the numbers.... NYX Gaming Group loses $57.93-million in fiscal 2016
NYX Gaming Group Ltd (C:NYX)
Shares Issued 108,228,682
Last Close 4/24/2017 $1.29
Tuesday April 25 2017 - News Release
Mr. Matt Davey reports
NYX GAMING GROUP LIMITED REPORTS FOURTH QUARTER AND FISCAL YEAR 2016 RESULTS
NYX Gaming Group Ltd. has released its financial and operating results for the fourth quarter and fiscal year ended Dec. 31, 2016.
"This was a transformational year for NYX. With the integration of OpenBet now substantially complete, we are ideally positioned as a leading provider of sportsbook, gaming technology, and NextGen content to the regulated gaming market," said Matt Davey, CEO of NYX Gaming Group. "Since the beginning of 2017, our new operating model has been delivering an improved cost structure that, combined with our growth strategy, will result in increased operating leverage."
Fourth Quarter 2016 Highlights
- Revenue of $54.5 million, or growth of 196.6% year-over-year;
- Revenue grew 31.2% year-over-year excluding the impact of the OpenBet acquisition;
- Royalty and license revenue of $26.0 million, or growth of 64.3% year-over-year;
- Gross profit of $48.1 million, or 88.3% of revenue compared to 86.2% of revenue in Q4 2015;
- Adjusted EBITDA of $12.9 million, an increase of 185.1% over the prior year period;
- Signed 16 new agreements for the Open Platform System ("OPS") and Open Gaming System ("OGS");
- Launched OGS content across 14 new client sites;
- Granted unconditional registration to deploy gaming content to the heavily regulated British Columbia market;
- Signed 11 new deals and launched six new clients during the quarter ended March 31, 2017.
Fiscal Year 2016 Highlights
- Revenue of $163.7 million, or growth of 213.0% year-over-year;
- Revenue grew 46.8% year-over-year excluding the impact of the OpenBet and Chartwell and Cryptologic acquisitions;
- Royalty and license revenue of $90.7 million, or growth of 105.4% year-over-year;
- Gross profit of $144.2 million, or 88.1% of revenue compared to 85.6% of revenue in 2015;
- Adjusted EBITDA of $42.7 million, an increase of 305.3% over the prior year;
- Completed the acquisitions of OpenBet, the #1 regulated digital gaming supplier globally, and Betdigital, a leading content and technology supplier to the UK gaming market.
Fourth Quarter 2016 Operating Results
In the fourth quarter of 2016, NYX Gaming Group saw strong demand for both the OGS and OPS platforms with 16 new customer agreements signed, including Televisa, NeoGames Sazka, bwin, Evoke and Planetwin365. Additionally, the Company successfully launched their OGS content across 14 new client sites, including Luckia, Evoke, CIE NJ, Casumo and Rank Mecca.
As of December 31, 2016, the development pipeline continued to remain strong as commitments were held with 24 customers that had not yet launched. This included two OPS deals and 22 OGS deals. As of March 31, 2017, NYX Gaming Group has signed 11 new deals and launched six new clients since year end.
In addition, on the content side, the Company's NYX content studios released 27 new games during the fourth quarter of 2016. This resulted in the number of unique game installations across the Company's distribution network growing to 29,990 in the fourth quarter of 2016, an increase of 89.6% and 17.3% from the fourth quarter of 2015 and the third quarter of 2016, respectively.
On November 3, 2016, NYX Gaming Group announced that they had been granted unconditional registration as a Class B Supplier from the Gaming Policy and Enforcement Branch in British Columbia. The registration permits the Company to deploy their market-leading content in British Columbia for the first time. The Company's newly acquired sportsbook technology business, OpenBet, has been certified in Canada since 2012, where they have long-standing partnerships with British Columbia Lottery Corporation ("BCLC"), Loto-Quebec and the Atlantic Lottery Corporation. In 2016, BCLC's combined net win grew to $2.36 billion with much of the growth attributed to the expansion of online gaming, which delivered 24.0% year-over-year growth.
Summary of Results
The increase in revenues and gross profit for the three months and full year ended December 31, 2016, compared to the prior year periods, was attributable to a number of factors including new customer launches, the contribution from the newly acquired OpenBet business, and increased gaming revenues from the Company's existing customers.
Summary of Financial Information (in 000s, except per share) Three Months Ended Dec. 31, 12 Months Ended Dec. 31, 2016 2015 2016 2015 Total revenue $54,508 $18,377 $163,733 $52,309 Gross profit 48,142 15,838 144,211 44,798 Gross profit margin 88.3% 86.2% 88.1% 85.6% Adjusted EBITDA 12,920 4,532 42,735 10,544 Adjusted EBITDA margin 23.7% 24.7% 26.1% 20.2% Net loss (61,120) (10,739) (57,936) (8,403) Basic and diluted loss per share (0.57) (0.21) (0.77) (0.20) Total assets 752,376 291,812 752,376 291,812 Total non-current liabilities 472,017 97,633 472,017 97,633
Revenue
Revenue for the three months ended December 31, 2016 increased to $54.5 million, or 196.6%, from $18.4 million for the three months ended December 31, 2015. All revenue categories grew significantly as a result of a full quarter contribution, $30.4 million, from the Company's recently acquired OpenBet business, and 14 new customer launches on OGS during the fourth quarter of 2016.
Royalty and license revenue for the current quarter increased $10.2 million, or 64.3%, to $26.0 million from $15.8 million in the prior year period. Professional services revenue for the quarter increased $23.9 million to $25.1 million from $1.2 million for the same period in the prior year, due primarily to the acquisition of OpenBet in May 2016.
