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spk12: Thank you, Operator, and good morning, everyone. By now, everyone should have access to our fourth quarter and full year 2020 earnings release, which is available on the NeoGames website at neogames.com in the investor relations section. Before we begin the formal remarks, we remind everyone that the discussion today includes forward-looking statements. These forward-looking statements, which are usually identified by the use of words such as will, expect, anticipate, should, or other similar phrases, are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect, and therefore you should exercise caution when interpreting and relying on them. We refer everyone back to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We encourage investors to review our regulatory filings, including the Form 20F for the year ended at December 31st, 2020, when it is filed with the SEC. During today's call, we will discuss non-IFRS financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with IFRS. A reconciliation of these measures to the most directly comparable IFRS measures is available in our earnings release on the neogames.com website. Hosting the call today, we have Moti Malul, Neogames Chief Executive Officer, and Raviv Adler, Chief Financial Officer of the company. They will provide some opening remarks, and then we will open the call to questions. With that, I'll turn the call over to Moti.
spk11: Thank you, Jacques, and good morning, everyone. Welcome to our first earnings call as a publicly traded company. We are proud of the business we have built over the last few years, establishing ourselves as the technology-driven innovator in the iLawry space. Over that time, we focused on profitable growth, And as we grew the top line every year, we carved out a leadership position in this bargaining sector. We view becoming a public company as the beginning of a new era for NeoGames, opening up new opportunities to drive the business forward and creating value for all of our stakeholders. To that end, I want to recognize and welcome our new shareholders. We sincerely appreciate the support and are grateful to have you join us on this journey. I also wanted to take a moment to acknowledge and thank our amazing team at NeoGains who are designing, building, marketing, and selling the innovative products that enable our customer partners to find growth and drive significant contribution to good causes in their jurisdictions. We're incredibly proud of the strong results that we delivered throughout this year and are pleased to share highlights from the fourth quarter. we continued to make progress on our vision to unleash our customers' full iLottery potential, empowering them with the best technology platforms, the most powerful game experiences, and a complete range of expertise, experienced services, and market-leading solutions. This morning, I will highlight some key points about our full year 2020 performance, talk about some early trends that we're seeing in 2021, and then provide our take on the longer-term growth opportunity and what we are doing to ensure we maintain our leadership position in iLottery to capture share. After which, I will turn the call over to Raviv, our CFO, to run through our financials. For the full year, revenue was $49.2 million, which is up 48.8% over last year. In addition, our share of NPI revenues for the year was $9.5 million compared to $1.9 million last year. Looking at the two components added together, they equate to $58.7 million for the full year 2020, representing growth of over 67.7% compared to last year. Equally as important, we continue to grow profitability and our adjusted EBITDA grew at a rate more than double the top line. For the full year 2020, we generated adjusted EBITDA of $28.7 million, up nearly 142% from the prior year. We ended the year strong as fourth quarter result came in better than expected. The better than expected fourth quarter was the result of four key tailwinds. several of which were largely one-time incremental benefits to our plan. First, results in Virginia were ahead of our customer and our expectations, as we saw a higher and faster conversion of existing DrawGame subscription players and other registered players into eInstant games sooner than we were expecting. This trend of the earlier-than-expected adoption is factored into our 2021 revenue guidance. Second, revenues in Alberta occurred a bit earlier than expected, as the solution came online sooner than anticipated, as our incredible teams were able to lift off the ground a go-live in just five months from contract sign. Third, with the resurgence of stay-at-home orders in most of our customer jurisdictions around the globe, we experienced increased activity from the mere fact people spent more time at home in the fourth quarter. Lastly, as many investors may be aware, the U.S. experienced a double jackpot run beginning in December and extending into January. On this point, it is worth quickly mentioning how the flow-through works with jackpot runs in iLottery. Throughout the U.S., all lotteries experienced growth in sales due to the double jackpots of Mega Millions and Powerball which started to pick up in December and even stronger into January. iLottery was no exception, as we saw meaningful volume growth across all US customers. We typically see iLottery benefit from jackpot runs in two ways. First, during the jackpot runs themselves, with direct revenues due to the volume uptick. And second, as a result of the run, an increase of new player signups that post a jackpot run creates an opportunity for our customers and our marketing team to further engage and cross-promote these players through non-jackpot games. The end of the jackpot run in January segues nicely to my next topic, what we are seeing early in 2021. In Michigan, exactly the same time the double jackpot run was ending, the iGaming switch was turned on and we saw the launch of more than 10 iGaming and online sport betting sites. With the end of the jackpot run, we expected revenues would return to normal levels, and what we have seen during February is that revenue trends were largely aligned with that expectation, and run rates were at the average of the month prior to the jackpot. We see this as a positive early, and I do stress early, indication that our experience in Michigan may be no different compared to what we have seen and experienced in other jurisdictions. To remind listeners of what those experiences have been, I refer back to our IPO materials. As we mentioned in our registration statement, we strongly believe, based on experience in Europe as well as early cases in the U.S., that iLottery can grow and thrive parallel to introduction of sport betting and other forms of online gaming. Most recently, before Michigan, In New Hampshire, when sport betting was introduced more than a year ago, the lottery has reported strong parallel growth on both programs. One other recent early 2021 item I wanted to touch on is the announcement of our entry into a new market in Europe. We entered an agreement with the Austrian lotteries to provide them with great content from our market-proven library of games developed by our talented team at Neo Games Studio. which we believe will enhance the overall gaming experience offered by the lottery, adding a new level of entertainment to their online lottery players. From the NeoGames perspective, the agreement is further demonstration to one of the growth strategies we pointed out in our IPO, that was to leverage the successful content created by our studio and expand into more lotteries globally. We had a really strong finish to 2020, and we have started off strong in 2021. So what are we doing to keep up the momentum? Maintaining our