Revenue of $61.0
million, up 73.3% year-over-year, and Adjusted EBITDA of
$17.5 million
LAS VEGAS, Aug. 22, 2017 /CNW/ - NYX Gaming Group Limited
(TSXV:NYX) ("NYX" or the "Company") today announced financial and
operating results for the second quarter ended June 30, 2017. All amounts expressed are in
Canadian dollars unless otherwise noted.
"We saw positive momentum in the second quarter with sequential
improvement in revenue, adjusted EBITDA, and adjusted EBITDA margin
from the prior quarter," said Matt
Davey, CEO of NYX Gaming Group. "Our development
pipeline remains strong and we continue to sign new customers at a
steady rate, as our sportsbook, gaming, and content offerings are
resonating with customers and driving scale and operating leverage
in our business."
Second Quarter 2017 Highlights
- Revenue of $61.0 million, or
growth of 73.3% year-over-year;
- Organic revenue growth of 50.6% year-over-year, excluding the
impact of the OpenBet and Betdigital acquisitions in May 2016;
- Royalty and license revenue of $31.9
million, or growth of 53.1% year-over-year;
- Gross profit of $51.9 million, or
85.0% gross margin compared to 87.3% gross margin during the second
quarter of 2016;
- Adjusted EBITDA of $17.5 million,
an increase of 66.7% over the prior year period;
- Net cash provided by operating activities of $11.5 million compared to net cash provided by
operating activities of $3.1 million
during the second quarter of 2016 and $8.4
million during the first quarter of 2017;
- Signed 18 new agreements for the Open Platform System ("OPS")
and Open Gaming System ("OGS");
- Launched OGS content across 13 new client sites; and
- As of June 30, 2017, held
development commitments with 36 customers that have not yet
launched.
Second Quarter 2017 Operating Results and Highlights
During the second quarter of 2017, NYX signed 18 new agreements
for OGS and OPS and successfully launched OGS content across 13 new
client sites including Soft Swiss, JAXX, Sekabet, Casino Gran
Madrid, and Goldbet. NYX also launched 21 new slot games on
the OGS platform including games with PokerStars NJ, a Stars Group
brand in New Jersey, USA.
This extends the Company's long-standing partnership with The
Stars Group as leaders in digital gaming in regulated
territories.
As of June 30, 2017, the
development pipeline remains strong as commitments were held with
36 customers that had not yet launched. As of August 15, 2017, NYX has signed 16 new deals and
launched five new clients since June 30,
2017.
On July 21, 2017, NYX closed an
agreement with a leading alternative credit provider to refinance
its existing debt and amend its existing £135.0 million term loan
facility. The Company added €74.9 million in term loan
facilities and expanded its revolving credit facility from £5.0
million to £15.0 million. As part of the debt refinancing,
NYX redeemed all of its outstanding 10.0% Senior Secured Series A,
B and C Debentures, repaid its $10.0
million 6.0% unsecured debenture, and repaid all outstanding
amounts of its revolving credit facility. The resulting
denomination of NYX's debt now more closely matches geographical
revenue concentration, and the Company's estimated total annual
cash interest expense has been reduced from approximately
$28.0 million to $23.0 million going
forward.
Summary of Results
The increase in revenue and gross profit for the three and six
months ended June 30, 2017, compared
to the prior year periods, was attributable to the results of
operations from OpenBet acquired in May
2016, and new customer launches and development
projects. The OpenBet acquisition has brought significant
growth to the Company's online sportsbook product offerings and
presence in the online gaming industry.
Summary of Financial Information
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
CAD$ (in 000s,
except per share)
|
2017
|
2016
|
|
2017
|
2016
|
Royalty and
license
|
31,904
|
20,841
|
|
62,810
|
38,210
|
Professional
services
|
28,815
|
11,885
|
|
56,547
|
13,331
|
Social
gaming
|
295
|
2,485
|
|
580
|
3,322
|
Total
revenue
|
61,014
|
35,211
|
|
119,937
|
54,863
|
Gross
profit
|
51,856
|
30,754
|
|
103,929
|
46,996
|
Gross profit
margin
|
85.0%
|
87.3%
|
|
86.7%
|
85.7%
|
Adjusted
EBITDA
|
17,535
|
10,517
|
|
34,338
|
15,315
|
Adjusted EBITDA
margin
|
28.7%
|
29.9%
|
|
28.6%
|
27.9%
|
Net loss
|
(21,065)
|
(36,543)
|
|
(18,542)
|
(45,680)
|
Basic and diluted
loss per share
|
(0.19)
|
(0.72)
|
|
(0.17)
|
(0.90)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
December
31,
|
|
|
|
|
2017
|
2016
|
Total
assets
|
|
|
|
743,440
|
752,376
|
Total non-current
liabilities
|
|
|
|
481,634
|
472,017
|
Revenue
Revenue for the three months ended June
30, 2017 was $61.0 million, up
73.3% compared to $35.2 million for
the three months ended June 30, 2016.
