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IGT fires on all four cylinders: Unit sales, ASPs, gaming ops placements, and rev/unit/day were all better than expected.

“Every aspect of our business is providing a meaningful contribution to our strong financial performance. It’s gratifying to see the effort of our employees and the proficiency of our strategic investments generating eturns for our shareholders.”

- Patti Hart, CEO of IGT.


  • 1,000 unit growth in their mega jackpot footprint helped gaming operations growth continue for the 4th consecutive quarter
  • They got 18% floor share at SCC 
  • International business pace continues to accelerate with both quality and quantity of order flow
  • First Cloud trials are up and running across Europe
  • Double Down is accelerating gaming operations growth 
  • Expect that their financial results will continue to strengthen throughout the rest of the year
  • Gaming operations growth was driven by a combination of core business and interactive
    • For FY 2012, expect high-single digit growth in their install base and revenue growth in the low single digit 
    • Expect that GM will increase in the second half of the year and be up on a YoY basis, excluding Interactive\
  • Product sales
    • Expected continued growth in units (both domestically and internationally) and increases in ASPs
    • For the remainder of the fiscal year, they expect continued growth in units and average selling prices both domestically and internationally.  They expect gross margins to be at or slightly below last year's strong margin performance mainly due to product mix.
  • Anticipate returning at least as much cash to shareholders in the 2H12
  • Continue to sense increasing optimism from their customers
  • Raising their guidance, which includes the results from DoubleDown acquisition


  • Recognized the lion's share of their Revel units but not Ohio
  • A lot of the lease operations business (NY lottery and MD Live) just have lower yields and that's where a lot of the growth is coming from.  It's still good business for them.
  • International margins: expect that gross margins will strengthen as the year progresses (across the board and specifically in International (Asia Pac))
  • Focus for DoubleDown is to strengthen their product and expand their reach onto mobile platforms
  • They expect NA replacements to grow modestly (3-5%) for the rest of the year. There was nothing extraordinary in the quarter though.
  • Double Down accounting and integration:
    • They have drawn out the retention payments because they are currently not cash payments and they are temporary (for just the next few years)
    • Double Down contributed about 1 penny and expect that to be the case for the next few quarters as well
    • The point of breaking those out was to have analysts be aware of them and either treat them as an expense and therefore reduce the acquisition price or exclude them and include them in the acquisition price.
  • 15 cents of acquisition charges are predominately related to certain intangibles
  • So the high end of their guidance is just due to Double Down but the continuation of other positive trends that they are seeing
  • International ASP strength is partly due to moving up-market.  Focusing on locally tuned product - so they have been able to reflect the localization of content in the ASPs.  There was very little FX benefit this quarter.
  • SG&A? Expect $100-105MM/Q or 31-33% of revenue (which includes DD)
  • $35MM of Interactive revenue?
    • No comment
    • Next quarter will be the first full quarter of integration
  • The amortization of intangibles that they were adding back were only going to be amortized temporarily
  • There is nothing that reflects the Canadian VLT market in their current quarter.  It's really just strength in the US market.
  • Don't necessarily model 5,000 replacement units each quarter. 8,100 units is a good 6 month run rate for them.  Their stance on the replacement market is that it will be flat to growing with IGT getting a mid-30's share.
  • Gross margin for Double Down is a little skewed because of the way Facebook revenues come through.  The revenue growth is a little better than the margin growth.  So they expect stable DD gross margin and a pick up in other interactive margins.
  • They have not pursued their Cloud strategy in the US as of yet.  The US is really not going to happen until 2013/2014 given regulatory issues. Really focused on Europe for now.
  • Sex in the City is doing well internationally.  Dark Knight & Ghostbusters is also doing well for them internationally. Feel like they have a nice product sales line up in gaming operations.
  • They are not looking at any new acquisitions right now, but wouldn't comment if they were.  They are really focused in expanding their content distribution.
  • Asia is a great market for share pick up.  Latin America is more about new openings and some share expansion.  In the EMEA region, they are knocking on doors that they haven't knocked on for a while. 
  • Coming from mid-teens international shipshare but have their sights set on mid 20's
  • Update on Canadian VLT shipments?
    • Think that they may get some in September (maybe 1000 or so) but it's more of a 2013 event for them
  • The SCC units were recognized in the quarter.  Expect that Ohio units will be recognized in June.
  • To calculate the adjusted average yields, they have deducted the Interactive revenues from the numerator, divided by the same number of units.


  • Increased Adjusted EPS FY12 guidance to $0.98 to $1.04 per share
  • Gaming operations: 
    • Install base of 56,1k units and average daily revenue per unit of $59.09 (+5% YoY) --inclusive of interactive business
    • Gross margin decreased... primarily due to higher depreciation expense and the inclusion of the interactive businesses
    • Install base increase driven by NA and International lease ops
    • Excluding the positive impact from the interactive businesses, average revenue per unit per day in the second quarter was $52.34, up 3% sequentially but down 4% over the prior year quarter, mainly due to normal seasonality and a higher mix of lower-yielding units
    • DoubleDown Casino increased its monthly users by 24% to 5.6 million at the end of the March Q vs. December
  • Product sales:
    • Units: 10,200 
      • NA: 6,800 (5,000 replacement), up 19% YoY
      • International: 3,400 (flat YoY)
    • ASP: $15,8k
      • NA: $14.9k (+9% YoY)
      • International: $17.6k (+10% YoY)
      • ASP increase mainly due to a favorable mix of higher priced boxes, including G23 MLD and Universal Slant MLD boxes
    • Gross margin decreased...  primarily due to higher international non-standard manufacturing costs
    • North America product sales gross margin increased...due to favorable mix and lower non-standard
      manufacturing costs
  • Repurchased 3MM shares of stock at an average price of $15.43 for a total cost of $46MM