GigCapital4, Inc. Price & Performance (GIG)

Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab. There's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. Company may not be in a position to answer every question it receives during the meeting itself, however, the company can review all questions submitted today and will publish those responses where it's appropriate to do so. I would now like to hand you over to CEO, Richard Carter. Richard, good morning, sir. Good morning, and welcome to our quarter four results presentation. It's been an extremely active and eventful period for Gig GiG, following our listing last October, and we are very excited to update you today on the positive progress we are making across our business verticals. I will begin running through our key highlights before handing over to Phil Richards, our CFO, who will take you through the financials, I I'll then update you on our strategic progress on our outlook for FY 2025. Turning now to Slide three. I'm pleased to report a transformational quarter for the company. [indiscernible] revenue increasing 19%, quarter on quarter, and 44% year on year on an underlying basis to $8,800,000 This strong performance was driven by a combination of improved operational execution, a strengthened product offering, as a reminder, we upgraded many of our key products last year under the XSuite branding Additionally, Higher client onboarding cadence, and improved revenue per new client launches also positively impacted growth.

The turnaround in Q4 revenue, it was pleasing to transition from an adjusted EBITDA losses during the previous three quarters of twenty twenty four and return to EBITDA Not only have the foundations been transformed for improving revenue, and profit growth from our existing customer base, but we but we've also secured a further six new customer agreements during quarter four, in addition to extending our partnership with Betson Group. A top five customer. These agreements further demonstrate the success of GIG's renewed commercial strategy and upgraded product offering and come in addition to the significant increase in our overall sales pipeline. Which ended the quarter at a new high of 75,000,000 Growth has continued to build beyond the end of the year with the launch of Primero, Gig's first social sweep state casino, BetzZone, who also recently launched in The UK market, I will now hand over to Phil, will take you through the financial performance. Hey, Richard. If we now look at the overall financial picture across the year by quarter, you'll see that we have a significant growth in revenue quarter three to quarter four, as Richard has already alluded to, and we ended the quarter at $8,800,000 revenue.

I'm also so pleased that we achieved a small positive EBITDA as we look to scale the business and improve our margins accordingly. Over the next few slides, I'll walk through a more detailed analysis of revenue and OpEx drivers alongside an analysis of our quarterly cash flow. In this slide, you'll see how our underlying revenue has grown sequentially through the year. To £8,600,000 in Q4 twenty twenty four. A 43% growth from Q4 twenty twenty three. When we look at our revenue, underlying revenue is a key metric for us. This effectively is the revenue we're generating from ongoing business operations stripping out the impact of one off revenue generating activities such as the 2023 Solarline Enterprise Solution and clients who've exited the business. The underlying revenue growth leads us to an exit position for twenty twenty four of £33,400,000 of annual recurring revenue or ARR, up from $24,900,000 at the end of twenty twenty three. This is measured as we define it as contractually guaranteed revenue over a period of twelve months. Moving now to our revenue bridge and here the specific movements year on year can be seen in more detail illustrating the point made earlier regarding underlying revenue and the composition in this.

Q4 twenty twenty four saw significant growth from new customers in existing adding 1,300,000.0 in the quarter alone when compared to the prior year. It should be noted that customer exits from 2023 created a significant headwind to the business comparatives throughout 2024 as can be seen here with customer retention being a key focus for us during 2024. To ensure this is no longer an issue facing the business going forward. Success of this can be seen in significant customer renewal sign customers therefore not exiting the business. You'll see on this slide an additional oversight into our cost drivers, Being a SaaS business, our costs are predominantly in people, market technology, and this is shown here accordingly. Our total cost through 2024 have remained stable throughout Whilst we've experienced significant revenue growth, in particular in Q4, therefore delivering significant bottom line growth accordingly. I'm confident that we can maintain this cost base going into 2025. Therefore be able to realize the full scalable potential of our business accordingly. We look then now at EBITDA, during the course of the year, we had several significant events which needed to be adjusted out to ensure a more accurate reflection of our EBITDA, which is why it represents a present and adjusted EBITDA for the year 2024.

These impacted the ongoing profitability of the business and therefore needed to be stripped out. And not least of which being our IPO at the start of Q4 twenty twenty four. Impact today is significantly decreased in Q4 twenty twenty four pleasingly and therefore, we will be adjusting for far less things in Q4 twenty twenty four and going onwards. And I'm delighted that we were able to return to positive adjusted EBITDA in the quarter. We've continued to invest significantly in our people to ensure we've got best in class product and team servicing this and also that we're able to effectively sell and market this product to our current and prospective partners. We're continuing looking ways to ensure that cost growth is kept in absolute minimum ensuring therefore that revenue growth drops through to the bottom line as much as possible. And this is seen from our EBITDA position improving by $1,200,000 quarter on quarter with revenue increasing $1,400,000 The conversion of this additional revenue to therefore being over 80%. If we then look at our cash flow, this leads me into what looking at our cash position at the year end. We finished the quarter with £6,300,000 in the bank having started the quarter at £10,000,000 As can be seen from the waterfall, we continue to invest significant in our software development with the majority of our cash outflows being people related costs.

