NGMS - Earnings call transcript Q4 2020

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the NeoGames Fourth Quarter and Year-end 2020 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded today, March 11, 2021. the to turn ICR. Cornet now will call Jacques over with I

Jacques Cornet

year which you, everyone. website our access full morning, and at fourth earnings now, and Thank Investor good have neogames.com By in operator, Relations the available is on everyone the should quarter XXXX NeoGames release, section. to

condition. such forward-looking anticipate, by the statements, which exercise We should when forward-looking phrases, on subject discussion future formal begin recent caution numerous XX-F differ to our could of results everyone similar the relying we or year We Form the and encourage financial These we impact review These risks performance. refer XX, filings, could filings of with we remind expect, results including to that that investors back what XXXX, our should usually statements. the is when identified actual that as the Before for for SEC. remarks, operating discussion more use filed and words it today of will, them. SEC interpreting future other includes expect, guarantees not our the are and therefore, uncertainties statements a the to to detailed are from December everyone you cause materially ended and are regulatory risks

some Raviv IFRS questions. Hosting considered of turn Officer; evaluating remarks, release comparable most During results today, Moti. IFRS. A and we or today's isolation financial in performance. to to accordance on over believe call Malul, these have the open Chief will the Officer measures company's with will the With then available call, in for is of and Financial not in measures that, NeoGames' the provide useful we we call substitute will call be They financial be the discuss measures company. to Chief earnings the non-IFRS neogames.com opening in Moti we financial measures, reconciliation as directly can which prepared our the website. These a should Executive Adler, our I'll

Moti Malul

good first Thank our to and call you, a Jacques, traded morning, as Welcome company. publicly everyone. earnings

throughout delivered from innovative incredibly We appreciate also of this we causes products in find view us and the to becoming a year quarter. technology-driven forward proud to a Over significant the the jurisdictions. we growth. the position I welcome space. establishing a moment partners company sector. over to growth We're marketing you that good built the leadership in at up year, to focused drive are NeoGames, who new grew a our the out take for innovator sincerely ourselves of all every years, creating new are journey. And opportunities customer business stakeholders. for are support are the NeoGames we share drive have our new end, contribution as burgeoning We iLottery on the last beginning to and on join designing, pleased the time, We to we and of acknowledge To and that I business selling the we value as top as strong line era this have results carved public thank grateful profitable to the enable shareholders. team our to want in this fourth of and and building, highlights opening and wanted proud that amazing our their that few recognize

expertise, provide This capture on a we XXXX key highlight complete then after and to our iLottery XXXX our to to market-leading the range full about and vision experiences our unleash about some in in our to make will we services progress customers' growth the morning, maintain the game year most potential, and seeing powerful opportunity longer-term them on our empowering ensure our experience Raviv, full iLottery CFO, technology solutions. platforms, over position to are with we points through our of best financials. continued We performance, the I share, run what doing talk leadership that I take which trends early to are call turn some will and

For the was full year, up $XX.X million, last is which over revenue year. XX.X%

the our NPI share addition, million last of compared to $X.X In for year. revenues year million $X.X was

XXXX, our than over the Equally as together, adjusted compared million they to top equate XX.X% the more last we representing a at full at grew X added important, the EBITDA continue grow of double rate profitability, components $XX.X year and Looking for to year. growth to line.

XXXX, For million, tailwinds, the the adjusted in of quarter ended which incremental onetime than several fourth expected. better-than-expected prior the The year was benefits as key largely X strong year. to nearly generated we plan. from We quarter the came EBITDA fourth up of $XX.X year result results full XXX% our of were better

of than earlier-than-expected factored a ahead were our saw expecting. This other of Virginia our XXXX eInstant adoption expectations and were sooner and conversion we guidance. of in players we as higher subscription faster into draw trend players revenue into game games existing customer and results our is registered First, the

anticipated contract go-live Second, than were from able the X the off in sooner lift a Alberta sign. a earlier just as ground months as occurred our revenues incredible solution in came to expected bit than online teams

fact with of we orders more time in the stay-at-home customer home activity fourth the mere in quarter. the the at increased most experienced our jurisdictions around people resurgence of spent from globe, Third,

an worth X runs started direct in ways: flow-through Throughout in iLottery. Lastly, January. runs iLottery to across of the iGaming the the with jackpots U.S. online see January the as time and all sport On next in typically it the a benefit experienced from in second, December was sign-ups customers. meaningful exactly with switch during to experienced as topic, saw was run through first, in growth early how at and run and jackpot my works betting In a that marketing run due and an of to cross-promote we the these XX the more result customers jackpot saw sales increase our in turned engage volume in and many run games. sites. players Mega PowerBall, The to is team into jackpot the which we stronger creates jackpot launch point, run, player Millions the our even into January. nicely the segues no U.S. jackpot aware, be December extending mentioning as due the on beginning further of up to jackpot iLottery opportunity lotteries We Michigan, the jackpot post and U.S., are seeing and nonjackpot for all runs exception new pick volume revenues double investors the ending, what double quickly we may was growth themselves this of than same XXXX. iGaming double of end and uptick;

