Meridian Q3 2024 Earnings Report

Meridian EPS Results

• Actual EPS: -$0.36
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Meridian Revenue Results

• Actual Revenue: $40.99 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Meridian Announcement Details

• Quarter: Q3 2024
• Date: 11/12/2024
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 12, 2024
• Conference Call Time: 8:00AM ET

Meridian (NASDAQ:MRDN) Corporation was a bank holding company and the former parent of Meridian Bank, a community-focused financial institution headquartered in Pennsylvania. Through its banking operations, the company provided commercial and retail banking services to businesses, professionals and individual customers.

Meridian Bank’s offerings included commercial real estate and business loans, residential mortgages, consumer lending, deposit accounts, cash-management and treasury services, and other financial products. The bank primarily served customers in southeastern Pennsylvania and southern New Jersey.

Christopher J. Annas served as Meridian Corporation’s chairman and chief executive officer. Meridian Corporation was acquired by Univest Financial Corporation, and its shares are no longer publicly traded under the MRDN symbol.

Meridian Q3 2024 Earnings Call Transcript

Key Takeaways

• Q3 consolidated revenue surged 85% year-over-year to $41M, with gross profit up 39% to $22.4M and adjusted EBITDA of $4.3M, while ending the quarter with $38.4M in cash against $17.5M of short-term debt and 60% growth in shareholder equity to $94M.
• Strategic acquisitions of Meridian Bet and Classics for a Cause are now integrated, with the latter contributing $2.1M in revenues, $503K in EBITDA and $253K in profit in just two months, positioning the company for further accretive deals.
• RKINGS tournament business rebounded from customer acquisition challenges, posting an 11.1% increase in ticket-sale revenue in October and poised for record-setting results in Q4.
• GMA G aggregator platform saw wagering jump 84% to $1.4B and gross profit margins rise to 26.2%, driven by the addition of high-margin “Crash” games and AI-driven retention strategies.
• Mexican online casino Mixed Play scaled rapidly with active players up 56% to 14,000, cash deposits up 25% to $1.5M and gross gaming revenue up 36% to $575K quarter-over-quarter.

Presentation

[Operator]

Thank you, and good morning, everyone. Welcome to Golden Matrix Group's Q3 2024 Earnings Call. We appreciate you joining us today. On today's call are Brian Goodman, CEO and co-founder of Golden Matrix Group, and Zoran Milosevic, CEO of Meridianbet. Brian and Zoran will provide an overview of Golden Matrix's Q3 financial and operational results. At the conclusion of this call, the recording and supporting resources will be available at the Golden Matrix Group's 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.

[Operator]

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 10-Q filing and other public disclosures. Non-GAAP measures will be discussed, and reconciliation of these numbers can also be found in our recently filed 10-Q and earnings press release available on our website. Please note this event is being recorded. If you require operator assistance, please press star then zero. I will now hand over to Brian Goodman, CEO and co-founder of Golden Matrix Group.

Thank you, and good morning, everyone. Welcome to Golden Matrix Group's Q3 2024 earnings call. We appreciate you joining us today. On today's call are Brian Goodman, CEO and co-founder of Golden Matrix Group, and Zoran Milosevic, CEO of Meridianbet. Brian and Zoran will provide an overview of Golden Matrix's Q3 financial and operational results. At the conclusion of this call, the recording and supporting resources will be available at Golden Matrix Group's 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 the applicable securities law. 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 10-Q filing and other public disclosures. Non-GAAP financial measures will be discussed, and reconciliation of these numbers can also be found in our recently filed 10-Q and earnings press release available on our website. I will now hand the call over to Brian Goodman, CEO and co-founder of Golden Matrix Group. Brian.

[Brian Goodman, CEO at Golden Matrix Group]

Welcome, everyone, and thank you for joining Golden Matrix's Q3 Earnings Call. Joining me today is Zoran Milosevic, CEO of Meridianbet, to update you on the progress across our business. On this call, we will cover operational highlights, financial performance, divisional performance, and the overall outlook for the company as we look towards the close of 2024. Starting with operational performance, I'm happy to report on the company's continued operational progress. The Q3 reflects our continued resilience and commitment to long-term growth, strengthening our industry position and executing on our business goals. In Q3, we continued our strategy of scaling the business, delivering broad-based growth with strong contributions across our key markets, and also finalizing the Classics for a Cause acquisition, which will no doubt deliver solid revenues and added profits to Golden Matrix.

[Brian Goodman, CEO at Golden Matrix Group]

Additionally, our recent performance in October of 2024 has clearly demonstrated and supported our bullish outlook for strong ongoing growth and sustainable results. Onto our financial highlights. The entire iGaming industry is booming, and we are very proud to be part of this rapidly evolving segment of the market. We have yet again posted strong financial performance across the business. Q3 consolidated revenues grew 85% to $41 million, a continuation of the strong trend shown in the last quarter. Year-to-date revenue grew by 55% to $105 million. Q3 consolidated gross profit increased by 39% to $22.4 million, and year-to-date gross profit also increased by 24% to $61.8 million. Q3 consolidated adjusted EBITDA was $4.3 million. During Q3, we did encounter residual one-off costs due to the completion and implementation of the Meridianbet acquisition and also the recent acquisition of Classics for a Cause.

