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NeoGames optimistic over Aristocrat merger potential amid Q2 growth

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NeoGames’ CEO Moti Malul has talked up further growth opportunities for the business ahead of its acquisition by Aristocrat Leisure, following a Q2 in which it saw revenue rise 98.2% to $62.0m (£48.5m/€56.2m).

Aristocrat in May agreed to pay $1.20bn (£921.2m/€1.07bn) to take ownership of all shares in the provider. NeoGames’ board has unanimously approved the deal, while the provider’s shareholders last month overwhelmingly voted in favour of the acquisition.

The deal remains subject to satisfaction of certain closing conditions but is expected to close in H1 of fiscal 2024.

Speaking as NeoGames posted its Q2 results, CEO Malul said this completion date is very much still on the cards. He added that the acquisition presents NeoGames, and indeed the combined business, with exciting opportunities.

“We are very pleased with the achievements and partnerships that defined and drove our Q2 results,” Malul said. “Our continued commitment to innovation and excellence has paved the way for expansion across various global markets, with progress during the second quarter of 2023 across all business lines including BtoBet, Pariplay, Aspire Core, as well as NeoPollard Interactive (NPI).

“We are excited about the future and the potential it holds for our company’s continued success. We continue taking steps towards completing our merger with Aristocrat Gaming, which we expect to be completed during the first half of fiscal year 2024.

“In the meantime, we remain dedicated to elevating the igaming landscape, capitalising on opportunities and executing on our strategic goals for all stakeholders.”

Q2 Revenue – with or without NeoPollard Interactive

The total revenue figure comprised net gaming revenue plus the provider’s revenue share from the NPI joint venture with Pollard Banknote. Without this contribution, revenue was 122.8% higher year-on-year at $47.9m.

Breaking this down, igaming revenue amounted to $34.2m, a 312.1% increase on last year’s total. NeoGames said this reflected accounting for the majority of Aspire Core revenue on a net basis compared to historical figures prepared on a gross basis. 

This it said, was prompted by new commercial terms in certain Aspire Core contracts which went into effect in January. NeoGames completed its acquisition of Aspire Global in June 2022.

Key developments for the Aspire business included securing its first igaming deal in the US with PlayLive! Online Casino in Pennsylvania. It also picked up its official igaming licence for slot games in Germany.

If igaming revenues were accounted for on a gross basis for Aspire Core, igaming revenue would have been $56.8m for igaming. This, NeoGames said, would have reflected 7.5% year-over-year growth when measured in reporting currency.

Turning to ilottery, revenue climbed 7.8% to $13.8m. In addition to this was the separate NPI share at $14.1m, up 37.9% year-on-year. Combined revenue in this segment was $27.9m, a rise of 21.2%.

Net loss remains but reduces

Alongside the revenue increase was a rise in operating costs. For Q2, spending amounted to $57.0m, a 60.1% rise on last year, with the main outgoing being distribution expenses at $24.1m.

Finance expenses hit $5.8m while its share in joint venture profits amounted to $8.1m. This left a pre-tax loss of $6.8m, an improvement on $12.3m last year.

NeoGames paid $979,000 in income tax, leaving a $7.8m net loss, less than $12.9m in 2022. In addition, adjusted EBITDA jumped 74.8% to $18.0m.

H1 revenue rockets 184.0%

The situation also improved during the first half. Revenue in the six months to 30 June was $97.4m, up 184.0% on the previous year.

Revenue from igaming hit $69.3m and ilottery $28.2m, with an additional $28.9m from the NPI venture.

Operating costs more than doubled from $51.0m to $109.1m but $11.1m of finance costs were more than offset by $16.5m profit share from NPI.

Income tax payments totalled $2.1m, leaving a net loss for the half of $8.6m, compared to $13.8m in 2022. Adjusted EBITDA also improved by 103.2% to $38.2m.

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