IGT reports 2% decline in Q1 revenue

20 May 2019

International Game Technology (IGT) has reported a 5% year-on-year decline in group revenue for the first quarter of 2019, a result of lower revenue from gaming operations.

Total revenue for the three months ended March 31, 2019 declined to $1.14bn. Of this sum, $991m was generated by service revenue - a 5% decline from Q1 2018 - and $153.9m from product sales, down 4% year-on-year.

The majority of revenue was derived from IGT’s Italy business unit, which accounted for $437m of the total, down 10% year-on-year. This comprised $204m in lottery service revenue, with total lotto wagers up 5% from Q1 2018 to £2.14bn.

Scratch & Win sales, meanwhile, were down marginally as a result of one fewer day of sales than in the prior year, though this was offset by an “exceptional” performance from IGT’s Multiplier games in the period.

Italian gaming service revenue fell 20% to $153m, which IGT blamed in part on increased taxes on amusement with prizes (AWPs) and video lottery terminals (VLTs). This was offset to an extent by improved productivity of its gaming machines, with a 21% decline in the number of AWP units resulting in a decline of less than 2% in stakes.

Revenue for IGT’s second largest unit, North American Lottery, was flat at $296m. Lottery service revenue remained stable at $241m, offset by a 13% decline in lottery product sales. However, the division benefited from an 8% increase in gaming revenue, albeit from a low base, to $41m.

The North America Gaming & Interactive division, on the other hand, saw revenue slide 2% to $239m. This was down to a 6% drop in product sales, coupled with minor growth in gaming service revenue.

Finally the International segment saw revenue fall 7% year-on-year to $172m. The division was hit by a $10m fall in gaming revenue to $81m.

As of March 31, 2019 IGT’s total installed units were down 3% to 60,444 machines. In Q1 a total of 7,001 machines were shipped, up 20% year-on-year.

“Our first-quarter results confirm the consistent growth profile of our global lottery business and the progress we’ve made in sales of gaming machines, where global unit shipments increased 20%,” IGT chief executive Marco Sala said.

“The results of our Italy operations are also noteworthy, with further growth in lottery and resilient machine gaming performance.

“As we look to the future, our focus remains on improving revenue and profits from gaming activities, innovating with new lottery games and technologies, and pursuing emerging growth opportunities.”

Total costs for the quarter declined 4% to $966.8m, due to reduced costs of services and product sales-related expenses. Selling, general and administrative expenses were down 6% to $205.1m, while research and development costs fell to $66.1m.

This left an operating profit of $178.2m, a 10% year-on-year decline. However, a foreign exchange gain of $58.6m saw IGT’s non-operational expenses decline from $201m in Q1 2018 to $45m. This ultimately resulted in the supplier posting a net profit of $40.3m for the quarter, a significant improvement on the prior year loss of $103.1m.

Total revenue for the three months ended March 31, 2019 declined to $1.14bn. Of this sum, $991m was generated by service revenue - a 5% decline from Q1 2018 - and $153.9m from product sales, down 4% year-on-year.

The majority of revenue was derived from IGT’s Italy business unit, which accounted for $437m of the total, down 10% year-on-year. This comprised $204m in lottery service revenue, with total lotto wagers up 5% from Q1 2018 to £2.14bn.

Scratch & Win sales, meanwhile, were down marginally as a result of one fewer day of sales than in the prior year, though this was offset by an “exceptional” performance from IGT’s Multiplier games in the period.

Italian gaming service revenue fell 20% to $153m, which IGT blamed in part on increased taxes on amusement with prizes (AWPs) and video lottery terminals (VLTs). This was offset to an extent by improved productivity of its gaming machines, with a 21% decline in the number of AWP units resulting in a decline of less than 2% in stakes.

Revenue for IGT’s second largest unit, North American Lottery, was flat at $296m. Lottery service revenue remained stable at $241m, offset by a 13% decline in lottery product sales. However, the division benefited from an 8% increase in gaming revenue, albeit from a low base, to $41m.

The North America Gaming & Interactive division, on the other hand, saw revenue slide 2% to $239m. This was down to a 6% drop in product sales, coupled with minor growth in gaming service revenue.

Finally the International segment saw revenue fall 7% year-on-year to $172m. The division was hit by a $10m fall in gaming revenue to $81m.

As of March 31, 2019 IGT’s total installed units were down 3% to 60,444 machines. In Q1 a total of 7,001 machines were shipped, up 20% year-on-year.

“Our first-quarter results confirm the consistent growth profile of our global lottery business and the progress we’ve made in sales of gaming machines, where global unit shipments increased 20%,” IGT chief executive Marco Sala said.

“The results of our Italy operations are also noteworthy, with further growth in lottery and resilient machine gaming performance.

“As we look to the future, our focus remains on improving revenue and profits from gaming activities, innovating with new lottery games and technologies, and pursuing emerging growth opportunities.”

Total costs for the quarter declined 4% to $966.8m, due to reduced costs of services and product sales-related expenses. Selling, general and administrative expenses were down 6% to $205.1m, while research and development costs fell to $66.1m.

This left an operating profit of $178.2m, a 10% year-on-year decline. However, a foreign exchange gain of $58.6m saw IGT’s non-operational expenses decline from $201m in Q1 2018 to $45m. This ultimately resulted in the supplier posting a net profit of $40.3m for the quarter, a significant improvement on the prior year loss of $103.1m.