GGRAsia – Sales in Asia help boost Aristocrat 1H revenue to US$2.2bln

Sales in Asia help boost Aristocrat 1H revenue to US$2.2bln

May 16, 2024 Newsdesk Latest News, Top of the deck, World

Australia-listed slot machine maker and online gaming content provider Aristocrat Leisure Ltd reported revenue of just under AUD3.27 billion (US$2.19 billion) for its financial first half, up 6.1 percent from the prior-year period.

The company posted an interim profit after tax and before amortisation of acquired intangibles (NPATA) of AUD752.1 million, an 8.6-percent increase from a year ago, it said in a Thursday filing.

The firm declared a dividend of AUD0.36 per ordinary fully-paid share for the six months to March 31, payable on July 2. The company also announced a AUD350-million increase in its on-market share buy-back programme, running up to February next year.

First-half earnings before interest, taxation, depreciation, and amortisation (EBITDA) on a normalised basis were up 17.6 percent year-on-year, to nearly AUD1.20 billion.

Aristocrat said revenue growth in the period was “underpinned by Aristocrat Gaming”, the group’s casino technology segment, “with strong performance in North America gaming operations … [and] strong outright sales in most ‘Rest of World’ markets, and encouraging growth at Aristocrat Interactive.”

“This was once again an outstanding result, reflecting Aristocrat’s resilience and ability to grow share and drive profitability through different operating environments,” stated Aristocrat’s chief executive and managing director, Trevor Croker, in prepared remarks accompanying the results.

“The group delivered strong revenue and EBITDA growth over the half. This was underpinned by record Aristocrat Gaming performance, led by an exceptional North America gaming operations result, and strong growth in Aristocrat Interactive, while Pixel United achieved improved profitability despite mixed market conditions,” he added.

JP Morgan said in a Thursday note that Aristocrat produced a “solid” first-half result, that was “ahead” of the institution’s “estimates across EBITDA and NPATA”.

Aristocrat said its gaming segment recorded revenue of nearly AUD1.83 billion in the six months to March 31, an 8.3-percent increase from a year ago. It accounted for about 56.0 percent of the group’s aggregate revenue for the period.

Revenue in North America rose by 5.8 percent year-on-year, to US$950.2 million. Aristocrat said its installed base in that market grew by approximately 3,200 units during the period.

Growth in Asia, review of social gaming assets

Revenue in the Rest of World segment increased 6.6 percent year-on-year, to AUD376.7 million. Profit for the segment stood at AUD179.3 million, up 29.1 percent from a year earlier.

The performance was “driven mainly by growth in Asia due to strong game performance on recent releases, recovery in the sale of replacement units and product mix benefits,” stated Aristocrat.

In Asia, specifically, “revenue and profit doubled compared to the prior corresponding period driven by strong game performance on recent releases, including ‘Dragon Link’, and ‘Bao Zhu Zhao Fu’, combined with Aristocrat’s participation in venue openings,” said the company.

The group’s Pixel United division generated US$875.0 million in interim revenue, down 1.8 percent year-on-year. Profit from the segment however rose by 16.8 percent, to US$306.9 million.

Pixel United comprises three operating businesses: Product Madness, Plarium and Big Fish Games, along with a number of studios located around the globe.

In Thursday’s announcement, Aristocrat said it would “conduct a strategic review” of the group’s “casual and mid-core gaming assets”, including its Big Fish Games – excluding the Big Fish Social Casino assets – and Plarium Global.

“No decisions have been made, and Aristocrat will assess all options to maximise shareholder value and ensure the ongoing success of these businesses going forward,” stated the firm.

JP Morgan said the strategic review regarding Aristocrat’s social gaming assets was a “key positive”.

“These assets have been a significant drag on top-line growth over the last few years; and have required a lot of incremental capital/investment,” wrote analysts Don Carducci and Michael James.

“While expectations in terms of any sale multiple should be muted, the potential removal of this cost/earnings drag is a key positive,” they added.

Aristocrat’s online real money gaming (RMG) segment – called Aristocrat Interactive – generated interim revenue of US$71.9 million, up 48.6 percent from a year ago. Profit for the segment grew by 207.7 percent year-on-year, to US$20.0 million.

The company said the performance in the segment was driven by “new customer installations, higher hardware sales, and scaling of the iGaming business”.

The group completed in late April the acquisition of RMG provider NeoGames SA, and announced Moti Malul, previously CEO of NeoGames, as CEO of Aristocrat Interactive.

Aristocrat’s CEO Mr Croker said in his remarks that the group expects to deliver “significant revenue opportunities and strategic benefits from the combination of Aristocrat’s leading gaming content, and long-term customer and regulatory relationships, with NeoGames’ technology and platform solutions”.