITDA by 4.9 percent from its previous forecast, to just under US$1.37 billion.
This was on the basis that Dragon Train would have contributed circa US$70 million to group EBITDA, according to the institution.
In a Monday statement on the court case, Light & Wonder had reaffirmed its 2025 US$1.4 billion target for the group’s consolidated adjusted EBITDA.
The firm said its “pre-ruling estimate” for 2025 consolidated adjusted EBITDA for Dragon Train “was less than 5 percent of the US$1.4 billion” target.
Nonetheless, JP Morgan stated: “[Company] guidance for a 5 percent Dragon Train EBITDA contribution in financial year 2025 understates the true value and longer-term earnings contribution of the game.”
Such value included that “the benefits of incremental installed base units are increasingly weighted” to the three years after product deployment.
JP Morgan added that “near-term growth remains” for Light & Wonder, “even after excluding additional Dragon Train installs”.
Though the institution stated: “The true value and earnings power of leased machines is long dated and likely understated at only 5 percent beyond financial year 2025.”