13 November 2024
Gaming Innovation Group Software Plc
("GiG" or the "Company")
Q3 2024 Report
Results in line for Q3 2024 with sales momentum increasing throughout the period and into Q4
GIG Software Plc (First North: GiG SDB), a leading B2B iGaming technology company, is pleased to announce its financial results for the third quarter ended 30 September 2024.
Key Operational Highlights
- Successfully listed on the Nasdaq First North Premier Growth Market in Stockholm, Sweden, under the ticker GIG SDB. New listing will enable management to reinvigorate GiG's sales and marketing activities to help expand the Group's global client reach
- Revenue for the quarter amounted to €7.4 million, with underlying revenue (excluding client exits and Enterprise revenue), growing 26% YOY from €5.8 million in Q3 2023 to €7.3 million in Q3 2024
- New SweepX product launch to target the fast-growing sweepstake market in the US (five contracts and head of terms already signed)
- Delivered multiple new customer launches, notably with Betsson via their Inkabet brand in Peru and in Mexico with LuckyDays
- New contracts signed, including with Primero, a market-leading US developer of innovative skill-based games
- Significant new business pipeline continues to build, with €36 million at commercial stage and a total pipeline of over €60 million at the end of September 2024
- Post quarter-end agreements signed with leading land-based casino and leisure brands both in the Philippines with Bloomberry Resorts Corporation under their market-leading Solaire brand, and one in the European market
Financial Summary
- Revenue* of €7.4 million (Q3 2023: €9.3 million) for the third quarter of 2024 and €23.0 million (2023: €28.7 million) for the 9 months ended 30 September 2024
- Adjusted EBITDA** for the third quarter of 2024 was a loss of €1.1 million (Q3 2023: profit of €3.1 million) at a margin of -14.8% (32.9%), and a loss of €3.0 million (2023: profit of €10.0 million) at a margin of -13.2% (34.8%) for the 9 months ended 30 September 2024
- Operating loss (EBIT) excluding exceptional items for the third quarter of 2024 was €9.7 million (Q3 2023: profit of €9.4 million) and a loss of €22.1 million (€8.5 million) for the 9 months ended 30 September 2024
- Cash and cash equivalents balance of €10 million at 30 September 2024
Q3 2024 Financial Breakdown
€m | Q3-2024 | Q3-2023 | % Change | Jan-Sept 2024 | Jan-Sept 2023 | Jan-Dec 2023 |
Revenue* | 7.4 | 9.3 | -21% | 23.0 | 28.7 | 37.8 |
Adjusted EBITDA** | (1.1) | 3.1 | -136% | (3.0) | 10.0 | 8.4 |
EBITDA*** | (3.7) | 12.7 | -133% | (7.4) | 19.3 | 15.6 |
Adjust EBITDA margin | -14.8% | 32.9% | 0 | -13.2% | 34.8% | 22.2% |
EBIT*** | (9.7) | 9.4 | -209% | (22.1) | 8.5 | 3.5 |
(Loss)/Profit after tax | (59.6) | 9.1 | -755% | (74.1) | 6.1 | (0.1) |
Cash and cash equivalents | 10.0 | 10.0 | 10.6 |
*2023 results contain €7.8m one-off revenue related to GiG Enterprise Solution sale (2024: €1.3m)
**Adjusted for share based payments, one-off spin-off related costs and one-time asset impairments
***2023 EBITDA/EBIT contains €10.4m reversal of contingent consideration for 2022 SportnCo acquisition. 2024 EBIT excludes one-off extraordinary item of €50.8m relating to intangible asset write-downs
Richard Carter, Chief Executive Officer of GiG, commented:
"Q3 has been a momentous quarter for GiG, both in terms of underlying activity for the business and for our investor base by being able to realise our value on the First North stock exchange as a standalone Group.
The quarter saw considerable activity across all areas of the business, including product development with the launch of our new sweepstakes product, SweepX, pipeline generation, customer signings and new brand and customer launches.
Looking ahead to Q4 and beyond, I am confident that GiG has never been in a better position to expand its presence across the global B2B iGaming and sports betting markets. Underpinned by strong existing partnerships, alongside our cutting-edge proprietary technology that we have refined over a number of years, I am optimistic of an extremely bright and growth-filled future."
Investor Webcast
CEO, Richard Carter, and CFO, Phil Richards, will provide a presentation and Q&A for investors and shareholders via the Investor Meet Company platform on Wednesday, 13 November 2024 at 11.00 a.m. CET / 10.00 a.m. GMT.
The online presentation is open to all existing and potential shareholders and registration is free. Questions can be submitted during the presentation and will be addressed at the end.
