Increased operating expenses, particularly related to research and development, sent second-quarter cash flow down for electronic slot and bingo machine maker PlayAGS. The company posted a loss wider than that of a year ago, although revenue rose.
Both earnings and revenue missed Wall Street forecasts.
In a statement issued after stock markets closed Wednesday, PlayAGS, which was founded in 2005 and went public in January 2018, said it had a net loss of $7.6 million, or 21 cents per diluted share, for the three months ended June 30, compared with a net loss of $5.3 million, or 15 cents per diluted share, a year earlier.
The latest result missed the consensus earnings estimate of 14 cents per share derived from analysts surveyed by Yahoo Finance.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that filters out nonrecurring costs, fell 2.2 percent to $35.7 million from $36.5 million.
“The decrease was related to increased operating expenses as we continue to invest in strategic areas of our business, particularly in R&D, to capitalize on the vast whitespace in front of us,” PlayAGS President and CEO David Lopez said in a statement accompanying the results.
Revenue rose 2.4 percent to $74.5 million from $72.8 million. Yahoo Finance-polled analysts had, on average, forecast $82.3 million in revenue.
Investors sold off PlayAGS stock on the news. The share price fell 79 cents, or 4.37 percent, to close at $17.30 in regular trading. After-hours trading was more punishing — the shares dropped $1.55, or 8.96 percent, more to reach $15.75 at 3 p.m. PDT. TheStreet.com rates the shares “D” or “sell.”
Despite the loss and cash flow dip, Lopez said his company foresees growth.
“With our many upcoming product launches, including the Orion Upright and three new slot innovations which we’ll showcase at (the Global Gaming Expo), we remain confident in the many opportunities for sustainable growth in the back half of 2019 and beyond.”
G2E will run Oct. 14 through Oct. 17 at the Sands Expo and Convention Center in Las Vegas.
During the second quarter, PlayAGS’ electronic gambling machine revenue rose 2.5 percent to $71 million from $69.3 million.
Table products revenue increased 33 percent to $2.4 million from $1.8 million, driven by increased progressive table game and side bet placements.
PlayAGS revised its EBITDA guidance for 2019. saying it expects $140 million to $150 million in 2019, an increase of 6 percent to 10 percent from a year earlier. The company said decreased electronic gaming machine revenue, largely due to product underperformance in Oklahoma, and decreased interactive gaming operations revenue caused by the company’s delayed entry into New Jersey, factored in the revision.
Follow Matthew Crowley on Twitter @copyjockey.