As we note in our guidance, we're working towards being in a cash flow positive position by the end of Q3 twenty twenty five with cash outflows reducing each month up this point, I'm very pleased with the progress we've made with this already, having reduced our monthly cash outflows by over 50% quarter on quarter. This downwards trend continuing throughout into the New Year. As you may note today, in addition to our current cash balance, we're due to receive the final $4,500,000 due from our previous parent during Q1 also have access to a $2,000,000 revolving credit facility should this require utilization further along the year. I'm therefore very confident that we have strong balance sheet needed to support our growth ambitions and deliver the results required for cash generation accordingly. Richard will give a little bit more detail what this means for our guidance for 2025.

With this, I will hand you back. Moving on to Slide 12.

Here, I'd like to provide an update on our progress against our key 2024 strategic growth pillars. Starting with enhancing our technology and product offering. 2024 has proven to be a pivotal year in which the tech and product teams delivered major advancements in our core technology platform supporting CRM and customer retention tools. This greatly enhanced new set of next generation products ensures scalability, security and seamless integrations, and are extremely efficient to operate and scale given they are built on a modular and flexible architecture. This is a key enabler of why we are winning new clients and why we are able to rapidly enter new markets. I will touch further on this point shortly. We also have delivered a new scalable front end solution which will allow us to reduce our delivery timeframes by up to 30% on markets we already have a presence, allowing us to launch more clients with the same resources. This is already starting to have a positive impact. We also launched our new social casino suite stake platform solution during Q4. Which significantly widens the addressable market and revenue opportunity for the group. In 2025 and beyond. We continue to make meaningful enhancements to our sportsbook and successfully launched the iconic Pools and I'll talk more on this later on in this presentation.

Moving on to our second priority, improving our operational execution and delivery. Is an area where we've made continuous positive steps throughout 2024, as the teams have embraced a more data driven analytical culture. In particular, we now have the capacity to launch up to nine clients a quarter given the streamlining of both the delivery and the development processes during 2020 and this will underpin our 2025 growth ambitions. On the back of these operational improvements, we've also lowered the cost to serve both new and existing clients which will result in limited cost inflation despite the anticipated uplift in department activity stroke delivery in 2025.

Finally, our migration layer allowing for the rapid onboarding of operators from competitor platforms to GiG was successfully deployed at scale with three partner migrations 2024.

And we look into 2025, we anticipate targeting larger, more complex new partners which offers significantly higher medium term revenue profitability. New market expansion also continues to be another key focus area for Great. As it not only expands our ability to sign new clients, for our turnkey product suite, but also provides the option for material growth and diversification for our existing clients. We successfully executed this strategy during twenty twenty four in Mexico. Canada, Estonia, in additional Argentinian provinces and Peru. [indiscernible] 2025, expect to continue to expand our regulated geographic market reach, which with additional focus on LatAm, Canada, a new entry into The Philippines and Swiss markets. In addition to the launch of our new elevated Xsuite product offering in Spain, later this year. Finally, new business development. Which is the harbinger of our future success. Continues to deliver positive progress. Over the year, we restructured our sales team and improved the quality of our sales pipeline. And we are beginning to see tangible results from these changes. With the sales pipeline now standing at €75,000,000 up from €31,000,000 at the end of Q1 twenty twenty four. Pleasingly, these opportunities now consist of established brands, government lotteries and multi jurisdictional Tier one operators.

And significantly, dollars 16,000,000 of this is now signed on long term contracts as at the end of twenty twenty four, representing more than 2.5 fold increase Now against this backdrop of strategic progress, we are reiterating our guidance for 2025 revenue of at least $44,000,000 and EBITDA of at least $10,000,000 Moving on to Slide 13. Here, I'd like to provide an update on our progress on new partner launches. As mentioned earlier, the business has had a very productive year in terms of product launches. Helping a whole host of new and existing customers either unveil or elevate their online gaming offering. Our team delivered 16 brand launches across the full year, spanning nine markets and licensed jurisdictions. And we are aiming to continue this solid momentum in 2025 to further increase our market shares in the most attractive regulated markets globally. Such as Mexico, Canada, Peru, The Philippines, Switzerland and The UK to name a few. The goal for 2025 is to hit 28 launches. Which would constitute 75% year on year growth which we expect to be a mix of new and existing customers. [indiscernible] This is an ambitious goal, but I believe we have the sales momentum the market coverage and the product portfolio hit these targets.

