Golden Matrix Group Inc. (Nasdaq: GMGI) Chief Executive Officer Brian Goodman caught up with DirectorsTalk for an exclusive interview to discuss the main drivers in revenue growth, further acquisitions, biggest growth markets globally, and why investors should invest in the company.
Q1: Golden Matrix Group has released another set of strong quarterly earnings. What was the main driver behind the 55% year-to-date revenue?
A1: Well, I guess we’re firing on all fronts in current reports as well as I think in future. The online gaming business is a booming business overall but in terms of our own performance, all of our divisions are performing really well. We had an 85% increase quarter on quarter, and just our gross profit also increased by 39%.
In reality, I often say that we’re a diverse company and we’re not only diverse in terms of the countries that we operate in, we’re also diverse in the fact that we have multiple synergistic products, if that’s what you want to call them. We have a very strong B2B business, which builds platforms and hosts operating casino, we also have, obviously, a very powerful sportsbook, and we have a raffle ticket business, two of them now, we bought one in Australia very recently. All of these businesses are performing extremely well and they’re working well together, because there are synergies between the businesses.
Now, moving forward, as I may have mentioned in some of our press releases, that there’ll be cost efficiencies going forward as well, because obviously, these businesses are all being consolidated quite recently. We only bought Meridian in April of this year, and we bought the Australian company just over a couple of months ago so these businesses fuel each other.
Overall, like I say, the market’s booming, and our footprint is growing as well. We operate in over 21 licensed jurisdictions now and this year alone, we’ve been awarded three licenses, and we put out an announcement, as you may have seen, that we will be getting our Brazilian license fairly soon. That’s a huge achievement, because as you probably know, it’s one of the largest gaming markets in the world and it’s a huge opportunity for us to continue to scale.
Q2: The company has grown organically as well through acquisitions, Meridian Bets is a good example that you’ve just mentioned. With a strong cash balance sheet, will you be looking to acquire any other businesses? And if so, can you provide us with insights into where globally?
A2: I think globally, we have a strategy in terms of how we enter new markets, and so mostly, in actual fact, in all cases, we find somebody that we can partner with, that’s familiar with the culture of the country or the state that we that we are going to launch in. We then create a joint venture where we are the majority shareholder and then we have an ability to acquire them over time and that allows us to use their expertise in those particular markets. That’s been very successful for us as alternatively, running into somebody else’s market that you don’t really know a lot about and their culture and trying to launch something.
The whole world is becoming regulated, it used to be prohibition a few years ago, now it’s all regulation, and so as the world becomes regulated, we’ll look for new opportunities in new jurisdictions. We’ll partner up with people who are familiar or are successful operators in those regions and that’s how we’ll grow the business.
In terms of acquisitions, we have a few that we’re looking at right now but we’re a very conservative company in that we’ve always been profitable and we’ve been fairly careful with our expenditure. If we were to acquire something, it would be along the lines of what we’ve always done in terms of part stock, part cash, and also an earn out component so that the seller remains part of the business as well, that they remain a small percentage of the business. We then have an ability to acquire them over time and that for us is a winning formula.
So, yes, we are looking at accretive acquisitions and whilst, like I say, we do multiple products, each one of these products are quite important. They each serve a purpose in terms of how they drive the other products.
Q3: Just going back to something you said earlier, do you think that South America is the biggest growth market globally for the gaming sector?
A3: People say it’s probably the third largest gaming market in the world but the one thing that’s different about Brazil is that it’s a federal license. In America, you have a state by state situation, you find people that have maybe one state, two states, a few states, and then some of the operators that only do America, they don’t do anything outside of America. So, it’s difficult to compare apples with oranges.
At the end of the day, it’s certainly the biggest opportunity in gaming right now. There is no question about that because it is one of the largest markets and also, it’s a soccer-fuelled betting society. So it’s what we’re familiar with, that’s where our strengths lie, because European football is our strength. Our distribution, our operations are distributed through Latin America, Europe, and we have obviously a strong lottery business in the UK.
Brazil in particular is something we were looking forward to and presents a huge opportunity for us and for anybody else who may get a license, I guess.
Q4: Now, as you mentioned, there’s been significant press coverage around regulation and taxation of the gaming industry in certain countries. With that in mind though, what are the main challenges and opportunities facing the gaming industry at the moment?
A4: I think every country is slightly different because you have mature markets and then you have developing markets and developing markets cannot be viewed as a small markets, people shouldn’t get confused between a developing market and a small market.
The developing market is a market that there’s new regulations and over time, those regulations would evolve because each country has different protection mechanisms and requirements. In terms of, say, Europe, it’s a very mature market and they wouldn’t expect dramatic changes to their regulations but in terms of some of the developing markets, you could expect, I would assume, in terms of things over time, compliance, things like that.
From our point of view, in all of the countries we operate, we have very close relationships with all of the gaming authorities. We encourage them to implement stronger compliance measures and controls because it favours the people that operate correctly and the people who operate legitimately. So, in terms of that, we do expect in the developing markets, including Brazil, I’m assuming over time, that things may change.
There’s also financial pressures in America, as you can see. We don’t actually operate in America, but we’ve applied for a New Jersey license and we expect it quite soon, but we’ll provide online slot content to some of the major operators, is what our plans are and that’s where we’ll gain revenues from the US. In terms of that, obviously, you’ve seen that some of the states have tried to increase or have increased their taxes and I suppose they see this as a good monetary source so it can be expected.
Q5: For anybody who’s just come across Golden Matrix Group, how would you put the company across? Why should investors invest?
A5: Well, I think we have a track history of, like I say, profitability, delivering shareholder value and, in terms of being a conservative company, we’ve always run a tight ship. Like I say, over time, we’ve been cash positive and we have quite a large cash balance on hand and we carefully assess what direction we take when we do make capital expenditure.
In terms of our technology, we believe that we have one of the best technology stacks that are available in the market today. More than 80% of sportsbook operators don’t have their own technology, they simply buy it from other software vendors, which isn’t an ideal situation. In terms of us, we have a new generation of software that has just been launched a few months ago and if you were to look around, you would find that I think the youngest technology out there would be somewhere around eight years old. You can imagine to yourself how technology’s changed in the last year or two years, what’s happened in eight years is quite dramatic.
So, we believe we have an edge. We will grow this high double-digit growth over time and our technology will obviously assist in helping us to grow it and that’s our strengths.
I often say to people, AI is the new buzzword, artificial intelligence, everybody’s talking
about artificial intelligence but in terms of gaming, it’s an extremely important item, because without it, you had a distinctive disadvantage and all of these legacy systems, they cannot really take on artificial intelligence, it wasn’t even invented in some of the days when these systems were built.
So, it’s something that’s very powerful that we have as part of our systems and it helps with the user experience, and also obviously helps us to target our players and offer them that experience and not sell them a bet on Liverpool to win a match, and they’re Manchester United supporters. It’s a situation where it helps the player, it offers a better experience, and it also benefits the casino and we believe that we’ve got this edge.
Also, the way we address businesses and the way we expand our business worldwide, that’s the benefit, and I tell people we’re a billion dollar company in the making and in time to come, when we speak again, we’ll revisit it.
