IGT Faces Q1 Challenges but Stays Resilient with $583M Revenue

A Tough Quarter with Bright Spots

Despite the dip, the company delivered $250 million in adjusted EBITDA, with a robust 42.8% margin, showcasing the strength of its lottery business.

“First quarter profit was in line with expectations at constant currency, and we delivered strong cash conversion,” said CFO Max Chiara.

Operating income fell 93% to $8 million, hit by a $33 million non-cash currency loss, while free cash flow reached $92 million, fueled by $168 million in operating cash flow.

The U.S. and Canada, a key market, generated $259 million in revenue, a 20% drop from $322 million in Q1 2024, driven by a 46% plunge in multi-state jackpot revenue to $17 million from $31 million.

Only one jackpot exceeded $1 billion in the fiscal year, compared to five last year, hammering Lottery Management Agreement (LMA) earnings.

Instant ticket and draw game revenue held steadier at $500 million globally, down 3% from $514 million, with U.S. same-store sales slipping 1.3% wager-based and 1.6% revenue-based.

“Global sales of instant ticket and draw games continue to expand, driven by a steady pipeline of game innovation and portfolio optimization strategies,” said CEO Vince Sadusky.

iLottery, however, shone, with bets surging over 25% across regions, signaling strong digital demand. Other services and product sales fell 28% and 39%, respectively, adding to the revenue squeeze.

Challenges Pile Up

Several factors dragged Q1 performance. The 46% jackpot decline was a major blow, as high-stakes lotteries like Powerball and Mega Millions drive significant LMA revenue, recognized in real-time.

Currency fluctuations, particularly the EUR/USD rate, inflicted a $33 million non-cash hit on operating income, unlike Q1 2024’s currency gain.

Increased investments for sustainable growth, including lottery rebranding costs, further pressured profits. Adjusted EBITDA dropped 24% to $250 million from $327 million, reflecting lower volumes and margin mix from last year.

A worsening macroeconomic environment, with rising inflation and interest rates, also loomed large. Chiara noted, “Given lower U.S. multi-state jackpot activity and the current worsening macroeconomic environment, we believe it is likely we will be at the low end of the full-year revenue and Adjusted EBITDA guidance provided in February.”

Strategic Moves and Financial Health

IGT made savvy financial plays in Q1 to bolster its position. On March 14, it secured a €1 billion term loan due 2030, using €500 million to repay credit line debt and reserving €500 million for a potential Italy Lotto license.

The board declared a $0.20 per share quarterly dividend, payable June 12, 2025, reinforcing shareholder value. Capital expenditures reached $76 million, supporting innovation and rebranding efforts. “With a solid financial profile and ample liquidity in advance of important contract renewals, we remain well-positioned for the future,” Chiara emphasized.

IGT’s cash conversion remained strong, with $92 million in free cash flow, despite a projected $350 million cash use for 2025, largely due to €800 million in Italy Lotto license payments impacted by currency shifts. The company plans to outline its capital allocation strategy post-Italy Lotto tender and Gaming & Digital transaction closure.

2025 Outlook and Beyond

IGT revised its 2025 guidance, projecting $2.55 billion in revenue and $1.1 billion in adjusted EBITDA, aligning with the lower end of February’s forecast due to jackpot softness and macro challenges.

Capital expenditures are expected at $450 million, reflecting investments in contract wins and renewals. The Italy Lotto tender looms as a great opportunity, with reserved loan funds poised to secure it.

Sadusky remained optimistic, stating, “While the world is currently faced with great uncertainty, we are excited about the initiatives we are working on to drive sustainable, long-term growth and shareholder value.”

iLottery’s 25% growth and global instant ticket gains, up 1.4% normalized, point to digital and innovation-driven recovery. With $6.9 billion in U.S. iGaming and lottery markets, IGT’s focus on portfolio optimization and rebranding could spark a rebound, especially if jackpots rebound later in 2025.