Aristocrat shares slump as H1 revenue rises, earnings fall

We examine some of the key highlights from Aristocrat’s first-half results as well as commentary from the company’s CEO.

Aristocrat share price slumps, digital retains momentum

The market responded bearishly to Aristocrat Leisure's (ALL) first-half, FY20 results release, bidding the stock significantly lower in the early parts of Thursday’s session.

Indeed, Aristocrat plunged at the open to $25.250 per share, down from yesterday’s close of $27.340 per share. The gaming heavyweight clawed back some of those losses by the session's close, finishing out the day at $25.970 per share, down 5.01%

Overall, for the six months ending 31 March, and on a year-over-year basis, the gambling giant recorded:

  • Revenues of $2,251.8 million, up 7%
  • Earnings (EBITDA) of $707.6 million, down 7.7%
  • Earnings per share (EPS) of 47.9 cents per share, down 14.3%
  • Operating cash flow of $620 million
  • No interim dividend, down from an interim dividend of 22 cents per share in H1 FY19

Looking at Aristocrat’s revenue on a more granular level, we see that the company's digital business segment continued to grow at a rapid pace, while its land-based revenue streams were impacted by Covid-19 restrictions.

Specifically, ALL’s digital revenue climbed 18.5% to US$695 million. This, said the company, was 'driven by substantial growth in RAID: Shadow Legends, continued scaling of Lighting Link and strong performance of Cashman Casino.’

Broken down by business segment, as with the company’s H1 FY19 results, digital continued to be the largest revenue contributor, accounting for 46.4% of the company's sales – up from 39.0% in H1 2019. Class III Outright Sales & Other contributed 26.3%, while Gaming Operations made up 27.3% of company revenues.

Elsewhere, Aristocrat took today’s first-half results release to remind the market of the company’s prudent liquidity management strategies. Some of these strategies include: the aggressive reduction of second half operating expenses; the suspension of the interim dividend and a recently finalised US$500 million debt raise, which the company plans to use for general corporate purposes.

All up, Aristocrat had $1.8 billion in available pro forma liquidity as of 31 March, 2020.

In response to today's release, Aristocrat's CEO and MD, Trevor Croker said theses results 'demonstrates our core strengths and the relevance of our product-led strategy, despite the unprecedented challenges generated the COVID-19 pandemic.'

Mr Croker further noted that:

'Our progress in driving share through outstanding product and diversifying revenue streams – including across attractive Digital genres and titles – are also evident in this result.’

In the last month the Aristocrat share price has risen an impressive ~18%.

How to trade ASX gaming stocks

You can use CFDs to trade the stocks such as Aristocrat and other gaming stocks like Tabcorp – LONG or SHORT – through IG’s world-class trading platform now. For example, to buy (long) or sell (short) Aristocrat Leisure using CFDs, follow these easy steps:

  1. Create an IG Trading Account or log in to your existing account
  2. Enter ‘Aristocrat’ or ‘ALL’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

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