edge is important, as we believe that the global iLottery market is poised for significant growth, especially in the US where the market is in its infancy, not only in terms of the number of unopened states, but also for the states that are already live with iLottery. The vast majority of regulatory states have only been online for a very short period and still present a sizable organic growth opportunity. From our view, the growth opportunity in the market for both the new states and live states remains tremendous. We also expect the external growth opportunities to continue to expand. We are beginning to see increased activity in some states, including legislation, and in some cases, gaming expansion committees that are holding public hearings on the matter. We are deeply engaged in those states, providing data to demonstrate the success and importance of iLottery and the impact it can have on state budgets. Underlaying both the organic and external growth opportunities, investors should expect us to keep investing in technology and product innovation. as that drives the monetization advantage we provide our customers. Our focus and expertise every day is on technology. We never sit back or stay satisfied on our tech because we know that we have to continue to be the best to gain the market credibility. We invest roughly $20 million a year in tech to ensure that our leadership is sustainable over the long run. On the game side, We believe we already have one of the largest and most successful iLottery game portfolios in the global lottery industry, with games that have proven to drive significant revenues in both North America as well as Europe. We are working to expand that even further. The competitive advantage of our exclusive focus on iLottery platforms also extends to our game studio that remains focused on delivering the best games to the iLottery market every month. We believe that having a full stack that includes the games, the technological infrastructure, and the operational expertise and experience embedded into our services combined with our operational and marketing expertise is the key to success in the iLottery industry over the long run. We think it's a principal reason we have had success with our current customers. We wanted to provide a bit more data and color on our success with customers around the globe. Since we launched in Michigan during 2014, iLottery has accounted for a growing percentage of gross sales. During the state's fiscal year ended September 2020, iLottery penetration of instance was nearly 44%, and iLottery penetration of the entire portfolio was 39%. In Europe, we are proud to take part of the continued success for Sazka in the Czech Republic. Sazka has mentioned that the online channel has grown to represent more than 30% of total GGR. In 2020, where draw game sales online mitigated a drop of retail lottery sales during COVID. The strong partnership with Sazka has led to a six-year extension of our agreement with them till end of 2025. We're also seeing accelerating trends in New Hampshire as we continue to improve our product and gain more market and operating knowledge. In New Hampshire, where we have been live for just a bit over two years, we also continue to drive volumes higher for our customer. According to ENK gaming research USI lottery tracker report for Q4, New Hampshire iLottery sales were up 168% year-over-year to $44 million during the fourth quarter. This represented a 12% increase sequentially from Q3. And the pace of getting to higher iLottery turnover rates has demonstrated itself very well in Virginia. For instance, according to ENK, in Virginia during the fourth quarter, which is only the second full quarter we are alive with a full iLottery program, iLottery sales increased 31% sequentially to approximately $160 million. By the way, the initial results significantly exceeded the state's projections and represented nearly 25% of the state lottery's gross sale during that quarter. And most recently, in Alberta, Canada, We went from signing the contract to going live within five months, which is record breaking in the Canadian market. We will continue to roll out additional gaming vertical to that customer during 2021. As you can see, we are very invested in success of our customers and our teams are working day and night to ensure our solutions continue to be the best in market. It is all well summarized in the fact that according to the latest Q4 iLottery tracker report from ENK, our U.S. accounts are driving 70% of iLottery gross sales in the entire U.S. market. With that, I'll now turn the call over to Raviv to discuss the financials.
spk09: Thank you, Moti. As Moti mentioned, during the fourth quarter, on November 24th, we've completed our IPO. The transaction provided us with approximate of net of $43 million of incremental cash net of deduction of issuance expenses on our balance sheet and put us in a strong financial position as we continue to execute our growth strategy into 2021 and beyond. Before I get into result and as a reminder, when we discuss our results, I would point out that our iLottery business in North America operates through our 50-50 joint venture, Neopolar Interactive, or MPI, except for the Michigan contract. To be more precise, our contract in Virginia, New Hampshire, North Carolina, and the province of Alberta run through MPI, and except for the MPI contracts, we conduct all our business through Neogames. And as a result, from an accounting standpoint, as probably many of you already know, we generate revenues and earnings through our only home operation and through our equity interests in NPI. With that, I will jump into numbers. Revenues as reported for the fourth quarter of 2020 on our income statements, which exclude our share of NPI revenues, was $14 million, up over 56%, over the same period last year. Our share of NPI revenues was $4.5 million, compared with $900,000 last year. The sum of total of these two numbers was $18.5 million during the fourth quarter, representing an increase of over 87% year-over-year. For the fourth quarter, our adjusted EBITDA was $9 million, up over 160% compared with $3.5 million last year. as we continue to demonstrate our ability to grow the profits alongside with the top-line revenues. For the full year, NEO Games reported revenues of $49.2 million, up over 48% over last year. In addition, our share of NPI revenues for the year was $9.5 million, compared with $1.9 last year. Looking at the two components together, they equate to $58.7 million for the full year of 2020, which is up over 67% compared with 2019. Our adjusted EBITDA was 28.7 million, which is over 140% compared with our 11.9 reported on 2019. Turning to our balance sheet, we ended up this quarter with a bit below 60 million worth of cash and cash equivalents. Our debt at the quarter end was approximately 35 million at the weighted average interest rate of 1.1%, leaving us with a net cash position of a bit below 625 million at the end of the quarter. Post our IPO, we had approximately 25 million shares outstanding. Few words before we dive into the guidance of 2021, and as Moti mentioned, fourth quarter results were ahead of our plan. With several tailwinds, including high volumes in Virginia, revenues coming online faster than we've anticipated in Alberta, impact of state home restrictions due to COVID and benefits from the U.S. jackpot run. As we look forward, we try to balance the aspect of what we can freely control and estimate and those that we cannot. With that looking ahead, we estimate that the full year for 2021 revenues plus our share of NPI revenues will range between $65 million to $69 million. The revenues guidance does not include launching any new turnkey contracts. With that, I will turn the call back to Moti.
