NeoGames remains committed to and confident in continued sustainable growth despite a slowdown in revenue during Q3, which the group attributed to UK and Germany hurdles.
The igaming and ilottery supplier reported total revenues, including its share in NeoPollard Interactive – another share is held by Pollard Banknote – at $63.3m, a 14% drop on Q3 2023 revenue of $73.3m.
This figure accounted for the ‘majority of Aspire Core revenues on a net basis in the third quarter compared to historical figures in the third quarter of 2022’, NeoGames explained.
There is also a geographic element to the hurdles faced by the group. NeoGames added that revenue reflects growth for its ilottery, games and sports businesses, which were partially offset by a slowdown in Aspire Core revenue.
Regulatory changes in the UK – where the Gambling Act review White Paper recommendations are set to be adopted – and a pause in German operations prior to NeoGames securing a local licence were given as reasons.
Meanwhile, remaining headline figures saw adjusted net income rise 31.8% from $3m to $4.4m and adjusted EBITDA increase 12.9% from $17.6m to $19.9m.
Moti Malul, NeoGames CEO, explained: “While Aspire Core results slowed due to regulatory shifts in the United Kingdom and operational changes in Germany as we obtained our licence to operate in that market, we anticipate seeing gradual improvement over the next few quarters.
“We remain focused on achieving sustainable growth. We are also encouraged by the interest and pipeline in the US market for our igaming offering. We plan to continue to invest in delivering the deals we’ve announced and to enhance our product offering to scale and capture future opportunities in the space.”
Breaking down the group’s business segments, igaming revenue stood at $31.9m during Q3, a 34% drop from Q2 2022 figures of $48.51m, with NeoGames again reflecting the fact that most of Aspire Core’s revenues were on a net basis and UK and Germany difficulties.
Highlights for NeoGames sports betting and igaming operations, which the firm acquired in June 2022 via its takeover of Aspire Global, included the launch of the BtoBet sportsbook in North America through a partnership between NPI and Alberta Gaming, Liquor & Cannabis (AGLC).
Further highlights included the aforementioned entry into Germany when the Aspire Global subsidiary secured a Gluecksspiel (GGL) slots licence, whilst Pariplay signed 10 new operators and entered its fifth US state, Pennsylvania.
In contrast, ilottery revenue rose 5.6%% from $13.7m to $14.4m, whilst its share in NPI accounted for $17m, 53.3% more than the year prior ($11.1m). Total group-wide ilottery revenue, therefore, rose 26.5% to $31.4m, largely attributed to US activity.
The segment’s highlights during the quarter saw NPI selected to provide a turn-key solution to NPI whilst its solutions were approved for use by the North Carolian Education Lottery. Lastly, the NeoGames Studio’s offering was taken live with Greek Lottery operator OPAP via Pariplay’s partnership with the firm.
Closing Q3, NeoGames outlined cash and cash equivalents of $27.1m, down 34% on the 2022 sum of $41.2m and resulting in net negative cash of $14.1m for the nine months ending September 2023.
On the other hand, NeoGames net loss for the quarter fell from $4.4m to $3.6m, with both the loss and reduction in quarter-end cash attributed to costs relating to NeoGames takeover by Aristocrat Leisure.
ASX-listed firm Aristocrat first secured terms to acquire NeoGames in May of this year for a total sum of $1.2bn, with shareholders approving the agreement on combination two months later.
The merger is due to take place in H1 2024, depending on customary closing conditions including gaming and antitrust approvals, but 61% or outstanding NeoGames shareholders have approved the deal.
Malul concluded: “We continue to make progress towards completing our merger with Aristocrat Leisure, and during this quarter have received additional regulatory approvals which are required to close. We continue to expect the deal to be completed during the first half of fiscal year 2024.
“In the meantime, we remain dedicated to elevating the igaming landscape, capitalising on opportunities, and diligently executing on our strategic objectives for the benefit of all stakeholders.”