PlayAGS saw its revenues increase by 14 per cent year-over-year to a third-quarter record $89.4m compared to $78.3m in Q3 2022.
All three operating segments contributed to the company’s record revenue performance, with Interactive, EGM and Table Products revenue increasing 20 per cent, 14 per cent and nine per cent year-over-year, respectively. Spectra UR43 continues to cement its position as one of the company’s best-ever new product launches, amassing a total footprint of more than 2,700 units as of September 30, 2023.
The company recently introduced the second cabinet in the Spectra family, Spectra UR49. With a vibrant 49-inch curved monitor and multiple configuration options, the Spectra UR49 strategically complements the workhorse Spectra UR43 cabinet by diversifying the Company’s core cabinet portfolio across a variety of price points and use cases, enabling AGS to sell into multiple segments of a traditional operators’ slot floor. To date, Spectra UR49’s two launch titles, Rakin’ Bacon Odyssey and Sahara, are performing nicely above House Average across a variety of test sites, favorably positioning the cabinet for its planned commercial launch in Q4 2023.
AGS President and Chief Executive Officer David Lopez said: “We delivered another solid quarter of execution in the third quarter, with our product momentum and focused team producing performance that far exceeded the trends observed across the broader domestic gaming landscape. Exiting our most exciting Global Gaming Expo to date, I believe our deeper and more diverse product portfolio, combined with our passionate team, position us to deliver on this theme of relative outperformance for many quarters to come.”
Kimo Akiona, AGS Chief Financial Officer added: “Our record-setting Q3 2023 Adjusted EBITDA and free cash flow performance enabled us to reduce our net leverage to 3.4 times at quarter end, placing us inside of our targeted year-end range of 3.25 times to 3.50 times a full quarter ahead of schedule. We remain intently focused on leveraging our commitment to capex discipline and working capital efficiency to consistently generate free cash flow, which combined with our operating momentum, should allow for further net leverage reduction in the quarters ahead.”
Domestic EGM gaming operations, or recurring revenue, increased six year-over-year to $48.6m. A 20 per cent year-over-year increase in the company’s higher-yielding premium EGM installed base, further deployment of Spectra UR43, which is delivering per unit performance comparable to our premium products, and continuous installed base optimization allowed the Company to deliver year-over-year recurring revenue growth that far outpaced market-wide domestic GGR trends. Domestic EGM recurring revenue topped $45m for the sixth consecutive quarter and accounted over for 60 per cent of the total domestic EGM revenue generated in Q3 2023.
The domestic EGM installed base expanded to 16,424 units at the end of Q3 2023, representing an increase of 166 units versus the prior year and up sequentially for the sixth consecutive quarter. Outsized premium EGM footprint growth and deployment of our high-performing Spectra UR43 cabinet drove the expansion of our domestic EGM installed base in both the year-over-year and quarterly sequential periods.
Domestic EGM RPD increased five per cent year-over-year to a third-quarter record $32.57, exceeding $30 for the tenth consecutive quarter. Outsized premium unit growth, further capital efficient installed base optimization, deployment of the high-performing Spectra UR43 cabinet and a relatively stable gaming macroeconomic environment paced the improved Q3 2023 domestic EGM RPD performance versus the prior year. Domestic EGM RPD decreased modestly relative to the $33.48 achieved in Q2 2023, reflecting historically normal seasonality in market-level GGR trends.
AGS’ installed base of high-performing premium EGM units increased 20 per cent year-over-year and accounted for 17 per cent of the domestic EGM installed base at the end of Q3 2023 compared to approximately 14 per cent at the end of Q3 2022. The company’s premium EGM installed base grew sequentially for the fifteenth consecutive quarter. Supported by the added versatility of its premium gaming cabinet offering and our deep portfolio of premium game content, the premium EGM footprint continues to deliver superior per unit economics, driving relative outperformance in reported domestic EGM RPD metrics and enhancing the returns the company is able to achieve on the machine-related growth capital investments.