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Aristocrat delivered 12% revenue growth in the first half of its 2023 financial year (six months ended 31 March) as it continues to invest in entering the online real-money gaming sector.

Topline numbers

Revenue for the half-year totalled A$3.08bn, an increase of 12.2% year-on-year.

Aristocrat’s largest business area by revenue was its Americas Gaming segment, which generated A$1.45bn during the half, up 26.4%.

Pixel United, the company’s social gaming-focused online division, generated a further A$1.32bn, but came in flat at 0.7% year-on-year.

Gaming sales in Australia and New Zealand brought in a further A$221.6m, down 0.5%, while International sales totalled A$88m, up 37.5%

Group EBITDA totalled A$1.03bn, up 5.7% year-on-year, on an EBITDA margin of 33.3%

Profit after tax for the half was A$653m, up 27.3% from A$513m in the comparative period.

News nugget

Undoubtedly the biggest news for Aristocrat this half was the announcement of its $1.2bn acquisition of iGaming supplier NeoGames.

The deal represents a major statement of intent on Aristocrat’s part, as it continues to increase its focus on the online RMG sector.

Through its four distinct business units, NeoGames offers Aristocrat a suite of products and services across the iLottery, iGaming and online sports betting sectors.

Aristocrat CEO Trevor Croker said he believes the acquisition “will truly be transformational for Aristocrat, laying the foundation to fulfil our ambition to be a global leader in online RMG”. 

He added: “The combination of Aristocrat’s market-leading content and deep customer relationships across our gaming and digital businesses, with NeoGames’ technology and platforms, will enable us to accelerate our content distribution globally, position us as the technology partner of choice with online RMG customers, and ultimately create an additional sustainable growth engine for the group.”

The acquisition represents Aristocrat’s latest move towards the RMG sector, following the unveiling of its Anaxi RMG brand in October last year.

Anaxi is Aristocrat’s online RMG division, which creates digital versions of the company’s land-based slot games for online casinos.

Aristocrat has continued to splash the cash on this segment, with A$42m invested in Anaxi specifically during the reported half-year.

Commenting on the progress of that business unit, CEO Croker said: “Our newest operating business, Anaxi, delivered on its initial market entry commitments and established sound foundations for growth. 

“With content agreements signed with partners representing over 55% of the iGaming market in the US [by GGR], we are comfortably on course to exceed our target of penetrating at least 70% of regulated jurisdictions across North America over the next five years.”

During the half, Anaxi signed deals with operators including Caesars Sportsbook & Casino, BetMGM and Penn Entertainment, as well as announcing a new agreement with FanDuel at the end of the reporting period.

“Early industry data on a small sample is highly encouraging and validates our hypothesis that our market leading land-based content will resonate well online,” commented Croker on the firm’s H1 earnings call.

Anaxi also completed the acquisition of Roxor Gaming during the half, which it said offers it a “highly scalable and feature rich” remote game server, as well as content publishing technology intended to help accelerate Anaxi’s growth plans.

The combination of NeoGames and Anaxi acts as the foundation for Aristocrat’s entry into the RMG space, the company said, together demonstrating both sides of its “build and buy” strategy in the sector.

Best quote

“We remain steadfast in our view that online RMG is a logical and complementary growth and diversification opportunity for the group, to leverage our leading land-based content across a new and growing distribution channel.”

– Aristocrat CEO Trevor Croker on the company’s commitment to the RMG sector

Best question

Executive director of equity research at UBS Andre Fromyhr wanted to know more detail about the financial impact of Aristocrat’s Anaxi RMG segment.

“I appreciate you’ve shared some information around what share of design and development (D&D) spend could be allocated toward Anaxi, but are there other costs associated with setting up that business, and are you starting to recognise the income streams from Roxor and the other initiatives that you’ve got?” he asked.

In response, CEO Croker said: “This is a start-up business, so we are at the investment stage. We’re investing in critical infrastructure and in D&D to make games and technology. 

“I think we need to think of this as a building strategy, and it is going to require some investment to actually generate revenues longer term.”

Aristocrat CFO Sally Denby added some more colour to the Anaxi strategy, as she revealed that some 10% of the company’s total employee base is dedicated to Anaxi at this point in time.

On the question of when the business segment can be expected to generate revenue, she added: “Given that our content has only just started to go out to market, you can probably expect to see revenue come through the RMG segment in the second half.”

Current trading and outlook

Aristocrat has reaffirmed that it expects to see net profit after tax and amortisation (NPATA) growth for the full-year 2023.

It also expects to improve the profit from Pixel United in the second half of the year compared to the prior-year period, albeit with full-year profit from the business segment expected to come in “moderately below” the level reported for the full-year 2022.

The business will continue to invest in the Anaxi business segment, while over the medium term it intends to continue gaining market share across all of its business segments and deliver profitable growth.