Aristocrat Leisure reported a 53% rise in after tax profits to A$1.45bn (€871.9m) in the 12-month period ending 30 September (FY2023).

The online and land-based gaming supplier reported steady growth across nearly all financial indicators, which the business said was the product of accelerated investment in its strategy.  

Revenue for the period stood at A$6.30bn, a 13% increase from the A$5.57bn recorded by Aristocrat in FY2022.

The company’s EBITDA also increased during the reporting period, rising 13.8% to A$2.11bn.

After normalising the results to account for the impact of acquisitions, Aristocrat said it achieved profit after tax of A$1.45bn. This stands as a 24.4% increase from the same period in 2022.

Aristocrat chief executive Trevor Croker said he was “proud” of the company’s financial results.

“The growth that Aristocrat delivered over the period demonstrates the ongoing resilience, competitiveness and diversification of our portfolio, and sound fundamentals in the markets in which we operate.

At the same time, we have been able to accelerate investment behind our successful growth strategy.

“The benefit of our strategic investments to grow and diversify Aristocrat was particularly evident in the strong 7% revenue and EBITDA growth in constant currency at group level over the year.

“This was underpinned by an exceptional gaming performance which more than offset an extended industry-wide moderation in mobile game demand, again highlighting diversification and scale as fundamental strengths of our business.”

Aristocrat bets on online growth

Going forward, the business said it would continue to invest in “attractive adjacencies and verticals” as it aims to build further resilience in its operating portfolio.

This will include through its “build-and-buy” strategy in online RMG. Since announcing the approach in Q1 2022, the company has sought to invest in its own platform, while at the same time making acquisitions to speed up the process.

The most significant of these deals in 2023 was the business’ $1.2bn purchase of iLottery supplier NeoGames, a deal which is expected to close in H1 2024.

This followed on from an attempted acquisition of Playtech in 2021, which shareholders ultimately rejected.

Previously, the company also purchased B2B supplier Roxor Gaming in a deal that closed in February 2023.

In its FY2023 report, Aristocrat highlighted that its RMG division Anaxi had achieved several milestones since its launch in October 2022.

Those included signing content agreements with businesses representing 80% of the US iGaming market, it said.

Company opts to raise dividend

Following the results, Aristocrat announced it would be increasing its dividend to shareholders to A$0.34 per share, up from A$0.26 in the same period the previous year.

As part of the business’ capital management strategy, it has returned A$811m to shareholders over the past 12 months through dividends and buy backs.

Going forward, Aristocrat predicted continuing profit growth through to September 2024.

The company said this reflected its strong market share, as well as profit and revenue growth in its Aristocrat Gaming division.

However, the business warned it could see a possible moderation in consumer spending in certain key markets.

Aristocrat added it intends to invest in Anaxi as it scales its content portfolio and accesses more markets in both North America and Europe.

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.

Aristocrat has reported double-digit revenue and EBITDA growth for 2022 amid a warning that next year’s results might be impacted by lower profit from Pixel United and further investment in real-money gaming brand Anaxi.

Aristocrat’s share price fell by more than 5% on Wednesday (16 November).

For the financial year ended 30 September 2022, Aristocrat posted an EBITDA increase of nearly 20% to A$1.85bn and a 13.9% rise in net profit after tax to A$1.05bn.

The results were underpinned by a 17.7% increase in group revenue to A$5.6bn, with the company pointing to an “exceptional performance” in its North American gaming operations and in outright global sales in spite of “supply chain issues and mixed operating conditions across its key markets”.

Aristocrat Gaming contributed 54%, or nearly A$3bn, to the total revenue, while social gaming platform Pixel United generated 46%.

However, Pixel United, which reports in US dollars, saw revenue decline marginally by 0.6% to $1.8bn (A$2.67bn) in 2022 compared to 2021.

Aristocrat Gaming’s Americas revenue accounted for $1.7bn (A$2.52bn), a nearly 25% increase on 2021. Revenue in Australia and New Zealand increased by 15.5% to A$461.7m.

In 2022, Aristocrat moved to cease operating its mobile games in Russia after it invaded Ukraine. This market had historically contributed about 3% of Pixel United bookings.

As a result, normalised profit after tax increased 27% year-on-year to A$1.1bn.

Aristocrat CEO Trevor Croker: “While we are focusing first on the North American iGaming vertical, we ultimately aim to be the leading gaming platform within the global online RMG industry. We will continue to invest behind this key adjacent growth opportunity as we build Anaxi over the medium-term.”

Aristocrat CEO and managing director Trevor Croker said: “Aristocrat’s performance underlines the ongoing implementation of our growth strategy. Throughout the year, we continued to invest in competitive product portfolios to drive further share growth across key segments, greater operational diversification and deeper business capability.”

“Strong performance in Aristocrat Gaming more than offset headwinds in the Pixel United business, again highlighting the increasing diversification and resilience of our Group,” he added.

Croker further highlighted that the company made further progress in its ‘build and buy’ strategy to scale in online real money gaming (RMG), with the launch of its new business, Anaxi.

“While we are focusing first on the North American iGaming vertical, we ultimately aim to be the leading gaming platform within the global online RMG industry. We will continue to invest behind this key adjacent growth opportunity as we build Anaxi over the medium-term,” Croker said.

Looking ahead, the company said it expects the Aristocrat Gaming business to continue performing strongly. Aristocrat also said it planned further investments in Anaxi.

However, the company warned the Pixel United business is expected to deliver lower growth in bookings and profit in 2023 compared to previous years, which could have affected investor confidence and sent the stock down 5%.

Social gaming specialist Aristocrat has revealed a new brand for its real money gaming (RMG) segment, Anaxi.

The firm announced the creation of a dedicated online RMG business in February this year, in the wake of the collapse of its attempted acquisition of industry giant Playtech.

After that deal fell through, Aristocrat announced it was exploring alternative ways of entering the RMG space, based on a ‘build and buy’ approach to scaling in the sector.

It said the strategy would see it invest in building out its own online RMG platform infrastructure, while undertaking select M&A, partnerships and talent acquisitions to accelerate progress where appropriate.

Aristocrat said the creation of its new Anaxi brand would support the execution of that strategy, including by helping the business continue to attract and retain talent and foster team culture within the company.

“We’re excited to announce Anaxi as the name of our emerging online Real Money Gaming business at Aristocrat,” said Anaxi CEO Mitchell Bowen.

Anaxi CEO Mitchell Bowen: “We look forward to working with our partners as Anaxi reimagines the world’s greatest gaming content online and begins our journey towards becoming the most trusted name in online RMG globally.”

“We look forward to working with our partners as Anaxi reimagines the world’s greatest gaming content online and begins our journey towards becoming the most trusted name in online RMG globally.

“We are thrilled to be showcasing our new Anaxi brand at G2E Las Vegas and invite our customers, partners and players to ‘Experience Anaxi’ with us on the Aristocrat Gaming stand,” Bowen concluded.

Anaxi’s first regulated iGaming products will launch with two “major” customers in the US by the end of the calendar year 2022, the firm said.

The rebrand comes shortly after Aristocrat’s acquisition of independent, UK-based B2B gaming supplier Roxor Gaming in September.

Roxor was founded in 2019 by former Gamesys chairman and co-founder Noel Hayden, and was previously the in-house studio and product team of the Gamesys Group.

Since separating from Gamesys in 2019, the business has invested heavily in its content portfolio, responsible gambling and platform technology, it said, in addition to its retention-focused gaming ecosystem.

The business is live with operators in New Jersey and is primed for expansion in the UK and North America, it added.