- COMPANY RESULTS
Gaming Innovation Group (GiG) reported a year-on-year increase in revenue and net profit during 2023, the final full year before the business splits in half.
The decision to split came in early 2023, with GiG launching a strategic review in February. This will see the GiG Media affiliate and Platform & Sportsbook divisions become separate entities.
GiG Media includes all media offerings such as affiliate lead generation services. Platform & Sportsbook covers technical igaming platforms including Sportnco, acquired in April 2022, and front-end development and other managed services.
Over the course of 2023, GiG has been working to prepare for the split. This includes making a series of senior appointments, with Richard Carter to lead the Platform & Sportsbook business as CEO and Jonas Warrer GiG Media.
Amid this, GiG in September announced the exit of Richard Brown as CEO. This was ahead of schedule, with Brown having been due to remain at GiG until the end of 2023. He took over as CEO Glitnor Group in January.
GiG remains committed to M&A strategy
As for other recent developments, GiG in November announced the acquisition of KaFe Rocks. GiG said this would accelerate its market presence in the North American market. This followed its purchase of AskGamblers back in January 2023.
Amid all this, GiG reported a strong set of results for 2023, with both revenue and net profit higher year-on-year. As such, chairman Petter Nylander was full of praise for the group, talking up its growth potential for 2024 and beyond.
“Looking ahead, we remain committed to our strategic objectives, including the planned split of the company into two separate entities,” Nylander said. “This strategic move will unlock new growth opportunities and maximise value for our shareholders.
“As we approach the split in 2024, we are confident in setting new long-term financial targets for both GiG Media and Platform & Sportsbook. With our strong performance, diversified earnings and robust growth prospects, we are well-positioned for success in the years to come.”
GiG splits revenue report for 2023
Looking at the results for 2023, consolidated group revenue hit €126.m (£108.1m/$136.0m), up 40.8% year-on-year. However, due to the planned split, GiG says Platform & Sportsbook is reported here as a discontinued operation.
As such, consolidated revenue for the year was 44.4% higher at €89.1m, all of which came from GiG Media. Growth here was helped by a rise in publishing revenue, which increased throughout the year, while first-time depositors were also up in 2023 by 34.0%.
In terms of revenue from Platform & Sportsbook, this amounted to €37.8m, up 33.6%. This was helped, GiG says, by the Sportnco acquisition in the previous year. GiG now works with partners across 29 markets through its Platform & Sportsbook division.
Higher costs fail to dent profit hike
Breaking down other figures for 2023, GiG did this based on consolidated revenue, covering just its GiG Media business. Again, GiG said this was in line with preparations for the proposed split.
Based on consolidated revenue, operating expenses were 50.9% higher at €48.9m. Costs for depreciation and amortisation and amortisation of acquired assets were also up, as were financial expenses.
This left a pre-tax profit of €16.7m, down 15.2%. GiG paid €3.3m in tax, meaning a $13.4m net profit from continuing operations, down 29.1%. Adjusted EBITDA for this business was 36.4% higher at €40.1m.
However, GiG also accounted for a €2.4m profit from assets held for distribution – Platform & Sportsbook. Last year, this generated a €13.2m loss.
When also including a €736,000 loss from discontinued operations and €669,000 negative difference from foreign currency translations, GiG was left with a comprehensive net profit of €14.5m. This, it says, was 383.3% ahead of €3.0m in 2022.
Mixed results in Q4 for GiG
Looking at the final quarter of the year, consolidated group revenue was 36.3% higher at €35.6m. Excluding Platform & Sportsbook, consolidated revenue was still up by 48.9% to €26.5m.
For GiG Media, where, again, all consolidated revenue came from, first-time depositors hit an all-time quarterly high of 137,600. Paid media represented 27% of all GiG Media revenue in Q4, revenue share agreements 60%, cost per acquisition 8% and listing fees and other services 33%.
As for Platform & Sportsbook, revenue was 11.0% higher at €9.1m for the quarter. GiG says 82% of operator gross gaming revenue came from locally regulated or soon to be regulated markets. Of all revenue, 61% came from Europe, 13% North America, 20% Latin America and 6% rest of the world.
However, accompanying this revenue increase was a 68.5% jump in operating expenses to €15.0m. Financial expenses were also higher, although slightly offset by depreciation and amortisation and amortisation of acquired assets.
This left a pre-tax profit of €2.2m, down 63.9% from Q4 of 2022. After paying €1.8m in tax, profit based on these figures was down 92.6% to €402,000. Adjusted EBITDA, however, was 29.2% higher at €11.5m.
Figures did not improve when including Platform & Sportsbook. Loss for the assets held for distribution totalled €4.3m while GiG also reported a €555,000 negative impact from the exchange differences on translation of foreign operations.
As such, this left GiG with a comprehensive net loss for Q4 of €4.6m, in contrast to the €108,000 profit in 2022.
CEO remains upbeat on Q4 Media earnings
Despite the mixed bag during Q4, Warrer said GiG Media was presenting a hat trick – “all-time high revenue, all-time high player intake, and all-time high EBITDA” – for the quarter during the company’s earnings call.
However, he admitted that it was a “very unusual” quarter for the business, “with split-related and one-off costs” bleeding into the results.
Commenting on GiG Media’s international performance, Warrer said GiG has a “sustained belief” in Europe and the Americas. This is despite player intake in GiG’s Paid division falling 28% year-on-year, which Warrer attributed to the Fifa World Cup taking place in 2022.
“With the FIFA world cup, Latin America – especially last year – was a very attractive market to attract players in,” he said. He added that GiG’s acquisition of KaFe Rocks “supports expansion in North America and LatAm”.
The CEO also outlined six key growth pillars for GiG Media, focusing on opportunities for growth and diversification. Regarding the second pillar – centred on M&A – Warrer confirmed that GiG is “looking into” other international partnerships, “as we can see it is a way to grow material revenue”.
He added that the migration of single-market websites to GiG Media’s platform during Q4 had improved “the quality of offerings across the portfolio”.
Looking at Platform and Sportsbook, Carter said the business’s revenue increase during Q4 “was all organically driven”. As for the business’s integration and sales, Carter revealed that GiG has “very strong visibility” that it’ll “be able to launch at least another three brands before the end of this quarter.”
In terms of the year ahead, Carter added that in 2024, “the market will start to get a strong visibility as to where this business is going”.
“The most growth will be driven by bringing on new customers.”