Gaming Innovation Group - Another step in the right direction

Improved cost base… …with a strong pipeline for 2021 Off to a strong start in ‘Q1 21 New ATH from the media segment We find the Q4 report to be another step in the right direction. The restructuring is completed, and we note the improved efficiency resulted in comparable operating expenses down by 25% y-o-y. This paved the way for EBITDA margins to expand ~5pp q-o-q. We also note continued sequential improvements within the Media segment (e.

g. affiliate), which after a lacklustre 2019 now clearly is back on track. We note a new ATH in December revenue from this segment, as well as encouraging KPIs such as FTD intake up 36% y-o-y and 9% q-o-q.

Although platform services saw a slight sequential decline (due to discontinuation of white-label contracts, as well as negative impact from new German regulation), we note that y-o-y growth amounted to =90% (up ~19% in normalised revenues). Given the pipeline of new customers in 2021, we expect to see a further ramp-up from this segment over the next 12 months. Strong demand for platform services We fine-tune our estimates upwards due to strong momentum from the media segment, as well as the recent client signings within platform services.

The strong momentum of client signings within platform services has also been sustained into 2021. Thus far in Q1, GiG has signed with two new clients involving a long-term platform agreement with Playstar for the intro into the US market (expected launch in ‘Q4 21) and a LOI with a German operator (expected launch ~Q3 21). Enhanced position for 2021 GiG’s position for 2021 continues to improve and we note that Q1 is off to an encouraging start with normalised revenues for January up 40% y-o-y.

GiG’s media momentum has also been sustained into 2021 with another ATH in revenues in January, as well as FTDs. On our 2022e, GiG is trading at an EV/EBITDA of 7x and P/E of 17. 7x coupled with a free cash flow yield of 9%.