IGT is confident in accomplishing its near and medium-term goals following a strong third quarter of 2023.
Commenting on the financials, CEO Vince Sadusky noted that the gaming company achieved “excellent momentum in key performance indicators” in the quarter, resulting in “revenue growth and stronger profit expansion”.
IGT gaming and digital offset lottery losses
Publishing its Q3 results, IGT reported that total revenue was consistent on a year-over-year basis at $1.06bn (Q3 2022: $1.06bn), and up six per cent YoY (2022: $1bn) when excluding its Italy commercial services, which were sold in September 2022.
While total revenue aligned with the previous year, the company’s Global Lottery segment revenue dropped, PlayDigital remained in line, and Global Gaming improved.
Gaming revenue rose by eight per cent YoY to $409m (2022: $379m) following growth in the installed base – up 472 units to 52,627 – and higher system and software sales.
PlayDigital revenue came in at $55m, up one per cent YoY (2022: $54m) as icasino double-digit GGR growth was ‘offset by the impact of exiting certain legacy iSoftBet jurisdictions and unusually high sports betting hold levels in the prior year’.
Meanwhile, lottery revenue declined by four per cent YoY to $601m (2022: $626m). Excluding the Italy commercial services sale, revenue rose by five per cent on strong same-store sales in Italy, with continued strength in both instant ticket and draw games and elevated US multi-state jackpot activity.
Sadusky commented: “The strength of our leadership positions across Global Lottery, Global Gaming, and PlayDigital is evident in our third quarter and year-to-date results. Excellent momentum in key performance indicators is driving revenue growth and even stronger profit expansion.
“With a compelling pipeline of innovative products and solutions showcased at recent tradeshows, I am confident we can achieve our near and medium-term goals as we focus on unlocking the intrinsic value of IGT’s market-leading assets.”
Q4 and full year expectations
IGT’s Q3 operating income came in at $239m, up by 13 per cent YoY (2022: $211m) with the margin expanding by 250 basis points to 22 per cent.
Contributions from gaming ($93m, 42 per cent YoY increase) and PlayDigital ($16m, 32 per cent YoY improvement) helped achieve an uptick in operating income, while lottery was down to $206m (2022: $211m) impacted by the sale of Italy commercial services (2022: $12m).
Corporate support and other expense income stood at $75m, in line with Q3 2022 as project costs in the current year offset transaction costs in the prior year.
Adjusted EBITDA rose by eight per cent YoY to $433m (2022: $402m) on ‘higher operating income and depreciation and amortisation, partially offset by lower transaction expense associated with the sale of Italy commercial services’. Net debt stood at $5.3bn.
Looking ahead to the remainder of 2023, IGT is expecting Q4 revenue of approximately $1.1bn with lottery revenue up low-to-mid single-digits YoY, while gaming and PlayDigital revenue is expected to be in line with the prior year. Operating income includes approximately $25m in previously communicated restructuring and project costs.
For the full year, the company is predicting revenue of approximately $4.3bn, operating income margin close to 23 per cent, cash from operations between $900m and $1bn and capital expenditures between $400m and $450m.
Max Chiara, CFO of IGT, added: “We are pleased with the financial results we delivered in the third quarter, including top-line growth, margin expansion, and strong cash flow generation.
“Our financial position is solid with net debt leverage at a historical low point and already comfortably within our long-term target range, which coupled with no meaningful near-term debt maturities and access to significant liquidity, greatly enhances our balance sheet and creates additional financial flexibility.”