News
International Game Technology PLC Reports Third Quarter 2018 Results
Reading Time: 15 minutes
– Solid Lottery and Gaming KPIs drive strong third quarter results
– Net income was $22 million in the third quarter; Adjusted net income was $64 million
– Adjusted EBITDA of $443 million reflects strong Italy and global Lottery performance
– Full-year Adjusted EBITDA outlook narrowed to $1,740 – $1,780 million, the top half of the prior range
– Cash dividend declared of $0.20 per ordinary share
International Game Technology PLC (“IGT”) (NYSE:IGT) today reported financial results for the third quarter ended September 30, 2018. Today, at 8:00 a.m. EDT, management will host a conference call and webcast to present the third quarter results; access details are provided below.
“Solid performance and important, long-term contracts drove very good third quarter and year-to-date results,” said Marco Sala, CEO of IGT. “Global Lottery same-store revenues for instants and draw games rose mid-single digits. The installed base of gaming machines was up, and unit shipments of gaming machines increased 10%. And, we enjoyed particularly strong sales and profit growth in Italy, confirming the vitality of that important market. We are firmly on track to achieve our 2018 financial and operational goals.”
“We’ve delivered Adjusted EBITDA growth of 4% and 7% for the third quarter and year-to-date periods at constant currency and scope,” said Alberto Fornaro, CFO of IGT. “As a result, we are narrowing our Adjusted EBITDA outlook for 2018 to $1,740 – $1,780 million, the top half of the prior range.”
Overview of Consolidated Third Quarter Results
|
Quarter Ended |
Y/Y |
Constant |
||
|
2018(1) |
2017 |
(%) |
(%) |
|
|
(In $ millions, unless otherwise noted) |
||||
|
Revenue |
1,156 |
1,221 |
-5% |
-4% |
|
Operating income |
200 |
(556) |
NM |
|
|
Net income/(loss) per diluted share |
$0.11 |
($3.95) |
NM |
|
|
Net debt |
7,570 |
7,335 |
3% |
|
|
Adjusted EBITDA |
443 |
428 |
3% |
4% |
|
Adjusted operating income |
257 |
258 |
0% |
0% |
|
Adjusted net income per diluted share |
$0.31 |
$0.40 |
-23% |
|
|
Note: Adjusted EBITDA, adjusted operating income, and adjusted net income per diluted share are non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release. |
|
(1) On January 1, 2018, IGT adopted ASU 2014-09 (Topic 606), Revenue from Contracts with Customers (“ASC 606”). This negatively impacted Revenue in the third quarter by $22 million and positively impacted Adjusted EBITDA by $12 million. Comparative schedules summarizing the impact on the third quarter and nine months ended September 30, 2018 Condensed Consolidated Statements of Operations are included later in this release. |
Consolidated revenue was $1,156 million, down 4% at constant currency
- $22 million negative impact due to ASC 606
- Impacted by lumpiness of product sales and timing of multi-state jackpots
- Strong global Lottery performance, improved Gaming KPIs, and broad-based strength in Italy
Adjusted EBITDA rose 3% to $443 million; Adjusted operating income was unchanged from prior year at $257 million
- Disciplined expense management more than offset lower revenue
- Adjusted operating income includes higher depreciation associated with recent Lottery contract extensions and upgrading of Gaming installed base
Interest expense was $107 million compared to $114 million in prior-year quarter
Provision for income taxes was $46 million compared to a benefit of $20 million in the prior-year period
Net income attributable to IGT was $22 million in the quarter; Adjusted net income attributable to IGT was $64 million
Net income per diluted share of $0.11; Adjusted net income per diluted share of $0.31
Cash from operations was $249 million for the first nine months of the year and capital expenditures were $374 million
- $366 million (gross) upfront payments for the Scratch & Win license in Italy
Cash and cash equivalents were $448 million as of September 30, 2018, compared to $1,057 million as of December 31, 2017
Net debt was $7,570 million as of September 30, 2018, compared to $7,319 million as of December 31, 2017
Operating Segment Review
North America Gaming & Interactive
|
Select Financial Data |
Constant |
Key Performance Indicators |
% |
||||||||
|
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
FX |
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
Change |
||||
|
Gaming |
Total Revenue |
231 |
262 |
-12% |
Installed base (end of period) |
||||||
|
Gaming Services |
152 |
171 |
-11% |
Casino |
23,357 |
22,924 |
1.9% |
||||
|
Terminal |
106 |
123 |
-14% |
||||||||
|
Social (DDI) |
0 |
0 |
0% |
Machine units shipped |
|||||||
|
Other |
46 |
48 |
-4% |
New/Expansion |
843 |
729 |
15.6% |
||||
|
Product Sales |
79 |
91 |
-13% |
Replacement |
2,998 |
2,868 |
4.5% |
||||
|
Terminal |
54 |
46 |
17% |
Total machines shipped |
3,841 |
3,597 |
6.8% |
||||
|
Other |
25 |
44 |
-44% |
||||||||
|
Total |
Revenue |
231 |
262 |
-12% |
|||||||
|
Operating Income |
45 |
65 |
-33% |
||||||||
Revenue of $231 million compared to $262 million in the prior-year quarter
- Decline of $14 million, or 5%, after adjusting for $17 million jackpot expense reclass
- Gaming services revenue of $152 million compared to $171 million in the prior year
- Stable after adjusting for jackpot expense reclass
- Installed base up 433 units from prior year; yields and installed base stable sequentially
- Product sales revenue of $79 million compared to $91 million in the prior year
- 16% increase in terminal sale revenue includes growth in casino replacement and VLT units, higher average selling prices
- Large software sale in prior year
Operating income of $45 million compared to $65 million in the prior-year quarter
- Large, high-margin product sales mix in the prior year
- Increased depreciation related to upgrading installed base
- Timing of jackpots
North America Lottery
|
Select Financial Data |
Constant |
Key Performance Indicators |
% |
||||||||
|
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
FX |
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
Change |
||||
|
Gaming |
Total Revenue |
37 |
48 |
-22% |
Installed base (end of period) |
||||||
|
Gaming Services |
37 |
40 |
-6% |
VLT – Government Sponsored |
14,965 |
15,225 |
-1.7% |
||||
|
Terminal |
25 |
25 |
-1% |
||||||||
|
Other |
12 |
14 |
-16% |
Lottery same-store revenue growth |
|||||||
|
Product Sales |
0 |
8 |
-98% |
Instants & draw games |
4.8% |
||||||
|
Multistate Jackpots |
-25.9% |
||||||||||
|
Lottery |
Total Revenue |
242 |
259 |
-7% |
Total lottery same-store revenue growth |
-0.6% |
|||||
|
Lottery Services |
225 |
237 |
-5% |
||||||||
|
FM/Concessions |
164 |
170 |
-4% |
||||||||
|
LMA |
25 |
34 |
-25% |
||||||||
|
Other Services |
36 |
33 |
8% |
||||||||
|
Product Sales |
17 |
22 |
-22% |
||||||||
|
Terminal |
0 |
1 |
-100% |
||||||||
|
Systems/Other |
17 |
22 |
-20% |
||||||||
|
Total |
Revenue |
279 |
307 |
-9% |
|||||||
|
Operating Income |
60 |
75 |
-20% |
||||||||
Revenue of $279 million compared to $307 million in prior-year period
- Lottery service revenue down 5% to $225 million
- 4.8% same-store revenue growth for instant tickets and draw-based games more than offset by significantly lower multistate jackpot activity