spk11: Thank you, Raviv. So as I've mentioned earlier, we see success across the board with our global customer base. We are entering 2021 with a 70% market share in the growing USI lottery industry, according to ENK Gaming's USI lottery tracker for the fourth quarter of 2020. We have a proven model generating tangible success for our customers and thus for NeoGames and our shareholders. The model is highly scalable to continue to be able to grow as the industry grows. We think we have plenty of runway ahead of us with many exciting paths for growth. We're looking forward to sharing our progress in the quarters and years to come. I'll close by reiterating how excited we are about the momentum we have across the board. There is a lot of work ahead, but we are very optimistic. With that, we thank you for joining us this morning, and we are happy to answer any questions. Operator, please open the line for questions.
spk07: As a reminder, ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone, and to withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question will come from the line of Jeff Stanchel. Jeff Stanchel from Staple, you may begin.
spk04: Hey, great, thanks. Good morning, everyone. I just want to start on the legislative front. A bit of a slow start to the year thus far, but I wanted to see what you are hearing for potential new states opening up. expecting to hear about new contract opportunities in the coming weeks, months, just anything there would be helpful. You know, I think you kind of talked about some ground.
spk11: Sure. Hey, good morning to you. Thanks for joining us. A couple of things. First of all, it does seem like a slow start. However, it's in line with what we have said and what we have expected because, as we have mentioned, quite a few of the different legislative governing commissions or committees that oversee the lotteries in different shapes and forms across the U.S. are now in the process of reforming, changing members within them that have taken the majority of Q1. It started right after the new year, post the elections, and we do see that phenomena happening. As those things settle down, and we do see that they are now settling down, We have expected that there will be a beginning of, let's call it an educational process to those newcomers in order to get them in line with the decisions that lotteries would like them to take and put in front of them. We're very active in the space. We believe that we are mapped very well. We are constantly being asked to provide such information of impact or actually the lack of impact on retail sales, the growth of iLottery and what it contributes to state budget and what can the different states expect from it and so on. In some states, we already see even the formation of legislation. Maybe you have noticed, but we've seen a bill suggested in Massachusetts for iLottery that will maybe be a part of the broader discussion around sport betting over there with a number of additional bills. We have similarly seen a bill in Connecticut that mentions certain expansions of iLottery side-by-side with potential other expansions in those states. And these are just to name states that may even need bills. Other states, as I remind you guys, do not necessarily need bills, but they do need the approvals of those governing different bodies, which we are helping them educate. So time-wise, things are picking up. We do expect that they will accelerate across the other parts of the years, and that's what we see as of now.
spk04: Okay, great. Thanks. That's a really helpful color. Moving over to your content-only contracts, you recently added in the partnership you highlighted with the Austrian National Lottery, How meaningful could this partnership be to longer term to kind of overall profitability? And, you know, as well, you know, how meaningful could content partnerships be more broadly, and should we continue to see more partnerships announced as the year progresses?
spk11: Yes, sure, of course. So, yes, we did indicate, and I remind that back to our IPO materials, that in recent years, We have been completely dedicating the attention and focus of our talented game studio to provide its games to our turnkey customers in order to focus on accelerating the growth over there. We have felt already last year that now is the time for us to recalibrate the attention of our studio to also provide our content into customers that don't necessarily have full turnkey solutions from us. And we're very happy that so early in the process, we have already seen that manifesting itself into an actual deal and go live. We are working diligently on more opportunities in the space in different parts. And we definitely expect that as lotteries see content being something more and more important in their ability to success to drive revenues, that we should have a room for growth in that segment.
spk04: Okay, Grant. And one more quick one for me, if you don't mind. You've seen some news flow recently around, you know, call it lottery career apps, which almost look and feel like Uber Eats for retail lottery tickets. You know, what are your thoughts here? Do you see this as a viable long-term business model? And if so, would you consider introducing a similar product?
spk11: Yeah. Yeah, we've also obviously looked at that trend or space. Some lotteries see that to be supportive of an early stage phenomena before they take decisions into a broader iLottery program. Without being 100% accurate, the majority of the states we have seen that happening in are not states that has full iRotary programs in them. We're following that space to see, but there are quite a few additional things we need to factor if and when we take a decision to look at that space more seriously. We feel that the business model we currently have being a B2G provider and not necessarily a B2C provider serves us well. And we, of course, always look at additional opportunities within the space.
spk04: Okay, great. That's very helpful. Thanks for all the color, and congrats on a really strong first quarter out of the game.
spk07: Thank you. Thank you very much. Our next question comes from Chad Bainon from Macri. You may begin.
