Losses Increase Despite Revenue Rise For PlayAGS in Second Quarter

PlayAGS, an esteemed gaming technology provider, has reported a 2.3% annual rise during this year’s second quarter. This was offset by a widening of net loss over the three-month period leading to June 30th.

The second quarter’s total revenue stood at $74.5 million. Comparatively, it was $72.8 million during the same period last year.

Contributing Factors

This was mostly owing to record gaming operations revenue, as PlayAGS officials suggest…

…Electronic Gaming Machine and Table Products both had their respective revenues increased. The 2% year-on-year growth for the gaming operations revenue, to $53.6 million, was driven by Electric Gaming Machines that were obtained from Integrity Gaming. Table products, in the meantime, also rose 35% to 2.4m – due to increased progressive table game and side bet placements.

A Little Downside

The company’s interactive business is a completely different matter, however…

…because this particular segment saw its revenue slip 35.1% to $1.1 million. At the same time, the revenue for social gaming declined 46.4% to $890,000, which was the outcome of PlayAGS strategically optimizing its acquisition costs.

The good news is that real-money gaming revenue rose to $221,000, which is a massive 333.3% leap!

What About Costs?

As far as operating costs are concerned…

…they were also up in Q2 – the brand spent $72.5 million during this period which is significant compared to 2018’s $61.8m. Gaming operations costs jumped to $10.9 million from $9.7 million, while depreciation and amortisation costs also jumped from $19.5m to $23.7m.

Net loss for the period rose 42.3% year-on-year to $7.6 million, thanks to higher spending. PlayAGS remarked that this includes an “impairment of goodwill of $.3.5 million, as well as an impairment of intangible assets of $1.3 million related to the real money gaming business of interactive segment.”

Earnings Slipped Too

As a result of everything mentioned above…

…adjusted earnings before interest, tax, depreciation and amortization fell 2% year-on-year to $35.7 million, due to increased headcount costs related to Electronic Gaming Machines.

David Lopez, PlayAGS president and chief executive has reflected on this second quarter and said of the results that they are mixed. Higher operating costs are cited as a reason for a higher net loss. He did remain optimistic about the latter half of the year.

“Results in the second quarter were mixed, with 2% year-over-year growth in both total and recurring revenue offset by a slight decrease in adjusted EBITDA.

The decrease was related to increased operating expenses as we continue to invest in strategic areas of our business, particularly in R&D, to capitalise on the vast white space in front of us.

With our many product launches, including the Orion UprightSM and three new slot innovations, we remain confident in the many opportunities for sustainable growth in the back half of 2019 and beyond.”

Source:

“PlayAGS sees revenues rise but new losses widen in Q2”, igbnorthamerica.com, August 9, 2019.