Gaming device maker International Game Technology (IGT) reported overall revenue up 2.1% to $541m in the first quarter of its fiscal 2014. Earnings for the three months ending Dec. 31 rose 22.3% to $79.2m, but the company warned that continued sluggishness in the North American market meant full-year profits would come in at the low end of previously announced guidance, with the potential of “further downside risk.” The company said it was implementing measures to mitigate this risk, including unspecified cost reductions. IGT shares closed Thursday down 2.5% but have fallen nearly 9% in after-hours trading.
IGT’s gaming revenue fell 8% to $223m as their installed machine base fell 4% to 54.3k units, with a reduction in North American MegaJackpots machines singled out as a prime factor in the decline. IGT’s product sales revenue rose 4% to $243.6m thanks to IGT’s deal to supply Caesars Entertainment with 7k video poker terminals. But the lower-priced terminals led to an 11% drop in average price per machine to $13.2k. International machines sales rose 21% in the Asia-Pacific region, but fell 53% in Latin America due to ongoing importation restrictions.
IGT’s interactive division reported a 41% boost in revenue to $74.6m. The bulk of this was provided by social gaming operation DoubleDown Casino, which saw revenue rise 57% year-on-year to $65m (up 6% sequentially). DoubleDown’s daily active user (DAU) ranks rose 17% to 1.7m, monthly active users were up 26% to 6.2m while average bookings per DAU rose 35% to $0.42. IGT noted with pride that DoubleDown was GAAP-accretive in Q1. IGTi, which represents IGT’s real-money online gambling operations, saw revenue fall 16% to $9.8m, but gross profit rose 5% thanks to lower royalty expenses. IGTi currently has eight online casino partners in New Jersey offering 20 of IGT’s slot and video titles.
CFO John Vandemore said DoubleDown’s mobile operations “continued to outperform desktop,” but insisted IGT remained “very well invested in the desktop,” which does “exceedingly well for us.” Regardless, Vandemore said the focus will remain on mobile growth opportunities “because we believe those are faster-paced in the years to come.”
In a post-earnings call with analysts, IGT CEO Patti Hart trumpeted the October release of Monopoly Plus on DoubleDown, which turned out to be the most successful game ever launched on the social gaming platform. That is, until IGT released its in-house Golden Goddess game later in the quarter. Asked about the potential loss of Hasbro game licenses like Monopoly, Hart made the observation that “we’ve yet to really prove that big brands matter, actually. The really best-performing games for us that have legs for a very long time have historically been our in-house brands … In the real-money wagering, I would say the jury is out still on the real value of big brands in that space.”
