The UK bingo market continues to grow at mid-high single digits, and within that Stride has been gaining market share rapidly. The company is led by a management team with a proven track record of shareholder value creation (see GlobalCom or Wink Bingo for examples).
We know that industry changes including the Point-of-Consumption tax have seen weaker players exiting the segment or downsizing.
But even compared to the stronger competitors, Stride wields an advantage. Below is a comparison with Jackpotjoy. We can see that Jackpotjoy achieves very similar EBITDA margins to Stride. And the total Distribution Cost for Jackpotjoy is similar to Stride, at around 45% of revenues (this cost includes software licence fees, processing, royalties, hosting, and marketing cost).
Because Stride uses proprietary software platforms there is less licence fee expense, meaning more of the distribution expense can be allocated to player acquisition (marketing). So, whilst both companies have similar overall distribution cost and similar EBITDA margins, the organic revenue growth is stronger in the case of Stride .
We believe that these dynamics remain in place over the coming years.Full report is available via Capital Network website