International Game Technology (IGT) has increased full-year revenue guidance after posting better-than-expected results during the first quarter of 2024.
Revenue in the three months to 31 March amounted to $1.07bn (£850/€988m). This was only marginally higher than $1.06bn in the previous year but surpassed initial expectations for Q1 at IGT.
Growth came as a result of higher revenue from the Global Lottery business. While IGT saw a drop in Gaming & Digital revenue, this segment of the business still performed better than forecast.
Furthermore, while operating costs were higher year-on-year, IGT was able to make savings in non-operating expenses. This, coupled with higher revenue, meant net profit was up in Q1.
“Innovative game, hardware, and systems solutions drove better-than-expected Global Lottery and Gaming & Digital performance in Q1,” IGT CEO Vince Sadusky said.
“As a result, we are upgrading our full-year 2024 revenue and profit goals, which reflect broad-based momentum across key performance indicators in the balance of the year.”
Global Lottery revenue tops $661m
Breaking down Q1 and beginning with the Global Lottery business, revenue increased 5.9% to $661m.
IGT put this down to “significantly” higher product sales, driven by new GameTouch 28 self-service terminals in Canada and software upgrades in Singapore and Germany. It also notes continued same-store sales strength in Italy.
Total services revenue in this segment was 2.8% higher at $619m. In addition, product sales revenue almost doubled from $22m to $42m.
Gaming & Digital revenue down as Everi merger edges closer
Turning to Gaming & Digital, revenue was 6.9% lower at $406m. This, according to IGT, was due to lower product sales as a result of fewer terminal unit shipments in the current year. IGT also spoke of elevated intellectual property and software licences in the prior year.
This, however, was partially offset by higher service revenue driven by growth in the global installed base and a 10.0% increase in igaming revenue.
Total service revenue from Gaming & Digital in Q1 was 4.1% higher at $253m. In contrast, product sales revenue from this business declined 20.7% to $153m.
Also on this segment, in February, IGT confirmed that it will merge its Global Gaming and PlayDigital businesses with Everi. This, IGT says, will create a “comprehensive and diverse” global enterprise.
Everi will rebrand to International Game Technology Inc and trade on the New York Stock Exchange under the ticker IGT. The combined business will be worth an estimated $6.20bn.
While the deal is not due to complete until later this year or early 2025, IGT has already made changes to its management team. This includes Enrico Drago stepping down as CEO of PlayDigital.
Speaking in an earnings call in Q1, Sadusky said the merger it continues to “make progress”. He also said neither IGT nor Everi had received any negative comments from customers about the deal.
“We continue to make progress on separating Global Lottery from Gaming & Digital and preparing for the proposed transaction with Everi,” Sadusky said. “Overall, it’s been met with a really positive response and we are looking forward to joining together and becoming one unit.”
Net profit tops $82m
In terms of spending, total operating costs were up 0.9% to $812m in Q1. Cost of services was the main outgoing for IGT, with these expenses amounting to $412m.
However, non-operating costs were reduced by 42.6% to $58m. As such, IGT was left with a pre-tax profit of $198m, up 27.7% year-on-year.
IGT paid $69m in tax and also accounted for $47m in income from non-controlling interests. As such, net profit attributable to IGT in Q1 amounted to $82m, an increase of 256.5% from 2023.
IGT expects full-year revenue to reach $4.40bn
Based on these results, IGT has now increased guidance for full-year revenue.
When posting its 2023 results, the group estimated that revenue for 2024 would amount to between $4.30bn and $4.40bn. However, after early success in Q1 and surpassing targets for the quarter, FY24 revenue is now set to be at least $4.40bn.
Furthermore, IGT says its operating profit margin will reach 21.0%, or 24.0% when excluding separation and divesture costs. Cash from operations should be around $1.00bn and capital expenditure approximately $500m.
As for Q2, revenue is forecast to be almost level with Q1 at $1.05bn.
Revenue and net profit down at Everi in Q1
Last week, Everi, which looks set to become part of the new International Game Technology Inc business, also posted its Q1 results.
Q1 proved a tricky period for Everi, with both revenue and net profit falling year-on-year. Revenue was down 5.6% to $189.3m, with declines across its Games and Fintech segments.
Total costs were 10.9% higher at $164.6m, with expenses up across the board. Inevitably this, coupled with lower revenue, had an impact on bottom line.
The group paid $1.4m in income tax and noted a negative foreign currency impact of $1.7m. This left a net profit of $2.9m, down 89.6% year-on-year, while adjusted EBITDA fell 13.1% to $80.3m.
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