Gambling Industry Acquisitions and Financial News — Weekly Round-up for April 13, 2018

Nektan Reports Continued Growth In Q3-2018

Revenues and cash wagering numbers rise

Gibraltar-based international B2B and white label gaming software and services provider, Nektan plc has posted a trading and business update for the three months ended 31 March 2018 (Q3 FY18), with the following unaudited highlights:

  • Net Gaming revenue up 44.8 percent y-o-y at GBP 5.1 million;
  • 5.4 percent y-o-y decline in First Time Depositors at 36,359;
  • Cash wagering increase of 43.8 percent y-o-y;
  • The company launched 18 new sites and five new partners in Q3 FY18, and now operates a total of 111 brands from 49 partners with plans to launch up to 20 new sites from both existing and new partners throughout the quarter ending 30 June 2018;
  • A total of 73 games were launched in Q3 FY18, from three new as well as existing game vendors, further diversifying Nektan’s game portfolio.

Business-to business highlights included:

  • Nektan generated GBP 83,000 in revenue from the B2B business during Q3 FY18 versus GBP 47,000 in Q2 FY18 with a total of nine deals now live globally;
  • The first global platform deal with Tyche Digital is now live and generating revenue, opening up a significant pipeline of further opportunities;
  • Nektan has a total of three deals now live in Asia and has completed 10 game vendor integrations delivering 250+ games on its Evolve Lite platform;
  • The company expects to go live with its first Tier 1 operator in Asia during April 2018 and Tyche has signed a further four deals with significant Asian operators, which are expected to go live before Nektan’s financial year-end;
  • During the last quarter, Nektan went live with a sheltering deal allowing games developer Magnet Gaming to operate in Gibraltar under Nektan’s licence. Further sheltering deals are expected to be approved and launched before the financial year-end;

On-Premise Gaming (North America)

  • Nektan’s US subsidiary, Rapid Games, continues to generate significant interest in its on-premise solution and is expected to complete back-end system integration with a major commercial operator and to initiate trials with further multi-property groups during the current quarter;
  • During the last quarter, Rapid Games completed the development of, and received certifications for, its latest product additions, which now include a third party Class III RGS, integrations with smart tables and tablets, a growing library of both Class II and III games and compliance with an expanding list of standards and regulations.

Gary Shaw, Interim Chief Executive Officer of Nektan, reported:

“Our results clearly demonstrate Nektan’s growing commercial and operational strength throughout international markets. The significant increase in net gaming revenues and cash wagering from our European white label business represents continuing growth momentum. This growth, at the same time as launching into new markets, underlines Nektan’s strength of management and technical capabilities. I am particularly pleased with our ability to expand, deploy and support in multiple geographic markets during this period from our stable, centralised cost base, delivering incremental revenue growth to the Group.

“We remain confident about our growth strategy and look forward to announcing further encouraging updates over the coming months.”

Italian Online Gambling Enjoys A Strong Performance In March

New online casino record, and significant improvement in sports betting

Latest numbers from Italian news outlet Agimeg show that the Italian online gambling market continued to deliver a robust performance in March, delivering new online casino revenue records and outstanding sports betting results.

The online sports betting vertical delivered revenues up 82.4 percent year-on-year at Euro 51.3 million over the month on turnover that rose 12.4 percent at Euro 546.2 million. By contrast, the retail sector generated revenues of Euro 59.8 million on turnover of Euro 385.4 million.

Top online sports betting performer was Bet365 with market revenue share of 16.5 percent, followed by Planetwin365, Eurobet, Snaitech and Sisal.

Overall revenue in the online casino vertical rose 27 percent y-o-y to Euro 60.6 million, overtaking the old record of Euro 59.7 million recorded in January this year. PokerStars led the market with 9.3 percent market share, pursued by Lottomatica on 8.8 percent and Sisal, Eurobet, and 888 Holdings.

Online poker performance remained low but positive, with tournament fees up 7.4 percent at Euro 8 million, and cash games stakes up 1.5 percent at Euro 6.3 million. Predictably, PokerStars led the vertical, with 62.4 percent of the tournament market and 40.3 percent of cash game spending.

The virtual sports vertical was almost entirely successful in the retail sector, where Euro 21.1 million of the total Euro 22.8 million in revenue was generated. Goldbet dominated the sector, followed by Snaitech and Eurobet.

Online bingo revenues came in at just Euro 2.8 million.

Aspire Global Hails 2017 Full Year Results

A milestone year… an IPO, record revenues and record EBITDA

iGaming solutions provider Aspire Global has reported a strong full year 2017 performance with record result in terms of revenue and EBITDA.

