Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
180. Bull, Bear & Beyond – GiG: executive interview
2 Plays8 days ago
In our interview, Phil Richards, CFO of GiG Software, gives an overview of the company, its markets and growth outlook. Phil begins by describing GiG’s products and the services it provides, as well as an overview of the industry and customers it serves. He highlights what he believes distinguishes GiG from its peers. Phil provides insight on the company’s financial characteristics including the nature of its revenue generation and investment requirements, as well as how the adoption of AI will help to make GiG more efficient and more profitable. We conclude with the company’s financial outlook and its most important key performance indicators.
**************************************************************************************
About ‘Bull, Bear & Beyond’
Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
About Edison:
Edison is a content-led IR business. We believe quality investment content should inform all investors, not just brokers. Our mission: engage and build bigger, better-informed investor audiences for our clients.
Edison covers 50+ investment trusts, read about them here: https://www.edisongroup.com/equities/investment-companies/
Recommended
Transcript
Introduction to GIG Software
00:00:07
Speaker
Hello, I'm Russell Poynton from Edison Group and today I'm delighted to have Phil Richards with me who's the CFO of GIG Software which is B2B iGaming technology company listed on the first North Premier Growth Market and with a market cap of about 70 million euros.
00:00:27
Speaker
Thanks for joining us Phil. Thanks Russell, nice to be here.
Role and Offerings of GIG Software
00:00:30
Speaker
ah So why don't we start off with, I've given a brief headline of what you do, but we'll just talk about what GIG software does, the customers it serves, and and you know were the kind of markets you youre you're looking to grow into.
00:00:45
Speaker
Absolutely. so So Gig is effectively the back end for many um you know operators in the iGaming space globally. So we offer a platform, what's called a PAM or a Player Account Management System. So that's the back end when it comes to KYC onboarding, et cetera, of players.
Market Presence and Clientele
00:01:01
Speaker
um and then we offer a sports book so that's you know your typical sort odds setting risk mitigation etc and then we have on top of that data and logic that sit and underpin everything we do that allows people to map player journeys gives a real kind of usp for us to people to understand fighting and better therefore in better players journey you know maybe be increase the revenue per user for example and and deposits etc and then On top of that, we also do have a sweepstakes product, which is in the sweepstakes market in the US as well. and so But underpinning all of this really is our our platform, our PAM, which you know sits across all of these layers.
00:01:39
Speaker
um And that is to many different regulated markets. So we're sort of certified or the equivalent of in about 30 different markets at the moment globally. And that spreads right across from...
00:01:51
Speaker
your LATAMs, your Argentina, Peru, through to we've got ah customers in in the US, in Canada, we do UK, Spain, France, Nordics. like So it's a real kind of global organization. and typically our customer profile are operators in the iGaming space that are growing that don't have their own in-house proprietary technology as it stands and therefore we offer them the service to effectively have like a market-leading back end with all the whistles and bells on there and they can then go and and attract customers on the back of that and do the marketing for their for their brand and but we also work with
00:02:30
Speaker
tier one operators as well so for example Betson and what this enables them to do is to go quickly into markets that may not necessarily be their primary focus so that you know for example we work with Betson in Peru so it's not going to be effective for them to you know reposition their dev team to develop the product for Peru to get certified etc etc but it's quick for them to use us to go into that market quickly, cheaply, effectively, very scalable,
Business Model and Revenue Strategy
00:02:56
Speaker
quick to launch. So we can work with all different kind of types of operators, whether it's the tier ones or the tier twos and tier threes, depending on what type of product they need. And that's both for the platform and for the sports book as well. Okay.
00:03:08
Speaker
And there's a bit of follow up to that. What are the financial characteristics, you know, in terms of revenue, how much of it is recurring? Yeah, so most of our revenue is recurring because we base it on a revenue share model with minimum revenue guarantee. So whenever we go in with a customer, we'll have like a base there, which is the minimum revenue we have to we want for per month from this operator.
00:03:27
Speaker
And then on top of that is a revenue share. So when they hit above the minimum revenue thresholds, it's then a revenue share model for both the platform and for the sports book. And typically, you know, the platform revenue share is slightly lower than the sportsbook side of things. So the margin's a bit high on the sportsbook side of things as well. and But that is the model we go across the board. Yes, there are some initial upfront free setup frees for us to develop the tool to integrate with, you know, the operator.
00:03:52
Speaker
But our model is on a recurring revenue basis, not on a sort of, it's not loaded towards these. so So the key with customers is that initial, getting the initial contract and then you could then you can we sell after that. Yeah, absolutely. and And for us, you know, we don't want our customers to be just sitting there minimums. Just, you know, we want yeah to grow with, because that's a win-win for both of us. They grow, we grow. And that's the whole point. It's like, you know, whether you grow in your market or you expand internationally, but we're both winning out of that.
