Stride Gaming — FY2018 Earnings Presentation
23 slides from Stride Gaming's earnings presentation, Nov 21, 2018
Slide 1: 2018 Year End Results
21 NOVEMBER 2018 2018 YEAR END RESULTS 1
Slide 2: Disclaimer
DISCLAIMER The information contained in this confidential document (“Presentation”) has been prepared by Stride Gaming PLC (the “Company”). It has not been fully verified and is subject to material updating, revision and further amendment. This Presentation has not been approved by an authorised per
Slide 3: Agenda
AGENDA 1 INTRODUCTION 2 FINANCIAL REVIEW 3 STRATEGIC & OPERATIONAL REVIEW 4 SUMMARY AND Q&A 3
Slide 4: Overview of Stride
OVERVIEW OF STRIDE A leading operator of online gaming products in the UK Slots, scratch cards, bingo and casino style games Proprietary technology and operating ecosystem Player journey, content, cashier, back office and marketing Multi-brand strategy Maximise LTVs and minimises CPAs Stride Togethe
Slide 5: Highlights
HIGHLIGHTS REVENUE LFL ADJUSTED EBITDA** NET CASH 8.7% 1.5% 12% 2018: £89.0m* 2017: £81.8m 2018: £20.0m 2017: £19.7m 2018: £26.6m 2017: £23.7m PROPRIETARY YIELD PER PLAYER FUNDED PLAYERS PLATFORM REVENUE 24% 2% 6.1% 2018: £60.5m^ 2017: £48.6m 2018: £144 2017: £147 2018: 137,000 2017: 146,000 * NGR i
Slide 6: Dividend Policy – Increased Shareholder Returns
DIVIDEND POLICY – INCREASED SHAREHOLDER RETURNS PROGRESSIVE NEW SPECIAL PROPOSED DIVIDEND DIVIDEND POLICY POLICY Proposed Final dividend: 1.7p per Proposed dividend: 8.0p per share Policy: minimum of 50% of the share (FY2017 1.5p per share) (FY2017: Nil) adjusted net earnings per year subject to cas
Slide 7: UKGC Conclusion
UKGC CONCLUSION • On 13 November 2018, conclusion of UK Gambling Commission (“UKGC”) review resulting in £7.1m fine • UKGC review highlighted that all issues have been addressed in full – we can now fully focus on driving our strategic objectives • The Board is fully committed to ensuring the Group
Slide 8: Financial Review
FINANCIAL REVIEW
Slide 9: FY 2018 Financial Highlights
FY 2018 FINANCIAL HIGHLIGHTS +8.7%* 89.0 90 81.8 80 70 60 50 (£m) 40 -18% 1.5%** -20% +11% 30 19.7 19.7 20.0 16.1 18.3 14.7 20 2.7 3.0 10 0 Revenue (NGR) Adj EBITDA Adj EBITDA (Pro- Adj net earnings Dividend forma) Results summary FY 2017 Results summary FY 2018 * NGR includes the Group’s share in A
Slide 10: Income Statement
INCOME STATEMENT £'000 FY 2018 FY 2017 Change Revenue including 50% joint venture 88,968 81,815 8.7% Less joint venture revenue (net of platform fee income) 3,484 0 Revenue 85,484 81,815 4% Cost of Sale (POCT) 16,016 11,621 38% 18.7% 14.2% Distribution cost 13,495 13,560 0% 15.8% 16.6% Marketing cos
Slide 11: Income Statement (continued)
INCOME STATEMENT(continued) £'000 FY 2018 FY 2017 Adjusted EBITDA 16,097 19,670 1. Exceptional UKGC fine – relates to the UKGC fine of Adj EBITDA margins 18.8% 24.0% £7.1million plus 0.7m of legal and other associated costs 2. Profit on disposal of available-for-sale investment – Share-based payment
Slide 12: Cost Structure
COST STRUCTURE • Increase in gaming duties by 5% due to the introduction of the new POCT effective from 1 August 2017 • Distribution costs down 1% as more revenue derived from the proprietary brands where gaming royalties are lower • Increase of 1% in marketing costs to support the growth of our hig
Slide 13: Adjusted EBITDA Bridge
ADJUSTED EBITDA BRIDGE 18.8% Marketing 13
Slide 14: Cash Flow
CASH FLOW £’000 FY 2018 FY 2017 High cash conversion – excluding the Cash generated from operations 5,260 12,851 cash payments on earnouts during the Cash conversion 32% 80% year, cash conversion in FY 2018 was Net cash from Investment activities 88% and FY 2017 104% Purchases of Intangible,property
Slide 15: Balance Sheet
BALANCE SHEET £'000 FY 2018 FY 2017 Non- Current assets Solid working capital position Property plant and equipment 780 661 Intangible assets 36,021 57,756 Cash position Other Non current assets 495 2,693 Solid gross cash position of £29.2m, which 37,296 61,110 includes player liability of £2.7m and
Slide 16: Strategic & Operational Review
STRATEGIC & OPERATIONAL REVIEW 16
Slide 17: Strategic Priorities
STRATEGIC PRIORITIES 1. Focus on the 2. Invest in our 3. Streamline 4. Leverage UK market to grow platform to the cost base technology and market share improve user and maximise expertise to grow experience and efficiencies in related areas maximise returns 17
Slide 18: Well Positioned to Capitalise on Changing UK Market Dynamics
WELL POSITIONED TO CAPITALISE ON CHANGING UK MARKET DYNAMICS Growing UK market remains the largest and most sophisticated single online gaming market globally Well-established operator in the UK Experienced and dedicated management team 18 Own proprietary platform supports agility, flexibility and p
Slide 19: Investment in Compliance
INVESTMENT IN COMPLIANCE Significant investment and improvement made to team, tools and processes: • Appointed a Risk and Regulatory Compliance Committee • Appointed a Director of Compliance and MLRO, a deputy MLRO and increased staffing within the compliance team • Appointed a Fraud & Risk Training
Slide 20: Refining the Multibrand Model
REFINING THE MULTIBRAND MODEL • Majority of marketing, product development, business analytics and Top tier brands / customer retention initiatives to be focused on top tier of brands proprietary • Single Customer View – ability to identify players and their gaming Middle tier brands / proprietary a
Slide 21: Leveraging Technology to Grow in Related Areas
LEVERAGING TECHNOLOGY TO GROW IN RELATED AREAS Continuing to explore opportunities to leverage our technology platform and industry knowledge to achieve growth in related areas Stride Together • Partnership division has seen significant traction during the year • First joint venture with Aspers Casi
Slide 22: Outlook
OUTLOOK Current trading in Remain focused Continue to Updated dividend line with on the UK market leverage unique policy returning expectations to grow market infrastructure to surplus cash to share capitalise on growth shareholders opportunities 22
Slide 23: Q&A Thank You
Q&A THANK YOU