Accel Entertainment, Inc.ACEL
Accel Entertainment, Inc. Segments Disclosure
Segment Reporting
The Company assesses its reportable segments on an annual basis or as changes in its business occur. As part of its assessment, the Company has determined its chief operating decision maker (“CODM”) to be its Chief Executive Officer, Andrew Rubenstein, who is ultimately responsible for the operating performance of the Company and the allocation of resources. The CODM assesses financial performance and allocates resources based on Adjusted EBITDA. Adjusted EBITDA is used by the CODM to understand the Company’s underlying drivers of profitability, trends in its business, and to facilitate company-to-company and period-to-period comparisons. Segment asset information is provided to the CODM but is not used to allocate resources.
The Company defines Adjusted EBITDA as net income plus:
•Amortization of intangible assets and route and customer acquisition costs
•Stock-based compensation expense
•Loss from unconsolidated affiliates
•Loss (gain) on change in fair value of contingent earnout shares
•Gain on expiration of warrants
•Other expenses, net
•Depreciation and amortization of property and equipment
•Interest expense, net
•Emerging markets, which reflects the results, on an Adjusted EBITDA basis, for non-core jurisdictions where the Company’s operations are developing
•Income tax expense
The Company’s distributed gaming reportable segment consists of the installation, maintenance, and operation of gaming terminals, redemption devices that disburse winnings and contain ATM functionality, and other amusement devises in authorized non-casino locations such as restaurants, bars, convenience stores, liquor stores, truck stops, and grocery stores. The Company’s operations and services are consistent in the Company’s markets.
The Company has determined that with the acquisition of the FanDuel Sportsbook & Horse Racing in Collinsville, Illinois, that as of December 31, 2024, it has two operating segments, distributed gaming and casino and racing. However, due to the fact
the construction of the casino is in its early stages and the limited operations of racing in the winter months, the casino and racing operating segment does not reach the criteria of being a reportable segment. As such, the Company will continue to report as a single reportable segment.
Significant segment expenses, including disaggregated significant expenses that are presented within general and administrative expenses, are presented in the Company’s consolidated statement of operations and comprehensive income and are included in the table below.
The following table presents financial information with respect to the Company’s single reportable segment, distributed gaming, for the years ended December 31, 2024, 2023, 2022. Additionally, the Company has included an "all other" operating segment which is its casino and racing business that is neither individually reportable nor able to be aggregated or combined with another operating segment.
(in thousands,) | December 31, | |||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
Distributed gaming | ||||||||||||||||||||
Total net revenues (1) | $ | 1,229,577 | $ | 1,170,420 | $ | 969,797 | ||||||||||||||
Adjustments: (2) | ||||||||||||||||||||
Cost of revenue | 852,226 | 809,524 | 666,126 | |||||||||||||||||
Compensation related costs - operations (3) | 77,902 | 67,523 | 59,174 | |||||||||||||||||
Compensation related costs - general and administrative (3) | 53,606 | 51,926 | 37,070 | |||||||||||||||||
All other segment items (4) | 56,899 | 60,002 | 45,035 | |||||||||||||||||
Adjusted EBITDA for distributed gaming | $ | 188,944 | $ | 181,445 | $ | 162,392 | ||||||||||||||
Adjusted EBITDA for “all other” operating segment (5) | $ | 203 | $ | — | $ | — | ||||||||||||||
| Less Adjustments for: | ||||||||||||||||||||
Depreciation and amortization of property and equipment | $ | 43,978 | $ | 37,906 | $ | 29,295 | ||||||||||||||
Amortization of intangible assets and route and customer acquisition costs | 22,577 | 21,211 | 17,484 | |||||||||||||||||
| Interest expense, net | 35,892 | 33,144 | 21,637 | |||||||||||||||||
| Emerging markets | 165 | (948) | 2,598 | |||||||||||||||||
| Stock-based compensation | 12,204 | 9,416 | 6,840 | |||||||||||||||||
| Loss (gain) on change in fair value of contingent earnout shares | 1,276 | 8,539 | (19,544) | |||||||||||||||||
Gain on expiration of warrants | (13) | — | — | |||||||||||||||||
| Other expenses, net | 19,339 | 6,453 | 9,320 | |||||||||||||||||
| Income before income tax expense | $ | 53,729 | $ | 65,724 | $ | 94,762 | ||||||||||||||
| Income tax expense | 18,438 | 20,121 | 20,660 | |||||||||||||||||
| Net income | $ | 35,291 | $ | 45,603 | $ | 74,102 | ||||||||||||||
(1)Total net revenues is further disaggregated by revenue stream as included on the consolidated statements of operations and comprehensive income.
(2)The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(3)Compensation related costs represent payroll and other related costs that are included in General and administrative on the consolidated statements of operations and comprehensive income.
(4)All other segment items include other operating and general and administrative expenses (such as general and administrative expenses related to parts, advertising, information technology, etc.) which are included in general and administrative on the consolidated statements of operations and comprehensive income and cost of manufacturing good sold, as well as, adjustments for stock-based compensation expense and emerging markets.
(5)Given the timing of the acquisition for the casino and racing business in December of 2024 (see Note 10, Business and Asset Acquisitions, for information on the acquisition), all corporate expenses were allocated to the distributed gaming reportable segment as of December 31, 2024. The "all other" operating segment had total net revenues of $1.4 million; cost of revenues of $147 thousand; compensation related costs - operations of $581 thousand and all other segment items of $464 thousand.
As of December 31, 2024 the consolidated assets associated with the distributed gaming segment are $990.1 million and the assets for the "all other" operating segment are $58.3 million.
See the consolidated financial statements for other financial information (such as cash used for capital expenditures, etc.) regarding the Company’s reportable segment.About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.