Behind The Numbers – PlayAGS (AGS) EGM and Table Products Strength
PlayAGS is a leading designer and supplier of electronic gaming machines (EGM’s) and other products and services for the gaming industry, with a primary focus on supplying EGM’s into the tribal Class 2 gaming market. Current Jaguar clients are familiar with this name as we first presented the bull case in the March 18th Weekend Research with the stock trading just below $22. Following another positive quarter, shares are now trading above the $30 level.
Following the company’s Q2 earnings report (breakdown shown below), Stifel has raised their price target to $34 (from $26) while Macquarie has raised their target to $32 (from $28):
-EPS of -$0.15 vs -$0.01 estimate – Miss
-Revenue of $72.8M vs $64.7M estimate – Beat
-Total Revenue increased 45.4% Y/Y
-Recurring Revenue increased 26% Y/Y
-EGM Revenue increased 46.2% Y/Y
-EGM Units Sold increased 84% Y/Y
-Table Products Revenue increased 152% Y/Y
Behind The Numbers – Within the company’s EGM segment, Q2 saw a total of 1,058 cabinets sold, the most in the company’s history. Approximately 60% of the sold units were the Orion Portrait Cabinet, and 12% came from Orion Slant. Like the last couple of quarters, sales were driven by placements across the entire country, with nearly 60 different operators across 19 states, including 2 Canadian jurisdictions. Management would add that corporate orders comprised approximately 50% of EGM sales revenue in the quarter, highlighting their success making inroads with this important customer subset.
As mentioned above, ~60% of sold units centered on their Orion Portrait Cabinet. Management stated that they have seen many customers who either took initial orders late last year or early this year, re-ordered the Orion Portrait in a much more meaningful way the second time around based on its initial performance.
Finally, within their Table Products segment, CEO David Lopez would highlight their trial unit of the Dex S shuffler that has been live in California for almost 2 weeks now. According to Mr. Lopez, “Initial performance has been solid, and the shuffler has held up well in a busy casino environment. We’ll continue to monitor performance closely, and prepare to launch at more test locations with a goal to commercialize by the end of the year.”