Leading slot manufacturer International Game Technology Plc. beat Wall Street estimates with its earnings in the third quarter, with a 5 percent jump in year-over-year net revenue to .27 billion and a 4 percent increase in adjusted EBITDA to 0 million.
The boost in revenue was $20 million above the consensus estimate, while earnings per share of $0.45 were $0.01 higher than forecasts. The company also reported operating income of $164 million for the quarter—up 26 percent year-over-year—and a net loss of $0.01 per share, which reflected the impact of $21 million in foreign exchange losses.
The revenue growth was due in large part to the company’s lottery segments in North America and Italy. Same-lottery sales outside of Italy were up 6 percent from the prior year quarter while lottery wagers in Italy were up 7 percent. Overall revenue from its North America lottery business was up 22 percent to $307 million, aided by a new business in New Jersey and record-sized Powerball jackpots, while international lottery service revenue was up 8 percent to $215 million.
“Strong lottery performance across the world, a larger global installed base and increased sales of gaming machines drove another quarter of solid revenue and profit expansion,” said Marco Sala, CEO of IGT. “IGT’s leadership positions in lottery and gaming machines were evident at the recent gaming and lottery trade shows. The engaging player experiences and technology solutions IGT creates are the cornerstones of our growth strategy, and we are encouraged by customer enthusiasm for our innovative new products.”
IGT shipped almost 9,000 gaming machines globally during the quarter and grew its worldwide installed base by 1,000 to more than 58,000.
However, the uptick in lottery and equipment sales was offset by a drop in gaming service revenue—most notably a 17 percent year-over-year drop from its DoubleDown game, which was attributable to fewer users and increased competition in the social casino market.
“DoubleDown’s performance continues to be challenging,” said Sala. “It has proven competitive content and stable monetization rate, but no longer enjoys the early-mover market advantages. We recognize this and are focused on restoring its leadership in this attractive market segment.”
Overall, IGT’s North America Gaming & Interactive unit saw a 7 percent drop in revenue from $341 million to $317 million, primarily due to a smaller number of machines installed on casino floors.
IGT continued to expand its footprint in the U.S. lottery space by securing several important contracts with state lotteries, winning a concession in Florida that lasts through 2031 and entering into similar agreements with Georgia and Texas. In Italy, the company secured a nine-year concession with Italy Lotto.
As of September 30, IGT’s balance sheet held $350 million in cash against $7.94 billion in net debt, which equates to a roughly 4.5 times adjusted EBITDA to debt leverage ratio.
“We achieved broad-based growth across regions in the third quarter and our financial condition is strong,” said Alberto Fornaro, CFO of IGT. “Higher profitability enabled us to maintain our leverage ratio despite the significant interest and tax payments of the quarter. Based on our performance to date, we remain comfortable with our adjusted EBITDA outlook for the full year.”
