Gentlemen, and welcome to the Gaming Innovation Group Software PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so. Before we begin, we would just like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to CEO Richard Carter. Richard, good morning, sir.
Good morning, and welcome to our first quarterly results presentation as a standalone listed business. I'm Richard Carter, Group CEO, and joining me on the call is our Group CFO, Phil Richards. Now, before we dive into the results themselves, I'd like to take a minute to provide some background information on our business. GiG was founded in 2012 and has grown to become one of the leading iGaming and sportsbook technology providers, employing over 450 people with offices in Malta, Spain, and France. As a SaaS-based business, we have over 30 global platform licenses, a TAM of close to 30 billion, and we work with over 70 brands worldwide. We have considerable scope to expand that footprint, and I'll come back to that and talk about that later in the presentation.
Now, more recently, we successfully listed the business on the Nasdaq First North Premier Growth Market in Sweden, and I'm very excited about our prospects as a standalone listed business with full autonomy and control that that gives us over our future. Now, let's turn to our business today and talk a little more about our market-leading solutions. GiG has four key iGaming software solutions, which we can deploy either individually or as part of a total turnkey solution, creating multiple revenue touchpoints with our customers. As our four key products include our market-leading iGaming platform, CoreX, our sportsbook offering, SportsX, the group's AI and machine learning-based tools, DataX and LogicX, and finally, the newest member of the GiG family, our sweepstakes product, SweepX, which is already gaining strong market traction with five contracts or heads of terms already signed.
All of these solutions integrate seamlessly with one another and provide our customers with one of the most sophisticated and comprehensive iGaming engines in the marketplace. We're able in this way to differentiate our business from our competitors by the breadth of our product portfolio, secondly, the number of markets our products cover, and thirdly, our speed to market, which I'll touch on upon our operational highlights.
Turning to our third quarter operational highlights, there's no question that our stock market listing has been a major milestone for the business. I firmly believe that our enhanced profile, capital structure, and the greater autonomy that this has yielded will reinvigorate our business, creating a platform to enhance our broader go-to-market strategy, which places our unique product set at the heart of everything we do.
Pleasingly, our underlying financial performance is developing in accordance with our strategic plan, with underlying revenues up 26% to EUR 7.3 million. I will leave Phil to cover our financial performance in greater detail later on in this presentation. Not only have the foundations been set for growth from our existing base, but we've also secured a number of new mandates, including with Betsson, Inkabet brand in Peru, and with Primero, a market-leading U.S. developer of innovative skill-based games. This growth continued beyond the end of the quarter, with two significant contracts signed, with the Philippines and one in Europe. All of this is underpinned by the continuous growth in both the quantity and quality of our business development pipeline, which stood at over EUR 60 million at the end of September, with over half of this at the commercial stage.
Moving now to what has been a busy commercial quarter for the business. We signed three new customer agreements in the period, in addition to agreeing five binding Heads of Terms, which we expect to onboard by the end of the year. In the U.K., we extended our reach, signing a new long-term agreement to power the Betzone brand, deploying our CoreX, LogicX, and DataX applications, a great example of how we can land and expand our offering with established brands. As I've already mentioned, our new business pipeline now stands at over EUR 60 million, and we remain confident of a high conversion rate on these prospects. As noted in the previous slide, we were able to sign two significant new long-term agreements following our Q3 period end, one with a leading land-based casino and leisure brand in the Philippines and one in Europe with another leading brand.
Collectively, all additions during the period and post-period end will begin to add meaningful growth to our top line over the next 12 months and beyond. Looking now at our strategic objectives in a little bit more detail, there's no question that our recent stock market listing will generate significant opportunities to enhance our business. And to that end, we are focusing on four key strategic growth drivers. The first of these in our plan is to continue enhancing our technology and product offering. We are committed to continuing to invest in R&D to fuel both new product development and enhancements to our existing product stack. We will also seek to leverage third-party partners to offer a more holistic offering to our customers, something we know that we want, and more importantly, our customers are increasingly asking us to facilitate.
