SG grows 2019 revenue and cuts losses despite Q4 struggles
Scientific Games has reported a year-on-year rise in revenue and a reduction in net loss for 2019, despite the year ending with a difficult fourth quarter in which gaming and social revenue declined.
Revenue for the 12 months through to 31 December 2019 amounted to $3.4bn (£2.61bn/€3.15bn), up by 1.2% from $3.36bn in the previous year.
Scientific Games did not go into full detail about its full-year revenue results at this stage, but did post an overarching view of its performance, including that its services segment generated $1.82bn in revenue, 2.3% higher than in 2018.
Revenue from product sales remained level year-on-year at $994m, while instant products revenue fell slightly from $592m in 2018 to $587m in the past year.
In terms of spending, total operating expenses were down 8.1% to $2.85bn as Scientific Games was able to cut costs across various areas of the business. Its main outgoing was selling, general and administrative at $707m, but this was down 1.4% from $697m in the previous year.
Other major outgoings included cost of services, which climbed from $505m to $538m, but cost of product sales fell 1.9% to $457m and instant product costs from $284m to $289m.
Scientific Games also noted that its depreciation, amortisation and impairments costs were 6.2% lower at $647m for the year.
Higher revenue and lower spending pushed operating income up 105.1% year-on-year to $546m, while net loss before tax improved from $339m to $108m. After tax, net loss for the year stood at $130m, compared to $352m in 2018, but Scientific Games noted that the prior year included a $152m charge related to resolving a legal matter with Shuffle Tech.
“This past year, we made great strides in developing the best games, attracting industry leading talent, and improving our capital structure,” Scientific Games’ chief executive and president Barry Cottle said.
“I’m confident we have the right team in place to reach our goal to be the market leader across land-based gaming, lottery, sports and digital gaming driven by leading content and the platforms that enable play anywhere and anytime. Our recent contract and deal wins across our businesses, and the globe, highlight that we are on the right path.”
The full-year growth came despite a tough end to the year for Scientific Games, with revenue in the fourth quarter down 2.6% year-on-year to $863m.
Gaming was the main source of income for Scientific Games in the three months to 31 December 2019, but revenue was down 5.3% to $445m. Lottery revenue was up slightly to $233m, and digital revenue also increased marginally to $72m, but revenue from the SciPlay social gaming arm fell 0.9% to $113m.
Operating expenses for the quarter hiked 25.8% year-on-year to $711m, though the prior year contained a $171m benefit related to internal restructuring. Coupled with the revenue decline, meant operating income slipped by 52.7% to $152m. Scientific Games reported $187m in other financial expenses, leading to a net loss of $35m before income taxes, compared to an income of $214m in the final quarter of 2018.
After income taxes of $2m, plus a $6m profit from from non-controlling interests, net loss for the period stood at $43m, a significant drop from a profit $207m in the previous year.