NGMS - Earnings call transcript Q1 2021

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the NeoGames First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, May 14, 2021. I will now turn the call over to Jacques Cornet with ICR.

Jacques Cornet

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

today the formal remind the statements. Before we will remarks, forward-looking begin include everyone we that discussion

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

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

Moti Malul

first Welcome quarter earnings and to call. morning Jacq, our good you, Thank everyone.

As XXXX. a our we're announcement, to you from off start strong can in see

Alberta, unleashing We start continue year technology iLottery to driven experiences, strong continued execute strong performance trends key empowering highlight potential, moment. in the Virginia a will XXXX. ahead and the I platforms, we're customers during the performance business over of The jurisdictions with touch I the expertise and by This best our CFO our launched will run entertaining a double financials jackpot thus and a of of them and for U.S. solutions. leading most to market points through game the was few discuss factors January. far their full our to Raviv, complete I seeing the some range services performance. expectations to will our in this the recently including on the morning, XXXX quarter during run about and and first call in turn Afterwards,

For million, compared up the first quarter which XX.X%, year. is quarter first to revenues last were $XX.X the

was the our addition, to share the for during compared revenues of $X million of XXXX. $X.X quarter first In million, quarter NBI

quarter first together, growth. the outpaced to is approximately year-over-year. important $XX.X growth growth XXX% components adjusted profitably, they our growing Equally at revenue the we're for XXXX, of Looking equate added as two representing EBITDA million of that

about quarter adjusted of year. we same of EBITDA $X.X to up first the XXXX, For the last generated million, compared period XXX%

results expected of in few factors. a due briefly on earlier a touched my the to for were the I combination quarter remarks, As better than

other we experienced We're First, compared in to ahead Virginia jurisdictions. expectations. adoption continues higher of to a accelerated what and operate rate seeing

players non-jackpot brought trends to the sooner even a into in introduction record January. expected. and double in jackpot, down launch with new launched As of than state. amplified the during we during revised the and we our lottery first These pace put, betting through know, you continued a call, simultaneously were quarter in to instance. in introduce continue sales of said a conversion enabled them of sport with the breaking instant their expectations higher after which QX betting of anyway. especially faster in saw we iLottery grow Interestingly, games Virginia slowed many significant player increase has online the Simply iLottery not online to as online games, and sports sports betting the quarter

for outside the Alberta and gaming vertical. website are after exceeded and growing regulated our expectations iGaming of quarters the full revenues original U.S., two iLottery Playalberta. provinces introduce continue Second, in Results of only new only we to operations

are of games. and introduced anticipated a quarter, much draw-games This we Dealer, vertical we with beginning the implement to range Live wide

first our results and the provide dynamics of that Hampshire, and New other forms can in lotteries to seen and Third, there the have experiencing has betting, the Michigan launched that been what parallel sport supporting data iGaming audiences. than iGaming, sport other in Michigan, and market perform of to and online well. online as continue proposition results with been in online the our during quarter. unique of We've additional sport points Side-by-side more their betting in XX have sites in in of with jurisdictions advertised in given view seeing grow Virginia, similar in and Europe U.S. lot we and with we iLottery focus are betting aggressively introduction quarter thrive what gaming, a introduction Along

mentioned a as part quarter. Millions Lastly, early that in into first carried we call, PowerBall double we've and QX run jackpot of the Mega our from from benefited

to which time. increased enjoyed with initially new will continue from we've to benefits continue we deeper relationships While the over traffic develop us able been these of benefit players, them, to

we remain to to generated continue markets at year to strong that put have markets. we the past in has our position momentum to out us take in successful landscape, our a positioned the the be existing model over new growing well confident further Looking and

make inquiries leading very many for continue to internal where see states new into material impact providing the position from to results and having and existing market still and good and believe coming a iLottery especially those is the success operate. engaged state particularly the market is on evolves, have When iLottery insights in at market strong tremendous. in look conversations out to for both data market as and we We of We Especially the how importance the budgets. in we global where growth the they is the we and U.S., remain live opportunity iLottery. live poised states carry states jurisdictions, U.S. continue the demonstrate that growth, and deeply and of is causes new,

the our of main One for superiority content. technology our reasons is success and of the

in expect keep that product investing mention innovation. us As to technology always, and it is should important to investors

Together monetization clearly provide the content central and making and external drives we're that to of in investments is driver turnkey the that we a our success which As with achieved is business. this for year. internal our for provide of both advantage role have business, accounts. will roughly the by the our significant tied million The growth in developed we calendar in technology The our play growth customers the total games Studio foundation driving a full superb our $XX NeoGames growth.