With jackpot. that may have in the have run, seen I been, IPO early, to we To to be a have were February seen experienced back as our of that the And in during see to prior month and we to largely what average revenue end no refer our aligned stress the rates compared is other return that those the revenues with I do trends we We of listeners jurisdictions. jackpot materials. remind would indication that expectation, positive Michigan expect were at the this run and normal experience experiences what of levels. early, difference and what

parallel the that on recently Most Hampshire, As gaming. lottery well we New mentioned online strong programs. in when introduced U.S., of as based a more before cases to reported early strongly sport forms our in ago, other the than Michigan, iLottery betting Europe and believe, in both and was sport we parallel betting grow as statement, in registration thrive year on of experience introduction has can growth

their to new created demonstration market touch our provide players. market-proven finish to lottery, our our of strong the leverage recent content a studio offered in successful NeoGames pointed that item of the growth have is we we I We strategies developed adding entry agreement great a entered Austrian level out XXXX, to NeoGames the with talented expand IPO, at to to our agreement by and is perspective, content will was of the team online entertainment to into overall We off Europe. of the wanted by XXXX further the lottery of and enhance really our the one new a into One by had an on early which Lotteries in the games the strong experience Studio, we started believe more them gaming with globally. lotteries XXXX. library in from From announcement

growth, states in that both already very not opportunity. believe is From market especially the remains that The been to states view, market the majority tremendous. vast short with and what of up for keep So is but are terms have our organic only as poised states for the still the of live is also iLottery. its growth growth period a we a for the significant only iLottery states the our online infancy, where doing important U.S. iLottery global sizable and in present the live opportunity market unopened in the new for we states the edge momentum? in are number of Maintaining

the continue We to to expand. growth also expect opportunities external

matter. legislation and that gaming activity public are states, cases, to beginning on including the increased holding committees are We hearings see in some in expansion some

engaged in the our expect on advantage that it provide We providing have investors are and external success and those keep importance should can and we technology budgets. impact in product states Underlying the organic state investing and deeply the innovation iLottery demonstrate to as opportunities, growth customers. data drives to the monetization us of both

tech run. every $XX that satisfied is technology. a ensure over to to to leadership because market the continue know sit that be our the best the expertise million day year on on in credibility. our never roughly long sustainable We back invest to tech or and focus We stay gain have we is we Our

game On games as that we both the North successful significant one industry in lottery the to Europe. the in games of believe most and with already as iLottery portfolios well proven revenues drive global side, have America largest have we

technological run. We of on platforms the and includes games, focused having our and services, iLottery that a market that gross to expertise, experience delivering we it's wanted -- to long in key studio iLottery into exclusive industry of expertise every focus are that is our launched month. iLottery to that globe. remains over percentage operational customers. operational our the the the believe think current embedded working advantage games has and during The We provide around a the had our further. combined infrastructure sales. with a the customers stack full success iLottery for the with success we competitive bit the more We marketing expand XXXX, Since to games the data Michigan extends and best with also our principal our success have in a accounted color on We even to reason in growing iLottery on

were has strong the to we XX%. with In Czech Republic. than the and grown has was our higher QX, demonstrated till to COVID. in QX. has of for We're partnership ended very of U.S. trends a Sazka sales take online of of sales been During knowledge. penetration Instants has XXXX more led during customer. XXX% of the Sazka sales for year operating The have state's XX% to iLottery extension and This live where XXXX, New year-over-year September online And product According report represent iLottery proud iLottery well we end gain seeing $XX continued rates drop the them million we the iLottery XX% draw success sequentially Hampshire, was GGR In of drive we of penetration also that of the in total as X-year a higher just Sazka nearly quarter. iLottery up volumes increase also getting XXXX. continue turnover bit the agreement our Research portfolio retail improve E&K Gaming mitigated and channel our in more XX% Hampshire over entire part New in lottery game years, tracker X New Virginia. fiscal fourth represented market with to accelerating a from to itself Europe, are a to to for to where pace continue for during mentioned Hampshire