Revenue for the twelve months ended December 31, 2016 increased $111.4 million, or 213.0%, to $163.7 million from $52.3 million in the prior year. As was the case above, all revenue categories grew significantly as a result of the OpenBet acquisition during the current year, as well as the Company's prior year acquisition of Chartwell Technology Inc. ("Chartwell") and CryptoLogic Limited, NYX ("Cryptologic"). Revenue from Chartwell/Cryptologic and OpenBet was $8.8 million and $78.4 million, respectively, for the twelve months ended December 31, 2016. Additionally, 50 new customers launched on OGS during 2016.
Royalty and license revenue for the twelve-month period increased $46.5 million, or 105.4%, to $90.7 million from $44.2 million for the prior year. Professional services revenue for the twelve-month period increased $60.7 million to $63.2 million from $2.5 million for the same period in the prior year.
Gross Profit
Gross profit for the three months ended December 31, 2016 increased by $32.3 million, or 204.0%, to $48.1 million, compared to $15.8 million in the prior year period. Gross profit margin was 88.3% for the three months ended December 31, 2016, compared to 86.2% for the prior year period. The increase in gross profit was a result of a revenue increase from the underlying core casino business and the revenue impact from acquisitions of $31.8 million.
Gross profit increased by $99.4 million, or 221.9%, for the twelve months ended December 31, 2016 to $144.2 million, compared to $44.8 million for the prior year. Gross profit margin was 88.1% for 2016, compared to 85.6% for the prior year. The increase in gross profit was a result of a revenue increase from the underlying core casino business and the revenue impact from acquisitions of $81.1 million.
Net Loss
The Company's net loss for the three months ended December 31, 2016 was $61.1 million, compared to $10.7 million in the prior year period. The decrease in net income was primarily the result of intangible asset impairments of $21.4 million and goodwill impairments of $65.9 million, partially offset by $46.2 million of gains on fair value adjustments to derivatives, and a full quarter positive contribution from OpenBet operations.
The Company's net loss for the twelve months ended December 31, 2016 was $57.9 million, compared to $8.4 million for the prior year. The decrease in net income was primarily the result of intangible asset impairments of $27.9 million and goodwill impairments of $66.1 million, as well as $19.7 million of acquisition and restructuring costs, partially offset by $93.2 million of gains on fair value adjustments to derivatives, and seven and a half months of positive contribution from OpenBet operations.
During 2016, it was determined that goodwill associated with the acquisitions of Sportech NYX Gaming, Game360 and Chartwell and Cryptologic was impaired. A contributing factor to the impairment was the performance of the reporting units and changes made by management to the plans for future operations. Additionally, intangible assets related to the Company's customer relationships from the Chartwell and Cryptologic acquisition, game catalog from the Side City Studios, Inc. acquisition, and OnGame/eGaming Consulting poker product were determined to be impaired.
Adjusted EBITDA
To supplement the Company's consolidated financial statements presented in accordance with International Financial Reporting Standards ("IFRS"), the Company uses Adjusted EBITDA, a measure they believe is appropriate to provide meaningful comparison with, and to enhance an overall understanding of, their past financial performance and prospects for the future. The Company believes Adjusted EBITDA provides useful information to both management and investors by excluding specific expenses and gains that they believe are not indicative of their core operating results. Further, Adjusted EBITDA is a measure of operating performance used by management, as well as industry analysts, to evaluate operations and operating performance and is widely used in the technology and gaming industry. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with IFRS. In addition, other companies in NYX Gaming Group's industry may calculate Adjusted EBITDA differently than the Company does. A reconciliation of net loss to Adjusted EBITDA is provided in the table below.
Adjusted EBITDA was $12.9 million and $42.7 million for the three and twelve months ended December 31, 2016, respectively, compared to $4.5 million and $10.5 million for the three and twelve months ended December 31, 2015, respectively. During the fourth quarter, EBITDA was positively impacted by strong growth in revenues from organic growth in the Company's real-money casino business and the contribution of an entire quarter of OpenBet operations.
Financial Position as of December 31, 2016
- Cash and cash equivalents (including restricted cash) of $42.4 million;
- Total assets of $752.4 million;
- Total liabilities of $561.2 million;
- Total equity of $191.1 million;
- Total borrowings of $327.9 million.
Outlook
Based on preliminary financial information, NYX Gaming Group expects the following results for the quarter ended March 31, 2017:
- Revenue to be in the range of $57.0 - $61.0 million;
- Adjusted EBITDA in the range of $15.0 - $17.0 million.
Investors are cautioned that such preliminary financial information is unaudited and subject to change, reconsideration and/or modification. Such financial information is based on management's current beliefs, intentions or expectations based on certain assumptions and estimates, which could prove to be significantly incorrect. Any preliminary financial information should not be viewed as a substitute for full interim and annual financial statements that have been reviewed and/or audited by the Company's auditors.
Fourth Quarter and Fiscal Year 2016 Conference Call & Webcast
A conference call and webcast to discuss NYX Gaming Group's fourth quarter and fiscal year 2016 results will be held on April 25, 2017, at 8:30 a.m. E.T. Matt Davey, CEO of NYX Gaming Group, and Eric Matejevich, CFO, will host the call. A question and answer session will follow the presentation. To participate, interested parties are asked to dial (647) 427-7450 or (888) 231-8191 prior to the scheduled start of the call. A replay of the conference call will be available by dialing (855) 859-2056 and using the reference number 86894990. The replay of this call will be available until May 2, 2017.