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Scientific Games has released its financial results for the third quarter of 2021, showing a year-on-year increase in revenues from continuing operations of 24.8%.

Combined revenue for the quarter totalled $824m, up 18.1% year-on-year, and was made up of $539m in revenue from continuing operations, up 24.8%, and $285m from discontinued operations, up 7.1%.

Combined net income from these revenues came to $187m, consisting of $100m from continuing operations and $87m from discontinued operations. In Q3 2020, the combined net loss from all operations was $111m.

Combined adjusted EBITDA came to $332m, compared to $235m in Q3 2020.


Revenue breakdown

Of the total $529m revenue brought in by continuing operations, the majority, $339m, came from gaming, up 46.8% year-on-year.

The supplier said this was primarily driven by strong growth in gaming operations due to an increase in its premium installed base, as well as growth in game sales and its table games business. 

Adjusted EBITDA in gaming grew 123.4% from the prior year, at $172m, driven by strong growth in revenues coupled with lower allowance for credit loss and inventory valuation charges.

SciPlay, Scientific Games’ social gaming business, brought in a further $147m, though this was down 2.6% on Q3 2020.

The supplier said this was due primarily to a temporary event, isolated in Jackpot Party Casino, which has since been addressed. The issue was also partially offset by strong monetisation metrics and record growth at Gold Fish Casino. 

Scientific Games said it expects SciPlay to return to growth both year-on-year and sequentially in the fourth quarter. 

The business’ iGaming offerings brought in the remaining $53m, up 6.0% year-on-year.

The supplier said that adjusted EBITDA in iGaming grew 13% from the prior year period, with performance driven by the strength of its original content, elevated US GGR and an increase in the business’ US market share. 

US iGaming revenue grew 109% compared to the prior year and US share increased 200bps to 27% in the quarter. Since the third quarter of 2019, wagers processed through the supplier’s iGaming platform have increased from $9.0bn to $16.9bn.

Of the total $539m generated in revenue, $408m came from provision of services, up 21.1%, while the remaining $131m came from product sales, up 37.9%.


Costs and results

Total operating expenses came to $505m for the quarter, up 9.3% year-on-year.

Expenses were made up of $164m in selling, general and administrative costs, $96m in depreciation, amortisation and impairments, $90m for the cost of services, $63m for the cost of product sales, and $45m in restructuring and other costs.

This left the business with an operating income of $34m. After $120m in interest expenses, offset slightly by a $12m gain on remeasurement of debt and $2m in other income, total other expenses came to $106m, leaving the business with a net loss from continuing operations before income taxes of $72m.

After receiving an income tax benefit of $172m, the business was left with a net income from continuing operations of $100m. Adding $87m in net income from discontinued operations, less $5m in net income attributable to a noncontrolling interest, the net income attributable to Scientific Games was $182m for the quarter, compared to a $117m net loss in Q3 2020.

This gave a net income per share of $1.89, compared to a $1.23 per share loss in the same period last year.

For the year-to-date, revenue came to $1.57bn, generating a net income attributable to Scientific Games of $276m. This puts the business well ahead of its position in the first nine months of 2020, during which it generated $1.22bn in revenue and posted a net loss of $479m.


Looking to the future: the inside view

Scientific Games’ proposal to acquire the remaining 19% equity in SciPlay, which was submitted in July, is awaiting the outcome of SciPlay’s special committee process.

Following the end of the quarter, Scientific Games also acquired live casino supplier Authentic Gaming on 3 November, which it said provides the business with a foothold in a key vertical and the fastest growing part of the iGaming market.

Barry Cottle, president and chief executive of Scientific Games, said: “In just the last few months we have made tremendous progress on our strategic pillars, delivering on our promises, and rapidly advancing our vision to be the leading cross-platform global game company.”

“With the sale of our Lottery and Sports Betting businesses we are transforming our Company, raising $7 billion which will significantly de-lever the balance sheet and enable us to invest for growth. With our streamlined organisation we have all of the pieces in place, and are singularly focused on building games fully cross-platform.”

“Operationally we also made great strides in the quarter, further cementing the turnaround at our Gaming business, strengthening our leadership position in iGaming and making great progress expanding in Casual at SciPlay. I want to thank all of our teams around the world for their hard work and commitment and for what they have enabled us to accomplish.”

Connie James, executive vice president and chief financial officer, added: “We have an exciting path ahead of us as we move rapidly to unlock significant value.”

“With the announced sale of Lottery and Sports Betting businesses as well as organic investments and key acquisitions like Authentic, Lightning Box and Koukoi, you are quickly getting to see the shape as well as the pace and agility of our new organisation,” James concluded. 


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