‘Two out of three ain’t bad’ as IGT sees gaming and digital aid lottery dip

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International Game Technology has witnessed increases across two of its three gaming verticals while also reporting the lowest debt leverage in the company’s history. 

Publishing its 2022 third quarter results, IGT revealed that its global gaming revenue experienced a 31 per cent increase, up to $379m, when compared to the same period in 2021. 

Moreover, its constant currency also grew by 34 per cent on significant increases in machine shipments, average selling prices, installed base yields and intellectual property, as well as multi-year poker site licences.

The second of three segments include IGT’s digital and betting arm that witnessed 27 per cent revenue growth to $54m, 34 per cent at constant currency, with the firm pointing to its icasino performance as a main driver, including the iSoftBet acquisition, new markets in North America and organic growth. 

However, despite recording the highest revenue income of the three sectors, standing at $626m in Q3, IGT’s global lottery sector was down four per cent when compared to the year prior, but up four per cent at constant currency. This, the firm stated, was driven by “strong multi-jurisdictional” jackpot activity. 

Overall, consolidated revenue experienced an increase by eight per cent, 14 per cent at constant currency, from $984m the Q3 2021 to $1.06bn during the same period this year. 

“IGT’s organisation along three business segments enables our teams to be focused on developing and delivering best-in-class products and services,” said Vince Sadusky, CEO of IGT. “The accomplishments are evidenced in accelerated revenue and profit expansion in the third quarter, achieving the top-end of our margin outlook. 

“Customer and player demand trends remain encouraging and IGT’s suite of innovative products and solutions has never been better. In addition, we reached the lowest debt leverage in the company’s history, while returning a record $224m in capital to shareholders so far this year.”

Looking into the group’s operating income, IGT noted that it was consistent with the prior-year period, standing at $211m, but up nine per cent at constant currency.

Breaking down each of the three arms, lottery’s operating income was down 10 per cent, standing at $211m, representing 34 per cent of its margin, despite a lower contribution from Italy and increased investment in research and development. 

Gaming’s income doubled to $65m when compared to the previous year, with digital and betting said to be “relatively consistent” to 2021 at $12m, despite continued investments to fund growth. 

Corporate support and other expenses of $76m, up from $66m in the prior year, driven by higher transaction-related expenses.

Furthermore, IGT reported an adjusted EBITDA of $402m, which the firm stated was stable and up seven per cent at constant currency. Moreover, its net interest expense stood at $73m, down $6m from 2021’s figure. IGT stated this was driven by lower average debt balances.  

“Our strategy to innovate, optimise, and grow is fueling progress across the portfolio,” said Max Chiara, CFO of IGT. “Robust year-to-date cash flows and proceeds from the sale of the Italy proximity payments/commercial services business, in addition to proactive liability management, enabled us to reduce debt to the lowest level ever. 

“This enhanced credit profile provides greater financial flexibility to execute on the broadened, balanced capital allocation strategy presented at the investor day last November.”

Looking into key highlights from the third quarter, IGT pinpointed the aforementioned acquisition of iSoftBet for approximately €160m in July of this year, as well as the completed sale of Italian proximity payments/commercial services business in September for gross proceeds of €700m.

Furthermore, Q3 witnessed IGT strengthen its lottery contract portfolio via a four-year extension in New York and a seven-year extension in Georgia as a primary technology supplier. In addition, the firm inked a 10-year instant ticket printing and service contract in Texas.

Other noticeable achievements included an agreement with Santa Casa de Misericórdia de Lisboa, deployment of its Resort Wallet and IGTPay at Station Casinos properties in Las Vegas and at Indigo Sky Casino in Oklahoma and a multi-year contract with Nisqually Red Wind Casino.