NeoGames Announces Fourth Quarter and Full Year 2021 Results

Wednesday, 09. March 2022 22:15

Fourth Quarter Revenues and Share of NPI Revenues Interest total $21.3 million, up 15.2% year-over-year –

Full Year Revenues and Share of NPI Revenues Interest total $84.5 million, up 43.9% year-over-year –

– Initiates Full Year 2022 Revenue and Share of NPI Revenues Guidance of between $90 and $97 million –

LUXEMBOURG, March 09, 2022 (GLOBE NEWSWIRE) -- NeoGames S.A. (Nasdaq: NGMS) (“NeoGames” or the "Company"), a technology-driven provider of end-to-end iLottery solutions, announced today financial results for the fourth quarter and fiscal year ended December 31, 2021.

Moti Malul, Chief Executive Officer of NeoGames, said: “Sound commercial execution and unrivaled innovation in iLottery are continuing to drive growth for our customers. During the fourth quarter we saw growth in all of our key accounts with particular strength in our US accounts. Our combined revenues and share in NPI Revenues grew 5% sequentially, and over 40% for the full year.

“We carried our momentum into 2022 with our offer to acquire Aspire Global, which continues to be on track for closing in the first half of 2022. More and more we find our iLottery customers require a broad range of integrated gaming verticals. We firmly believe that combining NeoGames and Aspire Global will drive our strategy to be a leader in providing digital solutions to lotteries globally. We are already successfully collaborating with Aspire to launch their Pariplay content in Alberta and the early results are very encouraging. We remain focused capitalizing on an expanding market opportunity and continuing to create value for our shareholders.”  

Fourth Quarter 2021 Financial Highlights

  • The total of Revenues and the Company’s share in NPI revenues was $21.3 million during the fourth quarter of 2021 compared to $18.5 million during the fourth quarter of 2020, representing an increase of 15.2% year-over-year. Revenues were $12.3 million during the fourth quarter of 2021, compared to $14.0 million during the fourth quarter of 2020. In addition, the Company’s share in NPI revenues was $9.0 million during the fourth quarter of 2021, compared to $4.5 million during the fourth quarter of 2020, representing an increase of over 100% year-over-year.
  • Comprehensive loss was $(3.6) million, or $(0.14) per share, during the fourth quarter of 2021, compared to comprehensive income of $2.5 million, or $0.11 per share, during the fourth quarter of 2020. Comprehensive income was impacted by several non-recurring items, including prospective acquisition related expenses of $3.8 million related to the Aspire Global prospective acquisition and $2.6 million related to share based compensation expenses.
  • Adjusted EBITDA1 was $7.9 million during the fourth quarter of 2021, compared to an Adjusted EBITDA of $9.2 million during the fourth quarter of 2020 representing a decrease of 13.8% year-over-year.
  • Network Net Gaming Revenue (“NGR”) was $189 million during the fourth quarter of 2021, compared to $142 million during the fourth quarter of 2020, representing an increase of 33% year-over-year.

Full Year 2021 Financial Highlights

  • The total of Revenues and the Company’s share in NPI revenues was $84.5 million during 2021 compared to $58.7 million during the prior year, representing an increase of 43.9% year-over-year. Revenues were $50.5 million for 2021, compared to $49.2 million for the prior year. The Company’s share in NPI revenues was $34.1 million for 2021, compared to $9.5 million during the prior year.
  • Comprehensive income was $4.7 million, or $0.18 per share, during 2021, compared to comprehensive income of $6.5 million, or $0.29 per share, during the prior year. Comprehensive income was impacted by several non-recurring items, including prospective acquisition related expenses from the Aspire Global prospective acquisition, share based compensation expenses and additional costs of being a publicly listed company for all of 2021.
  • Adjusted EBITDA2 was $33.4 million during 2021, compared to an Adjusted EBITDA of $28.7 million during the prior year representing a increase of 16.5% year-over-year.
  • Network Net Gaming Revenue (“NGR”)2 was $750 million for 2021, compared to $448 million for the prior year, representing an increase of 67% year-over-year.

