During the Q1 earnings call on Tuesday, International Game Technology CEO Vince Sadusky discussed the company’s plans to secure the lottery in Italy, revealing that $500 million has been allocated for this purpose if they obtain the license.
The announcement coincided with IGT’s publication of its Q1 results, which showed a 10% decline in group revenue to €583 million, with reductions in three out of four core segments.
Although revenue decreased across all markets geographically, Italy experienced the smallest decline at 3%. Sadusky and IGT view this market, especially concerning the lottery license, as a significant growth opportunity.
Since 1993, IGT has managed the Italian lottery. However, with the current term expiring in November, it faces strong competition from companies like Novomatic, Allwyn, and Flutter for license retention.
IGT stated that the license evaluation process is well underway, with economic proposals set to be reviewed on May 19th. Sadusky anticipates the technical evaluations to be completed before this date.
To prepare for the potential license renewal, IGT secured a new €1 billion term loan, with €500 million already utilized for debt repayment. The remaining €500 million will only be used if they secure the license for another term.
How do tariffs affect IGT?
The Q1 update addressed broader concerns for IGT, including the impact of tariffs and the potential for a recession. Sadusky remains optimistic about the company’s performance, particularly in the US and Italy markets.
Sadusky also discussed the pending sale of IGT’s gaming and digital assets to Apollo Global, a deal expected to finalize in Q3, making IGT solely a lottery business.
Factors behind Q1 revenue decrease
IGT attributed the drop in revenue to lower instant ticket and draw-based revenue, a 3% decline totaling $500 million. Additionally, US multi-state jackpot wager-based revenue fell by 46% due to higher activity in the previous year.
Service revenue decreased by 10% to $557 million, while product sales revenue dropped by 38% to $26 million. Geographically, the US and Canada contributed $259 million, a 20% decrease, with Italy generating $246 million (down 3%), and the rest of the world at $79 million (down 7%).
Net profit decrease by 204%
Operating costs remained steady at $445 million, but non-operating expenses rose by 78% to $82 million. Pre-tax profit decreased by 93% to $8 million, with net profit falling by 53% to $60 million when accounting for discontinued operations.
Bottom-line net profit, excluding non-controlling interest, was $27 million, marking a 204% decline from the previous year. Adjusted EBITDA also decreased by 24% to $250 million.
Sadusky expressed confidence in the company’s long-term growth initiatives, despite the current global uncertainties.
