Ainsworth Game Technology (AGI) H1 2024 earnings summary

Executive summary

• Profit before tax was AUD 15.7 million, including currency gains and a minor one-off item; underlying profit before tax was AUD 14.3 million, down 39% year-over-year, within the upper range of guidance.

• Revenue for the period was AUD 121.4 million, down 15% year-over-year, mainly due to lower sales in Latin America and Europe, and the end of the GAN exclusivity agreement.

• North America contributed 56% of total revenue (AUD 67.9 million), with segment profit up to AUD 32.6 million, driven by strong recurring revenue and new product launches.

• Net profit after tax was AUD 14.0 million, up from AUD 2.0 million in H1 2023, due to lower one-off expenses and favorable FX movements.

• Dividend remains suspended to prioritize liquidity and ongoing R&D investment.

Financial highlights

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

• Underlying EBITDA was AUD 26.8 million, down from AUD 29.4 million last year; reported EBITDA was AUD 28.2 million, up year-over-year due to FX gains.

• Net operating cash flows were AUD 28.4 million, up from AUD 12.1 million in the prior period; however, operating cash outflow of AUD 28.4 million was reported due to SAT tax payments.

• Net debt was AUD 11.1 million at 30 June 2024, after a drawdown to settle Mexican tax payments.

• Cash balance at period end was AUD 13 million, down from AUD 19.8 million at December 2023.

Outlook and guidance

• H2 2024 expected to provide increased revenue opportunities as new products and regulatory approvals are secured.

• Sustainable profitability anticipated, with growth expected from R&D investments and new game releases.

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

• Inventory buildup from H1 is expected to decrease as forecasted sales are delivered in H2.

• New game titles and legislative changes in the US are anticipated to drive further growth in North America.