The company posted a record revenue increase of 18 percent to reach Euro 71.9 million (2016: Euro 61 million) and EBITDA of Euro 14.3 million (2016: Euro 11.4 million), up 25 percent.

Aspire revealed it is actively seeking merger and acquisition opportunities for faster growth while also narrowing its focus on activities in soon-to-be and regulated markets such as Sweden.

Chairman of the board Carl Klingberg, said: “We are looking forward to realising the grand agenda for the coming year, aiming at continued strong growth on a yearly basis.”

Playtech On The Acquisition Trail Again

Italian operator Snaitech the latest target in a Euro 846 million deal

Playtech plc has announced that it has reached an agreement with certain shareholders of Snaitech S.p.A to acquire an approximately 70.6 percent. of the issued share capital of Snaitech.

Upon completion of the deal, Playtech will be required to make a mandatory takeover offer for all the remaining shares in Snaitech, subject to regulatory and shareholder approvals. Full completion is expected to occur in Q4 2018

Strategic highlights of the acquisition include:

  • Creates leading vertically integrated retail and online Italian gaming business that will control its own technology across all products and verticals from land-based to online;
  • In line with Playtech’s strategy to invest in profitable, highly cash generative businesses with strong management, similar DNA and attractive financial returns;
  • Significantly enhances Playtech’s revenue mix towards regulated markets, with 78 percent of the enlarged group’s 2017 pro-forma revenues from regulated markets;
  • Establishes strong presence in Italy, Europe’s largest and growing gaming market, a fragmented market which is relatively underdeveloped online;
  • Builds upon Playtech’s historical success of developing online markets through structured agreements;
  • Combines two market leading players in the B2B / B2C space with brand strength and scalable offerings and provides Playtech with incremental organic growth potential and greater strategic optionality;

Key strengths and competitive advantages of Snaitech include:

  • The leading market position in retail betting, one of the most extensive gaming machine networks and a strong online position in Italy;
  • Distinct competitive advantages, underpinned by a strong brand and extensive franchisee based distribution network;
  • Proprietary technology that is complementary to Playtech technology platform; and
  • Experienced management team with a successful operational and financial track record who will remain with Playtech post acquisition.

Financial highlights include:

In 2017, Snaitech generated revenue and EBITDA of Euro 890 million and Euro 136 million respectively;

  • Total purchase enterprise value of Euro 846 million with implied EV/EBITDA (pre-synergies) of 6.2x;
  • Expected material annual cost synergies of Euro 10 million and revenue synergies;
  • Transaction funded by a combination of existing cash resources and new debt facilities;
  • Enlarged group net debt leverage of below 1.5x times 2017 EBITDA; and
  • Significant EBITDA enhancement and double-digit EPS accretion.

Playtech CEO Mor Weizer said in a statement Thursday:

“The acquisition of Snaitech represents the continuation of our strategy to invest in leading retail brands in fast growing, regulated markets. The acquisition delivers the Board’s strategic objective to improve the quality and diversification of Group revenue, whilst delivering exposure to high growth end markets, by utilising the strength of Playtech’s balance sheet.

“Playtech has always been at the forefront of its industry and the acquisition offers the opportunity to create a vertically integrated B2B2C operator in Europe’s largest gambling market, delivering significant value to shareholders.”

Fabio Schiavolin, Chief Executive Officer of Snaitech said:

“This acquisition reflects Snaitech’s position as one of the leading and best known brands in Italy and delivers meaningful value to our shareholders. The combination of Playtech’s technology and experience in Italy with Snaitech’s powerful brand mean we will be better able to capture the online opportunity in the fast growing and dynamic Italian market. We are pleased to be joining the Playtech team and look to the future with confidence and excitement.”

New Gioco Sales Rise In First Quarter

90.93% year-on-year increase in online sales posted

Austria and Italy-facing gambling group Newgioco has posted a positive first quarter for 2018, reporting increased online sales and a $570,000 reduction in debt.

The company said Thursday that online sales via subsidiary Multigioco were up an impressive 90.93 percent in Q1-2018 at $45.8 million (Q1-2017: $24 million). Betting turnover rose 67.2 percent y-o-y to $52.7 million, $6.56 million of it from online activity or a rise of 63.7 percent on the same quarter last year.

Importantly, NewGioco was able to report that it has reduced its debt burden by $570,000, re-financing half a million dollars on better terms.

CEO Michele Ciavarella reported: “We remain proactive towards merger and acquisition opportunities to move the group further towards becoming a premier international leisure betting operator.” He added that management is optimistic regharding potential new markets in the USA and South America.