Gaming Innovation Group: Dodging industry headwinds - ABG

- Q2: 8% organic sales growth, but adj. EBITA down 6% y-o-y
- Platform & Sportsbook signings have begun to accelerate
- Could see less of a neg. impact from Google update vs. peers

Expect solid Media Q2; 16% org. growth and 47% margin
Including Sportsbook and Platform, we forecast group Q2 normalised sales and adj. EBITDA of EUR 39m and EUR 14m, respectively, for sales growth of 25% y-o-y (of which 8% org.) and a margin of 35.6%. The quarter is busy for the industry in general given two Football championships (Euros and Copa America), and it is also expected to contribute good sportsbook margin. Keep in mind, however, that we assess GiG is mainly exposed to casino, rather than sports betting. We include the minor acquisitions (Titan & Casinomeister) in our estimates, and re-distribute sales between quarters (lower Q2 and higher H2). GiG Media, re-branded as Gentoo, continues to deliver solid org. growth (Q2e at 16% vs. 21% in Q1) and strong margins close to 50% (Q2e at 46.5%, 48.0% in Q1), driven by the snowball effect on recent FTD's sent on rev-share contracts.

Platform & Sportsbook starting to materialise the pipeline
While P&S was the main disappointment in Q1 with near-term earnings pressure on high opex ramp-up and back-loaded revenue, the pipeline was said to be very strong. This has now, encouragingly, started to materialise with three recent signings (two in the UK and one in Ontario). As such, our conviction in an acceleration from H2'24e, particularly Q4'24e, has increased, and we consequently raise our '25e-'26e sales by 3% despite a lower assumed base from Q2 on revised assumptions.

GiG less negatively affected by Google update
We note the negative sentiment for affiliates, particularly on the uncertainties surrounding this spring's big Google update. However, we highlight that GiG has limited exposure to media partnerships, which is the main segment impacted. As such, GiG should be a relative winner, and could even be net positively affected from its focus on owned and operated sites.

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