Investors can register for the presentation via the following link:
https://www.investormeetcompany.com/gig-software-plc/register-investor
Financial Statements and Notes to the Accounts
For access to the Financial Statements and Notes to the Accounts for the third quarter ended 30 September 2024, please view the accompanying PDF attachment.
For further information, please contact:
GiG Software PLC Richard Carter, Chief Executive Officer Phil Richards, Chief Financial Officer | via Vigo Consulting / ir@gig.com |
Vigo Consulting (Investor Relations) Jeremy Garcia / Kendall Hill / Peter Jacob GiG@vigoconsulting.com | Tel: +44 (0) 20 7390 0230 |
About GiG Software Plc
GiG Software is a leading B2B iGaming technology company that provides premium solutions, products, and services to iGaming operators worldwide, fully compliant with regulatory requirements. GiG's proprietary technology empowers our partners by delivering dynamic, data-driven, and scalable iGaming solutions that drive user engagement, optimise performance, and propel sustainable growth in the ever-evolving digital landscape. GiG's vision is to be the pioneering force in the iGaming industry, transforming digital gaming experiences through innovation and technology that inspire and engage players worldwide.
GiG operates out of Malta and is listed on the NASDAQ First North Premier Growth Market in Stockholm, Sweden, under the ticker GiG SDB.
Find out more at www.gig.com.
Follow us on social media:
LinkedIn: https://www.linkedin.com/company/gig-gaming-innovation-group/
X: https://twitter.com/GIG_online/
This information is information that Gaming Innovation Group Software Plc is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 08.00 am CET on November 13, 2024.
CEO's Review
I am delighted to introduce GiG Software plc ('GiG'), one of the newest additions to Sweden's Nasdaq First North Premier Growth Market (ticker: GIG SDB). After what has been many months of hard work from all involved across GiG, including advisors and our former colleagues at Gentoo Media, I am proud to say that as of 1 October 2024, GiG is officially a standalone listed business. More importantly, we are now in charge of our own destiny and have already started to unlock the significant potential of our underlying business.
Whilst Q3 was rightly dominated by our stock market listing, this new structure provides a level of autonomy our team has never experienced before. Going forward, we will be able to focus on the business, from the ongoing development of our world-class product suite to refreshing our go-to-market strategy, as we target both new customers and territories. This reinvigorated focus will enable the team to deliver upon our mid-to-long-term growth ambitions.
Pleasingly, Q3 saw considerable activity across all areas of the business, including product development with the launch of our new sweepstakes product, SweepX, pipeline generation, customer signings and new brand and customer launches.
Underlying revenue growth was 26% when stripping out the impact of one-off revenue generating activity in 2023, which was in line with market expectations and further demonstrates the robust nature of our revenue generation. Consequently, GiG has laid solid foundations for the rest of 2024, 2025 and beyond.
Our overarching focus remains on ensuring that we continue to offer best-in-class, premium products to our partners and potential customers across the globe, helping support their growth and ultimately leading to the development of mutually beneficial partnerships where both sides are able to thrive. We see the addition of SweepX to our growing product portfolio as just one example of the additional verticals that we have been able to build and launch at scale in a very short time period.
I am very pleased with the continued healthy rate of launches that we were able to facilitate during the quarter, and what is particularly compelling is the amount of additional launches we will be able to handle in the future after we significantly increased our capacity for new client launches. This will enable us to realise the revenue from our ever-growing pipeline at an earlier period due to our ability to launch multiple brands and clients over a very short space in time.
The quarter culminated with a very successful event at SBC in Lisbon, where management held many extremely productive meetings with current and potential customers. These continued after quarter end with the team attending G2E in Las Vegas to make further inroads into the US market.
In summary, Q3 has been a momentous quarter for GiG, both in terms of underlying activity for the business and for our investor base by being able to realise our value on the First North stock exchange as a standalone Group.
Looking ahead to Q4 and beyond, I am confident that GiG has never been in a better position to expand its presence across the global B2B iGaming and sports betting markets. Underpinned by strong existing partnerships, alongside our cutting-edge proprietary technology that we have refined over a number of years, I am optimistic of an extremely bright and growth-filled future.
Richard Carter
CEO
13 November 2024
Q3 2024 Highlights
Commercial Update
New Customer Signings
During Q3 2024, GiG signed three new customers to its market-leading suite of services, in addition to five binding Heads of Terms across the period. Of particular significance was GiG's announcement that it has further extended its footprint in the UK with a long-term agreement to power the Betzone brand with its revolutionary iGaming platform, CoreX, and powerful workflow automation tools, LogicX and DataX.
