Licensing strategy delivering adjusted EBITDA growth of 69% and adjusted EBITDA of £5.7m
Gaming Realms plc (AIM:GMR), the developer and licensor of mobile focused gaming content, announces its annual results for the year ended 31 December 2021 and Q1 highlights for 2022.
Gaming Realms’ licensing strategy has enabled the Group to grow revenues at high margins during FY21. The Group launched in several new regulated iGaming markets which will provide continued growth in the coming year.
2021 Financial Highlights:
· Revenue increased by 29% to £14.7m (2020: £11.4m) for the year
o Licensing revenue increased 48% to £11.1m (2020: £7.5m)
o Social publishing revenue decreased 8% to £3.6m (2020: 3.9m). On a constant currency basis, the decline was 1%
· Adjusted EBITDA before share option and related charges increased 71% to £5.7m (2020: £3.3m)
· EBITDA increased 146% to £5.0m (2020: £2.0m)
o Licensing segment generated £6.4m EBITDA (2020: £3.5m)
o Social publishing segment generated £1.1m EBITDA (2020: £1.4m)
o Head office costs were £2.5m (2020: £2.9m including £0.7m of restructuring costs and impairment charges) due largely to the increase in share option and related charges and growth in business activities
· Profit after tax for the year of £1.3m (2020: Loss of £1.5m)
· Year-end cash balance increased to £4.4m (2020: £2.1m)
2021 Operational Highlights:
· Increased portfolio to 53 proprietary games on the Group’s remote game server (“RGS”) (2020: 44)
· Launched in 2 regulated iGaming markets in the U.S. in Michigan and Pennsylvania
· Launched in European regulated iGaming markets in Italy, Romania and the Netherlands
· Launched with 35 new partners for Slingo Originals content including Wynnbet, Sisal, Aspire Global and Goldbet
· Signed inward brand licensing deals with Everi, Discovery Channel, IGT, Play AGS, Pragmatic Play
· Increased unique players in licensing business by 48%
· Prepared for launch in the Ontario, Quebec and Spanish markets
· Extended brand licensing deal with Scientific Games for Slingo branded lottery instant scratch cards
Q1 2022 Highlights:
· Increased licensing revenue 43% in Q1 2022 to £3.0m (Q1 2021: £2.1m)
· Launched in Spain with Gamesys and Yo Bingo (part of Rank Group)
· Launched with Loto-Québec
· Obtained iGaming Supplier Licence from Ontario with subsequent launch earlier this month
· Released four new Slingo games: Slingo Superspin, Slingo Fire & Ice and Slingo Racing
 EBITDA is profit before interest, tax, depreciation, amortisation and impairment expenses and is a non-GAAP measure. The Group uses EBITDA and adjusted EBITDA to comment on its financial performance. Adjusted EBITDA is EBITA excluding non-recurring material items which are outside the normal scope of the Group’s ordinary activities. Adjusting items in the prior year include management restructuring costs and impairment of financial assets.
 Adjusted EBITDA before share option and related charges.
Gaming Realms continues to deliver on its strategy of expanding its game portfolio and launching into new regulated markets. In 2021, the Group launched in 5 new regulated markets, including Michigan and Pennsylvania in the U.S., and will continue to grow its market share in these territories during 2022. Since the beginning of 2022, the Group has launched its Slingo portfolio in Spain and, more recently, Canada through the newly launched market in Ontario and with Loto-Québec. With 10 new partners launched to date in 2022, together with the launch of 4 new Slingo games, the Board is confident in the Group’s strategy and expectations for the current year. Whilst still early in the year, the Company is currently trading ahead of management expectations and therefore is confident in the outlook for the year.
Commenting on the Group’s performance, Michael Buckley, Executive Chairman, said:
“2021 was another exceptional year for the Group as we expanded our Slingo portfolio and entered new regulated iGaming markets, increasing revenue by 29% and producing a maiden profit for the financial year of £1.3m.
“Our core licensing business continued to go from strength to strength as we secured 35 new licensing and distribution partners throughout the year that supported a 48% growth in the number of unique players enjoying our content globally.
“The Group’s commitment to increasing our global presence during the period has provided us with a strong foundation on which to deliver further growth in 2022 as we remain focused on expanding our foothold in these territories. Momentum has certainly continued into the year so far, having already released four new games and launched in both Spain and Canada. With additional planned launches in new markets and with new partners in the pipeline, we look forward to providing further updates in due course.”
About Gaming Realms
Gaming Realms creates and licenses innovative games for mobile, with operations in the UK, U.S., Canada and Malta. Through its unique IP and brands, Gaming Realms is bringing together media, entertainment and gaming assets in new game formats. The Gaming Realms management team includes accomplished entrepreneurs and experienced executives from a wide range of leading gaming and media companies.
Executive Chairman’s Statement
The Group made excellent progress during the year, increasing revenues by 29% to £14.7m (2020: £11.4m), and adjusted EBITDA by 71% to £5.7m (2020: £3.3m) before share options and related charges. We invested heavily in our proprietary Remote Game Server “RGS” platform, and expanded into multiple regulated markets. We also increased our Slingo Originals game portfolio to 53 with the addition of 10 new games, and licenced Slingo into adjacent markets including our lottery deal for physical scratch cards in North America.
