Slide 1: 2018 Interim Results
23 MAY 2018 2018 INTERIM 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 CONCLUSION 3
Slide 4: Stride Gaming PLC - A Snapshot
STRIDE GAMING PLC - A SNAPSHOT Strong growth Proprietary Investment in Operate only in Clear growth Profitable, highly online gaming gaming platform talent regulated and/or strategy and cash generative, operator legalised proven model dividend paying markets 4
Slide 5: Significant progress against our objectives
SIGNIFICANT PROGRESS AGAINST OUR OBJECTIVES Continued Integration Investment Partnerships growth in of Diversification in growth core acquisitions 14% growth in NGR Earn out periods Casino / live dealer New content and Stride Together JV completed brands with Aspers Online 25% growth on Sport perfor
Slide 6: Financial Review
FINANCIAL REVIEW
Slide 7: H1 2018 Financial Highlights
H1 2018 FINANCIAL HIGHLIGHTS +14% 44.9 45.0 39.3 40.0 35.0 30.0 25.0 20.0 -1% +19% 0% +8% 15.0 8.8 8.7 8.7 8.0 8.0 7.3 10.0 1.2 1.3 5.0 0.0 Revenue (NGR) Adj EBITDA Adj EBITDA (Like-for- Adj earnings Dividend like) H1 2017 H1 2018 * NGR includes the Group’s share in Stride Together’s revenue and was
Slide 8: Income Statement
INCOME STATEMENT £'000 H1 2018 H1 2017 % Change Revenue including 50% joint venture 44,897 39,328 14% Less joint venture revenue (net of platform fee income) (1,035) Revenue 43,862 39,328 12% Cost of Sale (POCT) 7,917 5,594 42% 18.1% 14.2% Distribution cost 6,363 6,562 -3% 14.5% 16.7% Marketing cost
Slide 9: Income Statement (continuous)
INCOME STATEMENT(continuous) £'000 H1 2018 H1 2017 Adjusted EBITDA 8,680 8,790 Adj EBITDA margins 19.8% 22.3% (1) Amortisation of intangible The useful economic lives of software assets were re- Share-based payments 682 640 assessed, which created an accelerated amortisation charge of £3.4 million i
Slide 10: Cost Structure
COST STRUCTURE • Cost revenue ratio at 80% (H117: 78%) • Increase in gaming duties by 4% due to the introduction of the POCT2 • Increased cost in Admin expenses of 2% from further investment in talent (tech and BI), compliance and regulation requirements • 2% reduction in Distribution costs and 2% r
Slide 11: Adjusted EBITDA bridge
Adjusted EBITDA bridge Adjusted EBITDA Margins (%) 25.0% 22.3% -3.8% 1.5% -2.4% 2.2% 20.0% 19.8% 15.0% 10.0% 5.0% 0.0% Adj EBITDA H117 POCT increase Distribution costs Marketing growth Admin growth Adj EBITDA H118 11
Slide 12: Cash Flow
CASH FLOW £’000 H1 2018 H1 2017 Cash generated from operations 9,052 4,228 Cash conversion 91.4% 84.5% High cash conversion Investing activities Purchases of intangibles and property, plant and equipment (646) (362) Capitalisation costs – RMG £0.6m Investment in Passion Gaming, net of cash acquired
Slide 13: Balance Sheet
BALANCE SHEET Unaudited Audited Solid working capital position £'000 28 February 2018 31 August 2017 Non- Current assets Cash position Property plant and equipment 769 661 Strong gross cash position of £27.9m, which Intangible assets 48,787 57,756 includes player liability of £2.7m. Available-for-sa
Slide 14: Post Balance Sheet Events
POST BALANCE SHEET EVENTS • March 2018 – As part of the terms of the acquisition of Passion Gaming (“PG”) in November 2017, the Group committed to purchase a copy of the software used by PG for a royalty fee from an unrelated third party, for a total consideration of just under £400,000. This will c
Slide 15: Strategic & Operational Review
STRATEGIC & OPERATIONAL REVIEW 15
Slide 16: Online Gaming Market
ONLINE GAMING MARKET UK Online Gaming Market (GGY £4.46bn)* • UK remains the world’s largest real-money gaming market • From October 2015 to September 2016, UK digital revenues 3% 1% amounted to £4.46bn* 4% • UK online GGY forecast to increase c 7% CAGR in 2016-21* • Heightened regulatory focus in t
Slide 17: Our Vision and Growth Strategy
OUR VISION AND GROWTH STRATEGY TO BE A LEADING MULTI- PRODUCT, MULTI-MARKET ONLINE GAMING OPERATOR 1 2 3 FOCUS ON OUR DIVERSIFY NEW CORE PRODUCT OFFERING MARKETS Continue to build scale Enter into new verticals Extend brands and and grow market share in such as hi-lo games, products to new attractiv
Slide 18: Focus on Our Core
1 FOCUS ON OUR CORE RMG REVENUE PROPRIETARY DEPOSITS PLATFORM REVENUE 14% 25% 11% H1 2018: £44.9m^ H1 2017: £39.3m H1 2018: £29.7m^ H1 2017: £23.8m H1 2018: £79m H1 2017: £70.9m YIELD PER PLAYER MOBILE/TOUCH REVENUE BRANDS 11% 17% 157 H1 2018: £141 H1 2017: £127 H1 2018: 68% H1 2017: 58% H1 2017: 14
Slide 19: Focus on Our Core – Stride Pyramid
1 FOCUS ON OUR CORE – “Stride Pyramid” 10 sites / 66% NGR Multi brand - multi vertical Increase in male players - 57% female / 43% 26 sites / 24% NGR male (80:20 in 2016) 13 sites sitting on proprietary platform make up majority of NGR and take up c70% of marketing 121 sites / 10% NGR budget Bottom
Slide 20: Diversify Product Offering
2 DIVERSIFY PRODUCT OFFERING • Launch of 18 proprietary casino games and introduction of live dealer tables • Launched Aspers Casino Online in October 2017 • Passion Gaming performing in line with expectations • Launch of sports betting ahead of the FIFA Football World Cup 20
Slide 21: New Markets
3 NEW MARKETS Sweden market size: €237.0m casino UK market size: €528.5m sport €3.7bn casino €72m bingo Denmark market size: €2.6bn sport €230.6m casino €216m bingo €226.3m sport €22m bingo • Diversification opportunities supported by scale, infrastructure and platform Italy market size: • Plan to l
Slide 22: Investment in Platform and People
INVESTMENT IN PLATFORM AND PEOPLE People Platform Business Intelligence RMG headcount up New bingo platform Data science projects 19% for compliance and Launched 12 HTML5 product performance Data analytics games, 2 casino sites optimisation internship and 202 3rd party casino games Implementation of
Slide 23: Outlook
OUTLOOK Continue to Addition of Sport Geographic Confident in invest in team to support diversification long-term growth and proprietary customer with entry in strategy technology acquisition Europe by Q4 2018 23
Slide 24: Q&A Thank You
Q&A THANK YOU