32Red's growth was driven by Roxy Palace acquisition and Italian operations
Companies: 32Red
32Red Plc reported record revenue and EBITDA in a trading update for the year ending 31 December on Wednesday.
The Company delivered record annual NGR (Record Net Gaming Revenues) in 2016, up 28% at £62.3m, driven primarily by healthy organic growth, increased marketing spend, a full year's contribution from Roxy Palace Casino (acquired mid-2015), and healthy growth and profitability from 32Red Casino's Italian operations.
"Revenue from 32Red Other Products continued to grow strongly, primarily driven by 32RedSport which is developing as an increasingly important customer acquisition and retention channel."
Edison Investment Research said it was a positive trading update, with the firm expecting 2016 EBITDA to have doubled to £10.5m. This is a marginal reduction to Edison's previous forecast.
Analyst Jane Anscombe said the results had been helped by the "highly accretive" Roxy acquisition:
"Our unchanged 2017/18 forecasts are for continued very strong profits growth as the business scales up, with more favourable supplier agreements and Italy now in profit. The 2017e EV/EBITDA of 6.8x looks much too low for a high growth, 77% regulated, cash generative gaming business in a consolidating market."
CEO Ed Ware said it had been a "hugely" successful year with strong growth in core Casino products driving record breaking profits and revenues:
"We have continued to deliver progress against our clear growth strategy underpinned by the strength of the 32Red brand, effective return on investment-driven marketing and an enhanced customer proposition."
Mr. Ware reaffirmed the Board's belief that it will deliver continued progress in 2017, saying that key strategically important contracts signed during H2 16 would help the Company deliver its growth strategy.
So far in 2017, the Company says trading has been strong across the Group, with revenues for January up 21% versus the same month in 2016.
32Red's share price jumped 6.3% as the market opened on Wednesday before falling back 4%.