All revenue categories, with the exception of social gaming,
grew primarily as a result of a full quarter contribution from the
Company's acquisition of OpenBet in May
2016, which provided $32.9
million for the three months ended June 30, 2017 versus $16.5
million for the three months ended June 2016. Other revenue contributors were
new OGS customer site launches, new NextGen and third party gaming
content on the OGS platform, and new client site launches of the
Company's OPS platform. Social gaming revenue for the three
months ended June 30, 2017 decreased
due to the Company's divestiture of the social poker business in
June 2017.
Gross Profit
Gross profit increased by $21.1
million, or 68.5%, for the three months ended June 30, 2017 to $51.9
million, compared to $30.8
million for the three months ended June 30, 2016. The increase in gross profit
was a result of a revenue increase from the underlying core casino
business and the revenue impact from acquisitions. Gross
profit margin was 85.0% for the three months ended June 30, 2017, compared to 87.3% for the three
months ended June 30, 2016. The
decline in gross margin was the result of higher payments to third
party gaming content providers on the Company's OGS platform.
General and Administrative Expenses
General and administrative expense, which includes marketing,
administrative, and personnel costs, increased by $13.3 million to $36.6
million for the three months ended June 30, 2017, compared to $23.3 million for the three months ended
June 30, 2016. The increase was
due primarily to the higher operating and personnel expenses
associated with the Company's acquisition of OpenBet.
Interest Expense, Fair Value Adjustment to Derivatives and
Foreign Exchange
Interest expense was $11.0 million
for the three months ended June 30,
2017, compared to $7.1 million
for the three months ended June 30,
2016. The increase in interest expense was due to
additional borrowings related to the financing associated with the
acquisition of OpenBet during the second quarter of 2016. The
current period was comprised of interest expense, net of interest
income, plus amortization of debt issuance costs.
During the three months ended June 30,
2017, the Company recorded a loss on the fair value
adjustment to derivatives of $13.6
million, compared to a gain of $8.3
million for the three months ended June 30, 2016. The loss was due primarily
to the change in fair value of the embedded derivatives related to
the Company's debt instruments and equity conversion feature in the
preferred shares.
Derivative financial instruments are recorded at fair value
using the Black-Scholes options pricing model, Monte Carlo
Simulation model, or a binomial option pricing model as
appropriate. The main factors driving the change were
volatility in the Company's stock price and strike prices greater
than the current stock price. As of June 30, 2017, the derivative liabilities and
asset were valued at $29.8 million
and $4.5 million, respectively.
While there is no cash impact to these changes, the volatile
nature of the Company's stock could cause large changes in value
from period to period.
Foreign exchange gain for the three months ended June 30, 2017 was $1.0
million, compared to $0.4
million for the three months ended June 30, 2016.
Net Loss and Net Loss Per Share
The Company's net loss for the three months ended June 30, 2017 was $21.1
million, compared to a net loss of $36.5 million for the three months ended
June 30, 2016. The current
quarter net loss was primarily the result of a $13.6 million loss on fair value adjustment to
the derivatives, $11.0 million of
interest expense, net, and $7.7
million amortization expense for the three months ended
June 30, 2017. The prior year
quarter's loss was driven by a $23.9
million loss on exchange of debt and $13.4 million of acquisition and restructuring
charges related to the integration of OpenBet and initiatives for
the combined company going forward, partly offset by an
$8.3 million gain on fair value
adjustment to the derivatives.
Basic and diluted net loss per share were $0.19 for the three months ended June 30, 2017, compared to basic and diluted net
loss per share of $0.72 for the three
months ended June 30, 2016.
