GiG registers record revenue of €31.8m in Q3, signs deal to acquire KaFe Rocks for €35m

Gaming Innovation Group (GiG) registered record revenues of €31.8 million in the third quarter of 2023, the company announced, representing a year-on-year increase of 39 per cent.

It also revealed a €35 million deal to acquire leading affiliate company KaFe Rocks.

GiG, an iGaming platform and sportsbook provider supplying solutions to its partners, reported that adjusted EBITDA reached €23.4 million, and, excluding a €9.8 million reversal of earn-out provision, EBITDA came in at €13.6 million. This represents a year-on-year increase of 61 per cent, with a margin of 42.8 per cent.

The company said that record GiG Media revenues, reaching €22.5 million for the period with an increase of 49 per cent, supported its growth. GiG media Media has recorded 12 consecutive record-breaking revenue quarters.

“The third quarter of 2023 has proven to be another period of growth and achievement”, said Petter Nylander, chairman of GiG.

Revenues for GiG’s Platform and Sportsbook were €9.3 million, rising by 20 per cent year-on-year, while the group reported positive cash flow from operations of €3.2m.

KaFe Rocks acquisition

GiG further announced that it signed an agreement to acquire affiliate company KaFe Rocks, with a view to cement its lead generation efforts while also pushing GiG Media further into the coveted North American market. It reported a purchase price of €35 million, to be paid in the form of €15 million cash up front, and a further €20 million in four semi-annual payments over four months. GiG will also pay €2.5 million in shares subject to specific operational cost savings targets.

Further, should specific performance targets be met, there will be an added earn-out.

The transaction is structured by way of a Share Purchase Agreement (SPA) were GiG’s subsidiary Innovation Labs Ltd. (part of GiG Media) acquires KaFe Rocks Limited (Malta). GiG intends to finance the initial consideration through a combination of existing cash, shareholder loans, and/or proceeds from a potential bond issue. Closing of the transaction is subject to completion of due diligence, financing, applicable regulatory approvals, and final board approval and is expected in December 2023.

KaFe Rocks has a thriving global portfolio diversified across 15+ markets, featuring user-centric US-facing flagship brands Time2play.com and USCasinos.com. Over the last 12 months, Time2Play has shown impressive revenue growth, with further acceleration expected, GiG stated.

It is anticipated that Kafe Rocks will generate a minimum revenue of €23 million in 2024 with an EBITDA margin above 45 per cent, implying a 2024 EV/EBITDA multiple of around 3.6x for the acquisition. “The EBITDA margin is expected to increase over the next few years.”

On top of the revenue and EBITDA growth potential, GiG said the acquisition will further diversify GiG Media’s business, improving customer, website, and market concentration and reducing overall risk. The investment will accelerate GiG Media revenues, expected to reach between MEUR 125-135 for 2024.

Jonas Warrer, CEO of GiG, said: “We want to remain the leading casino affiliate in the industry and grow in the North American market. Our acquisition of KaFe Rocks validates these goals. After the successful integration of AskGamblers, we have been looking for the next splendid candidate to join the family. In KaFe Rocks, we’ve found a flourishing business led by an exceptionally skilled team. Their reputable affiliate assets will undoubtedly drive growth for the broader group. I eagerly await working closely with the KaFe Rocks team.”

Aimee Speight, spokesperson for KaFe Rocks, said: “It’s a momentous occasion for KaFe Rocks to join forces with GiG Media. We considered several buyers but were persuaded to go with GiG Media based on the strong performance the company has shown over the last few years. Joining GiG Media, we are optimistic about seeing Kafe Rocks business venturing into new heights.”