[Brian Goodman, CEO at Golden Matrix Group]

The company has continued to maintain a healthy balance sheet. As of September 30th, the company had over $38.4 million in cash and equivalents, with short-term debt of only $17.5 million. Shareholder equity of the company grew 60% to $94 million. Divisional performance. Turning to the individual business units where we have continued our strong momentum. I will begin with RKings Competitions, our high-performing and highly profitable U.K.-based tournament business. RKings experienced a brief challenge with one of its customer acquisition channels, which marginally impacted the performance of our tournament business for Q3. However, we have now overcome this hurdle, and we are already seeing an exceptionally strong recovery with a recent surge in ticket sales, revenues, and increased profitability, and we expect this business to regain its record-setting accomplishments.

[Brian Goodman, CEO at Golden Matrix Group]

Revenue in October was already up in September by 11.1%, and we expect a strong performance for this quarter, with expectations for continued strong Q4 growth and for RKings to yet again make a substantial contribution to both profits and revenues for the entire group. GMAG, our B2B aggregator platform, continues to deliver as we focus on increasing gross margins by diversifying our game portfolio and introducing popular high-margin games. In the evolving landscape of iGaming, where innovation is key, one of the most exciting and important developments in iGaming is the new crash games category, and we are fortunate to have a diverse range of the world's most popular crash games. The addition of high-demand games and improvements in AI-driven customer retention strategies have resulted in substantial increases in wagering volume and active player numbers on the GMAG platform.

[Brian Goodman, CEO at Golden Matrix Group]

Q3 wagering grew by 84% to $1.4 billion, and year-to-date wagering also increased by a staggering 115% to $3.6 billion. We have been focusing on improving our gross margins in this business unit. Q3 gross profit margin increased to 26.2% compared to 24.7% in the Q2 of 2024. We are encouraged by this recent momentum in generating higher margins in this business unit. On to Classics for a Cause, our newly acquired business in Australia. This recent acquisition has introduced a dynamic new segment to our portfolio, capturing new revenue streams, bottom-line profitability, and expanding our customer base. We have seen enthusiastic player participation, indicating strong market acceptance. This division is a unique differentiator for us, adding substantial brand value, and I'm pleased to announce that our Classics for a Cause division, which we acquired earlier this quarter, is already delivering significant contributions to the overall business.

[Brian Goodman, CEO at Golden Matrix Group]

We anticipate continued success as we improve its technology and capability and integrate this business into our other divisions, leveraging its unique value proposition. While Classics for a Cause does not trade for the full quarter, as it was only acquired on August the 1st, 2024, the company has already contributed $2.1 million in revenues, $503,000 in EBITDA, and $253,000 in profit for only two months of the quarter. Our Mexican online casino, MexPlay, continues to scale. Cash deposits and active players are both trending upward, underscoring the growth potential in this market. We have a monthly average of over 14,000 active players in the Q3 compared to 9,000 in the Q2, a 56% increase. Q3 cash deposits of $1.5 million were 25% higher compared to $1.2 million in the Q2 of 2024.

[Brian Goodman, CEO at Golden Matrix Group]

Q3 gross gaming wagering of $15 million increased 67% compared to $9 million in the Q2 of this year. Q3 gross gaming revenue of $575,000 jumped 36% compared to $422,000 in the Q2. I'll now hand you over to Zoran, CEO of Meridianbet, to talk through Meridianbet's results.

[Zoran Milosevic, CEO at Meridianbet]

Thank you, Brian, and welcome, everyone. I'm pleased to present Meridianbet's standout result and strong growth this quarter. Overall revenue growth, in Q3 2024, Meridianbet delivered a strong financial performance, with total revenue increasing by 16% compared to Q3 2023. This growth was driven by our online segment, which contributed a 19% increase, while the retail segment grew by 6%. Total deposits rose to $61.9 million, marking a 13% increase from Q2 2024. New online registrations reached 125,000, achieving a notable 23% year-over-year growth. Online casino performance. In the Q3, our online casino gross gaming revenue margin rose to 3.37%, the highest level since Q2 2023, and an improvement over last year's 2.22%. Quarterly turnover reached $356.4 million, marking a strong 21% year-over-year increase. We achieved a robust 26% year-over-year growth, fueled by the addition of over 1,500 new games.