Adjusted EBITDA
To supplement the Company's condensed consolidated financial
statements presented in accordance with IFRS, the Company uses
Adjusted EBITDA, a measure they believe is appropriate to provide
meaningful comparison with, and to enhance an overall understanding
of, their past financial performance and prospects for the
future. The Company believes Adjusted EBITDA provides useful
information to both management and investors by excluding specific
expenses and gains that they believe are not indicative of their
core operating results. Further, Adjusted EBITDA is a measure
of operating performance used by management, as well as industry
analysts, to evaluate operations and operating performance and is
widely used in the technology and gaming industry. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for measures of
financial performance prepared in accordance with IFRS. In
addition, other companies in NYX Gaming Group's industry may
calculate Adjusted EBITDA differently than the Company does.
A reconciliation of net loss to Adjusted EBITDA is provided in the
table below.
The Company defines "Adjusted EBITDA" as net earnings (loss)
before interest and other non-operating income (expense), income
taxes, depreciation and amortization, impairment charges,
share-based payments, gains and losses on the revaluing of
contingent consideration and derivatives, foreign currency gains
and losses, acquisition and restructuring costs, and other gains
and losses.
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
CAD$ (in
000s)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(21,065)
|
|
|
$
|
(36,543)
|
|
|
$
|
(18,542)
|
|
|
$
|
(45,680)
|
|
|
Net tax expense
(benefit)
|
2,917
|
|
|
1,281
|
|
|
3,587
|
|
|
(483)
|
|
Loss before
tax
|
(18,148)
|
|
|
(35,262)
|
|
|
(14,955)
|
|
|
(46,163)
|
|
|
Depreciation and
amortization
|
8,449
|
|
|
6,261
|
|
|
17,095
|
|
|
10,723
|
|
|
Interest expense,
net
|
10,985
|
|
|
7,062
|
|
|
22,107
|
|
|
9,428
|
|
EBITDA
|
1,286
|
|
|
(21,939)
|
|
|
22,247
|
|
|
(26,012)
|
|
|
Impairment of
intangibles
|
—
|
|
|
166
|
|
|
—
|
|
|
6,651
|
|
|
Acquisition and
restructuring costs
|
1,958
|
|
|
13,419
|
|
|
2,642
|
|
|
16,119
|
|
|
Foreign exchange loss
(gain)
|
(1,106)
|
|
|
(403)
|
|
|
235
|
|
|
(478)
|
|
|
Fair value adjustment
to derivatives
|
13,595
|
|
|
(8,313)
|
|
|
3,745
|
|
|
(5,267)
|
|
|
Loss on exchange of
debt
|
—
|
|
|
23,856
|
|
|
—
|
|
|
23,856
|
|
|
Revaluing contingent
consideration
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,077)
|
|
|
Share-based
payments
|
1,031
|
|
|
345
|
|
|
1,854
|
|
|
472
|
|
|
Other
expense
|
771
|
|
|
3,386
|
|
|
1,615
|
|
|
6,051
|
|
Adjusted
EBITDA
|
$
|
17,535
|
|
|
$
|
10,517
|
|
|
$
|
34,338
|
|
|
$
|
15,315
|
|
Adjusted EBITDA was $17.5 million
for the three months ended June 30,
2017, compared to $10.5
million for the prior year period. As the acquisition
of OpenBet was completed on May 20,
2016, the current year period was positively impacted by a
full quarter of contribution from OpenBet's operations. Other
expense for the three months ended June 30,
2017 included one-time costs primarily consisting of legal
expenses and the business divestiture of social gaming.
Financial Position as of June 30,
2017
- Cash and cash equivalents (including restricted cash) of
$35.8 million;
- Total assets of $743.4
million;
- Total liabilities of $562.6
million;
- Total equity of $180.9 million;
and
- Total borrowings of $330.5
million.
Second Quarter 2017 Conference Call & Webcast
A conference call and webcast to discuss NYX Gaming Group's
second quarter 2017 results will be held on August 22, 2017, at 5:30
a.m. PT (8:30 a.m. ET).
Matt Davey, CEO of NYX Gaming Group, and Eric Matejevich, CFO of NYX Gaming Group, will
host the call. A question and answer session will follow the
presentation. Interested parties are invited to join the call by
accessing a live audio webcast at http://bit.ly/2vgVkxx or by
dialing (647) 427-7450 or (888) 231-8191 prior to the scheduled
start of the call. A replay of the conference call will be
available by dialing (855) 859-2056 and using the reference number
65220945. The replay of this call will be available until
August 29, 2017.
The Company will make NYX Gaming Group financial information for
the quarter ended June 30, 2017
available to shareholders, prospective investors, broker-dealers
and securities analysts on August 22,
2017.