- Lower LMA revenue from Illinois
- Lottery product sales of $17 million compared to $22 million in prior year
- Growth in instant ticket printing
- Large VLT system and lottery terminal sales in prior year
Operating income of $60 million compared to $75 million in prior-year period
- Tough jackpot and product sales revenue comparisons
- Higher depreciation related to recent contract wins and extensions
International
|
Select Financial Data |
Constant |
Key Performance Indicators |
% |
||||||||
|
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
FX |
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
Change |
||||
|
Gaming |
Total Revenue |
98 |
128 |
-20% |
Installed base (end of period) |
||||||
|
Gaming Services |
33 |
59 |
-40% |
Casino |
12,332 |
13,022 |
-5.3% |
||||
|
Terminal |
13 |
14 |
7% |
VLT – Government Sponsored |
3,675 |
1,569 |
134.2% |
||||
|
Other |
19 |
45 |
-55% |
Total installed base |
16,007 |
14,591 |
9.7% |
||||
|
Product Sales |
65 |
69 |
-2% |
||||||||
|
Terminal |
47 |
43 |
15% |
Machine units shipped |
|||||||
|
Other |
18 |
26 |
-30% |
New/Expansion |
529 |
176 |
200.6% |
||||
|
Replacement |
2,681 |
2,633 |
1.8% |
||||||||
|
Lottery |
Total Revenue |
100 |
82 |
23% |
Total machines shipped |
3,210 |
2,809 |
14.3% |
|||
|
Lottery Services |
69 |
70 |
0% |
||||||||
|
FM/Concessions |
54 |
52 |
6% |
Lottery same-store revenue growth |
|||||||
|
Other Services |
15 |
18 |
-18% |
Instants & draw games |
3.8% |
||||||
|
Product Sales |
31 |
12 |
162% |
Multistate Jackpots |
2.7% |
||||||
|
Systems/Other |
31 |
12 |
162% |
Total lottery same-store revenue growth |
3.7% |
||||||
|
Other |
Total Revenue |
18 |
24 |
-23% |
|||||||
|
Service Revenue |
17 |
18 |
-1% |
||||||||
|
Product Sales |
0 |
6 |
-92% |
||||||||
|
Total |
Revenue |
216 |
234 |
-5% |
|||||||
|
Operating Income |
56 |
40 |
46% |
||||||||
Revenue down 5% in constant currency to $216 million
- Stable Lottery service revenue
- Same-store revenue growth of 3.7%
- Lower non-wager revenue compared to prior year
- Significant increase in Lottery product sales from large, multi-year software license
- Gaming service revenue of $33 million compared to $59 million in the prior year
- Prior year had benefit of certain discrete, non-recurring items
- Jackpot expense reclass of $3 million
- Service revenue from terminals up high single-digits at constant currency from growth in the installed base
- Gaming product sales revenue down 2% in constant currency to $65 million
- 14% increase in gaming machine unit shipments; higher average selling prices
- Lower systems revenue
Operating income up 46% at constant currency to $56 million
- High-margin software license sale
- Disciplined expense management
Italy
|
Select Financial Data |
Constant |
Key Performance Indicators |
% |
||||||||
|
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
FX |
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
Change |
||||
|
Gaming |
Total Revenue |
175 |
173 |
2% |
(In € millions, except machines) |
||||||
|
Gaming Services |
175 |
173 |
2% |
Lottery |
|||||||
|
Terminal |
159 |
157 |
2% |
Lotto wagers |
1,913 |
1,815 |
5.4% |
||||
|
Other |
16 |
16 |
5% |
10eLotto |
1,361 |
1,261 |
7.9% |
||||
|
Product Sales |
0 |
0 |
0% |
Core |
434 |
494 |
-12.2% |
||||
|
Late Numbers |
70 |
60 |
17.9% |
||||||||
|
Lottery |
Total Revenue |
184 |
180 |
4% |
MillionDAY |
47 |
– |
NM |
|||
|
Lottery Services |
184 |
180 |
4% |
||||||||
|
FM/Concessions |
233 |
229 |
3% |
Scratch & Win Wagers |
2,179 |
2,198 |
-0.9% |
||||
|
Other Services |
(49) |
(50) |
-1% |
||||||||
|
Product Sales |
0 |
0 |
0% |
Italy lottery revenue growth |
3.6% |
||||||
|
Other |
Total Revenue |
70 |
66 |
8% |
Gaming |
||||||
|
Service Revenue |
70 |
66 |
8% |
Installed base (end of period) |
|||||||
|
Product Sales |
0 |
0 |
0% |
VLT – Operator (B2C) |
11,027 |
10,958 |
0.6% |
||||
|
VLT – Supplier (B2B) |
8,094 |
8,752 |
-7.5% |
||||||||
|
Total |
Revenue |
430 |
418 |
4% |
AWP |
43,074 |
59,084 |
-27.1% |
|||
|
Operating Income |
145 |
126 |
17% |
Total Installed Base |
62,195 |
78,794 |
-21.1% |
||||
|
Wagers |
|||||||||||
|
VLT – Operator (B2C) |
1,426 |
1,329 |
7.3% |
||||||||
|
AWP |
879 |
948 |
-7.2% |
||||||||
|
Interactive Wagers (Gaming) |
447 |
404 |
10.5% |
||||||||
|
Other |
|||||||||||
|
Sports Betting Wagers1 |
225 |
204 |
9.9% |
||||||||
|
Sports Betting Payout (%)1 |
81.1% |
83.3% |
-2.1 pp |
||||||||
|
1Includes Virtual Wagers and Pools & Horses |
|||||||||||
Revenue up 4% at constant currency to $430 million with growth across all Gaming businesses
- Lottery Service revenue up to $184 million from $180 million in the prior year
- Lotto wagers up 5.4% on continued strength in 10eLotto and contribution from MillionDAY
- Scratch & Win wagers down modestly on comparison with successful relaunch of Miliardario in the prior-year period
- Gaming Service revenue up 2% at constant currency
- Higher revenue despite state-mandated reductions in AWP units, incremental taxes, and certain regional restrictions
- Strong underlying productivity
- Sports betting wagers increased 9.9% to €225 million, payout 210 basis points better
Operating income increased to $145 million, up 17% at constant currency
- Strong profit flow-through, especially for Lotteries
- Disciplined cost management
Other Developments
The Company’s board of directors declared a quarterly cash dividend of $0.20 per ordinary share
- Record date of November 14, 2018
- Payment date of November 28, 2018
Recent Capital Markets Activity
- Issuance of $750 million 6.25% Senior Secured Notes due 2027
- Net proceeds used to redeem $600 million 5.625% bonds due 2020, $144 million 7.50% notes due 2019, and $97 million of its 5.5% bonds due 2020, with the balance funded through utilization of the revolving credit facility
- Average debt maturity extended to over 4 years
Full Year Outlook
- Narrowing 2018 Adjusted EBITDA outlook to $1,740 – $1,780 million at a EUR/USD rate of 1.19, the top half of the prior range
- Continue to expect capital expenditures of $575–$625 million
Conference Call and Webcast
October 31, 2018, at 8:00 a.m. EDT
Live webcast available under “News, Events & Presentations” on IGT’s Investor Relations website at www.IGT.com; replay available on the website following the live event
Dial-In Numbers
- US/Canada toll-free dial-in number is +1 844 842 7999
- Outside the US/Canada toll-free number is +1 612 979 9887
- Conference ID/confirmation code is 9277539
- A telephone replay of the call will be available for one week
- US/Canada replay number is +1 855 859 2056
- Outside the US/Canada replay number is +1 404 537 3406
- ID/Confirmation code is 9277539
Comparability of Results
All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise. Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items. Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2018 are calculated using the same foreign exchange rates as the corresponding 2017 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company’s financial performance. Management believes these non-GAAP financial measures reflect the Company’s ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with U.S. GAAP.
