NeoGames S.A. (NGMS) Q3 2022 Earnings Call

NeoGames S.A. (NASDAQ:NGMS) Q3 2022 Earnings Conference Call November 10, 2022 8:30 AM ET Company Participants Jacques Cornet – ICR Moti Malul – Chief Executive Officer Raviv Adler – Chief Financial Officer Conference Call Participants Cassandra Lee – Jefferies Ramin Sobhany – Truist Securities Jeff Stantial – Stifel Chad Beynon – Macquarie Operator Good day ladies and gentlemen. Thank you for standing by. Welcome to the NeoGames Third Quarter 2022 Earnings Conference Call. All participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded today, November 10, 2022. I would now like to turn the call over to Jacques Cornet with ICR. Jacques Cornet Thank you, operator, and hello everyone. By now, you should have access to our third quarter 2022 earnings release, which is available on the NeoGames website at www.neogames.com in the Investor Relations section. Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements. These forward-looking statements which are usually identified by use of words such as will, expect, anticipate, should or other similar phrases, are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and therefore you should use caution when interpreting and relying on them. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We encourage investors to review our regulatory filings including the Form 6-K for the quarter ended September 30, 2022 when it is filed with the SEC. During today’s call, we will discuss non-IFRS measures, which we believe can be useful in evaluating the company’s financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with IFRS. The reconciliation of these measures to the most directly comparable IFRS measures is available in our earnings release on the neogames.com website. Hosting the call today, we have Moti Malul, NeoGames Chief Executive Officer; and Raviv Adler, Chief Financial Officer of the company. They will provide some opening remarks and then we will open the call to questions. With that, I’ll turn the call over to Moti. Moti Malul Thank you, Jacques and good morning everyone. Last night, we released our third quarter results which is our first full quarter combined with Aspire Global since the acquisition. I will begin by highlighting some key points about the quarter and then provide an update on our current initiatives and the trends we are seeing in the market. Raviv will then run through our financial results. During the third quarter, we reached a number of significant milestones across our business lines, further increasing our conviction in the benefits of our integrated end-to-end iLottery, iGaming and Sportsbetting solutions has to offer to the global gaming market. We saw new markets move towards implementing an iLottery solution signed iGaming and Sportsbetting deals, both in the US and internationally and continued the integration of the Aspire Global business. We are also proud to report record revenue results for the quarter, both on the consolidated basis, as well as for our core iLottery business. While we are far from done, working to fully accomplish our goals, we see this quarter as a strong step in the right direction. First, a few financial highlights which Raviv will expand upon later. On a consolidated basis, the total of revenues plus share of NPI revenues grew to $73.3 million, which includes a full quarter of Aspire Global. Looking at the pieces, our iLottery business posted the highest top line quarterly result ever in our history. iLottery revenues and share of NPI revenues together were $24.7 million, up 22% compared to last year and up 8% compared to the June quarter. iGaming revenues were also up nearly 8% on a constant currency basis, with particular strength coming from the Games and Sports segments of the business. Taking a closer look at the iLottery segment of our business, we saw strong performance across our current accounts and positive development on multiple legislative fronts. Driven by the July Jackpot run, all of our major U.S. customers experienced both year-over-year and quarter-over-quarter growth. While this is very encouraging in its own right, it becomes even more impressive when drilling down to the account level. Michigan volumes continued their sequential growth which began in Q4 of last year, demonstrating the parallel growth potential of iLottery alongside iGaming, as we anticipated would happen based on what we have seen in other markets in the US and globally. We believe that these results and those from the past few quarters support our thesis that iLottery and iGaming can and do grow in the same market. The Virginia lottery continues to outperform impressively with another strong quarter. It made us so proud to see them win the Global EGR Operator Award for 2022 as the Lottery Operator of the Year a well-deserved win that we are honored to have such a strong partnership with doing our part by powering them with the best technology available and our market-leading suite of games for NeoGames Studio. New Hampshire and North Carolina also showed nice sequential growth leveraging the July Jackpot into the rest of the quarter. Considering the current state of the US economy, we consider this a very positive sign as the macro outlook grows less and less clear. Turning to the state authorization front. We saw West Virginia come to market with a much anticipated RFP during the quarter following the RFI process. We view this as an interesting opportunity and look forward to demonstrating our competitive advantage to the state lottery as they choose an iLottery solution that needs to grow and flourish in an already existing iGaming and online Sportsbetting environment. Naturally with the mid-term elections having just taken place, Q3 did not see much progress on the legislative front in the US. However, we do believe that iLottery authorization will regain momentum in various states in 2023 following the elections and in light of preparation of a macroeconomic environment that may suggest pressure on state budgets. On the gaming front, we made significant progress both in the US and internationally with particular strength coming from our Pariplay content aggregation business. In the US, Pariplay was licensed in both Pennsylvania and Connecticut. The platform and games are now certified in five out of six regulated US states allowing us to bring content from both our Wizard Games studio and third parties to players across the country. We further bolstered Pariplay’s position in the US by signing additional content providers to the aggregator platform with a few interesting ones signing exclusive deals with Pariplay to enter the US market demonstrating the strength of our offering. Finally, we expanded our relationship with BetMGM through the launch of content from Wizard Games on the BetMGM casino platform in Michigan. This launch gives us three states including New Jersey and West Virginia in which our content is live with a market-leading BetMGM platform. Internationally,
Read More