Ainsworth Game Technology - Business Update and Cybersecurity Incident - 27 November 2024
AGI (AGI) Share Update November 2024 Tuesday 26th
Ainsworth Game Technology Projects Strong Revenue Growth Amid Margin Challenges
Ainsworth Game Technology Limited (ASX: AGI) has released a trading update for the second half of the financial year ending 31 December 2024, highlighting expected revenue growth and addressing a recent cybersecurity incident.
Instant Summary:
- Expected profit before tax of $8-10 million for H2CY24.
- Revenue growth estimated at 12% compared to H1CY24.
- Gross margins expected to decrease to approximately 62% from 67% in H1CY24.
- Cybersecurity incident under investigation, not expected to materially impact results.
Trading Update
Ainsworth Game Technology Limited (AGT) has announced its preliminary management forecasts for the second half of the financial year ending 31 December 2024. The company expects to report a profit before tax, excluding currency and one-off items, in the range of $8 million to $10 million. This forecast reflects the positive momentum achieved across the business, with an estimated revenue growth of 12% compared to the $121.4 million reported in the first half of the year.
Despite the revenue growth, AGT has noted a decline in gross margins, which are expected to be approximately 62% for the full year, down from 67% in H1CY24. This decrease is attributed to factors such as the product mix sold in LATAM, competitive market conditions, and under-recovery of production variances.
Geographical and Segment Performance
All geographical regions reported solid growth, except for the digital segment. The digital segment experienced an initial decline due to reduced contributions from Game Account Network Limited (GAN) following the termination of exclusivity arrangements in H1CY24.
AGT's CEO, Mr. Harald Neumann, expressed optimism about the company's growth prospects, citing upcoming game releases and hardware initiatives as key drivers for future performance.
Cybersecurity Incident
AGT also reported a cybersecurity incident currently under investigation. Although the incident caused some disruptions in internal systems and operations, the company does not expect it to have a material adverse impact on the forecasted results for H2CY24.
The anticipated revenue growth is a positive sign for AGT, indicating strong market demand for its products. However, the decline in gross margins could weigh on profitability, potentially affecting investor sentiment. The cybersecurity incident, while not expected to impact financial results significantly, highlights the importance of robust security measures in protecting business operations.
Investor Reaction:
Analysts are likely to view the revenue growth favorably, but concerns may arise regarding the declining margins and their impact on overall profitability. The cybersecurity incident may prompt questions about AGT's risk management strategies.
Conclusion:
Investors should monitor AGT's upcoming game releases and hardware initiatives, as these could drive future growth. Additionally, keeping an eye on the company's response to the cybersecurity incident will be crucial in assessing its long-term resilience.