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Gaming Innovation Group (GiG) has revealed it is set to acquire affiliate business KaFe Rocks for €37.5m, while also achieving an all-time high in Q3 revenue.

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The acquisition of the Malta-based affiliate business, which rebranded as Time2Play Media in June, involves a €15m upfront cash payment and an additional €20m spread over 24 months in four semi-annual payments, contingent on specific performance targets being met. 

In addition, GiG will pay €2.5m in shares subject to specific operational cost savings targets.

The transaction, which is aimed at further strengthening GiG Media’s position in the US market, is anticipated to close in December, subject to successful due diligence, financing, regulatory approvals, and final board approval.

Topline numbers 

Meanwhile, GiG announced record-breaking Q3 revenue of €31.8m, marking a 39% year-on-year increase, with 23% of that growth being organic. 

Adjusted EBITDA stood at €23.4m. When excluding a €9.8m reversal of the earn-out provision, EBITDA reached €13.6m, reflecting a 61% year-on-year increase. 

This translated to an adjusted EBITDA margin of 42.8%, up from 37% in Q3 2022.

Affiliate division GiG Media achieved an all-time high revenue of €22.5m, a year-on-year increase of 49%, with 23% of it being organic.

Adjusted EBITDA reached €10.4m, up from €6.8m in Q3 2022.

The number of first-time depositors (FTDs) grew by 31% year-on-year, reaching 113,800 in Q3. 

Elsewhere, GiG’s Platform & Sportsbook division recorded a 20% year-on-year revenue increase, totalling €9.3m, all of which was organic growth. 

Adjusted EBITDA for this division came in at €3.2m, up from €1.7m in Q3 2022.

KaFe Rocks acquisition 

With the acquisition of KaFe Rocks, GiG said it will “cement its position as the dominant lead generator” in the online casino market. 

KaFe Rocks boasts a diversified portfolio across 15+ markets, featuring user-centric US-facing flagship brands like Time2play.com and USCasinos.com. 

GiG foresees KaFe Rocks generating a minimum revenue of €23m in 2024, with an EBITDA margin exceeding 45%, implying a 2024 EV/EBITDA multiple of approximately 3.6x for the acquisition. 

The EBITDA margin is expected to grow in the coming years.

Beyond revenue and EBITDA growth, GiG believes this acquisition will enhance the diversity of GiG Media’s business, reducing overall risk by improving customer, website, and market concentration.

Once completed, the acquisition is projected to boost GiG Media’s 2024 revenue to between €125m and €135m.

“A flourishing business”

 “We want to remain the leading casino affiliate in the industry and grow in the North American market. Our acquisition of KaFe Rocks validates these goals,” said GiG CEO Jonas Warrer.

“After the successful integration of AskGamblers, we have been looking for the next splendid candidate to join the family. In KaFe Rocks, we’ve found a flourishing business led by an exceptionally skilled team. 

“Their reputable affiliate assets will undoubtedly drive growth for the broader group. I eagerly await working closely with the KaFe Rocks team,” he added. 

KaFe Rocks spokesperson Aimee Speight described the deal as a “momentous occasion”. 

“We considered several buyers but were persuaded to go with GiG Media based on the strong performance the company has shown over the last few years. Joining GiG Media, we are optimistic about seeing Kafe Rocks business venturing into new heights,” she added. 

The transaction is structured by way of a share purchase agreement, with GiG’s subsidiary Innovation Labs Ltd. acquiring KaFe Rocks. 

Last year, Glitnor Group scrapped its plan to acquire KaFe Rocks due to inadequate capital for a public listing. 

The goal was to grow the business and boost revenue by expanding into the affiliate sector, ultimately pursuing a US listing via a special purpose acquisition company (SPAC).

More to follow after GiG’s Q3 2023 webcast.