About IGT
IGT (NYSE:IGT) is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Digital and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has over 12,000 employees. For more information, please visit www.IGT.com.
Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the “Company”) and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “shall”, “continue,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company’s control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the factors and risks described in the Company’s annual report on Form 20-F for the financial year ended December 31, 2017 and other documents filed from time to time with the SEC, which are available on the SEC’s website at www.sec.gov and on the investor relations section of the Company’s website at www.IGT.com. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. You should carefully consider these factors and other risks and uncertainties that affect the Company’s business. All forward-looking statements contained in this news release are qualified in their entirety by this cautionary statement.
Contact:
Robert K. Vincent, Corporate Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
James Hurley, Investor Relations, +1 (401) 392-7190
Simone Cantagallo, +39 06 51899030; for Italian media inquiries
|
International Game Technology PLC |
|||
|
Condensed Consolidated Statements of Operations |
|||
|
($ and shares in thousands, except per share data) |
|||
|
Unaudited |
|||
|
For the three months ended |
|||
|
September 30, |
|||
|
2018 |
2017 |
||
|
Service revenue |
963,265 |
1,013,054 |
|
|
Product sales |
192,565 |
208,147 |
|
|
Total revenue |
1,155,830 |
1,221,201 |
|
|
Cost of services |
586,811 |
625,247 |
|
|
Cost of product sales |
107,311 |
150,358 |
|
|
Selling, general and administrative |
194,099 |
196,862 |
|
|
Research and development |
63,277 |
79,009 |
|
|
Restructuring expense |
2,768 |
9,976 |
|
|
Impairment loss |
1,530 |
715,220 |
|
|
Transaction expense, net |
6 |
627 |
|
|
Total operating expenses |
955,802 |
1,777,299 |
|
|
Operating income (loss) |
200,028 |
(556,098) |
|
|
Interest income |
3,249 |
2,906 |
|
|
Interest expense |
(106,802) |
(113,711) |
|
|
Foreign exchange gain (loss), net |
21,104 |
(117,526) |
|
|
Other expense, net |
(17,244) |
(9,802) |
|
|
Total non-operating expenses |
(99,693) |
(238,133) |
|
|
Income (loss) before provision for (benefit from) income taxes |
100,335 |
(794,231) |
|
|
Provision for (benefit from) income taxes |
46,327 |
(19,824) |
|
|
Net income (loss) |
54,008 |
(774,407) |
|
|
Less: Net income attributable to non-controlling interests |
31,709 |
29,207 |
|
|
Net income (loss) attributable to IGT PLC |
22,299 |
(803,614) |
|
|
Net income (loss) attributable to IGT PLC per common share – basic |
0.11 |
(3.95) |
|
|
Net income (loss) attributable to IGT PLC per common share – diluted |
0.11 |
(3.95) |
|
|
Weighted-average shares – basic |
204,219 |
203,489 |
|
|
Weighted-average shares – diluted |
204,344 |
203,489 |
|
|
International Game Technology PLC |
|||
|
Condensed Consolidated Statements of Operations |
|||
|
($ and shares in thousands, except per share data) |
|||
|
Unaudited |
|||
|
For the nine months ended |
|||
|
September 30, |
|||
|
2018 |
2017 |
||
|
Service revenue |
3,017,283 |
3,063,477 |
|
|
Product sales |
547,841 |
529,812 |
|
|
Total revenue |
3,565,124 |
3,593,289 |
|
|
Cost of services |
1,812,553 |
1,866,281 |
|
|
Cost of product sales |
333,065 |
403,056 |
|
|
Selling, general and administrative |
605,405 |
607,571 |
|
|
Research and development |
198,497 |
242,142 |
|
|
Restructuring expense |
7,924 |
30,706 |
|
|
Impairment loss |
1,530 |
715,220 |
|
|
Transaction expense (income), net |
50 |
(26,682) |
|
|
Total operating expenses |
2,959,024 |
3,838,294 |
|
|
Operating income (loss) |
606,100 |
(245,005) |
|
|
Interest income |
9,599 |
7,992 |
|
|
Interest expense |
(323,320) |
(344,494) |
|
|
Foreign exchange gain (loss), net |
96,955 |
(384,749) |
|
|
Other expense, net |
(45,567) |
(33,247) |
|
|
Total non-operating expenses |
(262,333) |
(754,498) |
|
|
Income (loss) before provision for income taxes |
343,767 |
(999,503) |
|
|
Provision for income taxes |
159,064 |
53,932 |
|
|
Net income (loss) |
184,703 |
(1,053,435) |
|
|
Less: Net income attributable to non-controlling interests |
104,054 |
94,870 |
|
|
Net income (loss) attributable to IGT PLC |
80,649 |
(1,148,305) |
|
|
Net income (loss) attributable to IGT PLC per common share – basic |
0.40 |
(5.66) |
|
|
Net income (loss) attributable to IGT PLC per common share – diluted |
0.39 |
(5.66) |
|
|
Weighted-average shares – basic |
204,009 |
203,002 |
|
|
Weighted-average shares – diluted |
204,375 |
203,002 |
|
|
International Game Technology PLC |
|||
|
Condensed Consolidated Balance Sheets |
|||
|
($ thousands) |
|||
|
Unaudited |
|||
|
September 30, |
December 31, |
||
|
2018 |
2017 |
||
|
Assets |
|||
|
Current assets: |
|||
|
Cash and cash equivalents |
447,550 |
1,057,418 |
|
|
Restricted cash and cash equivalents |
255,470 |
248,012 |
|
|
Trade and other receivables, net |
821,764 |
937,854 |
|
|
Inventories, net |
332,921 |
319,545 |
|
|
Other current assets |
469,741 |
407,520 |
|
|
Income taxes receivable |
50,298 |
94,168 |
|
|
Total current assets |
2,377,744 |
3,064,517 |
|
|
Systems, equipment and other assets related to contracts, net |
1,390,707 |
1,434,194 |
|
|
Property, plant and equipment, net |
184,425 |
193,723 |
|
|
Goodwill |
5,697,030 |
5,723,815 |
|
|
Intangible assets, net |
2,088,573 |
2,273,460 |
|
|
Other non-current assets |
2,206,794 |
2,427,953 |
|
|
Deferred income taxes |
37,706 |
41,546 |
|
|
Total non-current assets |
11,605,235 |
12,094,691 |
|
|
Total assets |
13,982,979 |
15,159,208 |
|
|
Liabilities, redeemable non-controlling interests, and shareholders’ equity |
|||
|
Current liabilities: |
|||
|
Accounts payable |
1,040,701 |
1,240,753 |
|
|
Other current liabilities |
1,161,113 |
1,780,875 |
|
|
Current portion of long-term debt |
– |
599,114 |
|
|
Short-term borrowings |
29,957 |
– |
|
|
Income taxes payable |
82,127 |
55,935 |
|
|
Total current liabilities |
2,313,898 |
3,676,677 |
|
|
Long-term debt, less current portion |
7,987,583 |
7,777,445 |
|
|
Deferred income taxes |
493,605 |
491,460 |
|
|
Income taxes payable |
25,654 |
55,665 |
|
|
Other non-current liabilities |
450,951 |
446,113 |
|
|
Total non-current liabilities |
8,957,793 |
8,770,683 |
|
|
Total liabilities |
11,271,691 |
12,447,360 |
|
|
Commitments and contingencies |
|||
|
Redeemable non-controlling interests and shareholders’ equity |
2,711,288 |
2,711,848 |
|
|
Total liabilities, redeemable non-controlling interests, and shareholders’ equity |
13,982,979 |
15,159,208 |
|
|
Condensed Consolidated Statements of Cash Flows |