Recent Business Highlights

  • Launched our suite of games with Sisal Şans, the operator of Turkey’s national lottery Milli Piyango, providing them with complete access to our premium game content, further enriching our European footprint.
  • On January 17, 2022, we commenced a public offer to the shareholders of Aspire Global plc to acquire 100% of the outstanding shares for approximately $480 million. The offer is comprised of cash for 50% of Aspire Global and equity for the remaining 50% of shares. If the offer is accepted by at least 90% of Aspire shareholders, and subject to additional terms and conditions, the transaction is expected to close during the first half of 2022.
  • On January 24, 2022 NPI announced its first digital content partnership with the Atlantic Lottery Corporation (“ALC”), further extending its and the Company’s reach in Canada.
  • On January 31, 2022, in collaboration with Aspire Global’s subsidiary, Pariplay Ltd, through NPI, we integrated Pariplay gaming content in Alberta, enhancing the technology, games and services offered and further providing players a cohesive online gaming and lottery experience.

Guidance

The Company is initiating revenue guidance for the full year 2022. The Company expects Revenue and its Share in NPI Revenues from existing customer accounts to be between $90 million and $97 million, representing an approximate 11.0% increase year-over-year at the midpoint. This range is based on revenues from existing accounts, does not assume revenues from the launch of new turn-key accounts, and reflects the range of possible outcomes of the conflict in Ukraine.

Conference Call & Webcast Details

NeoGames will host a live conference call and audio webcast on Thursday, March 10, 2022 at 8:30 a.m. Eastern Time, during which management will discuss the Company’s fourth quarter results and provide commentary on business performance. A question and answer session will follow the prepared remarks.

The conference call may be accessed by dialing (833) 301-1152 for U.S. domestic callers or (914) 987-7393 for international callers. Once connected with the operator, please provide the conference ID of 4128509.

A live audio webcast of the earnings conference call may be accessed on the Company’s website at ir.neogames.com. The replay of the audio webcast and accompanying presentation will be available on the Company’s investor relations website shortly after the call.

About NeoGames

NeoGames, incorporated in Luxembourg, is a technology-driven innovator and a global provider of iLottery solutions for national and state-regulated lotteries. NeoGames’ full-service solution combines proprietary technology platforms with the experience and expertise required for successful iLottery operations. NeoGames’ pioneering game studio encompasses an extensive portfolio of engaging online lottery games that deliver an entertaining player experience. As a trusted partner to lotteries worldwide, the Company works with its customers to maximize their success, offering a comprehensive solution that empowers them to deliver enjoyable and profitable iLottery programs to their players, generate more revenue, and direct proceeds to good causes.

Cautionary Statement Regarding Forward-looking Statements

Certain statements in this press release may constitute “forward-looking” statements and information, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. Forward-looking statements give the Company’s current expectations and projections relating to its financial condition, competitive position, future financial results, plans, objectives, and business. In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the following: we have a concentrated customer base, and our failure to retain our existing contracts with our customers could have a significant adverse effect on our business; we do not have a formal joint venture agreement or any other operating or shareholders’ agreement with Pollard Banknote Limited (“Pollard”) with respect to NPI, our joint venture with Pollard, through which we conduct a substantial amount of our business; a reduction in discretionary consumer spending could have an adverse impact on our business; the growth of our business largely depends on our continued ability to procure new contracts; we incur significant costs related to the procurement of new contracts, which we may be unable to recover in a timely manner, or at all; intense competition exists in the iLottery industry, and we expect competition to continue to intensify; our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions; in addition to competition with other iLottery providers, we and our customers also compete with providers of other online offerings; the gaming and lottery industries are heavily regulated, and changes to the regulatory framework in the jurisdictions in which we operate could harm our existing operations; while we have not experienced a material impact to date, the ongoing COVID-19 pandemic, including variants, and similar health epidemics and contagious disease outbreaks could significantly disrupt our operations and adversely affect our business, results of operations, cash flows or financial condition; and other risk factors described in our Prospectus, filed with the Securities and Exchange Commission on September 13, 2021, and other documents filed with or furnished to the SEC. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. We caution you therefore against relying on these forward-looking statements, and we qualify all of our forward-looking statements by these cautionary statements. These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this press release. You should not put undue reliance on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Non-IFRS Financial Measures and Key Performance Indicators

This press release may include EBIT, EBITDA, Adjusted EBITDA, NPI and NPI Revenues Interest, which are financial measures not presented in accordance with IFRS. We use these financial measures to supplement our results presented in accordance with IFRS. We include these non-IFRS financial measures because they are used by our management to evaluate our operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments.