spk13: Hi. Good morning, Moti Raviv. Appreciate it. Congrats on... Coming public and, more importantly, the strong fourth quarter that you presented here. Thank you, Ted. I wanted to start with respect to your guidance. And you noted that you're not including any new turnkey contracts. So a few questions on that. One, how should we think about seasonality for the business, mainly the turnkey contracts, given there's a lot of moving parts, markets are ramping, the COVID impact? And if that's too difficult, should we just assume that it's back half-weighted? And then related to that, if there are turnkey contracts that are awarded, kind of highlighting what you just talked about, given the legislative progress, how fast, based on your history, can you be up and running, particularly with what you highlighted in Alberta? Thanks.
spk11: Hey, thanks again, Chad, for joining us. Much appreciated. First of all, I don't believe seasonality is connected to those types of contracts. The reason we haven't included those within our projections is simply because they have very different shapes and forms relative to the scope that they may have within them, scope of local deployment, scope of integrations based on the specific cases. And because we... We don't yet have the ability to be specific about it. We have decided to not include revenues from such turnkey contracts in our projections. Coming back to what you mentioned earlier about the ability to go live fast, we have a track record of going much faster than competition in the U.S. market Canada was an interesting, unique case that I hope at some point in time will replicate itself into the U.S. market because we were allowed to deploy a cloud-based solution, as long as, of course, it was Canadian cloud, but that's fine. And that allows to shave off significant portions related to deploying multiple data centers in-state and everything related to ordering of hardware, commissioning it, et cetera, et cetera. I point you back, for example, to New Hampshire, where we have stated that from signing of the contract to go live, we took about seven months. We signed the contract in February, and we went live in September. So even with deploying in-state data centers, we feel that we can be fast about it, but it really depends primarily on the scope of
spk13: Okay, great. That's perfect. And then lastly, just on the margins in the fourth quarter and how we should think about the puts and the takes, it looks like there was probably some type of benefit because of the flow-through on the IP rights, which were strong in the fourth quarter, but then also some of the items that you talked about with the double jackpot run in Virginia and Should we assume that margins come back down to more of a historical range in the 30s or as you continue to invest in tech, which is probably the most important, or just given the higher revenues, can you start to see margins slightly above that? That's all for me. Thank you.
spk11: Thank you, Chad. I'll have Raviv answer that question.
spk09: Hi, Chad. Good morning. So first time, I assume that you've noticed that we didn't provide any EBITDA guidance for 2021 for various reasons, mainly due to the fact that we're running in an extremely dynamic digital market business with some macroeconomics impacts. You've mentioned COVID. and the jackpot rounds, the competition in Michigan, et cetera. In high level, your assumptions are right relative to the IP rights EBITDA margins during Q4. This contract is running more or less on a kind of a fixed cost base, so it can be projected to have the similar EBITDA margin effect over 2021 numbers. But with that, I would rather stop on providing any further EBITDA guidance and margins for 2021.
spk13: Okay. Appreciate it. Thanks, guys. Congrats on everything. Thank you, Jed.
spk07: Thank you. Once again, that's star one for questions, star one. Our next question will come from Barry Jonas from Tourist Securities. You may begin.
spk02: Great, thank you. I wanted to start with the Ohio RFP. Can you just give us an update on next steps and any thoughts on timing there?
spk11: Morning, Barry. Yeah, you know, the interest of iLottery in that state is picking up from a number of directions. We have seen iLottery being discussed in certain relevant budget committees And there's also a specific committee that was recently appointed in the Senate to look at gaming expansion as a whole that have said that they will also look into iLottery. We have been close with all of those discussions and hearings, but we have nothing to report relative to tangible timeline because that is still within the hand of the state.
spk02: Got it, got it. And then how are you thinking about M&A here? Are there any areas that potentially could interest you, either on the tech side or other verticals?
spk11: Obviously, you know, now that we have become public, we're constantly approached with opportunities that we keep looking at. We definitely have not yet – made a distinct decision on any of them, but we keep screening the market to see if there are opportunities that we believe will accelerate the growth we have in the core business lines and that falls in line with what we have in front of us. But nothing that we can specifically point to at this point of time.
spk02: Got it. And just one more for me. Can you talk about the relationship with Pollard? I don't think the JV agreement has been further formalized at this point, and you've both recently announced some developments in Europe. Thanks.
spk11: Yeah, the agreement with our partners, Polar Banknote, has always been for the North American market. Both of us had established businesses elsewhere. I reminded that NeoGames had more than five or six customers even prior to having the relationship for the North American market, which is working well. Great. While we have not made steps on the legal front, it is, I remind you, an actual company that is owned 50-50 by the partners. I would also point your attention to the fact that the agreement between us is adjacent to serving the contract in Michigan that has been recently extended until the middle of 2026. That's all I can report at this point of time, and we definitely think that we will seek opportunities outside of North America, as the one that we have mentioned about Austria.
spk14: Great. Thanks so much, and congrats.
spk11: Thank you, Barry.
spk07: Thank you. Thank you. And there are no further questions in the queue. I'd like to turn the call back over to Moti for any closing remarks.
spk11: Thank you. I would really like to thank everyone that has taken the time to join us this morning. We have a lot of respect and appreciation to the fact that we are new in this market and we definitely take things a step at a time, but we are so much excited about the opportunities ahead of us and the ability that we are already shown to capitalize on them. We truly look forward to hosting you guys in the calls in the next quarters and years. Thank you very much.
