Revenue edges up at Aspire Global in Q1

Aspire Global has put a 1.5% year-on-year rise in revenue in the first quarter primarily down to an increase in demand for its products in the UK, Irish and wider European markets, though the gaming solutions supplier saw net profit drop during the period.

Revenue for the three months through to 31 March 2020 amounted to €33.7m (£29.5m/$36.7m), up from €33.2m in the corresponding period last year.

From the start of 2020, Aspire reported a new B2B sub-segment to include its games business, encompassing the Pariplay operation that was consolidated in October last year.

B2B net gaming revenue increased by 13.3% to €24.4m and 16.7% to €22.7m excluding inter-segment revenues. This was boosted by the launch of two B2B brands in Q4 of 2019, which Aspire said performed better than expected in the first quarter.

In addition, three new partner deals were signed for the platform offering in the quarter, while two new brands were launched on the platform, a sport vertical was added to an existing partner and a successful migration was completed.

Looking at the B2C segment, which represents Aspire’s proprietary brands, net gaming revenue fell by 19.7% year-on-year to €11.0m, primarily due to lower revenue in the UK and Ireland, as well as the Nordics as a result of changes to regulation.

Taking a closer look at geographical performance in Q1, and though Aspire saw overall revenue from the Nordics slip 39.2% to €4.5m, it noted growth across all other markets.

UK and Ireland revenue climbed by 25.5% to €5.9m after Aspire said it was able to adapt to new regulatory requirements announced in Q4 of 2019, while revenue from the rest of Europe climbed by 7.4% to €21.7m and rest of the world revenue jumped by 77.8% to €1.6m.

Aspire also noted that the global outbreak of novel coronavirus (Covid-19) had an impact on revenue towards the end of the quarter, in terms of sports betting activities. However, as sports only represented 7.5% of total revenue in Q1, with Aspire’s operations directed towards mainly casino, the overall impact was minimal.

That said, in March, Aspire set out how it had taken proactive measures to help reduce the risk for employees and also ensure business continuity during the ongoing pandemic.

Looking at spending in the quarter and operating expenses were up slightly from €26.4m in Q1 of 2019 to €27.4m this year.

Distribution expenses were the main outgoing for Aspire, with these costs rising 5.1% to €22.6m mainly due to the consolidation of Pariplay. Distribution costs excluding Pariplay fell by 4.7% to €20.5m, though the new games segment added €2.1m in fees.

Administrative spending was up 5.4% to €3.9 million, as Aspire committed more funds to investments in the technology, customer support and compliance departments, including recruitments in addition to the consolidation of Pariplay. Gaming duties were down from €1.5m in Q1 of 2019 to €908,000 this year.

However, Aspire also noted higher costs elsewhere during the quarter, including in terms of amortisation and depreciation, with this climbing by 45.4% to €1.3m, which left it with an operating profit of €3.9m, compared to €5.2m last year.

When taking into account higher finance expenses of €2.1m, up from €915,000 as a result of unfavourable currency exchange rates, this meant pre-tax profit fell from €5.2m to €2.8m. After tax, net profit amounted to €2.5m, down 49.0% from €4.9m in 2019.

After also considering the impact of Aspire’s share in the results of associated companies, which amounted to €187,000, comprehensive net income for the period stood at €2.4m, down 41.5% from €4.1m last year.

Reflecting on the Q1 results, chief executive Tsachi Maimon was upbeat, praising Aspire for its ability to post an increase in revenue despite the ongoing Covid-19 situation.

He also suggested the pandemic could in fact have a positive impact on finances moving forward, with more players moving to online casino due to the cancellation of sports events and temporary closure of land-based gaming facilities around the world.

“In the quarter we saw limited impact from the pandemic,” he said. “However, as a consequence of the pandemic, players choose online entertainment over land-based, and in April total trading volumes increased to about €13.5m, which is about 20% higher than the average monthly trading volume in Q1 2020.

“The world is going through challenging times during the pandemic. Early in the quarter we took proactive measures to reduce the health risks for the employees and to ensure business continuity. Thanks to a robust underlying business and dedicated employees, service levels remained high.”

Maimon also said how Aspire will continue its focus on geographic expansion in Q2 and beyond, with licence applications and launches planned for markets all over the world.

“We are preparing ourselves for license applications in the Netherlands Q1 2021 and in Germany Q3 2021,” he said. “We are also preparing to launch our games and aggregation platform in four new markets in 2020; we will be targeting Italy and Spain in Q2 2020 and New Jersey and Switzerland in Q3 or Q4 2020.”

In terms of merger and acquisition activity, though this has been impact by the pandemic, Maimon said Aspire continues to seek out options that could help to improve its business.

“We continue our active search for acquisitions and new projects that could broaden the offering for players, enhance the scale benefits of the platform or accelerate the B2B growth,” he said. “It is our clear target to control more parts of the value chain in order to enable our partners to achieve their full potential.

“We have been successful in securing business continuity during the pandemic and continue the execution of our growth strategy, capitalising on our complete igaming offering.”