Q1 results 2021

GiG Q1 revenue grows 64% thanks to record media returns

| By Robin Harrison
Gaming Innovation Group (GiG) saw revenue grow 64.0% year-on-year in the first quarter of 2021, with media services business hitting an all-time high of €10.0m.
Finance

Revenue for the three months to 31 March 2021 came to €18.3m (£15.8m/$21.9m). 

This revenue figure included the full profit and loss from its white label agreement with SkyCity Malta, a subsidiary of the New Zealand land-based operator. If standard white label accounting principles were applied, giving GiG only a share of SkyCity Malta earnings, normalised group revenue for the period would have been €15.4m, a 43.9% year-on-year rise. 

The main contribution came from GiG’s media services division, which set a new revenue record of €10.0m – up 22.0% – in Q1, of which more than 60% (€6.9m) came from revenue share agreements. 

Paid media channels were launched in seven new territories, and revenue from paid media grew 72.2% to €3.1m.

Having secured a sports betting vendor registration from the Virginia Lottery, and an igaming registration from the West Virginia Lottery, it now has nine US state licences, and is active in 11 states. 

This helped it refer 43,712 first time depositors (FTDs) to operator clients in the quarter, a 55.7% jump from the prior year. This broke down to 27,653 from publishing (up 32.2%) and 16,059 from paid media (up 124.2%). 

Its platform services arm, meanwhile, saw revenue grow 88.4% to €8.1m, though if this is normalised, that figure dropped to €5.2m, still a 36.8% improvement on the prior year. 

Having signed 14 new partners to its solutions in 2020, GiG has added a further three in 2021 to date. This included PlayStar Casino, which is preparing to launch in New Jersey, an unnamed German-facing operator, and an agreement to launch a new online casino brand for an existing partner. 

It has 14 brands in its intregration pipeline, with clients ranging from current online partners to igaming brands being launched by brick-and-mortar businesses in new regulatory markets. 

As a result of “increasingly complex” licensing procedures and longer licensing processes, GiG admitted that it faces certain delays in its development work. It has completed projects for five new brands, with three live on its platform, one awaiting client sign-off for launch, and one converting from a white label to a Software-as-a-Service agreement. 

Its platform is now certified in ten regulated markets, with a further seven to be added through its development pipeline. 

Finally, GiG aims to revitalise its sports betting business through a partnership with Genius Sports Group that combines its platform with the sports data specialist’s live data, trading and risk management services. Genius is to manage day-to-day sportsbook operations through this deal. 

There are currently four brands live on the platform, with a further four in the development pipeline. The live brands’ turnover came to €21.4m for the first quarter, resulting in revenue of €0.2m. 

GiG’s costs of sales for the first quarter grew 94.1% to €825,000, though thanks to its increased revenue, gross profit was up 62.8% at €17.5m.

Marketing expenses grew significantly to €4.7m, as a result of the expansion of its media services division, though this was mitigated in part by a slight decline in other operating expenses, to €8.2m. As a result earnings before interest, tax, depreciation and amortisation (EBITDA) grew markedly, rising from €589,000 in the prior year to €4.6m. 

Once €2.1m in depreciation and amortisation charges, plus €1.1m in amortisation related to acquired affiliate assets, were factored in earnings before interest and tax came to €1.3m, compared to a €4.7m loss in the prior year. 

Once finance-related expenses were taken out, GiG’s pre-tax profit stood at €690,000, again a significant improvement on prior year losses of €4.3m. After a €1.5m income tax benefit, it swung from a loss to a profit of €2.2m from continuing operations. 
Its since-divested B2C arm incurred a loss of €67,000, for a profit of €2.1m. This was increased by a €129,000 foreign exchange gain, for a total profit of €2.4m. 

“The business and the team continue to work exceptionally hard to continue to deliver, and with a relentless dedication to improve the business, striving towards its future potential,” GiG chief executive Richard Brown commented. “We have a media business that is again starting to deliver exciting growth prospects and global igaming platform business that is beginning to scale forward.

“A strong start to the year, but this continues to be just the foundations of what is possible to achieve with this business over the coming years and what we as a group are targeting long term.”

Digitain NFL banner