Scientific Games has declared a $351 million loss in its Q3 report, despite the fact the company’s stock price still rocketed by 21%. The increase has been attributed to the announcement of the company’s potential IPO of its social gaming business in 2019.
The loss is a $292 million increase on last years $59 million. The company stated that the loss is due to restructuring, charges, and a verdict in its legal battle with Shuffle Tech International in which the company was ordered to pay $105 million.
Scientific Games Corporation opened a case of patent infringement against Shuffle Tech in 2014. However, after a 10-day trial, a US jury declared the case a frivolous attempt by the brand to monopolize the automatic card shuffling machine market in casinos.
The jury found them liable for $105 million dollars, which under anti-trust laws was tripled by the judge. This has resulted in a $309.6 million total. Although Scientific Games has declared the amount as part of its Q3 total loses the company has not actually moved the cash out of its coffers. Rather the trial is entering an appeal phase which SG’s lawyers are dead set on winning.
Scientific Games Corporation declared an $860 million revenue for its 2018 Q3, which is a 6.8% increase on 2017. It attributed the growth on company contributions from its newly acquired NYX Gaming Group and sector growth in the lottery and social sectors.
Its EBITDA was up by 5.1%, lottery revenue by 1.5%, and social gaming revenue by 10.5%.
Despite the category increases, the overall loss has resulted in a less than stellar Q3 report. The stock price increase is believed to be because of the company’s CEO Barry Cottles announcement that Scientific Games will be offering an initial public offering (IPO) of minority shares in its social gaming business.
At present the company is carrying a debt load of $8.9 billion and funds realized from the IPO will be funnelled to clearing some of the company’s liabilities. This is positive news for investors that saw company stock prices close the trading day 21% higher on the 8th of November.
The company believes that the IPO will allow for more flexibility to grow its social unit and provide more value for stakeholders. In addition, it is expanding its portfolio following the acquisition of Don Best Sports Corporation and CBS Canada.