Casino supplier Scientific Games Corp.’s second-quarter net loss widened to $203 million, from $77 million a year earlier, according to a filing last week. Revenue decreased 36.2 percent to $539 million, down from $845 million in the prior-year period.
In a press release, the company reported that the increase in net loss was “due to lower revenue and the effects of Covid-19” during the reporting period. The company said revenue from its gaming and lottery segments was “negatively impacted” by the health crisis.
In the second quarter, revenue in the brick-and-mortar gaming segment fell 78.7 percent year-on-year, to US$91 million. That included an 89.3 percent decline in the gaming operations segment and a 64.2 percent drop in revenue from sales of gaming machines. The gaming segment recorded an adjusted EBITDA loss of $31 million, compared to a positive result of $215 million a year earlier.
However, a bright spot has been the company’s digital offerings, including SG Digital real-money and SciPlay digital social games.
In the SciPlay segment, revenue rose by 40.7 percent year-on-year, to $166 million, while the separate digital segment saw a 5.8-percent growth in revenue, to $73 million. The digital and SciPlay segments saw nearly 70 percent and 80 percent adjusted EBITDA growth, respectively, “driven by new launches and the continued ‘stay at home’ environment,” the company said.
Barry Cottle, Scientific Games’ president and chief executive officer, credited “strong cost containment and cash management,” which allowed the digital group “to deliver better than expected cash flow for the quarter.
“The diversity of our businesses and our position on the forefront of digital gaming were critical to allow us to successfully navigate the worst of this environment,” Cottle said.
The group said it had available liquidity of US$943 million at the end of the second quarter. Total liquidity increased by approximately US$200 million in July, following a private offering of senior notes, it added.
A note from Deutsche Bank Securities reiterated the digital bright sport for the company, writing that SG Digital is “likely to produce strong second-half 2020 growth.” Deutsche Bank analysts Carlo Santarelli and Steven Pizzella said in their note that there would be “tougher” comparisons ahead for 2021 due to the “stay-at-home outperformance” in terms of consumers using the digital products during the Covid-19 emergency, but that this development will likely be “mitigated somewhat… by the return of sports and new states coming online.”
Scientific Games’ net debt as of June 30 was nearly US$8.53 billion, from US$8.65 billion a year earlier.
