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Golden Matrix slips to Q2 net loss despite revenue growth

| By Robert Fletcher
Online game developer and licensor Golden Matrix Group (GMGI) posted a net loss in the second quarter despite also reporting a year-on-year increase in revenue.
Paf 2023

Traditionally its slowest quarter, GMGI said it was pleased with the revenue performance of both its B2B and B2C segments in the three months to 30 April.

However, the group said system failures when extreme numbers of customers purchased tickets for high-ticket prize competitions hit revenue and profitability in its RKings B2B operations.

Addressing the issue, chief executive Brian Goodman said technology has been updated so that is systems can cope with higher player traffic moving forward.

“Working with Amazon AWS, the technology has now been upgraded to increase the performance and speed of RKings’ servers and accommodate heightened levels of participation by our players,” Goodman said.

“Having that resolved, we remain confident in RKings’ continued success in Great Britain and look forward to introducing its scalable platform to additional geographic markets.”

Higher costs overshadow revenue growth

Revenue for the second quarter reached $1.31m (£8.1m/€9.5m), a 21.2% increase from $8.3m in the previous year. The RKings B2B segment generated $3.8m of this total, while $6.5m came from Mexplay B2C operations.

Looking at spending, costs of goods sold increased 39.0% to $8.2m, while operating costs were also up 44.4% to $26m. 

GMGI also reported $29,281 in additional income from interest and foreign exchange gain. However, such was the impact of higher spending that pre-tax loss reached $461,452, in contrast to a $873,229 profit in 2022.

The group paid $72,301 in income tax, leaving a net loss of $533,753, compared to a profit of $586,984 last year. Even when accounting for $96,343 in foreign currency translation, comprehensive net loss was $437,410, in contrast to a $476,749 profit in the previous year.

Second half net loss

The figures made for similar reading in the first half of the group’s financial year. Revenue was 21.3% higher at $21.1m, but higher spending led to a net loss.

Costs of goods sold reached $16.6m and operating expenses $5.3m. Finance-related income hit $60,401, but pre-tax loss stood at $759,287, compared to a $1.4m profit in 2022.

Income tax payments amounted to $217,987, which left a net loss of $977,274, in contrast to a $1.1m profit in the previous year. After accounting for $248,602 in foreign currency translation, comprehensive net loss hit $728,672, compared to a $833,182 profit last year.

MeridianBet acquisition edges closer

GMGI also provided an update on its planned acquisition of MeridianBet Group and its related companies. The group struck a deal in January to purchase the B2C sports betting and gaming business for approximately $300.0m.

GMGI said the two parties verbally agreed to extend the date and modify additional terms of the agreement to facilitate the closing of the transaction. Plans to confirm a new definitive date for closing will be made public in the near future.

“This is a very exciting time in the history of our company,” Goodman said. “We enter the second half of this year with a strong balance sheet and two well-established verticals, as well as a growing casino business in Mexico.

“With the successful acquisition of the MeridianBet Group, the combined enterprise will be generating multiple streams of gaming revenue while providing players worldwide with the most popular best-in-class products, including casino games and sports betting.”

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