Supplier News

Australia – Ainsworth Game Technology records improved performance with revenues up 38 per cent

By William - 31 August 2022

Ainsworth Game Technology has recorded revenue increases of $220.2m, up 38 per cent on the $159.5m posted the preceding year.

Underlying EBITDA was $48.6m, up from $15.5m. Profit before tax, excluding currency effects and one-off items, was $27.3m, a positive change versus the previous underlying loss before tax of $17.1m.

“I am pleased to report much improved earnings from Ainsworth this year. AGT’s performance continued to improve through the year driven by re-openings and recovery in many of our major international markets,” commented new CEO Harald Neumann.

“While our domestic performance does not yet reflect our potential, I am encouraged with the investments we have made to fundamentally upgrade and further improve game performance which we expect to deliver further improvement in our results.

“This is key to our long term sustained success and I look forward to updating you as we make continued progress.”

Reflecting the improvement in trading conditions offshore, international revenues increased by 50 per cent and now account for 82 per cent of the Group’s total revenue. Recurring revenues increased by 28 per cent.

Ainsworth benefited from solid growth in the second half of the year as trading conditions continued to recover across the Americas.

Revenue in the second half of the financial year was $119.5m, a rise of 19 per cent on the first half of the year. Underlying EBITDA in H2 was $27.9m, representing growth of 35 per cent compared to the first half of the year, and almost double the result of $15.5m reported for the pandemic impacted year 2021.

The improved results were primarily driven by strong product performance in North America. High denomination games continue to be a strength of the supplier in the United States – regularly delivering five of the top 25 performing games in the segment.

Historical Horse Racing also made a material contribution to the results with the sale of 400 machines previously placed under participation to Kentucky Downs which was a highlight of the year. New HHR installations in Kentucky, Wyoming, Louisiana and most recently New Hampshire also made initial contributions in the period.

Newly approved HHR legislation in Kansas along with continued expansion in New Hampshire and Louisiana is expected to provide additional placement opportunities in this high-quality market. Machines placed under participation and lease including connection fees, which generate recurring revenue, contributed 45 per cent of this segment revenues.

Average selling prices and recurring revenue increases along with disciplined cost controls resulted in a rise in segment profit to $51.5m versus $39.1m in the preceding year, up 32 per cent.

Revenues in Latin America increased by 185 per cent. The recovery was driven by venue re-openings, and a significant increase in unit sales of over 200 per cent. Demand continues to grow for the A-STAR range of cabinets and top performing game themes such as Pan Chang, Rio Grande Los Toritos, and Multi- Win Games.

Segment profit increased to $20.8m compared to a heavily pandemic impacted loss of $8.6m in the year before. At 30 June 2022, a total of 3,818 units were under operation, generating $16.8m in recurring revenue, an increase of 147 per cent.

Ainsworth’s domestic performance improved as the year progressed although revenues overall were impacted by the lockdowns in NSW from July to October 2021. Within Queensland, revenues in the second half of the financial year increased by 26 per cent compared to the first half and 36 per cent for the full year compared to the prior twelve months.

An increase in unit sales drove the growth, offsetting reductions in regulatory changes introduced in Victoria and South Australia which generated additional revenue. Average selling prices remained consistent despite competitive market conditions.

Overall game performance improved across all domestic markets, a key priority at AGT, with both Cash Stacks and Treasure Spirits series showing sustained performance. Segment profit improved to $6.2m compared to $2.4m in the prior year.

The Rest of the World segment reported a slight improvement in revenue to $14m with online revenues contributing 69 per cent of the segment total, compared to 43 per cent previously. This increase in online revenue assisted to offset reduction in land-based sales in New Zealand where pandemic related lockdowns impacted activity levels.

Higher margin online revenues enabled segment profit to increase 38 per cent to $9.1m compared to $6.6m. Ainsworth is actively working on measures to mitigate inflationary cost pressures across its regions. Group operating costs in constant currency terms were $190.5m, 13 per cent higher than in the prior year.

Total headcount numbers were consistent to those twelve months earlier with reductions in resources in Australia reflecting the reduced revenue environment.

The supplier has also established a new global organisational structure with new product leadership and clear lines of accountability. Management has also implemented a range of measures focusing on technology, development, and culture to improve product performance, lift staff retention rates and enhance AGT’s ability to attract world class development talent.

Strong operating cash flows of $51.3m were used to support investments in technology and game development, increased inventory purchase to protect Ainsworth from supply chain disruptions and retired $39.1m of debt.