River iGaming to ramp up B2B focus amid B2C struggles
Online gaming solutions provider River iGaming will focus more on B2B operations after the division performed ahead of expectations in the third quarter, but has sought advice on strategic alternatives for its B2C business after it fell short of targets.
In a trading update, River said it went live with its first B2B client in September, while the provider also reported a “backlog of new clients”, with rising demand for its B2B solutions.
However, River also reported a “very challenging” market for its B2C brands, and the worse-than-expected performance for this segment is set to impact its results for the second half of 2019.
River said it has initiated and partially completed significant cost cutting measures for the B2C division, and is working with Akur Capital to review strategic alternatives for the segment.
As a result, River said it will commit more resources on becoming a software-as-a-service driven B2B business. River said it is working on different initiatives to capitalise on opportunities in B2B, with spending to continue as planned within the segment.
The move comes after River in July completed the acquisition of the Bear Group B2C subsidiary of mobile games developer Gaming Realms in a deal worth £11.5m (€13.6m/$15.1m). That sale allowed Gaming Realms to pivot to a dedicated B2B supplier.
River said that once it has merged Bear Group into its current operations, it will be able to provide its customers with a better experience. In addition, River said centralising operations will create a leaner cost structure and optimise overall performance.
In Q3, River also completed the acquisition of Gaming Realms' igaming platform, which it will continue to develop and enhance as it targets new B2B clients.
Meanwhile, River also highlighted the ongoing development of its Mediafusion marketing platform, with the build to be completed before the end of the year. River said the platform will help drive additional revenue.
In terms of overall financial performance in the third quarter, proforma revenue for the third quarter amounted to €3.8m. Direct costs for the period amounted to €2.2m, meaning River ended the quarter with a gross profit of £1.6m.
However, River also incurred various other costs, including operating costs worth €797,257 in Q3. Personnel costs stood at €1.3m, marketing costs amounted to €869,833 and depreciation and amortisation expenses totalled €42,007. This meant River was left with an operating loss of €1.4m for the period.
For the year-to-date, proforma revenue stood at €9.2m and after direct costs of €4.4m, gross profit was €4.8m. Expenses related to operating, marketing and personnel, as well as depreciation and amortisation, meant an operating loss of €4.0m for the nine months to 30 September.