Ainsworth’s (ASX:AGI) profit collapses to A$1m as North America cracks under competitive pressure

Raptor cannot plug Ainsworth’s shrinking US hole fast enough

Ainsworth Game Technology (ASX:AGI) has just delivered a trading update that will sting any investor who held on through the FY25 reset. The slot machine maker expects profit before tax of just A$1.0 million for the six months to 30 June 2026, against A$13.9 million in the prior corresponding period. That is a roughly 93% drop on what was already a modest base.

Revenue is expected to land near A$116 million, down 24% on the A$152.1 million reported in the PCP and meaningfully softer than the A$138.7 million printed in the second half of CY25. The slide is squarely a North American story. Outright cabinet sales fell and the installed base under gaming operations shrank.

Underlying EBITDA is expected to halve to roughly A$13 million from A$26.9 million. Net debt edges up to about A$14 million from A$11.8 million at December. The Raptor cabinet is doing real work in Australia, but it is nowhere near big enough to offset what is happening in the United States.

North America is the entire problem, and management knows it

Ainsworth is calling out two things in North America. The first is competitive pressure, which is code for stronger game performance from Light & Wonder, Aristocrat and IGT taking floor share. The second is softer US consumer spending hitting daily fee revenue per machine.

CEO Ryan Comstock points to organisational changes late in FY25 and says new sales and product leadership has now been appointed in North America. That is a fair admission that the existing structure was not working. It also means the turnaround clock has only just started ticking.

Our concern is that this is the third update in roughly two years where management has flagged North American underperformance and pointed to product refresh as the fix. Each refresh cycle in this industry runs 12 to 18 months. Investors are being asked to underwrite another one.

Australia and Raptor are quietly carrying the business

The APAC segment, which is mostly Australia, is the only part of this result that reads well. Revenue is expected to grow about 4% on the PCP and segment margin lifts to 25% from 23%. Raptor cabinet installs plus the new cabinet variations released earlier this year are doing the heavy lifting.

APAC now contributes around 31% of total revenue, up from 23% a year ago. That mix shift is real, but it is partly flattering because the US denominator is shrinking. A growing slice of a falling pie still leaves Ainsworth structurally smaller than it was 12 months ago.

Latin America and Europe held up roughly in line, with revenue down 13% but margins better. That is acceptable in a tough year but is not a growth engine.

The R&D spend is the real swing factor from here

R&D is now running at about 22% of revenue, up from 18.5% in the prior half. In absolute terms the spend is up 7% on PCP. That ratio is climbing partly because revenue is falling, which mechanically inflates the percentage.

We think this is the right call strategically. Cabinet performance in North America is decided by game maths and presentation, and you cannot cut your way back into a floor. But it does mean operating leverage works against AGI for as long as the top line keeps sliding.

Cash from operations of around A$2 million is thin. The undrawn debt facility provides cover, but every quarter of subdued US sales puts more pressure on the balance sheet runway.

The Investors Takeaway for Ainsworth Game Technology

Ainsworth has done this dance before. Strong Australian product, weak US execution, promises of a refreshed pipeline. The question for investors is whether the new North American leadership team can actually convert R&D into floor share within a reasonable window, or whether Light & Wonder and Aristocrat have simply moved too far ahead.

We would want to see two things in the H2CY26 update. First, evidence that the North American installed base has stopped shrinking, even at the cost of flat pricing. Second, that Raptor’s APAC momentum is sustaining into the cabinet variations launched earlier this year rather than fading. Without both, the A$1 million pre-tax profit print is not a trough, it is a trend.

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