In a year marked by ambitious growth and strategic restructuring, International Game Technology (IGT), a global leader in gaming, has revealed a mixed financial picture for 2023. Notwithstanding a dip in net profits, the company boasted a significant increase in group revenue, following its guidance with a leap from $4.23 billion in the prior year. This revenue upswing is primarily attributed to the robust performance of its Global Gaming and PlayDigital sectors, though it’s important to note that the Global Lottery division did experience a decline.
Yet, all was not gloomy within the Global Lottery as the last quarter of 2023 saw some nominal improvements. This uptick, alongside the sustained growth in other areas, propelled IGT to a vigorous year-end. “We delivered a strong finish to the year in the fourth quarter, propelling full-year 2023 profits to record levels,” remarked IGT CEO Vince Sadusky with palpable optimism. He stressed that a diverse portfolio of products and solutions catalyzed significant momentum across key performance indicators, enhancing margins throughout IGT’s business segments.
The company’s strategic landscape is poised for considerable change following the recent announcement of a company restructure last month. A forthcoming merger with Everi aims to see IGT’s Global Gaming and PlayDigital segments amalgamate to form a “comprehensive and diverse” powerhouse within the global gaming industry. This move will translate into Everi and the spun-off segments of IGT combining forces, with IGT shareholders expected to retain approximately 54% of shares in the merged entity, and Everi stockholders the remaining 46%. Accounting for this merger, the enlarged enterprise will boast a valuation of $6.20 billion.
The boards of both IGT and Everi have given their nod of approval for this consolidation, which is anticipated to finalize later in the year or possibly by early 2025. Following this transition, Everi is set to be rebranded as International Game Technology Inc. and will continue to be publicly traded on the New York Stock Exchange. CEO Sadusky underscored the belief that this division into separate lottery and gaming focused entities, each with a specialized management team and a streamlined business model, would imbue both with an enhanced capability to serve customers and nurture significant stakeholder value.
An assessment of IGT’s 2023 financial outcomes up to December 31 uncovers a headline story of revenue growth despite a modest retreat in service revenue by 0.4% to $3.35 billion. However, this was more than balanced by a promising 11.2% rise in product sales revenue which totaled $963 million. Despite the Global Lottery division’s revenue slipping 2.4% to $2.53 billion, it remained the primary revenue source for the company. IGT cited the disposition of its Italian commercial services operation as a factor for revenue reduction. Excluding this effect, the revenue would have reported a 6.0% increase.
The Global Gaming sector recorded an ascent of 9.1% in revenue to $1.55 billion, attributed to the robust performance indicators for the business. PlayDigital also celebrated record revenue, touching $228 million for the year, marking a 9.1% hike, with igaming growth across multiple markets operating as the prime catalyst for this surge.
In operational terms, the annual expenses edged marginally higher to $3.31 billion, with the cost of services at $1.63 billion leading the expenditure. Although non-operating costs rose 11.7% to $372 million, the ultimate pre-tax profit reflected a healthy increase of 6.8% to $629 million compared to the previous year. After accounting for tax expenses of $322 million and adjusting $151 million in profit due to non-controlling interests, IGT netted a profit of $156 million for the year, which, despite being 43.3% lower than 2022’s profit of $275 million, was mitigated by the fact that the total adjusted EBITDA reached an apex of $1.78 billion, escalating by 6.9%.
Focusing on the fourth quarter alone, group revenue was bolstered by 3.4%, delivering a total of $1.13 billion. This was composed of $839 million from services and $291 million from product sales. The Global Lottery saw a revenue increase of 6.6% to $681 million within the quarter, with product sales and same-store sales growth in Italy as its drivers. Meanwhile, Global Gaming maintained its revenue at $390 million, balancing higher terminal product sales and intellectual property revenue against a dip in system sales. PlayDigital, in contrast, confronted a revenue decline of 9.2% to $59 million, burdened by a prior year one-time jackpot expense benefit and sluggish sports betting volumes and hold rates within Rhode Island.
Expenses for the quarter rose marginally by 1.2% to $873 million, but IGT experienced a reprieve with a 9.3% decrease in non-operating expenses totaling $146 million. Consequently, pre-tax profit surged by a remarkable 57.1% year-on-year to $110 million. The tax bill for the quarter stood at $83 million with a $35 million adjustment for profit from non-controlling interests. This left IGT with a net loss of $7 million for Q4, an improvement over the preceding year’s $64 million loss. Nonetheless, adjusted EBITDA for the quarter enjoyed an increase of 8.4% to $454 million.
“We achieved all of our financial goals in 2023,” declared IGT chief financial officer Max Chiara. He spotlighted the firm’s substantial cash generation which financed additional investments and shareholder returns, while concurrently pushing leverage to historically low levels, situating IGT in a formidable financial stance as it proceeds into 2024. Chiara expressed confidence in the company’s capacity to escalate its investments to fuel future growth – a sentiment reflective of IGT’s resilient and adaptable strategy in the dynamic landscape of global gaming.
