Golden Matrix Group - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue was $42.7M, up 72% YoY; consolidated gross profit was $24.2M (≈57% margin), while adjusted EBITDA declined 5% to $5.6M due to deliberate growth investments.
• The quarter posted a small net loss of ~$0.26M versus $3.95M net income in Q1 2024, driven by higher amortization (+$1.7M), interest expense (+$1.5M), and stock-based compensation (+$1.0M).
• FY 2025 revenue guidance was introduced at $190–$195M (+26–29% YoY), and Q1 results were in line with prior guidance of $42–$45M; catalysts include Brazil license, Nigeria B2B launch, and platform migration to Atlas.
• Strategic balance sheet actions eliminated ~$9.6M in Lind Global debt and converted >$9.5M of acquisition-related debt to equity, improving net leverage (<1.6x; pro forma just over 1.2x).

What Went Well and What Went Wrong

What Went Well

• Record raffle performance with all-time highs in revenue, ticket sales, and prize values; 26,000 new registrations (+146% YoY). CEO: “Our raffle segment reached all-time highs…”.
• Meridianbet momentum: permanent online betting license in Brazil through 2029; B2B operations launched in Nigeria; user KPIs strong (first-time deposits +56%, registrations +22%, deposits +12%, active users +7%).
• Platform execution: full migration to Atlas (5th-gen), optimizing operational efficiency and scalability; CFO cites economies of scale and improved user experience.

What Went Wrong

• Profitability headwinds: net loss vs prior-year profit due to higher amortization (+$1.7M), interest expense (+$1.5M), and SBC (+$1.0M).
• Margin mix: consolidated gross margin ~57%, down from prior-year mix, reflecting aggregation of lower-margin GMAG/RKings/CFAC segments (29%) vs Meridianbet (72%).
• OpEx increased $10.3M to $24.3M, including Brazilian launch costs, promotions/sponsorships, Serbian wage/tax increases, and Atlas depreciation; FX was a ~4% headwind to reported growth.

Transcript

Operator (participant)

Good morning, everyone, and welcome to Golden Matrix Group's first quarter 2025 earnings call. We appreciate you joining us today. I will now hand the call over to Brett Milotte, Managing Director of ICR. Brett, please go ahead.

Brett Milotte (Managing Director)

Thank you, and good morning, everyone. Welcome to Golden Matrix Group's Q1 2025 earnings call. We appreciate you joining us today. On today's call are Brian Goodman, CEO of Golden Matrix Group; Zoran Milosevic, CEO of Meridianbet; and Rich Christensen, CFO of Golden Matrix Group. At the conclusion of this call, the recording and supporting resources will be available on Golden Matrix Group's IR website. As a reminder, today's call will contain forward-looking statements. Certain statements made on this conference call, including our responses to questions, may constitute forward-looking information within the meaning of applicable securities laws. These statements are based on various assumptions about future events, including market and economic conditions, business prospects, technological developments, and regulatory changes. While we believe these assumptions are reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially.

For a complete discussion of these factors, please refer to our most recent 10Q filing and other public disclosures. Non-GAAP measures will be discussed, and reconciliation of these numbers can also be found in our recently filed 10Q and earnings press release available on our website. I will now hand over the call to Brian Goodman, CEO of Golden Matrix Group.

Brian Goodman (CEO)

Good morning, everyone, and thank you for joining us to review Golden Matrix's first quarter 2025 results. We're proud to kick off the year with strong momentum fueled by platform innovations and continued expansion into high-growth regulated markets. Our first quarter reflects excellent group performance and elevated operating efficiency across the entire organization. Revenue grew at a robust rate, further demonstrating the strength of our business underpinned by our strategic roadmap and our geographic and operational diversity. We not only have unique diversity in terms of our extensive global footprint but also in our diverse and scalable revenue streams, spanning scalable B2B technology solutions and dynamic B2C operations, positioning us at the forefront of the iGaming industry. Our raffle business delivered record results in Q1, including all-time highs in revenue, ticket sales, and prize values.

We also added 26,000 new users during the quarter, a 146% increase compared to Q1 2024, highlighting the strength and momentum in this segment. We have eliminated The Lind Partners debt of approximately $9.6 million and completed the conversion of over $9.5 million in acquisition-related debt by Meridian Founders into equity. These actions have resulted in greater financial strength and flexibility and send a strong message that we are well-positioned to focus on growth and drive long-term shareholder value. We're excited to take you through the highlights, and I'll now hand you over to our CFO, Rich Christensen, to walk you through the financial performance for the quarter.

Rich Christensen (CFO)

Thank you, Brian. Golden Matrix had a strong start to fiscal 2025. While the first quarter is our slowest quarter seasonally, we have continued to invest in our technology, execute in our existing markets, and expand in new markets to accelerate growth throughout the year. First, let's start with revenue. Total revenue for the first quarter of 2025 was $42.7 million, representing a 72% increase year-over-year. Foreign exchange rates negatively impact the growth rate by roughly 4%, so constant currency growth was 76%. If we were to exclude the impact of our prior-year acquisitions of both Golden Matrix and Classics For A Cause, recall that the Meridianbet acquisition was treated as a reverse merger, and so last year's results only include Meridianbet. Revenue grew organically at 10%. Moving to gross profit, gross profit reached $24.2 million in Q1 of 2025, reflecting a gross margin of approximately 57%.

