Q3 Revenue of $54.4 million, up 308.9%, Net Income of $41.4 million, and Adjusted EBITDA of $14.5 million.
LAS VEGAS, NV, Tuesday, November 22, 2016. This updated release to the news release that was issued on Tuesday, November 15, 2016, is being issued pursuant to a review by the staff of the Ontario Securities Commission. The Company is including additional disclosures to meet the staff’s expectations related to the use of non-GAAP financial measures.
On November 15, 2016,NYX Gaming Group Limited (TSXV:NYX) ("NYX Gaming Group" or "Company") announced its financial and operating results for the third quarter ended September 30, 2016. All amounts expressed are in Canadian dollars unless otherwise noted.
“NYX continues to deliver strong organic growth across all product verticals. Through our M&A activity, we have built the foundations of a world-class digital gaming software supplier that focuses on regulated markets. The team has made significant progress against a number of key objectives that position us at the forefront of the industry opportunity. We are entering phase two of our journey now to unlock the true value of our operations and we continue to see market-leading demand for our products and services. ” says CEO Matt Davey.
Third Quarter 2016 Highlights
- Revenue of $54.4 million, or 308.9% growth year-over-year, for three months ended September 30, 2016;
- Royalty and license revenue of $26.5 million;
- Gross profit of $49.1 million;
- Net income $41.4 million;
- Adjusted EBITDA of $14.5 million (please see adjusted EBITDA reconciliation to net income below and note that this is a Non-GAAP measure);
- Signed 7 new agreements for OPS and OGS;
- Launched our OGS content across 8 new client sites;
- Released 18 new games;
- Sky Betting & Gaming live with OpenBet in Italy
Third Quarter Operating and Financial Results
In the third quarter of 2016 NYX continued to see a strong demand in both the Open Gaming System ("OGS") and Open Platform System ("OPS") with 6 new agreements signed for the Open Gaming System ("OGS") and Open Gaming Platform ("OPS") with Topsport, Comeon!, Televisa, and OlyBet. Successfully launched our OGS content across 8 new client sites Goalbet, TonyBet, and Sverige Kronan.
As of September 30, 2016, the development pipeline continues to remains strong as commitments held with 23 customers that have not yet launched.
In addition, on the content side, our NYX content studios released 18 new games during the three-month period ended September 30, 2016. This saw the number of game instances (i.e., unique game installations) across our distribution network grow from 21,547 in Q2 2016 to 25,562 in Q3 2016 or 18.6% growth for the quarter.
NYX was also honored to accept the Digital Gaming Innovator at the 2016 Global Gaming Awards held in Las Vegas on September 26, 2016. NYX won the award specifically for its online slot, “Witch Pickings”, which introduced industry-unique bonus features and has been a top performing game since its launch earlier this year.
Powered by OpenBet technology and services, Sky Betting & Gaming has launched sports betting products in Italy, marking the first time that Sky's services will be offered to customers outside of the UK.
OpenBet delivered excellent performance over the Melbourne Cup reaching a peak of 19600 bets-per-minute. The figure represents a 19% increase on the previous year and is a record for OpenBet for an individual event through a single operator. Sportsbet, which uses the OpenBet platform, processed more than five-times the number of bets during peak periods than its nearest rival.
Summary of Results
The increase in revenues and gross profit for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 is attributable to a number of factors including new customer launches, the Company's purchase of OpenBet, and increased gaming revenues from our existing customers.
Summary of Financial Information
|CAD $ (in 000s)||Three Months Ended||Nine Months Ended|
|September 30,||September 30,|
|Gross profit %||90.3%||83.5%||88.0%||85.3%|
|Net income (loss)||41,350||(6,499)||3,182||2,336|
|Basic income (loss) per share||0.45||(0.14)||0.05||0.06|
|Diluted income (loss) per share||0.44||(0.14)||0.05||0.06|
|Total non-current liabilities||503,360||126,162||503,360||126,162|
Revenue for the three months ended September 30, 2016 increased to $54.4 million, or 308.9%, from $13.3 million for the same calendar period a year ago. All revenue categories grew significantly as a result of a full quarter contribution from the Company’s prior year acquisitions of Chartwell and Cryptologic, which were acquired July 31, 2015, a full quarter contribution from OpenBet, which the Company acquired May 20, 2016, and eight new customers launched during the current quarter.
Royalty and License revenue for the quarter increased $15.0 million, or 130.9% to $26.5 million from $11.5 million for the same period in the prior year. Professional Services revenue for the quarter increased $24.3 million to $24.7 million from $0.4 million for the same period in the prior year.
Revenue for the nine months ended September 30, 2016increased$75.3 million or 221.9% to $109.2 million from $33.9 million for the nine months period ended September 30, 2015. As was the case above, all revenue categories grew significantly as a result of the Company’s prior year acquisitions of Chartwell, Cryptologic, and OpenBet, as well as 33 new customers launched during the current period.
Royalty and License revenue for the nine-month period increased $36.4 million or 128.3% to $64.7 million from $28.3 million for the same period in the prior year. Professional Services revenue for the nine-month period increased $36.7 million to $38.1 million from $1.4 million for the same period in the prior year
Gross profit increased by $38.0 million or 342.1% for the three months ended September 30, 2016 to $49.1 million compared to $11.1 million the three months ended September 30, 2015. The gross profit percentage was 90.3% for the three months ended September 30, 2016 compared to 83.5% for the three months ended September 30, 2016. The increase in gross profit was a result of an increase in revenue from the underlying core casino business and the revenue impact from acquisitions.
Gross profit increased by $67.1 million or 231.7% for the nine months ended September 30, 2016 to $96.1 million compared to $29.0 million the nine months ended September 30, 2015. Gross profit percentage was 88.0% for the nine months ended September 30, 2016 compared to 85.3% for the nine months ended September 30, 2015.
