Online bingo operator hits its Stride

Online bingo operator hits its Stride

Tuesday, November 29, 2016 Posted by Andy McCarron
Listed operator shows the benefit of ‘transformational’ acquisitions

Listed bingo operator Stride Gaming hailed the “transformational” effect of the year’s acquisitions as it reported net gaming revenues up 22 percent year-on-year and adjusted EBITDA rising 27 percent in the year to August.

In late July the company bought the bingo brands Moon Bingo and Robin Hood Bingo, known as the Tarco assets, along with Netboost Media for a combined initial consideration of £18.2m and an earnout agreement worth a further £22m. At the same time it also bought the 8Ball bingo business for a further upfront £12m with another earnout of up to £18m depending on performance.

Chief executive Eitan Boyd said the results for the 12 months to 31 August were testament to the company’s strategy of focusing on UK bingo. “With 105 brands and 10 percent market share of the UK online bingo market following these acquisitions, Stride Gaming now has material scale, strong operational leverage and occupies a pre-eminent position in the soft gaming market,” he added.

The number of real-money players rose 37 percent in the year to August.

The analysts were suitably impressed. At Canaccord, Simon Davies said the results showed impressive momentum including “encouraging progress” from the acquired assets. “Stride has made significant progress since its mid-2015 IPO, building real scale in the soft gaming market. Margins will be diluted in 2017 following the Tarco/8Ball acquisition, but we see significant scope for additional rationalisation, and continued premium top line growth through 2017 and 2018.”

Over at house broker Shore Capital, the analysts pointed out that with £2.5m of cost synergies and £3m of revenue synergies on track to be achieved, they expected the new acquisitions to be a “significant driver of value creation.”

The bingo industry is facing the prospect of a ban on the UK on advertising on daytime television, but Davies at Canaccord suggested this would not affect Stride as much as others in the market due to its greater reliance on online marketing.

Looking ahead, the company said it now had “material scale, strong operational leverage and significant market share” and that it was now best-placed to exploit the opportunities in the market. It added that its aim was to consider expansion into further verticals in the year ahead as it looked to enhance its base in soft gaming.

Earlier this month, the company secured an £8m loan facility with Barclays Bank which has seen the company pay back a loan from an existing shareholder. The company said the new facility would enhance the company’s ability to drive both organic and acquisitive growth.

Totally Gaming says: Stride Gaming has certainly made its mark on the UK online bingo scene since it listed last year and the boost to its market share makes it one of the major players in the market. However, like the rest of the bingo industry, it will be awaiting news of what the UK government has in store on the free-play/bonus taxation front.

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