ACEL Q3 Deep Dive: Core Market Stability and Developing Market Expansion Drive Growth

Slot machine and terminal operator Accel Entertainment (NYSE:ACEL) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 9.1% year on year to $329.7 million. Its GAAP profit of $0.16 per share was 15.6% above analysts’ consensus estimates.

Is now the time to buy ACEL? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Accel Entertainment delivered steady third quarter results, as revenue and earnings per share both exceeded Wall Street expectations. Management attributed the performance to ongoing strength in its core markets of Illinois and Montana, alongside improved efficiency in capital deployment and operational focus on higher-yielding locations. CEO Andrew Rubenstein highlighted that "growth this quarter was supported by higher gaming terminal counts, stable machine performance and improved efficiency in capital deployment," underscoring the company's disciplined approach to market expansion and asset optimization.

Looking ahead, Accel Entertainment's strategy is centered on scaling profitability in developing and new markets while maintaining disciplined growth investments. Management emphasized the importance of continued investment in software, technology, and data analytics to support machine refreshes and operational enhancements. CFO Brett Summerer noted, "Accel's unique local model, consistent execution, strong financial foundation and a clear focus on both near- and long-term growth create an exceptional platform for continued success." The company remains focused on driving returns from both established and emerging markets, with a particular eye on further route optimization and selective M&A.

Key Insights from Management’s Remarks

Management credited third quarter momentum to a combination of core market resilience, targeted investments in developing regions, and operational initiatives that enhanced efficiency and cash flow.

• Illinois and Montana stability: The company's largest markets continued to generate steady revenue, benefiting from ongoing location optimization and a focus on higher-performing sites. In Illinois, growth was driven by same-store performance and new machine placements, while Montana saw profitability gains tied to proprietary gaming content and systems.
• Developing market momentum: Nebraska and Georgia delivered strong double-digit revenue growth, with management citing successful location expansion and market share gains as key drivers. These markets now represent a growing portion of Accel’s portfolio and are expected to remain sources of profitable growth.
• Ticket-in, ticket-out (TITO) rollout: The initial rollout of TITO technology, which allows players to redeem winnings through printed tickets instead of cash, is improving both player convenience and operational efficiency. Management expects broader adoption to further streamline operations and potentially enhance revenue per machine.
• Louisiana and new market integration: Accel’s acquisition of Toucan Gaming accelerated its entry into Louisiana, where the company is optimizing routes and preparing for additional bolt-on acquisitions. Louisiana now accounts for approximately 3% of revenue, and management sees this state as a priority for near-term expansion.
• Fairmount Park ramp and opportunity: The recent launch of casino operations at Fairmount Park is showing sequential monthly growth in gaming revenue. Early performance is informing future development plans, with management evaluating timing and scope for a potential phase two expansion as customer engagement increases.

Drivers of Future Performance

Accel Entertainment’s outlook is anchored in continued core market optimization, strategic investments in technology, and disciplined expansion in both developing and new markets.

• Core market optimization: Management plans to further optimize routes in Illinois and Montana by focusing on higher-yielding locations and enhancing the existing machine base. This strategy is expected to keep machine counts steady with incremental growth in average revenue per machine, supported by the ongoing rollout of TITO.
• Developing and new market expansion: Accel is prioritizing profitable growth in developing markets such as Nebraska and Georgia, where legislative changes have been favorable. The company also aims to scale operations in Louisiana through bolt-on acquisitions, leveraging its recent entry and integration experience.
• M&A and capital allocation discipline: The management team remains patient and selective in M&A, favoring bolt-on opportunities in key states while monitoring broader market shifts, such as declining transaction multiples. Capital allocation decisions will continue to balance share repurchases, debt reduction, and disciplined growth investments.

Catalysts in Upcoming Quarters

For upcoming quarters, the StockStory team will be tracking (1) further adoption and revenue impact of ticket-in, ticket-out technology in Illinois, (2) the pace of bolt-on M&A activity, especially in Louisiana and other focus states, and (3) continued growth and operational milestones at Fairmount Park. We will also monitor legislative developments that could open new markets and sustained execution on core market optimization.

Accel Entertainment currently trades at $9.93, in line with $9.92 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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