Gambling technology giant Scientific Games saw revenue grow and losses decline in the first quarter of 2021.
Growth in its lottery, digital and social gaming segments helped offset a drop in gaming machine sales over the three months to March 31, with group revenue up 0.6% to $729m.
Revenue from services came to $463m, up 7.9%, with instant products’ contribution growing 20.0% to $162m. Revenue from product sales, however, fell 38.1% to $104m.
Breaking down revenue by company segment, the SG Lottery division became the largest source contributor to group revenue. Revenue was up 17.0% to $248m, with most of this growth coming from the US.
The land-based SG Gaming, typically the largest segment, saw revenue drop 23.1% to $248m, due mostly to a drop in gaming machine sales.
Social gaming division SciPlay saw revenue grow 28.0% to $151m, thanks to continued growth of mobile, while the online SG Digital’s revenue was up 11.9% to $86m, with a rise gaming revenue mitigating a decline in the sports contribution.
Scientific Games chief executive Barry Cottle explained that all segments showed success in the quarter, with gaming succeeding at executing a new strategy with greater emphasis on research and development and cutting administrative costs, which was first put into place when Matt Wilson was appointed head of the division.
“Our new gaming strategy and product roadmap continues to have success and our lottery, SciPlay and digital businesses delivered strong growth in the quarter,” Cottle said.
“Our results demonstrate the strength of our content and franchises, engaging players on any platform they want to play.”
While revenue increased, expenses declined, by 14.4% to $648m.
The supplier’s costs of sales services and instant win products increased in line with revenue, to $139m and $77m, respectively. Costs of product sales, meanwhile dropped faster than the decline reported in revenue, by 45.1% to $50m.
Selling, general and administrative costs were down 12.1% to $186m, while research and development costs rose marginally to $52m. Depreciation, amortization and impairment expenses were down 11.2% to $121m, while restructuring and other costs dipped slightly to $21m.
This resulted in an operating profit of $81m for the quarter, up from an operating loss of $32m the year prior.
However, the business then incurred a large interest expense, of $121m, down 2.8%. This was partially offset though by gains from businesses in which Scientific Games does not hold a controlling stake and on the remeasurement of certain debt liabilities.
As a result, the supplier’s non-operating expenses were $87m, down 26.9%. This meant its pre-tax loss came to $6m, a significant improvement on Q1 of 2020’s pre-tax loss.
After paying $3m in income taxes, Scientific Games’ net loss was $9m, 94.2% lower than its net loss the previous year.
“I am extremely pleased with our progress this quarter,” Cottle added. “Despite the continued challenges, our teams’ dedication and focus enabled us to build on our gains from last year. We delivered another strong quarter, enabling us to return to growth on both the top and bottom lines.
“The executive team and our board are continuing to work together and are making great progress as we look to optimize our portfolio, deleverage our balance sheet and capitalize on key areas of growth in order to unlock value for our shareholders.”