Presenting its half-year results on a pro forma basis – as if the recently acquired companies had been part of the business a year earlier – the company posted a 20% year-on-year increase in adjusted underlying earnings (EBITDA) on a 21% increase in net gaming revenue.
Stride said it continued to make progress in the integration of 8Ball, Netboost Media and the Tarco assets acquired in August 2016.
Current trading is strong and Stride remains confident of meeting full-year expectations.
Non-core social gaming business under review after slide in revenues
It was not all chips with gravy for the online gaming company, however, with the performance of the social gaming business weaker than expected.
Stride has put an improvement plan in place for this part of the business, and it said the early signs have been encouraging, but the company took a £10.2mln non-cash write down on its social gaming interests, which resulted in a reported loss of £10.3mln, versus a reported loss of £0.1mln the year before.
Strides described the social gaming arm as “non-material” – it accounts for just 11% of revenues - and said it was conducting a review of the business.
“The disappointing performance [of social gaming] is in part we believe as a result of changing dynamics in the social gaming markets, which are maturing and are leading to higher acquisition costs and lower lifetime values of players,” suggested chairman Nigel Payne.
Net gaming revenue for the whole group in the six months to the end of February was £44.01mln versus £36.50mln the year before.
Eyes down for strong growth in the core business
Performance in what the company calls its “real money gaming” (as opposed to social gaming) bingo-led business was strong.
This part of the business accounts for 89% of group revenues, and the half-year period saw yield per player rise 8.5% to £127 from £117 the year before, which Stride said demonstrates a continued improvement in engagement and the ability to make money from the growing number of players.
Social net gaming revenue, however, was down 24% to £4.7mln from £6.2mln.
Adjusted EBITDA, which excludes the one-off impairment for the social gaming business, rose to £9.64mln from £8.03mln.
The interim dividend was raised to 1.2p from 1.1p.
Cash at the end of the reporting period was healthy at £19.2mln, albeit down from £21.1mln a year earlier.
Stride Gaming eyeing expansion opportunities in Europe
The company said it is actively examining rolling out its existing product into new regulated territories, particularly in Europe, where it sees significant growth opportunities.
“We are extremely pleased with the financial results from the first half. Our key focus for the second half is to maximise the potential of the Real Money Gaming vertical through strengthening our core business; integrating the acquisitions of 8ball, Netboost Media and Tarco assets; and increasing our market share of the UK bingo market,” said Eitan Boyd, chief executive officer of Stride.
“The second half will see the launch of the joint venture with Aspers and we will look to build our B2B vertical into a substantial revenue generating operation. We will also examine entry into other soft gaming verticals and territories,” he added.