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Gaming Realms stretches into the US

The mobile gaming developer is growing its international presence
Gaming Realms stretches into the US
  • Solid revenue growth in 2020 
  • Performance supported by new partnerships and game titles 

It has been a good year to be in the gaming business – at least, from a corporate perspective. For many, online gambling has been an effective distraction from pandemic-induced boredom, as live sports and in-person casinos closed. Gaming Realms (GRM) has certainly benefited from changes to customer behaviour during the lockdowns. On results day, the gaming developer, which specialises in betting apps, said that it moved to an adjusted cash profit of £2.9m in 2020, compared with a loss of £0.3m in 2019. 

Licensing revenues grew by 81 per cent to £7.5m, with social publishing sales up by more than two-fifths to £3.9m. The company added 10 new proprietary games on its remote game server or ‘RGS portfolio’.  That is on top of a series of strategic partnerships for its ‘Slingo Orginials’ content, including with 888 Holdings (888), Flutter Entertainment (FLTR) and Sky Betting & Gaming. It also bagged licensing deals with NetEnt and PlayTech to build new Slingo games, among others. 

It's not all about the lockdowns, though. Management’s investment in new gaming looks like it is paying off – unique players in its licensing business more than doubled last year to 2.28m. Combine that with the group’s potential entrance into Pennsylvania and Michigan (where it is still pending license approval) and Gaming Realms has plenty of room to grow. 

It sounds like a decent recipe for success: more games, more partnerships and more markets. Analysts at Peel Hunt are understandably bullish, forecasting an adjusted pre-tax profit and EPS of £2.6m and 0.9p, respectively, in 2021, compared with £0.5m and 0.2p in 2020. 

Gaming Realms thinks it will get its hands on a supplier license in Pennsylvania and launch by the end of the first half, and at the moment says it is trading marginally ahead of expectations. We are cautious, given that it is a relatively small fish in an intensely competitive space – although it does look capable of holding its ground in the face of bigger rivals, maintaining a 3.5 per cent market share in New Jersey. There is plenty of excitement over growth prospects in the gambling industry in the US, and that could due another boost as the sporting calendar springs back to life. But Gaming Realms still looks volatile to us, with its shares dropping by almost a tenth on the day of the results. For now, we're neutral. Hold. 

GAMING REALMS (GMR)   
ORD PRICE:41pMARKET VALUE:£ 118m
TOUCH:40.2-41p12-MONTH HIGH:47pLOW: 7p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:4p*NET CASH:£1.4m
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201634.0-6.97-2.55nil
20177.61-8.64-2.89nil
20186.17-6.05-1.98nil
20196.88-4.67-1.60nil
202011.4-1.58-0.54nil
% change+66---
Ex-div:na   
Payment:na   
*Includes intangible assets of £11.1m, or 4p a share