Gentoo Media Inc. (G2M) Earnings Call Transcript

Ladies and gentlemen, welcome to this press conference. Today, I'm pleased to present Richard Brown. [Operator Instructions] Speaker, please begin.

Good morning, everyone. Richard Brown here, CEO of Gaming Innovation Group. I'm joined by the Chairman, Petter Nylander; and Group CFO, Tore Formo, to give you a little bit of a breakdown around the transaction and the announcement that we will divest our B2C section of the business this morning. I will pass over now to Petter, who'll give a quick introduction, and then I will pass through some of the more details of the transaction itself and the strategic rationale behind it.

Thank you, Richard. Good morning, everyone. Yes, Petter Nylander speaking now. So thank you for joining. So the purpose of this call is to focus on the transaction that was announced recently this morning and our perspective, and we're open to take any questions with either Tore, Richard and myself. But just to start and give some context introduction from my perspective. So as you heard us in Q3, we initiated a strategic review, and the rationale behind the strategic review was to focus on 2 things predominantly to reduce the complexity of the business and focus the company where we see our strength and the best opportunity for future value creation, and secondly, to strengthen the balance sheet. So we were happy that we are able this morning to address both these issues with this transaction. So this is something that was a target and that we have now sort of achieved. And on -- in next week, when we go through the Q2 -- Q4, we're going to go focus on the numbers in particular, and how we see more in detail a little bit the future and the strength of the company. So by this, I hand over to Richard, a few remarks on his perspective on this transaction and the company. Please.

Thank you, Petter. Yes, so we initiated the strategic review in November, as Petter said, with those kind of 2 main objectives, one regarding balance sheet and how that would be resolved as well as the makeup of the existing company and whether that was the correct strategic structure of the organization to pursue forward. As part of the review, we identified that there's been an occurrence of multiple weaknesses that had developed over time. And I think as the changing dynamic of the industry has been pressurized into a very condensed period of time over the last 12 months, some of those items kind of materialized in force. To give you some examples in that case, I think it was the correct strategic rationale to have the kind of B2B and B2C structure as the industry has evolved over the last few years. However, it's gone to the stage where they were becoming conflicting agendas and priorities within the business that were hampering the growth potential of either party. I think it was also relating to the reregulation of multiple markets within Europe. The requirements to grow the B2C business in terms of marketing funds available were pretty stringent, and we realized that that may not be something that we may be able to facilitate continually to facilitate the growth of the B2C business. I also saw opportunities, I think, for us to be able to focus entirely the business into one -- or into a B2B supplier. I believe that the longevity and sustainability and financial upside there is significant. I believe we're very well strategically positioned to capitalize on that, and I'm very confident in the ability for our -- of our execution to get to where we need to be to become a significant force in that area. I'm very excited by this new chapter in GIG's history. I look forward, and I'm quite inspired to continue to work towards that -- those goals. One of the other elements that we've seen kind of -- we talked about complexity, the varying client types. So we've been focusing now over the last 6 months. I think historically, the perceived -- rather than real but perceived conflict between B2B and B2C was not historically a problem. However, it has become as we are to aim for larger clients, more land-based clients, ones who are not sort of a digital challenge, as we would refer to, that has become more of a sticking point for them. So again, this business has started to have conflicting agendas as an example of that. And one of the reasons the strategic rationale behind this divestiture is not just -- it will also provide upside for the remaining business as well. That's just a quick -- I will, of course, in the call and in the presentation on Tuesday present some more details around the strategic rationale behind it. I will now just flick through very quickly to clarify what we believe is the value of the deal being. So yes, we will receive an initial consideration of EUR 22.3 million in addition with EUR 8.7 million prepayment, which relates to a premium fee that is being paid on top of and in conjunction with the renewability. Betsson will remain a client for the next 30 months on the platform, so I'm very excited to take on a tier 1 operator and to work together with them to continue to grow the brands and have -- and allow them to create capability of their B2C focus in order to continue to grow and both parties working together and benefiting from that. Also part of the deal is we have agreed an element, again, I will talk more about on Tuesday, is that we've seen a varying desire for various sports books. Betsson has a leading sports book in the space. They have a proven track record with it. And they also have B2B ambitions. So we've agreed to integrate their Sportsbook solution that we would be able to then provide or potentially provide to other B2B customers as well in conjunction with our own sports book as well, which we will also talk about more next week. I think that's a pretty good introduction for -- or a comprehensive introduction for this stage. As I said, more details will come through into the next week, but I think we can now pass over if there's any questions on the line.

[Operator Instructions] The first question is from Jonas Amnesten of Redeye.

My question regards to the -- you say that the total value of the transaction is estimated to approximately EUR 50 million. Does this include the normal platform fee for the first 30 months as well? Or...

Correct. That's correct. That number encompasses both consideration, premium rate and the normalized platform fee that we will be charging. So it's the total deal value.

Yes. Okay. Great. And my second question regards -- you mentioned that you're going to add Betsson Sportsbook as well. How will this work with -- considering you have your own platform solution as well? Is it that your customer will be able to choose between them? Or what's the idea?