IGT Reports Profit in Second Quarter 2023 Results


LONDON, UK – International Game Technology (IGT) reported financial results for the second quarter ended June 30, 2023.

“Our second-quarter and first-half results reflect solid revenue and profit momentum across all business segments,” said Vince Sadusky, CEO of IGT. “We achieved the high end of our outlook by executing key strategic initiatives and growing demand for IGT’s compelling content and solutions. We are solidly on track to deliver on our 2025 objectives and remain focused on unlocking the intrinsic value of IGT’s market-leading businesses.”

“Our year-to-date performance showcases the strong cash generation of the business,” said Max Chiara, CFO of IGT. “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. Based on our first-half results, we are confidently raising our full-year 2023 revenue and operating margin outlook.”

Key Highlights:

  • Secured 10-year brand licensing extension with Sony Pictures Television granting IGT exclusive rights to the legendary Wheel of Fortune® brand across Gaming, Lottery, iGaming, and iLottery as well as non-exclusive rights to distribute Wheel of Fortune content for free-to-play social casinos
  • Awarded 20-year license, as part of a consortium, to operate certain lottery games for Minas Gerais State Lottery in Brazil; executed 10-year contracts in Malta for lottery technology and instant ticket printing; won eight-year iLottery contract in Connecticut; executed four-year transition agreement in Belgium and contract extension in Costa Rica
  • Executed agreement to deploy IGT’s award-winning IGT ADVANTAGE™ system at the Rio Hotel & Casino
  • Launched Mystery of the Lamp™ on new PeakCurve™49 cabinet
  • Launched omnichannel Wheel of Fortune jackpot game in the U.S. and exclusively digital MegaJackpots™ games in Alberta and expanded omnichannel Powerbucks™ games to Alberta, building on success in other Canadian provinces
  • Named “Sportsbook Supplier of the Year” at 2023 SBC Awards North America
  • Won “Diversity and Inclusion” category at 2023 Women in Gaming (WIG) Diversity & Employee Wellbeing Awards

Financial Highlights:

  • Consolidated revenue grew 3% to $1.06 billion, up from $1.02 billion in the prior year; net of the Italy commercial services sale in September 2022, revenue increased 11%
  • Global Lottery revenue of $624 million was down 4% year-over-year; net of the Italy commercial services sale, revenue rose 8% on strong same-store sales in Italy, execution of a multi-year software licensing agreement for a lottery central management system, and higher LMA incentives
  • Global Gaming revenue of $373 million, up 13% from $330 million in the prior year, on record U.S. & Canada unit shipments for a second quarter period, higher global average selling prices, growth in the installed base across geographies, and robust system sales
  • PlayDigital revenue increased 38% to $59 million, up from $43 million in the prior year, primarily driven by strong player demand trends and contributions from the iSoftBet acquisition
  • Operating income of $251 million increased 10% from $228 million in the prior year; operating income margin expanded 150 basis points to 24%
  • Global Lottery operating income of $229 million was in line with the prior year despite the sale of Italy commercial services business; operating income margin increased 120 basis points on strong Italy same-store sales, high-margin software license, and LMA incentives
  • Global Gaming operating income rose 25% to $71 million; operating income margin expanded 190 basis points to 19% on strong operating leverage
  • PlayDigital operating income more than doubled to $18 million; operating income margin improved 1,200 basis points to 31% on strong gross margin expansion and despite higher investments in research and development and talent
  • Corporate support and other expense of $68 million was stable with the prior year
  • Adjusted EBITDA of $443 million, compared to $409 million in the prior-year period, on higher operating income and depreciation and amortization; Adjusted EBITDA margin increased to 42% from 40% in the prior year on improved margins across operating segments
  • Net interest expense of $71 million, compared to $75 million in the prior year, primarily driven by lower average debt balances
  • Foreign exchange loss of $5 million, compared to foreign exchange gain of $19 million in the prior year, primarily reflecting the non-cash impact of fluctuations in the EUR/USD exchange rate on debt
  • Other non-operating income, net of $2 million, versus other non-operating expense, net of $150 million in the prior year, driven by an accrual related to the DDI/Benson matter in the prior-year period
  • Income tax provision of $86 million, compared to a benefit of $11 million in the prior year, primarily driven by higher pre-tax income; pre-tax income in the prior year was impacted by accrual for the DDI/Benson matter
  • Net income of $90 million versus $34 million in the prior-year period
  • Diluted earnings per share of $0.23, versus diluted loss per share of $0.02 in the prior year, primarily reflects $150 millionin non-operating expense in the prior year related to the DDI/Benson matter that has since been settled; Adjusted diluted earnings per share of $0.45 versus $0.57 primarily due to a higher quarterly effective tax rate
  • Net debt of $5.4 billion compared to $5.2 billion at December 31, 2022; Net debt leverage of 3.1x, in line with 3.1x at December 31, 2022

Cash and Liquidity Update

  • Total liquidity of $1.8 billion as of June 30, 2023 
  • $0.5 billion in unrestricted cash and $1.4 billion in additional borrowing capacity from undrawn credit facilities

Other Developments

  • On June 8, 2023, the company announced its Board of Directors is exploring strategic alternatives for the Global Gaming and PlayDigital segments with the goal of unlocking the full value of the portfolio.
  • The company’s Board of Directors declared a quarterly cash dividend of $0.20 per common share
  • Paid $220 million in final settlement of the DDI/Benson matter in the second quarter, in addition to $50 million paid to escrow in the fourth quarter of 2022; full-year 2023 after-tax impact estimated at ~$170 million

Introducing Third Quarter 2023 Expectations; Raising Full-Year 2023 Outlook

Third Quarter: 

  • Revenue of approximately $1.0 billion
  • Operating income margin of 22%-23%

Full Year:

  • Revenue of $4.2 billion-$4.3 billion
  • Operating income margin of ~23%
  • Cash from operations of $900 million-$1,000 million
  • Capital expenditures of $400 million-$450 million