Aristocrat sees record H1 profit as it advances online RMG strategy; readies to launch iGaming in two US jurisdictions

Gaming content and technology giant Aristocrat Leisure Limited has announced record fiscal half-year profit for the six months ended March 31, 2022. Normalized profit after tax was AUD 580 million ($407.6 million), which represents an increase of 41% compared to the prior corresponding period, reflecting “the effective execution of the strategy and increasing business capability.” The business additionally announced it will go live with iGaming products in two US jurisdictions as it advances its RMG strategy.

The ASX-listed company says profit was driven by top-performing portfolios and accelerated investment in Online Real Money Gaming. Sustained expenditure in talent, technology and product led to strong organic growth, with profit also up 37% of pre-COVID 1H19 performance, achieved despite mixed operating conditions and supply chain disruptions.

The slot machine developer and iGaming content provider said growth across the Aristocrat Gaming and Pixel United -its mobile games publisher subsidiary- portfolios led to “above-industry performance” in key segments and genres. The business posted EBITDA of AUD 970 million ($682.4 million), up 30% compared to the prior corresponding period.

“Aristocrat delivered an impressive and resilient performance despite mixed operational conditions and challenges,” said Aristocrat CEO and Managing Director Trevor Croker. “We took comprehensive action to protect our people and business, while investing strongly to accelerate our growth strategy going forward.”

According to the executive, sustained investment enables the company “to take share wherever we play” and deliver significant top and bottom-line growth. Additionally, the company is accelerating the implementation of its “build and buy” strategy to scale in online Real Money Gaming, which provides further channels for the business to distribute its content.

“Our ambition is to be the leading gaming platform in the global online RMG industry, and we anticipate being live with iGaming products in two jurisdictions in the US by the end of calendar year 2022,” Croker said. The specific markets were not unveiled.

The revenue report follows a February announcement that Aristocrat would be restructuring its business into three main parts: real-money online gaming, casino equipment business -Aristocrat Gaming-, and social gaming -Pixel United, formerly known as Aristocrat Digital-. 

“Our priorities at the moment are to buy, scale and enter the RMG business and that remains pretty clear. We’ve been transparent about it,” Croker further said, according to The Australian Financial Review.

The company is still seeking to acquire platforms in the segment, but without a large target in close range, it will buy back AUD 500 million ($352.2 million) in shares after raising AUD 1.3 billion ($915.8 million) for the failed bid for software company Playtech.

The Playtech deal was meant to set the company for a new phase of growth by expanding the company beyond its two key segments -gaming machines for land-based venues and social games- and into RMG. But the in-house “build and buy” strategy is now expected to work, including the projected launch in the US.

Moreover, the company continued to make progress in its sustainability efforts during the period, including a commitment to responsible gameplay, and to adopting a group-wide science-based emissions reduction target “by the end of calendar year 2023.”

“Aristocrat enters the second half with excellent fundamentals and strong operational momentum, a robust balance sheet and an abundance of opportunity to accelerate our growth strategy,” Croker added.

Further financial highlights of the period include group revenue increased to AUD 2.7 billion ($1.9 billion), which represents a 23.1% increase from the prior period, while operating cash flow increased by 42% to AUD 502.4 million ($353.3 million).

Operational highlights delivered during the period were achieved despite challenges brought by the outgoing conflicts in Ukraine, an industry-wide moderation in overall mobile game demand post Covid-19, and ongoing global supply chain disruptions. 

As Covid-19 restrictions eased and customers increased their capital commitments towards Aristocrat's products during the period, gaming sales posted strong growth. The business also posted an increased average fee per day (FPD) in the North American market, and expanded into adjacent markets including VLTs in jurisdictions such as Canada, Oregon and Illinois.

The board of directors has also now authorized an interim fully franked dividend of AUD 0.26 per share (AUD 173.7 million - $122.2 million), with a payment date for the interim dividend on July 1, 2022.