PlayAGS Adjusts to COVID-19 Impact, Aims for Growth in New Markets
Mar 9th 2023, 9:21 pm
Performance Analysis: PlayAGS, Inc. is a leading supplier of EGMs and other products and services for the gaming industry. The company operates its business in three different segments, EGMs, Table Products, and Interactive. In the year 2022, approximately 72% of the company's total revenue was generated through recurring contracted lease agreements. The COVID-19 pandemic and the related closure of almost all the company's casino customer locations in fiscal year 2020 had a significant impact on the key factors that impact the company's revenues. The amount of money spent by consumers on the company's domestic revenue share installed base, the amount of daily fees of participation EGMs, and the expansion of existing and new casinos witnessed a slowdown during the closures. The company's revenue from leasing, licensing, and selling products were adversely affected due to such closures. The company had to reduce expenses and capital purchases to adapt to the severity of the pandemic. The company implemented short-term furloughs, company-wide salary reductions, and reduced its workforce by over 10%. As of December 31, 2022, all of the company's customers have reopened; however, some remain under various restrictions. Forward-looking Analysis: Looking ahead, the relative competitiveness and popularity of the company's EGMs compared to competitive products offered in the same facilities and general macro-economic factors including levels of and changes to consumer disposable income and personal consumption spending will be the key drivers of revenue. The COVID-19 pandemic may continue to have an impact on the company's financial performance, with the possibility of additional shutdowns or capacity restrictions in the future. The company aims to expand its product line-up and grow in markets where it currently has limited or no presence. The company acquired certain intangible assets related to the purchase of table game-related intellectual property and an installed base of table games under the Lucky Lucky trade name from Aces Up Gaming in January 2022. The company's CEO, David Lopez, highlighted that the acquisition is a strategic step towards increasing operational excellence and expanding the company's footprint in the Table Products segment. The company aims to focus on expanding its Interactive segment, which provides growth opportunities, including deploying one or more of our platforms in Canada in 2023, subject to regulatory approval. The company will also continue to focus on cost-saving initiatives and investments in technology and innovation, including the development of new products to meet changing customer demands and preferences. In conclusion, PlayAGS, Inc. has been impacted by the COVID-19 pandemic and related closures in the gaming industry. However, with the reopening of all their customers, the company aims to focus on expanding its product line-up and growing in new markets. While the pandemic may continue to have an impact on the company's financial performance, the company's strategic initiatives and investments in technology will help drive growth in the future. Furthermore, the competitive landscape in the gaming industry and general macro-economic factors, including consumer spending, will play a critical role in the company's future financial performance.