Aspire Global — Strong new customer and geographic pipeline

Aspire Global (Stockholm: ASPIRE)

Last close As at 24/04/2024

108.20

−0.40 (−0.37%)

Market capitalisation

5,048m

More on this equity

Research: Consumer

Aspire Global — Strong new customer and geographic pipeline

Aspire Global (AG) reported a strong FY20 and a good start to FY21, with January trading volumes 34% ahead of the average for Q120. FY20 EBITDA (at a margin of 16.7%) exceeded consensus expectations. Strong revenue growth in B2B Core was complemented by record performances from recent acquisitions Pariplay (B2B Games) and BtoBet (B2B Sports). Across B2B (68% of group total) there is a consistent message that new industry-leading partners (eg Betfair, William Hill and Rush Street Interactive) and increasing geographic coverage (the US, Colombia and Russia) are driving organic growth and laying the foundations for future growth in immature markets. AG’s strong free cash flow is reflected in the year-end cash position ex-player deposits of €22.7m (FY19: €23.5m) despite outflows for M&A (€17.7m) and internal investment (€8.7m). The April 2021 €27.5m bond maturity is funded by one-year €10m bridging loans from shareholders and cash in hand ahead of the March 2022 loan receipt from a related company.

Russell Pointon

Written by

Russell Pointon

Director, Consumer

Consumer

Aspire Global

Strong new customer and geographic pipeline

Travel & leisure

QuickView

19 February 2021

Price

SEK64.2

Market cap

SEK3.0bn

Share price graph

Share details

Code

ASPIRE

Listing

Nasdaq First North Premier Growth Market, Stockholm

Shares in issue

46.4m

Business description

Aspire Global is a leading B2B provider of iGaming solutions, offering partners all relevant products to operate a successful iGaming brand. It also owns/offers B2C online gaming brands, including Karamba. Aspire operates in 26 regulated markets across Europe, the US, South America and Africa.

Bull

Structural growth in regulated online gaming markets with industry-leading products. It recently entered growth markets such as the US, South America and Africa.

Highly scalable business as the addition of new partners does not require the addition of major overheads.

Revenue share model aligns Aspire Global’s interests with those of business partners.

Bear

The online gaming industry is subject to political and regulatory risks. However, Aspire’s main focus is on regulated markets, where risks should be lower.

The online gaming industry is highly competitive.

Annual dividend distributions have not been consistent since the IPO in 2017 due to Aspire’sactive M&A agenda. Management continues to target a long-term payout ratio of 50%.

Analysts

Russell Pointon

+44 (0)20 3077 5700

Sara Welford

+44 (0)20 3077 5700

Aspire Global is a research client of Edison Investment Research Limited

Aspire Global (AG) reported a strong FY20 and a good start to FY21, with January trading volumes 34% ahead of the average for Q120. FY20 EBITDA (at a margin of 16.7%) exceeded consensus expectations. Strong revenue growth in B2B Core was complemented by record performances from recent acquisitions Pariplay (B2B Games) and BtoBet (B2B Sports). Across B2B (68% of group total) there is a consistent message that new industry-leading partners (eg Betfair, William Hill and Rush Street Interactive) and increasing geographic coverage (the US, Colombia and Russia) are driving organic growth and laying the foundations for future growth in immature markets. AG’s strong free cash flow is reflected in the year-end cash position ex-player deposits of €22.7m (FY19: €23.5m) despite outflows for M&A (€17.7m) and internal investment (€8.7m). The April 2021 €27.5m bond maturity is funded by one-year €10m bridging loans from shareholders and cash in hand ahead of the March 2022 loan receipt from a related company.

Q420: Broad-based record results

AG’s FY20 EBITDA of €27.1m, up c 25%, was ahead of consensus expectations of €26.0m, thanks partly to the success of higher-margin Games and Sports and intra-group synergies. Net revenue of €156.8m (gross revenue €161.9m), ahead by 23%, was broadly in line. Q420 organic gross revenue growth of 30.8% to €44.4m was AG’s strongest quarterly increase in FY20. The maturing of new partner brands, as well as high investment in IT infrastructure, continued to drive B2B Core’s 27% net revenue growth in Q420. Pariplay’s Q420 record-high revenue and EBITDA were due to growth in the number of proprietary games and operators. BtoBet’s outlook is promising with the addition of major new clients ahead of full integration being completed. Following weakness due to uncertainty from regulation, B2C returned to robust revenue growth of 30% in Q420.

FY21: Consensus EBITDA below guidance

The consensus EBITDA estimate for FY21 of €30.5m compares with management’s FY21 target of €32.0m, a margin of 16% (FY20:16.7%) on gross revenue of €200m. Achieving this would imply year-on-year growth of c 12% from FY20’s pro forma EBITDA of €28.5m, and compares with AG’s EBITDA CAGR of c 24% since FY16, generated mostly from organic growth with complementary M&A to expand the product offer and geographic coverage.

Valuation: EV/EBITDA 9.8x for FY21

The recent share price performance produces an FY21e EV/EBITDA multiple of 9.8x, below multiples of other platform/content providers and in line with operators.

Consensus estimates

Year
end

Net revenue
(€m)

EBITDA
(€m)

EPS
(€)

DPS
(€)

EV/EBITDA
(x)

Yield
(%)

12/19

127.5

21.7

0.01

0.00

13.8

N/A

12/20

156.8

27.1

0.28

0.00

11.0

N/A

12/21e

181.0

30.5

0.43

0.18

9.8

2.8

12/22e

214.5

37.5

0.56

0.24

8.0

3.7

Source: Refinitiv, company data

General disclaimer and copyright

This report has been commissioned by Aspire Global and prepared and issued by Edison, in consideration of a fee payable by Aspire Global. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Aspire Global and prepared and issued by Edison, in consideration of a fee payable by Aspire Global. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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