The acquisition of Aspire Global helped to boost NeoGames’ revenue in Q3, but also led to higher costs as the business swung to a loss.
NeoGames’ revenue skyrocketed by more than 400% year-on-year to $62.2m (£53.0m/€60.1m) in Q3. A major reason for this was the acquisition of igaming supplier Aspire Global during Q2.
“The strong performance where we grew revenue and profitability across the business is a great start for our first full quarter post completion of the combination,” NeoGames chief executive Moti Malul said.
While Aspire was a major reason for the growth, Malul also noted that revenue from NeoGames’ core ilottery arm was up 22% year-on-year to a new record high.
Meanwhile, he also noted that revenue from igaming and sports betting – the verticals provided by Aspire – were up by 8% year-on-year.
“It’s early days in our integration efforts, yet we are already seeing the benefits from the combination as we advance our global leadership across ilottery, igaming and online sports betting,” Malul said.
The business made a further $11.1m through its 50% share in joint venture NeoPollard Interactive with Pollard Banknote. As a result, the business made a combined $73.3m in revenue if NeoPollard is included.
Higher costs for NeoGames
However, the acquisition also led to higher costs, with operating expenses rising sixfold to $66.3m The business also paid $41.3m in distribution expenses, after these costs came to only $2.4m in Q3 of 2021.
NeoGames also incurred $2.1m in development expenses, $1.3m in sales and marketing expenses and $6.4m in general and administrative expenses, plus $14.3m in depreciation and amortisation costs and $835,000 in acquisition-related expenses.
As a result, the business reported a $4.3m operating loss in Q3, after a $642,000 operating profit a year earlier.
While it received a $5.5m share in NeoPollard’s profits, it also paid $4.7m in finance expenses. This, Malul said, was mostly related to currency changes.
“While we believe our results are indicative of the underlying strength we currently see in our business, we remain aware of the macro environment,” he said. “We did experience headwinds during the quarter related to fluctuations in foreign currency exchange rates, serving as a reminder that we need to remain disciplined and focused on controlling what we can.”
As a result, NeoGames reported a pre-tax loss of $3.3m.
After paying $1.1m in income tax, the business was left with a $4.4m net loss.
