The new financial targets indicate that Aspire Global expect the strong revenue growth to continue. The revenue target of MEUR 200 in 2021 is 20% over our projections for 2021 and is corresponding to a CAGR of 26% for the next three-year period. The EBITDA target is, however, just 3% over our EBITDA projection for 2021. In the light of this, we have asked Aspire Global´s CEO Tsachi Maimon a few questions.
1. The new financial target of MEUR 200 in Revenue by 2021 indicates 100% growth the next three-year period, assuming you will reach MEUR 100 in 2018. What will be the main drivers behind this CAGR of 26%?
Answer Tsachi: The trigger we see for this growth is continued growth of existing strong partner operators but also bringing in some strong new partnerships that we believe will contribute to the performance.
2. The new financial target with 16% EBITDA margin is a decrease from the 22% EBITDA margin that you reported in the Q3 report. What are the main reasons for the decrease?
Answer Tsachi: Increased gaming duties will decrease the EBITDA margin. And it's only when simulating the income and gaming duties Aspire Global will have from more regulated markets which we currently operating in and are on the process of being regulated.
3. Comparing the new financial targets, of MEUR 200 in revenue and EBITDA margin of 16% for 2021, with the old, MEUR 120 and EBITDA 15% for 2020, indicate that you expect 17.5% EBITDA margin for the additional MEUR 80. Our view is that the scalability of the business should increase the margin for the additional MEUR 80 further, above 20%. What is the reason behind this low increase of the EBITDA margin?
Answer Tsachi: The reason why the EBITDA margin does not increase more is because of the increase in gaming duties when entering new regulated markets. The EBITDA margin will increase from original plan and targets, despite the gaming duties, is because of the scalability of our business and increased focus on B2B, such as game development.
The answers from Tsachi together with the new financial targets indicates that the business might have more potential than what we have estimated. However, Aspire Global seem to be expecting more gaming duties from regulated markets than what we have done. As a result, Aspire Global´s EBITDA target, of MEUR 32, is more or less in line with our projections.
We will not amend our estimates at this point but wait until the Q4 report to further examine what markets Aspire Global will focus on and what gaming duties we can expect on these markets.
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