These signings further demonstrate the success of GiG's renewed commercial strategy, and come in addition to the significant increase in our overall sales pipeline, which ended the quarter at a new high of over €60 million in opportunities as at 30 September 2024, with over half of these at advanced contractual or signed stage.
Brand Launches
During the Quarter, GiG launched four brands across three different markets, including with Betsson via its Inkabet brand in Peru, where GiG expects the brand to tap into this significant and growing market. Alongside Inkabet, GiG also launched brands in Spain with Sol Casino and Emotiva, and in Mexico with LuckyDays.
Market Update
GiG has identified key market opportunities for growth in the near future, as we align our strategic focus on expanding into regulated and emerging regions. With anticipated changes in regulation and market demand, GiG is well-positioned to leverage its innovative technology solutions to drive success and strengthen its footprint in the following dynamic territories:
- Finland: Finland's gambling market is currently controlled by the state monopoly, Veikkaus. However, there are discussions about moving to a multi-licensing system like Sweden's, to reduce illegal gambling and boost tax revenue. New regulations may come into effect by 2025, opening doors for international operators.
- Brazil: Brazil is moving from an unregulated to a regulated market for online gaming and sports betting. While a sports betting law passed in 2018, full regulations have been slow. In 2023, steps were taken to create a regulatory framework, with full implementation expected by 2024. This regulation aims to increase government revenue and attract global operators
- New Zealand: New Zealand's market is mainly managed by the Lotteries Commission and TAB. Offshore operators dominate, and the government plans to introduce stricter rules. A licensing framework is expected to be developed by 2025, allowing for regulated local and international operations
- France: France, a mature regulated market, is focusing on responsible gambling and advertising restrictions. The regulator, ANJ, is reviewing potential expansions to online casino licensing, with possible legislative changes by 2025, creating new opportunities for iGaming operators
- Sweepstakes: In the US, sweepstakes gaming is growing rapidly, functioning outside traditional gambling laws. As the market matures, clearer guidelines are expected, focusing on consumer protection and fair play.
Strategy
GiG offers innovative and proprietary products with an unparalleled geographical footprint with certifications in 29 markets worldwide. This gives GiG a large overall addressable market and, with the combination of our recently launched social sweepstakes casino platform, SweepX, next-generation iGaming platform CoreX, market-leading sportsbook, SportX, and AI-driven solutions, LogicX and DataX, the total addressable market is expected to significantly expand into 2025.
New market entries and the rollout of our next-generation X Suite products not only widen and expand our ability to sign up new clients for our turnkey product suite, but also offer the option for material growth and diversification for our existing clients through extended geographical presence and a wider product offering.
As regulated markets become more demanding for technology providers, our elevated product offering and fast-growing regulated geographic market reach will provide significant opportunities to continue expanding and scaling the business, improving revenue quality and growth, and ultimately increasing shareholder value.
2024 & 2025 Outlook
The entry into the newly regulated Peruvian market and the subsequent launch of our long-term partner Betsson's Peruvian brand, Inkabet, onto our technology reinforce the growth opportunities that arise from entering new markets with existing partners. We anticipate securing further new market entry agreements from both existing and new partners in the remainder of 2024.
We continue to enhance our X Suite of products to address the evolving needs of the industry, including faster deployment, the addition of multiple new game providers, new payment options, enhanced scaling, and an increased ability to consume real-time data insights. These improvements aim to capitalise on growing global opportunities and attract larger partners.
In addition to enhancing our existing product offering, we recently launched a new social sweepstakes casino product vertical that will allow GiG to be well positioned to realise the potential of this burgeoning high-growth market, particularly across the US.
GiG enters the rest of 2024 with renewed focus and belief. The recent changes to the Group's operational structure, the development of our highly complementary suite of iGaming and sportsbook solutions, and the significant investment in our commercial and marketing functions will not only materially expand our medium-term total addressable market, but will provide the Company with the ability to enter markets faster, onboard new clients quicker and more effectively, and attract larger and more significant brands. This, alongside the anticipated lessening impact from client exits, new market launches, and significant opportunities to cross-sell and up-sell GiG's full product suite, will enable the Group to accelerate growth and realise the scalability of the business model.
Advanced discussions with key partners continue to develop for both new markets and new products, underpinned by an ever-expanding sales pipeline across platform, sports and sweepstake verticals.
In summary, the renewed strategy and focus on mid- and long-term business objectives are providing us with an increasing number of exciting opportunities to expand and scale the business, improve revenue quality and growth, and ultimately increase shareholder value.
