Gaming Realms – Full Year Results & Valuation Update

Final results show full effect of licensing focus. Momentum carries on into Q1 and further US growth expected. Target price increased.

Gaming Realms is a creator and licensor of innovative games for mobile, operating in the UK, US, Italy and Canada. Flagship brand Slingo® is a popular and unique game genre combining elements of slots, bingo and table gameplay. These games are licensed by some of the world’s biggest online gaming operators, including DraftKings, Sky Betting & Gaming and GVC, and distributed directly to operators or via global partners such as Scientific Games using the company’s proprietary Remote Game Server platform.

  • 2020 a record year with a maiden adjusted EBITDA profit posted

    The last financial year was a record one financially for Gaming Realms as its high margin licensing focused strategy really took off. Revenues increased by 66% to £11.4 million and at the adjusted EBITDA level a maiden profit of £2.9 million was posted from continuing operations, up from a loss of £0.255 million in 2019. Into the new financial year and strong momentum is said to have continued, with Licensing revenues increasing by 60% in Q1 2021 to £2.1 million.

  • More games, more partners, more players

    Operational highlights of the year included the company’s portfolio of proprietary games on its Remote Game Server growing from 34 to 44. During the year Slingo Originals content launched with 26 new partners including gambling industry giants such as, DraftKings, Paddy Power Betfair and Sky Betting & Gaming. That helped to increase the number of unique players by 140% to 2.28 million and see increased international demand for content.

  • Fast growing US markets offer further growth in 2021 and beyond

    In the US, the trend of individual states opening up regulated and legal online gambling activities continues. Gaming Realms obtained a provisional supplier licence for Michigan in January, with launch in the state expected in May. In Pennsylvania a game content supplier licence was filed for last year, with receipt and a going live date expected in the first half of 2021.

  • Peer derived EV/EBITDA multiple valuation suggests significant upside

    Our chosen peers trade on an average historic EV/EBITDA multiple of 45 times. Discounting this to 25 times and using our 2022 forecasts implies an equity valuation of £199.17 million. Discounted back to the present day at a rate of 12% and considering potential equity dilution from the company’s convertible loan gives us a target price of 51p. We retain our stance of Conviction Buy.


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Table: financial overview
Year to Dec 2019A 2020A 2021E 2022E
Revenues (£m) 6.9 11.4 14.9 20.8
Adjusted EBITDA (£m) (0.3) 2.9 5.4 8
Source: Company accounts & Align Research