Aristocrat Leisure (ASX:ALL) share price jumps 9% on profit update

The Aristocrat Leisure Limited (ASX:ALL) share price is charging higher on Monday following the release of a trading update…

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The Aristocrat Leisure Limited (ASX: ALL) share price is charging higher on Monday morning.

At the time of writing, the gaming technology company’s shares are up 9% to $40.86.

Why is the Aristocrat Leisure share price is charging higher?

Investors have been buying Aristocrat Leisure shares following the release of a trading update this morning.

As you might have guessed from the Aristocrat Leisure share price reaction, the company has been performing very positively.

According to the release, the Aristocrat Gaming business has experienced exceptional product performance and customer engagement. Together with stronger than expected consumer sentiment and economic conditions in the United States and ANZ region, its profits are growing quicker than expected.

In addition to this, the Aristocrat Digital business has delivered above industry-average growth in bookings. This is translating into revenue and profit growth comparable to the prior corresponding period.

Management notes that the Digital business is benefiting from a diverse portfolio of world-class titles, as well as strong investment in User Acquisition (UA), Live Ops, new game content and features. Overall demand continues to be elevated, compared to pre-COVID levels.

What does this mean for its first half result?

In light of the above, for the six months ended 31 March, Aristocrat Leisure expects to report a normalised net profit after tax and before amortisation of acquired intangibles (NPATA) of $412 million.

This represents growth of 12% compared to the six months ended 31 March 2020.

Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be $750 million, representing growth of 6%.

Management commentary

Aristocrat’s Chief Executive Officer and Managing Director, Trevor Croker, commented: “These results reflect the fact that we have the right strategy, and made the right choices to sustain our investment in outstanding people and product, customers, talent and culture throughout the COVID-impacted period.”

“As a result, we have continued to take share and maintained our leadership of key Gaming markets and segments, while also growing our share in Digital games, where we are now a top 5 game publisher in tier 1 Western markets.”

However, the chief executive has warned that economic conditions remain uncertain across its key markets.

He said: “We expect economic conditions across key markets over the full year to remain uncertain, as a result of ongoing COVID-driven volatility. We are closely monitoring key factors including consumer sentiment, gaming venue patronage and currency headwinds. We will continue to rigorously execute our strategy over the second half of fiscal 2021, with increased investment in D&D, UA to support new game launches and existing games and strategic capabilities that will sustain our longer term growth.”

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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