The Ainsworth Game Technology Limited (ASX: AGI) share price backtracked today after the company provided a business update.
At market close, the gaming technology company's shares finished the day at 88 cents, down 2.78%.
What was announced?
Investors sold off their positions in Ainsworth today despite the company's strong forecasted preliminary results and new partnership agreement.
According to its release, Ainsworth advised it expects to report a profit before tax of $1 million for H2 FY21. Continued improvements in market conditions following the impact of COVID-19 led the group to achieve better revenue and profitability.
Group underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for FY21 is projected to come in at $19 million. Most of the earnings were attributed to the robust second-half performance which recorded $13.2 million. This represents an increase of 128% on the $5.8 million achieved in the first-half.
Ainsworth noted, however, that both forecasted metrics excludes any currency movements and one-off items such as the $3.3 million sale of land at its Nevada facility.
In addition to the update, the company announced an exclusive agreement with internet-based interactive gaming services, GAN Limited (NASDAQ: GAN).
The 5-year partnership will see Ainsworth provide GAN with exclusive use of online real money games within the United States. Rights of up to 79 unique slot titles including QuickSpin brand of wheel games are included in the deal.
Furthermore, Ainsworth will supply a variety of new game content on a regular basis to keep customers enthused.
Online operations will run in New Jersey and are being planned for Michigan and Pennsylvania.
The contract will generate a minimum guaranteed amount of US$30 million and will come into effect 1 July 2021. The funds will be received with US$10 million in cash in H1 FY22, and the remaining US$20 million paid over the life of the contract.
About the Ainsworth share price
Year-to-date, Ainsworth shares have gained traction to almost double in value, up over 80%, reflecting positive investor sentiment. The company's share price reached a 52-week high of $1.175 before profit taking swooped in.
On valuation grounds, Ainsworth commands a market capitalisation of around $294 million, with approximately 336 million shares outstanding.
