Why Is Ainsworth’s Profit Slipping Despite Revenue Growth in FY25?
Ainsworth Game Technology forecasts a slight decline in full-year profit driven by weaker North American sales in the second half, despite revenue growth in Asia-Pacific and Latin America.
- FY25 underlying profit before tax expected at $21.5 million, down from $23.2 million in FY24
- Second half profit forecast drops to $7.6 million from $13.9 million in first half
- Revenue up 9% year-on-year, but H2FY25 revenue down 11% from H1FY25
- North American revenue declines 20% in H2FY25 due to sales timing and lower participation
- Increased R&D spend to 17.5% of revenue and higher inventory funded by secured bank loan
A Mixed Financial Picture for FY25
Ainsworth Game Technology Limited (ASX – AGI) has released a trading update for the 12 months ending 31 December 2025, revealing a modest decline in underlying profit before tax (PBT) to approximately $21.5 million, down from $23.2 million in the prior year. While the company’s revenue is forecast to rise by around 9% compared to FY24, the second half of the year is expected to see a notable slowdown in profitability and revenue momentum.
North America Faces Headwinds
The most significant challenge comes from Ainsworth’s key North American market, where revenue is projected to fall by about 20% in the second half of FY25 compared to the first half. This decline is largely attributed to the timing of Video Lottery Terminal (VLT) sales and distributor purchases that boosted the first half but were not repeated later in the year. Additionally, participation revenue has weakened due to a reduction in installed units and lower average daily yields, compounding the revenue drop.
Steady Growth in APAC and LATAM
In contrast, the Asia-Pacific region has maintained its revenue levels in the second half, buoyed by the successful launch of the A-Star Raptor in early 2025. Latin America also showed modest revenue growth despite ongoing challenges, particularly in Mexico, where increased gaming taxes and anti-money laundering investigations have introduced uncertainty for venue operators. These regional performances have helped offset some of the North American softness.
Operational and Financial Implications
The slowdown in unit sales during the latter half of the year has led to increased inventory levels. To manage working capital needs, Ainsworth plans to utilise its secured bank loan facility with Western Alliance Bancorporation. Meanwhile, the company is ramping up its investment in research and development, which is expected to represent 17.5% of total revenue for FY25, up from 16% in the first half. Underlying EBITDA is forecast to remain stable at around $48 million, indicating controlled operational costs despite the revenue fluctuations.
Looking Ahead
While Ainsworth’s full-year results show resilience amid regional disparities, the profit contraction in the second half and the evolving regulatory landscape in Latin America pose challenges. Investors will be watching closely how the company navigates these headwinds and whether its increased R&D spend will translate into new growth drivers in the coming years.
Bottom Line?
Ainsworth’s FY25 results highlight regional contrasts and set the stage for a pivotal 2026 amid regulatory and market uncertainties.
Questions in the middle?
- How will Ainsworth mitigate the impact of declining North American participation revenue going forward?
- What are the potential effects of increased gaming taxes and regulatory scrutiny in Latin America on future earnings?
- Can the company’s elevated R&D investment deliver new products that reverse the profit decline?
