IGT has declared a consolidated revenue uptick in the fourth quarter and full year 2023 with strong gains occurring from its Global Gaming segment ahead of its merger with Everi Holdings.
Publishing its financial results, IGT reported a Q4 consolidated revenue of $1.1bn, up three per cent in comparison to the same period the previous year (Q4 2022: $1.1bn).
For the full year, revenue grew by two per cent – or seven per cent when taking into account the net of the Italy commercial services sale – to $4.3bn (2022: $4.2bn). Lottery generated 59 per cent of the revenue during the year, followed by gaming (36 per cent) and digital (five per cent).
IGT’s gaming growth
Per segment, Global Lottery revenue in Q4 rose by seven per cent year-over-year to $681m (Q4 2022: $639m) thanks to higher product sales and continued same-store sales momentum in Italy.
Across 2023, lottery revenue fell by two per cent to $2.5bn (2022: $2.6bn), but when taking into account the net of the Italy commercial services sale, revenue improved by six per cent YoY “on 2.3 per cent global same-store sales driven by strong Italy performance and higher product sales”.
Global Gaming revenue during the quarter was in line with the same period the previous year at $390m, as strong terminal product sales and improved intellectual property revenue were offset by lower systems sales.
For 2023, gaming revenue benefited from “broad-based strength in key performance indicators” and grew by nine per cent to $1.6bn (2022: $1.4bn).
PlayDigital revenue fell by 10 per cent to $59m (Q4 2022: $65m) due to a one-time benefit related to jackpot expense in 2022 and lower sports betting volumes and hold rates in Rhode Island.
In the full year, PlayDigital revenue improved by 10 per cent to $228m (2022: $209m) following igaming growth across several regions.
IGT also recently announced that Everi is merging with its gaming and PlayDigital businesses to “create a global leader in gaming equipment, fintech services and casino systems”.
As a result of this upcoming merger, expected to be completed in late 2024 or early 2025, IGT will be merging its Global Gaming and PlayDigital segments – Gaming & Digital – for the reporting periods of Q1 2024 onwards.
“We delivered a strong finish to the year in the fourth quarter, propelling full-year 2023 profits to record levels,” commented Vince Sadusky, CEO of IGT.
“A compelling array of products and solutions fueled broad-based momentum in key performance indicators, driving margin improvement across our global lottery, global gaming and PlayDigital segments.
“We believe the recent determination to split the business and create separate lottery and gaming pure-play companies, each with experienced management teams and simplified business models, better positions each company to service customers and create significant value for stakeholders.”
Operating income improvement
Operating income in Q4 improved by 11 per cent YoY to $256m (Q4 2022: $230m) with a margin of 22.7 per cent, growing by 10 per cent and 17 per cent across lottery ($238m, 2022: $216m) and gaming ($80m, 2022: $68m) respectively.
PlayDigital was in line with the previous year ($17m, 2022: $17m), while corporate support and other expense rose to $79m after “higher separation and divestiture costs related to the exploration of strategic alternatives for the global gaming and PlayDigital segments in addition to higher restructuring costs”.
For the full year, a record operating income of $1bn was achieved (2022: $922m) with a margin of 23.2 per cent after strong performances across all segments.
Lottery was in line with the previous year ($913m, 2022: $909m), gaming improved by 29 per cent ($313m, 2022: $242m), PlayDigital registered a new high and rose by 32 per cent ($65m, 2022: $50m) and corporate support and other expense increased as well ($290m, 2022: $279m).
Q4 adjusted EBITDA rose by nine per cent to $454m (Q4 2022: $419m), while for 2023 as a whole, adjusted EBITDA improved by seven per cent to hit a record $1.8bn (2022: $1.7bn) “driven by higher operating income and amortisation, partially offset by higher separation and divestiture costs”.
Net income for the quarter improved to $27m in comparison to a net loss of $31m during the same period the previous year. For the full year, net income fell to $307m in comparison to $414m registered at the end of 2022.
Cash from operations rose to a record $1bn in 2023 (2022: $899m) “despite a $220m, $184m net of tax, payment in final settlement of DDI/Benson matter”.
As of December 31, 2023, net debt was $5.1bn (2022: $5.2bn), while total liquidity was $1.8bn, breaking down as $572m in unrestricted cash and $1.2bn in additional borrowing capacity.
2024 outlook
Looking ahead to 2024, IGT has set a revenue guidance range of $4.3bn to $4.4bn with an operating income margin of 20 per cent to 21 per cent. Cash from operations is expected to be below $1bn, while capital expenditures are expected to be around $500m.
The company also noted that the Gaming & Digital merger with Everi is expected to raise $3.7bn, of which $2.6bn will be distributed to IGT to repay debt (around $2bn) and fund transaction-related cash outflows (approximately $400m).
For Q1, IGT is expected to achieve revenue of approximately $1bn with an operating income margin of around 20 per cent.
“We achieved all of our financial goals in 2023,” said Max Chiara, CFO of IGT.
“Robust cash generation funded incremental investments in the business and shareholder returns, while driving leverage to historically low levels, putting IGT in a strong financial position as we enter 2024. This gives us confidence in further expanding our investment in the business to fund future growth.”