This resulted in revenue growth of 48% in our licensing business to £11.1m (2020: £7.5m), and we are continuing to see strong momentum in this area with increased international demand for our Slingo Originals portfolio. With growing distribution via our RGS combined with control of overheads, we were able to increase our EBITDA margin within the licensing division to 57% (2020: 50%).
Licensing business highlights:
· Increased library of proprietary games to 53 games in total at year-end.
· Went live with 35 new partners during the year, all of whom have licensed the Company’s Slingo Originals content.
· Launched in 2 additional regulated iGaming markets in the U.S. being Michigan and Pennsylvania.
· Launched in 3 regulated iGaming markets in Europe, being Romania, Italy and the Netherlands.
· Increased unique players in the year by 48% to 3.36m (2020: 2.28m).
· Signed deals with IGT, Play AGS and Pragmatic Play as partners for new branded Slingo games.
· With growth in New Jersey, together with launches in Michigan and Pennsylvania in the second half of the year, U.S. content licensing revenues grew 47% in 2021, and by 56% with constant currency conversion.
· Extended brand licensing deal with Scientific Games for Slingo branded lottery instant scratch games.
We continue to operate our Social business as a partially integrated division. This gives us an opportunity to rebrand our real money games for social users, and monetise them further. It also keeps the Slingo brand within the Group, and has the advantage of bringing our games to a wider audience, many of whom play for real money as and when they are in a regulated territory.
Revenue from Social decreased 8% to £3.6m (2020: £3.9m), but this decline was marginal at 1% on a constant currency basis. EBITDA decreased to £1.1m (2020: £1.4m), the decline again exaggerated by currency movements. However, the Social business continued to provide a positive cash contribution to the Group.
The Group made significant progress during 2021 towards expanding its presence in the U.S. iGaming market beyond New Jersey, being granted additional full iGaming Supplier Licences in the U.S. states of Michigan and Pennsylvania. An application process was started for a supplier license in Ontario, Canada, which was subsequently granted in March 2022. Ontario is likely to be a larger market than any of the currently regulated U.S. states.
Capitalising on these opportunities, we signed a number of direct integration and multi-State deals, and the Group now has licensing agreements with the majority of the U.S. iGaming market. These include multi-State deals with BetMGM, Draftkings, Fanduel, Rush Street Interactive, Golden Nugget, Poker Stars, Barstool/PNG, Kindred, Wynn Interactive, Parx, Tropicana/Gamesys and Caesars Entertainment. The Company also has direct integrations with BetMGM, Draftkings, Rush Street Interactive, Fanduel, Golden Nugget, Gamesys, Wynn Interactive and 888.
Gaming Realms continued to strengthen its position in the growing European market having successfully launched in the Italian iGaming market with Goldbet and Sisal in January 2021.
In November 2021, Gaming Realms entered the regulated Romanian iGaming market through a partnership agreement with Superbet, the largest digital and retail betting operator in Romania. Superbet now publishes many of the games from the Slingo Original’s portfolio.
Further bolstering its European presence, Gaming Realms went live in December 2021 with JVH gaming and entertainment group in the newly regulated Dutch market under the Jack’s Casino and Sports brand (“Jack’s Casino”).
Board and employees
Despite a number of Covid-19-related challenges during 2021, the Group’s senior management and staff demonstrated outstanding teamwork and resilience, and the operational and financial outcomes achieved during the year owe much to their skill and commitment. On behalf of the Board and shareholders, I would like to pass on my sincere thanks to all of them.
After joining the Board in 2019, Chris Ash resigned as a Non-Executive Director of the Company in September 2021 given conflicts of interest that could arise from our third-party distribution agreement with 4ThePlayer.com, of which he is a Director. On behalf of the Company, I would like to thank Chris once again for the valuable guidance and strategic advice he provided in scaling our licensing business.
Post Period End and Outlook
Gaming Realms continues to focus on the following areas:
· International expansion – particularly in the US and European regulated markets
· Adding new distributors, operators and licensors
· Further penetration with existing distributors and operators driven by new games
Momentum has continued into 2022, with Gaming Realms focusing on regulated markets and North America in particular. In this regard, we launched our game portfolio in Ontario on 4 April 2022, having already gone live with Loto Quebec in March. With the increased number of states we are now in, together with our multi-State deals with the largest operators, we are well placed to gain market share in North America.
In January of this year, the Group entered the regulated Spanish market with long-term strategic partner Gamesys (now part of Bally’s Corporation) under its Monopoly and Botamania brands and has since launched with Yo Bingo (part of Rank Group). Looking to the future, we have recently signed a deal with Microgaming, one of the largest distributors of content in the industry, and hope to launch our game portfolio with some of their partners shortly.
We have already increased our games portfolio with 4 new games in 2022, and during the course of this year we will introduce new marketing features on our platform. These developments will maintain and drive stronger relationships with our partners and players. The Company has made an excellent start to the current year, with licensing revenues increasing by 43% year-on-year for the first quarter of 2022, and unique players increasing by 39% to over 1.5 million in the same period. This strong performance in the first quarter, combined with new markets and partners coming on stream, leads your Board to believe the Company will continue to grow significantly following its proven successful strategy.
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