We find many positive data points in the report and note that the company continues to sign new clients, primarily to the platform segment. In addition to the Q2 beat on adj. EBITDA, the raised long-term margin target and specified organic growth target of 20% annually look strong, but were not surprising given the rapid pace of client signings we have seen recently. We highlight the strong media performance, which grew 5% q-o-q in a seasonally weaker quarter (and 35% y-o-y despite tough comps including the COVID-19 boost and the Euro 2020 championship). This could be explained by the FTD intake growth in the previous few quarters on rev-share contracts, which naturally pushes revenues back due to bonus dynamics. Furthermore, the total revenue momentum into Q3e seems to continue, with July revenues up 37% y-o-y, also on equally tough comps. Opex came up slightly q-o-q, largely explained by the consolidation of Sportnco, and management emphasises that it expects strong cost synergies ahead.
We raise our estimates, primarily ‘23e-‘24e Given that we were already in the top range of the FY’22 adj. EBITDA guidance, which was reiterated, we make only small positive EBIT revisions for H2’22e. For ’23e-’24e we raise EBIT by 5-10% on higher sales, coupled with lowered other opex on the back of the strong long-term outlook and cost savings pace. Our new estimates do not fully reflect GiG’s new targets, however, as we are hesitant to raise our ’24e top-line growth estimates that steeply until we have better visibility.
Share is up 12% YTD, trading at 6x ’23e EV/EBITA The market clearly appreciated the report, sending the share up 9% yesterday, further increasing the gap to B2B iGaming peers’ YTD performance. Based on the closing price, coupled with our revised estimates, GiG is now trading at 6x-4x ’23e-’24e EV/EBITA.
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