spk12: Thank you, Operator, and good morning, everyone. By now, everyone should have access to our fourth quarter and full year 2020 earnings release, which is available on the NeoGames website at neogames.com in the investor relations section. Before we begin the formal remarks, we remind everyone that the discussion today includes forward-looking statements. These forward-looking statements which are usually identified by the use of words such as will, expect, anticipate, should or other similar phrases are not guarantees of future performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and therefore you should exercise caution when interpreting and relying on them. We refer everyone back to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. We encourage investors to review our regulatory filings, including the Form 20F for the year ended at December 31st, 2020, when it is filed with the SEC. During today's call, we will discuss non-IFRS financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with IFRS. A reconciliation of these measures to the most directly comparable IFRS measures is available in our earnings release on the neogames.com website. Hosting the call today, we have Moti Malul, Neogames Chief Executive Officer, and Raviv Adler, Chief Financial Officer of the company. They will provide some opening remarks, and then we will open the call to questions. With that, I'll turn the call over to Moti.
spk11: Thank you, Jacques, and good morning, everyone. Welcome to our first earnings call as a publicly traded company. We are proud of the business we have built over the last few years, establishing ourselves as the technology-driven innovator in the iLawry space. Over that time, we focused on profitable growth, And as we grew the top line every year, we carved out a leadership position in this bargaining sector. We view becoming a public company as the beginning of a new era for NeoGames, opening up new opportunities to drive the business forward and creating value for all of our stakeholders. To that end, I want to recognize and welcome our new shareholders. We sincerely appreciate the support and are grateful to have you join us on this journey. I also wanted to take a moment to acknowledge and thank our amazing team at NeoGains who are designing, building, marketing, and selling the innovative products that enable our customer partners to find growth and drive significant contribution to good causes in their jurisdictions. We're incredibly proud of the strong results that we delivered throughout this year and are pleased to share highlights from the fourth quarter. we continued to make progress on our vision to unleash our customers' full iLottery potential, empowering them with the best technology platforms, the most powerful game experiences, and a complete range of expertise, experienced services, and market-leading solutions. This morning, I will highlight some key points about our full year 2020 performance, talk about some early trends that we're seeing in 2021, and then provide our take on the longer-term growth opportunity and what we are doing to ensure we maintain our leadership position in iLottery to capture share. After which, I will turn the call over to Raviv, our CFO, to run through our financials. For the full year, revenue was $49.2 million, which is up 48.8% over last year. In addition, our share of NPI revenues for the year was $9.5 million compared to $1.9 million last year. Looking at the two components added together, they equate to $58.7 million for the full year 2020, representing growth of over 67.7% compared to last year. Equally as important, we continue to grow profitability and our adjusted EBITDA grew at a rate more than double the top line. For the full year 2020, we generated adjusted EBITDA of $28.7 million, up nearly 142% from the prior year. We ended the year strong as fourth quarter result came in better than expected. The better than expected fourth quarter was the result of four key tailwinds. several of which were largely one-time incremental benefits to our plan. First, results in Virginia were ahead of our customer and our expectations, as we saw a higher and faster conversion of existing DrawGame subscription players and other registered players into eInstant games sooner than we were expecting. This trend of the earlier-than-expected adoption is factored into our 2021 revenue guidance. Second, revenues in Alberta occurred a bit earlier than expected, as the solution came online sooner than anticipated, as our incredible teams were able to lift off the ground a go-live in just five months from contract sign. Third, with the resurgence of stay-at-home orders in most of our customer jurisdictions around the globe, we experienced increased activity from the mere fact people spent more time at home in the fourth quarter. Lastly, as many investors may be aware, the U.S. experienced a double jackpot run beginning in December and extending into January. On this point, it is worth quickly mentioning how the flow through works with jackpot runs in iLottery. Throughout the U.S., all lotteries experienced growth in sales due to the double jackpots of Mega Millions and Powerball which started to pick up in December and even stronger into January. iLottery was no exception, as we saw meaningful volume growth across all US customers. We typically see iLottery benefit from jackpot runs in two ways. First, during the jackpot runs themselves, with direct revenues due to the volume uptick. And second, as a result of the run, an increase of new player signups that post a jackpot run creates an opportunity for our customers and our marketing team to further engage and cross-promote these players through non-jackpot games. The end of the jackpot run in January segues nicely to my next topic, what we are seeing early in 2021. In Michigan, exactly the same time the double jackpot run was ending, the iGaming switch was turned on and we saw the launch of more than 10 iGaming and online sport betting sites. With the end of the jackpot run, we expected revenues would return to normal levels, and what we have seen during February is that revenue trends were largely aligned with that expectation, and run rates were at the average of the month prior to the jackpot. We see this as a positive early, and I do stress early, indication that our experience in Michigan may be no different compared to what we have seen and experienced in other jurisdictions. To remind listeners of what those experiences have been, I refer back to our IPO materials. As we mentioned in our registration statement, we strongly believe, based on experience in Europe as well as early cases in the U.S., that iLottery can grow and thrive parallel to introduction of sport betting and other forms of online gaming. Most recently, before Michigan, In New Hampshire, when sport betting was introduced more than a year ago, the lottery has reported strong parallel growth on both programs. One other recent early 2021 item I wanted to touch on is the announcement of our entry into a new market in Europe. We entered an agreement with the Austrian lotteries to provide them with great content from our market-proven library of games developed by our talented team at Neo Game Studios. which we believe will enhance the overall gaming experience offered by the lottery, adding a new level of entertainment to their online lottery players. From the NeoGames perspective, the agreement is further demonstration to one of the growth strategies we pointed out in our IPO, that was to leverage the successful content created by our studio and expand into more lotteries globally. We had a really strong finish to 2020, and we have started off strong in 2021. So what are we doing to keep up the momentum? Maintaining our edge is