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Vera&John boosts JPJ as core Jackpotjoy business stalls

| By iGB Editorial Team
Gaming revenue up 8% year-on-year to £77.8m

JPJ Group has cited growth within its Vera&John arm as the main reason behind an 8% year-on-year increase in overall revenue during the third quarter, despite revenue falling in its core Jackpotjoy business.

Gaming revenue hit £77.8m (€89.4m/$100.9m) in the three months to the end of September at the online bingo-led operator, up from £71.8m in the same period last year.

This growth comes despite revenue in the Jackpotjoy business slipping 3% year-on-year from £53.5m to £52.1m. JPJ put this down to a decline in its Mandalay brands and the closure of some high value accounts in response to responsible gambling measures.

JPJ Group executive chairman Neil Goulden (pictured) said he only expects these issues to be affect revenue for Jackpotjoy in the short-term.

“We expect that the impact of closed accounts will begin to annualise during H2 2019 and, provided there are no further regulatory challenges, the Jackpotjoy segment will return to revenue growth thereafter,” Goulden explained.

However, this drop was offset by strong growth in the Vera&John segment, with revenue up 41% on a constant currency basis to £52.7m, increasing its share of the overall revenue at JPJ to 33%.

Goulden said: “The Vera&John segment is once again the stand-out, with year-on-year revenue growth of 41% on a constant currency basis. The growth at Vera&John highlights our strategy of international diversification, with 44% of Group revenue generated outside the UK in Q3.”

During the quarter, JPJ also agreed a deal to sell its social gaming business to South Korean studio Bagelcode for £18m. The company said this will allow it to focus exclusively on real-money gaming.

As part of this effort, JPJ plans to bring various operational functions currently outsourced to Gamesys – the business from which it acquired Jackpotjoy and other brands – in-house.

In addition, JPJ is opting against extending its non-compete agreement signed with Gamesys following the acquisition. JPJ acknowledged while this will leave Gamesys free to consider launching new brands in the UK, Spain and Sweden, it does not believe that this “represents a significant incremental competitive threat given JPJ Group’s strong, market-leading position in these geographies”.

Elsewhere, JPJ said costs fell marginally in Q3 to £65.1m – with a decline in administrative expenses offset by increased distribution costs – while adjusted EBITDA was up 13% year-on-year to £28.8m, mainly due to “strong earnings growth” at Vera&John.

In addition, JPJ reported a post-tax profit of £7.3m for the quarter, compared to a net loss of £8.2m in the corresponding period last year.

Regulus analysts also offered their view on the results, noting the Gamesys move in particular. They said that on one hand it can be seen as a “high-risk strategy”, given how much more “dynamic Gamesys has been than JPJ in key markets”.

However, Regulus also said: “Given that the non-compete largely revolves around bingo and this is only one means of generating the slot-led customers that are the mainstay for both JPJ and Gamesys, we doubt that the change will amount to much commercially.”

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