Scientific Games seeks to expand digital gaming enterprises

Las Vegas-based Scientific Games Corp. has its sights set high as the gaming industry recovers.

Company CEO Barry Cottle told investors Monday that he sees “huge market opportunity” to expand Scientific’s digital gaming enterprises. Company executives are “extremely confident” that Scientific is well-positioned to do just that.

The company is targeting its online gaming business to compare in size to its land-based gaming business within three years, Cottle said on a first-quarter earnings call.

“We recognize the incredible opportunity the digital transition in our industry presents, and we are seizing this opportunity,” he said.

Scientific brought in $729 million in revenue during the first financial quarter, the company reported Monday, compared with $725 million during the first quarter of 2020. Of that total, $244 million came from gaming and $86 million came from digital gaming. The company also reported a 17-percent, year-over-year increase in its lottery business segment — $248 million during the first three months of this year compared to $212 million during the same period last year.

Scientific also reported a net loss of $9 million, or 16 cents per share, during the first three months of the year, compared to a net loss of $155 million, or $1.69 per share, in the same period last year.

More than 84 percent of its North American gaming machines are active, Chief Financial Officer Michael Eklund said.

“(We’re) just really pleased with the momentum in the gaming business right now,” Eklund said. “We landed about where we thought we were gonna land in Q1.”

Eklund said positive trends in North America and the potential easing of U.K. and European COVID-19 restrictions “bode well” for sequential and year-over-year improvements in the second quarter.

The company’s goal of expanding its digital gaming to compare with its land-based gaming is “ambitious in its current form,” according to a note by Barry Jonas, a gaming analyst with Truist Securities. He also noted the company’s recent hiring of Rich Schneider as chief product officer.

”As the market begins recovery, we could see strong market share performance driven by the new management team and potential Lottery funded gaming R&D investment,” the note said.

Union Gaming analyst John DeCree wrote that the company’s 17-percent lottery revenue growth “is probably one of the biggest takeaways from the quarter, bolstered by iLottery, covid-related tailwinds, and elevated jackpot activity. Scientific’s lottery segment is one of its “most undervalued and underappreciated businesses,” he wrote in a Monday note.

“Operationally, SGMS printed a very solid quarter and paved the way for a continued recovery throughout the year,” the note said.

Shares of Scientific Games Corp. closed at $52.13, down $3.89.

Contact Mike Shoro at mshoro@reviewjournal.com or 702-387-5290. Follow @mike_shoro on Twitter.