Scientific Games Mulls Social Gaming IPO
Scientific Games Corporation is considering an initial public offering of its social gaming business, including live social casinos and the associated apps, a white-label social platform and other businesses, according to a statement from CEO Barry Cottle.
“For our rapidly growing social business, an IPO would give us greater flexibility to pursue growth for the business and drive value for stakeholders,” CEO Barry Cottle said in a statement issued before the market opened on November 8.
“The social gaming business continues to experience rapid growth and has reached significant scale. The company believes an IPO would provide greater flexibility to pursue additional growth initiatives specifically designed for its social gaming business, as well as unlocking additional value for Scientific Games stakeholders.”
Shares of Scientific Games Corp. surged 25 percent on the day of the announcement, jumping $5.42 to $26.74 as 5.4 million shares changed hands, more than three times the average over the past 50 trading days, according to the Las Vegas Review-Journal.
The company’s social gaming division offers a popular white-label social application, as well as such apps as Bingo Showdown, Monopoly and Jackpot Party Social Casino. The division feeds social gaming content to Facebook and other sits. Among recent acquisitions are Spicerack and Red7 Mobile.
Revenues for its social gaming division rose 11 percent in the third quarter to $105 million while attributable cash flow jumped 34 percent to $27 million.
Scientific Games’ third-quarter revenue rose 7 percent to $821 million while cash flow gained 9 percent to $326 million, slightly beating market expectations.
Despite the increase, net loss rose from US$59.3 million to US$351.6 million due to “restructuring and other charges” including US$309.6 million from a legal fight over its Shuffle Tech card shuffler.
“We are very pleased with the growth we are seeing across our businesses as we continue to lead our industry into the future,” said Cottle in the company’s earnings statement. “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 here in the U.S. and around the world.”