Stride Gaming’s H117 pro forma net gaming revenues (NGR) grew 21% to £44.0m, driven by strong organic growth in the real money gaming (RMG) vertical. In a continuation of previous trends, the social gaming vertical has weakened, with a 24% decline in revenues to £4.7m, and Stride has recognised a £10.2m impairment on its InfiApps assets. However, the core RMG business is gaining market share, trading has been robust in Q317 and management has reiterated its FY17 outlook. Our headline FY17 revenue and EBITDA figures remain unchanged. Stride trades at 7.5x calendar 2017e EV/EBITDA, a meaningful discount to its peers.
A 21% increase in like-for-like H117 revenues was driven by organic growth and market share gains in the core RMG business. Revenues from the proprietary platform rose 55% to £23.8m, reflecting a highly analytic data-driven approach and multi-brand strategy. Non-proprietary platform RMG revenues (acquired assets) grew 4% to £15.5m and we anticipate further growth once the earnout period ends. Despite the decline in social gaming revenues, management has reiterated its FY17 outlook and our headline FY17 revenue and EBITDA remain unchanged. FY18 financials are expected to be affected by higher taxes, further investment into the proprietary platform, as well as a lower contribution from social gaming, and we have lowered our FY18e EBITDA by 11.9%. We also introduce FY19 figures.
As previously highlighted, the social gaming market has proved challenging and H117 revenues declined 24% to £4.7m. As a result, Stride has recognised a £10.2m impairment on its social gaming assets vs a total acquisition price of c £19m. Once the earnout period ends in July 2017, Stride will gain greater control and it will undertake a full strategic review of the business. Our estimates now assume a minimal contribution to EBITDA going forward. In addition, we have not included any potential upside from the recently announced B2B licensing vertical, and JV with Aspers. We expect a fuller update on both these verticals at FY results.
Stride is fully regulated, successfully increasing market share, growing well ahead of the sector average and generating cash, with a progressive dividend policy. However, its 7.5x calendar 2017e EV/EBITDA is below the peer group average. In our opinion, a demonstrable success in integrating the recent acquisitions, post all the earnouts (December 2017), is key for a re-rating.