Scientific Games has reported a 7% rise in third-quarter earnings over the same period last year. The increase represents a climb to $821 million this year from $768.9 million last year, spurred on mainly by revenue generated from both their lottery and social gaming divisions.
Lottery revenues for the quarter came in at about $206.8 million and social gaming revenues showed an increase of $105.1 million which is 11% higher than the same period last year.
The firm also confirmed that after several successive periods of rapid growth they are considering an IPO for the the social gaming arm of their business. Barry Cottle, Scientific Games CEO stated that he felt an IPO would give the company more flexibility in how they pursue growth for the business. It was also confirmed that proceeds from an IPO would go towards reducing the company’s debt.
Cottle said, “We are very pleased with the growth we are seeing across our businesses as we continue to lead our industry into the future. Our investments in digital, sports betting, and new games are producing the most innovative and engaging products in the market and we are excited about the customer response here in the U.S. and around the world…We remain focused on delivering for our customers and running our business efficiently and effectively to drive revenue, reduce costs and continue to build momentum across the Company.”
Scientific Games’ consolidated attributable earnings before interest, taxes, depreciation, and amortization (EBITDA) showed an increase of 9% for the third-quarter period as well, reaching $325.7 million.
Losses Also Increased…
On the opposite side of the coin, net losses for the company increased from $59.3 million to $351.6 million, a more than 500% jump over the same quarter last year. Most of this, however, can be attributed to a $306.9 million legal settlement that the company was ordered to pay to Shuffle Tech over a patent infringement dispute, with restructuring costs cited as the cause for much of the remainder.
Paul Leyland, an analyst from Regulus Partners showed some optimism, saying, “Scientific Games has achieved two important things after a long period of debt-fuelled M&A: it has pivoted into material digital capability and it is generating enough cash to start paying down material proportions of debt.”
He did, however, issue some words of warning as well, “If the digital assets are unable to unlock growth (post PASPA promises notwithstanding), global channel shift is likely to remain much more of a threat than an opportunity to SG, in our view.”