Industry Growth and GIG's Competitive Edge
00:04:20
Speaker
So our point is to help them to understand their player profile, to understand the market and therefore generate more revenue from that market and where they might be able to expand to as well.
00:04:29
Speaker
Let's move on to the industry itself to talk about how how competitive it is, the growth drivers, and perhaps the barriers to entry for your business. Yes. So, I mean, look, the gaming industry is growing like rapidly at the moment. You know, every year you'll see more and more countries introducing regulation, which is good for us because we operate in regulated environments. So, for example, you've got Finland coming up, you've New Zealand coming up, France looking to regulate. So there's always Brazil did last year, which is a huge, huge, well, this year, I should skips, we're still in this year, which is a huge market to be in as well.
00:05:02
Speaker
So the significant growth drivers, you know, Asia is yet to be regulated. The Philippines is probably the only market there that's regulated. So there are many that are to be regulated. So there are many pockets of growth that we are seeing still.
00:05:14
Speaker
ah You know, the US is still regulating as we stand with, and particularly with iGaming. Sportsbook is a bit more mature than iGaming in the US. um In terms of, you know, who's in there, how competitive it's based, it's quite a competitive space. all right there's quite a few companies that are operating in that area that either do a platform or a sports book there are not so many that do both there are not so many that combine platform and a sports book so you you might have to get a sports book from one and platform for the other and typically maybe there'll be good or if they do combine it with good platform rubbish sportsbook and and vice versa so so whilst it is a competitive environment on its own but if you ask if you look at the sort of full turnkey suite of solutions that we have that's where we have ah a bit of an edge and it's actually very difficult to get into the space that we're in because of the regulatory hurdle so we've you know run through all of the regulation and certification processes for so many different jurisdictions that to emulate that
00:06:11
Speaker
is actually quite a challenge for a newcomer you might be able to get into one but you're not gonna be able to scale across like europe and latam etc and that's where we have an edge where we can say listen not only can we help you to grow in your domestic market but also if you want to launch another brand in canada or you want to go into peru or whatever you want to go in We can do that because we're already in there. We already know the environment. We already understand the regulatory systems and we're already certified. So it's very easy to scale up quickly with us as well, which is, is I would say, you know, regulation is a significant barrier to entry because that takes a long time. Okay.
00:06:48
Speaker
So it's a competitive market. So what do you think sets GIG apart from your competition?
Challenges and Unique Solutions
00:06:54
Speaker
So I think really it's, you know, the product very good, you know, first of all, and we, it's offering the turnkey solution, which is very, very important, including the data and logic, which we haven't really seen anyone else offering, which is this more kind of bespoke machine learning idea of generating and driving more revenue to our operators.
00:07:12
Speaker
And then we also have this idea that we're in 30 plus different markets. So it's If you combine all of those, you get to a very, very compelling offering that very few people, if any, in the market can match.
00:07:24
Speaker
And what are the things that you you worry about most? what are that What are the key challenges for you I mean, so for us and for the know so the broader environment, I mean, obviously there are regulatory changes that come in, which are always something that we need to then adapt to. It can be good for us because it lifts the barriers even higher for near entrance.
00:07:45
Speaker
And when we're in there, we can adapt quite quickly. But there are things like tax hikes and things, you know, like the UK budget, for example, which is is always a headwind. You know, we have operators in the UK and this will impact them quite significantly some instances. So...
00:07:59
Speaker
Those types of things are headwinds for us. However, as I say, the more regulated it gets, the better it is for us because it means that as a regulated business, knowing all these, you know, having regulated and certified technology helps us to erect more barriers.
00:08:14
Speaker
And the other thing is also it's it's timing, you know, operators, marketing, etc. because We need our operators to spend on marketing for them to grow in there. And, you know, and there may be reasons why they're like, you know, we're going hold back for a month, two months, three months, which in the long run is fine. But obviously that's revenue that we're missing today. So it's it's more timing of revenue based on how quickly the operators want to scale up.
00:08:39
Speaker
Right. So that's quite important for us.
Investment in Growth and AI Utilization
00:08:42
Speaker
Good. um So let's talk about the investment requirements of the business. I'd imagine there's there's a level of ongoing investment in order to keep the the the the technology ticking along.
00:08:52
Speaker
But then there's is there investment as you go in for new contracts? Yes, I mean, we're always going to need to improve the product as well. like There is obviously ongoing maintenance of the product, but there are always new things we're adding. you know This year we added the new sweepstakes vertical, an entirely new product.
00:09:08
Speaker
ah We're developing in mobile apps. We're investing in you know AI. And I know that, listen, everyone says that, but it actually we've been doing this for a couple of years now and it's actually really going to It's already delivering significant improvements in our efficiency and what we're doing internally and externally as well. so And new markets require investment to make sure the product is market ready as well. So that does require additional investment. So there is that level that we need to maintain, but we do need to build upon that to get into new markets, to develop new products, and also to effectively make us more efficient through using tools with machine learning and AI as well.
