Falling Revenue For Scientific Games in Q3
As companies announce their third quarter revenue, industry heavy-hitter Scientific Games has announced significant losses in the third fiscal quarter. While the company experienced a demonstrable decline in revenue year-over-year from the same period in 2019, company spokespeople reiterated that revenue had, in fact, increased from the second quarter of this year, and that the company was staying strong, regardless.
In The Third Quarter, Scientific Games Loses Revenue
In a report released this week, Scientific Games continued to suffer revenue loss year-over-year in 2020, though the third quarter, which ended on September 30, 2020, was an improved performance from the company’s earnings in the second quarter of this year. Because of this upward trend, company leaders remain optimistic.
For the third fiscal quarter, 2020, Scientific Games earned a revenue of $698 million, a decline of 49% from what it was during the same period in 2019 ($855 million). During the second fiscal quarter of 2020, when brick-and-mortar casinos were forced to close during the pandemic and lottery ticket sales fell, the company earned $539 million.
As such, Scientific Games experienced a net loss of $111 million during Q3. This bruise is particularly painful when compared to year-over-year gains during the same period of time in 2019, when the company trumpeted a net income of $18 million. The consolidated EBIDTA for the company was $235 million, citing COVID-19 as a factor in this number.
The company remains with a substantial amount of available liquid assets, valued at around $1.2 billion. In a brief statement from Scientific Games Executive Vice President Michael Eklund, it was explained that the company plans to continue to grow its liquidity and streamline operations to reduce costs further.
Losses Due To Debt and COVID
According to representatives from Scientific Games, the numbers for the company’s third quarter can be attributed largely to losses across the international economy due to the coronavirus pandemic and ensuing international lockdowns. Exacerbating these losses, however, was debt remeasurement for the company, adding a loss of $24 million.
Scientific Games Isn’t Alone: Losses For MGM
The announcement that Scientific Games had lost significant revenue during the third fiscal quarter of this year followed shortly after international casino titan MGM revealed its third quarter numbers, showing a 66% loss year-over-year from the same period in 2019. According to MGM, the majority of these losses were in Las Vegas and Macau operations.
Scientific Games Is Keeping Busy, So Where Are The Gains?
As the international economy has staggered due to unrelenting hits from the coronavirus pandemic and ensuing, or recurring, regional lockdowns, companies in the gambling industry have been working to offset losses incurred by falling lottery ticket sales and declining or no visitation to brick-and-mortar casinos.
For Scientific Games, this has taken a number of forms. This fall, the company announced several large partnerships, the most significant of which came at the beginning of October — just after the third quarter revenue numbers were announced — revealing that Scientific Games would be partnering with Hard Rock International for its online offerings.
A few weeks later, Scientific Games boasted that it had released a new cabinet, the Kascada, and had acquired the games catalogue of Big Time Gaming, allowing Scientific Games to be the exclusive distributor of Big Time Gaming content in the US and Canada, as well as the UK and Europe.
Still, these large announcements — coming one after the other — still beg the question: if there’s been all this continued growth, where are the revenue gains? An important point of clarification is that the Hard Rock-Scientific Games deal is so recent that it is unlikely, yet, to show demonstrable returns. Also, these partnerships were made after the end of Q3.
One complicating element, however, is that the company did launch a virtual horse racing product in August, during the third fiscal quarter, as part of a partnership with Racecourse Media Group. Representatives from Scientific Games did not extensively explain how new iGaming options, including this product, may have bolstered company revenue during Q3.
Throughout The Pandemic, Scientific Games’ Leadership Stays Positive
Though this time has been profoundly challenging for gambling industry members who typically rely on IRL gambling, Scientific Games’ higher-ups have maintained positive attitudes throughout. At the end of July, during one of the most difficult periods of the pandemic, representatives from the company shared that losses were less than feared.
In July, company spokespeople attributed the losses during the second fiscal quarter — when revenue totaled $539 million, compared to $845 million from the same period in 2019 — to falling lottery ticket sales and declining (or no) attendance to affiliated brick-and-mortar casinos during nationwide lockdowns in the spring.
At that time, company spokespeople did specifically reference how Scientific Games’ online offerings, SciPlay and Digital, were contributing almost 70 and 80 percent (respectively) to company revenue during the second fiscal quarter, indicating further growth could come in these sectors in the future.