Gaming Innovation Group Inc

OSE:GIG

Earnings Call Transcript 2022-Q3

[Hjalmar Ahlberg, analyst]

Welcome to Redeye. Today, we are joined by Gaming Innovation Group and its CEO, Richard Brown, who will present the Q3 report, and then we will follow up with Q&A. But with that, I'll leave over the hand to Richard who will present the report.

[Richard Brown, executive]

Perfect. Thank you very much, Hjalmar, and thank you for hosting us this morning. As always, a true pleasure to stand here and report our Q3 numbers for Gaming Innovation Group. As I mentioned also in my CEO letter as a kind of way of introduction, I felt that this quarter was an extremely strong quarter. We achieved several operational milestones across the business, and we performed very well operationally. There's much more to come there. And in conjunction with that, we also delivered record numbers in terms of financials.

So I'm very pleased with the overall development. That being said, we have an extreme focus on continuous improvement throughout the organization. And we can see that there's so many opportunities that lie in front of us over the coming months and years that we're really doubling down incredibly focused on in making sure that the operation is built to realize those opportunities, but also to continue to improve its daily operations. Very pleased with how we're presenting today. And with that, I'll move over to a very brief introduction of Gaming Innovation Group.

The business itself is a B2B supplier within the iGaming industry that's focused on several high-value areas and sections of the B2B supply chain. The business is a global one. The gambling industry is also a global industry, and therefore, we treat it as such. We are focused on multiple markets, regulation as being a primary driver for the growth in a number of markets that we're able to operate in. And the business is actually both in platform and sports betting, but also in the media side of things, operating in more than 30 different markets as of today, and we continue to push forward and drive that business part of the area and the expansion forward.

Just to kind of explain a little bit more detail as well. The GiG Media is our leading iGaming and affiliate business within iGaming and sports betting, very, very strong product portfolio within that part of the group that provides an extremely high-value player acquisition channel to multiple of our partners. It has a global reach, as I mentioned in the previous slides and is built and powered by first-class marketing technology. The platform and sportsbook, it provides a state-of-the-art platform and sportsbook solution to the industry and to its clients. It is built for regulated markets, in particular, and localization within those markets. It is a highly customizable product and structure of technology that enables both the clients and their end users to have an extremely strong offering towards the customers. We have a proven sportsbook with flexible end-to-end solutions.

I will touch now on some of the highlights for the quarter. GiG delivered its seventh successive all-time high in revenues and EBITDA with double-digit growth across both. The media business also operationally delivered on one of its most important KPIs, first-time depositors with 85% year-over-year growth. We've continued a pursuit of an aggressive spend within marketing because we could see a significant opportunity for ROI within that sector and in the quarter and launched several new markets and several new products and sites within existing markets in order to continue to push forward the business.

The Platform and Sportsbook section or segment continue to positively deliver with 4 additional client launches and signing of 4 additional new agreements. And the Sportnco integration is moving extremely well. Very pleased to have also hit an operational milestone of the first level of integration of the technical products into GiG's existing product portfolio. This then enables us very much to move into the second phase of the post-merger integration plan and combining the 2 businesses together.

Moving then over to the financials. Revenues hit another all-time high at EUR 22.9 million, up 35% year-over-year, and EBITDA came in at EUR 8.5 million, up 47% year-over-year and EBIT coming in at EUR 2.5 million. Again, very pleased with the continued positive development of the financial performance of the organization.

Just to touch a little on our strategy. We continue to operate on a 3-pronged approach where we look at market expansion, both in the media and the platform business, we continue to drive forward by expanding the business's operations into multiple new markets, in particular, driven as new markets open up in their regulatory purposes. We can see this as a growth driver, not only by attracting new customers into the platform business, but also enabling us to add multiple clients into markets. This enables margin expansion because most of the cost that we take is upfront for the single market entry. And in the media business, we continue not only to add sites into new markets but also new product verticals, so whether that casino or sports pushing into those existing markets as well as into new.

