Global lottery, gaming, and B2B tech giant IGT has posted third-quarter revenue of $1.6 billion, a 7.7% year-on-year gain from the $984 million registered in the same period in 2021.
Profits in Q3 rose 39% year-over-year for the company, which provides B2B platform and tech solutions to a number of retail betting kiosks and online sports betting sites (such as FanDuel) across 24 different legal sports betting markets in North America. IGT also beat street estimates by reporting earnings per share of $0.43, a 39% YoY improvement over last year's $0.31 third quarter.
IGT's core Global Lottery division turned in $626 million in revenue for the quarter, a slight 4% YoY loss compared to the same period last year. However, IGT's two other business segments more than offset that decline.
The company's Global Gaming unit reported Q3 revenue of $379 million, a solid 30.9% YoY increase over last year's third-quarter results, which it attributed to "significant increases in machine shipments, average selling prices, installed base yields and intellectual property, as well as multi-year poker site licenses".
Third-quarter operating income at the Global Gaming division rose to $65 million, a spectacular 107% YoY increase over the $31 million recorded in the same quarter of 2021.
Meanwhile, IGT's Digital and Betting division saw revenue rose by a healthy 27.2% to $54 million. Much of this growth was driven by improved online casino results and fresh earnings generated by its recently acquired iGaming content and game aggregator, iSoftBet.
"Our strategic focus on driving growth through innovation and optimizing our processes and scale is paying off," said Vince Sandusky, CEO of IGT, in his closing remarks at Tuesday's Q3 earnings call. "When the company reorganized around three main business segments with global product responsibility, it enabled our teams to focus on delivering best-in-class products and services more efficiently and profitably.
Global Gaming posted "terrific" Q3 results
Sadusky added that Global Gaming had another "terrific" quarter with revenue up over 30% and operating profit more than double, which he attributed to widespread momentum across a number of different sectors.
"The increase in profit is noteworthy since Global Gaming has had to sustain higher supply chain costs than our other businesses," said Sadusky. "Our roster of core video and multi-level progressive games on award-winning new hardware drove record unit shipments in the U.S. and Canada for a Q3 and year-to-date period — This resulted in the highest U.S. and Canada ASPs ever in the third quarter."
Sadusky also alluded to the important contribution to Q3 growth made by iSoftBet, which it first acquired in April before completing the purchase in July, but noting that is was a key driver for the revenue growth.
"GGR was up for our existing North American iCasino and sports betting operations, which account for most of the segment's revenue," said the IGT chief. "With the addition of iSoftBet, our iCasino offer is now live in over 25 jurisdictions and there are a number of new market launches in Europe and Latin America planned for next year."
He was also bullish about prospects for the company's iGaming and sports wagering division, which Sadusky noted is already profitable — but has more room to grow.
"The SaaS-like business model means that the profit margin should expand as we gain scale," said Sadusky. "You should see that dynamic unfolding beginning next year as we continue to work on the iSoftBet integration for the rest of 2022."
Debt reduction offers safety margin
Another impressive result issued from IGT's earnings report was the company's reduction of its overall debt load to $5.1 billion, down from $5.9 billion at the end of last year. This resulted in a corresponding reduction in net debt leverage from 3.5x on December 31, 2021 to 3.1x — the lowest in company history.
Much of the debt leverage reduction came from the IGT's $700 million sale of its Italian proximity payments business, although the proceeds from that transaction were partially offset by the $160 million purchase of iSoftBet.
"Our strategy to innovate, optimize, and grow is fueling progress across the portfolio," said Max Chiara, CFO of IGT. "Robust year-to-date cash flows and proceeds from the sale of the Italy proximity payments/commercial services business, in addition to proactive liability management, enabled us to reduce debt to the lowest level ever."
Chiara added that IGT's long-term target is to be in the range of 2.5% to 3.5% leverage, and while he feels they are currently "in a good spot," there is still room for improvement.
"Obviously, we would like to be in the low end of the buffer to protect ourselves for potential bad times coming," Chiara added.
