Jackpotjoy Plc: International Drives Revenue Growth
Edison | May 15, 2018 06:49AM ET
Jackpotjoy PLC (LON:JPJ) Q1 revenues rose 13% to £80.7m, driven primarily by diversification and growth in international markets, with its Vera&John division (26% of revenues) increasing 35%. The earn-out period for the Spanish division has now ended and, given its strong performance, the total contingent consideration increased 20% in the quarter to £72.1m, with £63.8m payable this year. Our headline revenue and profit forecasts remain broadly unchanged and we continue to expect significant deleverage after the final major earn-out payment in June 2018. The stock trades at 7.8x EV/EBITDA and 6.5x P/E for FY19, a meaningful discount to peers.
Headline figures in line with our estimates
JPJ is continuing its steady growth through diversification into new markets, producing consistently strong cash flow across all divisions (90% cash conversion). Q118 revenue growth of 13% was driven by a 35% increase in Vera&John, while the core Jackpotjoy division increased by 7%, indicating mid-single-digit UK growth. As previously discussed, Mandalay has now been consolidated into the Jackpotjoy division and we expect management to focus on cross-sell between brands. Group EBITDA of £27.1m (vs £29.2m in 1Q17) was in line with our estimates and, while the revenue mix is now more skewed to international growth, our headline forecasts remain broadly unchanged.
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