NeoGames S.A.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the NeoGames first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, May 12, 2022. I will now turn the call over to Jack Skornet with ICR.

Thank you, Operator, and good morning, everyone. By now, everyone should have access to our first quarter 2022 earnings release, which is available on the NeoGames website at www.neogames.com in the investor relations section. Before we begin our formal remarks, we need to remind everyone that the discussion today will include forward-looking statements. These forward-looking statements, which are usually identified by 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 all of you to our recent SEC filings for more detailed discussion of the risks that could impact our future operating results and financial conditions. We encourage investors to review our regulatory filings, including the form 6K for the period ended March 31st, 2022. 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 measure 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.

Thank you, Jacques, and good morning, everyone. Last night, we released our first quarter 2022 results. This morning, I will highlight some key points about the first quarter performance and provide an update on the trends we are seeing in the market. Raviv will then run through our financials and business performance. Overall, there haven't been significant changes since we last spoke only two months ago. as the business continues to perform well and in line with our expectations. We're also obviously diligently working towards the close of the Aspire acquisition as we recently launched a tender offer and we are on track for closing before the end of the quarter. During the quarter, the total of revenues plus our NPI revenue interest climbed modestly, growing 3.8% year over year as well as over 5% sequentially from Q4, bringing the total sum to an all-time high of 22.4 million. We considered this to be an impressive result given the comparison of the first quarter of 2021, which benefited significantly from a double jackpot run from both Mega Millions and Powerball. These results highlight the strong trends we are seeing in some of our key markets. Virginia, for example, continues to outperform with strong growth both quarter over quarter and year over year. The account continues to innovate in many areas. One such is the recently launched online raffle games subsequent to quarter end. Alberta, too, has demonstrated continued growth Given the full portfolio of gaming verticals across lottery, casino, and sports, which we have geared PlayAlberta with, such that the market has become our second largest turnkey account, we view Alberta as a terrific example of the type of account where our lottery customer will benefit from our strategic acquisition of Aspire. For example, content from ParryPlay Wizard Game Studio continue to gain traction and wallet share with an impressive introduction that began in Q4 last year. In Michigan, with the first quarter of this year, we have fully lapped the introduction of iGaming in the market in January of 2021. This gives us enough perspective to see evidence for what we believe is sustainable growth in the account, which has continued the growth that started at the second half of Q4 last year into Q1. Recall, when we last spoke, we mentioned results had stabilized sequentially. And in fact, we were seeing beginnings of what we were hoping would be a momentum shift during the latter part of the fourth quarter. As we have mentioned in the past, our long-term belief is that after an aggressive period of promotion from iGaming during 2021, the lottery will get to a point where the business stabilizes and then again begins to regain growth. We are seeing new players join the system, and in our view, these new players today are more dedicated lottery players because they are all aware of the iGaming offering and have decided to join the iLottery program. While we may still see fluctuations in revenues due to expected impacts from factors such as seasonality or large jackpots, Overall, we are expecting the pattern will be trending towards growth moving forward. Our Caesars partnership continues to perform well, as we launched New York and Illinois with them during the first quarter. In April, we also went live in the first Canadian market with Ontario, broadening our partnership with Caesars to include international markets. In Europe, SASCA Another of our multi-gaming product customers continues to perform well, and we have seen continued growth of revenues with an impressive online performance. The regulatory environment and state authorization in the U.S. for iLottery continues to evolve in some key markets, which we have mentioned on prior calls. However, since we last spoke two months ago, there hasn't been much new to report. Internationally, we see movements in a few regions. One with interesting dynamics is Brazil, in which we see continued progress in various states to form, create, and regulate lottery authorities as a first step towards gearing up with lottery tech and operations, as well as sport betting in the coming years. This is a long-term process, but an interesting market with attractive potential opportunities given its size particularly when you consider the products that will be offered within this emerging lottery market. Obviously, our biggest news during the quarter was the announced acquisition of Aspire Global in January. To summarize the deal, we view it as a natural development for the progression of NeoGames, as a combination with Aspire will enhance our scale and competitive position across all business lines, adding Aspire's proprietary sport betting offering, its iGaming content and aggregation platform, as well as its turnkey B2B gaming solutions to the NeoGames offering. We believe this strategic combination will generate significant long-term shareholder value by synergistically capitalizing on the key strengths of our two companies and positioning NeoGames for expansion in new and existing markets. based on their impressive first quarter results, remain excited at the prospects of completing the transaction. The deal continues to progress on schedule for closing, as we recently put out the prospectus on the commenced offering a couple of weeks ago. The acceptance period runs from April 27th through May 25th, with an expected settlement date of June 14th, 2022. Currently, Given market reception, we are confident we will meet the shareholder approval threshold, and we look forward to updating you on our next earnings call. Lastly, I would like to provide an update on the conflict in Ukraine as it relates to our operations, friends, and colleagues who remain there during these difficult times. Once again, their safety and well-being are our chief concern, and with this in mind, I'm happy to report that all are currently safe, and we continue to support them in the best way we can while the situation remains fluid. Secondly, we have been so far very successful with our efforts and were able to completely mitigate all impacts to our business through various measures such as relocation to safer areas and parallel recruitment outside of Ukraine in a few markets. We are fortunate to have such a dedicated, motivated, and engaged team in Ukraine who are all demonstrating admirable responsibility and loyalty to the company and to our customers. Like everyone, we hope to see a swift end to this conflict, but until then, we expect our operations to continue with minimal impact. With that, I'll now turn the call over to Raviv.