Now turning to Slide 14. Here, we look into more detail at our proprietary sportsbook SportX. [indiscernible] 2024 was a year of consolidation. With a steady stream of product improvements delivered, including an increase in the size and depth of our pre match and in place sports coverage, the rollout and upsell of Betbuilder across more than 75% of our operators and the addition of third party content like Betmakers which has added horse and greyhound racing to our portfolio. We also launched a new refreshed user centric front end which is driving positive user feedback and engagement. And finally, we launched Sportx into two new regulations, with the Pools and the Powerplay during 2024. And while we see considerable room for improvement, 2024 sports book turnover increased 30% and invoiced sports revenue increased 46% year on year. [indiscernible] let's turn to Slide 15. As can be seen from the revenue composition, our primary revenue generator in 2020 However, a key objective in 2025 is to double down on our sports book foundations we put in place during the last twelve months. And to materially grow the number of sportsbook clients and our overall sports revenue, so it represents at least 15% to 20% of the total revenue within the next three years.

So how are we going to do this? Well, firstly, we'll leverage the cross sell opportunities from our existing Pan customers. And I'm pleased to say that we're already building strong traction here. Additionally, we'll continue to serve growing business development pipeline with the planned launch of several new Sportech instances across various regulations during this year. From Q3 onwards, we will deliver our next gen trading and improved risk management tools, which we've been working on for the past twelve months. This is a game changer for our sports offering and will give us parity with the current tier one sports providers in our sector. And we'll continue to invest in upgrading our front end and middleware layers bringing regular updates to keep Sportx to the top of the best industry standards in terms of player experience. Finally, Slide 16. In summary, 2024 has been a positive and productive year for the business. We have renewed momentum as evidenced by quarter four's 19% quarter on quarter revenue growth and 40% underlying year on year revenue growth. We continue to execute our strategy to grow and improve all business areas, and we are encouraged by the broad based growth we are seeing across our key markets and verticals. [indiscernible] The business has continued to generate substantial recent contract momentum driven by new signings and new customer launches.

And we are continuing to build a substantial new business pipeline which stands at £75,000,000 of annual contract value. Taken together with the progress we are making with our existing partners, we are confident that we will meet our 2025 revenue guidance of at least €44,000,000 and EBITDA of at least $10,000,000 Our people remain humble and hungry to deliver much more. And I have every confidence that together, we will continue to seize material opportunities that lie ahead. Thank you for listening and Phil and I will be more than happy to take questions.

Perfect. Richard, Phil, if I may just jump back there. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that to review those questions that were submitted already, I'd just like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can all be accessed via your Investor Dashboard. Guys, as you can see there, we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions. But Jeremy, at this point, sir, if I may hand over to you to share the Q and A with the team. And if I pick up from you at the end, that'd be great. Thank you.

Thank you, Jake. Starting from the top, it looks as though sports book growth is a key objective for the company. How should we expect this growth to come through during the next few years?

Okay. Good morning, everyone. In terms of sports, as I said during the presentation, we did a lot of work during 2024 upgrading the sports book. And as we go through 2025, we're going to see further upgrades and we're going to introduce the new next generation trading tools. And I think once those training tools come through, then we'll have the material opportunity to see an increase in the revenue. As of today, we are currently going through 15 sales opportunities. With an annualized value of roughly £12,000,000 so that's £3,000,000 a quarter. [indiscernible] at €1,000,000 a quarter, so that's obviously significant upside. I expect as we go through Q3, Q4, we'll start to see a big ramp up in terms of the sports revenue and going into 2026. Additionally, we recently hired a new sports sales director He'll be joining us in late April, May.

And I think that will also help and we'll see a big boost in terms of the sports opportunities as we go through 2025 and we'll tell you more in our next results around this area.

Excellent. Next question. Do you have the balance sheet to scale the business in the medium term?

I'll take that. That's all right, Richard. Thank you. Yes. So listen, from our perspective, we're exactly where we expected to be. We have a very strong balance sheet that will continue to strengthen. And can more than support our growth trajectory For example, I will highlight that not only are we due to receive for an additional €4,500,000 this quarter from previous parent, which part of it has already been received, But as mentioned during the presentation, our cash burn has significantly decreased throughout the quarter and beyond going into 2025, [indiscernible] and will continue to strengthen through the year.

You set yourself quite ambitious growth targets for 2025. What gives you the confidence you can achieve these goals?

I think there's multiple drivers in terms of why we'll achieve these goals. I think firstly, you started to see in Q4, we're starting to see an improving growth rate from our existing clients. The laws of the clients in 2024 are now ramping up. And now positively contributes throughout 2025, We've got a very ambitious new client launch rate this year, but we've got very good visibility on that. The year started very positively, so that will be another key driver. And I think also when you look at our market leading products offering, and the increased engagement that we're getting with much larger clients much more profitable and larger revenue generating clients, I think, that in particular really gives us the confidence that that we'll be able to make our 2025 and beyond targets.

