Ainsworth Game Technology (AGI) H1 2024 earnings summary

Executive summary

• Revenue for the period was $121.4 million, down 15% year-over-year, mainly due to lower sales in Latin America and Europe, while North America contributed 56% of total revenue and remained resilient.

• Underlying profit before tax (excluding currency and one-off items) was $14.3 million for H1 2024, within the upper range of guidance and down 39% year-over-year; reported profit after tax was $14.0 million, up from $2.0 million in H1 2023 due to lower one-off expenses and favorable FX movements.

• No interim dividend was declared, with suspension continuing to prioritize liquidity and ongoing R&D investment.

• Investments in new product development and technology upgrades are expected to drive future growth.

Financial highlights

• Gross margin improved to 67% from 60–63% in the prior period, driven by higher average selling prices and increased high-margin recurring revenue.

• EBITDA was $28.2 million, up from $14.0 million in the prior half but down from $29.4 million year-over-year; underlying EBITDA was $26.8 million, a 9% decrease year-over-year.

• Net operating cash outflows totaled $28.4 million, primarily due to a $29.1 million payment to the Mexican Tax Administration Service, resulting in net debt of $11.1 million at period end.

• Earnings per share (diluted) rose to 4.1 cents from 0.6 cents year-over-year.

• R&D expenses rose to 21% of revenue, up from 15% year-over-year, reflecting increased investment.

Outlook and guidance

• H2 2024 is expected to provide increased revenue opportunities as new products and regulatory approvals are secured, with additional guidance to be provided as trading conditions become clearer.

• Sustainable profitability anticipated, with growth expected from R&D investments, new game releases, and legislative expansion in North America.

• Latin America revenue expected to recover as import approvals in Mexico are progressively received and new protocols are implemented.