IGT Cites ‘Growing And Resilient’ Lottery Vertical As Key To Q4 Revenue Uptick

On the company’s 2023 fourth-quarter and full-year earnings call Tuesday, executives from International Game Technology PLC (IGT) were quick to cite the lottery business as a key component in a Q4 that topped financial forecasts.

The London-based business, whose products and services cover lottery, online casino, gaming machines, sports betting, and more, pointed to 7% Global Lottery growth propelling overall revenue for the quarter over $1.1 billion, an increase of 3% year-over-year.

“Lottery profitability improved in 2023 with operating margin expanding 100 basis points to 36 percent,” noted IGT CEO Vincent Sandusky regarding full-year figures. “Lottery is a large, steady growing, and resilient industry with recession-proof characteristics. Growth accelerated during the pandemic, and our 2023 results confirm that we are successfully maintaining these higher play levels with significantly improved margins.”

For the year overall, the numbers were mixed for IGT, with group revenue up about 1.9% from $4.23 billion to $4.31 billion, but net profit down significantly — from $275 million in 2022 to $156 million in 2023 — due to an assortment of higher operating and non-operating costs.

Lottery up, iLottery way up

CFO Massimiliano Chiara expanded on the Q4 lottery numbers during the call.

“Global Lottery delivered $681 million in revenue in the fourth quarter,” Chiara said, “an increase of 7 percent driven by strong product sales and Italy same-store sales growth. Global same-store sales declined 3 percent, reflecting the impact of strong U.S. multi-state jackpots sales in the prior year that were bolstered by the record $2 billion Powerball jackpot that hit on November 7, 2022.”

Chiara was referencing the Powerball jackpot claimed in California with an all-time record annuity value of $2.04 billion (and a cash value just shy of $1 billion).

The 7% revenue growth in Global Lottery in Q4 represented a slight uptick compared to the 6% growth for the full year, which Sadusky asserted “are impressive numbers for a business of this scale.”

He added that same-store sales in North America increased in the low single-digits, while “iLottery sales continue to expand at a fast cliff, up over 40 percent in 2023, mostly driven by organic growth in existing markets.”

IGT signed multi-year contract extensions in 2023 in the lottery sector in California, Kentucky, Virginia, and South Dakota.

The market opened on Tuesday with IGT trading at $24.26 per share and dropped slightly to $23.58 at market close Tuesday. As of this writing on Wednesday, the stock had fallen an additional $1.59 per share, or 6.76%, to $21.99.

Talking 2024

Looking ahead, Sadusky noted that the company has been awarded an eight-year contract to offer iLottery in Connecticut and will go live later this year with draw-based games in the state.

The structure of IGT is set to change in the wake of February’s news that the company is spinning off its Global Gaming and PlayDigital divisions and merging them with Everi. That merger is expected to close in late 2024 or early 2025.

In the meantime, IGT ended 2023 on a positive note and its leaders are expressing optimism.

“We delivered strong financial performance in 2023 with results that met upgraded financial targets,” Chiara summarized. “We’re heading into 2024 on a solid foundation with clear prospects for profitable growth, significant liquidity, and no material near term debt maturities.”