In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance
- WORSE: Despite management's effort to focus the call on what they accomplished in FY2013 it was hard to mask the fact that there wasn't much to be "extremely pleased about" in FQ4 or guidance.
- SLIGHTLY WORSE: Results missed expectations, but part of the miss was due to some non-recurring issues related to temporary delays in payment processing on Facebook and some disruptions related to the rollout of Apple's iOS7 platform. Trends in October were at record levels. IGT continues to expect DD to finally be GAAP accretive in F1Q 2014.
- We are pleased with our success at DoubleDown and we expect that the transaction will be accretive on a GAAP basis in the first quarter of fiscal 2014.
- I think those (new) markets will develop perhaps a little bit slower than we thought, though my comment last period was in anticipation of multiple quarters. As we enter new markets, we do expect that there may be some downward pressure on ARPU as DAU picks up, and we did see a pickup in DAU. I think the positive surprise for us this quarter is that it didn't damage ARPU, and actually we're seeing incredibly strong conversion rates continue in our domestic markets. Over time, I still expect that there may be some pressure on that ARPU number as we further penetrate the international markets, but we didn't see that materialize in this quarter which was a great surprise.
- LITTLE WORSE: Yields and installed base both declined 4% YoY. IGT touted a QoQ increase in yields, although part of the lift was due to the conversion of lower yielding leased games and normal seasonality. Gross margins were better though and capex remained disciplined. Gaming ops margins and yields for 2014 are expected to be in-line with 2013.
- PREVIOUSLY: Gaming operations capital expenditures are expected to decrease year-over-year as we remain focused on disciplined capital deployment.
- We are striving to improve yields through a variety of initiatives.
- We're holding up on margins which again is what we were focused on
- BETTER: Captured 40% share in Canadian/Illnois VLT market and increased North American ship share in FQ4. Although gains came at the price of lower ASPs and margins. IGT shipped over 4,700 units Video Poker units to CZR this Q
- PREVIOUSLY: We are confident that we maintained our industry-leading ship share in the replacement market this quarter.
INTERNATIONAL PRODUCT SALES
- IN LINE: For the first time in 4 quarters unit sales were actually up YoY. That said, they likely got a lift from some leased games converting to sale
- PREVIOUSLY: I think we are starting to see some signs of improvement. Despite ongoing challenges in certain regions, there is still significant potential in our international business as we leverage our investments in localized content and infrastructure improvements.
- SAME: Revenues increased 29% YoY primarily due to an expansion of our on-line desktop and mobile partners excluding the impact of our former European on-line pokeer network and a one-time bad adjustment in the prior year. In 2014, they expect modest growth at IGTi as they launch on-line casino style wagering in US.
- PREVIOUSLY: We continued momentum in this business, both in our existing markets where we attracted 15 new partners since a year ago and are excited about new markets like New Jersey, where our prospects to partner with some of our land-based customers, we're working on now.
- SAME: Has entered into $200MM accelerated share repurchase agreement.
- PREVIOUSLY: We have about $520 million remaining on our board-authorized repurchase. We continue to target using that authorization over the next two to four years, which is consistent with what we've said in the past.
- SAME: Expect "modest" pick up excluding Canada & IL. Hoping that the CZR's deal will be a catalyst for video poker demand
- PREVIOUSLY: We haven't really seen a significant change in the tenor of those conversations. The volume has not picked up as far as the volume of the voice from the customer on concern about their budget. So I would say the volume is there. The people we're hearing from are different than they were a year ago or different than they probably even were a quarter ago.