New customers power 11% Jackpotjoy revenue growth

Jackpotjoy group (JPJ) this morning reported an 11% rise in Q1 revenues, driven by new customers on its core Jackpotjoy and Vera&John brands.

Group revenues for the three months ended 31 March 2017 reached £71.4m, while adjusted EBITDA climbed 4% year-on-year to £29.2m.

The flagship Jackpotjoy brand, which accounts for 71% of the business, was the best performing segment with 14% growth, compared to a 13% rise for Vera&John and a 14% decline for Mandalay.

The group attributed the Mandalay drop to changes to its on-site promotional spend, made in preparation for the UK bonus tax expected in August 2017.

Across the three brands, average monthly active customers grew 15% to 240,000, while monthly revenue per customer increased 2% to £87.

“It is pleasing to report that we are making good progress in executing on our strategy across our portfolio of brands,” said Andrew McIver, group CEO.

“I look forward to updating you more on the initiatives underway at our half-year results in August. Group trading has continued to be in line with our expectations and we remain confident that we will grow in line with the market during 2017.”

Victoria Pease, analyst at Edison Investment Research, issued a positive note on the firm, explaining: “Despite its market dominance, JPJ trades at a meaningful discount to its peer group, at 6.9x EV/EBITDA.

“The valuation reflects legacy concerns over the Gamesys relationship, high leverage, the lack of dividend and low stock liquidity. In our view, cash generation should lead to demonstrable debt reduction from 2018 and we would expect a re-rating as the market regains confidence in the business model.”

JPJ shares were up 2.5% to 584p in early trading on the London Stock Exchange.