Igaming affiliate operator Acroud AB has issued a Q3 trading update alongside a Letter Of Intent (LOI) to acquire a company in sports betting and news of the granting of three additional new licenses in the American states of West Virginia, Indiana and Iowa.
In the statement, the firm said it has decided to accelerate the implementation of its growth strategy with the aim of responding more proactively to future growth and acquisition opportunities.
It added that it is currently engaged in several active acquisition dialogues and its two largest shareholders are in favor of the growth strategy adopted by the Board.
CEO Robert Andersson commented: “Operationally, the company is now moving at a fast pace, with underlying KPIs pointing in the right direction at the end of Q3 – an effect of the change management during Q2 and Q3. In addition to the three licenses awarded in Q3, we also expect to be granted licenses in Pennsylvania, Illinois and Colorado in the near future, which will significantly increase our addressable market in the USA.”
Acroud went on to confirm it has signed an LOI regarding the acquisition of a “fast-growing lead generation company within sports betting, well positioned for emerging markets such as Latin America, Africa and Asia”.
The agreement comprises a total purchase consideration of approximately $1.42m, the majority of which will be paid in shares, and an additional consideration which is contingent on 2021 target fulfilment, based on EBITDA growth and an EBITDA multiple corresponding to 3.5.
The potential acquisition is expected to accelerate the company’s growth in strategic focus areas such as sports betting and emerging markets.
Turning to the Q3 update, the company cited challenging trading with the previous sharp increase in poker and casino traffic in the period March to May now slowing to pre-COVID levels. A slower than expected recovery in sports betting has also hampered its performance.
Revenue is expected to amount to $2.83m in Q3 2020, 33% lower than in Q2 2020 and 31% lower than in Q3 2019. Reported EBITDA is expected to amount to $1.18m, 36% lower than in Q2 2020 and 49% lower than in Q3 2019. The EBITDA margin for Q3 2020 is expected to be 40%.
More positively, Acroud told shareholders that it is now accelerating growth in other markets and expects to have offset the decline in revenue by about the end of Q4 2020. In connection with the strategy work, further efficiency measures have been implemented, which will bring cost reductions from Q4 2020. The efficiency measures are continuing, with the goal of improving the operating margin.