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Aspire Global
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===B2C (31% FY20 pro forma revenue, 22% pro forma EBITDA)=== B2C operates proprietary online casino brands, including Karamba, and sports brands that use AG’s B2B technology and services (above), and markets them to AG’s own online customers. In February 2021, the board of directors instructed management to conduct a review of the B2C segment in order to identify how to enhance its future growth prospects, the outcome of which may include a disposal of the segment or a merger. In FY20, B2C’s revenue of €51.0m and EBITDA of €6.2m represented 31% and 22% of the pro forma group total, a lower margin of 12.1% versus the group average of 16.7%. On a pro forma basis, that is including 12 months of BtoBet’s revenue and EBITDA, AG’s revenue was €166.9m and EBITDA was €28.5m. Depending on the segment, AG may disclose a number of revenue figures. Management discloses revenue gross of VAT, which is similar to how the online gaming operators, for example bet-at-home, report revenue, and also net of VAT. It reports revenue gross of VAT, as unlike most other B2B peers, it receives net gaming revenue (NGR) directly from the ultimate customers, that is the players of the games, before sharing the revenue with the operators, expensed further down the income statement. This is in contrast to the majority of its peers, which receive their net share of revenue from the online gaming operators. As a result, it is not possible to directly compare reported revenue and EBITDA margins versus peers. It makes the use of sales-based multiples analysis versus its peers meaningless too. Management’s commentary on revenue and profitability, specifically EBITDA, is typically with reference to revenue including VAT, therefore Edison Investment Research will be consistent with management’s narrative. For some segments, AG also reports a higher revenue figure that includes inter-segment revenue, which Edison Investment Research does not use. In addition, the company includes share-based payments in EBITDA whereas Edison Investment Research customarily excludes them. At the divisional level, share-based payments are not disclosed, therefore in the commentary on the segments and group performance Edison Investment Research will use management’s definition of EBITDA, but our presented EBITDA numbers in the financial summary use our definition. The difference is not material; in FY20, share-based payments were €0.5m, equivalent to c 40bps on EBITDA margin.
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