Acroud AB (publ) has had a stable quarter marked by intensive change management where restructuring, refinancing and a change of name for the business have been carried out at a rapid pace to create conditions for future success and growth.Acroud AB (publ) has had a stable quarter marked by intensive change management where restructuring, refinancing and a change of name for the business have been carried out at a rapid pace to create conditions for future success and growth.
SECOND QUARTER 2020
- Revenue amounted to EUR 3,567 (3,497) thousand.
- EBITDA amounted to EUR 1,499 (2,024) thousand. Adjusted EBITDA (before items affecting comparability) was EUR 2,058 (2,024) thousand.
- Profit after tax was EUR -1,144 (1,242) thousand.
- Adjusted profit after tax (before items affecting comparability and currency effects) was EUR 1,297 (717) thousand.
- Earnings per share after dilution amounted to EUR -0.015 (0.016). Adjusted earnings per share (before items affecting comparability and currency effects) was EUR 0.017 (0.009).
- New Depositing Customers (NDC) increased by 8% (-29%).
- Cash flow from operating activities amounted to EUR 2,442 (1,983) thousand.
FIRST SIX MONTHS 2020
- Revenue amounted to EUR 6,757 (7,550) thousand.
- EBITDA amounted to EUR 3,239 (4,577) thousand. Adjusted EBITDA (before items affecting comparability) was EUR 3,798 (4,577) thousand.
- Profit after tax was EUR 1,614 (3,183) thousand. Adjusted profit after tax (before items affecting comparability and currency effects) was EUR 2,736 (2,210) thousand.
- Earnings per share after dilution amounted to EUR 0.021 (0.042). Adjusted earnings per share (before items affecting comparability and currency effects) was EUR 0.036 (0.029).
- New Depositing Customers (NDC) declined by -5% (-22%).
- Cash flow from operating activities amounted to EUR 4,067 (4,824) thousand.
SIGNIFICANT EVENTS IN THE QUARTER
- In April, the Company applied for bondholders’ approval concerning certain changes to the terms of the Company’s outstanding senior secured bond.
- In May, it was announced that a qualified majority had voted in favour of the proposed changes to the bond terms for the outstanding senior secured bond. The changes included an extension of the bond’s maturity to September 2022, with a retained interest rate of 7.25%.
- In May, the Company issued an update on the results for Q2 2020 as the new CEO conducted a strategic review of the Company’s operations. This has created a clearer operational organisation with clearer processes and areas of responsibility, and a focus on fewer products, while at the same time the Company has recruited more operational expertise to drive future growth.
- Acroud made further repurchases of the Company’s own corporate bonds on the market, corresponding to a nominal amount of SEK 3.0 million. Including the previously communicated repurchases of SEK 122 million, Acroud’s bond repurchases amount to SEK 125 million.
SIGNIFICANT EVENTS AFTER THE QUARTER
- The Company adapted and took measures to create a strong long-term position in the Dutch market. The measures involved an adjustment of the product offering to ensure compatibility with the rules in the Dutch market until the new gambling act enters into force in the first quarter of 2021. Although the adjustment will have a negative impact on revenue in the short term, the measures are a long-term investment to ensure a strong position and sustainable development for the Dutch operations over time.
- Net Gaming Europe was renamed Acroud. The name change was part of the extensive change work initiated when Robert Andersson took over as CEO, which involves an intensified focus on organic growth and entrepreneurship. In connection with the name change, the Company has also changed its ticker symbol on Nasdaq to “ACROUD” with effect from 17 July.
CEO’s comments: A Challenger on a Quest
It feels good that we have been able to see an increased pace and flexibility within the organisation during what must still in many ways be seen as a challenging time for the whole world. Looking specifically at our industry, Sports betting has been a major challenge. Looking at the last quarter, revenue was EUR 3,567 thousand and EBITDA was EUR 1,499 thousand, having been affected by one-off costs of just over EUR 550 thousand. We are growing sequentially, while development is relatively “flat” compared with the previous year. Our focus on exploiting the Company’s potential in the form of employees, customers, end users, brands and geographical markets, as we move forward at high speed, will bring growth over time. One thing that has become clear to me during my fist half year is that the Company has had a lack of focus, with people trying to achieve too many things at the same time, which makes it difficult to produce something really good. This has now changed and we are allocating more resources to a smaller number of focus areas.
The second quarter can be said to have been marked by intensive change management where restructuring, refinancing and a change of name for the business have been carried out at a rapid pace to create conditions for future success and growth. As I wrote in my previous CEO’s Comments, the focus is on building a fast and effective company with a strong organisation permeated by entrepreneurial spirit and a growth focus. And I can say that during Q2 we have delivered on this. We have carried out a skills exchange where we have appointed new top expertise primarily in operations, closed the Swedish office, brought the companies together under one name, strengthened the capital structure and discontinued non-priority brands. All of this has resulted in items affecting comparability (one-off costs) of just over EUR 550 thousand, and will bring annual cost savings of just over EUR 300 thousand, while at the same time we have created a much stronger and forward-looking company adapted for growth over time.