important, as we believe that the global iLottery market is poised for significant growth, especially in the US where the market is in its infancy, not only in terms of the number of unopened states, but also for the states that are already live with iLottery. The vast majority of regulatory states have only been online for a very short period and still present a sizable organic growth opportunity. From our view, the growth opportunity in the market for both the new states and live states remains tremendous. We also expect the external growth opportunities to continue to expand. We are beginning to see increased activity in some states, including legislation, and in some cases, gaming expansion committees that are holding public hearings on the matter. We are deeply engaged in those states, providing data to demonstrate the success and importance of iLottery and the impact it can have on state budgets. Underlaying both the organic and external growth opportunities, investors should expect us to keep investing in technology and product innovation. as that drives the monetization advantage we provide our customers. Our focus and expertise every day is on technology. We never sit back or stay satisfied on our tech because we know that we have to continue to be the best to gain the market credibility. We invest roughly $20 million a year in tech to ensure that our leadership is sustainable over the long run. On the game side, We believe we already have one of the largest and most successful iLottery game portfolios in the global lottery industry, with games that have proven to drive significant revenues in both North America as well as Europe. We are working to expand that even further. The competitive advantage of our exclusive focus on iLottery platforms also extends to our game studio that remains focused on delivering the best games to the iLottery market every month. We believe that having a full stack that includes the games, the technological infrastructure, and the operational expertise and experience embedded into our services combined with our operational and marketing expertise is the key to success in the iLottery industry over the long run. We think it's a principal reason we have had success with our current customers. We wanted to provide a bit more data and color on our success with customers around the globe. Since we launched in Michigan during 2014, iLottery has accounted for a growing percentage of gross sales. During the state's fiscal year ended September 2020, iLottery penetration of instance was nearly 44%, and iLottery penetration of the entire portfolio was 39%. In Europe, we are proud to take part of the continued success for Sazga in the Czech Republic. Sazga has mentioned that the online channel has grown to represent more than 30% of total GGR. In 2020, where draw game sales online mitigated a drop of retail lottery sales during COVID. The strong partnership with Sazga has led to a six-year extension of our agreement with them till end of 2025. We're also seeing accelerating trends in New Hampshire as we continue to improve our product and gain more market and operating knowledge. In New Hampshire, where we have been live for just a bit over two years, we also continue to drive volumes higher for our customer. According to ENK gaming research USI lottery tracker report for Q4, New Hampshire iLottery sales were up 168% year-over-year to $44 million during the fourth quarter. This represented a 12% increase sequentially from Q3. And the pace of getting to higher iLottery turnover rates has demonstrated itself very well in Virginia. For instance, according to ENK, in Virginia during the fourth quarter, which is only the second full quarter we are alive with a full iLottery program, iLottery sales increased 31% sequentially to approximately $160 million. By the way, the initial results significantly exceeded the state's projections and represented nearly 25% of the state lottery's gross sale during that quarter. And most recently, in Alberta, Canada, We went from signing the contract to going live within five months, which is record breaking in the Canadian market. We will continue to roll out additional gaming vertical to that customer during 2021. As you can see, we are very invested in success of our customers and our teams are working day and night to ensure our solutions continue to be the best in market. It is all well summarized in the fact that according to the latest Q4 iLottery tracker report from ENK, our U.S. accounts are driving 70% of iLottery gross sales in the entire U.S. market. With that, I'll now turn the call over to Raviv to discuss the financials.
spk09: Thank you, Moti. As Moti mentioned, during the fourth quarter, on November 24th, we've completed our IPO. The transaction provided us with approximate net of $43 million of incremental cash net of deduction of issuance expenses on our balance sheet and put us in a strong financial position as we continue to execute our growth strategy into 2021 and beyond. Before I get into results and as a reminder, when we discuss our results, I would point out that our iLottery business in North America operates through our 50-50 joint venture, Neopolar Interactive, or MPI, except for the Michigan contract. To be more precise, our contract in Virginia, New Hampshire, North Carolina, and the province of Alberta run through MPI, and except for the MPI contracts, we conduct all our business through Neogames. And as a result, from an accounting standpoint, as probably many of you already know, we generate revenues and earnings through our Olihon operation and through our equity interests in NPI. With that, I will jump into numbers. Revenues as reported for the fourth quarter of 2020 on our income statements, which exclude our share of NPI revenues, was $14 million, up over 56%, over the same period last year. Our share of NPI revenues was $4.5 million, compared with $900,000 last year. The sum of total of these two numbers was $18.5 million during the fourth quarter, representing an increase of over 87% year-over-year. For the fourth quarter, our adjusted EBITDA was $9 million, up over 160% compared with $3.5 million last year. as we continue to demonstrate our ability to grow the profits alongside with the top-line revenues. For the full year, NEO Games reported revenues of $49.2 million, up over 48% over last year. In addition, our share of NPI revenues for the year was $9.5 million, compared with $1.9 last year. Looking at the two components together, they equate to $58.7 million for the full year of 2020, which is up over 67% compared with 2019. Our adjusted EBITDA was 28.7 million, which is over 140% compared with our 11.9 reported on 2019. Turning to our balance sheet, we ended up this quarter with a bit below 60 million worth of cash and cash equivalents. Our debt at the quarter end was approximately 35 million at the weighted average interest rate of 1.1%, leaving us with a net cash position of a bit below 625 million at the end of the quarter. Post our IPO, we had approximately 25 million shares outstanding. Few words before we dive into the guidance of 2021, and as Moti mentioned, fourth quarter results were ahead of our plan. With several tailwinds, including high volumes in Virginia, revenues coming online faster than we've anticipated in Alberta, impact of state home restrictions due to COVID, and benefits from the U.S. jackpot run. As we look forward, we try to balance the aspect of what we can fully control and estimate and those that we cannot. With that, looking ahead, we estimate that the full year for 2021 revenues plus our share of NPI revenues will range between $65 million to $69 million. The revenues guidance does not include launching any new turnkey contracts. With that, I will turn the call back to Moti.
