Fiscal-year results for 2025 at Aristocrat Leisure were “relatively in line … although divisionally mixed,” according to Jefferies Equity Research analyst Kai Erman. He shared his views in a pair of investor notes, filed November 11 and 12.
Aristocrat’s social-casino warhorse, Product Madness, came out ahead of expectations. This, Erman said, offset other online underperformances. There were also 1,611 installations of leased machines that “should draw attention,” per the Jefferies analyst.
Outright sales of gambling devices stood at 13,400, including what appeared to be a strong United States performance. Erman attributed the latter to better Aristocrat market share and especially to product launches, such as the Baron line of cabinets.
Following the November 11 earnings call, Erman revisited his findings. He felt that slowing leased-machine installations had put into the shade results that generally met expectations.
Retail sales of slot machines were said to be potent. Erman also opined that Aristocrat could pick up a tailwind heading into 2026 from the effects of the latest U.S. federal tax cuts and from next year’s gambling revenues, anticipated to be higher than 2025’s.
While Erman allowed for the validity of concerns about Aristocrat’s online business, he felt the North American outlook was positive and the stock was “attractive at these levels.” Erman reiterated his Buy rating on Aristocrat shares.
Although Erman felt that investors feared a slowdown in the Gaming Operations division, Aristocrat had stated that Class II machines would make a comeback, reversing their third-quarter underperformance. Aristocrat’s pipeline of Class III, premium-level, leased, slot machines was characterized as “potent,” particularly with regard to new installations in the first half of 2026.
Concerns about Aristocrat’s terrestrial-game performance “seem overdone,” Erman wrote, noting the company enjoyed the largest market share in gaming operations “with strong product momentum.” His research with customers indicated that competing leased slots were making minimal inroads, except for Light & Wonder machines.
As Aristocrat’s flotilla of leased machines continued to grow around five percent, Erman argued, the company “remains a clear beneficiary,” slowish late-2025 results notwithstanding.
No caveats were required of game sales, described as continuing their momentum into 2026, “with strong growth in adjacencies.” U.S. sales were up four percent and the remainder of the world was two percent higher, a pleasant surprise for Erman, given conditions in the Asian market. “Ongoing momentum” was discerned in Australia and New Zealand.
Thanks to better-than-expected direct-to-customer business, Product Madness outperformed by five percent, “which was pleasing. Aristocrat continues to materially outperform a declining Social Casino market,” Erman wrote.
Even so, he substantially trimmed his estimates for Aristocrat’s online-gaming business “and [will] make further cuts today.” Erman said he was particularly concerned by a slowdown in content-driven revenue, from 17 percent to 14 percent, even as North American igaming revenue shot up 30 percent.
“We expect it is some time until igaming execution improves,” Erman thought, especially with Lightning Link not going live until the middle of 2026. Aristocrat targeted AU$1 billion in online revenues for 2029, but Erman lowered his expectation to AU$850 million.
Still, “Our confidence in North American gaming momentum underpins our view that the stock is attractive at these levels despite Interactive concerns,” Erman concluded.
