Accel Entertainment 2025 Q1 Earnings Beats Expectations as Net Income Surges 97%

Accel Entertainment Inc (ACEL, Financial) released its fiscal 2025 Q1 earnings on May 5th, 2025, showcasing record revenues and substantial growth in net income. The company exceeded analyst expectations with revenues of $323.9 million, surpassing the estimated $318.75 million. Accel maintained its guidance, forecasting full-year capital expenditures between $75 million and $80 million. This strategic allocation is aimed at enhancing operational efficiency and driving long-term revenue growth within its expanding markets.

Revenue
Accel Entertainment reported a total revenue increase of 7.3% to $323.91 million in 2025 Q1, compared to $301.82 million in the previous year. Net gaming revenues contributed $301.95 million to the total, while the amusement segment added $5.91 million. Manufacturing revenues amounted to $3.86 million, and ATM fees alongside other revenues totaled $12.20 million, culminating in a robust revenue performance for the quarter.

Earnings/Net Income
Accel Entertainment witnessed a remarkable 88.9% increase in earnings per share, rising to $0.17 in 2025 Q1 from $0.09 in the prior year. The company's net income surged by 97.0% to $14.61 million, up from $7.42 million, demonstrating a strong earnings performance that reflects continued profitability and stable business operations. The EPS performance was notably positive, highlighting robust financial growth.

Price Action
The stock price of Accel Entertainment edged up 1.99% during the latest trading day, marking a 3.24% decline over the past trading week, yet showing a 5.19% increase month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Accel Entertainment shares post-earnings release and holding for 30 days has underperformed significantly over the past five years. The strategy yielded a return of -15.02%, starkly trailing the benchmark's 85.86% return. This resulted in an excess return of -100.88% and a compound annual growth rate (CAGR) of -3.24%, indicating considerable losses. Furthermore, the strategy experienced a high maximum drawdown of -66.44% and a Sharpe ratio of -0.10, pointing to substantial risk and negative returns. The performance underscores the challenges in leveraging post-earnings momentum for Accel Entertainment shares, highlighting the importance of strategic timing and market conditions in investment decisions.

CEO Commentary
Andy Rubenstein, CEO, highlighted a record-setting quarter with total revenue of $344 million and adjusted EBITDA of $50 million, both reflecting 7% year-over-year growth. He emphasized stable revenue growth in Illinois and Montana, with Nebraska and Georgia showing strong double-digit growth. Rubenstein noted the completed integration of operations in Louisiana, expected to drive future revenue growth, and expressed confidence in Accel's decentralized business model, enhancing flexibility. He conveyed optimism about ongoing customer acquisition efforts and operational efficiencies contributing to free cash flow growth.

Guidance
Accel Entertainment reiterated its full-year capital expenditures forecast of $75 million to $80 million. Allocations include $39 million to $41 million in existing markets, $5 million to $7 million in Louisiana, and $31 million to $32 million for Fairmount. The company anticipates that, after initial investments in Fairmount and Louisiana, normalized annual CapEx will return to $40 million to $45 million, positively impacting free cash flow and returns on capital. Rubenstein expressed confidence in continued growth momentum across businesses.

Additional News
Accel Entertainment has demonstrated strategic confidence in its growth trajectory by repurchasing 1 million shares of its Class A-1 common stock for approximately $10.2 million. This move reflects the company’s commitment to enhancing shareholder value and underscores its belief in the long-term potential of its business model. Furthermore, Accel has embarked on strategic expansions, notably commencing casino and racing operations at Fairmount Park Casino & Racing in April 2025, which promises favorable customer engagement. These initiatives position the company to capitalize on emerging opportunities and strengthen its presence in the gaming industry.