BUSINESS

Scientific Games interactive revenue rises 52% in Q1

TAGs: bally technologies, Lottery, Scientific Games, scientific games corporation, turkey

scientific-games-revenueGaming and lottery technology supplier Scientific Games Corporation (SGMS) saw revenue rise 70% in the first full quarter of contributions from its $5.1b acquisition of rival Bally Technologies.

Overall revenue in the three months ending March 31 rose to $656.7m from $388m in the same period last year. Operating income swung from a $12.1m loss last year to a gain of $18.1m. However, acquisition- and integration-related expenses resulted in a net loss of $86.4m for the quarter, nearly twice the $45m lost in Q1 2014. On a non-GAAP basis, adjusted earnings more than doubled to $252.1m.

The Bally acquisition had a dramatic effect on SGMS’ gaming segment, which reported revenue up 161% to $426m (services up 148% to $238m and product sales up 178% to $188m). Bally operations contributed $286.7m to the gaming segment’s total.

The lottery segment saw revenue fall 4.1% to $186m, thanks to a 35% decline in product sales and a 9% fall in services revenue. The quarter saw SGMS break off talks to run the Turkish national lottery with its local partners, which had won the 10-year concession last July. The consortium couldn’t arrange the necessary funding, causing Turkey to award the concession to the runner-up bidder ERG-Ahlatçı.

SGMS’ interactive segment reported revenue up 52.3% to $46.9m, including $7m in new Bally contributions. SGMS says it enjoyed an unspecified increase in real-money online gambling revenue, while its Jackpot Party and Gold Fish social casino apps enjoyed a 76.9% spike in daily average users (DAU), although this was partially offset by a 17.4% decline in daily average revenue per DAU to 19¢.

SGMS recently announced that casino operator Penn National Gaming had signed up with SGMS’ Play4Fun social casino platform. SGMS also launched a Quick Hits slots title on the Dragonplay Slots free casino app, SGMS’ first Bally social casino product, as well as launching real-money gaming operations with four new clients.

The casino supplier industry has undergone a wave of consolidation and CEO Gavin Isaacs was asked on the analyst call whether casino clients were hesitant to adopt too many of SGMS’ products – gaming devices, card shufflers, systems, social casino apps, etc. – out of fears of relying too heavily on one supplier. Isaacs said clients had been “very receptive” to SGMS’ one-stop-shopping approach and were looking to companies like SGMS to “lead the way into the future with new R&D and new concepts and products.”

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