NYX Gaming pushes on with revenue increase

NYX Gaming pushes on with revenue increase

Friday, November 18, 2016 Posted by Andy McCarron
Thompson-Hill departs OpenBet as restructuring takes shape

The first full quarter of results including all three of NYX Gaming’s most recent acquisitions gives some insight into the size of the company following the combination of the OpenBet, Betdigital, Chartwell and Cryptologic business units.

Revenues for the three months to September hit C$54.4m and adjusted EBITDA came in at C$14.5m. Organic growth wasn’t broken out in the figures but over the period the company signed seven new agreements for its Open Platform System (OPS) and Open Gaming System (OGS) and launched eight new client websites over the period. It also released 18 new games.

Major OpenBet client Sky Betting & Gaming also went live in Italy during the three months. However, the news regarding the results was somewhat overshadowed by other developments with OpenBet as it emerged that chief executive Jeremy Thompson-Hill would be leaving the business. The company confirmed he would be staying on as an advisor for the next two years.

OpenBet was acquired in May for £270m. As part of the deal, William Hill contributed £80m in return for preferred equity and Sky Betting & Gaming chipped in a further £20m.

The new clients NYX signed up include to the OPS include Topsport, the leading operator in Lithuania, Televisa in Mexico, and part Cherry-owned ComeOn. The company said that as of the end of September it had a development pipeline of 23 customers that have not yet launched.

Paul Leyland, founder of gambling consultancy Regulus Partners, said the organic activity was “impressive” and that the company has now built an array of complementary capabilities across channels, products and markets.

He added, though, that the positive activity needed to start delivering two related things – improved revenue per client and underlying cash generation. “The company’s leverage ratio of 4.3 times the run rate of EBITDA requires sustainable, profitable growth with few shocks.”

Whether Thompson-Hill’s departure counts as a shock is debatable. The company said it was part of a reorganisation of the business units along brand name lines and including the Betdigital acquisition from this year.

The impact of OpenBet on NYX’s revenues isn’t broken out, but it can be guessed at. The professional services segment of the business, which in the third quarter last year delivered C$0.4m of revenue, contributed $24.7m in the same period this year. Meanwhile, the royalty and licensing revenue stream enjoyed growth of over 130% to hit $26.5m.

NYX chief executive Matt Davey said the company was “entering phase two of our journey now to unlock the true value of our operations and we continue to see market-leading demand for our products and services.”

To deliver on its “considerable latent potential”, Leyland suggested the company would need to add more flagship clients and new products that are capable of taking market share as well as continued client growth. “A theoretically attractive collection of components has now been acquired, albeit each with their own issues and weaknesses,” he added. “Welding them together into an effective regulated omni-channel infrastructure provider will be high rewarding but no easy task.”

As of the end of September, the company had cash in the balance sheet of C$16.1m and total net debt of $272.4m. According to the agreement with its debenture holders, because cash was below C$20m, the company interest rate on its debentures will rise to 11% in December.

Totally Gaming says: NYX will likely take the departure of Thompson-Hill in its stride, though his continued presence as a consultant will be necessary as the company continues to fully incorporate the OpenBet business into the NYX structure. It is fair to say that 2017 will be a pivotal year for NYX as it tackles the task of fulfilling the potential of all the recent acquisitions.

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