Gaming Innovation Group has praised the previously announced €31m divestment of its B2C vertical to Betsson, as the firm looks to sustainable growth following a series of declines felt across 2019.
Publishing a financial report for 2019’s final quarter and full year, revenue fell 26.3 per cent during Q4 to €29.4 (2018: €39.9m), leading to a full-year decline of 18.7 per cent from €151.4m to €123m.
The company asserts that the declines were primarily driven by lower revenues within the B2C segment which was impacted by the challenging Scandinavian market, as well as the termination of a customer contract affecting year-on-year comparison by €6.7m and €3m respectively.
Gross profit for the quarter fell 22.1 per cent to €25m (2018: €32.1m), with full-year figures dropping a little over 20 per cent from €124m to €98.9m. EBITDA dropped 12.4 per cent for the year to €14.1m (2018: €16.1m), nudged along by a four per cent quarterly decrease from €5m to €4.8m.
Richard Brown, CEO of GiG, commented: “The dynamics in the online gambling industry, both competitive and regulatory, have changed dramatically in the last two years and we as a company are forcefully adapting to that.
“We are coming out of a strategic review initiated in November last year, I am certain the actions taken will place the company in a truly exciting position for growth while securing the sustainability of the company’s financial position by significantly reducing its debt and leverage.”
In Q4 2019, GiG initiated a strategic review of the whole company to identify value-creating opportunities, reduce complexity and improve efficiency within the business.
This led to the divestment of its B2C assets, including operator brands Rizk, Guts, Kaboo and Thrills, to Betsson Group, for an initial €31m.
Under the terms of the deal Betsson is committed to keeping the brands operational on the GiG platform for a minimum terms of 24 months, with the firm paying a premium platform fee based on NGR generated. Based on the expected platform fees, the total value of the transaction is estimated at approximately €50m.
Brown continues: “The divestiture of our B2C business provides us with a three pronged strategic advantage to the historical business model. While the previous strategy, which included the B2C business, had significant advantages historically, leading into 2020 with regulation of core markets and the upcoming further regulation across the world, mid-sized B2C operations will come under increasing pressure where scale is the only real way to drive long term success.
“The internal complexity, conflicting agendas and priorities between the B2C and B2B business within GiG was becoming a critical factor in the company’s ability to operate efficiently.
“By focusing our business entirely as a B2B supplier, GiG will not only be able to improve its product offering and its operational efficiency, but most importantly, the full focus will allow us to capitalise on the growing demand for platform services.
“My vision is for GiG to be the best platform provider in the industry and the quality of the platform, the scalability and focus of efforts will enable the realisation of that goal. This will, in turn, lead to sustainable growth for the company.”