Q1 2023 Financial Report for IGT

Tune in for the IGT Q1 2023 Financial results with pros and cons. A positive quarter for revenue, but concerns surround lottery growth. (Photo by Karolina Grabowska Pexels)

NYSE stock exchange listed and owner of slot developer iSoftBet, International Game Technology PLC (IGT), announced a promising start to the fiscal year, with a Q1 net income of $23 million on revenue of $1.06 billion.

Despite slight challenges, the company experienced an 8% growth in Global Lottery same-store sales as well as double-digit revenue growth in both PlayDigital (iSoftBet operates here), and Global Gaming brands, up by 17% and 17.2%, respectively.

Although the overall increase in revenue is great news, the company still has some work to do in its other divisions. There was an 8.2% drop off from the company’s Global Lottery brand. According to the financial report, this drop was largely due to the sale of IGT’s Italian commercial services business.

Overall, pretty impressive. Nonetheless, for some reason, the company’s stock price sank soon after the announcement. A slight glitch? Who knows what some of these traders think when they sell off after positive results? Is there a kink in IGT’s armoury we don’t see? Check out the pros and cons below.

CEO Vince Sadusky expressed satisfaction with the results, which have “exceeded expectations and put [IGT] firmly on track to achieve [their] full-year outlook.” He attributed the quarter’s success to the performances in the Global Lottery, Global Gaming, and PlayDigital segments, despite an 8.2% drop in Global Lottery to $624 million.

Detailed Breakdown of Q1 Figures

IGT provided a detailed breakdown of its Q1 figures, reporting revenues of $381 million for the Global Gaming segment and $55 million for PlayDigital. Geographically, the US and Canada experienced an 11.4% increase in revenue to $666 million, while Italy saw an 18.4% drop, primarily due to the sale of a business segment. Service revenue comprised the lion’s share of Q1 revenue at $846 million, with product sales contributing the remaining $215 million.

IGT anticipates Q2 revenue to hit $1 billion, with an operating income margin of 22-24%. For the full year, revenue is projected to be between $4.1 billion and $4.3 billion, with cash from operations expected to reach between $900 million and $1 billion.

Q1 2022 Figures Q1 2023 Figures % Change
Total Revenue $1.05 billion $1.06 billion +0.8%
Global Lottery $679 million $624 million -8.2%
Global Gaming $325 million $381 million +17.2%
PlayDigital $47 million $55 million +17%

CFO Max Chiara highlighted the company’s strong cash flow generation and credit profile improvement. He affirmed IGT’s commitment to enhancing its ability to be responsive in operations and flexible with finances. At the same time, the company has a commitment to also remain disciplined with costs.

Pros of International Game Technology PLC Q1 2023 Results

  1. Strong Revenue Growth: A revenue of $1.06 billion is a year-on-year increase of 0.8%
  2. Impressive Operating Income Margin: Thanks to cost management and efficient operational processes the operating income margin was a high 24%.
  3. Historically High Adjusted EBITDA: The company is showing profitability potential with an adjusted EBITDA of $449 million and a 42.3% Adjusted EBITDA margin. The highest reported by IGT.
  4. Debt Reduction: Down to 3.0x net debt leverage, this the lowest IGT has reported.
  5. Maintained Full-Year Outlook: IGT shows confidence in its business strategy and the current market conditions via its upbeat 2023 outlook.
  6. Awards and Recognitions: The developer has already won lottery, slot, and casino supply awards in 2023.

Cons of International Game Technology PLC Q1 2023 Results

  1. Decrease in Global Lottery Revenue: There are some concerns regarding IGT’s Global Lottery revenue growth after the sale of the Italy commercial services business, which caused an 8% year-over-year reduction from this segment.
  2. Decrease in Diluted Earnings Per Share: There was a drop of 72% to $0.11. In Q1 2022 the value was $0.39.
  3. Foreign Exchange Loss: A huge rise from $3 million to $26 million was lost due to foreign exchange. This is due to a weak dollar evident on the dollar index.
  4. Increase in Income Tax Provision: There was an $87 million income tax provision up from last year’s $65 million. The reason for this is down to incremental valuation allowances on deferred tax assets, partially offset by lower pre-tax income.
  5. Net Income Decrease: Even though profitability look good in the pros, IGT’s net income is down to $67 million from $117 million the year before.
  6. Increase in Corporate Support and Other Expense: A rise from $64 million  to $68 million is another concern as this comes from the currency exchange issue causing cost management concerns.

Awards For Lottery, Slots, Casino Supply & Diversity

IGT has also appeared in several awards ceremonies this year picking up accolades for its brilliance:

  • International Gaming Awards (IGA): Lottery Product of the Year
  • Global Gaming Awards (GGA): Casino Supplier of the Year
  • European Casino Awards (ECA): Best Slot Machine of the Year + Best Diversity and Inclusion Employer

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