and results see with to continue and seeing on programs. we One the content are interest as iLottery quarter we pipeline. interest by deal announced strategies. strengthen We're external execute with similar a lotteries existing this We been in such our launch has growth our that also with our internal growing Austrian lotteries in growing proud

and markets, of Virginia. our to one to the capita as to customers, leadership is per Ravi. to This the terms over shareholders, the U.S. we In highlight well With top present all U.S. turn Michigan, our now I'll added in fact our demonstrate internal in to iLottery on that, serve as and demonstrates execution stakeholders, market including are sales the the prospective value Hampshire, growth, call way for three customers. by the value that other states New our

Raviv Adler

Thanks Moti.

our results, the I Virginia, or when through business of revenues. a all the Except except North which our we I point our more into Before province in top-line operates in run Alberta, NeoGames. Interactive, Michigan, XX-XX is North that be NeoPollard reflected our in NPI contracts Hampshire, out our discuss of NPI. all our joint Carolina New business To in conduct in America through contracts, the venture precise, of get NPI, for local would results, reminder, as through we

from equity $XX.X interests XXXX, our as revenue many generate standpoint, earnings our we over you and the accounting the XX.X% up reported revenues quarter NPI. operation of was of a and first last an know, Revenues through of owned in the period on share As through million year. during which result, NPI our same excludes statement, wholly income

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

last the with year. million quarter, up EBITDA our adjusted XXX% million $X.X compared For was $X.X

and As strength, favorable number Virginia broader which profitability to in performance the to XXXX to ability alongside puts XXXX. We customer. revenues continue of results With during demonstrate Alberta off position us our our remainder we to starting accounts. execute added diversification a to continue see greater strong We're in to in our existing of great across its grow in key started revenues.

ended we balance million Turning cash cash and this worth about of our up to with quarter sheet, $XX.X equivalents.

position million. the a $XX.X weighted was us $XX.X rate in of debt the outstanding [X.XX%] approximately at interest average Our at million quarter cash leaving end net of

of Moti our guidance, into mentioned, Moving quarter expectations. ahead results were as first

is retention mentioned, in outlook. past ongoing we've rates favorable U.S. benefits for far players in with of Michigan, our several Virginia as which jackpot as Alberta news line part the and of tailwinds, a stay-at-home good dual in As implication the most of in from XXXX volumes result for that higher trends as run. well jurisdiction, including of so new and policies The with are

$XX we XXXX I'll control in back include the With balance million does looking to Moti. of this ahead, launching what of With the full NPI any share our estimate plus call we As revenues million. of At fully and versus and revenue be that, aspects turnkey that the the not we between The guidance of will revenues what we can we cannot midpoint, look mind to contracts. year-over-year year estimate control. guidance forward, growth the XX%. new represents turn $XX try

Moti Malul

Thanks, Raviv.

according board to ended the quarter U.S. leader iLottery quarter first as As success seeing an the markets. U.S. E&K of growing the We for iLottery our the market in XXXX. clear across a tracker mentioned KPI every Gaming in report I in we're market earlier,

for continue our for you to joining that, thank in the us expanding iLottery global any as we morning, questions. Operator? to answer capitalize landscape we're With positioned rapidly current in our well this generating results a we strength thus are happy the to leader on to and believe by shareholders. customers and and for momentum market. generating significant We we continue the value Our model the demonstrate NeoGames excited and our of NeoGames remained remain

Operator

[Operator line first of question the comes Instructions] with Jeff Our Stantial from Stifel.

open. is line Your Please go ahead.

Jeff Stantial

just last thanks getting thanks a Good this the you the Raviv, on be Moti, you touched in are the you receptive turnover and sticking a hear high the our color how morning online Moti a any out hitting an you spoke bit we iLottery mentioned adding are idea decision Do an great Are morning just a for playing educational year find discussions during would makers channel? in for but you taking level? these earnings good just it's QX there curious expansion. if could those And of period to bit this questions. helpful? any in Great, time on points further going lottery bit you of operator. at talk most to early amongst from morning some prepared - generally remarks,

Moti Malul

do two question maybe we to Yes, Jeff, of Yes, those that course want up point or continue course. And have these. great would come out I three discussions. in things of

much are more of First betting what of at iGaming It's and we more is on and a largely as budgets, growing collected it what looking dollar sports launch compares in majority there it the one or taxes us expense of iLottery states sports taxes into tax spent online state on cause see other, then how that iLottery actually promote and others. all, through in structure. are debt interest online is the rates betting more direct contributes collected but the because to the helps state that the not the and

mentioned also in regulators. definitely states, Missouri, shapes in seen has there discussions that's in that key have Massachusetts, Maryland, iLottery quite think different we within of that introduced with with types number the others bills I a that been trend We've iLottery bill, few a So looking states in and approach gaming of a other them and of and of betting and in in other Arkansas, that in quite a point the passed have and context past, you a discussing do not guys looks in iGaming. is the know, have sport noted expansion expansion Connecticut which what we require the like as states bills. at for gaming comprehensive in in

limited, relatively to a experienced best were fact we to what COVID, actions. the turn have that of I we will that So would had legislators of to in bandwidth that. with issues discuss attention good mindset largely so that and done say sign say our when and voice into other the the states expect we that's been we have And into do year, forward. was available third deal look thing promote the simply the rest of to QX has itself

Jeff Stantial

content, a I the well. including this talked party third Switching as a on Okay, wanted And of also trend great. the their providers prepared in you remarks. platform Thanks. offering. to touch encouraging That's content specifically little bit helpful gears to and bit, in

various much how are third also necessarily platform with the and see access holding you contract, evolving as you the Asset party involved stands, do how on this do market contracts USD offer game your the side many how without states and to conversely matures? content of content, instance

Moti Malul

Sure.

fantastic turnkey U.S., the the strategy up to accounts. focus of the taken attention we Specifically that game in wanted growth until our have recently our entire of drive to studio a we

offered introduce iLottery I programs said, Europe deals see recalibrating we're will exists well across North However, those to efforts as our that content in providers. with also as that other in now as America, both future

integrated In was did take one are search turnkey we that the them, accounts market. we content whether are the in of offering and as world. that, our the Austria it's to pipeline So third be and few a party order have Canada on quite and during to of platforms there additional quarter launched the in Alberta to into in U.S., note across North in we America a also working and a deals well, in the offered

Jeff Stantial

I color very Thanks. really appreciate me. all and It's great. here. Okay, helpful. quarter for strong another all That's congrats on the

Moti Malul

Thank you, Jeff.

Operator

Truist question of Jonas next comes Barry line the from our Securities. And with

Your ahead. open. go line Please is

Unidentified Analyst

you seen level for today. It's how actually high thinking kick kind around Hi, [Matt off Barry not the or we've gentlemen, lingering, it's in kind you Coleman] just results are - market, for COVID whether of impact the and thinking of how iLottery, the influenced about COVID general of to guys that's on one it about a just the or business? permanent, that's how positive are

Moti Malul

with. of into as players times, reengage Well, and that of type the turn post-COVID we start options course, business COVID few to that been that positively The year written online anticipate said that dealt has exception. was no of I last book impacted will that a has with perspective on in additional some in entertainment the not may any iLottery will

process re-engage, create the we're will longer definitely term are and year we're However, with the and more that during - and us confident with allow happy them we a that half relationships based retention year rates than this player ago, seeing. joined to

still would say that that remains, So major to of unknown marketing what but are and say our I efforts. how on an anticipating is we would question, view a of it's portion that carefully I should be retain through able we much

Unidentified Analyst

states think we potentially your about and has get other or state out Raviv why and there follow? things been, just how should on successful, rolling should not curious iLottery, to markets are been additional Michigan that talked you as so if about a that successful lot states that thoughts

Moti Malul

success way a for that forward a have and times in said others. so past, tremendous is still the few Michigan we As shown was many tremendous success the quite a

of and an timeline and continuous live done can New in speaking been QX. done have and But since performing future. to the to is of seeing portfolio are XXXX available and three also on transitioned sales has head our we're when the even are it's and sharing solution doesn't lot the many the what since. have into that draw offer other working by adopted not year transitioning offering is definitely has we the in of as QX November capita later correctly and that say a they that seen in XXXX, two Michigan has have and other they with launched since to into However, to relatively per of customers the now approve you end and lottery occupying them. the games lottery we has have phenomenal Carolina half similar Michigan between see, beginning be exception, and still ability what trends there Hampshire top well. and is that the North And revenues fantastically even the mention, to places and is close patterns, more only, of records was in while that learning U.S., past. have been exact with solution instance, specifically customers, I an we're Virginia what would to from it breaking experienced And reported we the on went that times account year-end, to has the that have live. we a a three try a more properly as the the And about passed before coming interesting our

success with definitely close we customers games even to only So if allowed. very are show draw our are working

Unidentified Analyst

in here. one more And if in you sneak don't mind me,

a looking update process Just in an on Ohio. for maybe

expect the NeoPollard from a Our is to go in do here? news process there. some time, - process you There to ultimately up route there understanding up time selected is winner. still if, from pops the the in was How XXXX uncertainty

Raviv Adler

in for broader since with go have them different explain the discussed been committees earlier mentioned and that also lottery year. this have committees end up to the iLottery try live and our potential, yet the And We've cause and connected the engaged the And that the do approving closely to we us those themselves. as with expansion to best beginning for to educate primarily those positively. explain gaining completed There state to for importance been processes not our of ensure the in of all number approach cause has that to of the of state, very a to I position. remain will

Unidentified Analyst

in the Okay, congrats very and quarter. helpful, great

Moti Malul

Thank you.

Operator

And the Macquarie. Chad of our line question next Beynon with from comes

go open. Your line is Please ahead.

Chad Beynon

for Raviv quarter not quarter. hi that nice three you're EBITDA, quarters. thanks you my start taking revenue Moti, first Hi, for to EBITDA $XX per give for the next with question, million XXXX, revenue of did Wanted understanding implies guidance roughly which guidance, giving

come You that of technology also year? we we three or EBITDA continuing items through you're $XX could quarters? the a think mentioned when for be are in clearer how should any to that for next the flow Thank there into million you. mindful other picture invest Are there about

Raviv Adler

and from question. entering economics we've There your out, differences market's Spot like commentary, EBITDA that the that as attention accounts, Chad, without to managed that which we hope to would into say forward we're mentioned, relative that our with margin same And that to and very obviously and the on year. the going or thanks said, serve, is offering margins drives positive the market portfolio. you would offering accounts the U.S. growth. on in filings. our the revenues the That trends each I which And to produce of EBITDA alongside diversification jurisdiction, we're of happy that familiar also fact EBITDA program the we - see attention guidance traditional, our type point we without of for given being that the into to previous we in touched you're the the do extremely the - to - just we in particular familiar actually iLottery - different the the with offer would with

Chad Beynon

of IP a appreciate respect you, with markets, know And be in about you're the Hill? I'm value then tell at your will the Hill, given that's any rights the guessing that of from nice how update light new contribution use given of William should Thanks. rolling not we the success Thank we talked next I out believe, how yes, about Caesars I which think historically. transaction Caesars certainly long-term helping that's in been with Is it's there I of them William giving and then that envision the great. guidance, about business? to recently is to of current would should think terms you closing, Okay, helpful. too guys year? And end relationship, expiration just I early the

Moti Malul

in very brands, you we're have on Obviously, have the that now of extended things types new into and that additional converting with and and they also the services brands this have certain the Caesar Chad. market that expected William I way already And have that amplified that. in Hill. looking platform type states support Thanks, touched opening access pace and happy and with order we've Caesars, the take their said with providing we now that looking we believe market. we is of relationship and has William The portion report, be asked at correctly now been the with to on even significant of the a accelerated met also at Hill to additional to Caesars that U.S. year additional QX to end efforts content in last which are simply us, ambitions

as this services not while you deal, have to the these growth account been this most recall, certain meet is revenues. in - with a portion So will that us we revenue amplify of share asked that probably are additional

moment for brands. foreseeable the over opening new sides we adding accelerated discussed You markets and are Caesars, focused websites both but are something and the Caesar term to on teams and on yet correct future and that assume longer the is with that haven't of for

Chad Beynon

the you ask but mentioned rollout be of you and tuck-in your to the given and your everything kind the Thank wanted that I to know in-house, the opportunities into what and kind that valuation about kind M&A you. comprehensive a of table lastly, you do that there plan market on nothing last envision And would offer position froth M&A just standpoint? strategy any you M&A and of then stock, quarter, of cash your other of fit opportunities. from was just I could

Moti Malul

great when as Yes, as would that we run newcomers a always, say I to Chad. very work to question market, one, valid walk and we the prefer crawl approach. a take

to You focus further know market. assume the until review six of of that a play a on But opportunities are contribution concentrated how like strategic We've a the that internal to NeoGames. taking just dealt into M&A Board be of markets up growth with the a we now see should we've that be now, at. with we future our of would we of and only working process the learning listed member you result look of and concentrated been financial the months. we mainly definition the than be with be and type to And a that infrastructure such want managing were should entering those and bit of guys. of I will we less And what with types what will process looking the

Chad Beynon

congrats And Moti. on Thanks, the quarter.

Moti Malul

lot. a Thanks Chad. you, Thank

Operator

any Moti would And over Thank questions no showing the remarks. time. to to further I at like I'm back you. Malul for turn And this conference further

Moti Malul

you. for joining us. foremost first Thank thank and you We guys

the interest taking the analysts are is in and us. and the that to performance that the As newcomers with our market appreciation such into time high showing for the we our the market company have speak a

greatly and support of And that's more our greatly, of and a Have weekend business appreciative been and than have Thank day. employees moving a it. ahead our We helping the guys. forward. both are you fantastic customers you, in for a good working COVID everyone's year situation that

Operator

today's concludes call. for Thank you conference This participating.

You day. disconnect. may a Everyone have now great

NeoGames (NGMS) 14 May 212021 Q1 Earnings call transcript