Gaming Innovation Group: Improving cash conversion continues - ABG

Strong platform performance drove 19% org. growth
Outlook remains strong – limited adj. EBITDA revisions
Share is trading at '23e EV/EBITDA below 7x


Q1: 52% organic Platform growth and cash flow improvement

Adjusting for one-off costs related to the strategic review, Q1 adj. EBITDA was in line with our estimate and slightly above FactSet consensus. As opposed to Q4, the Platform division was stand-out part of the report, doubling its revenue y-o-y, of which 52% was organic growth, where we are encouraged by the immediate support from the Enterprise Solution. In addition, we note a sharp sequential margin increase from 22% to 36%, as the revenue growth had an 100% drop-through to adj. EBITDA. The Media division continued to show solid performance with 13% growth ex AG, but this was slightly below our expectations in the quarter, as we underestimated the seasonality impact following an exceptionally strong Q4 with the World Cup. Opex was slightly higher than we expected, but adjusting for one-off oriented items such as costs related to the strategic review, it was largely in line with expectations. Finally, we note that the R12 months cash conversion continues to improve significantly, now generating 50% of adj. EBITA in core FCF.

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