[Zoran Milosevic, CEO at Meridianbet]

Hi-Lo, developed by our own in-house Expanse Studios, remained a top choice for players' engagement across our library of 6,500 games. Our iGaming portfolio was further strengthened with the integration of 600 additional games, alongside the launch of new global tournaments featuring a $2 million prize pool. Sports betting vertical. Sports betting revenue, covering both online and retail, saw a 7.4% increase year-over-year, despite challenging outcomes in July and September. Our online sports GGR margin improved to 9.5%, up from 8.1% in Q3 2023, supported by targeted marketing during Euro 2024 and Olympic Games. Retail sports performance. In Q3 2024, our retail shops' GGR margin reached a notable 10.3%, with August achieving a record-breaking 14.1%, the highest margin for this month on record, highlighting our strong performance mid-quarter. Retail casino growth. Retail slot machine revenue increased 17.5% year-over-year in Q3 2024, driven by the addition of 120 new machines.

[Zoran Milosevic, CEO at Meridianbet]

Brazilian license progress update. Our Brazilian entity, Meridian Gaming Brazil, has advanced another round in the country's exclusive federal short-listing process for a statewide sports betting and iGaming license. We demonstrated both operational and financial capacity and met all required criteria, placing us among 89 companies selected at the federal level. We are confident in our ability to successfully complete all remaining phases of the licensing process by the end of 2024. Continued success of Expanse Studios. Expanse Studios, our in-house iGaming development vertical, achieved strong growth and industry recognition in Q3. We added over 100 new partners, expanding our portfolio to 52 proprietary games. Player activity surged, with total spins in September reaching 72.3 million, twice the count from Q3 2023. Our active player base grew to 135,000 in September, marking a 135% increase year-over-year. The revenue increased by 167% compared to Q3 2023.

[Zoran Milosevic, CEO at Meridianbet]

This quarter, Expanse Studios launched new games specifically designed for the social casino category, an explosively popular segment in the U.S., while previous titles remained fully compatible with this fast-growing market as well. The studio was shortlisted for Best Slot Provider and Rising Star at the SiGMA East Europe event, reinforcing our position in the iGaming sector. Atlas rollout. We have now transitioned over 80% of our core operations to Atlas, our fifth-generation platform for sports betting and online casino. Atlas's scalable microservice-based architecture allows seamless deployment across major markets. Our preparations for full deployment of our system in Brazil are also underway as we advance in the country's exclusive licensing process. Meridian's in Q3, a strong AI statement. In Q3, we introduced two AI-powered tools that are reshaping our user engagement through highly personalized recommendations, with measurable improvements in player activity and retention.

[Zoran Milosevic, CEO at Meridianbet]

These are: Number one, AI Casino Recommender. Our system now leverages player behavior and preferences to deliver precise game recommendations, resulting in an over 10% increase in engagement with recommended games and a 9% boost in interactions with the new game titles. Number two, AI Bet Recommender. Designed for real-time sports betting, this tool analyzes extensive sports data to deliver personalized bet suggestions tailored to individual player behaviors. It is fully integrated with our CRM tools, improving user segmentation, engagement, retention, and player experience. Strong community bonds. In Q3 2024, Meridian executed 68 CSR initiatives across Europe, Africa, and Latin America, reinforcing our brand community impact and driving long-term shareholders' value. Key actions included targeted healthcare donations, educational support, responsible gaming campaigns, and environmental efforts.

[Zoran Milosevic, CEO at Meridianbet]

Additionally, the Meridianbet Foundation awarded global scholarship for the fifth consecutive year, now supporting dozens of top students across all markets we operate, further strengthening our market presence and talent pipeline. Conclusion: At Meridianbet, we are focused on closing 2024 with record-setting performance and sustained momentum into the future. I will now hand back to Brian Goodman.

[Brian Goodman, CEO at Golden Matrix Group]

Thank you, Zoran. I will now finish up with the outlook for Golden Matrix. While we have achieved top-line revenue growth and a strong increase in gross margin in the Q3 and encountered some trailing runoff costs incurred in the Meridianbet consolidation and the integration of the newly acquired Classics for a Cause, this is now behind us, and we are operating the business more efficiently with a focus on reduced costs and improved profitability. We are laser-focused on implementing cost efficiencies and cost rationalization across the company. This is primarily being achieved by reducing overall costs in terms of product synergies and removing redundancies. On the operational front, we are improving sales and marketing through broader distribution, increased sales and marketing, and we are also identifying product and distribution synergies to maximize efficiency and build higher sales with improved margins.

[Brian Goodman, CEO at Golden Matrix Group]

We are optimizing our operations across the globe and implementing tighter cost controls. We are excited about what the future holds for the business, and we see a large number of opportunities ahead of us. As mentioned, we have started the Q4 strongly, and we are on track to set new records. We have a clear strategy, a strong balance sheet, and a world-class team behind us, and we remain confident in the company's future prospects. We are well-positioned to settle debts as needed, pursue accretive acquisitions, and continue to support our expansive growth strategy. Thank you, everyone, for joining the call.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Zoran Milosevic, CEO

Analysts

• Brian Goodman, CEO at Golden Matrix Group