IGT has reported a slight dip in revenue and adjusted EBITDA for the third quarter of 2024, but CEO Vince Sadusky has expressed confidence in the direction the company is heading in.
During the quarter, the company also announced the sale of its Gaming & Digital business to funds managed by affiliates of Apollo Global Management for $4.05bn, a transaction which it expects to complete by the end of Q3 2025. The deal is part of a merger between the Gaming & Digital business and Everi Holdings.
As such, IGT has stated that this is the first quarter in which “the results of the Gaming & Digital business are classified as discontinued operations”.
The company has also provided guidance for Q4 and for the full year for continuing operations, reporting that they expect revenue up to $690m and $2.55bn respectively for each measuring period.
Publishing its Q3 results, IGT declared revenue for the quarter of $587m, down 2% year-over-year (Q3 2023: $601m) and 3% in constant currency (cc). For the year-to-date, ending 30 September, the company reported a revenue of $1.86bn (2023: $1.85bn).
Q3’s revenue was attributed to “sustained momentum in Italy and improved US instant ticket and draw game wagers”.
Gross profit was also down 5% YoY and 7% in cc during the quarter to $263m (2023: $278m), while operating income fell by 33% YoY to $110m (2023: $163m). YTD, gross profit had declined 2% YoY to $882m (2023: $896m), while operating income was down 9% YoY to $507m (2023: $555m).
Operating income was “driven by a $38m restructuring charge associated with OPtiMa 3.0, a program focused on optimising general & administrative and operating activities following transformational actions over the last several years”.
Q3 net income stood at $43m, down from Q3 2023’s $123m. Broken down, income from discontinued operations stood at $88m (2023: $46m), but income from continuing operations fell to a loss of $46m (2023: $77m income).
Adjusted EBITDA for the quarter was down 6% YoY at $264m (2023: $279m) with a margin of 44.9% (2023: 46.4%). YTD, adjusted EBITDA was down 2% YoY to $880m (2023: $898m) with a margin of 47.3% (2023: 48.6%). IGT noted that the figures highlight the “attractive profit profile of pure play lottery business”.
Reflecting on the Q3 results, Sadusky noted: “Our third-quarter and year-to-date performance underscores the strength and resilience of our business model marked by our scale, attractive margin structure and strong cash generation.
“Over the first nine months, we generated $1.9bn in revenue, led by steady Italy growth and improved third quarter trends in the US. We are excited to build upon a solid foundation as we transform into a leaner, more focused global lottery pure play and capitalise on attractive industry dynamics.”
YTD cash from operations was $724m, with $489m from continuing operations, which represents over 85% of YTD consolidated free cash flow.
Looking ahead, IGT expects Q4 revenue to be between $640m to $690m and adjusted EBITDA between $280m to $300m. As for the full year, revenue is expected to be between $2.5bn to $2.55bn and adjusted EBITDA between $1.16bn to $1.18bn.
CFO Max Chiara said: “Sustained cash flow generation in the first nine months was predominantly driven by continuing operations.
“The value of IGT is enhanced on a go-forward basis by a low pro forma leverage profile and by the launch of a cost optimisation initiative as we look to right-size the organisation while supporting long-term growth initiatives.”
