Better-than-anticipated Q1 report

Reiterated guidance

Outlook continues to improve

Strong start to the year
Gaming Innovation Group’s Q1 report was slightly better than our expectations. Sales were EUR 18.3m (vs. ABGSC 17.5m) and EBITDA was EUR 4.6m (vs. ABGSC 4.5m). The beat was primarily driven by a better-than-anticipated performance from the media segment. Looking into Q2, we note that it began on a strong note in April, with normalised revenues up 35% compared to the same period last year. Our signals indicate that Q2 is following the trend of strength seen in Q1.

Solid momentum in client signings
We have fine-tuned our estimates, which primarily stems from upward revisions for the media segment. We have also adjusted D&A while leaving the remaining part of the cost base relatively unchanged (note smaller estimate revisions in absolute terms). In conjunction with the Q1 report, GiG reiterated its financial targets of: 1) achieving double-digit annual organic sales growth, 2) achieving an EBITDA margin in excess of 40% by 2025 and 3) cash generated will be used to lower the leverage ratio, while it also will pursue growth opportunities within the iGaming sector. Overall, we find both the Q1 report and the trading update for April to be supportive of the outlook. Moreover, we note continued momentum regarding B2B client signings, as GiG has 12 new brands in its integration pipeline.

Enhanced long-term position
GiG’s long-term outlook continues to improve, which is underpinned by the encouraging start in April as well as the momentum from the media segment, which delivered another all-time high April in revenues and FTDs. On our 2022e, GiG is trading at an EV/EBITDA of ~6x and P/E of ~12x coupled with a FCF yield of ~11%.

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