PlayAGS (NYSE: AGS), a recent addition to our Battle Road IPO Review Consumer sector coverage, is based in Las Vegas, Nevada. Founded in 2003, PlayAGS sells electronic gaming machines, including slot machines, video bingo machines, as well as back office systems to casinos and various gaming entities. Consensus estimates call for revenue of $259 million and a loss of $0.21 in 2018.

PlayAGS made its debut on the NYSE on January 25, 2018 in a 10.3 million share IPO priced at $16 per share, with all proceeds going to PlayAGS, raising over $150 million in net proceeds. The IPO was led by large underwriting team, consisting of Credit Suisse, Deutsche Bank, Jeffries, Macquarie Capital, BofA Merrill Lynch, Citigroup, Nomura, Stifel, SunTrust Robinson Humphrey, and others.

Historically focused on the Native American gaming market, in which it estimates that it holds a 20 percent market share of all Class II electronic gaming machines (EGMs), PlayAGS has expanded into new segments, after having been acquired with funds provided by Apollo Global in 2013. While revenue from EGMs accounts for 94 percent of revenue, the company has expanded into other North American gaming markets, and introduced interactive and table game products that account for the remainder. The company estimates that it has over 22,000 recurring revenue EGMs, and over 38,000 daily active users for its mobile games.

We note that two geographic markets accounted for roughly 36 percent of total revenue in the 12 months ended September 30, 2017. Oklahoma comprised 24 percent of EGM revenue, with the Chickasaw Nation, a Native American gaming operator in Oklahoma, accounting for 11 percent of revenue, while the Poarch Band of Creek Indians, a Native American gaming operator in Alabama, accounted for 12 percent.

Through the first nine months of 2017, PlayAGS recorded revenue of $154 million, with operating income of $68 million, excluding depreciation and amortization, up 24 percent from $124 million during the same period in 2016, when it recorded $45 million in operating income, excluding depreciation and amortization. Having raised over $150 million in its IPO, PlayAGS has dramatically improved its balance sheet, which featured just $10 million in cash and $580 million in debt prior to its IPO.