00:09:43
Speaker
ah you You brought up AI there, so it probably deserves a follow-up question in terms of but what ah how are you actually using AI and what are those benefits that should come through to you? So there's quite a few different, because there's internal and external benefits. So internal benefits, it helps our developer to code quicker and with less bugs, for example. um you know you can You can use AI to generate quite a significant amount of coding, which is very, very time efficient as well. And it can help you to to test, to analyze quicker. So that is one way.
00:10:11
Speaker
And other departments can use it as well. you know like I mean, finance can use it, you know legal can use it. There are many internal efficiencies you can get from AI. And then you've got the external factor as well. So you can generate a better product for your customers using ai So for example, you can make yeah you can automate some of the customer service parts of things, et cetera. So you think resolutions are quicker, only important tickets escalated, things are solved in quicker time. So there's quite a lot of benefits.
00:10:39
Speaker
and then using AI to help the customer understand, help the operator understand their customer's journey, to map that, to tell them where they should be spent, you know marketing expenditure, at how they should be treating this, how they should personalize this offering for this profile of individual that's come onto their platform. You know, what does that, you know if you come onto the platform, this is your typical spending pattern. What does that mean? How would you attract, you know, how would you keep playing for longer, et cetera? So there are,
00:11:05
Speaker
it's It genuinely is like, I know you hear it in many industries about AI, orit can but it it genuinely can revolutionize what we do in many, many ways. That's why it's actually really important part for us to focus
Ambitious Growth Plans and Executive Experience
00:11:16
Speaker
on. Okay.
00:11:17
Speaker
So do those benefits actually flow through to you in terms of future profitability or do you do you get to reinvest those and in other things? No, it it it should ultimately help us to effectively cut our cost base slightly, so generate more cash. So you know if if we're coding more, then maybe we need nests less to do more, for example. you know if we and And then the other side of it, if we're if we're operating more efficient structure, then our operators can generate more revenue, and therefore we generate more revenue. So we should all drop through to the bottom line.
00:11:45
Speaker
Thank you. I know you've given quite comprehensive guidance about the outlook for the business from a financial perspective, so would you like to talk about that? Yeah, so I mean, from from our perspective, you know, it's we've got some very ambitious, you know, mid to long term goals. We really want to grow the business. We've got a well-seasoned exec that has a very good past record of doing so. You know, our CEO and, and um you know, his members of his old exec team are on board too. And they they previously basically did one of the biggest SPACs in the US history and, you know, um sort of carving out a sports book and listing it together with DraftKings in the US. So there's
00:12:25
Speaker
there's an extremely good track record of scaling out there and and for us we want to you know emanate that story you know for us the the targets we've we've we've set out are really to demonstrate how quickly we can scale the business how quickly we could you know a key thing for us is is making sure that we're actually generating cash know it's very important for us in the business next year to start generating cash and so really you know that's my my number one kpi really is cash generation for next year And then using that to accelerate our growth going forwards. and And really, you know, we want this company to be, you know, 10x what it is today. You know, we think there's a massive, massive potential out there and we can we can really realize that.
00:13:02
Speaker
So beyond those financial targets you've given, are there other KPIs we should be looking at beyond the cash? I mean... Yes, for us it's also about you know new markets we're going into, you know how quickly our operators are growing, how quickly we're able to launch new operators, how many more customers we're doing. So there are quite a few KPIs that are underpinning what we're talking about and when it comes to financials and sometimes there'll be timing whether a market opens up or not. We want to make sure we're in these markets so when there's something new opening up that we're in there. So for us the KPIs are
00:13:36
Speaker
you know it's not just yes cash generation has to underpin everything but longer term than that it's like okay well how are we going to get to this tenant growth what does it look like does it also mean that we might have to bolt on you know some m and a for example to help accelerate our growth when we reach a sort of peak organic growth period there's something else we're looking to it as well so that you know we've talked about that a bit in our presentations in terms of what is the strategy outside of
Investment Opportunity in GIG Software
00:14:01
Speaker
organic growth? And one of them certainly is, you know, do we look at bolt one acquisitions, partnerships, investing in that to get to where we want to get to.
00:14:08
Speaker
The final question is, ah would you, would you mind just summarizing the investment case for GIG software in a couple of sentences? Yeah, absolutely. I mean, this is a highly scalable recurring revenue business with you know cutting edge technology that has demonstrated that it can work with tier ones, tier twos, tier threes, and it's been proven across multiple different markets. So for me, it's Very scalable in many many different multiple in multiple markets with top tier customers and you know high growth potential. So for me, it's you know there's there's a lot there to unpackage, but it's a very compelling investment case in my personal opinion.
00:14:47
Speaker
and It sounds very exciting. ah Thanks for speaking to us today. Thanks so much.