AGS enjoys revenue growth as losses narrow in 2018

6 March 2019

PlayAGS has reported a 34.6% year-on-year increase in revenue for 2018, while the gaming technology supplier was also able to cut its full-year loss by half.

Total revenue for the 12 months through to December 31, 2018, amounted to $285.3m (£217.0m/€252.4m), up from $212.0m in the previous year.

AGS was boosted by growth across both its gaming operations and equipment sales businesses. Revenue from gaming operations climbed from $170.3m to $201.8m, while equipment sales more than doubled from $41.7m to $83.5m.

The company saw a 35.6% increase in revenue from electronic gaming machines, up from $199.9m to $271.0m. This was particular apparent in the fourth quarter, with AGS citing growth in early-entry markets such as Ontario, Mississippi and Nevada as well as continued penetration into ramping markets such as California and Florida.

AGS also reported an 88.2% jump in table product revenue, with this total rising from $4.1m to $7.7m, but interactive revenue was down 16.8% to $6.6m.

Increased activity across its various business areas pushed operating expenses up from $197.5m in 2017 to $260.0m in the past year, with AGS spending more across the entire business.

Most of this expense was down to depreciation and amortisation, with this rising from $71.6m to $77.55m, while selling, general and administrative costs were also up from $44.0m to $63.0m.

The cost of gaming operations increased from $31.7m to $39.3m and equipment sales spending jumped from $19.8m to $39.7m. AGS also committed more spend to research development - $31.7m in total - while write-downs and other charges totalled $8.8m in the past year.

However, despite higher costs, AGS was able to cut its loss by more than half, with net loss for the year amounting to $20.8m, down 53.8% from $45.1m in 2017. Loss before income taxes also dropped from $47.0m to $29.2m, while net loss was cut from $45.1m to $20.8m.

AGS also noted that total adjusted earnings before interest, tax, depreciation and amortisation for the 12 months came in at $136.2m, up by 27.5% on $106.8m in 2017.

Reflecting on the results, CEO David Lopez was pleased with the figures, paying tribute to the company’s performance in Q4 in particular. Revenue was up 25% to $72.1m in the final three months of the year, while adjusted EBITDA increased 19.3% year-on-year to $31.5m.

“We ended our first year as a public company with a solid fourth quarter and 35% growth in annual revenue,” Lopez said. “Our continued top line growth, increased operating cash, and free cash flow generation reflects the industry-leading performance of our products and AGS’ unique position given how underrepresented we are in the market.

“These two factors contributed to our phenomenal growth in electronic gaming machines ending the year with more than 4,300 sold units, a 71% increase from fiscal 2017.”

Lopez also referenced AGS’ $49m acquisition of Integrity Gaming, which went through last month. He said this will bolster the company’s recurring revenue footprint and provide long-term optimisation opportunities.

He added: “With new product and content launches, further penetration of both new and early-entry markets, and international expansion, AGS is positioned for another high-growth year in 2019.”