Q1 Revenue of $58.9 million, up 200%, and Adjusted EBITDA of $16.8 million, up 250%
LAS VEGAS, NV, May 30, 2017 – NYX Gaming Group Limited (TSXV:NYX) ("NYX Gaming Group" or the "Company") today announced financial and operating results for the first quarter ended March 31, 2017. All amounts expressed are in Canadian dollars unless otherwise noted.
“With our new operating model in place, we’re pleased to report growth in revenue and Adjusted EBITDA from the prior quarter and the prior year period,” said Matt Davey, CEO of NYX Gaming Group. “Our customer development pipeline remains strong, and we are focused on profitable growth through our product led strategy with targeted R&D investment in sportsbook, gaming, and content technologies.”
First Quarter 2017 Highlights
- Revenue of $58.9 million, or growth of 199.8% year-over-year;
- Organic revenue growth of 17.3% year-over-year, excluding the impact of OpenBet and Betdigital acquisitions during May 2016;
- Royalty and license revenue of $30.9 million, or growth of 77.9% year-over-year;
- Gross profit of $52.1 million, or 88.4% of revenue compared to 82.7% of revenue in Q1 2016;
- Adjusted EBITDA of $16.8 million, an increase of 250.1% over the prior year period;
- Signed 11 new agreements for the Open Platform System ("OPS") and Open Gaming System ("OGS");
- Launched OGS content across six new client sites; and
- As of March 31, 2017, held development commitments with 28 customers that have not yet launched.
First Quarter 2017 Operating Results and Highlights
During the first quarter of 2017, NYX Gaming Group signed 11 new agreements for OGS and OPS and successfully launched OGS content across six new client sites including Pokerstars Denmark, Rush Street, Nederlandse Loterij, MarathonBet, Luckia, and GVC Holdings.
As of March 31, 2017, the development pipeline remains strong as commitments were held with 28 customers that had not yet launched. As of May 23, 2017, NYX Gaming Group has signed three new deals and launched two new clients since March 31, 2017.
In addition, the number of unique game installations across the Company’s distribution network grew to 34,933 at the end of the first quarter of 2017, an increase of 94.2% and 16.5% from the first quarter of 2016 and the fourth quarter of 2016, respectively.
In April 2017, NYX was named Casino Platform Supplier and Best Platform Supplier at the 2017 EGR North America Awards and iGaming North America Awards, respectively. The awards acknowledge the Company’s position as the industry’s market-leading gaming offering, through the Company’s OGS and OPS platforms, which allow licensees to leverage the best-of-breed multi-vendor casino content from around the world.
Summary of Results
The increase in revenue and gross profit for the three months ended March 31, 2017, compared to the three months ended March 31, 2016, was attributable to a number of factors including the results of operations from OpenBet and Betdigital (both acquired in May 2016), increased gaming revenues from our existing customers, and new customer launches.
Summary of Financial Information
|Three Months Ended March 31,|
|CAD$ (in 000s, except per share)||2017||2016|
|Gross profit margin||88.40%||82.70%|
|Adjusted EBITDA margin||28.50%||24.40%|
|Net income (loss)||2,523||-9,136|
|Basic and diluted net income (loss) per share||0.02||-0.18|
|March 31,||December 31,|
|Total non-current liabilities||467,661||472,017|
Revenue for the three months ended March 31, 2017 increased to $58.9 million, or 199.8%, from $19.7 million for the three months ended March 31, 2016. All revenue categories grew significantly as a result of a full quarter contribution in the amount of $34.7 million from the Company’s acquisition of OpenBet in May 2016, and 11 new agreements for OGS and OPS during the first quarter of 2017.
Royalty and license revenue for the current quarter increased $13.5 million, or 77.9%, to $30.9 million from $17.4 million in the prior year period. Professional services revenue for the quarter increased $26.3 million to $27.7 million from $1.4 million for the same period in the prior year due primarily to the acquisition of OpenBet.
