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SG 2020 revenue declines 19.9% amid lower product sales


Scientific Games saw revenue decline 19.9% to $2.72bn, as product sales collapsed amid land-based closures, but this was partially offset by growth in social and igaming revenue.

Services brought in $1.59bn of this revenue, down 12.7%, while product sales revenue was down 44.4% to $553m and instant product revenue declined 1.9% to $578m.

Scientific Games’ operating expenses slipped slightly, by 5.4% to $2.70bn, just marginally lower than revenue. 

This included costs of sales for services of $531m, for product sales of $349m and for instant products of $280m.

Selling, general and administrative expenses were down 0.9% to $701m, research and development costs declined to $166m and depreciation, amortization and impairment expenses for tangible assets were down to $554m. 

However, the business also incurred a new $54m expense for goodwill impairment, while restructuring and other costs were up 139.3% to $67m.

This led to operating income of just $22m, down 96.0%.

After $503m in interest costs, $51m in debt restructuring costs and $12m in other financial expenses, the supplier made a pre-tax loss of $544m, five times its 2019 loss.

Scientific Games paid $4m in income tax for a net loss of $548m, 364.4% more than it lost in 2019.

After $21m in profit was attributed to noncontrolling interests, a loss of $569m was attributed to Scientific Games shareholders, 337.7% more than the prior year’s loss.

“While 2020 certainly had unforeseen challenges, I couldn’t be more proud of our team for successfully navigating through them,” Scientific Games chairman and chief executive Barry Cottle said.

Looking only at the fourth quarter of 2020, Scientific Games made $762m in revenue, down 11.7%. Of this total, $432m was from services, down 4.2%, while product sale revenue fell 33.7% to $177m and instant product revenue was up 2.7% to $153m.

Breaking this revenue down by business segment, SG Gaming saw revenue drop 35.7% to $286m, while SG Lottery revenue was up 9.9% to $256m.

Social-gaming focused SciPlay saw revenue grow 30.1% to $147m due to improved payer conversion, which the supplier added  outpaced industry growth. SG Digital revenue grew 1.3% to $73m.

Expenses, meanwhile, were down 1.6% to $700m, as selling, general and administrative expenses increased to $188m.

This led to operating income of $62m, down 59.2%.

After financial costs of $153m, the supplier made a net loss of $91m, up 160.0%. The business then received a $7m tax benefit for a new loss of $84m. A $90m net loss was attirubtable to shareholders.

“As we start off the new year, I am truly excited about the team, products, and game franchises that should enable share gains, deal wins, and opportunities to enter new genres,” Cottle added. “The executive team and our Board are working purposefully to transform our Company, capitalize on the evolving industry trends and deliver outsized returns to our Shareholders.”