Mobile games developer Gaming Realms has reported a profit of £929,305 (€1.0m/$1.2m) for 2018 after offloading various affiliate marketing and B2C real-money gaming assets, but was hit by a drop in continuing revenue.
For the 12 months to December 31, 2018, continuing revenue came in at £6.2m, down from £7.6m in the previous year.
Gaming Realms put this down primarily to a decline in social publishing revenue, which fell 43% year-on-year from £6.9m to £3.9m. This was partially offset by a 63% reduction in costs for such operations.
However, the developer noted significant growth for licensing revenue, comprising its igaming content including Slingo-branded products, which rocketed by 167% from £800,000 in 2017 to £2.2m.
The licensing division went live with 17 new partners during the year, while its library of proprietary games jumped from nine to 28. Gaming Realms has also struck deals with a number of other game distributors in the first half of 2019.
In terms of continuing expenses, Gaming Realms was able to cut costs, with marketing expenses down from £2.3m to £665,363, administrative costs from £7.5m to £4.9m, and operating expenses from £1.5m to £901,807.
There was an additional expense of £228,451 as the result of impairment charges, while share-based payments incurred a cost of £67,824.
Continuing loss for the year stood at £5.6m, but Gaming Realms was boosted by its discontinued operations, which posted a collective profit of £6.6m. This led to an overall profit for the year of £929,305, compared to a loss of £8.2m last year.
Citing a difficult UK regulatory environment, Gaming Realms took the decision to offload its affiliate marketing business in March 2018, as well as of part of the B2C real money gaming business in July 2018 and, in February 2019, exchanged contracts to sell the remaining B2C RMG business.
Gaming Realms has said when it completes the sale of the remaining real money gaming business – which it expects to happen shortly – the remaining business will focus on the development and licensing of games for third-party real money and social gaming operators.
In terms of how the discontinued operations performed in 2018, Gaming Realms has said revenue amounted to £16.5m, down from £24.0m in the previous year. However, adjusted earnings before interest, tax, depreciation and amortisation improved from a loss £3.6m to a positive of £427,000.
Reflecting on the results, chief executive Patrick Southon has said that the sale of the assets now frees up Gaming Realms to focus more on game development, which has proven a major growth area for the business in recent years.
“We began our licensing business in 2017 as part of a strategy to fully capitalise on the strength of our games development operations,” he said. “In a period of 24 months, we have developed, licensed and launched 34 games via major gaming partners such as GVC and 888 and captured over 3.5% market share in New Jersey.
“As a result, and post the imminent completion of the sale of the remaining B2C RMG business, we are looking forward to focusing solely on increasing the cadence of game development and licensing delivery as more B2B partners come online.”
Meanwhile, Gaming Realms has provided a brief update on its performance in the first quarter of the current year. Gross gaming revenue – the total revenue generated by partners from its licensed content – increased 37% quarter-on-quarter to £10.8m.
Slingo Originals content also went live on eight new sites during the quarter, taking the total distribution to 34 gaming sites globally.