Another one of our key objectives is to improve our operational execution and focus. In broader terms, this means embracing a more data-driven culture internally, streamlining and refining our processes where possible, and ultimately lowering our cost to serve for existing customers while delivering for new customers. This is more about exploring and integrating new ways of working and using the latest technologies to drive greater levels of efficiency across the business. Expanding into new markets with a focus on profit is our third key strategic driver. This is a key target for me and one of the main reasons why, as a standalone business, we can do more to identify the new market opportunities and broaden our footprint globally.
I believe that there are some great opportunities in newly regulating and already licensed markets, and we could most certainly do more across Europe and LATAM with both established and nascent brands. Pleasingly, SweepX, our social casino sweepstakes platform solution, is already making solid progress in the U.S., and we are actively pursuing further commercial deals across what is beginning to become a significant growth market. That leads us nicely onto our final strategic driver, an increased focus on new business growth. We have already restructured our sales team and are refocusing our go-to-market strategy, which has already come to fruition. However, there is, of course, much more we will be doing over the coming months. To that end, we are reiterating our guidance today for 2025, in which we forecast to deliver at least EUR 44 million of revenue and at least EUR 10 million of EBITDA.
I'll now turn over to Phil, who will talk us through the financials.
Many thanks, Richard. First, I wanted to highlight the key figures that demonstrate the steps we've taken to build the foundations for our growth going forward. We're particularly pleased with the underlying revenue growth of 26%, and this, backed by a strong balance sheet and controlled costs, will continue to allow us to realize the scalable business model we've been building. While no one would deny that 2024 was very much a work in progress, with focus on ensuring we have a clean launch of the new GiG, our priority underpinning the future growth guidance has been to ensure revenue growth and visibility supported by strong working capital and controlled costs, as you can see by these three key metrics that we're highlighting on this slide. Moving on now, however, to a breakdown of our revenue and Adjusted EBITDA.
As you can see, revenue stabilized quarter on quarter, with the decline from the prior year being primarily attributable to client exits, the impact of which being EUR 1.7 million headwind, and one-off revenue from GiG Enterprise Solution, which was EUR 1.8 million, was recognized in Q3 2023, and this is why we strip this out when we look at the underlying revenue growth, because these are one-off headwinds in comparatives that we won't be seeing going forward. However, with regards to adjusted EBITDA loss for the period, firstly, I think I should just explain what the adjustments are, so 2024 saw a significant change within the business, especially relating to the spinoff from the legacy GiG group. This allowed us the opportunity to ensure that GiG Software had a fresh start, alongside which included reviewing all the areas of the financials to ensure complete accuracy going forward.
Therefore, this included the write-down of certain trade receivables to the amount of EUR 1.8 million, alongside one-off costs relating to spinoff for EUR 0.4 million. Additionally, of course, we adjust for EUR 0.4 million in share-based payments. Taking all of these together, that's what gets you to our Adjusted EBITDA loss for the period. If I now go into revenue in a bit more detail, as mentioned previously, the overall revenue performance year on year was impacted by several one-off headwinds. However, when I strip these out, I'm really pleased to see the 26% increase year on year in our underlying revenue to EUR 7.3 million. I'll go into the drivers of this growth in a little bit more detail on the next slide. Following from headline revenue figures, I wanted to give a better graphical insight into the movements between the quarters year on year.
As you can see, we're starting to see the positive impact from new customer launches and the signing of additional contracts with customers yet to launch. The full revenue impact of these will start to be realized in 2025 and beyond. I'm really pleased with the healthy mix between 2024 launches already contributing to our revenue growth and setup fees being realized through new customer wins, which gives us confidence over our future growth potential, as Richard has highlighted already earlier on in our presentation. If I now look at our Adjusted EBITDA average, I want to do the same with revenue, just give a graphical analysis of how we get from the year-on-year growth and the movements. I want to take you through the makeup of our EBITDA figures for Q3 2024.
Look, it's clear that we still need to invest in our product development, marketing, and our people. However, we are implementing significant measures to ensure that our costs stay under control. This can already be seen by the underlying cost remaining constant Q1 through to Q3. We expect that trend to continue. The Adjusted EBITDA loss was a loss of EUR 1.1 million for the quarter. However, with the revenue growth expected and cost controls most in place, I anticipate that's to be in a profitable position going forward. We'll talk a little bit on this later on in the presentation. If we move then from this, how does this translate into our cash flow?
