AGS is well positioned to deliver additional growth in the coming quarters, according to the company’s latest financial report, thanks to improved execution and acceleration across all three key reporting categories.
Following a first quarter in which the firm highlighted robustness and durability as “inherent to our company’s recurring revenue-centric business model,” the company claims a series of year-over-year advances in Q2, albeit there is still space for growth when compared to 2019.
Consolidated revenue was $66.8 million, up from $16.8 million in 2020 and $74.5 million in 2019, with growth in table products and interactive offset by a 13.8% drop in its electronic gaming machine business.
“Although North American slot replacement demand has meaningfully improved over the past several months, operators’ aggregated capital spend on new equipment purchases remains below pre-COVID-19 levels, pacing our reported EGM revenue decline vs Q2 2019,” according to AGS.
Interactive revenue was $2.8 million, up 30.5 percent and 153.3 percent from $2.1 million and $1.1 million in 2020, respectively, with table products coming in at $2.8 million (2020: $674,000 and 2019: $2.4 million).
EGM revenue increased 338.4 percent from $13.9 million in the second quarter of 2020 to $61.1 million in the previous quarter, however this figure is down 13.8 percent from $70.9 million two years before.
Growing premium game footprint
AGS President and CEO David Lopez explained: “We were able to leverage our over 15,000 unit domestic EGM installed base, our growing premium game footprint, and the revenue strength witnessed throughout the domestic gaming market to establish new company records in both domestic EGM revenue per day and domestic EGM gaming operations revenue in the second quarter.
“Looking ahead, our improved execution and accelerating product momentum across all three of our business segments position us to deliver additional growth and share taking in the coming quarters.”
The $3.9 million net loss in the second quarter was better than the $42.6 million and $7.6 million deficits in the second quarters of 2020 and 2019, respectively.
This is attributable to stronger operating performance and lower depreciation and amortisation expense, which are largely offset by slightly higher interest expense connected to an additional $95 million term loan that was closed in May 2020, according to AGS.
In addition, $3.1 million in one-time charges connected to the aforementioned debt financing transaction lowered net loss in the prior year quarter.
Fewer one-time charges and lower D&A spending drove the improvement over the previous year’s level, which was largely offset by slightly higher interest expense.
Total adjusted EBITDA was $32.1 million, up from a $1.2 million loss the previous year, but down from $35.7 million in 2019.
Continued revenue development strategies
When compared to Q2 2019, adjusted EBITDA for interactive and table goods “increased sharply,” owing to the successful implementation of continuing revenue development strategies in each sector.
The impact of the ongoing recovery in the North American slot replacement market from post-COVID-19 lows on unit sales more than offset the upside from 2021 gaming operations. EGM adjusted EBITDA decreased 17.1 percent compared to the same period in 2019, as the upside from 2021 gaming operations was more than offset by the impact of the ongoing recovery in the North American slot replacement market from post-COVID-19 lows.
AGS’ CFO, Kimo Akiona, added: “The continuous improvement being achieved as a result of our enhanced game content development execution, upgraded product management capabilities, and refined capital deployment processes, sets us on a path to deliver more consistent financial performance, improving our capital returns and leverage profile, and, most importantly, strengthening shareholder value over time.”