Confidence in achieving heightened interactive ambitions have been reflected on by AGS President and CEO David Lopez after a record performance drove the company through the third quarter.

It is predicted that a “more diverse product portfolio” combined with “our passionate team” is expected to position AGS “to deliver on this theme of relative outperformance for many quarters to come”.

A record setting quarter

Total revenue through the quarter swelled 14 per cent to a record $89.4m (2022: $78.3m), with all core operating segments, those being interactive, electronic gaming machines and table products, up 20 per cent, 14 per cent and nine per cent, respectively.

Despite this, net loss swung to $156,000 versus income of $476,000 one year earlier, which is aligned to an increase in debt service costs and the inclusion of a favourable tax item in the prior year period, which were partially offset by year-on-year growth in income from operations.

Total adjusted EBITDA rose 16 per cent YoY to a highest ever $40.1m (2022: $34.4m), driven by interactive and EGM growth of 57 per cent and 17 per cent, respectively.

For the year-to-date, revenue reached $262.3m (2022: $203.1), with net loss swinging to $361,000 from income of $10.5m.

“We delivered another solid quarter of execution in Q3 with our product momentum and focused team producing performance that far exceeded the trends observed across the broader domestic gaming landscape and contributed to several new financial records along the way,” Lopez noted.

This was aligned to “a few notable accomplishments”, with the first of these being domestic EGM operations “once again outpacing the revenue trends observed across the broader domestic gaming landscape”.

In addition, global EGM unit sales, ongoing optimisation efforts and a stable macroeconomic backdrop and an increased online performance were each also cited.

AGS’ Interactive ambitions

As the interactive segment “entered launch mode”, a record performance saw revenue reach $3.1m, up 20.2 per cent to $2.6m, with AEBITDA increasing by almost 60 per cent YoY to $903,000 (2022: $575,000).

RMG revenue increased 26 per cent YoY and 20 per cent sequentially to occupy 90 per cent of the division’s entire make-up, with North American-facing customers accounting for over 90 per cent of Q3’s RMG revenue mix.

This was put down to new game launches, including the company’s first ever three-reel game theme, which is said to have become the group’s “most successful new game released today” that has “outperformed our previous best release by nearly 40 per cent”.

In addition, more tactical and targeted business development activities with B2C operator partners, platform enhancements, and a successful launch into West Virginia also helped interactive deliver its best performance.

“The strong performance propelled the title to the top of the charts in the October Eilers report with another AGS game theme capital gains taking second place,” Lopez noted.

“As I look to 2024 and beyond, I’m confident the strategic ambitions for our interactive team should allow for more consistent delivery of AGS content and the online channel. 

“Further diversification of our online content offerings into additional genres and more strategic and impactful interactions with our B2C partners, all of which will position us to deliver outsized growth.”

EGM and table products

AGS’ most dominant segment remains that of EGMs, with revenue up 14.3 percentage points to $81.86m (2022: $71.62m) through the July to September time frame. AEBITDA closed at $36.7m, up 17.4 per cent from 2022’s $31.3m.

Revenue from domestic operations reached $48.6m, up six per cent YoY, while on an international basis a 25 per cent increase to $5.4m (2022: $4.3m) was recorded. Equipment sales closed at $27.8m, a 30.2 per cent rise from $21.3m.

Total table products revenue increased nine per cent to $4.3m (2022: $4m), while AEBITDA dropped five per cent to $2.4m that is said to “reflect a higher allocation of field service expense to the segment to better align with the current complexion of the installed base and a greater mix of equipment sales revenue”.

Executive’s closing statements

Lopez added: “While I’m encouraged by the recent success and consistent momentum building across all three of our operating segments, I’m even more enthused with how our improved operating performance has allowed us to deliver on two key strategic objectives, consistent free cash flow generation and delivery.”

Kimo Akiona, AGS Chief Financial Officer, commented: “Looking ahead to Q4, although we expect interactive revenues to be nicely, higher versus the prior year. 

“We believe that combination of a challenging Q3 comparison with the quarter benefiting from our most successful R&D launch, game launch to date, and the anticipated timing of new content introduction could temporarily moderate the level of sequential revenue growth we were able to achieve. 

“That said as David indicated, we’re increasingly confident to added depth and diversity of our under-development online content offering along with our execution of more targeted and tactical business development initiatives put our interactive business on a multi-year path to consistent and sustainable outsized growth in 2024 and beyond.”