Gaming Realms – Full Year Results
Gaming Realms is a creator and licensor of innovative games for mobile, operating in the UK, US, Canada and Europe. Flagship brand Slingo® is a popular and unique game genre combining elements of slots, bingo and table gameplay. These games are licensed by some of the world’s biggest online gaming operators, including DraftKings, Sky Betting & Gaming and GVC, and distributed directly to operators or via global partners such as Scientific Games using the company's proprietary Remote Game Server platform.
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High margin, licensing focused strategy drives growth in 2021
Revenues for 2021 grew by 29% to £14.7 million, mainly as the Licensing division put in growth of 47% to £11.1 million. This came after a range of new distribution and partner deals and launches in new markets helped unique players grew by 48%. Meanwhile, the non-core Social Publishing division’s revenues fell by 8% to £3.6 million, or by just 1% on a constant currency basis, after the mainly dollar denominated business experienced currency headwinds.
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Operational gearing drives profits
At the adjusted EBITDA level (adding back share option and related charges) profits surged by 71% to £5.7 million, ahead of our expectation for £5.4 million. This was driven by the company’s strong operational gearing, along with head office costs falling from £2.9 million to £2.5 million.
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Growth continues into Q1 2022, with trading ahead of expectations
Licensing revenue was up by 43% in Q1 to £3 million and unique players increased by 39% to over 1.5 million. This was against a very strong comparator, with licensing revenues up by 60% in Q1 last year. Management noted that while still early in the year, trading is currently ahead of expectations and that they have confidence in the full year outlook.
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Further expansion in 2022 set to see strong growth continue
For the rest of the year the growth strategy will continue to focus on; international expansion; adding new distributors, operators and licensors; and further penetration with existing distributors and operators driven by new games. We are looking for revenues of £20.8 million and adjusted EBITDA of £8 million for the year. Updating our valuation we set a target price of 53.66p and retain our stance of Conviction Buy.
Gaming Realms is a developer, publisher and licensor of mobile games. Co.'s principal activities is that of an online bingo and casino operator, the provision and marketing of interactive bingo and casino services to customers in the U.K. and social gaming on Facebook and mobile to customers in the U.S. and Europe. Co. has three reportable segment. The social publishing provides freemium games to the U.S. and Europe. Licensing includes IP brand and content licensing to partners in the U.S. and Europe. The real money gaming products and marketing services operates Co.'s brands and provides other digital marketing services to both gaming and non-gaming clients in the U.K.
Align Research is a commissioned research company founded in November 2015 in order to provide the under-served smaller company space with high quality analysis. We have an initial focus on the natural resources sector, in which we see significant opportunities given the current once in a generation bear market, however all undervalued small caps (sub £100m) are considered by our team. Align was founded by industry professionals with decades of experience in the stock markets, headed up by highly qualified individuals from both fund management and analytical backgrounds.
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