Alberta, sale to a during sequentially within most XX% way, is Virginia, recently, going the months, XX% instance, record-breaking lottery's gross state's Canada, which only sales significantly full the the exceeded according the of in live in to during $XXX to contract with the in results is that and we projections we Canadian E&K, second program, went fourth the approximately For iLottery the market. the quarter quarter. initial represented which signing X live iLottery quarter, And million. state nearly are full from By increased

continue to vertical during will to We gaming roll XXXX. customer out that additional

iLottery our now over see, and continue that night accounts of to As very our is in according from that, invested market. QX gross and to discuss to E&K, the driving sales call best day are latest U.S. the turn XX% in can customers, summarized working report are to tracker the our in our you we the Raviv solutions be With entire success teams well the in all the to financials. are market. of fact U.S. I'll ensure It iLottery

Raviv Adler

Thank you, Moti.

of The transaction and position of execute -- into us $XX of during deduction strategy of mentioned, a in quarter, our us Moti put we expenses continue approximate net to on cash the net our we've on balance issuance financial million IPO. XXXX As November incremental our sheet strong of provided beyond. with and growth XX, as completed fourth

of iLottery contract for And get in I discuss accounting With Alberta you for of Interactive, through NeoGames. our and NPI NPI. venture we and over a through North Hampshire, Carolina year. results, precise, the or wholly through interests excludes our last reported know, a through America period Michigan we province except of a run our To many standpoint, probably contract. operation statements, into an on and that the point we numbers. over XX-XX our income jump NPI. in business from will into up business Revenues XX% our NeoPollard Before as for NPI, results the I as through million, quarter revenues result, be more except Virginia, I joint our generate our fourth share reminder, revenues, conduct when which in New already the our all as contracts, would out operates North earnings and was the owned XXXX And equity NPI of as same that, $XX

Our share these total year-over-year. an sum of the fourth XX% representing last of compared million X million numbers was of year. during NPI revenues $X.X of $XXX,XXX $XX.X with quarter, The was increase over

For demonstrate the line revenues. the million quarter, adjusted continue the over our ability $X.X $X our to grow year fourth was XXX% alongside million, we compared profits up to last with top EBITDA with as

$XX.X XX% For the full over million, last over year, NeoGames year. reported revenues up of

share NPI was for our year compared revenues million of last $X.X million addition, $X.X In the with year.

$XX.X Looking over is the at of which the two components together, they for equate XXXX. million -- up XX% with to full over XXXX, compared year

Our adjusted million our compared is on reported EBITDA XXX% was $XX.X $XX.X with million, over XXXX. which

our cash Turning of and sheet. bit below equivalents. quarter this cash $XX ended a We up to million worth with balance

of we below net interest approximately into several online high our quarter tailwinds, revenues XXXX. fourth than ahead restrictions to of of Alberta, U.S. the impact and we've coming shares million outstanding. had Our few at bit million $XX leaving debt A IPO, run. of end including plan, approximately the a at And the as from quarter before Moti jackpot $XX in million our quarter. average guidance X.X%, the with weighted we anticipated results with faster mentioned, at stay-at-home in a rate us a was volumes words dive Post position due were the of COVID end of cash benefits XX Virginia,

include what revenues can full those look try for turn million. call forward, we will the plus $XX that, revenues we aspect we that range launching $XX back we Moti. revenues we cannot. contracts. million With and does new will year to ahead, estimate With of estimate any our between looking the balance I turnkey to of share control that and not NPI that, XXXX As The fully guidance the to

Moti Malul

Thank you, Raviv.

customer So we base. success across mentioned global see as board the earlier, I've with our

We quarter industry of the market Gaming's XX% U.S. fourth are U.S. iLottery the XXXX. XXXX entering to share growing a for with according in tracker iLottery E&K

by is are and quarters for excited we close how our to thus scalable There our model any we to I'll to have questions. think to the the to a very and morning, be for We the Operator, in progress us proven lot have we thank answer and we shareholders. happy come. NeoGames our model paths The exciting but sharing optimistic. runway momentum growth. are this industry for a have grows. is We're work for We tangible the we customers reiterating ahead the open With success us forward that, years please as board. ahead, plenty questions. about generating with grow many joining highly of continue to across for of you and line we are of able looking

Operator

Instructions]. [Operator

Our will come question from line Jeff from of Stantial first the Stifel.

