AGS hits ninth consecutive quarter of revenue growth in Q1
PlayAGS has achieved its ninth straight quarter of revenue growth to kick off 2023, with records being set in revenue and adjusted EBITDA through the first three months of the year.
Reflecting on the results, President and CEO David Lopez noted that the performance is “another testament” to the investments the company has made in people and products over the past few years to strengthen its business.
Publishing its Q1 financial report, AGS announced a new revenue record of $83.2m, up 14 per cent year-over-year (Q1 2022: $72.9m) and a 2 per cent improvement over the previous high set in Q4 of $81.7m.
Q1 2023 was also the ninth consecutive quarter in which revenue growth has been achieved by the company.
Broken down per segment, electronic gaming machines generated the most revenue with $76.6m, a 14 per cent uptick YoY (2022: $66.9m) followed by table products with a record $4.1m, up 18 per cent (2022: $3.5m) and interactive with $2.52m, a 2 per cent increase (2022: $2.47m).
EGM revenue improved thanks to sales income growth of 23 per cent to $24.1m (2022: $19.6m), further recovery in Mexico with revenues up 15 per cent and “record domestic EGM gaming operations revenue for the second consecutive quarter”. Total gaming operations revenue amounted to $52.4m, up 11 per cent (2022: $47.3m).
Table products record income in Q1 was “supported by a more than doubling” of card shuffler revenue “in connection with accelerating customer demand” for the PAX S single-deck shuffler, consistent growth within the installed base of table game progressives, and further AGS Arsenal site license offering adoption.
Interactive revenue was affected by “outsized growth” in AGS’ real money gaming business being offset by “an anticipated decline in social casino revenue” as the company “strategically re-orient” its technical and commercial resources to “maximize profitable revenue growth”.
AGS’ adjusted EBITDA for Q1 reached $36.5m, up 11 per cent YoY (2022: $32.8m) and a new record in the reporting period. Adjusted EBITDA margin was 43.9 per cent (2022: 45 per cent)
The company noted that table products and EGM adjusted EBITDA growth of 23 and 13 per cent respectively was offset by a decline in Interactive as it continues to “strategically invest” to strengthen “RMG customer account management capabilities, accelerate the flow of new AGS game content into the North American RMG channel” and diversify online content offerings.
Lopez said: “Our record-setting first quarter revenue and adjusted EBITDA performance is yet another testament to the way in which the strategic investments we have made in our people and products over the past several years have strengthened the underlying resiliency and vibrancy of our business.
“Supported by what I view as the strongest team and most compelling new product line-up in AGS’s history, I am extremely excited about what lies ahead for the company and our shareholders.”
AGS generated a net loss of $334,000 in Q1, a significant improvement from the previous year (2022: $12.6m net loss) due to “strong year-over-year revenue growth and the inclusion of approximately $8.5m in non-recurring costs in the prior year period” related to February 2022 debt refinancing.
The company added that these items were “partially offset by the slightly higher interest expense incurred in Q1 2023 as a result of the move higher in market-level interest rates”.
CFO Kimo Akiona added: “As an organisation, we remain singularly focused on optimising our operating and capital deployment efficiency to further de-lever our balance sheet.
“Supported by our strong first quarter financial performance, the growing demand for our high-performing for-sale products, and the relative stability observed across our recurring revenue operations, we remain confident in our ability to exit 2023 with net leverage inside of our targeted 3.25 times to 3.75 times range, with an intermediate-term focus on returning net leverage inside of three times.”