Gross profit increased by $35.8 million, or 220.6%, for the three months ended March 31, 2017 to $52.1 million from $16.2 million for the three months ended March 31, 2016. Gross profit margin was 88.4% for the three months ended March 31, 2017, compared to 82.7% for the three months ended March 31, 2016. The increase in gross profit was a result of a revenue increase from the underlying core casino business and the revenue impact from acquisitions.
General and Administrative Expenses
General and administrative expenses ("G&A") includes marketing, administrative, and personnel expenses. G&A increased by $21.9 million to $36.1 million for the three months ended March 31, 2017, compared to $14.2 million for the three months ended March 31, 2016. The increase was due primarily to the higher operating and personnel expenses associated with the Company’s acquisitions of OpenBet and Betdigital. In addition, increases in personnel and administration costs associated with support functions for legal, finance, and human resources contributed to the increase in expenses.
Net Income (Loss)
The Company reported net income for the three months ended March 31, 2017 of $2.5 million, compared to a net loss of $9.1 million for the three months ended March 31, 2016. The increase in net income was primarily the result of the contribution from OpenBet and gain on fair value adjustment of derivatives of $9.9 million during the period, partially offset by higher personnel costs, interest expense, and loss on foreign exchange for the three months ended March 31, 2017 compared to the prior year period.
To supplement the Company’s consolidated financial statements presented in accordance with International Financial Reporting Standards ("IFRS"), the Company uses Adjusted EBITDA, a measure they believe is appropriate to provide meaningful comparison with, and to enhance an overall understanding of, their past financial performance and prospects for the future. The Company believes Adjusted EBITDA provides useful information to both management and investors by excluding specific expenses and gains that they believe are not indicative of their core operating results. Further, Adjusted EBITDA is a measure of operating performance used by management, as well as industry analysts, to evaluate operations and operating performance and is widely used in the technology and gaming industry. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with IFRS. In addition, other companies in NYX Gaming Group’s industry may calculate Adjusted EBITDA differently than the Company does. A reconciliation of net loss to Adjusted EBITDA is provided in the table below.
The Company defines “Adjusted EBITDA” as earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, impairment charges, share-based payments, gains and losses on the revaluing of contingent consideration, foreign currency gains and losses, acquisition and restructuring costs and other gains and losses.
|Three Months Ended March 31,|
|CAD$ (in 000s)||2017||2016|
|Net income (loss)||2523||(9,136)|
|Net tax expense (benefit)||670||(1,765)|
|Income (loss) before tax||3193||(10,901)|
|Depreciation and amortization||8646||4463|
|Interest expense, net||11122||2365|
|Impairment of intangibles||—||6485|
|Acquisition and restructuring costs||—||2700|
|Fair value adjustment to derivatives||(9,850)||3046|
|Revaluing contingent consideration||—||(6,077)|
Adjusted EBITDA was $16.8 million for the three months ended March 31, 2017, compared to $4.8 million for the same period in the prior year. During the first quarter of 2017, EBITDA was positively impacted by the contribution from OpenBet operations.
Financial Position as of March 31, 2017
Cash and cash equivalents (including restricted cash) of $39.7 million;
- Total assets of $754.6 million;
- Total liabilities of $561.0 million;
- Total equity of $193.6 million; and
- Total borrowings of $332.2 million.
First Quarter 2017 Conference Call & Webcast
A conference call and webcast to discuss NYX Gaming Group's first quarter 2017 results will be held on May 30, 2017, at 8:30 a.m. E.T. Matt Davey, CEO of NYX Gaming Group, and Eric Matejevich, CFO of NYX Gaming Group, 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 (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 22376094. The replay of this call will be available until June 6, 2017.
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 months ended March 31, 2017 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 defined 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 the Company’s 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 online 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 may be unable to successfully integrate the acquired businesses, 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 and final short form prospectuses dated July 9, 2015 and July 14, 2016, each 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.
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