Jeff Stantial

I potential the up. front. far, the wanted hear would Can a are but weeks, expect opening helpful. on start to about coming months? opportunities to I we new see A just want contract Just there bit what in legislative thus start to you the new year slow be of anything to for states hearing

possibly ground. I think kind that some you of

Moti Malul

Sure. Thanks things. for couple joining of us. A

all, of a start. slow like it First seem does

However, governing the are within majority shapes in reforming, what see few we process do phenomenon mentioned, we and that it's different and the U.S. elections, a in them. That the post of changing said the have QX. new year in now oversee we that the after have and of started right the have forms across committees have because lotteries quite with what members line happening. or It taken the as we commissions legislative different of expected

like an educational are we in down, of, do will a process that active order they now newcomers be of We're see put in to we well. the very mapped settling We let's believe those them decisions it, have we those to them that there expected in that line down, the As that them. take with get settle things very and beginning space. lotteries would call in to and are front

We a be of states, or provide sales, asked different we are actually such contributes a budget discussion of the information in expect we've there to but the on. even number some have Massachusetts on impact broader and what states the deals. over the state will to retail Maybe noticed, betting the growth formation that for and of of legislation. suggested constantly maybe In sport seen part it you of it already around being of and additional iLottery a impact iLottery can see with what from lack bill so

I We a of in iLottery expansions Connecticut have these And similarly that seen certain expansions governing with bill need that you as which those do in different those are need just the mentioned may educate. remind we them do the even not necessarily other approvals Other states. to states, helping but name potential of states side-by-side are guys, they bills. bills, need bodies,

they that things parts the time-wise, up. And So expect as the We that's we what picking accelerate across years. will are see other do now. over of

Jeff Stantial

That's Great. really helpful Okay. color.

as Moving to to term partnership continue partnership in with more could to highlighted be be the partnerships this you And you the of announced longer your Lottery. over profitability? progresses? broadly? Austrian content kind added to meaningful could meaningful How we should well, And more year as National see content-only recently how the partnerships contracts, overall

Moti Malul

course. sure, Yes, of

to focus been over did we talented back games accelerating order that and our customers and completely attention to in yes, focus the years, IPO games to remind in So provide of we growth our there. its have to turnkey recent studio our I indicate, the on that dedicating materials,

to seen go so us. content attention process, customers the that also for don't provide early We have have into turnkey manifesting already we're happy an And now our necessarily we to the of solutions already very that actual last studio the have itself year us and that our in is full from into that felt recalibrate live. time deal

parts. see that revenues and growth We diligently expect more a And their opportunities are room that in segment. -- space different lotteries on important ability something that in definitely working drive more more have in content to as to we success in the being should we for

Jeff Stantial

more one you just from one don't And quick me, if Great. mind. Okay.

see recently And flow tickets. Uber You've seen Do for they which viable here? product? around, look some What it, consider long-term lottery career as you like app, business thoughts and almost a if model? similar you feel call lottery introducing so, this are retail Eats a would news your

Moti Malul

space. Yes. that obviously We've also looked at or trend

that they but to see, before of see XXX% lotteries Some not phenomena majority are decisions iLottery full space there the a Without into be are program. that states We're programs supportive iLottery that following accurate, being of seen them. in in we happening states early-stage an have broader quite that to additional the that BXG take a that currently when we few provider to course, need opportunities We feel space things a have necessarily decision space. within at of business BXC us and the being factor at model always provider seriously. look we, And not take to if serves well. look more a and we the have we additional

Jeff Stantial

Okay. strong on the first out That's a helpful. Great. quarter gate. really of very Congrats

Operator

Our from next come of question Macquarie. the will Chad line from Beynon

Chad Beynon

importantly, on quarter to with and public coming Wanted on any start turnkey more to including you're not and, you that you contracts. that here. presented guidance, noted the strong respect new Congrats your fourth

legislative that. ramping, weighted? that just how history we the moving kind the what the you in too parts, And and contracts are you COVID it's up there's with assume questions about that, a a of about lot awarded, just given back-half your fast markets if the should to then particularly based that So for Alberta? that's business, there progress, are on how mainly talked are if you difficult, impact? given turnkey what turnkey should we contracts, seasonality on related be running, highlighting highlighted can of One, think And few

Moti Malul

us. for Much Chad, again, joining Thanks appreciated.