||||
|
($ thousands) |
||||
|
Unaudited |
||||
|
For the nine months ended |
||||
|
September 30, |
||||
|
2018 |
2017 |
|||
|
Cash flows from operating activities |
||||
|
Net income (loss) |
184,703 |
(1,053,435) |
||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||
|
Depreciation |
312,203 |
289,088 |
||
|
Amortization |
204,256 |
317,989 |
||
|
Service revenue amortization |
164,952 |
155,318 |
||
|
Loss on extinguishment of debt |
49,460 |
35,428 |
||
|
Stock-based compensation expense |
24,944 |
5,102 |
||
|
Debt issuance cost amortization |
16,511 |
16,602 |
||
|
Deferred income tax provision |
11,815 |
(170,698) |
||
|
Impairment loss |
1,530 |
715,220 |
||
|
Foreign exchange (gain) loss, net |
(96,955) |
384,749 |
||
|
Gain on sale of Double Down Interactive LLC |
– |
(51,348) |
||
|
Other non-cash costs, net |
3,132 |
8,428 |
||
|
Changes in operating assets and liabilities: |
||||
|
Trade and other receivables |
92,823 |
42,023 |
||
|
Inventories |
(26,682) |
16,526 |
||
|
Upfront Italian license fees |
(366,270) |
(185,368) |
||
|
Accounts payable |
(123,057) |
(60,733) |
||
|
Other assets and liabilities |
(204,053) |
(67,954) |
||
|
Net cash provided by operating activities |
249,312 |
396,937 |
||
|
Cash flows from investing activities |
||||
|
Capital expenditures |
(374,313) |
(552,169) |
||
|
Proceeds from sale of assets |
8,200 |
168,201 |
||
|
Proceeds from sale of Double Down Interactive LLC, net of cash divested |
– |
823,788 |
||
|
Other |
2,064 |
1,990 |
||
|
Net cash (used in) provided by investing activities |
(364,049) |
441,810 |
||
|
Cash flows from financing activities |
||||
|
Principal payments on long-term debt |
(1,658,753) |
(1,601,134) |
||
|
Dividends paid – non-controlling interests |
(126,926) |
(51,508) |
||
|
Dividends paid |
(122,394) |
(121,840) |
||
|
Return of capital – non-controlling interests |
(64,974) |
(62,538) |
||
|
Net payments of financial liabilities |
(36,407) |
(32,495) |
||
|
Payments in connection with the extinguishment of debt |
(42,148) |
(38,832) |
||
|
Debt issuance costs paid |
(10,199) |
(16,350) |
||
|
Net proceeds from short-term borrowings |
29,957 |
– |
||
|
Capital increase – non-controlling interests |
135,536 |
127,211 |
||
|
Proceeds from long-term debt |
1,415,762 |
938,160 |
||
|
Other |
(18,051) |
(24,785) |
||
|
Net cash used in financing activities |
(498,597) |
(884,111) |
||
|
Net decrease in cash and cash equivalents, and restricted cash |
(613,334) |
(45,364) |
||
|
Effect of exchange rate changes on cash and cash equivalents, and restricted cash |
10,924 |
40,858 |
||
|
Cash and cash equivalents, and restricted cash at the beginning of the period |
1,305,430 |
541,316 |
||
|
Cash and cash equivalents, and restricted cash at the end of the period |
703,020 |
536,810 |
||
|
Supplemental Cash Flow Information: |
||||
|
Interest paid |
(419,508) |
(397,555) |
||
|
Income taxes paid |
(125,388) |
(159,613) |
||
|
International Game Technology PLC |
||||
|
Net Debt |
||||
|
($ thousands) |
||||
|
September 30, |
December 31, |
|||
|
2018 |
2017 |
|||
|
7.500% Senior Secured Notes due July 2019 |
146,237 |
148,231 |
||
|
4.125% Senior Secured Notes due February 2020 |
504,248 |
833,655 |
||
|
5.625% Senior Secured Notes due February 2020 |
– |
595,767 |
||
|
4.750% Senior Secured Notes due March 2020 |
441,871 |
585,171 |
||
|
5.500% Senior Secured Notes due June 2020 |
125,247 |
125,709 |
||
|
6.250% Senior Secured Notes due February 2022 |
1,457,021 |
1,470,075 |
||
|
4.750% Senior Secured Notes due February 2023 |
974,884 |
1,008,601 |
||
|
5.350% Senior Secured Notes due October 2023 |
61,005 |
61,082 |
||
|
3.500% Senior Secured Notes due July 2024 |
573,132 |
– |
||
|
6.500% Senior Secured Notes due February 2025 |
1,088,008 |
1,086,913 |
||
|
6.250% Senior Secured Notes due January 2027 |
742,760 |
– |
||
|
Senior Secured Notes, long-term |
6,114,413 |
5,915,204 |
||
|
Revolving Credit Facilities due July 2021 |
147,951 |
76,880 |
||
|
Term Loan Facilities due January 2023 |
1,725,219 |
1,785,361 |
||
|
Long-term debt, less current portion |
7,987,583 |
7,777,445 |
||
|
6.625% Senior Secured Notes due February 2018 |
– |
599,114 |
||
|
Current portion of long-term debt |
– |
599,114 |
||
|
Short-term borrowings |
29,957 |
– |
||
|
Total debt |
8,017,540 |
8,376,559 |
||
|
Less: Cash and cash equivalents |
447,550 |
1,057,418 |
||
|
Net debt |
7,569,990 |
7,319,141 |
||
|
Note: Net debt is a non-GAAP financial measure |
|
International Game Technology PLC |
||||
|
Adjusted EBITDA and Free Cash Flow |
||||
|
Reconciliations of Non-GAAP Financial Measures |
||||
|
($ thousands) |
||||
|
For the three months ended |
||||
|
September 30, |
||||
|
2018 |
2017 |
|||
|
Net income (loss) |
54,008 |
(774,407) |
||
|
Provision for (benefit from) income taxes |
46,327 |
(19,824) |
||
|
Non-operating expenses |
99,693 |
238,133 |
||
|
Depreciation |
109,755 |
103,182 |
||
|
Amortization |
67,806 |
99,562 |
||
|
Service revenue amortization |
53,837 |
54,279 |
||
|
Stock-based compensation expense |
7,825 |
1,829 |
||
|
Restructuring expense |
2,768 |
9,976 |
||
|
Impairment loss |
1,530 |
715,220 |
||
|
Transaction expense, net |
6 |
627 |
||
|
Non-cash purchase accounting (excluding D&A) |
(233) |
(126) |
||
|
Bad debt expense |
– |
4 |
||
|
Adjusted EBITDA |
443,322 |
428,455 |
||
|
Cash flows from operating activities |
129,162 |
73,013 |
||
|
Capital expenditures |
(115,346) |
(181,579) |
||
|
Free Cash Flow |
13,816 |
(108,566) |
||
|
International Game Technology PLC |
||||
|
Adjusted EBITDA and Free Cash Flow |
||||
|
Reconciliations of Non-GAAP Financial Measures |
||||
|
($ thousands) |
||||
|
For the nine months ended |
||||
|
September 30, |
||||
|
2018 |
2017 |
|||
|
Net income (loss) |
184,703 |
(1,053,435) |
||
|
Provision for income taxes |
159,064 |
53,932 |
||
|
Non-operating expenses |
262,333 |
754,498 |
||
|
Depreciation |
312,203 |
289,088 |
||
|
Amortization |
204,256 |
317,989 |
||
|
Service revenue amortization |
164,952 |
155,318 |
||
|
Stock-based compensation expense |
24,944 |
5,102 |
||
|
Restructuring expense |
7,924 |
30,706 |
||
|
Impairment loss |
1,530 |
715,220 |
||
|
Transaction expense (income), net |
50 |
(26,682) |
||
|
Non-cash purchase accounting (excluding D&A) |
(666) |
(513) |
||
|
Bad debt recovery |
– |
(17,858) |
||
|
Adjusted EBITDA |
1,321,293 |
1,223,365 |
||
|
Cash flows from operating activities |
249,312 |
396,937 |
||
|
Capital expenditures |
(374,313) |
(552,169) |
||
|
Free Cash Flow |
(125,001) |
(155,232) |
||
|
International Game Technology PLC |
||||||
|
ASC 606 – Revenue Recognition Impact |
||||||
|
Condensed Consolidated Statements of Operations |
||||||
|
($ thousands, except per share data) |
||||||
|
