JP Morgan Securities Australia Ltd expects the financial performance data of slot machine maker and gaming content provider Aristocrat Leisure Ltd to “improve sequentially” in the financial year to September 30, 2026.
Such performance will in likelihood be “driven by improving portfolio mix, GGR [gross gaming revenue] trends, and a further unwind in promotions,” stated the brokerage in a Wednesday memo.
The institution also said, “outright sales strength should continue” with the deployment of the firm’s The Baron slot cabinets in Asia and in the Europe, the Middle East, and Africa (EMEA) markets, coupled with “further product and hardware penetration in North America, and Australia and New Zealand”.
The Australia-listed slot machine maker reported on Wednesday full-year statutory interim net profit after tax and before amortisation of acquired intangibles (NPATA) of just above AUD1.31 billion (US$857.0 million), up 6.5 percent year-on-year.
That was on revenue of almost AUD6.30 billion, up 11.0 percent from the previous fiscal year.
Aristocrat Leisure’s reporting segments span regulated land-based gaming, via Aristocrat Gaming; social casino, via Product Madness; and regulated online real money gaming, via Aristocrat Interactive.
Full-year results measured by current segments saw Aristocrat Gaming generate a profit of AUD2.16 billion, up 6.9 percent year-on-year. Product Madness made AUD516.2 million, a 11.6 percent improvement. Aristocrat Interactive’s profit was AUD130.7 million, an 87.0 percent gain.
The JP Morgan analysts noted however that “higher D&D [design and development] spend will impact” Aristocrat Leisure’s margins in the 12 months to September 30 next year.
They stated: “D&D investment guidance of ‘mid-single digit percentage growth versus previous comparable period’ is a change versus prior guidance for a step down to ‘a 11 to 12 percent of sales over the medium term’.”
“While increased investment in the Interactive segment is required to support iLotteries growth … and distribution of gaming content across various channels, it has led to near-term earnings downgrades,” observed the analysts.
They added: “Offsetting this, the company’s shift to managing D&D expense as a growth rate instead of as percentage of sales should drive operating leverage as sales growth recovers from financial-year 2025 levels.”
