We take three key messages from Gaming Realms PLC (LON:GMRG)’ interims: strong growth in real money gaming, significant progress with major blue-chip licensing partners and management’s belief that the group will be EBITDA positive for 2016. The latter implies maiden EBITDA profits of over £3m in H216 underpinning our unchanged EBITDA forecast of £6.9m for 2017. More importantly, this suggests that the group has passed a tipping point in its development, which is not yet reflected in the 2017 EV/EVITDA of only 7.2x.
Building real traction in RMG and social gaming
With its proprietary Grizzly platform scaling nicely, Gaming Realms has been able to focus on marketing its real money gaming (RMG) brands, with over 143k new depositing players in H116 (H115: 39k), revenue growing to £10.2m (H115: £4.2m) and 84% of depositing players using mobile. It is also ready to begin licensing its games to selected partners on a B2B basis. The Slingo social gaming brand (acquired in August 2015) has successfully crossed over into RMG but, more importantly, is attracting blue-chip licensing partners. Gaming Realms has already launched Britain’s Got Talent, X Factor and Deal or No Deal Slingo-based games sites and we expect more to come, including product launches from its US licensing partners Zynga (Slingo-branded social casino slot game), Scientific Games (Slingo-branded land-based slot machines) and Pala Interactive (New Jersey online bingo).
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