In July, we decided to take rapid action to create the best possible long-term starting point for participating in the Dutch market as quickly as possible. The measures involve an adjustment of the product offering to ensure compatibility with the rules in the Dutch market until the new gambling act enters into force in the first quarter of 2021. The adjustment in the Netherlands will have a negative impact on revenue in the short term. We see the measures as a long-term investment to ensure a strong and sustainable position over time for our operations in the soon to be regulated Dutch market.
The sharp increase in traffic within poker and casino from March to May has slowed down since mid-June and normalised to a level similar to that before COVID-19. All in all, we therefore expect the third and fourth quarters to be more challenging.
Our conviction is that we have identified the challenges and created action programmes to optimise the Company’s future development.
We see an increased focus on the fastest growing brands within the Company and during Q2 we intensified our focus on the North American market and appointed an operational team dedicated to this market. We also see an increased traffic flow in North America and we have intensified work on licence applications in most of the new states, which are currently being processed. These include, for example, Pennsylvania, Indiana, West Virginia, Michigan and Colorado. Although competition in the North American market has increased over the last year, we can see that, with the right focus and the right team, we will be able to create a growth journey with both new and existing brands as more states “open up”.
One company, one future
The logic behind the complete change of name to Acroud is simple and has been part of the extensive change management that has taken place. The business has previously been conducted under several names, creating a lack of clarity and inefficiency both internally and externally, which struck me immediately when I took over as CEO. In Sweden and on the stock exchange, the Company was known as Net Gaming, while in the industry and globally, it was called Highlight Media. From there, it was a natural step to quickly and vigorously implement both a name change and a reorganisation in order to give the Company a fresh start under a brand new name under which we can gather, thereby also obtaining a common communication platform. A real fresh start, quite simply. This became Acroud, and is most easily described through our manifesto:
We are a challenger on a quest.
We are adapting and we are here to disrupt and claim what hasn’t been claimed.
We are here for the challenge, for the joy, for the pride of giving people guidance in their everyday life and supporting brands building their crowds.
We are here for the challenge because that’s our motto on how to enable synergies between people and brands.
We are here for the joy because that’s our motto on how to attract and nurture existing and future talent.
We are here for the pride because that’s our motto on how to build confidence and long-lasting relationships.
We are a challenger on a quest, and our journey has just begun.
We are Acroud. Join the ride.
We are working to strengthen the Company’s capital structure
In order to create conditions for future Growth and free up capital for operating activities, continuous optimisation of the Company’s capital structure is a top priority.
A milestone in this work was reached in May, when a qualified majority of bondholders voted in favour of proposed changes to the bond terms, including extending the maturity date by two years to September 2022 – a message of strength which enables us to concentrate on the business. As a further part of the optimisation of our capital structure, we have repurchased the Company’s own bonds on the market in 2019 and in March 2020. Repurchases were made at a corresponding nominal amount of SEK 67 million in 2019, with a further SEK 55 million in March 2020 and SEK 3 million in Q2 2020. We will continue to review the Company’s capital structure and optimise it ahead of our growth journey.
We now continue writing an important new chapter in the Company’s history, in which those of us who are lucky enough to work here will join forces to build a stronger, more profitable and more fun company, which will benefit all our customers, end users, suppliers and, of course, you as shareholders.
Join the Ride!
Acroud’s CEO Robert Andersson and CFO Gustav Vadenbring will present the report, followed by a Q&A session. The presentation will be held in English and can be followed at www.acroud.com or via https://tv.streamfabriken.com/acroud-q2-2020
To join the presentation by phone, please dial in using one of the following numbers:
From Sweden: +46850558359
From the UK: +443333009262
From the USA: +18446251570
After the presentation, the webcast and the presentation slides will be published on www.acroud.com where they can be listened to and viewed on demand.
For further information, please contact:
Robert Andersson, President and CEO
+356 9999 8017
Gustav Vadenbring, CFO
+356 9967 6001
Certified Adviser: FNCA Sweden AB, [email protected], +46 8 528 00 399
This information is information that ACROUD AB (publ) is required to disclose under the EU Market Abuse Regulation. The information was provided by the contact person above for publication on 13 August 2020 at 08.00 CET.
About ACROUD AB
ACROUD owns, operates and develops high-quality comparison sites, mainly in iGaming affiliation, for the purpose of helping our partners by channelling high-quality users to the Company’s customers – primarily iGaming operators. Through the sites, ACROUD generates high-quality users, primarily to global iGaming operators. The Company, which was founded in 2003, has just over 70 employees and is headquartered in Malta. The share (ACROUD) is listed on Nasdaq First North Growth Market. Certified Adviser: FNCA Sweden AB, [email protected], +46 8 528 00 399