Amortisation and interest expenses related to ilottery and igaming solutions provider NeoGames’ acquisition of Aspire Global pushed the business into a net loss in its Q1 financial results.
NeoGames characterised the results as maintaining momentum it carried from the end of 2022 into Q1 2023. Chief executive Moti Malul highlighted a number of the business’ achievements during the quarter.
“In ilottery, our proprietary games from NeoGames Studio continued to perform strongly across all of our key accounts and, together with the jackpot runs early in the quarter, have contributed to strong performance in the US,” he said.
“We are also proud to note that our customer, the Virginia Lottery, recently became the first US lottery to operate a completely cloud-based ilottery programme.”
For NeoGames’ gaming solutions divisions, Mulul pointed to its BtoBet B2B sports betting subsidiary that processed an all-time high of one billion bets during March. The executive also highlighted the work achieved by the company’s igaming content provider business PariPlay during the quarter.
In the three-month period PariPlay went live with 12 operators including DraftKings and signed another 10 deals, including one with Swedish operator Betsson.
“Equally exciting as the developments across all of our business units is the impact they had on our financial results,” Malul added.
“Our revenue grew 187% year-over-year and we were able to maintain EBITDA margins above 30% across the company operating segments. We look forward to building off this strong first quarter throughout the balance of the year and beyond.”
Revenue soars due to acquisition in NeoGames Q1
The company’s large year-on-year increase in revenue, which rose to $64.2m from the $22.4m the business achieved in the same period of the previous year, reflected “primarily” the business combination with Aspire.
Completed in June 2022, the $423.5m deal saw the business merge with the igaming solutions provider, then CEO Tsachi Maimo becoming company president and leading the newly formed igaming division. This igaming segment reported $35.1m in revenue in the first quarter of 2023.
The business’ ilottery segment – which was not affected by the acquisition – grew 8.7% on an annual basis to $14.4m from $13.3m.
On total revenue, the business announced an adjusted EBITDA of $20.2m, a 136.8% rise from the $8.5m the company reported pre-merger in Q1 last year.
Ultimately, NeoGames reported a net loss of $900,000 for the three-month period, representing zero movement from the $900,000 loss the company reported the previous year.
The company said that the loss this year was principally the consequence of share impacts from the amortisation of intangible assets related to the Aspire acquisition. The business saw a $13.6m hit from depreciation and amortisation costs in the quarter.
The supplier also said that interest rates resulting from the merger also hit the impacted NeoGames’ bottom line in 2023. These costs stood at $5.3m for the three-month period ending 31 March.
Other costs also made an impact on the company’s balance sheet. NeoGames reported a nearly 100% increase in distribution expenses, which rose from $2.5m in Q1 2022 to $23.4m.
