Introduction & Market Context
International Game Technology (NYSE:IGT) presented its first quarter 2025 results on May 13, highlighting the resilience of its lottery business despite facing headwinds from lower multi-state jackpot activity in the United States. The company, which is in the process of divesting its Gaming & Digital segment, demonstrated the underlying strength of its core lottery operations while positioning itself for future growth opportunities.
The presentation revealed that while overall revenue and profit metrics declined year-over-year, the company’s lottery business maintained solid performance when normalized for calendar shifts and jackpot impacts. Management emphasized the historical resilience of lottery sales during economic uncertainty, a trend supported by data spanning multiple recessions.
Quarterly Performance Highlights
IGT reported Q1 2025 revenue of $583 million, down from $661 million in the same period last year. Operating income decreased to $138 million from $219 million, while Adjusted EBITDA fell to $250 million from $327 million in Q1 2024. The company attributed these declines primarily to lower U.S. multi-state jackpot activity and associated LMA (Lottery Management Agreement) incentives.
Despite these challenges, the company highlighted several positive trends. Global instant ticket and draw game same-store sales increased by 1.4% when normalized for calendar shifts, demonstrating sustained player demand for core lottery products.
As shown in the following chart detailing same-store sales performance across regions:
Particularly impressive was the performance of IGT’s iLottery segment, which saw wagers increase by more than 25% year-over-year, driven by double-digit growth across all geographic regions. This digital growth represents a significant opportunity for the company as it focuses on its lottery business.
The company’s profit structure demonstrated resilience despite revenue challenges, as illustrated in this financial performance slide:
Strategic Initiatives
IGT outlined four key areas of strategic focus to drive sustainable long-term growth. These include product innovation, expanding retail touch points and point-of-sale network optimization, growing instant ticket services, and increasing iLottery adoption.
The company’s strategic roadmap is illustrated in the following slide:
Management emphasized the historical resilience of lottery sales during economic downturns, presenting data showing how both U.S. and Italian lottery sales have maintained growth trajectories even during recessionary periods. This historical performance underscores the defensive nature of IGT’s lottery business.
The following chart illustrates this resilience across economic cycles:
Forward-Looking Statements
IGT highlighted three important milestones on its near-term horizon. First, the Italy Lotto tender process is currently underway, representing a significant opportunity for the company to secure a key market position. Second, the sale of the Gaming & Digital segment is on track for closing in Q3 2025, which will provide a substantial cash infusion of $4.05 billion. Finally, the company plans to communicate its capital allocation strategy after the Lotto outcome and around the Gaming & Digital closing.
For fiscal year 2025, IGT provided the following outlook: revenue of approximately $2.55 billion, Adjusted EBITDA of around $1.10 billion, cash from operations of approximately negative $350 million (including €800 million or approximately $900 million for the Italy Lotto), and capital expenditures of approximately $450 million.
The company’s full-year outlook is detailed in this slide:
Detailed Financial Analysis
IGT’s financial position remains strong despite the revenue challenges. The company reported free cash flow of $92 million in Q1 2025, with cash from operations of $168 million and capital expenditures of $76 million. Net debt stood at $5,047 million on a reported basis, with a pro forma figure of $3,047 million.
The company has taken proactive steps to ensure ample liquidity, including the issuance of a €1 billion term loan, with €500 million already drawn and used for repayment and another €500 million committed. Total liquidity stands at $2.2 billion, comprising $0.6 billion in unrestricted cash and $1.5 billion in borrowing capacity.
The following slide details IGT’s cash generation and liquidity position:
IGT’s revenue profile for fiscal year 2024 provides context for understanding the company’s business model. Service revenue accounted for 94% of total revenue, with product sales making up the remaining 6%. Geographically, 49% of revenue came from the U.S. and Canada, 13% from Italy, and 38% from the rest of the world. The company maintained strong profit margins, with an Adjusted EBITDA margin of 47%.
The revenue and profit profile is illustrated in this comprehensive breakdown:
In conclusion, while IGT faced revenue and profit headwinds in Q1 2025 primarily due to lower multi-state jackpot activity, the underlying lottery business demonstrated resilience with normalized same-store sales growth and strong iLottery performance. With the upcoming Gaming & Digital sale and Italy Lotto tender process, the company is positioning itself for a focused future as a pure-play lottery business with strong cash generation capabilities and ample liquidity to fund growth initiatives.
Full presentation:
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