IGT credits revenue rise partly to social gaming

Slot machine giant International Game Technology (IGT) said Tuesday the company's quarterly revenues increased 9 percent, due partly to the spare change social gaming customers spent to increase their virtual bankrolls at the company's Double Down Casino.

IGT, which has headquarters in both Las Vegas and Reno, said overall revenues were $532.8 million in the third quarter, which ended June 30.

However, IGT's net income in the quarter fell 46.4 percent to $46.6 million, compared with $86.9 million in the same quarter a year ago. The company reported earnings per share of 16 cents, down from 29 cents per share in the third quarter of 2011.

IGT's net income has declined for three straight quarters. In the second quarter, net income fell 11.1 percent from the year earlier, while the figure fell 33.1 percent in the first quarter.

Revenues from the company's gaming operations division, which covers slot machines leased by casinos that share gaming revenues with IGT, and the interactive gaming business, grew 13 percent to $301.2 million in the third quarter.

Without interactive gaming business, the company said division revenues would have been flat.

Users to the company's Double Down Casino, which is found on Facebook, spent 25 cents per day on the website in the third quarter, up from 24 cents per day in the second quarter.

Customers can play with virtual gaming chips for free but Double Down allows players to buy additional virtual tokens for a fee.

IGT bought Double Down Casino for $500 million in January.

IGT said Double Down had 5.2 million monthly users at the end of June, a decrease of 7 percent when compared with the end of March.

IGT Chief Executive Officer Patti Hart said Double Down allows the company to place its slot machine titles in front of potential casino customers who play the games for free in a social setting. Instead of being seen by 1,000 people per day in a casino, the game was played by more than 1 million people per day worldwide.

"Our goal is to place multiple titles on multiple platforms," Hart said.

Roth Capital Partners gaming analyst Todd Eilers, in a preview report to investors before the IGT's quarterly earnings were released, said the slot machine maker would record strong game sales through casino openings in Ohio, Louisiana and Maryland.

IGT said it sold 8,200 machines in North America during the quarter, 67 percent more than the same quarter last year. However, the average price per slot machine was $13,146, roughly $1,200 less per machine than a year ago.

Hart said on a conference call with investors and analysts that the reduced price per machine was because of the number of lower-priced video lottery terminals sold during the quarter.

"Our third-quarter revenue growth and strong cash flows are reflective of our diverse business model," Hart said in a statement. "Against the backdrop of an inconsistent global economic recovery, we are generally pleased with this quarter's results and remain on track to meet our fiscal year 2012 financial goals."

Eilers said could see another boost in revenues during the fourth quarter, fueled by additional U.S. slot machine sales combined with the initial rollout of Canadian video lottery terminals into Quebec and Alberta.

As part of the company's $1 billion stock repurchase program, IGT bought back some 23 million shares in the quarter.