spk11: Thank you, Raviv. So as I've mentioned earlier, we see success across the board with our global customer base. We are entering 2021 with a 70% market share in the growing USI lottery industry, according to ENK Gaming's USI lottery tracker for the fourth quarter of 2020. We have a proven model generating tangible success for our customers and thus for NeoGames and our shareholders. The model is highly scalable to continue to be able to grow as the industry grows. We think we have plenty of runway ahead of us with many exciting paths for growth. We're looking forward to sharing our progress in the quarters and years to come. I'll close by reiterating how excited we are about the momentum we have across the board. There is a lot of work ahead, but we are very optimistic. With that, we thank you for joining us this morning, and we are happy to answer any questions. Operator, please open the line for questions.
spk07: As a reminder, ladies and gentlemen, to ask a question, you need to press star 1 on your telephone, and to withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question will come from the line of Jeff Stanchel. Jeff Stanchel from Staple, you may begin.
spk04: Hey, great, thanks. Morning, everyone. I just want to start on the legislative front, a bit of a slow start to the year thus far, but I wanted to see what you are hearing for potential new states opening up, you know, could we expect to hear about new contract opportunities in the coming weeks, months, just anything there would be helpful, you know, as you see kind of possibly some ground.
spk11: Sure. Hey, good morning to you. Thanks for joining us. A couple of things. First of all, it does seem like a slow start. However, it's in line with what we have said and what we have expected because, as we have mentioned, quite a few of the different legislative governing commissions or committees that oversee the lotteries in different shapes and forms across the U.S. are now in the process of reforming, changing members within them that have taken the majority of Q1. It started right after the new year, post the elections, and we do see that phenomena happening. As those things settle down, and we do see that they are now settling down, We have expected that there will be a beginning of, let's call it an educational process to those newcomers in order to get them in line with the decisions that lotteries would like them to take and put in front of them. We're very active in the space. We believe that we are mapped very well. We are constantly being asked to provide such information of impact or actually the lack of impact on retail sales, the growth of iLottery and what it contributes to state budget and what can the different states expect from it and so on. In some states, we already see even the formation of legislation. Maybe you have noticed, but we've seen a bill suggested in Massachusetts for iLottery that will maybe be a part of the broader discussion around sport betting over there with a number of additional bills. We have similarly seen a bill in Connecticut that mentions certain expansions of iLottery side-by-side with potential other expansions in those states. And these are just to name states that may even need bills. Other states, as I remind you guys, do not necessarily need bills, but they do need the approvals of those governing different bodies which we are helping them educate. So time-wise, things are picking up. We do expect that they will accelerate across the other parts of the years, and that's what we see as of now.
spk04: Okay, great. Thanks. That's a really helpful color. You know, moving over to your content-only contracts, you recently added in the partnership you highlighted with the Austrian National Lottery, How meaningful could this partnership be to longer term to kind of overall profitability? And, you know, as well, you know, how meaningful could content partnerships be more broadly? And should we continue to see more partnerships announced as the year progresses?
spk11: Yes, sure, of course. So, yes, we did indicate, and I remind that back to our IPO materials, that in recent years, we have been completely dedicating the attention and focus of our talented game studio to provide its games to our turnkey customers in order to focus on accelerating the growth over there. We have felt already last year that now is the time for us to recalibrate the attention of our studio to also provide our content into customers that don't necessarily have full turnkey solutions from us. And we're very happy that so early in the process, we have already seen that manifesting itself into an actual deal and go live. We are working diligently on more opportunities in the space in different parts. And we definitely expect that as lotteries see content being something more and more important in their ability to success to drive revenues, that we should have a room for growth in that segment.
spk04: Okay, Grant. And just one more quick one for me, if you don't mind. You've seen some news flow recently around, you know, call it lottery career apps, which almost look and feel like Uber Eats for retail lottery tickets. You know, what are your thoughts here? Do you see this as a viable long-term business model? And if so, would you consider introducing a similar product?
spk11: Yeah. Yeah, we've also obviously looked at that trend or space. Some lotteries see that to be supportive of an early stage phenomena before they take decisions into a broader iLottery program. Without being 100% accurate, the majority of the states we have seen that happening in are not states that has full iRotary programs in them. We're following that space to see, but there are quite a few additional things we need to factor if and when we take a decision to look at that space more seriously. We feel that the business model we currently have being a B2G provider and not necessarily a B2C provider serves us well. And we, of course, always look at additional opportunities within the space.
spk04: Okay, great. That's very helpful. Thanks for all the color, and congrats on a really strong first quarter out of the game.
spk07: Thank you. Thank you very much. Our next question comes from Chad Bainon from Macri. You may begin.