Financial Statements and Management's Discussion and
Analysis
NYX Gaming Group's interim condensed consolidated financial
statements, notes thereto and Management's Discussion and Analysis
for the three months ended June 30,
2017 will be available on SEDAR at www.sedar.com.
Additional information relating to NYX Gaming Group and its
business may also be found on SEDAR and the Company's website at
www.nyxgaminggroup.com.
Disclaimer
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Caution Regarding Forward-Looking Statements and Non-IFRS
Financial Measures
Certain statements included herein, including those that express
management's expectations or estimates of the Company's future
performance, constitute "forward-looking statements" within the
meaning of applicable securities laws. Any statements that
are contained in this news release that are not statements of
historical fact may be deemed to be forward-looking
statements. Forward-looking statements are often identified
by terms such as "may", "will", "would", "should", "could",
"expects", "plans", "anticipates", "believes", "intends", "trends",
"estimates", "likely", "predicts", "potential", or, in each case,
their negative or other variations of these words or other
comparable terminology, are intended to identify forward-looking
statements. Forward-looking statements are based on certain
assumptions regarding the Company's expected growth, results of
operations, performance, industry trends and growth
opportunities. Forward-looking statements are necessarily
based upon a number of estimates and assumptions that, while
considered reasonable by management at this time, are inherently
subject to significant business, economic and competitive risks,
uncertainties and contingencies that could cause actual results to
differ materially from those expressed or implied in such
statements. Because of the factors described herein,
investors are cautioned not to put undue reliance on
forward-looking statements, whether as a result of new information,
future events or changes. Applicable risks and uncertainties
include, but are not limited to: credit, market, currency,
operational, liquidity and funding risks, including changes in
economic conditions, interest rates or tax rates, the impact of
government regulation on the online gaming industry and the risk
that such regulation is subject to change, competition from other
providers of online gaming services, the possibility that the
Company may be unable to successfully integrate the acquired
businesses, the risks associated with international and foreign
operations, the impact of consolidations in the online gaming
industry and the other risks identified under the heading "Risk
Factors" in the Company's final long form prospectus dated
December 18, 2014 and final short
form prospectuses dated July 9, 2015
and July 14, 2016, each as filed on
SEDAR at www.sedar.com, and in other filings that NYX Gaming Group
may make with applicable securities authorities in the
future. The forward-looking statements contained herein
reflect NYX Gaming Group's current views with respect to future
events, and except as required by law, NYX Gaming Group does not
intend, and undertakes no obligation, to update any forward-looking
statements to reflect, in particular, new information or future
events, or otherwise.
This press release contains certain non-IFRS financial measures
and are noted where used. These measures are provided as
additional information to complement those IFRS measures by
providing further understanding of our results of operations used
by many investors to compare companies and management believes they
are important measures in evaluating NYX Gaming Group.
However, they are not recognized measures under IFRS and do not
have a standardized meaning prescribed by IFRS. Therefore,
they may not be comparable to similar measures presented by other
issuers. Investors are cautioned that such measures should
not be construed as alternatives to comparable IFRS measures
determined in accordance with IFRS.
About NYX Gaming Group
NYX Gaming Group Limited is a leading digital gaming software
supplier for interactive, social, and mobile gaming worldwide,
headquartered in Las Vegas,
USA, with a staff of more than
1,000 employees globally. NYX delivers value by adhering to
the highest standards of customer service, probity, and
responsibility.
The Company has one of the broadest distribution bases in the
industry, with over 200 unique customers.
The award-winning NYX OGS™ (Open Gaming
System), which allows licensees to leverage the best-of-breed,
multi-vendor casino content from around the world, is acknowledged
to be the industry's market-leading gaming offering. From its
own studios and a broad partner network of the most innovative
third party suppliers, NYX offers customers the widest portfolio of
content available, with access to over 2,000 game titles, via
OGS™.
In addition, NYX's award winning sports betting division OpenBet
is utilized and trusted by leading sports book operators, with its
scale and performance world-renowned. In 2016, the OpenBet
sportsbook processed more than two billion bets and broke new
records at the 2017 Grand National, where it processed 68,000 peak
bets-per-minute.
NYX Gaming Group Limited is listed on the TSX Venture Exchange
under the symbol NYX. For more information about the Company,
including press releases, links to SEDAR filings and other
financial information, please visit the Company's investor
relations website at: www.nyxgaminggroup.com/investors.
SOURCE NYX Gaming Group Limited