NeoGames net loss flat in FY23 as Aristocrat sale looms

NeoGames noted that it would not be hosting a conference call for its 2023 results in anticipation of its sale to Aristocrat Leisure. Aristocrat agreed to acquire NeoGames in May for a total of $1.20bn. The deal is expected to close before the end of Q2 2024.

Tsachi Maimon, president of NeoGames, told iGB that NeoGames and Aristocrat were a “really strong match” and their business offerings complemented each other. In July, NeoGames shareholders voted in favour of the acquisition.

Commenting on the company’s full-year performance, Moti Malul, CEO of NeoGames, said the deal is on track for completion.

“We continue to make progress towards completing our merger with Aristocrat Leisure and continue to receive the regulatory approvals required to close,” he said.

“In the meantime, we remain dedicated to elevating the igaming landscape, capitalising on opportunities and diligently executing on our strategic objectives for the benefit of all stakeholders.”

Also during the year, NeoGames was issued a non-compliance notice by Nasdaq following Lisbeth McNab’s resignation from the board. NeoGames regained compliance in July with the appointment of Steve Capp as an independent non-executive director.

This was also NeoGames’ first full year of operation since its acquisition of Aspire Global, which was completed in June 2022.

Expenses wipe out revenue in 2023

The total revenue plus NeoGames’ share of net profit interest (NPI) revenues totalled $254.5m for the year, up by 21.1%.

Revenue for NeoGames’ ilottery segment hit $57.0m for 2023, moving up slightly by 1.2%. The company’s igaming revenue also rose, levelling off at $134.6m, an increase of 10.2%.

The expenses generated throughout the year more than wiped out the revenue, coming to $218.2m. Distribution expenses remained high, but slipped 1.1% year-on-year to $96.4m. Depreciation and amortisation expenses worked out at $55.9m, a rise of 57.1%.

General and administrative expenses jumped by over $10m to $33.5m. Other expenses consisted of selling and marketing, business combination and development costs.

Although the operational loss was $26.6m, further income softened the blow. Finance expenses were $24.7m, but NeoGames’ share in profits of joint venture – its operating agreement with Pollard Banknote – was $37.3m. This left the pre-tax loss at an improved $14.1m.

Following $4.1m in income tax expense, net loss totalled at $18.2m for 2023. This was just 3.6% less than the $18.9m recorded in full-year 2022. Adjusted EBITDA for the year doubled to $66.5m.

Revenue falters in Q4

Turning to NeoGames’ fourth quarter results where revenue suffered a rapid decline, falling 31.0% to $47.7m. Combined with NeoGames’ share of NPI revenues, this comes out at $64.9m, which would still work out as a fall year-on-year.

Revenue generated by ilottery totalled $14.4m for the quarter, down by just $100,000. Igaming revenue also floundered, dropping 39.0% to $33.3m.

On a more positive note, total expenses worked out at 23.8% less than in Q4 2022, adding up to $55.4m. However, this still resulted in a heavier loss from operations year-on-year of $7.7m.

As expected, distribution expenses were the highest of the quarter at $25.4m. Depreciation and amortisation costs were $14.2m, while general and administrative expenses hit $9.3m.

Finance expenses at $7.4m hindered the total further. However, NeoGames’ share in joint venture profits brought in $10.6m. This left the pre-tax loss at $4.5m. Income tax of $1.5m brought the net loss for the quarter to $6.0m, further damage of $5.2m.

Adjusted EBITDA was 2.2% higher yearly, at $17.1m.

Malul: NeoGames making progress on strategic goals

Looking back on 2023, Malul praised the strategic progress made by NeoGames and highlighted growth in the company’s segments.

“We are very pleased with the progress we made during the fourth quarter and during the entire year of 2023, progressing our strategic goals and working to complete our merger with Aristocrat Leisure, which we announced last May,” Malul continued.

“We continue to see strong growth across our business lines, as three of our four segments, including ilottery, games and sports, all demonstrated strong double-digit growth in 2023.”

As for what’s in store for the year ahead, Malul mused on potential growth in the US, but added that efforts will continue on growing NeoGames’ existing partnerships and products.

“We are focused on achieving sustainable growth and remain encouraged by the interest and pipeline in the US market for our igaming offering,” he explained. “As we look ahead, we will maintain our focus on investing in the execution of our recently announced partnerships and product enhancements.”