Unaudited |
||||||
|
Q3 2018 |
||||||
|
Under Prior |
Revenue |
As Adjusted |
||||
|
Revenue |
1,177,375 |
(21,545) |
1,155,830 |
|||
|
Operating expenses |
(988,995) |
33,193 |
(955,802) |
|||
|
Provision for income taxes |
(46,006) |
(321) |
(46,327) |
|||
|
Net income attributable to IGT PLC |
10,972 |
11,327 |
22,299 |
|||
|
Net income attributable to IGT PLC per common share – basic |
0.05 |
0.06 |
0.11 |
|||
|
Net income attributable to IGT PLC per common share – diluted |
0.05 |
0.06 |
0.11 |
|||
|
Q3 2018 YTD |
||||||
|
Under Prior |
Revenue |
As Adjusted |
||||
|
Revenue |
3,619,952 |
(54,828) |
3,565,124 |
|||
|
Operating expenses |
(3,020,100) |
61,076 |
(2,959,024) |
|||
|
Provision for income taxes |
(159,342) |
278 |
(159,064) |
|||
|
Net income attributable to IGT PLC |
74,123 |
6,526 |
80,649 |
|||
|
Net income attributable to IGT PLC per common share – basic |
0.37 |
0.03 |
0.40 |
|||
|
Net income attributable to IGT PLC per common share – diluted |
0.36 |
0.03 |
0.39 |
|||
|
International Game Technology PLC |
||||||||||||
|
Condensed Consolidated Statement of Operations |
||||||||||||
|
Reconciliation of Non-GAAP Financial Measures |
||||||||||||
|
($ and shares in thousands, except per share data) |
||||||||||||
|
Quarter to date |
Adjustments |
Quarter to date |
||||||||||
|
September 2018 |
Impairment/ |
Transaction |
September 2018 |
|||||||||
|
As |
Purchase |
Foreign |
Restructuring |
and Refinancing |
As |
|||||||
|
Reported |
Accounting |
Exchange |
Expense |
Expense, net |
Adjusted |
|||||||
|
Total revenue |
1,155,830 |
(181) |
– |
– |
– |
1,155,649 |
||||||
|
Cost of services |
586,811 |
(21,241) |
– |
– |
– |
565,570 |
||||||
|
Cost of product sales |
107,311 |
(3,954) |
– |
– |
– |
103,357 |
||||||
|
Selling, general and administrative |
194,099 |
(27,017) |
– |
– |
– |
167,082 |
||||||
|
Research and development |
63,277 |
(232) |
– |
– |
– |
63,045 |
||||||
|
Restructuring expense |
2,768 |
– |
– |
(2,768) |
– |
– |
||||||
|
Impairment loss |
1,530 |
– |
– |
(1,530) |
– |
– |
||||||
|
Transaction expense, net |
6 |
– |
– |
– |
(6) |
– |
||||||
|
Total operating expenses |
955,802 |
(52,444) |
– |
(4,298) |
(6) |
899,054 |
||||||
|
Operating income |
200,028 |
52,263 |
– |
4,298 |
6 |
256,595 |
||||||
|
Interest expense, net |
(103,553) |
524 |
– |
– |
– |
(103,029) |
||||||
|
Foreign exchange gain, net |
21,104 |
– |
(21,104) |
– |
– |
– |
||||||
|
Other (expense) income, net |
(17,244) |
– |
– |
– |
19,875 |
2,631 |
||||||
|
Total non-operating expenses |
(99,693) |
524 |
(21,104) |
– |
19,875 |
(100,398) |
||||||
|
Income before provision for income taxes |
100,335 |
52,787 |
(21,104) |
4,298 |
19,881 |
156,197 |
||||||
|
Provision for income taxes (a) |
46,327 |
12,846 |
301 |
688 |
2 |
60,164 |
||||||
|
Net income |
54,008 |
39,941 |
(21,405) |
3,610 |
19,879 |
96,033 |
||||||
|
Less: Net income attributable to non-controlling interests |
31,709 |
27 |
– |
– |
– |
31,736 |
||||||
|
Net income attributable to IGT PLC |
22,299 |
39,914 |
(21,405) |
3,610 |
19,879 |
64,297 |
||||||
|
Net income per common share – diluted |
0.11 |
0.31 |
||||||||||
|
Weighted-average shares – diluted |
204,344 |
204,344 |
||||||||||
|
(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. |
|
International Game Technology PLC |
||||||||||||
|
Condensed Consolidated Statement of Operations |
||||||||||||
|
Reconciliation of Non-GAAP Financial Measures |
||||||||||||
|
($ and shares in thousands, except per share data) |
||||||||||||
|
Year to date |
Adjustments |
Year to date |
||||||||||
|
September 2018 |
Impairment/ |
Transaction |
September 2018 |
|||||||||
|
As |
Purchase |
Foreign |
Restructuring |
and Refinancing |
As |
|||||||
|
Reported |
Accounting |
Exchange |
Expense |
Expense, net |
Adjusted |
|||||||
|
Total revenue |
3,565,124 |
(540) |
– |
– |
– |
3,564,584 |
||||||
|
Cost of services |
1,812,553 |
(63,457) |
– |
– |
– |
1,749,096 |
||||||
|
Cost of product sales |
333,065 |
(11,735) |
– |
– |
– |
321,330 |
||||||
|
Selling, general and administrative |
605,405 |
(80,602) |
– |
– |
– |
524,803 |
||||||
|
Research and development |
198,497 |
(686) |
– |
– |
– |
197,811 |
||||||
|
Restructuring expense |
7,924 |
– |
– |
(7,924) |
– |
– |
||||||
|
Impairment loss |
1,530 |
– |
– |
(1,530) |
– |
– |
||||||
|
Transaction expense, net |
50 |
– |
– |
– |
(50) |
– |
||||||
|
Total operating expenses |
2,959,024 |
(156,480) |
– |
(9,454) |
(50) |
2,793,040 |
||||||
|
Operating income |
606,100 |
155,940 |
– |
9,454 |
50 |
771,544 |
||||||
|
Interest expense, net |
(313,721) |
1,536 |
– |
– |
– |
(312,185) |
||||||
|
Foreign exchange gain, net |
96,955 |
– |
(96,955) |
– |
– |
– |
||||||
|
Other (expense) income, net |
(45,567) |
(2,184) |
– |
– |
49,459 |
1,708 |
||||||
|
Total non-operating expenses |
(262,333) |
(648) |
(96,955) |
– |
49,459 |
(310,477) |
||||||
|
Income before provision for income taxes |
343,767 |
155,292 |
(96,955) |
9,454 |
49,509 |
461,067 |
||||||
|
Provision for income taxes (a) |
159,064 |
37,101 |
6,630 |
1,829 |
2 |
204,626 |
||||||
|
Net income |
184,703 |
118,191 |
(103,585) |
7,625 |
49,507 |
256,441 |
||||||
|
Less: Net income attributable to non-controlling interests |
104,054 |
77 |
– |
– |
– |
104,131 |
||||||
|
Net income attributable to IGT PLC |
80,649 |
118,114 |
(103,585) |
7,625 |
49,507 |
152,310 |
||||||
|
Net income per common share – diluted |
0.39 |
0.75 |
||||||||||
|
Weighted-average shares – diluted |
204,375 |
204,375 |
||||||||||
|
(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. |
|
International Game Technology PLC |
||||||||||||
|
Condensed Consolidated Statement of Operations |
||||||||||||
|
Reconciliation of Non-GAAP Financial Measures |
||||||||||||
|
($ and shares in thousands, except per share data) |
||||||||||||
|
Quarter to date |
Adjustments |
Quarter to date |
||||||||||
|
September 2017 |
Impairment/ |
Transaction |
September 2017 |
|||||||||
|
As |
Purchase |
Foreign |
Restructuring |
and Refinancing |
As |
|||||||
|
Reported |
Accounting |
Exchange |
Expense |
Expense, net |
Adjusted |
|||||||
|
Total revenue |
1,221,201 |
(182) |
– |
– |
– |
1,221,019 |
||||||
|
Cost of services |
625,247 |
(36,918) |
– |
– |
– |
588,329 |
||||||
|
Cost of product sales |
150,358 |
(23,961) |
– |
– |
– |
126,397 |
||||||
|
Selling, general and administrative |
196,862 |
(27,180) |
– |
– |
– |
169,682 |
||||||
|
Research and development |
79,009 |
(15) |
– |
– |
– |
78,994 |
||||||
|
Restructuring expense |
9,976 |
– |
– |
(9,976) |
– |
– |
||||||
|
Impairment loss |
715,220 |
– |
– |
(715,220) |
– |
– |
||||||
|
Transaction expense, net |
627 |
– |
– |
– |
(627) |
– |
||||||
|
Total operating expenses |
1,777,299 |
(88,074) |
– |
(725,196) |
(627) |
963,402 |
||||||
|
