Revenue increases across several business units and gains from the acquisition of digital gaming provider NYX Gaming earlier this year helped Scientific Games narrow its loss and increase revenue in the second quarter.
Scientific Games, a Las Vegas-based gaming equipment manufacturer, said in a Wednesday statement that its net loss was $5.8 million or 6 cents per share, for the three months ended June 30, matching the forecast of analysts polled by Zacks Investment Research. A year earlier, the company had a net loss of $39.1 million, or 43 cents per share.
The company said a $34.5 million gain on remeasurement of euro-denominated debt offset $33.5 million in restructuring and other charges.
Consolidated attributable earnings before interest, taxes, depreciation and amortization, a measure of cash flow, rose 8.1 percent to $340.4 million from $314.8 million.
Revenue rose 10.2 percent to $844.7 million from $766.3 million. The most recent result fell short of the $852.3 million forecast by Zacks-polled analysts. Nevertheless, CEO Barry Cottle noted during a Thursday conference call with analysts and reporters that the company has now achieved 11 consecutive quarters of year-over-year revenue and consolidated AEBITDA growth.
Cottle said several initiatives, including the release of four James Bond-themed games on four platforms, its lottery division’s launch of sports betting in Delaware and its digital division’s sports betting partnership with Caesars Entertainment Corp. in Delaware and soon to come in Mississippi.
“As you can tell, we have exciting initiatives in each our businesses and we’re taking advantage of these opportunities,” Cottle said. “I have great confidence that our momentum is building … I expect us to lead and drive the market over the long term.”
In its earnings statement, Scientific Games said $50.6 million in revenue from NYX aided the quarterly revenue increase. Scientific Games acquired NYX Gaming in January for $631 million, partly, executives said, to help boost sports betting capacity.
Sports betting became a bigger potential revenue source in March when the U.S. Supreme Court lifted the Professional and Amateur Sports Protection Act, the 1992 law banning single game sports betting everywhere except Nevada.
“The U.S. Supreme Court decision repealing PASPA was a watershed moment for our industry, opening up one of the largest untapped gaming markets in the world,” he said. “Thanks to smart planning, investment and innovation and our acquisition of NYX, Scientific Games was perfectly positioned to deliver current future lottery customers best-in-class products and services they wanted.”
The OpenBet platform, operated by the company’s SG Digital arm, has already proven successful, Cottle said, processing 177 million wagers in the United Kingdom alone during the 2018 World Cup soccer tournament, which ran from mid-June to mid-July.
Preparing for future sports betting, SG Digital during the quarter reached a multiyear deal to provide the British Columbia Lottery Corp. with sports book systems. Financial terms weren’t disclosed.
Also, the company completed pre-compliance testing of its OpenBet sportsbook platform to suit the Mississippi Gaming Commission’s proposed sports and race pool regulation.
Performance improved at many Scientific Games business segments. Gaming systems revenue increased 25.6 percent to $84.3 million from $67.1 million, helped by installations of new systems in casinos in the Canadian provinces of Alberta and Ontario. Table products revenue increased 21.7 percent to $58.9 million from $48.4 million, helped by higher utility products sales.
Also, total lottery revenue rose 2 percent to $207.1 million from $202.3 million.
Meanwhile, Scientific Games widened its social gaming footprint by launching the Monopoly Slots mobile app in the Apple and Amazon app stores and on Google Play. The game features components of the classic Hasbro board game; players can build a train station, stage a concert and complete missions while earning Monopoly bucks. The company said the Monopoly app launch helped lift social division revenue by 9 percent to $99.7 million.
Scientific Games already offers slots themed on classic Hasbro board games Battleship, Clue and Yahtzee.
Beyond the United States, Scientific Games signed a landmark seven-year agreement to betting terminals and content to Ladbrokes Coral Group, a Britain-based betting and gambling company.
In after-hours trading Wednesday, Scientific Games shares rose $1.20, or 2.62 percent, to close at $47. The share price has fallen 6.1 percent since 2018 trading began Jan. 2.
Follow Matthew Crowley on Twitter @copyjockey
