NeoGames reports increased earnings in Q3 2023, progress towards Aristocrat Leisure merger

November 10, 2023 10:19 AM
Photo: NeoGames (courtesy)
  • Sam Bentham, Special to CDC Gaming Reports
November 10, 2023 10:19 AM
  • Sam Bentham, Special to CDC Gaming Reports
  • Canada
  • Europe
  • United States

NeoGames, a provider of ilottery and igaming solutions, announced financial results for Q3 of 2023 yesterday, showing increased earnings from ilottery’s growth in the US. The company also revealed that progress was being made towards its acquisition by Aristocrat Leisure, the Australian gambling machine manufacturer.

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The financial update for Q3 revealed that NeoGames experienced a 12.9% increase in adjusted earnings, amounting to $19.9 million over three months. This increase came despite a shift in accounting for the Aspire Core division from gross to net revenue, following new commercial terms in some contracts.

This accounting change resulted in a reported sales drop to $63.3 million, a $10 million decrease year-on-year. Nonetheless, NeoGames pointed out that if like-for-like figures were considered, there would be an 11.5% increase in revenue. The improvement was even more pronounced when looking at the first nine months of the year, with the net loss decreasing from $18.2 million to $12.2 million, resulting in a substantial rise in adjusted earnings from $36.4 million to $58.0 million.

US growth has supported the financial position of NeoGames in Q3, which has been further underpinned by ilottery growth. A joint venture, NeoPollard Interactive (NPI), has further extended its reach in the US by securing a contract with the West Virginia Lottery, marking the fifth state where NPI will implement a full ilottery program. During this time, NPI also secured a deal with the North Carolina Education Lottery.

CEO of NeoGames Moti Malul emphasized in the company’s press release, “Our ilottery business continues to win market share and grow.” These revenues grew by 5.6% year-on-year during the third quarter of 2023 to $14.4 million.

The company also improved its net loss figures, reducing them from $4.4 million in the previous year to $3.6 million in Q3. The report mainly attributed this to the Aristocrat deal and amortization due to the Aspire Core, which NeoGames acquired in June 2022.

Additionally, NeoGames’ share in NPI revenues surged by 53.3%, reaching $17.0 million, compared to $11.1 million in the same quarter last year.

The report also highlighted other developments, like the company’s expanded offering with the Greek lottery operator OPAP through its subsidiary Pariplay, a leading provider of Internet Gaming Systems. Pariplay also entered its fifth US state by partnering with Rush Street Interactive in Pennsylvania in October.

In addition, its subsidiary BtoBet signed a partnership with Alberta Gaming, Liquor & Cannabis (AGLC) in August to assist with the growth and improvement of AGLC’s sports betting product, PlayAlberta. NPI had already entered into an agreement with AGLC to build and maintain its gambling platform. This marked the first entry into the North American market for BtoBet.

Malul commented on the report, saying, “We are pleased with the progress we made during the third quarter, advancing our strategic goals while we continue to work towards completing our merger with Aristocrat Leisure.”

Malul remains optimistic about the completion of the merger with Aristocrat Leisure, anticipating the deal’s closure in the first half of the fiscal year 2024. The ongoing merger process has steadily gained the necessary regulatory approvals throughout the quarter.

In May, Aristocrat Leisure agreed to a purchase of $1.2 billion for NeoGames’ shares. The merger received support from the board of NeoGames and the shareholders, who voted in favor of the acquisition.