As part of the spinoff transaction, first of all, it's worth bearing in mind the context of our balance sheet as at the 1st of October and the end of the month of September. We received a significant capital contribution of EUR 10 million from the legacy group that we spun out of. In addition, all the bank loans were repaid during the quarter, with the exception of one small loan, the balance of which being under EUR 500,000 in September. Whilst we still anticipate cash outflows for the next few coming quarters, with the revenue growth and the cost control measures in place, we expect the company to be generating cash by Q2 next year. Therefore, we're very pleased with how strong our balance sheet looks at the start of the 1st of October and going onwards through into next year.
I'll talk a little bit more about our cost base so you can see the composition of that in the next slide. To give a bit more flavor on our OpEx profile and development of this through the quarters, I wanted to show you the cost composition through our major OpEx categories, which are marketing, personnel costs, and administrative costs. As it's to be expected, the majority of our costs sit within personnel costs, as people are the key asset to our business. While there's been significant investment in our workforce, in particular bringing on a new management team to help realize the company's potential, I'm pleased to say we're now in a position that our cost base can support our future ambitions, and we don't anticipate significant further cost increases.
This all brings me on to where we think we're going to be for the rest of 2024 and 2025 going onwards. We've previously issued revenue guidance and 2025 guidance as well. We wanted to reiterate this guidance. So 8.8 million for Q4, and therefore revenue between EUR 30 million and EUR 33 million for the full year, with a positive Adjusted EBITDA for Q4 of EUR 0.2 million, as we continue to realize the impact of our business development activities and convert our pipeline growth to contracted revenue. If I then talk through into 2025, this slide here shows a summary of our guidance for 2025. This being, as Richard said previously, EUR 44 million revenue and an EBITDA of over EUR 10 million.
We have significant visibility over our revenue streams in the coming year, with over 80% of this being contracted already, which supports this guidance that we've released to the market. As previously mentioned, we're confident that our cost base supports these growth projections, and therefore we'll quickly be able to realize the scalability of our business model. The focus will, of course, be on cash generation, and this will be a key metric for us during this period, as we look to both generate profitability, cash, and revenue growth throughout 2025. Now back to you, Richard.
Thank you, Phil. To summarize, the listing has given us greater control over our own destiny, which we are now beginning to fully leverage as we aim to deliver long-term growth and shareholder value. The business has generated substantial contract momentum in the quarter, driven by new signings and new customer launches. We are continuing to build a substantial new business pipeline, which supports our growth ambitions. The underlying performance of the business is strong. As we trade across the next three to six months, our increase in revenues is demonstrating that we have a strong foundation in place for future growth, with our prudent strategy already delivering solid results. We are already seeing strong levels of client activity through launches and deployments, with brands worldwide continuing to choose GiG and our award-winning products and solutions to fulfill their iGaming and sports book needs.
Importantly, we sit on a strong financial base on day one, and our balance sheet strength fully supports our growth aspirations. And lastly, we have significant growth potential into 2025 and beyond. So on that note, I'd like to open up the call to questions.
Perfect. That's great. Richard, Phil, if I may just jump back in there, and thank you very much indeed for your presentation this morning. And what I'll do is I'll just bring back up your camera there. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. But just while the company takes a few moments just to review those questions that were submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can all be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions.
But Phil, Richard, at this point, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great. Thank you.
Thanks. That's great. I think the first question we've got in is for you, Richard. What real progress do you think the company can deliver now that you're in control of your own destiny?
I think there's enormous potential to grow this business as a standalone company. I think as a single board, a single strategy, that will just give us a really renewed focus on sort of delivering our key strategic pillars of delivering and executing. And I think we're already seeing that. So you can see in Q3 that we delivered underlying revenue growth of 26%, and we're seeing that accelerate. So I think that's really, really important. And I think we're also seeing, obviously, improvements in our sales pipeline. And the quality, the size, the breadth of that sales pipeline is continuing to improve. And as we continue to execute, I think we'll continue to see those key metrics improve.
