S&P Global Ratings has elevated Aristocrat Leisure Ltd.'s credit rating to 'BBB' from its earlier level, citing several factors that strengthen the company's financial and business risk profile. The rating agency highlighted sustained operating performance, broader revenue streams and robust free operating cash flow as central to the upgrade.
At the heart of S&P's assessment is Aristocrat's leading position in land-based gaming. The company has expanded its market share for installed participation units in North America and increased outright gaming machine sales across both North America and Australia, outcomes S&P says have driven steady earnings growth.
Recurring revenue now makes up a large portion of Aristocrat's top line, offering greater revenue and cash flow stability. In fiscal 2025, recurring sources accounted for 72% of total revenue. Much of this growth came from participation units in North America, which contribute recurring fees structured either as fixed amounts or as percentages of gross gaming revenue earned by casino operators.
Aristocrat's position in Australia and New Zealand also strengthened on outright machine sales. The company's ship share rose to 43% in fiscal 2025, up from 34% in fiscal 2024, giving it the largest share in those markets for outright sales.
On cash flow generation, S&P expects Aristocrat to deliver at least A$1.5 billion in free operating cash flow per year in fiscal years 2026 through 2028, after accounting for design and development investment and capital expenditure. That anticipated cash generation is expected to give the company flexibility to pursue bolt-on acquisitions, reduce debt organically and increase shareholder distributions. Aristocrat has also approved an increase and extension to its A$1.5 billion share buyback program, which is scheduled to complete by March 2027.
The rating agency singled out Aristocrat's Interactive segment as an important earnings growth driver in the coming years. S&P said the company plans to scale the rollout of new real-money online gaming content by leveraging intellectual property from its land-based operations.
The April 2024 acquisition of NeoGames has bolstered Aristocrat's standing in North American iLottery, where the company reportedly holds a 72% share of gross wager. This position forms part of S&P's view of the company's growing revenue diversity.
Financial leverage also factored into S&P's decision. Aristocrat reported a net debt to EBITDA ratio of 0.2x in fiscal 2025, substantially below its stated target range of 1.0-2.0x and well under S&P's downside rating threshold of 2.0x.
Reflecting these elements, S&P assigned a stable outlook to Aristocrat, indicating the agency expects the company to consolidate its operating performance while maintaining earnings margins and continuing to grow free cash flow.
Key takeaways
- Rating upgrade to 'BBB' driven by improved operating performance, revenue diversity and cash flow expectations.
- Recurring revenue represented 72% of total revenue in fiscal 2025, supporting stability in revenue and cash generation.
- Market share gains in land-based gaming and outright machine sales in North America and Australia helped lift earnings; Interactive segment and NeoGames acquisition underpin future growth prospects.
Risks and uncertainties
- Free operating cash flow projections are a key assumption - S&P's outlook assumes at least A$1.5 billion per year for fiscal 2026-2028; any material deviation could affect financial flexibility across merger, acquisition and capital return plans.
- Leverage metrics are currently conservative - Aristocrat's net debt to EBITDA was 0.2x in fiscal 2025, well below the company's target range and S&P's downside threshold; significant changes to this ratio could alter credit metrics and the rating trajectory.
- Growth expectations rely on the Interactive segment scaling new real-money online content and on the integration and performance of NeoGames in the iLottery market; underperformance in these areas could limit anticipated earnings contributions.
Conclusion
S&P's upgrade to 'BBB' reflects a combination of market leadership in land-based gaming, a higher mix of recurring revenue, and projected strong free operating cash flow that together provide Aristocrat with enhanced financial optionality. The stable outlook signals S&P's expectation that the company will sustain current operating momentum and cash generation through the near term.