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Q2 results see IGT increase FY23 guidance

| By Marese O'Hagan
International Game Technology (IGT) reported revenue of $1.05bn (£825.3m/€961.1m) for the second quarter of the year, prompting the operator to increase its full-year revenue outlook for 2023.
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The second quarter revenue was up 3.3% compared to Q2 2022. It was also largely level with Q1 revenue, which was $1.06bn.

Breaking it down by segment, IGT’s Global Lottery segment drove a large part of its revenue, hitting $624m. Although this was less than the $648m generated by the same segment in Q2 last year, revenue from Global Gaming grew by 13.0% to $373.0m.

PlayDigital’s revenue of $59m accounted for the remaining total for the quarter.

Vince Sadusky, CEO of IGT, said the revenue increase was propelled by strategic initiatives executed throughout the six months to 30 June.

“Our second-quarter and first-half results reflect solid revenue and profit momentum across all business segments,” said Sadusky. “We achieved the high end of our outlook by executing key strategic initiatives and growing demand for IGT’s compelling content and solutions.”

The operator noted its partnership with the Connecticut Lottery as one of the key strategic initiatives in question. It also noted the confirmation of a 20-year contract to operate instant and passive lottery in the state of Minas Gerais, Brazil, which was announced in June.

Just before the quarter’s end, IGT extended its long-term partnership with the Belgian National Lottery. In April, it extended its betting partnership with the Rhode Island Lottery.

Sadusky added that IGT is “solidly on track” to meet its 2025 objectives. Meanwhile, Max Chiara, CFO of IGT revealed that the operator is raising its full-year revenue outlook for 2023.

“We have a solid foundation to build from as we continue to invest in our growth objectives, further reduce debt and return capital to shareholders,” said Chiara. “Based on our first-half results, we are confidently raising our full-year 2023 revenue and operating margin outlook.”

“Strategic alternatives” for Global Gaming and PlayDigital

On 8 June, IGT announced that it was considering “strategic alternatives” for its Global Gaming and PlayDigital segments. This could see the segments sold, merged or spun-off.

At the time, IGT stressed that there is no timeline for this decision.

It also said the process could conclude in IGT retaining Global Gaming and PlayDigital and continuing to invest in the segments.

Q2 revenue break down

Breaking it down further by segment, Global Lottery revenue was mostly made up by service revenue, which totalled at $588m. Service revenue includes revenue from managing contracts, licence fees amortisation and other services. The remaining $35m came from product sales.

For Global Gaming, service revenue – consisting of terminals and software – totalled at $188m. Product sales revenue was $185m.

There was also a rise in gaming machine units sold by this segment, which totalled at 8,269. This was up by 14.9%, with a grand majority – 6,324 – sold in the US and Canada.

In terms of location, $650m of the revenue came from the US and Canada, up 11.1% year-on-year. Revenue from Italy totalled at $240m, a decrease of 16.6%. This decrease is likely a continuing effect of the sale of IGT’s proximity payment business in September 2022.

Rest of world revenue totalled at $164m, up by 10.8%.

IGT Q2 bottom line

Looking at operating expenses, the highest cost came from services, which totalled at $402m. Research and development costs totalled at $211m. Cost of product sales was $131m, while research and development generated expenses of $60m.

Total operating expenses for the quarter came to $805m, ticking up by 1.5%. This brought the operating income to $251m, a rise of 10.0% year-on-year.

Non-operating expenses added up to $75m. Following income taxes of $86m, the net income for the quarter hit $90m, almost triple the $34m net income in Q2 2022.

EBITDA and FY23 projections

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) totalled at $443m for the quarter, a rise of 5.8%.

IGT now expects revenue for the full year to be between $4.20bn and $4.30bn. This is up from the FY23 revenue projection of $4.10bn to $4.20bn projected in its FY22 results.

H1 break down

Revenue for the first half of the year totalled at $2.11bn, a rise of 2.1%

Total operating expenses for H1 totalled at $1.61bn for the six months, a rise of 1.1%. As is usually the case, the services segment generated the highest expense, totalling at $800m. Selling, general and administrative costs totalled at $428m, while cost of product sales amounted to $258m.

Research and development costs made up the remaining $122m.

The operating expenses brought the operating income to $506m.

Following non-operating expenses at $176m and income taxes at $173m, the total net income for the H1 was $157m, up by 4.0%.

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