This was a decline of 14 percentage points due to the aggregation of GMAG and the RKings and Classics for a Cause segments. Our prior-year results include our Meridianbet segments at a gross margin of 71%. Meridianbet's gross margin improved to 72% in the first quarter of this year. Our other two segments, GMAG and R Kings and Classics for a Cause, combined had a gross margin of 29%, which was a 3% improvement over 2024. We continue to see economies of scale now that we've completed our full transition of our core operations to Atlas, our fifth-generation sports betting and iGaming platform. This migration has optimized operational efficiency, enhanced scalability, and significantly improved the user experience, ensuring a seamless and more personalized journey for our players. Turning to operating expenses, operating expenses grew $10.3 million to $24.3 million in the first quarter.

This included $4.6 million of acquired cost from GMAG and R Kings, $1 million from the Classics For A Cause acquisition, and $1.4 million from amortization of intangibles related to those acquisitions. The remaining $3.3 million relates to costs within our Meridianbet segment, primarily to expand our business geographically, improve our market share, and advance our gaming technology. They include four things. First, startup cost for a Brazilian business. Second, promotional campaigns on social media and team sponsorship agreements focused on player acquisition and retention. Third, statutory increase in the minimum wage and taxes in Serbia, one of our largest European markets. Fourth, the depreciation of our gaming platform, Atlas, which we put in service late last year. We had a net loss of $300,000 or $0.00 per share. This was a decline of $4.2 million and $0.05 a share from last year.

Net income declined due to an increase in amortization of $1.7 million, interest expense of $1.5 million, and stock-based compensation of $1 million. Excluding these items, adjusted EBITDA declined $300,000 or 5% to $5.6 million. The additional operating expenses we incurred to accelerate growth offset the incremental gross profit generated in the first quarter. Turning to liquidity. As of March 31st, 2025, we had $29.7 million in cash and cash equivalents. Our net debt leverage ratio continues to improve and is now under 1.6 turns. Adjusting for the $9.5 million debt conversion and the $9.6 million early debt repayment, our estimated net debt service ratio would fall just over 1.2 turns. Now I'll hand it over to Zoran Milosevic, CEO of Meridianbet, to discuss operational highlights for Meridianbet.

Zoran Milosevic (CEO)

Thank you, Rich. Meridianbet delivered strong operational performance in Q1, continuing to scale across regulated markets and deepen engagement with our core user base. New registrations increased by 22%, driven by targeted campaigns and market-specific activations. First-time deposits surged over 56%, signaling higher conversion and stronger user intent. Total deposits rose 12%, reflecting both volume growth and deeper wallet share. Active users grew 7%, while spending per player in both sports and casino continued to climb, supported by personalized engagement and broader content depth. This quarter also marked a major step forward in market access. We secured a permanent online betting license in Brazil, unlocking full national coverage in one of the world's most valuable regulated gaming markets, with projected GGR of over $5.6 billion in 2025 alone.

Our licensing is valid through 2029 and positions Meridianbet as a first mover in the high-growth market, entering a multi-year expansion phase with clear regulatory clarity. We launched B2B operations in Nigeria through a fully licensed local entity. With over 60 million bettors and a $2 billion market, it's one of Africa's most dynamic gaming economies. Our entry builds on two decades of experience, now backed by fully regulated approval for both sportsbook and casino. This gives us regulatory stability in mature jurisdictions where our infrastructure, brand, and scale are very deeply embedded. We also continued our community investment. We delivered 56 community initiatives in Q1, including health donations, global scholarships, responsible betting education, and sustainability projects. Our global book donation campaign improved access to education in underserved regions. We also supported the Epic Trail, a multi-country event connecting communities across Europe.

These efforts strengthened our brand where it matters most, with the people and communities shaping our long-term success. Expanse Studios, our proprietary game development unit, also played a pivotal role in our content innovation and strategic reach. In the studio, we completed five new integrations with U.S.-based Sweepstakes Casino, expanding its footprint across the social gaming segment and introducing its proprietary titles in a broad North American user base. We expect to receive our online license in Romania in Q2, one of the key Eastern European iGaming markets. This will further expand our regulated footprint and open new distribution channels for our in-house content. We are strengthening our crash game portfolio with a new in-house title featuring distinctive mechanics and gameplay. It is a part of our broader push to expand proprietary content and deliver fresh experiences to our partners and players.

Altogether, Q1 reflects the kind of execution we aim to sustain: strategic expansion, product ownership, and control access to key growth markets. We operate in some of the world's most dynamic markets with focus, speed, and control, and our strategy is simple: grow smart, operate hard, and return value. Thanks for your time. Rich, back to you.

Rich Christensen (CFO)

Thank you, Zoran. As we look at our performance in the first quarter of 2025 and continuing through April, we're excited about the growth opportunities for the year. We expect our full-year revenue to be between $190 million and $195 million, representing a 26%-29% growth rate over 2024. We remain committed to disciplined capital allocation and investments that enhance growth and long-term value for our shareholders. We are well-positioned to build on our success with a strong balance sheet and significant opportunities across both existing and new markets.

Brian Goodman (CEO)

Thank you, Rich, and thank you, Zoran. Golden Matrix is entering the next phase of its evolution as a leading force in the global iGaming market. With a powerful combination of consistent performance, operational strength, platform innovation, and expanding geographic reach, we are well-positioned to continue building the company. Today's results highlight our financial resilience and our ability to deliver scalable growth. The company is well-positioned for long-term success, and our commitment to profitable, sustainable growth remains stronger than ever. We are excited about the future and the opportunities that lie ahead, and we will continue to drive value through technology, leadership, strategic market expansion, and superior execution. Thank you again for your continued support, and we look forward to an exciting and successful year ahead.

Operator (participant)

This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful day.