Growth in Aristocrat Leisure Ltd’s digital business “is reverting from unsustainable highs,” noted on Thursday JP Morgan Securities Australia Ltd. Business booked to the firm’s social casual games business for the financial year to September 30, fell 20.2 percent from the prior-year period, to about US$243 million, said the Australia-listed slot machine specialist in its latest financial-year results issued on Wednesday.
The gaming supplier said the decline in revenue from casual games was due to a number of factors, including the “maturity of the casual games portfolio”. According to investor-presentation material from Aristocrat, its Pixel United social games division – which does not offer real-cash wagering – is split into three parts: “Social Casino”; “role player game (RPG), Strategy and Action”; and “Social Casual”.
JP Morgan analysts Donald Carducci and Michael James said in their Thursday note that a “key concern” related to Aristocrat’s results was “the resilience of the digital portfolio”.
The analysts added that “as expected, social casual bookings declined significantly (-20 percent), offset by the strength of social casino and a more resilient than expected RPG, strategy game” product performance.
“We believe rebasing expectations for social casual [segment] is incumbent upon a combination of organic game launches, but also a greater focus on acquisitions of titles with strong retention characteristics,” stated the JP Morgan team.
In its latest results, Aristocrat had noted that “Pixel United delivered resilient performance in a challenging environment, as overall mobile bookings moderated [from] Covid-driven peaks in the prior period.” That was understood to be a reference to a generally-observed increase in business globally for online digital games of various kinds, coinciding with lockdowns and other social restrictions during the Covid-19 pandemic.
Aristocrat’s chief executive and managing director, Trevor Croker, had commented in the Wednesday results announcement, that “strong performance” in the group’s land-based casino equipment business Aristocrat Gaming, had “more than offset headwinds in the Pixel United business… highlighting the increasing diversification and resilience” of the company.
Pixel United’s revenue for the 12 months to September 30 was just over AUD2.59 billion (nearly US$1.74 billion). Judged year-on-year, it was up 5.0 percent.
Last month, Aristocrat announced that its online real money gambling (RMG) division would be rebranded as “Anaxi”.
JP Morgan said in its memo that the Aristocrat parent’s balance sheet “remains in excellent condition,” with net cash of AUD564 million. This gave the firm “significant” options “to pursue the North American real money gaming build-and-buy strategy”.
JP Morgan added that Aristocrat anticipated going ‘live’ in the RMG segment “with eight titles across three jurisdictions in early 2023”.
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