Gaming and lotteries supplier International Game Technology (IGT) upped its revenue and operating profit guidance for 2021 after Q2 revenue grew 73.5% to $1.04bn, while the sale of Lottomatica helped the business return to profitability.
Of the supplier’s two business segments, its global lottery business made up most of its revenue, growing 58.1% to $725m.
Of this total, $702m came from services, up 60.4%, with this mostly made up of operating and facilities management contracts. The remaining $23m of lottery revenue came from product sales, a 6.0% increase.
IGT’s global gaming segment, meanwhile, saw faster growth, up 125.9% to $316m. Of the global gaming revenue, $108m came from terminal services and $91m from system and software services, for total gaming services revenue of $199m. Gaming sales came to $117m, up 108.9% of which $86m were terminal sales, an increase of 102.2%.
This meant that IGT’s total services revenue was $901m, up 72.6%. Its total product sales revenue was up 79.5% to $140m.
Breaking down revenue geographically, the US continued to make up the majority of revenue as it saw a 52.1% increase to $561m. Italy, however, experienced a rapid decline of 141.0% to $353m after it was especially hard-hit by the novel coronavirus (Covid-19) in Q2 of 2020. The rest of the world brought in $127m, up 50.7%.
Of IGT’s $1.04bn in revenue, $61m came from betting and digital gaming.
IGT chief executive Marco Sala said impressive performances in all segments helped IGT post strong revenue numbers for the quarter.
“Impressive second quarter results highlight the vitality of our portfolio,” Sala said. “Outstanding Lottery performance, the progressive recovery in land-based Gaming, and strong increase in Digital & Betting activities drove substantial revenue and profit growth, delivering Adjusted EBITDA that is among the highest recorded in a quarterly period.”
IGT’s expenses for the quarter came to $796m, an 18.4% increase. Costs of services were up 21.3% to $438m, while costs of product sales grew 31.3% to $88m.
Selling, general and administrative costs were up 23.2% to $207m and research and development costs doubled to $61m.
After these expenses, IGT was left with an operating profit of $244m, having recorded an operating loss of $72m in Q2 of 2020.
After interest expenses of $91m, foreign exchange costs of $90m and other non-operating costs totaling $70m – and after account for a net tax benefit of $25m – IGT was left with a loss from continuing operations of $39m.
The business then made an additional $13m from discontinued operations – namely its Italian B2C business Lottomatica – and $391m from the sale of Lottomatica to a subsidiary of funds managed by private equity giant Apollo Global Management.
This left iGT with a net profit of $365m.
Looking at the first half of the year, IGT’s revenue was $2.06bn, up 45.3%, with $1.80bn of this coming from services.
After operating expenses of $1.55bn, down from 2020 due to goodwill impairment costs during the first half of that year, it made an operating profit of $504m, compared to a $290m loss in H1 of 2020.
After interest, foreign exchange and other costs, as well as taxes, IGT’s profit from continuing operations was $100m, after having lost $515m in the first half of 2020.
After accounting for the sale of Lottomatica and its revenue, IGT’s net income was $514m – almost identical to the amount it lost in H1 of 2020.
Sala added that, given the strong numbers, IGT had upped its outlook for the remainder of the year. The supplier now expects revenue of $2.0m for the second half of 2021, and operating income of $300m.
“On the strength of the first half performance, we are raising our outlook for the year and now expect to exceed 2019 levels for key financial metrics this year,” he said.