GiG reported Q3-revenue of EUR22.9m representing solid growth of 35% of which 24% was organic although it was just shy of our estimate of EUR23.4m. EBITDA also came in slightly lower at EUR8.5m vs our estimate of EUR9.0m, although this looks to be related to a growth push in the Media segment ahead of the FIFA WC in Q4. As such, marketing costs were higher than forecasted while other opex was lower than expected showing good cost control. FTD’s also continued to grow strongly in Q3 with an 85% increase YoY and with 95% being on revenue share or hybrid contracts this supports revenue growth outlook going forward.

Looking at the start of Q4, the company reports that October saw total growth of 34% of which 22% organic. We forecast 43% growth for Q4 in total which looks consistent with the October performance as November and December are likely to be strong on the back of the FIFA World Cup.  The company also reiterates its guidance for 2022 where it expects revenue of EUR87m-93m and EBITDA of EUR30m-35m. This is in line with our revenue estimate of EUR90m and EBITDA estimate of EUR34m.

Following the acquisition of Sportnco in Q2 2022 GiG's Platform business has become a profitable segment with a larger client base providing a more diversified income stream. In total, the segment had 62 brands online in Q3 2022 (up from 58 in Q2 2022 and 25 in Q1 2022 before Sportnco was consolidated) and with 13 brands in its integration pipeline coupled with several recently signed new contracts (including UK based Tier 1 operators Aspers Group) the growth outlook is strong as well. The segment reported an EBITDA-margin of 22% in Q3 2022 and 18% in Q2 2022 which can be compared to a level of around 5-10% before Sportnco was acquired. The segment's profitability is also likely to continue to expand gradually thanks to operating leverage in the business model and cost-saving synergies from the integration of Sportnco.

The Media segment continues to deliver solid growth with a continued strong intake of FTD's in the quarter which stood at 86.5k in Q3 2022 representing a YoY growth of 85%. With around 95% of FTD's being on revenue-share or hybrid contracts this also bodes well for future revenue growth. On the back of the strong FTD growth seen in recent quarters, the company is well-positioned to deliver strong growth in Q4 which should be stronger than normal owing to the FIFA World Cup.

In summary, we believe the outlook for GiG remains strong. We expect continued topline growth and margin improvement over the coming years with EBITDA-margin gradually moving towards the target of 50%. The margin improvement will mainly be driven by the Platform segment which should see expanding margin as synergies are realised from the integration of Sportnco while we also expect it to show operating leverage as costs should grow less than revenue in the coming years.

We make limited changes to our estimates following the Q3 results as the outcome was close to our expectations and as the company's guidance for 2022 remains unchanged.