We also use certain key performance indicators (“KPIs”), including Network NGR and Gross Gaming Revenue (“GGR”), to monitor our operations and inform decisions to drive further growth. These KPIs offer a perspective on the historical performance of our platform in the aggregate across jurisdictions in which we operate.] We believe these KPIs are useful indicators of the overall health of our business.

EBIT, EBITDA, and Adjusted EBITDA. We define “EBIT” as net income (loss), plus income taxes, and interest and finance-related expenses. We define “EBITDA” as EBIT, plus depreciation and amortization. We define Adjusted EBITDA as EBITDA, plus share-based compensation, initial public offering expenses, prospective acquisition related expenses and the Company’s share in NPI depreciation and amortization. We believe EBIT, EBITDA and Adjusted EBITDA are useful in evaluating our operating performance, as they are regularly used by security analysts, institutional investors and others in analyzing operating performance and prospects. Adjusted EBITDA is not intended to be a substitute for any IFRS financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.

NPI. Refers to NeoPollard Interactive LLC that represents the Company’s 50/50 joint venture with Pollard Banknote Limited (“Pollard”). The joint venture was formed for the purpose of identifying, pursuing, winning and executing iLottery contracts in the North American lottery market. NPI is managed by an executive board of four members, consisting of two members appointed by NeoGames and two members appointed by Pollard. NPI has its own general manager and dedicated workforce and operates as a separate entity. However, it relies on NeoGames and Pollard for certain services, such as technology development, business operations and support services from NeoGames and corporate services, including legal, banking and certain human resources services, from Pollard.

Company share in NPI Revenues . NPI Revenues is not recorded as revenues in our consolidated statements of comprehensive income (loss), but rather is reflected in our consolidated financial statements in accordance with the equity method, as we share 50% of the profit (loss) of NPI subject to certain adjustments.

Network NGR. We define “NGR” as (i) in North America, gross sales less winnings paid to players and any promotion dollar incentives granted to players, and (ii) in Europe, gross sales less winnings paid to players, any gambling tax or duty paid on such sales and any promotion dollar incentives granted to players. We measure Network NGR as the total NGR generated by Instants and DBGs on our platform. As most of our revenue share contracts are based on NGR, tracking Network NGR provides us with insight as to the marginal contribution of GGR growth to our revenues and allows us to detect inefficiencies in our GGR growth strategy.

Gross Gaming Revenue (GGR). We define “GGR” as gross sales less winnings paid to players.

Contacts

Investor Contact:
ir@neogames.com

Media Relations:
pr@neogames.com


NeoGames S.A.
Consolidated Condensed Balance Sheets
(Unaudited, U.S. dollars in thousands)

  December 31, December 31,
   2021   2020 
ASSETS    
CURRENT ASSETS    
Cash and cash equivalents $66,082  $59,767 
Designated cash  167   - 
Restricted deposit  9   12 
Prepaid expenses and other receivables  2,494   1,446 
Due from Aspire Group  1,483   56 
Due from the Michigan Joint Operation and NPI  3,560   3,192 
Trade receivables  3,724   3,701 
Total current assets $77,519  $68,174 
NON-CURRENT ASSETS    
Restricted deposit  154   164 
Restricted deposits - Joint Venture  3,848   3,773 
Property and equipment  2,159   1,301 
Intangible assets  22,354   17,835 
Right-of-use assets  7,882   3,127 
Deferred taxes  3,412   211 
Total non-current assets  39,809   26,411 
Total assets $117,328  $94,585 
     
LIABILITIES AND EQUITY    
CURRENT LIABILITIES    
Trade and other payables $9,475  $4,910 
Lease liabilities  769   1,651 
Capital notes, loans and accrued interest due to Aspire Group  21,086   - 
Loans and other due to Caesars, net  -   1,972 
Employees withholding payable  167   - 
Employees' related payables and accruals  4,202   3,562 
Total current liabilities $35,699  $12,095 
NON-CURRENT LIABILITIES    
Capital notes, loans and accrued interest due to Aspire Group $-  $17,739 
Loans and other due to Caesars, net  12,899   10,666 
Company share of Joint Venture net liabilities  830   1,025 
Lease liabilities  7,820   1,855 
Accrued severance pay, net  286   384 
Total non-current liabilities $21,835  $31,669 
EQUITY    
Share capital  45   44 
Reserve with respect to transaction under common control  (8,467)  (8,467)
Reserve with respect to funding transactions with related parties  20,072   20,072 
Share premium  71,021   68,608 
Share based payments reserve  5,814   3,907 
Accumulated losses  (28,691)  (33,343)
Total equity  59,794   50,821 
Total liabilities and equity $117,328  $94,585 


