Despite this setback, the company continues to demonstrate resilience, characterising the results as a continuation of momentum from 2022’s final quarter.
Strong Performance Amidst Financial Setbacks
Chief Executive, Moti Malul, proudly emphasised the company’s accomplishments during Q1. “In ilottery, our proprietary games from NeoGames Studio continued to perform strongly across all of our key accounts, and together with the Jackpot runs early in the quarter, have contributed to strong performance in the US,” he stated. Malul also noted that the Virginia Lottery, a NeoGames customer, recently made history as the first US lottery to operate a completely cloud-based iLottery program.
NeoGames’ gaming solutions divisions weren’t left behind. Its BtoBet B2B sports betting subsidiary processed a record-breaking one billion bets in March. Additionally, the company’s iGaming content provider, PariPlay, established new partnerships with 12 operators, including DraftKings, and secured 10 more deals, one of which was with Swedish operator Betsson.
Despite the financial turbulence, the company managed to record a 187% year-on-year revenue growth, maintaining EBITDA margins above 30% across its operating segments. “Equally exciting as the developments across all of our business units, is the impact they had on our financial results,” Malul said.
Revenue Boost from Aspire Acquisition
The acquisition of Aspire Global significantly influenced NeoGames’ revenue growth. The $64.2m revenue recorded in Q1 2023, up from $22.4m in the same period the previous year, primarily reflects this business combination. The merger, completed in June 2022, saw NeoGames join forces with the iGaming solutions provider, with then CEO Tsachi Maimo assuming the role of company president and leading the newly formed iGaming division. This segment reported $35.1m in revenue in Q1 2023.
However, the acquisition’s costs, including a $13.6m hit from depreciation and amortisation, and $5.3m interest expenses, ultimately pushed the company into a net loss of $900,000 for the quarter. Other costs, including a near 100% increase in distribution expenses, also strained NeoGames’ bottom line.
Neogames negative results: Implications for the iGaming Industry
The Q1 results of NeoGames could have a ripple effect on the iGaming industry. Firstly, the success of the Virginia Lottery’s cloud-based program may encourage other lotteries to adopt similar digital solutions, potentially boosting demand for iGaming and iLottery service providers. This includes a probable rise in web3 and crypto lotteries in the future.
Secondly, the financial implications of NeoGames’ Aspire acquisition highlight the considerable costs and risks associated with such mergers, which companies in the sector may need to factor into their growth strategies. Finally, NeoGames’ resilience and continued growth, despite its financial setbacks, sends a powerful message about the robustness and potential of the iGaming industry, even amidst challenging economic conditions.