Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- International Game Technology PLC (IGT, Financial) reported $250 million in EBITDA at a 43% margin, highlighting the resilient profit structure of its lottery business.
- iLottery sales increased by 26% in Q1, driven by strong performance across geographies, particularly in the US with significant growth in Kentucky and Georgia.
- The company successfully launched the Mega Millions game at a $5 price point, which is expected to drive increased sales and revenues.
- IGT is expanding its retail touchpoints with initiatives like self-service lottery vending machines and in-lane purchasing, which are expected to generate incremental sales.
- The company maintains a strong financial condition with pro forma net debt leverage below 3 times, and a significant liquidity buffer of $2.2 billion.
Negative Points
- IGT's Q1 revenue of $583 million was down from $661 million in the prior year, primarily due to lower jackpot activity and associated impacts.
- The company revised its full-year 2025 revenue and adjusted EBITDA guidance to the low end of previous ranges due to macroeconomic uncertainties and lower jackpot activity.
- There was a significant impact from the lack of large multi-state jackpots, which are sporadic and cause period-to-period variability in revenue.
- The company is facing challenges from macroeconomic and geopolitical uncertainties, including tariffs and declining consumer confidence.
- IGT's net debt rose by $270 million from the end of December 2024, partly due to foreign currency translation and working capital impacts.
Q & A Highlights
Q: Can you elaborate on the guidance revision and the impact of macroeconomic factors on IGT's performance?
A: Massimiliano Chiara, CFO, explained that the macroeconomic situation is fluid, particularly with tariff discussions. While core player demand remains stable, volatility is mainly due to jackpot performance and LMA impacts. The company is cautious about growth projections, especially in core EUR markets, but expects some growth in the second half of the year. CEO Vincent Sadusky added that the quarter was challenging due to fewer jackpot run-ups compared to the previous year, impacting sales and growth expectations.
Q: How is the Mega Millions $5 price shift being received by players?
A: CEO Vincent Sadusky stated that while the transition to a $5 price point for Mega Millions was smooth, it's too early to assess player reception due to a quick jackpot hit after the change. The company is optimistic about the potential impact, expecting players to appreciate the enhanced game features over time.
Q: What is the status of the Texas Lottery renewal process, and how should investors view potential risks?
A: CEO Vincent Sadusky noted that the Texas Lottery is under legislative review, similar to a process that occurred 12 years ago. The legislative session will conclude on June 2nd, after which more clarity is expected. The state has communicated that the procurement process is proceeding, with a decision anticipated later this year.
Q: Can you provide more details on the margin outlook and the impact of jackpot activity?
A: CFO Massimiliano Chiara confirmed that margins were impacted by low jackpot activity, which is expected to normalize. The first quarter margin was below 43%, but excluding certain items, it would have been closer to 46%. The company anticipates margins to improve in the second half of the year as jackpot activity normalizes.
Q: What are the next steps in the Italian Lotto license process, and when can we expect results?
A: CEO Vincent Sadusky explained that the technical evaluation of bids is complete, and economic proposals will be opened on May 19th. The results of the technical evaluation are expected around the same time, with a preliminary award anticipated shortly after the economic bids are disclosed.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
