Aristocrat Leisure Achieves 24% Earnings Lift On 13% Revenue Growth

About Aristocrat

Aristocrat Leisure Limited (ASX: ALL, Aristocrat or the Company) is a global gaming content, technology business and mobile games publisher and gaming machine manufacturer that also produces casino apps that can be downloaded directly to mobile phones. The Company produced its first gambling machine in 1953 and listed on the ASX in 1996. The immediate family of business founder, Len Ainsworth, retain a significant equity stake in the Company.

Full year earnings up 24 percent on 13 percent revenue growth

Aristocrat reported an impressive 24 percent lift in Net Profit After Tax (NPAT) for the year to September 2023 to $1.24 billion, compared to the previous financial year. The result was on the back of 13 percent higher operating revenue to $6.3 billion, buoyed by a credible performance from North American Gaming Operations. Seventy-one percent of ALL’s revenue is recurrent revenue, reinforcing the earnings quality of the Company. The EBITDA margin was broadly stable across the Group at 33.4 percent of revenue, reflecting easing supply chain challenges.

The result equates to a 26 percent lift in Earnings Per Share (EPS) to $1.90. The slightly higher EPS growth rate compared to NPAT growth of 24 percent is attributable to the positive impact of the $443 million on-market share buy-back program over the year to 30 September 2023. The buy-back program continues into the 2024 financial year. Total full-year dividend per share was 64 cents fully franked, an increase of 23 percent on the previous year. The final dividend of 34 cents, is payable on 19 December 2023.

Operating cash flow was up by 44 percent to $1.8 billion, with a high Cash Conversion Ratio (CCR) of 145 percent. CCR measures the percentage of profit that is backed by cash, and supports consistent dividends and in this case, ongoing share buy-backs. The Company’s balance sheet at 30 September had a net cash position of $809 million, an increase of 43 percent on the closing cash position of the September 2022 financial year.

Positive Outlook

Aristocrat is not in the habit of releasing specific earnings guidance numbers, however, the Company anticipates continued earnings growth in FY2024, despite the potential for a moderation in consumer spending in key markets. The Company’s US$1.2 billion acquisition of Nasdaq-listed neoGames, which is being funded from existing cash reserves, is expected to close in the first half of calendar 2024 and be EPS accretive from 2025. This strategic acquisition will position ALL to tap further into the fast-growing US online gaming market.

The Company’s conservative balance sheet and demonstrated shareholder return bias, as reflected in its progressive capital allocation program comprising consistent fully-franked dividends and ongoing share buy-backs funded from free cash flow, should support higher shareholder returns over the medium term.