is yet scope have projections different because specific local contracts forms is of to be to our of the I earlier seasonality we those mentioned those turnkey very decided we such scope to of all, have the revenues they include that long-term it, contracts. specific scope believe ability and the they reason -- on types we Coming go them, integrations you about The shapes ability in cases. included don't don't relative to live within projections. And simply deployment, have haven't of fast. to not the connected from back First within our because have what to based about may

portions New states centers everything I and it, point significant in have multiple U.S. interesting related to was go for itself live, months. data et in from September. We the point stated the where case competition you related deploying growing at Canada because to to in were record long than U.S. shave contract that's as, hardware, cetera. took to market. X track in live went that contract an allows the We unique I have that back, and of cloud-based in the a course, cetera, fine. a of we signed to we to cloud, market signing solution ordering replicate Hampshire about that much of but into will faster hope et we as example, some allowed deploy of time it commissioning off February we was Canadian And

So even centers, about feel data in-state with really it. on depends the fast deploying it be can But that we we scope. primarily

Chad Beynon

talked you flow-through the were the some about jackpot fourth in with but of because Virginia. benefit strong IP how the was double some That's Great. quarter, should of quarter just the the Okay. the in on probably puts then items run the like of and rights, type that looks takes. the we fourth there then which And about perfect. in on margins lastly, the also think and It

can Or see margins So given me. down to is which probably should historical margins we or all to of above a to for important, That's you revenues, range, invest XXs? the kind the back more of assume as the slightly that of in most start tech, in that? just kind come higher you continue

Moti Malul

I'll have Raviv answer that question.

Raviv Adler

mentioned XXXX. running a time, cost for to didn't jackpot or market we're rather IP first due relative that to runs, stop fixed guidance I EBITDA it base, on any margins Michigan, you've so is with XXXX the on the EBITDA EBITDA we the assume with over margin et reasons, XXXX level, guidance providing various and your less provide margins have during and a competition This for extremely as -- an more for running to further impacts business digital In the that projected fact macroeconomics such mainly So some dynamic But noticed QX. that, in high the similar COVID cetera. you've that effect contract numbers. be right EBITDA are of rights, kind I can would any assumption

Chad Beynon

it. Appreciate everything. on Okay. Congrats

Operator

Instructions]. [Operator

Our from the Securities. line will next question Jonas from Barry Truist come of

Barry Jonas

Great. Ohio RFP. steps? next thoughts just Can on an I timing with to update wanted start us any on give the you there? And

Moti Malul

interest that The Yes. from of iLottery picking in directions. a of up number state is

whole also that budget into said iLottery We iLottery. recently seen also being committee that specific look as was they there's relevant the look have have appointed discussed in a and certain that will committees, a in Senate to at expansion gaming

but close with all because tangible of to nothing that state. handle been of line relative and the is to we discussions have still within We report the those hearings, have time

Barry Jonas

the thinking you, there verticals? tech it. about could side any Got And M&A it. Got then are on you either other areas interest that or potentially here? how Are

Moti Malul

we decision growth have have Obviously, definitely this the with to can not have the of constantly looking But we made if become the them, we now that opportunities falls yet there believe approached that opportunities public, keep on have that at. we're but screening we we are market We any a see keep distinct of core and us. what to we in of line time. point we at front will nothing in point specifically business with that in that accelerate lines

Barry Jonas

point further you relationship with been Pollard? about it. agreement has some I talk formalized me. for And recently the the Europe. announced one more don't both JV in you've Got and developments Can just at think this

Moti Malul

Banknote, established The is always great. had for agreement North which American that NeoGames with X even has the American than businesses more working our you the us partners, had having market. for Yes. the elsewhere. X or Both been remind market, of relationship I to Pollard customers North prior

has you, been an extended between remind the serving that made owned actual XX-XX And the point the we will at of until While also attention of of that America think would mentioned we adjacent about the front, by all middle as one contracts fact the recently That's partners. legal that the your the have I we agreement outside seek XXXX. on is we Michigan is, company opportunities this to North time. not that in to Austria. have that can point definitely I report is steps I it us

Barry Jonas

Congrats.

Operator

over for the Moti in And queue. there questions no are any call further like closing the remarks. to I'd back to turn

Moti Malul

a thank the Thank you excited shown really Thank and in are to have a much. so in opportunities them. time the appreciation that in morning. -- that to We about you that fact ahead next like at years. take very and this join step this time, we and of truly guys but ability respect much us look to host you. capitalize definitely we things already forward we calls It's lot of a market, are everyone taken and quarters on we us to have the the the the new we I would to have

Operator

today's conference gentlemen, for call. Ladies Thank concludes and participating. this you

disconnect. now may You

NeoGames (NGMS) 11 Mar 212020 Q4 Earnings call transcript