NeoGames, the igaming solutions provider, has disclosed that it will forego holding a conference call for its 2023 financial results, opting instead to maintain focus on the impending sale to Aristocrat Leisure. May brought news of an agreement where Aristocrat, a gaming content and technology giant, would purchase NeoGames for a hefty sum of $1.20 billion, with expectations to finalize the deal prior to the conclusion of the second quarter of 2024.
Tsachi Maimon, who presides over NeoGames, shared with iGB that the synergy between NeoGames and Aristocrat represents a “really strong match,” given their complementary business models and offerings. In a display of confidence and approval, NeoGames’ shareholders cast their votes in July, supporting the acquisition unanimously.
NeoGames’ Chief Executive Officer, Moti Malul, articulated satisfaction with the company’s full-year performance and affirmed that the deal with Aristocrat remains on a steady course to completion. “We continue to make progress towards completing our merger with Aristocrat Leisure and continue to receive the regulatory approvals required to close,” he stated.
Undeterred by the transitional phase, Malul emphasized that NeoGames is persistently working towards enhancing the igaming landscape, seizing new opportunities, and meticulously working towards strategic aims for the benefit of stakeholders across the board.
An unexpected event in the year’s timeline was the receipt of a non-compliance notice from Nasdaq in the aftermath of Lisbeth McNab stepping down from the board of directors. NeoGames swiftly returned to compliance in July, with the induction of Steve Capp as an independent non-executive director.
A pivotal point for NeoGames was its first full operational year following the acquisition of Aspire Global, a transaction that reached its completion in June 2022. In fiscal terms, NeoGames charted a substantial growth with total revenue, combined with its share of net profit interest (NPI) revenues, scaling up to $254.5 million, indicating a 21.1% increase.
Individual segments reflected varying degrees of success. While its ilottery segment noted a moderate rise, reaching $57 million with a 1.2% increase, the igaming segment demonstrated stronger upward mobility, with revenues rising by 10.2% to $134.6 million.
Despite revenue gains, expenses soared to $218.2 million, dwarfing the revenue figures, with distribution expenses, albeit 1.1% lower year-on-year, still high at $96.4 million. Depreciation and amortization experienced a significant surge of 57.1%, totaling $55.9 million. Enhanced general and administrative costs climbed over $10 million, reaching $33.5 million.
Operational loss echoed at $26.6 million, although mitigated in part by other income forms. Finance expenses were pegged at $24.7 million, softened by a share in profits from the joint venture with Pollard Banknote amounting to $37.3 million. Consequently, the pre-tax loss showed improvement, settling at $14.1 million.
After accounting for $4.1 million in income tax expense, the 2023 net loss narrowly diminished to $18.2 million, a slight reduction from the previous year’s $18.9 million figure. Adjusted EBITDA, however, delivered a promising signal, doubling to $66.5 million.
The latter part of the fiscal year continued the trend of challenges, particularly in the fourth quarter. Here, revenue witnessed a sharp 31.0% downturn to $47.7 million. Nonetheless, when capturing the share of NPI revenues, the revenue amounted to $64.9 million, though still representing a year-on-year decline.
The ilottery segment persevered with a minor setback, whereas igaming revenue took a steeper fall of 39.0% to $33.3 million. However, the silver lining was found in the total quarterly expenses, which were 23.8% lower than the corresponding quarter in 2022, totaling $55.4 million, yet resulting in an operational loss of $7.7 million, marking a greater annual loss.
Distribution expenses remained the predominant cost factor for the quarter at $25.4 million, with depreciation and amortization and general and administrative expenses following behind. Finance charges continued to impair the overall financial health at $7.4 million, counterbalanced to some extent by joint venture profit shares contributing $10.6 million. This series of financial maneuvers left the pre-tax loss for the quarter at $4.5 million and, after accommodating an income tax expense of $1.5 million, the net loss for the quarter amounted to $6.0 million.
Yet, adjusted EBITDA held its ground, showing a 2.2% year-on-year increment, at $17.1 million. Capping off the year, Malul reflected on the strategic strides NeoGames had made, commending the growth within the company’s segments. “We are very pleased with the progress we made during the fourth quarter and during the entire year of 2023,” Malul added.
Looking forward, while keeping an eye on potential growth landscapes, such as the United States, Malul noted that NeoGames would continue nurturing its recent partnerships and product developments. “We are focused on achieving sustainable growth and remain encouraged by the interest and pipeline in the US market for our igaming offering,” he clarified. The anticipated merger with Aristocrat Leisure looms on the horizon, but the prevailing attitude at NeoGames is one of unrelenting ambition and commitment to their established trajectory of expansion and innovation.
