NeoGames Continues Aspire Global Integration Efforts (NASDAQ:NGMS)

A Fast Take On NeoGames

NeoGames S.A. (NASDAQ:NGMS) went public in November 2020, elevating $94 million in gross proceeds from an IPO priced at $17.00 per share.

The agency offers a collection of lottery administration software program options to nationwide and state-regulated lotteries and iGaming options.

Administration might want to present its capability to execute on the Aspire integration and ensuing cross-selling alternatives.

Till it does so and we see materials natural progress charges, I’m on Maintain for NGMS.

NeoGames Overview

Luxembourg-based NeoGames S.A. was based to develop iLottery administration software program and video games for state lotteries and different lottery operators in addition to iGaming software program for personal operators.

Administration is headed by Chief Government Officer Mr. Moti Malul, who has been with the agency since 2014 and was beforehand at predecessor agency Aspire in varied roles for 5 years.

The corporate’s main choices embrace the next:

• Regulation and compliance

• Fee processing

• Threat administration

• Participant relationship administration

• Participant worth optimization

• Recreation studio.

The agency pursues long-term contracts with nationwide and state lotteries and different lottery operators.

The agency offers 4 areas of providers to prospects: advertising and marketing operations, participant operations, expertise operations and enterprise operations.

NeoGames’ Market & Competitors

In accordance with a 2020 market analysis report, the worldwide lottery market was an estimated $321 billion in 2019 and is anticipated to achieve almost $393 billion by 2026.

This represents a forecast CAGR of two.9% from 2021 to 2026.

The principle drivers for this anticipated progress are elevated Web entry, rising use of cellular gadgets, improved leisure experiences and youthful demographics taking part in lottery video games extra ceaselessly.

Additionally, throughout the lottery business, administration says the worldwide iLottery section “has emerged as a fast-growing section…with GGR growing at a CAGR of 24.0% between 2003 and 2019, in response to H2GC.”

Main aggressive or different business contributors embrace:

• Worldwide Recreation Know-how (IGT)

• Scientific Video games (SGMS)

• Prompt Win Gaming.

NeoGames’ Latest Monetary Efficiency

• Whole income by quarter has risen sharply because of the completion of the agency’s acquisition of Aspire International on the finish of Q2 2022:

• Promoting, G&A bills as a share of whole income by quarter have risen sharply in current quarters:

• Working earnings by quarter has turned damaging just lately:

• Earnings per share (Diluted) have remained damaging prior to now 4 quarters:

(All knowledge within the above charts is GAAP.)

Prior to now 12 months, NGMS’s inventory value has fallen 31.3% vs. that of the Nasdaq 100 Index’s drop of 9.7%, because the chart signifies under:

Valuation And Different Metrics For NeoGames

Under is a desk of related capitalization and valuation figures for the corporate:

Click on to enlarge

(Supply – Looking for Alpha.)

Commentary On NeoGames

In its final earnings name (Supply – Looking for Alpha), overlaying Q3 2022’s outcomes, administration highlighted the worth it sees in with the ability to supply “built-in end-to-end iLottery, iGaming and Sportsbetting options” to world gaming markets.

The agency additionally famous optimistic developments in varied U.S. legislative initiatives.

As well as, administration continues to combine the NeoGames and Aspire International platforms.

The corporate acquired Aspire International in a $480 million deal earlier in 2022 that guarantees to make the corporate an vital participant within the Latin American iGaming market.

As to its monetary outcomes, whole income rose 14.1% excluding the Aspire International contribution.

NPI income rose 34.4% year-over-year, whereas adjusted EBITDA elevated 135%.

GAAP working losses elevated sequentially and year-over-year, and earnings per share remained damaging.

For the stability sheet, the agency completed the quarter with $60.6 million in money, equivalents and short-term investments and $192.9 million in long-term debt.

Trying forward, administration tightened its full-year 2022 steering vary and expects income of $202.5 million on the midpoint of the vary.

Concerning valuation, the market is valuing the corporate at an Enterprise Worth / Income a number of of 4.8x on 108.2% income progress, with most of that progress inorganic.

The first threat to the corporate’s outlook is the prospect of a world macroeconomic downturn in 2023, lowering discretionary spending by customers within the course of.

A possible upside catalyst to NeoGames S.A. inventory might embrace its continued integration of Aspire enhancing its capability to win iLottery contracts

However, administration might want to present its capability to execute on the Aspire integration and ensuing cross-selling alternatives.

Till it does so and we see materials natural progress charges, I’m Impartial on NeoGames S.A.