Gaming Innovation Group: Solid report, solid '23 guidance - ABG
Q2 adj. EBITDA 6% above our estimates
New '23 guidance, EUR 125-130m top line & 47-50% margin
Share is trading at 9-6x '23e-'24e EV/EBITA
Q2 slightly above our estimates on sales and adj. EBITDA
GiG delivered normalised revenue of EUR 31.1m which is 2% vs ABGSCe 30.6m, +10% q-o-q and +41% y-o-y driven by 22% organic growth (ABGSCe 22%), coupled with contribution from the acquisition of AskGamblers. For comparison, recall the trading update in the Q1’23 report which showed April revenue up 30% y-o-y, hence the latter part of the quarter looks to have accelerated compared to last year. On product mix, we note that solid Media top line explained the sales beat versus our expectations, while Platform and Sports Betting was largely in line. However, on adj. EBITDA, the Platform & Sports Betting division drove the beat, while Media came in line. Group adj. EBITDA reached EUR 14.0m (6% vs ABGSCe 13.3m), for a normalised margin of 45.0% which is 160bps better than we expected, continuing the sequentially improving path towards its endeavours of exceeding 50% margin during '24. Finally, FCF ex. M&A came in at 4.8m, corresponding to 34% cash conversion from adj. EBITDA, and was impacted by timing effects in working capital.
Guides for '23 revenue of EUR 125-130m, margin of 47-50%
The Q2 numbers were a bit stronger than we expected, but implies a limited mechanical impact on our '23e adj. EBITDA estimates (+1%). Looking forward into Q3’23e, the top line seems decent when looking at the July trading update, showing organic growth of 10% y-o-y. The organic growth is, however, a bit below the targeted run-rate of ~20%, but we note that July'22 comps looks fairly tough. Our pre-Q2 estimates suggest 42% growth for the full Q3'23e. In addition, GiG is guiding for total normalised revenue 2023 of EUR 125m-130m, where our pre-Q2 estimates suggest EUR126m, with an adj. EBITDA margin of 47-50%, where our pre-Q2 estimates are at 45%.
Conference call at 10.00 CET
We look f...
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