Interactive sports betting and gaming company Elys Game Technology released its first quarter 2022 financial report to reveal a revenue slump year-over-year and marginal sequential growth.
Revenue Decreased due to Italy Land-Based Closures
Nasdaq-listed Elys Game Technology generated for the three months ended March 31, 2022 GAAP revenue of $12.2 million, down 14% when compared to $14.2 million in Q1 2021 and 5% up to Q4 2021.
The company stated in the report that the decrease in revenue year-over-year was due to the closure of its land-based locations in Italy from June 2021, highly anticipating to regaining this market share by deploying land-based operations in new locations in the country in the next 12 to 18 months.
Michele Ciavarella, Executive Chairman of Elys Game Technology, did not comment on the decrease in revenue year-over-year and instead, focused on other key metrics such as turnover.
“Elys continues to improve on its performance with another strong quarter achieving a turnover growth of $2.7 million over an already strong Q4-2021 performance,” he said, attributing the growth to the company’s online betting channel in Italy and an “improvement in service revenues” on a sequential basis.
Non-GAAP betting handle, or turnover, in Q1 2022 amounted to $217.6 million, slightly improving the Q4 2021 reading of 214.9 million, while gross gaming revenue hold improved from 6.8% in Q4 2021 to 7% in the reported quarter. Across sportsbook, the disaggregated hold continued to perform in the double digits at an exemplary 18.3% in the quarter.
Costs Decreased but Loss more than Doubled
On the costs and expenses side, Elys registered selling expenses of $9.3 million, down 6% to $9.9 million in Q4 2021, representing 4.3% of turnover as compared to 4.6% in Q4 2021.
The decrease in selling expenses drove total costs and expenses down to $14.3 million, down 3.37% to $14.8 million in Q1 2021 but that was not enough and Elys ended the quarter with a loss of $2.1 million, up 250% to $0.6 million loss in Q1 2021.
Commenting on the results, interim chief financial officer of Elys Carlo Reali started by outlining the defensive strategy the Toronto-based company implemented in Italy to target growth towards Multigioco online operations which significantly reduced handle and revenue from retail.
“As part of our B2C operational strategy in Italy, the second stage of growth began in Q1-2022 where we acquired approximately 50 ADM land-based license rights, and which we expect to increase by an additional 50 rights over the coming 12 to 18 months that are instrumental in re-deploying our retail distribution in Italy.”
Carlo Reali, interim CFO, Elys Game Technology
Reali continued by outlining expectations that the investment in land-based operations “could generate additional revenue of approximately $20 million per year” and help the business return to pre-pandemic levels without further increasing the costs.
Reali also believes additional B2B revenue could be generated through the certification of Elys’ Italian sportsbook and Virtual Generation virtual sports platform.
Following the release of the report, Elys share price fell from $1.28 to $1.15 and is currently trading at $1.18.
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