Aristocrat's Progress in Slot Expansion and Mergers & Acquisitions Forecast
Aristocrat Leisure Outlook Brightens on Improved April Performance
Optimism has been reignited for gaming manufacturer Aristocrat Leisure following a better-than-expected performance in April, as suggested by Jefferies Equity Research analyst Kai Erman. The turnaround in gaming revenue in the U.S. last month has encouraged Erman to anticipate that Aristocrat's positive trajectory is set to continue.
Slot machine proceeds, which increased by 3.5% in April compared to flat results in March and a dip in February, have driven the overall gambling revenue up 1% year-on-year so far in 2025.
Aristocrat introduced its newest slot machine cabinet, featuring The Baron Portrait, at the start of the month. Analyst Erman, who anticipates the demand for slot machines to remain robust despite gambling revenue fluctuations in various areas, attributes Aristocrat's solid market position to its expanding catalogue of high-end machines and a premium mix across its installed base.
During the early part of 2025, nearly all of the approximately 2,500 new units shipped by Aristocrat were premium models. The company is also transitioning away from the deep discounts on Class II machines, a move expected to further enhance daily fee performance. Aristocrat currently holds a dominant 40% share in the gaming operations segment, which may serve as a buffer against wider economic pressure and help boost daily fee income as U.S. casino operators show signs of recovery.
Looking ahead, Erman anticipates Aristocrat to maintain an aggressive approach to mergers and acquisitions (M&A). The analyst believes the company's potential for incremental earnings growth is promising, given its track record of both bolt-on and transformative M&A deals.
Erman remains bullish about Aristocrat's online and interactive division. He believes the company is well on track to reach its $1 billion revenue target in this segment, driven by increasing market share and system expansion, particularly in the U.S.
According to the Enrichment Data, Aristocrat's performance in the first half of fiscal year 2025 was robust, with group revenue growing between 8.7% to 9% year-on-year, reaching approximately AU$3.03 to AU$3.3 billion (US$1.96 to $2.1 billion) depending on the source. The company's land-based gaming operations, especially in North America, demonstrated considerable strength, leading to a 4% profit increase in the region. EBITDA and normalized net profit before amortization also showed significant improvements. Additionally, Aristocrat's Product Madness social casino segment outperformed market benchmarks, contributing to the company's growth alongside gains in its Interactive division. About AU$533 million was returned to shareholders through dividends and share buybacks during the period.
In summary, Aristocrat Leisure's positive outlook for 2025 is supported by robust growth in slot machine units and gambling revenue, expanding market share in North American gaming, strong social casino performance, and disciplined capital management. The company's solid performance suggests a favorable trend in its core business segments, paving the way for continued growth in the remainder of 2025.
Aristocrat's robust growth in slot machine units and revenue indicates a promising future for casino-games, especially given the positive outlook on the casino-and-gambling industry. Analyst Erman anticipates this growth to be strengthened by Aristocrat's aggressive approach to mergers and acquisitions in the casino-games sector.
