International Game Technology (IGT) reported strong first quarter 2013 results, with earnings beating the Zacks Consensus Estimate by 4 cents.
Total revenue surged 17.9% year over year but declined 16.8% sequentially to $525.3 million (excluding royalty payment of $5.0 million) in the quarter. Year-over-year growth was primarily driven by higher product sales and strong performance from interactive businesses. Revenue was slightly ahead of the Zacks Consensus Estimate.
Gaming Operations revenue declined 3.7% year over year and 8.0% from the previous quarter to $242.6 million in the quarter. The decline was primarily due to lower MegaJackpots revenue, partially offset by higher lease operations revenue.
Average revenue per unit (ARPU) per day decreased 7.0% year over year to $46.80. At the end of the quarter, the company’s Gaming Operations installed base totaled 56,800 units, up 1,200 units from the year-ago quarter.
Product Sales soared 29.8% year over year but declined 25.1% on a sequential basis to $234.8 million. Year-over-year growth was primarily attributable to higher North America machine sales related to Canadian and Illinois VLT customers, as well as increased non-machine intellectual property licensing fees. IGT shipped 10,700 machines during the quarter compared with 7,300 units in the year-ago quarter. Average machine sales price was $14,800 versus $15,900 in the year-ago quarter.
Interactive revenue was $52.9 million compared with $12.6 million in the year-ago quarter. On a sequential basis revenue declined 1.9%. Social gaming revenue was $41.3 million while IGTi revenue was $11.6 million in the reported quarter.
Revenues from North America stood at $409.4 million, up 26.9% year over year while international operations revenue decreased 1.6% year over year to $120.9 million in the reported quarter.
Gross profit increased 22.9% year over year but declined 16.6% sequentially to $309.5 million. Gross margin increased 240 basis points (“bps”) from the year-ago quarter and 10 bps from the previous quarter to 58.9% in the first quarter.
In the first quarter, operating expenses were $169.2 million, up 11.3% year over year but down 7.4% on a sequential basis. Selling, general and administrative expense (SG&A) increased 11.7% year over year but declined 6.1% sequentially to $100.2 million. Research & development (R&D) expense climbed 16.0% year over year but decreased 8.7% sequentially to $54.