Perfect. Thank you. So the next question I've submitted, what does the EUR 50 million asset impairment relate to, and why have those assets declined in value so much? So I'll take that first, Richard. So as part of our spinoff from the legacy group, we undertook an exercise to review our balance sheet and clean this up as much as possible in preparation for our listing. Within this, we're a few legacy assets relating to the previous M&A and other bits and bobs that we've assessed should be impaired based upon the current position of the company. And we just took this opportunity really to make sure we were starting from a fresh start, a clean slate, and that we had significant confidence in our balance sheet going forward as well. So we've got our third question here. One for you, Richard.
You've highlighted around EUR 60 million of new business pipeline that's been built up by the end of the year. Could you please explain this a little bit more detail, and how would you look at that figure?
Yeah, sure. So basically, since I joined last year, our pipeline has sort of expanded from around EUR 5 million- EUR 60 million, and that's obviously been driven, as we've talked about before, about the significant investment that we've made both in marketing and also in our business development team. So in terms of that 60 million, as we said today, just over EUR 30 million of that is either contracted or at the final sort of contract stage. So in terms of how you should look at this sort of pipeline, we'll continue to grow that 60 million, and then we'll look to try and convert as much of that as possible, but if you look at sort of our guidance at the moment, we're talking about EUR 32 million-EUR 33 million of revenue this year.
So effectively, you should think about this as EUR 30 million of incremental revenue that we're going to add to this business. Now, obviously, there are some timing differences. So that EUR 30 million is not going to drop next year because some of our clients are going to be signing and not launching until later next year. But I think that gives everybody a good idea that effectively we've got almost EUR 60 million of revenue sort of contracted. And as we move through Q4 and into sort of the first half of next year, I expect that sort of 30 to continue to grow. So that's the way that we've sort of, I'd like people to sort of think about it.
Yes, that actually leads quite nicely on to the next question, which has been submitted relating to the revenue model. And so the question is, how much of your revenue is SaaS-based, and what's the content of that figure that recurs on a regular basis?
Okay, so that's a good question. So I think we've got quite a unique business here. It's obviously a SaaS business. And as of today, around 85% of our revenue is recurring revenue. And the other 15% is sort of made up of sort of one-off sort of setup fees, which is today a significant part of our business. But as we look forward, as we go into 2025 and 2026, I'd actually expect the recurring part of our business to increase. So I think a good sort of metric and guidance for us would be looking to, as we grow the business in 2025, for that recurring element to be going towards the 90%, early 90s. And then in 2026, I think we could probably see that getting up to sort of the 95%. So that's how I'd be thinking about it.
Perfect. Thank you. And now we have a question on costs here, which is, should we expect operating expenses to fall as you refine your operational base? I mean, we will always continue to invest in our product development. That's key. We need to be at the cutting edge, at the forefront of the market, and therefore technology, we need to keep the pace of that as well. However, as we discussed during the presentation as well, we expect our cost base to sustain the revenue growth to remain constant going forwards. And therefore, we can realize the sustainability in the margins that we think this business should be generating. There's another one here for me. And actually, this is a theme of a couple of other questions relating to our balance sheet and potential. Do you see any expectation for fundraising 2025?
So I might take that as well, Richard, if that's okay. So as we discussed, one of the exercises was to make sure that we were starting off the sort of new phase of life, as it were, with a very strong balance sheet, well-capitalized and ready to support our growth projections. So we're very confident that our balance sheet supports these growth projections with no additional need for further cash injections. And we're expecting to be cash-generative by 2025. I think it's worth pointing out as well that over the coming few months, we are expecting further cash inflows relating to part of the spinoff transaction as well, which will further strengthen our balance sheet and put us in a very good position going forward. So short answer is no, we're not anticipating raising any external financing to support our growth plans.
So if I go now to a couple of other questions. So one here for you, Richard. Is GiG leveraging artificial intelligence or machine learning to enhance customer experiences or improve operational efficiencies?
