Stride Gaming's (LON:STRST) AGM trading update confirmed the continued momentum in its core real money gaming (RMG) vertical. The Aspers Casino partnership has had an encouraging start and Stride is well positioned to keep gaining market share. Its key differentiating factor is the high-performing proprietary platform and we expect underlying margin expansion as customers migrate from acquired businesses. We believe that visibility into the social gaming vertical (5% of revenues) remains limited and we have lowered our future revenue forecasts by c £2m per year. Our profit forecasts are unchanged. At 7.4x EV/EBITDA and 10.8x P/E for CY18, Stride trades at a meaningful discount to peers.
RMG (95% of revenues) continues to gain traction
Stride is the UK’s third largest online bingo operator and the core RMG division is performing robustly. The acquired 8Ball and Tarco businesses are now fully integrated post their earnout periods and we anticipate further synergies as customers steadily migrate to Stride’s proprietary platform. The company is well placed to manage regulatory changes, such as social responsibility and self-exclusion, and should continue gaining market share.
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