Another question, do you have plans to add to your product suite in the medium term? Yeah. I mean, as we mentioned already, we obviously last year added a new sort of social casino product vertical. We're currently actually rolling out a new sort of add on product, which is we're building mobile apps And we'll talk a little bit more of that in detail. I think that gives us another significant revenue stream going forward. But I think this year is more about sort of upgrades, more cosmetic, it's about obviously delivering on the sales side rather than on the product [indiscernible] Can you give us an update on sweepstakes? How the new launches gone down? And is it looking in terms of future sales pipeline?

Yes. As you all know, we recently launched our first customer [indiscernible] It's going very, very well. In terms of the pipeline, it's very strong.

It's over $50,000,000 We're working on multiple deals at the moment. We expect to close.

In the coming weeks. So the outlook looks very, very positive. One thing that we have been doing recently is pivoting more towards migrations because that obviously brings in a much greater level of revenue earlier, so there's no ramp up phase. But overall, we're very pleased with how that new product vertical is gearing up.

What financial metrics should we use to measure both success and progress, EBITDA, revenue, sales pipeline, ARR, example, Yes. I mean, I guess the short answer is all of the above. Home for me, extremely excited numbers is the ARR number that we've got coming through to the year because when we measure that, we measure that based on minimum. So there's significant upside to that. To the $33,400,000 that we should see being realized over the year or beyond. Obviously, revenue increase is a big focus for us. Test generation is extremely big focus for us. Profitability will therefore come afterwards.

With our focus on the flat line in the costs, and the margins have just improved. So all those metrics together will give an extremely good indication as to how the business is going and very confident that guidance we've given out is going to be one that we can achieve for the year.

Is 2025 more about GiG sales, go to market strategy? Or are you more focused on product development and leveraging existing relationships? It's a combination of both. But as I said, this year, we did a lot of heavy lift lot of upgrades last year. This year is a year of consolidation. It's a year of making money.

And that obviously is going to be driven by us launching new clients. I mean, as Phil has already said, we don't expect to see any sort of major inflation in terms of our cost base. So this year, it's about consolidation and obviously just driving that top line from the existing products and resources we have.

How did the seasonal effects look for you? The guidance for Q1 implies a significantly stronger year end in order to reach the full year forecast. Can you elaborate on this? And how is this supported by your pipeline? Yeah. I mean, there is obviously an element of seasonality, but it doesn't really it's not really a key game changer for us. In terms of how we see this year forming. We've given quite a lot of detail on this in our previous presentations But effectively, We onboarded lots of clients in the second half of last year. They're building up. They'll come in the first half of this year.

We also obviously have our new client launches. We launched We've already said we've launched two. We expect obviously to to launch a significant amount as you saw in the guidance.

And as they come through this year with some underlying growth, that's how you get the step up from where we are in Q1 to where we are in Q4.

How big a part of EBITDA guidance do you [indiscernible] Is guidance probably strongly back loaded?

I mean, I'll take that. I mean, obviously, we run a very highly operationally geared business. It's a SaaS model.

So as we bring the we're effectively guiding to holding costs pretty flat. So as we move into the second half, then that additional incremental revenue will drop through to the bottom line and that's where you get that, obviously, higher EBITDA What is your outlook on CapEx spending, especially on software development?

So as we said previously, we are looking to maintain the same cost base that we had going through 2024, and that includes within it the expenditure that we had on software development. We obviously need to continue to invest in the product, We need to make sure our product is best in class, best in the market. However, we're not expecting to ramp up those costs during the year. We will utilize the resources we have, optimize the resources we have make sure that we're still investing in technology whilst having a steady cost base.

Was there any negative impact from regulatory changes in 02/2004, Q4 and in Brazil, for instance, Off the top of my head, no, I can't think of any. We were not in Brazil.

We don't have any revenue in Brazil. So that has not been a particular headwind for us. No, I can't think of any.

We're not in Colombia, though, so that we would see has an impact to us either. So no headwinds.

Okay. We have no more questions submitted at the moment. So if there's no more pending, which I didn't think you are, I'll just hand over to Richard to provide a quick summary.

Okay. Thank you for joining us this morning and thank you to all the Gig employees for their continued commitment and hard work. In the final quarter of last year. Q4, whilst a transformational quarter for GiG, and we are confident of delivering further growth in 2025 and beyond.

That's Richard, Phil, at this point, if I may just jump back in there. And thank you very much indeed for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of Gig Software PLC, we would like to thank you for attending today's presentation That now concludes today's session. So good morning, to you all.