Yes, we are. When I joined the company last year, we had a part of the company which we called GiG Logic, now called LogicX. And at the heart of it sits AI, machine learning, and it helps basically our operators to operate their business more efficiently in real time. And it's a real significant differentiator for us. And I think that's one of the reasons why you've seen our pipeline grow significantly, because it's one of the core parts of our product offering that most of our competitors don't have. So yes, we are using it. We will continue to invest there. And it will be a bigger part of our story and our business going forward in 2025, definitely.
Thank you. So, another question: Are there any new partnerships in the pipeline?
Yes, there's a lot of partnerships in the pipeline. I mean, as we announced today, we've signed two very significant new partnerships since the period ends. We're in final negotiations with multiple new significant partnerships. We've recently entered material in terms of our group average size clients, RFPs. And that's what makes up this sort of 60 million pipeline, which continues to grow. So it's a key focus of our business. And yes, we're definitely in lots of new sort of agreements, and we'd expect to sign them over the coming months.
Thank you. There's one here on M&A. Are there any plans for acquisitions to accelerate growth? And if so, which areas would be of interest?
No, I mean, M&A is definitely not something that we're discussing right now. I think it's really important that we just continue to execute on our key strategic pillars to grow the revenue, grow the EBITDA, grow the cash flow. That's the real focus. None of me or the team want to be distracted from doing that. But obviously, I think as we get through into 2025, we deliver on the top line and bottom line. And I think, as everybody knows, this industry is consolidating. And I think the M&A discussion will probably become more relevant and pertinent probably this time next year, but not right now. I mean, our focus is just delivery, delivery, delivery.
There's one here about customer churn saying the underlying growth, 26%, you're still affected by old customers churning. When will this effect mute out and have the churn level stabilize?
Yes, in terms of the final part, yeah, churn has definitely stabilized. I think we're effectively almost through the end of that, aren't we? I think, yeah, it was a tiny amount in this quarter. So I think we're through those legacy issues. And that's obviously dramatically held the business back. I think if you go back to the Q2 presentation, we showed what a big impact that was having on the business. So in terms of going forward, quarter on quarter, the drag becomes almost zero. And we don't expect going forward for that to impact our business. In terms of the other part of the question was
r elating to stabilization of churn levels, so.
Yeah, so I mean, churn levels are virtually zero. So I'm not saying that it's going to be zero going forward. But in terms of the overall context of our business, I don't see it having a major impact.
Thank you. There was a question here about sales, sort of refreshing the sales strategy and whether we've made changes in the makeup of the sales team, whether there have been any sales staff replacements or change of incentives. If you wouldn't mind, just.
Yeah, I mean, from almost 12 months ago, I mean, we've got a whole new sales team, a whole new sales strategy, completely refreshed, differentiated product offering, new C-level team, new way of working, being able to deliver now on time. So I mean, all of these little things all add up. And sort of that's what's, I think, the big changes. And all of that contributes to where we are in terms of the sales pipeline and where we are in terms of the recent deals we've announced and signed. And we expect to see continuous momentum here. And we expect, as I've said already, that we're already talking to bigger customers with more geographic reach. And we'd expect that to continue. And that's all down to all of the sort of all of those key elements that I've just highlighted.
Thanks, Richard. There was one for me about a little bit more detail around what additional cash flow we're expecting to see, so effectively, there are a few balances that, as of the end of 30th September, we just needed to finalize with Gentoo , and therefore, we are looking to settle those balances over the next few months, and that's going to be helpful to our balance sheet and our cash balance going forward as well, so it's effectively just settling out the true-up between what happened with the spinoff.
Perfect. Richard, Phil, if I may just jump back in there, and thank you very much indeed for being so generous of your time there and addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review, to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But Richard, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that would be great.
Yeah, sure. Well, just let me finish by just thanking everyone for joining us this morning on our Q3 earnings call. And thank you for all those questions. And we really look forward to delivering over Q4 and updating you on further progress in February where we're going to report our Q4 numbers. So thank you for joining us this morning.
Perfect. That's great. Richard, Phil, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Gaming Innovation Group Software PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning.