Mobile boosts GVC revenues despite low marketing spend
H1 net gaming revenue jumps 8% as firm also reports strong progress on bwin.party integration
GVC Holdings has posted an 8% jump in pro forma net gaming revenue (NGR) for the first half of 2016 on the strength of a booming mobile product, the firm announced this morning.
Pro forma NGR reached 441.8m for the six months to 30 June, with a 41% pro forma jump in clean EBITDA to 91.2m, as sports wagers via mobile rose 55% in H1 and casino and games grew 98%.
“[The growth] is GVC’s combination of hardworking, talented people and unique proprietary technology platform that has allowed us to achieve so much in such a short period,” Group CEO Kenneth Alexander said.
“The group operates in a highly competitive, increasingly regulated and taxed environment, GVC has never been better placed to face these challenges. Indeed, we believe the organic growth potential of the Group is now greater than originally anticipated at the time of the bwin.party transaction acquisition,” Alexander added.
The chief exec told investors the integration of bwin.party would be completed by the end of Q2 2017 with the annualised synergy target of 125m met.
The bwin.party acquisition also led to strong growth in sports wagers, up from 823.7m in 2015 to 2,107.4m this year. On a pro forma basis sports wagers grew 4%.
“We achieved this growth despite investing just 21% of NGR on marketing, this in part reflects the strength of the brands but also more efficient spend,” the firm said in its update.
The group also enjoyed greater profitability with sportsbook margins at 10% compared to 7.7% last year.
Meanwhile, GVC’s gaming brands, including Foxy Bingo, partypoker and partycasino, saw a 6% drop in pro forma NGR to 103.7m, with the firm attributing the downturn to increased gaming taxes in Austria and Germany.
“Whilst the progress we have made in terms of product improvement and strengthening personnel is significant, the real benefits of this are yet to come through,” GVC explained.
“There is much more still to come, with additional games and content to come on stream in the coming months. With a stronger product offering, focused brands and overall better customer experience, the opportunity to accelerate growth through additional marketing investment is an exciting one.”
GVC shares were up 3% to 743p in early trading, with Cenkos Securities among the analysts issuing a buy sign on the company.
Cenkos said in a note: “The stock trades on a 2017E EV/EBITDA of 9.2x, in line with the peer group but a 42% discount to Paddy Power Betfair. This is nonsensical, Buy.”