IGT global lottery unit revenue drags during Q3 but remains profitable

IGT’s global lottery business displayed a slowdown in both revenues and income during Q3, despite it continuing to be a mainstay for the business

IGT’s global lottery business displayed a slowdown in both revenues and income during Q3, despite it continuing to be a mainstay for the business.

Publishing its financial report for Q3, the global gaming and lottery firm recorded corporate revenues of $1.06bn, up 8% year-over-year from Q321’s $984m. 

IGT’s lottery unit sales down as global headwinds bite

The global lottery unit recorded falling revenues, with the $626m recorded in Q3 4% YoY, attributable to global financial headwinds felt from weakening currencies against the US dollar. 

Instant ticket and draw games sales growth stood at -0.5% during Q3, compared with 7% one-year ago, though this has significantly improved from the -8.6% witnessed in Q2.

Lottery achieved a 4% increase in constant currency revenues, with IGT noting that strong, multi-jurisdictional jackpot activity during the quarter helped to maintain sales. 

Q3 trading saw IGT bolster its lottery contract portfolio as the firm penned a four-year extension in New York and a seven-year extension in Georgia as a primary technology supplier, and a new 10-year instant ticket printing and services contract in Texas.

It also enhanced its European lottery portfolio, agreeing a deal with Santa Casa de Misericordia de Lisboa in Portugal to deliver up to 7200 Retailer Vue terminals.

Gaming growth headlines group performance

Offsetting the drags felt by the global lottery unit, global gaming revenues spiked 31% YoY, reaching $379m. This was impacted by “increases in machine shipments, average selling prices, installed base yields, and intellectual property and multi-year poker site licenses”.

Meanwhile, the digital and betting unit recorded 27% revenue growth YoY, increasing to $54m, driven by growth in casino and material contributions from its acquisition of iSoftBet.

“IGT’s organization 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.”

Maintaining its profitability level despite macroeconomic challenges, IGT posted flat adjusted EBITDA, falling 1% YoY to $402m compared to $407m last year. 

Global lottery retains strong profitability, with a 34% margin yielding $211m in net income, though this was down 10% YoY, attributable to a lower contribution from the Italian business and increased R&D investment. 

Total operating income also stood at $211m, with gaming and digital & betting gains offset by the 10% reduction in lottery income, as well as corporate support expenses growing by 38%.

IGT also offered insights into its full-year projections, anticipating revenue of $4.1bn – $4.2bn. 

“Our strategy to innovate, optimize, 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.”