Net profit dips despite revenue growth at IGT in 2023
Group revenue for 2023 was up from $4.23bn in the previous year and in line with guidance. IGT said this was down to growth in its Global Gaming and PlayDigital businesses, although Global Lottery reported a decline.
However, there were some marginal improvements within Global Lottery during the final quarter of 2023. This, coupled with growth in the other segments, ensured a strong end to the year,
“We delivered a strong finish to the year in the fourth quarter, propelling full year 2023 profits to record levels,” IGT CEO Vince Sadusky said. “A compelling array of products and solutions fuelled broad-based momentum in key performance indicators, driving margin improvement across our Global Lottery, Global Gaming and PlayDigital segments.”
New look for IGT as merger confirmed
Incidentally, the make-up of IGT will soon be rather different following news of a restructure last month. IGT is merging its Global Gaming and PlayDigital divisions with Everi to create a “comprehensive and diverse” global enterprise.
Global Gaming and PlayDigital will be spun off and combine with Everi. IGT shareholders will own around 54% of shares in the combined business and Everi stockholders the remaining 46%. The merger values the enlarged operation at $6.20bn.
Both the IGT and Everi boards have approved the merger, which will close later this year or early 2025. Following the close, Everi will be renamed International Game Technology Inc and trade on the New York Stock Exchange.
“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,” Sadusky said.
Mixed results for 2023
Taking a look at the results for the 12 months to 31 December 2023, the headline figure for IGT is revenue growth. Service revenue dipped 0.4% to $3.35bn but product sales revenue offset this decline, rising 11.2% to $963m.
Despite the decline in Global Lottery, it was still the main revenue source for IGT by some distance. Revenue here totalled $2.53bn, down 2.4%. IGT referenced the sale of its Italian commercial services business as a reason for this fall. Net of this impact revenue would have been 6.0% higher.
Global Gaming revenue climbed 9.1% year-on-year to $1.55bn in 2023. IGT said this was due to “broad-based strength” across key performance indicators for the business.
As for PlayDigital, revenue here was 9.1% higher at $228m for the year, a new record for the division. The group noted the impact of igaming growth across a range of markets as the main driver behind this increase.
Net profit slips 43.3%
Costs-wise, operating expenses for the year were only marginally higher at $3.31bn. The main outgoing for IGT was cost of services, which amounted to $1.63bn.
Non-operating costs climbed 11.7% to $372m, leaving a pre-tax profit of $629m, up 6.8% on 2022. IGT paid $322m in total tax and discounted $151m in profit from non-controlling interests.
As such, net profit for the year hit $156m, down 43.3% from $275m in 2022. However, total adjusted EBITDA reached an all-time high of $1.78bn, up 6.9% from the previous year.
Strong end to 2024 with Q4 growth
Looking to Q4, group revenue was up 3.4% to $1.13bn. Of this $839m came from services and $291m product sales.
Global Lottery revenue in Q4 increased 6.6% to $681m, driven by strong product sales and Italy same-store sales growth. Global Gaming revenue was level at $390m as higher terminal product sales revenue and increased intellectual property revenue were offset by lower systems sales.
PlayDigital revenue dipped 9.2% to $59m due to a one-time benefit related to jackpot expense in the prior year and lower sports betting volumes and hold rates in Rhode Island in 2023.
Operating costs were up 1.2% to $873m although non-operating expenses were reduced by 9.3% to $146m. This resulted in a pre-tax profit of $110m, up 57.1% year-on-year.
IGT paid $83m in tax and took off $35m in profit from non-controlling interests. As such, it was left with a net loss of $7m for Q4, although this was an improvement on the $64m loss from the previous year.
In addition, adjusted EBITDA for the quarter increased by 8.4% to $454m.
“We achieved all of our financial goals in 2023,” IGT chief financial officer Max Chiara said. “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.”