Gaming Innovation Group (GiG) has notched up an impressive record revenue of €31.8 million in the third quarter of 2023, showcasing a remarkable year-on-year surge of 39 percent, according to the latest announcement by the company.
In addition to this financial milestone, GiG has made a significant stride by sealing a deal to acquire the renowned affiliate company KaFe Rocks for a substantial sum of €35 million.
Breakdown of record revenues
The Q3 report revealed that GiG’s adjusted EBITDA reached an impressive €23.4 million, with EBITDA excluding a €9.8 million reversal of earn-out provision standing at €13.6 million. This marks a noteworthy year-on-year increase of 61 percent, demonstrating a robust margin of 42.8 percent. The stellar performance was largely driven by the record-breaking revenues from GiG Media, which amounted to €22.5 million for the quarter, reflecting a substantial increase of 49 percent. GiG Media has now achieved 12 consecutive quarters of record-breaking revenue.
Petter Nylander, Chairman of GiG, (in photo above), expressed his satisfaction, stating, “The third quarter of 2023 has proven to be another period of growth and achievement.”
Industry leadership for GiG Media
Breaking down the revenue streams, GiG’s Platform and Sportsbook recorded revenues of €9.3 million, indicating a robust year-on-year increase of 20 percent. The group also reported positive cash flow from operations, totaling €3.2 million.
In a strategic move to strengthen its position in lead generation and expand its footprint in the lucrative North American market, GiG announced the acquisition of KaFe Rocks. The agreement entails a purchase price of €35 million, with an initial upfront cash payment of €15 million. The remaining €20 million will be disbursed in four semi-annual payments over the course of four months. Additionally, GiG will issue €2.5 million in shares, subject to specific operational cost savings targets. Further, the deal includes provisions for an earn-out if specific performance targets are met.
North American xxpansion
The acquisition, structured through a Share Purchase Agreement (SPA), sees GiG’s subsidiary Innovation Labs Ltd. (part of GiG Media) acquiring KaFe Rocks Limited based in Malta.
The funding for the initial consideration will be sourced through a combination of existing cash, shareholder loans, and/or potential proceeds from a bond issue. The completion of the transaction is contingent on due diligence, financing, regulatory approvals, and final board approval, with expectations of closing in December 2023.
KaFe Rocks boasts a thriving global portfolio spanning 15+ markets, featuring flagship brands such as Time2play.com and USCasinos.com, targeting the US audience. Time2Play has demonstrated impressive revenue growth over the last 12 months, with GiG anticipating further acceleration. The outlook for KaFe Rocks in 2024 includes a minimum revenue projection of €23 million with an EBITDA margin surpassing 45 percent. GiG envisions a 2024 EV/EBITDA multiple of around 3.6x for the acquisition, anticipating an increase in EBITDA margin over the coming years.
In addition to the promising financial projections, GiG sees the acquisition as a strategic move to diversify GiG Media’s business, reducing overall risk by improving customer, website, and market concentration. The investment is anticipated to catalyze GiG Media revenues, projecting a range of between MEUR 125-135 for 2024.
Jonas Warrer, CEO of GiG, emphasized the company’s commitment to maintaining its position as the leading casino affiliate in the industry and expanding its presence in the North American market. Warrer highlighted the successful integration of AskGamblers and expressed anticipation in working closely with the KaFe Rocks team, acknowledging their exceptional skill set and the growth potential of their affiliate assets.
Aimee Speight, spokesperson for KaFe Rocks, echoed the sentiment, describing the union with GiG Media as a momentous occasion. Speight cited GiG Media’s strong performance over the years as a key factor in their decision, expressing optimism about the future growth prospects for KaFe Rocks under the GiG Media umbrella.
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