Net Income Tax Benefit
Net income tax benefit was $2.7 million for the three months ended September 30, 2016 compared to a benefit of $0.2 million for the three months ended September 30, 2016. The net income tax benefit was $3.2 million for the nine months ended September 30, 2016 compared to a benefit of $0.4 million for the nine months ended September 30, 2015.
The Company’s net income for the three months ended September 30, 2016 was $41.4 million compared to a net loss of $6.5 million for the three months ended September 30, 2015. Our net income for the nine months ended September 30, 2016 was $3.2 million compared to net income of $2.3 million for the nine months ended September 30, 2015. The increase in net income was primarily the result of income recognized from changes in the fair market value of embedded derivatives and a three-month positive contribution from OpenBet
Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other issuers. The Company defines Adjusted EBITDA as net earnings (loss) before tax, depreciation and amortization, net financing expenses, fair value adjustment to derivatives, revaluing contingent consideration, acquisition and restructuring charges, share-based compensation, foreign currency (gains) and losses, and other items as set out in the table below. These non-IFRS measures should not be considered in isolation from, or as a substitute to, financial information prepared in accordance with IFRS. The Company uses these non-IFRS measures in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that these non-IFRS measures provide useful information about its operating results and enhance the overall understanding of its performance.
Adjusted EBITDA was $14.5 million and $29.8 million for three months and nine months periods ended September 30, 2016 compared to $1.1 million and $5.8 million, respectively for the same period ending September 30, 2015. During the period, EBITDA was positively impacted by strong growth in revenues from strong organic growth in our real money casino business and the consolidation of three months of OpenBet Operations
Financial Position as of September 30, 2016
- Cash of $$16.1 million
- Total assets of $845.8 million
- Total liabilities of $503.4 million
- Total Equity of $265.0 million
- Total borrowings of $272.4 million
Senior Secured Debentures
Pursuant to the supplemental indenture, the debentures are now subject to an interest ratchet which is based on the value of NYX’s cash and cash equivalents as at September 30, 2016 and NYX’s Gross Secured Leverage Ratio for the nine month period ended September 30, 2016 and the three month period ended December 31, 2015. If cash and cash equivalents are less than $20 million or the Gross Secured Leverage Ratio is greater than 4:1, the Interest Rate for the Debentures shall be adjusted to 11.0%; if cash and cash equivalents are greater than $30 million and the Gross Secured Leverage Ratio is less than 4:1, the Interest Rate for the Debentures shall be adjusted to 9.0%; In all other circumstances, the rate would be 10%. NYX’s cash position was less than $20 million at September 30, 2016, therefore the Company’s interest rate on its debentures will increase to 11% on December 31, 2016.
Third Quarter Conference Call & Webcast
A conference call and webcast to discuss NYX's third quarter results will be held on November 15, 2016, at 8:30am ET. Matt Davey, Group CEO of NYX, and Eric Matejevich, CFO, will host the call. A question-and-answer session will follow the presentation. To participate, interested parties are asked to dial (647)-427-7450 or 1-888-231-8191 prior to the scheduled start of the call. A replay of the conference call will be available by dialing (855) 859 - 2056 and using the reference number 7402226. This call will be available until November 22, 2016.
The Conference Call will also be webcast live at
Financial Statements and Management's Discussion and Analysis
NYX Gaming Group's unaudited consolidated financial statements, notes thereto and Management's Discussion and Analysis for the three-month period ended September 30, 2016 will be available on SEDAR at www.sedar.com. Additional information relating to NYX Gaming Group and its business may also be found on SEDAR at www.sedar.com and the Company's website at www.nyxgaminggroup.com.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is definite in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Caution Regarding Forward-Looking Statements and Non-IFRS Financial Measures
Certain statements included herein, including those that express management’s expectations or estimates of our future performance, constitute “forward-looking statements” within the meaning of applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “potential” or the negative of these terms or other similar expressions. Forward-looking statements are based on certain assumptions regarding the Company’s expected growth, results of operations, performance, industry trends and growth opportunities. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that could cause actual results to differ materially from those expressed or implied in such statements. Investors are cautioned not to put undue reliance on forward-looking statements. Applicable risks and uncertainties include, but are not limited to: credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates, the impact of government regulation on the on-line gaming industry and the risk that such regulation is subject to change, competition from other providers of online gaming services, the possibility that the Company be unable to successfully integrate the B2B Business as described herein, the risks associated with international and foreign operations, the impact of consolidations in the online gaming industry and the other risks identified under the heading “Risk Factors” in the Company’s final long form prospectus dated December 18, 2014, as filed on SEDAR at www.sedar.com, and in other filings that NYX Gaming Group may make with applicable securities authorities in the future. The forward-looking statements contained herein reflect NYX Gaming Group’s current views with respect to future events, and except as required by law, NYX Gaming Group does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events, or otherwise.
This release contains Non-IFRS financial measures and are noted where used. These financial measures are used by many investors to compare companies and management believes they are important measures in evaluating NYX Gaming Group. However, they are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Therefore, they may not be comparable to similar measures presented by other issuers. Investors are cautioned that such measures should not be construed as alternatives to comparable IFRS measures determined in accordance with IFRS.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
NYX Gaming Group Limited is listed on the TSX Venture Exchange under the symbol (NYX.V).
For further information:
Matt Davey, Chief Executive Officer, NYX Gaming Group Limited
Joann Head, Director of Investor Relations
 This is a Non-GAAP financial measure calculated by adding the Income tax expense (benefit) to the Deferred income tax expense (benefit). This amount is added to (subtracted from) Net income to determine Income (loss) before tax as illustrated in the reconciliation to Adjusted EBITDA on the following page.