- Scientific Games reported revenue of $698 million in the third quarter, down 18% from the same period last year.
- The third quarter’s revenue exceeded the second quarter’s $539 million.
- The company experienced major changes over the quarter, including the refreshing of its board of directors and the growth of lottery, SciPlay division, and digital business.
- Cashless gaming appears to be a bright spot in the company’s future.
While Scientific Games executives hope the impetus they acquired in the third quarter will continue through 2020, a surge in coronavirus cases across the US could diminish future results.
The gaming technology company reported revenue of $698 million in the third quarter, down 18% from the same period in 2019. However, the third quarter’s earnings exceeded the $539 million that Scientific Games generated in the previous quarter.
Free cash flow increased by 22% year-over-year to $62 million.
During a Wednesday earnings call with investors, Executive Vice President and Chief Financial Officer for Scientific Games Michael Eklund said the company hates to see the rising cases of COVID-19 impacting casinos. He said that if the situation continues, the company has strategies to navigate the hard economic times and “get the cost structure where it needed to be.”
He added that Scientific Games would have to “go back there again” if it has to, though reluctantly.
Nevada has been experiencing an upward trend in COVID-19 cases since mid-September, with the test positivity rate jumping from 6.5% to 11%, according to the state.
The situation is no different across the country. Nationwide, the total confirmed COVID-19 cases surpassed the 9 million mark. Besides, 47 states are seeing a surge in new daily infections. The pandemic has claimed at least 231,000 lives in the US to date.
Eklund said that the uncertainty that the pandemic has caused has resulted in the global gaming market’s recovery to be “more like a U-shape” than a V-shape. He added that Scientific Games will remain focused on cash flow.
The company experienced major changes during the third quarter. In September, the largest shareholder in Scientific Games sold off a 34.9% stake in the company at $28 per share. This decision prompted a shake-up within the company’s board of directors.
President and CEO Barry Cottle feels the new board shares Scientific Games’ “commitment and disciplined approach to delevering.”
While the company’s lottery, digital business, and SciPlay division (a social game developer) grew in the quarter, the coronavirus pandemic-related reduction of casino companies’ operations negatively impacted gaming revenue.
Cashless gaming appears to be a bright spot in Scientific Games’ future. Cottle said the company has a hardware-software solution that is in pre-production, with two big corporate customers in which the deployment of the product should happen later this year.
He said that the company is seeing an increased interest in cashless gaming from a regulatory and operator perspective.
The company’s net loss for the quarter was $111 million, compared to a net income of $18 million in 2019. As of September 30, Scientific Games had about $1.2 billion in liquidity.