Operating (loss) income |
(556,098) |
87,892 |
– |
725,196 |
627 |
257,617 |
||||||
|
Foreign exchange loss, net |
(117,526) |
– |
117,526 |
– |
– |
– |
||||||
|
Other expense, net |
(9,802) |
(84) |
– |
– |
9,703 |
(183) |
||||||
|
Interest expense, net |
(110,805) |
610 |
– |
– |
– |
(110,195) |
||||||
|
Total non-operating expenses |
(238,133) |
526 |
117,526 |
– |
9,703 |
(110,378) |
||||||
|
(Loss) income before (benefit from) provision for income taxes |
(794,231) |
88,418 |
117,526 |
725,196 |
10,330 |
147,239 |
||||||
|
(Benefit from) provision for income taxes (a) |
(19,824) |
30,834 |
26,056 |
2,998 |
(3,230) |
36,834 |
||||||
|
Net (loss) income |
(774,407) |
57,584 |
91,470 |
722,198 |
13,560 |
110,405 |
||||||
|
Less: Net income attributable to non-controlling interests |
29,207 |
26 |
– |
– |
– |
29,233 |
||||||
|
Net (loss) income attributable to IGT PLC |
(803,614) |
57,558 |
91,470 |
722,198 |
13,560 |
81,172 |
||||||
|
Net (loss) income per common share – diluted |
(3.95) |
0.40 |
||||||||||
|
Weighted-average shares – diluted (b) |
203,489 |
203,689 |
||||||||||
|
(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. |
|
(b) Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported. |
|
International Game Technology PLC |
||||||||||||
|
Condensed Consolidated Statement of Operations |
||||||||||||
|
Reconciliation of Non-GAAP Financial Measures |
||||||||||||
|
($ and shares in thousands, except per share data) |
||||||||||||
|
Year to date |
Adjustments |
Year to date |
||||||||||
|
September 2017 |
Impairment/ |
Transaction |
September 2017 |
|||||||||
|
As |
Purchase |
Foreign |
Restructuring |
and Refinancing |
As |
|||||||
|
Reported |
Accounting |
Exchange |
Expense |
Expense, net |
Adjusted |
|||||||
|
Total revenue |
3,593,289 |
(540) |
– |
– |
– |
3,592,749 |
||||||
|
Cost of services |
1,866,281 |
(117,658) |
– |
– |
– |
1,748,623 |
||||||
|
Cost of product sales |
403,056 |
(77,261) |
– |
– |
– |
325,795 |
||||||
|
Selling, general and administrative |
607,571 |
(90,277) |
– |
– |
– |
517,294 |
||||||
|
Research and development |
242,142 |
(426) |
– |
– |
– |
241,716 |
||||||
|
Restructuring expense |
30,706 |
– |
– |
(30,706) |
– |
– |
||||||
|
Impairment loss |
715,220 |
– |
– |
(715,220) |
– |
– |
||||||
|
Transaction expense, net |
(26,682) |
– |
– |
– |
26,682 |
– |
||||||
|
Total operating expenses |
3,838,294 |
(285,622) |
– |
(745,926) |
26,682 |
2,833,428 |
||||||
|
Operating (loss) income |
(245,005) |
285,082 |
– |
745,926 |
(26,682) |
759,321 |
||||||
|
Interest expense, net |
(336,502) |
2,415 |
– |
– |
– |
(334,087) |
||||||
|
Foreign exchange loss, net |
(384,749) |
– |
384,749 |
– |
– |
– |
||||||
|
Other (expense) income, net |
(33,247) |
1,567 |
– |
– |
35,428 |
3,748 |
||||||
|
Total non-operating expenses |
(754,498) |
3,982 |
384,749 |
– |
35,428 |
(330,339) |
||||||
|
(Loss) income before provision for income taxes |
(999,503) |
289,064 |
384,749 |
745,926 |
8,746 |
428,982 |
||||||
|
Provision for income taxes (a) |
53,932 |
101,066 |
87,152 |
9,132 |
(88,159) |
163,123 |
||||||
|
Net (loss) income |
(1,053,435) |
187,998 |
297,597 |
736,794 |
96,905 |
265,859 |
||||||
|
Less: Net income attributable to non-controlling interests |
94,870 |
77 |
– |
– |
– |
94,947 |
||||||
|
Net (loss) income attributable to IGT PLC |
(1,148,305) |
187,921 |
297,597 |
736,794 |
96,905 |
170,912 |
||||||
|
Net (loss) income per common share – diluted |
(5.66) |
0.84 |
||||||||||
|
Weighted-average shares – diluted (b) |
203,002 |
203,303 |
||||||||||
|
(a) Adjustments for income taxes are determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. |
|
(b) Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported. |
|
INTERNATIONAL GAME TECHNOLOGY PLC |
|||||||||||
|
Select Financial Data |
Constant |
Key Performance Indicators |
% |
||||||||
|
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
FX |
Period Ended September 30 |
Q3 ’18 |
Q3 ’17 |
Change |
||||
|
Gaming |
Total Revenue |
541 |
611 |
-10% |
Installed base (end of period) |
||||||
|
Gaming Services |
397 |
443 |
-9% |
Casino |
35,689 |
35,946 |
-0.7% |
||||
|
Terminal |
303 |
319 |
-4% |
VLT – Government Sponsored (ex-Italy) |
18,640 |
16,794 |
11.0% |
||||
|
Social (DDI) |
0 |
0 |
0% |
VLT – Italy Supplier (B2B) |
8,094 |
8,752 |
-7.5% |
||||
|
Other |
94 |
124 |
-23% |
Total installed base |
62,423 |
61,492 |
1.5% |
||||
|
Product Sales |
144 |
168 |
-13% |
Yield |
$27.84 |
$29.12 |
-4.4% |
||||
|
Terminal |
101 |
89 |
16% |
(average revenue per unit per day) |
|||||||
|
Other |
43 |
79 |
-45% |
||||||||
|
Additional Italian Network Details: |
|||||||||||
|
Lottery |
Total Revenue |
527 |
521 |
2% |
VLT – Operator (B2C) |
11,027 |
10,958 |
0.6% |
|||
|
Lottery Services |
479 |
487 |
-1% |
AWP |
43,074 |
59,084 |
-27.1% |
||||
|
FM/Concessions |
452 |
452 |
1% |
||||||||
|
LMA |
25 |
34 |
-25% |
Machine units shipped |
|||||||
|
Other Services |
2 |
1 |
-17% |
New/Expansion |
1,372 |
905 |
51.6% |
||||
|
Product Sales |
48 |
34 |
42% |
Replacement |
5,679 |
5,501 |
3.2% |
||||
|
Terminal |
0 |
1 |
-60% |
Total machines shipped |
7,051 |
6,406 |
10.1% |
||||
|
Systems/Other |
48 |
34 |
44% |
||||||||
|
Global lottery same-store revenue growth |
|||||||||||
|
Other |
Total Revenue |
88 |
89 |
0% |
Instants & draw games |
4.5% |
|||||
|
Service Revenue |
88 |
84 |
6% |
Multistate Jackpots |
-23.1% |
||||||
|
Product Sales |
0 |
6 |
-92% |
Total lottery same-store revenue growth (ex-Italy) |
0.4% |
||||||
|
Italy lottery revenue growth |
3.6% |
||||||||||
|
Consolidated |
Revenue |
1,156 |
1,221 |
-4% |
|||||||
|
Operating Income: |
|||||||||||
|
Segment Total |
306 |
305 |
1% |
||||||||
|
Purchase Accounting |
(52) |
(802) |
93% |
||||||||
|
Corporate Support |
(54) |
(59) |
8% |
||||||||
|
Total |
200 |
(556) |
NM |
||||||||
Source: International Game Technology PLC
Source: European Gaming Media
The iGaming industry is advancing at breakneck speed, driven by technological innovation and evolving player expectations. Itai Zak, Executive Director of iGaming at Digicode, emphasizes the importance of bridging client aspirations with customized business solutions. Key trends shaping the future of iGaming include live dealer games, blockchain integration, artificial intelligence (AI) and machine learning (ML), enhanced personalization, and shifting regulatory environments. Let’s delve into how these trends influence the industry, presenting new opportunities while paving the way for future growth.
A Closer Look at Emerging Trends
- Live Dealer Games
