• About Us
  • The Team
  • Advertise with Us

The latest news on the gaming industry in Asia

() () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () ()
  • Home
  • Macau
  • Philippines
  • Singapore
  • Japan
  • Rest of Asia
  • World
  • Features
  • Industry Talk
  • Trends & Tech
  • follow
    • Facebook
    • Twitter
    • RSS Feed
    • LinkedIn

IPO option for Sci Games social casino biz: Telsey

Mar 14, 2018 Newsdesk Industry Talk, Latest News, Top of the deck  


IPO option for Sci Games social casino biz: Telsey

Casino equipment and gaming services supplier Scientific Games Corp might seek an initial public offering (IPO) or sale of its strongly-growing interactive gaming business, said a Tuesday report from brokerage Telsey Advisory Group LLC.

“The strongest growing business is in its interactive segment, which caters to online gaming. The high growth has come from the non-real money segment. It is possible the company could look to monetise this business through a sale or an IPO longer term,” said analyst Brian McGill.

In late February Scientific Games reported group-wide fourth-quarter revenue up 9.4 percent in year-on-year terms. The firm said it was driven by improvement across its three business segments: gaming, lottery and interactive.

In September 2016 the highly-leveraged Scientific Games designated the company’s wholly-owned interactive social gaming subsidiaries as unrestricted subsidiaries under its debt agreements. It said the move was made to “maximise growth” in the company’s interactive segment. As of a March 1 filing this year, the social gaming businesses of the group were still classified as “unrestricted”. The firm said in that filing: “Social gaming subsidiaries are not guarantors under our credit agreement and indentures and are not obligated to comply with many of the covenants set forth in those agreements.”

Non-cash play in interactive casino gaming is commonly known in the industry as “social casino”. Such gaming products commonly use online social media platforms for distribution, and are considered by traditional bricks and mortar casino operators and traditional casino equipment suppliers as a useful way to promote brand and product awareness; to encourage customers to use their products in traditional casinos; and to harvest data on players and their preferences. Some manufacturers have reportedly launched slot products on social casino platforms before introducing them to land-based casinos.

In April last year, Scientific Games acquired social game developer Spicerack Media Ltd. Three months later, it announced the acquisition of Red7Mobile Ltd, described at the time as “a Bristol, U.K.-based firm that designs, develops and delivers innovative and award-winning mobile and desktop casino games and sports apps for real-money gaming partners”.

Telsey Advisory’s Mr McGill noted that in the fourth quarter, Scientific Games saw social casino revenue grow 28 percent year-on-year – to US$95.5 million – and the firm reported in that quarter an average 2.5 million active daily users for such products. Scientific Games defines active daily users as unique visitors during a 24-hour period.

Quality social product

Mr McGill noted that Scientific Games – following its well-publicised merger and buying activity in the casino supplier sector – owned a number of brands with well-known slot product, including WMS, Bally, Shuffle Master and Barcrest, and also had “third-party” content available.

“The company offers its social interactive business through a number of products including 88 Fortunes, Blazing 7s, Golf Fish Slots, Jackpot Party, and Quick Hit Slots. We think the company is well positioned in this segment, due to it having the content to offer players. It has a solid background in slots, unlike some of the other major competitors and we think it will be able to take share,” wrote Mr McGill.

The analyst also suggested that free cash flow for the group as a whole “should improve” in the near term.

The brokerage stated: “After the acquisitions by Scientific Games, debt peaked at over US$8 billion with just US$1 billion of EBITDA [earnings before interest, taxation, depreciation and amortisation] initially.”

The report added: “The story was that the company was going to generate enough free cash flow to begin to pay down debt and reduce the leverage. The company struggled with this for the first year, as the company was not able to make a meaningful reduction in debt or leverage. However, with the better results through revenue growth and cost cutting, the company has been able to begin to produce free cash flow.”

Mr McGill noted that in 2017, the company had been able to deliver “over US$500 million” of cash flow from operations, and as of December 31, had total cash of US$789 million and total debt of US$8.7 billion.

“At the end of 2017, the company had 6.6x net debt to EBITDA, which was down from 7.4x at the end of 2016. Going forward, we expect the company will generate US$648 million of cash flow from operations and with capital expenditure of US$320 million, it should allow for free cash flow of US$328 million,” added Telsey Advisory.


  • tweet
Related articles
  • Sci Games sees quarterly loss narrow sequentially in 3Q
    Sci Games sees quarterly loss narrow...

    Nov 05, 2020  

  • Covid-19 ups cashless casino tech role: Sci Games CEO
    Covid-19 ups cashless casino tech role:...

    Oct 28, 2020  

More news
  • CNY 2021 unlikely to boost Macau casinos, say observers
    CNY 2021 unlikely to boost Macau...

    Jan 15, 2021  

  • Mass market play record 65pct Macau GGR in 4Q: govt
    Mass market play record 65pct Macau GGR...

    Jan 15, 2021  


Latest News

CNY 2021 unlikely to boost Macau casinos, say observers

CNY 2021 unlikely to boost Macau casinos, say observers

Jan 15, 2021  

Recent advisory notices issued by a number of local authorities in mainland China, calling on residents not to travel during the February Chinese New Year (CNY) break, further clouds the prospects...
Read More
Mass market play record 65pct Macau GGR in 4Q: govt

Mass market play record 65pct Macau GGR in 4Q: govt

Jan 15, 2021  

Malaysia Covid outlook negative to Genting Bhd: Moody’s

Malaysia Covid outlook negative to Genting Bhd: Moody’s

Jan 15, 2021  

Sign up to our FREE Newsletter

UB8V5.qr.16(Click here for more)

Partners

Pick of the Day

“We expect Las Vegas Sands to not have any material change in strategy. The focus remains developing Macau and Singapore”

Vitaly Umansky, Kelsey Zhu and Tianjiao Yu

Analysts at brokerage Sanford C. Bernstein



Most Popular

  • Sheldon Adelson, self-declared casino industry iconoclastSheldon Adelson, self-declared casino industry iconoclast January 13, 2021
  • Casino entrepreneur Sheldon Adelson dies aged 87Casino entrepreneur Sheldon Adelson dies aged 87 January 12, 2021
  • Guangdong govt advises public to stay in province for CNYGuangdong govt advises public to stay in province for CNY January 11, 2021
  • Quality fake chips sold online found at Macau casinoQuality fake chips sold online found at Macau casino January 13, 2021
  • Revamped Nüwa hotel reopens Feb 8, says City of DreamsRevamped Nüwa hotel reopens Feb 8, says City of Dreams January 12, 2021
Copyright 2014-2020 TEAM Publishing and Consultancy Ltd / All rights reserved
  • Code of Ethics
  • Privacy Policy
  • Useful Links
  • Contact Us