GiG reiterates its 2024 and 2025 financial guidance that was shared during Q2 2024. GiG guidance for FY 2024 revenues is between €30 million to €33 million and Adjusted EBITDA loss of between -€3.5 million and -€2.5 million. For 2025, the figures for revenue and EBITDA are €44 million and at least €10 million, respectively.
Post Q3 2024 Events
On 1 October 2024, GiG had its first day of trading on Sweden's Nasdaq First North Premier Growth Market, under the ticker GIG SDB. This spin-out will enable GiG to further focus on its growth and delivery strategy, allowing for greater autonomy and flexibility while maximising shareholder value in the process.
The Company also entered into a long-term agreements with leading land-based casino and leisure brands both in the Philippines with Bloomberry Resorts Corporation under their market-leading Solaire brand, and one in the European market.
Financial Review
Q3 2024
Revenue
Q3 2024 Revenue decreased by 21% year on year to €7.4 million (Q3 2023: €9.3 million). Within the €9.3 million revenue in Q3 2023, €1.8 million related to the sale of the GiG Enterprise Solution, and an additional €1.8 million derived from clients exiting the business (2024: €nil and €0.1 million, respectively). Therefore, when stripping out the impact of both, underlying revenue grew from €5.7 million in Q3 2023 to €7.3 million in Q3 2024. This revenue growth was driven predominantly from new customers signed during the year, ramping up through the course of the year.
For the nine months to 30 September 2024, revenues amounted to €23.0 million (€28.7 million). This decrease can be attributed to the revenue recognised during the same period of 2023 relating to the sale of the Enterprise solution, being €6.8 million for nine months of 2023 compared to €1.3 million for the comparative period in 2024, and also the aforementioned client exits of which €1.0 million was recognised to September 2024, in comparison to €4.4 million in the prior year. Stripping out the impact of this, for the nine months to September 2024, underlying revenue amounted to €20.7 million (€17.5 million), an 18% increase year-on-year.
Operating Expenses
Operating expenses for Q3 2024 amounted to €8.2 million (Q3 2023: €5.9 million) when stripping out the impact of one-off adjusting items relating both the spin-off and asset impairments. The operating expense increase is predominantly due to additional headcount during 2024, in conjunction with the implementation of management's strategic objectives relating to the standalone GiG business. This included the addition of a new C-level team from the end of 2023 through 2024, and additional investment in software development and marketing.
For the first nine months of 2024, underlying operating expenditure amounted to €24.6 million (€17.8 million), with the increase being driven by additional investment in software development, marketing and personnel costs.
Q3 2024 One-off Adjusting Items
The Company has highlighted specific non-recurring expenditure to give greater visibility over the underlying cost base.
Within the quarter, the Company incurred €0.4 million (€nil) in relation to spin-off costs for the October stock exchange listing, additional bad debt provisioning relating to specific items which required additional impairment of €1.8 million, and share-based compensation of €0.4 million (€0.4 million).
Adjusted EBITDA
When adjusting for the above items, adjusted EBITDA for Q3 2024 amounted to a loss of €1.1 million (Q3 2023: profit of €3.1 million). Adjusted EBITDA for the period to 30 September 2024 amount to a loss of €3.0 million (profit of €10.0 million).
Extraordinary Items
As a part of the spin-off process, GiG performed an impairment review on the carrying value of the intangible assets on its balance sheet. The conclusion of which being an impairment charge of €50.8 million (€nil) being recognised relating to the write-down of goodwill and intangible assets arising from previous acquisitions.
The comparative period in 2023 also contained a one-off gain relating to the reversal of contingent consideration relating to the same acquisition.
EBIT
EBIT for Q3 2024 amounted to a loss of €60.4 million (Q3 2023: profit of €9.4 million). EBIT for the nine months to 30 September 2024 was a loss of €72.9 million (profit of €8.5 million).
Financial Position & Cash flow
The cash position at 30 September 2024 was €10 million (31 December 2023: €10.6 million).
During September 2024, GiG received a €10 million capital contribution in relation to the spin-off transaction and subsequent listing from Gentoo Media Inc (previously GiG Media).
Additionally, all bank loans with the exception of one were repaid in full during the quarter. The remaining bank loan had a value of €0.5 million at 30 September 2024 (31 December 2023 total loan value: €7.0 million).
As mentioned previously, during the quarter the Company recognised significant impairment losses relating to its intangible assets, amount to a reduction in intangible asset valuation of €50.8 million, allocated across goodwill, software development and customer contracts. As a part of this exercise, the Company also recognised additional bad debt provisions during Q3 2024 amounting to €1.8 million.
