Scientific Games mulls IPO for social gaming business

Scientific Games has revealed plans for a possible initial public offering (IPO) for a minority interest in its social gaming business, while the company has cited its acquisition of NYX Gaming Group as one of the main reasons behind a 7% year-on-year jump in revenue during the third quarter.

The company said the IPO could take place next year in order to “provide greater flexibility to pursue additional growth initiatives” and “unlock additional value” for its stakeholders.

Scientific Games added that it intends to use the proceeds from the IPO primarily to repay debt.

Barry Cottle (pictured), CEO and president of Scientific Games, said: “For our rapidly growing social business, an IPO would give us greater flexibility to pursue growth for the business and drive value for stakeholders.

“We remain focused on delivering for our customers and running our business efficiently and effectively to drive revenue, reduce costs and continue to build momentum across the company.”

Meanwhile, Scientific Games has reported its financial results for the three months through to the end of September, during which revenue amounted to $821m (£630.8m/€724.1m). This 7% year-on-year growth was driven by a $6.5m contribution from NYX.

Scientific Games finalised its acquisition of NYX in January of this year in a deal worth around $587.9m – a move it said would create a “global digital gaming and lottery powerhouse”.

Consolidated attributable EBITDA at the firm was also up 9% year-on-year in Q3 to $325.7m, which the company said was primarily driven by higher revenue and continued operational efficiencies.

Scientific Games also reported a sharp increase in net loss – up from $59.3m to $351.6m due to restructuring and other charges, including a $309.6m charge related to a legal matter involving Shuffle Tech.

Cottle said: “We are very pleased with the growth we are seeing across our businesses as we continue to lead our industry into the future.

“Our investments in digital, sports betting, and new games are producing the most innovative and engaging products in the market and we are excited about the customer response in the US and around the world.”

Analysts from Regulus also gave their view on the Q3 results, saying Scientific Games had achieved “two important things after a long period of debt-fuelled M&A” in the form of pivoting into material digital capability and generating enough cash to begin paying down material proportions of debt.

Image: Scientific Games