Scientific Games revenues rise 7% as firm mulls IPO for social gaming business

Scientific Games has confirmed a 7% year-on-year rise in third-quarter revenues to $821m following growth in both its lottery and social businesses.

Revenues rose from the $768.9m reported during the same quarter of 2017, boosted by a $46.5m revenue injection from its NYX business which was roughly flat year-on-year.

Lottery revenues topped $206.8m during the quarter, while social gaming revenues rose by 11% year-on-year to $105.1m.

The company also confirmed it is considering an IPO for its social gaming business due to successive periods of rapid growth.

Scientific Games CEO Barry Cottle said an IPO would provide “greater flexibility to pursue growth for the business”.

The company confirmed that proceeds from the IPO would be used to reduce its debts.

Cottle added: “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.”

Consolidated attributable EBITDA also rose by 9% during the period, growing to $325.7m.

However, net losses increased by more than five times the previous Q3 2017 figure of $59.3m, rising to $351.6m during the quarter due to a combination of financial restructuring and the $309.6m legal settlement it was ordered to pay Shuffle Tech over patent infringement claims in August.

Paul Leyland, analyst at Regulus Partners, said: “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.”

However, Leyland sounded a note of caution for the future. He said: “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.”