Platform services drive Q2 revenue growth for GiG

11 August 2020

Gaming Innovation Group (GiG) has reported a year-on-year increase in revenue for the second quarter, primarily due to growth within its platform services arm.

Revenue in the three months to 30 June amounted to €16.7m (£15.0m/$19.6m), up 32.3% from €11.3m in the same period last year. This figure includes revenue from the New Zealand-facing SkyCity business, which went live in August last year.

GiG reported year-on-year growth across a number of its business sectors, including its platform services arm, which comprises the technical platform and the front end and other managed services. Revenue here almost doubled from €4.2m in 2019 to €8.2m.

According to GiG, while sales developed positively, the novel coronavirus (Covid-19) pandemic slowed some contract negotiations, as land-based operators dealt with lockdowns. However, while talks were delayed, GiG said that on a longer-term basis, this will accelerate the transition to online.

Elsewhere, revenue from media services remained level at €8.6m, despite the impact of Covid-19. Historically, revenue from sports has made up around 20% of media services revenue, and while this was hit by Covid-19, performance in casino and GiG’s ability to switch paid media to casino ensured the division grew in Q2.

GiG also noted that within its media services operations, 61% of revenue in Q2 was derived from revenue share agreements, while 12% came from cost per acquisition) 25% from listing fees and 2% from other services.

However, in terms of sports betting services, revenue here fell from €300,000 to €100,000, as GiG felt the impact of the cancellation and postponement of sports events due to Covid-19.

GiG also reported figures for its B2C gaming operations – comprising its in-house operators Rizk.com, Guts.com, gutsXpress.com, Kaboo.com and Thrills.com – all of which were sold to Betsson in April 2020. Revenue here amounted to €2.9m, but was reported as a discontinued operation for Q2.

Looking at spending in the quarter, operating expenses amounted to €13.0m, up 24.4% from €9.6m in the same period last year.

A rise in marketing expenses was the main reason for this increase, with spend climbing from €1.4m to €4.5m. Other operating expenses were also up slightly from €8.2m to €8.5m in Q2.

GiG ended the quarter with €2.8m in earnings before interest, tax, depreciation and amortisation (EBITDA), up 86.7% from €1.5m last year. However, after factoring in these costs, this left the operator with a €2.2m loss before interest and tax, though this was an improvement on a €4.4m loss in 2019.

After other expenses, GiG posted a €5.1m loss before tax, again an advance on the €6.5m loss last year. GiG paid €96,000 in tax during the quarter, and when also considering an €867,000 loss from discontinued operations, this left GiG with a net loss of €6.0m, compared to €6.1m last year.

“GiG has improved its performance in the quarter across all of its business units, and I am very pleased to see our media division that has historically had a 20% revenue exposure to sports betting move quickly and with force to enhance casino offerings to deliver a second quarter with consecutive revenue and EBITDA growth despite the ban on sporting events,” GiG chief executive Richard Brown said.

“Q2 was a strong start for GiG as its first quarter as a B2B only company, and the signings after the quarter confirm further my confidence that the company can continue to grow and flourish as its well position strategically in addition to having a first rate product offering across its portfolio which will deliver shareholder value in the years to come.”

The Q2 results meant that GiG was also able to post mainly positive results for the first half, with revenue for the six months to 30 June totalling €27.8, up 17.8% on last year.

Operating expenses were up 20.2% to €23.2m, which meant EBITDA fell slightly from €3.8m to €3.4m, and earnings before interest and tax from €8.1m to €6.9m.

After other costs, loss before tax was reduced from €10.5m to €9.4m, while GiG was boosted by €950,000 in income from discontinued operations. However, when accounting for other expenses, including €812,000 in foreign exchange costs, this left GiG with a net loss of €9.4m, compared to a €9.1m loss last year.