Live dealer games are revolutionizing the online gaming experience, blending the best aspects of land-based casinos with the convenience of virtual gaming. Players can now engage with real-life dealers via high-definition video streams, enhancing the social component of online gambling. This bridge between physical and virtual casinos introduces interactive features like live chat and immersive gameplay. Industry leaders like Evolution Gaming and NetEnt are setting new standards in player engagement with innovative game formats and top-tier studio setups, redefining the realism and appeal of live gaming.
- Blockchain and Cryptocurrency Integration
Blockchain technology is transforming iGaming by offering unparalleled transparency and security. With blockchain’s ability to enable provably fair gaming, players can verify that each round is fair via an immutable ledger. Cryptocurrencies like Bitcoin and Ethereum facilitate faster, more secure transactions, catering to tech-savvy players who value privacy. Platforms like Bitcasino.io are leading the way, leveraging blockchain to ensure fairness and seamless payments. However, the rise of blockchain also attracts regulatory attention, requiring operators to balance innovation with compliance as governments navigate this new technology.
- Artificial Intelligence and Machine Learning
AI and ML are instrumental in enhancing player experience and operational efficiency. AI algorithms analyze player behavior in real-time, offering personalized game recommendations and promotions. Additionally, AI-powered chatbots provide instant customer support, improving user satisfaction. AI-driven predictive analytics also help operators fine-tune marketing strategies based on player preferences. Companies like Bet365 are already using these technologies to stay ahead of the competition, offering more personalized and efficient gaming experiences.
- Richer Personalization and Engagement
Personalization has become crucial for iGaming operators looking to boost player satisfaction and retention. By leveraging data analytics, companies can offer tailored game recommendations, dynamic bonuses, and individualized promotional offers. This level of engagement enhances the player experience and strengthens loyalty. Industry pioneers like DraftKings and FanDuel push the envelope by offering highly customized features, such as personalized fantasy sports leagues and bespoke betting options.
- Regulatory Changes and Market Expansion
The constantly evolving regulatory landscape offers both challenges and opportunities for iGaming operators. As more regions legalize various forms of online gambling, companies gain access to new markets. With their large populations and increasing internet penetration, emerging markets like Brazil and Nigeria represent lucrative opportunities. However, navigating the diverse regulations in these markets requires agility and strict compliance with local laws to succeed.
- Enhanced Payment Solutions
With digital transactions becoming the norm, the demand for fast, secure, and flexible payment methods is skyrocketing. From digital wallets to instant banking and cryptocurrencies, players expect payment solutions that offer convenience and security. This growing demand is driving innovation in payment processing, giving operators more opportunities to streamline the transaction process while building trust with users.
Future Implications
The Expanding Role of AI and Blockchain
AI and blockchain are not just current trends, but they are poised to play an even more significant role in iGaming’s future. As AI technology evolves, more sophisticated algorithms will emerge, enabling real-time adaptation to player behavior and preferences. Blockchain’s application may extend beyond transparency and security, transforming game mechanics and player interactions potentially redefining how games are designed and played.
Shifting Player Preferences
Player expectations will continue to evolve toward immersive, interactive experiences. As Virtual Reality (VR) and Augmented Reality (AR) become more mainstream, they will significantly influence the future of iGaming. Players will demand more engaging, lifelike environments, pushing the industry to create innovative game formats and features that offer deeper immersion and entertainment value.
Regulatory Developments
The regulatory environment will continue to evolve, and iGaming operators must stay agile to navigate future changes. New regulations may increasingly emphasize responsible gaming and player protection, influencing platform design and operational practices. A more harmonized regulatory framework across jurisdictions could provide stability while requiring operators to prioritize compliance.
Integrating Emerging Technologies
Technologies like 5G and edge computing are set to revolutionize iGaming by enabling faster, more reliable connectivity. This will allow for more complex game designs and real-time player interactions, opening new avenues for innovative gaming experiences. As these technologies mature, operators will have greater opportunities to differentiate their offerings. The potential of these emerging technologies to revolutionize iGaming is truly exciting and promising for the industry’s future.
Final Thoughts
The iGaming industry is on the cusp of significant transformations, driven by technological advancements and shifting player demands. Innovations like live dealer games, blockchain integration, AI, ML, and enhanced personalization are just the beginning. As the industry evolves, staying ahead of these trends will be critical for operators looking to thrive in an increasingly dynamic environment.
At Digicode, we are constantly exploring new technologies and refining our solutions to meet the evolving needs of our clients. Our focus on adaptability and foresight ensures that our clients are not just keeping pace with the industry—they’re leading it.
The post Innovations Redefining iGaming: What Operators Need to Know appeared first on European Gaming Industry News.
A partnership between game developer Turbo Games and iGaming solution provider and aggregator Slotegrator began in November 2022 via the APIgrator game integration solution. Since then, the collaboration has been developing successfully — and now it’s time to analyze what made it successful.
Turbo Games has noticed how the new technologies spreading throughout the industry can work for the good of brand transparency and player loyalty: “We can already see how blockchain technology has made it possible to make betting checks more accessible to players. All you need is a blockchain-hash and a decoder service. We think we will continue to move in this direction. Many traditional online casinos do not offer the possibility to check the bet. Sooner or later we all have to come to this. Perhaps the development of artificial intelligence will help here, because we are already seeing its involvement in all spheres of human life.”
