David Gosen, Nektan’s Chief Executive Officer, said: “The combination of Nektan’s mobile platform and leading HTML5 content continues to prove very attractive in our target European and US markets. Our strategy to penetrate both these markets remains unchanged and we are now prioritising higher margin Real Money Gaming as the growth engine to ensure the Group delivers profitable revenue growth and sustainable value to our shareholders.
Our focus is already delivering positive results with increases in our Real Money Gaming live partners and a growing pipeline. The number of depositors and net gaming revenues from our real money casinos have at least doubled in Q4 over Q3, all helping to ensure we grow sustainable lifetime revenues from players. In the US, with our joint venture partner, again we are seeing a growing list of casino partners as a result of clear demonstrable uplifts in performance from the Xtraspin installations. Whilst still early days, our first mover advantage combined with the growing number of casinos with signed letters of intent or contracts demonstrate our market potential.”
Nektan PLC (AIM: NKTN) board expects FY2015 net gaming revenue to be approximately GBP0.5 million, with the adjusted EBITDA loss (excluding listing costs, exchange differences and non-cash charges relating to share based payments) to be better than expected, at approximately GBP5.5 million for the period, resulting from tight management of the fixed cost base.
The Company made considerable progress during the period in its target European and US markets, despite the delay in securing additional funding earlier in the year. This held back the Company’s rate of investment and revenue growth in the second half, but investment has since resumed. The Board remains confident of achieving significant revenue and EBITDA growth, albeit at a lower level in the short term, from a more focused investment in the high growth and higher margin Real Money Gaming sectors. Our Freemium Gaming business, whilst remaining an exciting opportunity, will continue to be secondary in focus until we demonstrate its revenue and profit potential. In parallel, the drive for operating efficiency continues with cost optimisation programmes in place.
Key highlights for the period include:
— Strong progress across our key performance indicators in Real Money Gaming (“RMG”) for H2 versus H1.
o White label RMG casino live partners increased to 20 (H1: 10)
o Net Gaming Revenue from RMG was GBP244k (H1: GBP115k)
o As a result of operational improvements, new payment methods and a growing portfolio of quality games, conversion percentage of registrations to first time depositors doubled
o The number of players making a deposit increased fourfold
o The successful launch of Sun Play in June 2015 in partnership with News UK, to develop and operate Sun Play, a best in class gaming and entertainment experience across mobile, tablet and desktop, on a multi-year contract
o Granted approval for both a software and a gaming licence for the UK market from the UK Gambling Commission
— Building tangible momentum in the US from our first mover advantage from Nektan’s joint venture, Respin LLC (“Respin”), with Spin Games LLC. The first Respin gaming units deployed with US land-based casinos are Xtraspin wheels that allow casinos to provide additional bonus opportunities for their players playing slots in venue.
o Live in four land based casinos with 25 HTML5 enabled Xtraspin gaming wheels, across two states, Nevada and California
o A further 18 land-based casinos have currently contracted or signed letters of intent (“LOI”) for delivery of in-venue mobile enabled gaming (H1: 10), with a strong pipeline of additional casino partners in existing and additional US states
o Early indications show an increase of more than 30% “coin in”, the amount players deposit in slot machines that have the Xtraspin wheels installed
— The Company announced in April and May 2015 a new financing package totalling approximately GBP8 million, ensuring that the Company is well positioned to continue to execute on the strategy, scale the business and drive profitable growth.
