Newgioco Reports Full Year 2018 Results

Business News

Newgioco Group a sports betting and gaming technology company providing regulated online and land-based gaming and wagering through licensed subsidiaries in Italy and Austria, and headquartered in Toronto, Canada, today reported its financial and operating results for the 12 months ended December 31, 2018.

Revenue of $34.6 million, up 51.2%. Gross gaming revenue (GGR) of $37.7 million, up 60.8%.Handle of $413.2 million, up 89.1%. Income from operations of $427,274, down 83.5% due to $3.1 million in non-recurring expenses including $1.0 million in investments for future growth, $1.6 million relating to legacy activities and items outside the normal course of business and $500,000 for executive compensation forgone in prior years

Net loss of $3.05 million compared to net income of $1.4 million in 2017. Adjusted EBITDA of $3.6 million compared to $2.6 million in 2017. Accelerated roll out in rapidly developing U.S. sports betting market. Significant progress made in strengthening management team and board of directors.

“Newgioco generated more than $413 million in total handle in 2018, an 89.1% improvement over 2017 volume, demonstrating our continued, strong growth,” commented Michele (Mike) Ciavarella, Newgioco Chief Executive Officer. “Our web-based handle grew 120.9% to $235.9 million, becoming our largest revenue stream. In addition, regulated products like online poker and online casino, continue to grow rapidly, reducing the impact of volatility from our sports betting revenue. As this trend continues, the quarter-to-quarter impact of sports betting on our profitability should decrease, giving us greater visibility and predictability into our quarterly revenues.”

“On the sportsbook side, the fourth quarter, while favorable for bettors, was a challenging one for the industry operators, and December especially so, resulting in abnormally low conversion ratios,” added Mr. Ciavarella. “However, our industry leading risk management capabilities enabled Newgioco to maintain hold ratios which far exceeded industry averages. Looking into 2019, we are expecting our handle exclusively from Italian operations to exceed $500 million. Growth from other geographies, regulated web-based revenue streams and software service fees in the U.S. and other markets are expected to be incremental to this baseline, helping accelerate our overall growth rates as we harvest the investments of the last year.”

“In the second-half of 2018, and especially in the fourth quarter, we increased our investments in anticipation of accelerating near-term growth,” concluded Mr. Ciavarella. “This included investments in our U.S. operation, a more expansive trade show presence and schedule, our expanded sales office in Naples, Italy, and our expanded risk management facility in Teramo, Italy, as well as the addition of six new vice presidents that recently joined Newgioco along with our new Chief Financial Officer. We expect these growth-related investments, which totaled more than $2 million in expenses in 2018, to drive accelerating growth in 2019 and beyond. In addition, we incurred $2.1 million in non-recurring charges, including $1.1 million in non-cash expenses, related to our convertible debentures, $508,000 in non-recurring charges and $500,000 for executive compensation forgone in prior years, which impacted our 2018 profitability.”

“With most of the investments behind us and our ELYS platform now fully developed, we believe we are poised for accelerated growth in 2019,” added Mr. Ciavarella. “We expect to add two to three U.S. tribal and/or non-tribal casinos as SaaS customers by the end of 2019, with a target of approximately 50,000 active U.S. domiciled players. With continued, steady growth in Italy, opportunities to expand in EuropeAfricaAsia and South America, and this greenfield opportunity in the U.S., we believe continued revenue growth is achievable and will lead to improved operating margins.”