Turbo Games specializes in provably fair games. Provable fairness is a concept where players can verify their wins or losses using blockchain technology — the outcome of the game is dictated by a smart contract and is absolutely random, barring the possibility of any human involvement. Using cryptographic hashing algorithms, the gambling site and the player’s device both generate seeds (random strings of numbers). Players receive a key that allows them to check the results; if the results are the same as the game round they witnessed, it proves that there was no foul play.
According to statistics from Turbo Games, the audience for provably fair games is mostly between 18 and 25 years old. However, there are also players aged 35-40 who prefer traditional games but would like to try something new, and have turned their attention to provably fair games.
There are good odds that the technology of provably fair games will become more popular, if not even commonplace, because it gives players a feeling of transparency and proves that the business is trustworthy without the need to search through dozens of reviews. Whereas many innovations in iGaming simply add entertainment, provable fairness addresses security concerns and reassures players that they’re not being exploited, which is invaluable.
Provably fair games are beneficial for both players and online casinos. Vadim Potapenko, Head of Sales at Turbo Games, comments: “It often happens that the users are not satisfied with the result, because gambling is not only about big wins, but also possible losses. By allowing them to check the fairness of a bet, we make life easier for platforms and players. Of course, this allows us to communicate with partners and users that we work honestly and that’s why they should trust our games.”
Ayvar Gabidullin, Business Development Manager at Slotegrator, adds that “this type of game is now becoming more and more popular and has great potential for both players and game providers in the future. On the part of the player, the advantage is that the player can always be sure that his game is fair and he can independently check any of his bets. And for the game provider, this also simplifies the process of implementing casino games, since now it will not be necessary to obtain the appropriate certificates from independent laboratories before launching new games, they can immediately enter the market with these games and where anyone can check the result and make sure that that there is no cheating with players. Many game providers are starting to look towards this type of game. And as far as I see, many operators are starting to think about adding these games.”
What do players in 2023 need? The iGaming industry is all about reputation and trust. Players have a huge number of platforms to choose from, making them pickier and pickier. There’s an abundance of forums where players leave reviews, so if players view a brand as untrustworthy, there are plenty of places they can share their opinion. Provable fairness not only stops that from happening, it provides evidence to the contrary, giving players something else to talk about.
Slotegrator also recommends investing time and effort into localization and creating an effective and detailed marketing strategy — before trying provably fair technology players need to get to the platform, and there is no acquisition without marketing.
ABOUT SLOTEGRATOR
Since 2012, Slotegrator has been one of the iGaming industry’s leading software and business solution providers for online casino and sportsbook operators.
The company’s main focus is software development and support for online casino platforms, as well as the integration of game content and payment systems.
The company works with licensed game developers and offers a vast portfolio of casino content: slots, live casino games, poker, virtual sports, table games, lotteries, casual games, and data feeds for betting.
Slotegrator also provides consulting services in gambling license acquisition and business incorporation.
More information: https://slotegrator.pro/
ABOUT TURBO GAMES
Turbo Games — a provably fair games provider that belongs to Turbo Stars company — has an ambitious goal to establish widespread recognition throughout the iGaming world. Even though it is young, the company consists of professionals who have been working on the brand for over five years and are even planning to introduce a new brand for a wider audience soon.
Turbo Games also works in Europe, India, and South Africa, where the company sees the most potential and expects the same “hype” as in Brazil.
The portfolio of Turbo Games consists of 21 titles, including well-known games like Mines, Crash X, DoubleRoll, Hi-Lo, and Plinko. The studio releases a game every month. However, not all games are developed from scratch. Wicket Blast and Spin Strike, the last two releases, are based on cricket and the Indian Premier League. Crash X remains the most popular fast game in the Turbo Games portfolio, and the studio reports that crash games enjoy stable levels of popularity. Overall, the main focus of the brand is provably fair games.
More information: https://turbogames.io/
Looking to take your career to the next level in the games industry? Then, Nordic Game Talents is the place to be! Games Factory Talents has teamed up with Nordic Game to bring you Nordic Game Talents.
From Oct 27-29, the online and interactive event is dedicated to recruitment and career building in the creative & games industry within the Nordic region. The event empowers participants to be part of a bigger community and motivates them to explore new paths in achieving their career goals.
Hiring creative & games studios – Supercell, Funcom, Panzerdog, Tactile Games, Gamecan, Fingersoft, Dazzle Rocks, Redhill Games to name a few from the Nordic region will be participating in the event. These studios will share information on their latest projects, work culture and what it takes to be part of their team. The individual games associations from Finland, Denmark, Sweden, Norway and Estonia will share insights through live sessions on the booming games industry in their respective countries. Career development topics pertinent to job seekers like – How to have a successful first interview, Creative Portfolio reviews will also be discussed.
Experienced game industry professionals and individuals beginning their careers from around the world are welcome to join the event. One-to-one interviews with the hiring studios can be scheduled through the event platform. A great opportunity to get to know the studios and network with game professionals from around the world.
Participating in the event
As a job seeker attending Nordic Game Talents, take a few minutes to fill out a simple registration form. After filling the registration form you will receive a link to the online event platform – PINE, to join the event on 27th October. Participants joining Nordic Game Talents will also receive a free-of-charge pass to the Nordic Game Conference.
To view the complete agenda, please click here and to learn more about the event please visit Games Job Fair
About Games Factory Talents
A Helsinki-based talent attraction agency dedicated to the games & creative industry. Our services include direct recruitment, organizing game job fairs and managing a community of game industry professionals through our GameDev Talent Board.
To learn more about Games Factory Talents visit – Games Factory Talents
Major Atlaslive Achievements and Innovations to Share at ICE Barcelona 2025
DATA.BET Reflects on 2024 Milestones, Growth, and Achievements
Week 3/2025 slot games releases
Fast Track CEO Shares Honest Reflections in New Interview: Ain’t No Rest for the Wicked
Meet Galácticos Legends Luis Figo, Iker Casillas, Michael Owen, and Michel Salgado at Digitain Stand at ICE 2025
GamCare releases Annual Report following record breaking year of support on the National Gambling Helpline
Saracen Casino Resort Chooses QCI Chatalytics to Enhance Casino Operations with Integrated AI Solutions
WA.Technology makes its debut in Brazil’s regulated market
EGT Digital’s top-performing titles are live on the leading Colombian betting site Betplay
BETBY TO INTRODUCE INDUSTRY-FIRST AI-BASED FEED AT ICE BARCELONA
-
gaming2 years agoODIN by 4Players: Immersive, state-of-the-art in-game audio launches into the next generation of gaming
-
EEG iGaming Directory8 years ago
iSoftBet continues to grow with new release Forest Mania
-
News7 years ago
Softbroke collaborates with Asia Live Tech for the expansion of the service line in the igaming market
-
News6 years ago
Super Bowl LIII: NFL Fans Can Bet on the #1 Sportsbook Review Site Betting-Super-Bowl.com, Providing Free Unbiased and Trusted News, Picks and Predictions
-
iGaming Industry7 years ago
Rick Meitzler appointed to the Indian Gaming Magazine Advisory Board for 2018
-
News6 years ago
REVEALED: Top eSports players set to earn $3.2 million in 2019
-
iGaming Industry7 years ago
French Senator raises Loot Boxes to France’s Gambling Regulator
-
News7 years ago
Exclusive Interview with Miklos Handa (Founder of the email marketing solutions, “MailMike.net”), speaker at Vienna International Gaming Expo 2018
