Vera&John drives JPJ to growth in Q1

Online bingo and casino operator JPJ Group has cited the performance of its Vera&John business as the main driver behind a 13% year-on-year increase in revenue during the first quarter.

London-listed JPJ reported gaming revenue of £83.3m (€95.6m/$107.6m) in the three months to March 31, 2019, up from £74.0m in the same period last year.

The operator’s Jackpotjoy business remains the main source of income, despite revenue from this segment falling 7% year-on-year from £52.8m in Q1 of 2018 to £49.1m in the most recent quarter.

In contrast, the Vera&John business generated revenue of £34.2m, up by 62% on £21.2m in Q1 of last year.

JPJ also noted an increase in costs and expenses for the quarter, with this total up from £63.4m to £69.1m, with higher spending across several areas of the group.

Distribution costs in Q1 climbed from £38.2m to £41.3m, due in part to higher licencing fees of £11.0m and selling and marketing expenses of £14.9m. There was also an increase in administrative costs from £24.8m to £26.6m, mainly due to higher compensation and benefits expenses of £9.1m.

Transaction-related costs such as legal, professional, due diligence and other costs associated with transactions, acquisitions or disposals by the group hit £1.1m, with JPJ having not spent anything in the comparative period.

However, despite these higher costs, the increased revenue was enough to allow JPJ to post a net income of £7.9m for the first quarter, compared to a net loss of £8.0m last year.

Adjusted net income was also up 18% from £19.1m to £22.6m, while adjusted earnings before interest, tax, depreciation and amortisation climbed 16% from £24.9m to £29.0m.

Executive chairman, Neil Goulden, said he is pleased that the group was able to deliver a good quarter of growth, praising the performance of Vera&John in particular.

“I’m pleased to report that the group has delivered another good quarter of growth,” he said. “Group revenues were up 13%, driven by a strong performance in Vera&John, while adjusted EBITDA increased by 16%.”

Goulden also highlighted the sale of its Mandalay business to 888 Holdings in March for £18.0m, saying this will allow the group to focus on driving progress across its core market-leading brands in the UK.

“We remain convinced of the growth opportunities in global online gaming markets and are confident that we are well-placed to take advantage of this positive backdrop and deliver value to shareholders,” he said.

Analysts at Regulus were complimentary of the decision to sell Mandalay to 888 and also praised JPJ for “mitigating domestically regulated market issues with grey market growth”.

However, Regulus also said while diversification is no doubt a positive for JPJ, the challenge is whether it can return to “strong and sustainable growth in domestically regulated markets – especially given that all three to which JPJ is currently exposed to are at the most liberal end of the regulatory spectrum” .