ALL FY25 result - rolling the dice

 ARISTOCRAT FY25 RESULT

A mixed bag for ALL, remembering the group is going through a transition, but not a significant one.

Going into this result, we had the sale of Plarium and the acquisition of the Interactive business (Neogames) to mess up the numbers a bit. ALL restated the comparable, fair enough, but it makes it messy. Given this, revenues were in line with my expectations, and NPATA was 5% ahead of my numbers, but this figure adds back a few significant items, as shown below. Overall, the underlying NPATA was up modestly, overall flat due to the divestments. ALL can be considered a mid to high single-digit profit grower, with upside to low double-digit profit growth if the new businesses are successful.



Note: Big Fish was divested post-balance date.

Guidance was for NPATA growth in 2026 on a CC basis.

ALL is in a transition year with the exit from the social casual segment and the acquisition of the NeoGames businesses. On my segments, Gaming did slightly better, Product Madness (social casino), a slight miss and Interactive, the new division, delivered a large miss on revenues, which was disappointing.

Segment reporting

Gaming

Revenues were up 9% and margins were down slightly from 56% to 55% due to the mix. The overall market grew in the key geographies and with new products and the new “Baron’ cabinet, ALL gained share. Outright sales were strong, with ALL gaining the number one spot in share for the first time. More is expected in 2026, especially share gains in the US. The fee per day was softer, but an improvement is expected in 2026. Two-thirds of the portfolio is participation-based, so it moves with gross revenues. Poor returning games were being removed and promotions rolled back, which will help 2026.  ANZ ship share was strong, and improved through the year and into 2026. The Monopoly franchise is due this year.

Product madness-Social casino

The focus is now completely on social casino, which is moving the land-based game onto Apps. Management described the result as strong in a weak market. DTC is a focus and has grown from 7% to 16% by the end of the year, and is now around 18%. The NFL franchise is about to be rolled out, and UI spend was increased to support the game. Revenues were up 2% and profit up 12%, due to cost containment and a mix shift to DTC.

Interactive

ALL reiterated their goal of achieving US$1b revenues in this division by 2029. A long way from the reported number of $344m. ALL concedes that more work is required here, but the content is expanding. The timing of products to market has blown out, with integration taking longer, and that was the reason for the disappointing result. Apparently, it is being addressed, and the reason why management has kept the revenue targets. The market would not like the delays and excuses in the new segment that is meant to drive growth for the group. The first iconic game, Lighting Link, is expected to be on the platform in 2026.

Other comments

ALL continue to buy back significant amounts of stock, with shares on issue falling over the year.

LNW litigation continues with a US court ordering discovery. ALL is pursuing this course of action to protect its IP.

The balance sheet is under-geared, and although ALL doesn’t need any large new segments, there is the possibility that M&A will centre around Interactive with product and technology to assist with speed to market and accelerate growth, being a focus.

 




SUMMARY VALUATION

ALL remains a highly profitable business and IMO has made the right strategic move in focusing on social gaming. The main reason is that it is near their core and expertise. Of course, execution of the strategy is critical, and the extent of the success will determine the outcome. The core gaming business remains strong but is largely limited by the growth in the overall industry.

Assuming exit Pes and eps growth rates for the next five years gives the following outcomes to generate 10% pa returns. With the base case highlighted at this stage. More results are required to build a bull case at this stage.

 



 

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