NeoGames S.A.
Consolidated Condensed Statements of Comprehensive Income
(Unaudited, U.S. dollars in thousands, except per share amounts)

  Quarter ended December 31, Year ended December 31,
  2021   2020   2021   2020 
        
Revenues$12,254  $14,007  $50,463  $49,202 
Distribution expenses  2,374   1,989   9,889   6,685 
Development expenses  3,462   2,342   9,428   7,452 
Selling and marketing expenses  546   389   1,549   1,483 
General and administrative expenses  3,793   2,119   12,300   7,496 
Initial public offering expenses  -   1,151   -   2,796 
Prospective acquisition related expenses  3,841   -   3,841   - 
Depreciation and amortization  3,957   3,161   14,613   11,657 
   17,973   11,151   51,620   37,569 
Profit (loss) from operations  (5,719)  2,856   (1,157)  11,633 
Interest expenses with respect to funding from related parties  1,226   1,082   4,811   4,343 
Finance income  -   -   -   (21)
Finance expenses  1,097   57   1,501   747 
The Company’ share in profits of Joint Venture  3,168   1,514   12,446   1,393 
Profit (loss) before income taxes expenses  (4,874)  3,231   4,977   7,957 
Income taxes (expenses) benefit  1,316   (737)  (325)  (1,443)
Net and total comprehensive income (loss) $(3,558) $2,494  $4,652  $6,514 
         
Net income (loss) per common share outstanding, basic $(0.14) $0.11  $0.18  $0.29 
Net income (loss) per common share outstanding, diluted $(0.14) $0.10  $0.17  $0.27 
         
Weighted average number of ordinary shares outstanding:        
Basic  25,549,026   23,354,587   25,302,350   22,329,281 
Diluted  25,549,026   24,938,404   26,640,120   23,898,477 


NeoGames S.A.
Reconciliation of Comprehensive Income (Loss) to Adjusted EBITDA
(Unaudited, U.S. dollars in thousands)

  Quarter ended December 31, Year ended December 31,
   2021   2020  2021  2020
         
Net and total comprehensive income (loss) $(3,558) $2,494$4,652 $6,514
Income Taxes (benefit) expenses  (1,316)  737  325  1,443
Interest and finance-related expenses  2,323   1,139  6,312  5,069
EBIT (negative)  (2,551)  4,370  11,289  13,026
Depreciation and amortization  3,957   3,161  14,613  11,657
EBITDA  1,406   7,531  25,902  24,683
Initial Public offering costs  -   1,151  -  2,796
Prospective acquisition related expenses  3,841   -  3,841  -
Share based compensation expenses  2,628   438  3,448  969
Company share of NPI depreciation and amortization  28   52  193  203
Adjusted EBITDA $7,903  $9,172 $33,384 $28,651


NeoGames S.A.
Revenues generated by NeoGames as well as Company's share in NPI Revenues
(Unaudited, U.S. dollars in thousands)

  Quarter ended December 31, Year ended December 31,
  2021  2020  2021  2020
         
Royalties from turnkey contracts $7,042 $8,820$29,882 $32,252
Royalties from games contracts  550  783  1,994  2,006
Use of IP rights  2,109  2,015  7,959  6,697
Development and other services – Aspire  340  566  1,617  2,430
Development and other services – NPI  1,833  1,481  7,578  4,404
Development and other services – Michigan Joint Operation  380  342  1,433  1,413
Revenues $12,254 $14,007 $50,463 $49,202
NeoGames’ NPI Revenues Interest $9,042 $4,478 $34,052 $9,535

1 The section titled “Non-IFRS Financial Measures and Key Performance Indicators” below contains a description of the non-GAAP financial measures discussed in this press release and reconciliations between historical GAAP and non-GAAP information are contained in the tables below. Throughout this press release, we also provide a number of key performance indicators used by our management and often used by competitors in our industry. These and other key performance indicators are discussed in more detail in the section entitled “Non-IFRS Financial Measures and Key Performance Indicators” in this press release

2 Non-GAAP Financial Measures and Key Performance indicators” for additional information about this key operating metric.


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