Veltyco Group PLC (LON:VLTY) Non-Executive Chairman Gilles Ohana caught up with DirectorsTalk for an exclusive interview to discuss their final results for the year ended 31st December 2017.
Q1: First off, congratulations are in order on delivering a record set of results for 2017. What have been the main drivers of this growth?
A1: Let me start by saying, first of all, as a Board we are extremely proud of those results that we’ve announced today.
Just to reiterate, the revenues increased from to €16.2 million which is an increase of 165% compared to 2016, the EBITDA increased 260% to €8.1 million for 2017 which was €2.2 million in 2016 and the net profit increased to €6.8 million compared to just €20,000 in 2016. We’ve also proposed, given those results, a maiden dividend of 0.25p per share and throughout the year, we also raised €2.5 million of equity to finance two acquisitions which I will mention in a minute.
In terms of why this performance, I think it’s been driven mainly through the marketing activities through the three verticals that we operate in which essentially are the sportsbook and casino on the one hand, the lottery business on the other hand and the financial trading on the third vertical.
The three verticals on the marketing side have been operating extremely well and have been steadily growing throughout the year, it’s also for 2017 the first full-year operation for a financial trading brand that we had acquired in 2016 called Zoomtraderglobal which has contributed in 2017 as a full-year.
We’ve also launched, in July 2017, our own brand for the sport betting vertical called Bet90 which is the acquisition I mentioned before, which got financed with this capital increase of €2.5 million and this Bet90 brand has started to contribute steadily through those results in the second half of 2017 and is expected to continue growing and contributing fully in 2018 to those results.
Q2: As you mentioned, you recently completed the acquisition of a database of active users in the online financial trading sector. What was the rationale for this and why do you prefer to own your brands?
A2: Initially, Veltyco Group started as a pure marketing company and Bet90, last year, was a first venture in operating our own brand, in a way, this is a bit like controlling your own destiny in a better way. When you operate your own brands, you tend to keep 100% of the earnings you generate, you’ll probably incur more costs than you would do if you were purely doing marketing activities but by being the operator you can control those costs in a better and more efficient way. Ultimately, you’re likely to generate a greater EBITDA number at the bottom line if you operate your own brand.
So, I think we are slowly moving towards a potential launch of the trading platform for the financial services vertical in 2018 and alongside Bet90 will be our two own brands essentially. It will take time for the operations to generate as much as the marketing activity, but I think it’s a trend that we are, on a selected basis, willing to continue to explore because, as I said before, you manage to control a much bigger part of the bottom line by doing so.
Q3: eSports is becoming more and more popular, how do you expect Veltyco to benefit from this trend?
A3: eSports is, as you said, is growing exponentially and is expected to grow exponentially in the next 5-6 years. We have, as you may know, a minority stake in a company called eSports.com AG which is the owner of the eSports.com website and domain which has the ambition to become the largest community of eSports players on the planet. eSports and Veltyco have extended throughout 2017 through partnerships and various initiatives including around blockchain technology and so on.
Ultimately, I think Veltyco will be able to provide, through Bet90, some gaming wagers on eSports.com and on the games that are being played there so that will not only benefit from the pure gaming revenues but also through the stake that Veltyco own into eSports.com.
Q4: Current trading is strong, how do you view the outlook for the rest of the year?
A4: Well, the 2018 year has started, I would say, in the same way as in 2017 finished, in Q1 of 2018, we generated around €4.8 million of revenues which itself 60% more than Q1 in 2017.
We expect this growth to continue in 2018 throughout the year backed by the full year of operations of Bet90 in 2018, the continuation of the growth of the three main verticals of the business on the marketing side and I suspect towards the end of the year, the contribution of the launch of our own financial trading brand.