Revenue surges in Q2 for Accel Entertainment; company plays down future growth ambitions

Accel Entertainment Shows Resilience Amidst Decreased Net Income, Outlines Growth Strategy

Accel Entertainment, a leading player in the gaming and racino industry, has reported its financial results for the second quarter of 2025. Despite a 50.2% decrease in net income compared to the same period in 2024, primarily due to a loss on the change in the fair value of contingent earnout shares, the company has shown resilience and optimism for the future.

The company's revenue, however, saw an 8.6% year-over-year increase, reaching a record quarterly revenue of $335.9 million. This growth is a testament to Accel's strong cash flow generation, as the company operated 27,388 gaming terminals at the end of the quarter, marking a 3.4% year-over-year increase.

Accel's growth strategy beyond its current operations involves market expansion through regulatory-tailored opportunities, strategic acquisitions, racino development, and technology upgrades. The company is actively expanding in new markets like Louisiana and Georgia, where regulatory shifts have opened additional revenue opportunities. The recent acquisition of Toucan Gaming in Louisiana adds $10 million in revenue and strengthens its footprint in the Southeast.

The second phase expansion of Fairmount Park Casino & Racing is another significant part of Accel's growth strategy. This investment signifies the company's commitment to developing racino operations, with potential increases in scale and services. U.S. Gaming and Interim Chief Financial Officer Mark Phelan expressed optimism that Fairmount Park will begin to produce dividends with time, and expects it to be a significant contributor to the company's earnings in 2026.

Capital expenditures in Q2 2025 totaled about $26 million, demonstrating Accel's commitment to both organic expansion and potential M&A. Ongoing improvements in gaming terminal technology, including Ticket-In Ticket-Out (TITO) implementation, are part of their operational enhancement to improve user experience and efficiency, supporting growth in core and emerging markets.

Despite the positive indicators, there remain strategic challenges and risks related to market execution and regulatory environment, requiring careful management as Accel expands. The company's CEO, Andy Rubenstein, stated there are no plans to expand the company beyond its current acquisitions.

Accel Entertainment is a major distributor of video gaming terminals, redemption machines, and amusement devices. The company's casino, racing, sportsbook, and food and beverage operations at Fairmount Park have shown positive indicators, aligning with internal expectations. Phelan commented that the company's expectations for Fairmount Park include contributions from all these operations.

In conclusion, Accel Entertainment's growth strategy is focused on continuing geographic and product expansion, leveraging regulatory changes and acquisitions to broaden their market presence beyond current commercial casinos, horse racing, and Video Gaming Terminals (VGTs). The company is not looking to "lever up" the company in any extreme way and has plenty of availability, planning to refresh its credit facility. With its strong cash flow, strategic acquisitions, and commitment to technological advancements, Accel Entertainment is poised for continued growth and success in the gaming industry.