spk13: Hi. Good morning, Moti Raviv. Appreciate it. Congrats on... Coming public and, more importantly, the strong fourth quarter that you presented here. Thank you, Chad. I wanted to start with respect to your guidance. And you noted that you're not including any new turnkey contracts. So a few questions on that. One, how should we think about seasonality for the business, mainly the turnkey contracts, given there's a lot of moving parts, markets are ramping, the COVID impact? And if that's too difficult, should we just assume that it's back half-weighted? And then related to that, if there are turnkey contracts that are awarded, kind of highlighting what you just talked about, given the legislative progress, how fast, based on your history, can you be up and running, particularly with what you highlighted in Alberta? Thanks.
spk11: Hey, thanks again, Chad, for joining us. Much appreciated. First of all, I don't believe seasonality is connected to those types of contracts. The reason we haven't included those within our projections is simply because they have very different shapes and forms relative to the scope that they may have within them, scope of local deployment, scope of integrations based on the specific cases. And because we... We don't yet have the ability to be specific about it. We have decided to not include revenues from such turnkey contracts in our projections. Coming back to what you mentioned earlier about the ability to go live fast, we have a track record of going much faster than competition in the U.S. markets Canada was an interesting, unique case that I hope at some point in time will replicate itself into the U.S. market because we were allowed to deploy a cloud-based solution, as long as, of course, it was Canadian cloud, but that's fine. And that allows to shave off significant portions related to deploying multiple data centers in-state and everything related to ordering of hardware, commissioning it, et cetera, et cetera. I point you back, for example, to New Hampshire, where we have stated that from signing of the contract to go live, we took about seven months. We signed the contract in February, and we went live in September. So even with deploying in-state data centers, we feel that we can be fast about it. But it really depends primarily on the scope.
spk13: Okay, great. That's perfect. And then lastly, just on the margins in the fourth quarter and how we should think about the puts and the takes, it looks like there was probably some type of benefit because of the flow through on the IP rights, which were strong in the fourth quarter, but then also some of the items that you talked about with the double jackpot run in Virginia. Should we assume that margins come back down to more of a historical range in the 30s or as you continue to invest in tech, which is probably the most important, or just given the higher revenues, can you start to see margins slightly above that? That's all for me. Thank you.
spk11: Thank you, Chad. I'll have Raviv answer that question.
spk09: Hi, Chad. Good morning. So first time, I assume that you've noticed that we didn't provide any EBITDA guidance for 2021 for various reasons, mainly due to the fact that we're running in an extremely dynamic digital market business with some macroeconomics impacts. You've mentioned COVID. and the jackpot rounds, the competition in Michigan, et cetera. In high level, your assumptions are right relative to the IP rights EBITDA margins during Q4. This contract is running more or less on a kind of a fixed cost base, so it can be projected to have the similar EBITDA margin effect over 2021 numbers. But with that, I would rather stop on providing any further EBITDA guidance and margins for 2021. Okay.
spk13: Appreciate it. Thanks, guys. Congrats on everything. Thank you, Jed.
spk07: Thank you. Once again, that's star one for questions, star one. Our next question will come from Barry Jonas from Tourist Securities. You may begin.
spk02: Great, thank you. I wanted to start with the Ohio RFP. Can you just give us an update on next steps and any thoughts on timing there?
spk11: Morning, Barry. Yeah, you know, the interest of iLottery in that state is picking up from a number of directions. We have seen iLottery being discussed in certain relevant budget committees And there's also a specific committee that was recently appointed in the Senate to look at gaming expansion as a whole that have said that they will also look into iLottery. We have been close with all of those discussions and hearings, but we have nothing to report relative to tangible timeline because that is still within the hand of the state.
spk02: Got it, got it. And then how are you thinking about M&A here? Are there any areas that potentially could interest you, either on the tech side or other verticals?
spk11: Obviously, you know, now that we have become public, we're constantly approached with opportunities that we keep looking at. We definitely have not yet – made a distinct decision on any of them, but we keep screening the market to see if there are opportunities that we believe will accelerate the growth we have in the core business lines and that falls in line with what we have in front of us, but nothing that we can specifically point to at this point of time.
spk02: Got it. Then just one more for me. Can you talk about the relationship with Pollard? I don't think the JV agreement has been further formalized at this point, and you've both recently announced some developments in Europe. Thanks.
spk11: Yeah. The agreement with our partners, Polar Banknote, has always been for the North American market. Both of us had established businesses elsewhere. I reminded that NeoGames had more than five or six customers even prior to having the relationship for the North American market, which is working Great. While we have not made steps on the legal front, it is, I remind you, an actual company that is owned 50-50 by the partners. I would also point your attention to the fact that the agreement between us is adjacent to serving the contract in Michigan that has been recently extended until the middle of 2026. that's all I can report at this point of time, and we definitely think that we will seek opportunities outside of North America as the one that we have mentioned about Austria.
spk14: Great. Thanks so much, and congrats.
spk11: Thank you, Barry.
spk07: Thank you. Thank you. And there are no further questions in the queue. I'd like to turn the call back over to Moti for any closing remarks.
spk11: Thank you. I would really like to thank everyone that has taken the time to join us this morning. We have a lot of respect and appreciation to the fact that we are new in this market and we definitely take things a step at a time, but we are so much excited about the opportunities ahead of us and the ability that we are already shown to capitalize on them. We truly look forward to hosting you guys in the calls in the next quarters and years. Thank you very much.
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