Strong electronic gambling machine sales helped PlayAGS quarter its loss and post record revenue in the second quarter.
In a statement issued after stock markets closed Thursday, the Las Vegas-based electronic slot and bingo machine maker said it had a net loss of $5.3 million, or 15 cents per share, for the three months ended June 30, compared with a net loss of $20.1 million, or 87 cents per share, a year earlier.
The latest results fell short of the 1 cent per share loss forecast by Yahoo Finance-polled analysts.
Adjusted earnings before interest, taxes, depreciation and amortization, a measure of cash flow, rose 39.2 percent to $36.9 million from $26.5 million.
Revenue rose 45.3 percent to a record $72.8 million from $50.1 million. The latest result smashed the $64.7 million revenue estimate of Yahoo Finance-polled analysts.
PlayAGS said its domestic installed base of electronic gambling machines increased by more than 2,400 units year-over-year, driven by Rocket Gaming’s purchase of about 1,500 units in December.
PlayAGS’ electronic game equipment sales rose 144 percent to a record $20.2 million. The company sold 1,058 units, an 84 percent rise from the 574 sold a year ago; Orion Portrait cabinet sales in California, Nevada and New Jersey drove the total higher.
PlayAGS’ average selling price for electronic game machines rose 18 percent to $18,728, also a quarterly record.
“We continue to reap the benefits of our Orion and Bonus Spin product launches, our steady ramp into key markets like Nevada, California and New Jersey,” the company said in a statement accompanying the results.
Stifel gaming analyst Brad Boyer told investors in a research note after the company’s conference call that the company’s most notable achievement in the quarter was the sale of over 1,000 new slot units.
“AGS continues to marry an attractive hardware platform with strong performing game content to take meaningful share in the North American slot market,” Boyer said. “Although the company has made considerable headway in the past 12 months, we still believe there is an ample runway for growth on the horizon as the company strives to achieve 5 percent market share (2.4 percent today).”
Jefferies gaming analyst David Katz had similar view of the company.
“We view the strong second quarter results as indicative of the positive product momentum the company has demonstrated since the IPO,” Katz said. “Based on the forward commentary, management is not indicating any deceleration in its momentum.”
This week, PlayAGS said Alberta Gaming, Liquor & Cannabis ordered 132 of AGS’ Orion Portrait cabinets and four of its best-performing games — Fu Nan Fu Nu, River Dragons, Olympus Strike, and Fire Wolf II — to deploy in 24 locations in the province. AGS said the order followed a field trial in which the games performed about house average.
The games will be installed early this month.
Deutsche Bank analyst Carlo Santarelli said the deal poised AGS, which recently tapped an official from a Canadian gaming operator to become the company’s head of sales for the region, to grow.
“Recall, Alberta has an estimated (20,000) units representing a sizable opportunity for AGS and the Canadian market overall represents a big runway for growth with a combined ~100k units,” he wrote in note to investors. “We believe this placement represents a first step in becoming a quantifiable share presence in Canada.”
The Orion Portrait cabinet carries an average selling price of $21,000, he wrote, and Deutsche Bank believes the order was sold with the units priced higher than $20,000. Therefore, he concluded, the deal implies revenue of about $2.6 million and incremental earnings before interest, taxes, depreciation and $1.3 million.
In June, PlayAGS acquired Gameiom Technologies Ltd., an internet gambling aggregator and content provider with licenses and offices in the United Kingdom and Gibraltar, for $5 million,
PlayAGS said it will integrate Gameiom into its interactive unit to help the company better serve sports betting partners. The May lifting of the Professional and Amateur Sports Protection Act, the 1992 law that had banned single game sports betting everywhere except Nevada, has opened new revenue opportunities for gambling companies of all stripes.
Play AGS shares rose 49 cents, or 1.73 percent, Thursday to close at $28.75 on the New York Stock Exchange. The shares for the company, which went public in January, are up 55 percent since Jan. 16.
Follow Matthew Crowley on Twitter @copyjockey