We work the business over and predominantly revenue share across both verticals. This enables us to grow significantly as the clients build up and reach maturity. And also because in the media business, we work predominantly in revenue share that we are able to actually grow the revenues as the players value of the lifetime continues to build up over time. And thirdly, we focus on product to drive market share. The better our products are, the more innovative we are within the product structures and how focused we are within those products and the localization enables us to drive further market expansion. Now whether that's attracting more customers, delivering better product that provides the end users a better experience in conjunction with that.

Moving over to now to our business update for the media side. Again, seventh all-time high quarterly revenues, exceptional performance once again, revenues were up EUR 15.1 million, up 35% year-over-year and EBITDA at EUR 6.8 million, up 32% year-over-year and the EBITDA margin remains more or less stable at 45%. We saw an opportunity also during the quarter to actually double down on an increasing marketing spend, both ahead of the World Cup at the end of this year, but also because we could see in several markets, the price and therefore, the return on investment that was presenting itself to us was to then go be aggressive in the period to acquire those customers. And again, because most of our own revenue share, then that will build a potential for future growth in the coming quarters.

Both our paid and publishing departments reached all-time highs, we've paid up 77% year-over-year and publishing up 20% year-over-year. Recurring revenues, as I mentioned, is an important element of how we build the revenue structures going forward and it was accounting for 61% of revenues of the segment.

Moving over to first-time depositors. I touched on this before, is one of our main KPIs that we continually focus on, not only the number but also the quality of the FTDs that are being delivered, and we're continually optimizing towards that to make sure that we continue to deliver and return value over time as we acquire more and more customers. We delivered over 86,000 first-time depositors in the quarter, up 85% year-over-year. And as I mentioned, 95% of those customers approximately have some form of revenue share component within them. That strong development has continued into the fourth quarter with October delivering 67% growth in first-time depositor numbers and player intake. So we continued that trend into the fourth quarter.

The business has also been expanding as part of the strategy. There are a number of states that we're able to operate in within the U.S. is now up 30% comparatively to the last year with 22 now in action. Our U.S. traffic on our main websites there increased by over 80% and revenues from Americas as a total increased by 200% year-over-year, making up now 20% of the revenue within the segment. That being said, we see continued and strong growth within the European and traditional markets that we hold and operate in. And that relates going back to the fact that we keep doubling down and improving the technological and product offerings that we operate within the media business in order to capture market share, and that's driven 26% year-over-year growth in that region. Our marketing compliance technology continues to perform well, signing 2 additional new contracts and resigning 3 during the quarter.

Moving over now to the Platform and Sportsbook section of the business. Revenues were up to EUR 7.8 million, up 36% year-over-year, and EBITDA grew 174% to EUR 1.7 million. 14% of that growth came organically, if you exclude the premium fees that we were receiving last year. And as I mentioned in the highlights, we reached a significant milestone of the integration of Sportnco within the post-merger integration plan of completing the technical integration.

We had a busy Q3 and we've continued to deliver significantly. We went live with 4 additional clients, including New Jersey and 7 were really awaiting go-lives either by the regulators or the clients' decisions to launch. We have 62 brands now live across the product portfolio, which is an increase of 19% year-over-year. And we were granted the supplier license within Ontario. And shortly after the quarter finished, we went live with 2 brands in that market. We currently have 13 brands in the integration pipeline. So we have a continued pace of delivery in the upcoming quarters, and we are looking forward to continuing to launch clients on a regular basis. Approximately 30% of our contracts are still within what we would consider prematurity and the sales pipeline that we have remained strong and is building nicely towards the end of the year and into the beginning of next.

We signed 4 new agreements during Q3, bringing the total number of 17 for the year to date, including the market expansions of our existing clients into new markets. There's a good geographical spread there throughout Europe and through in Latin America and North America, and we also take this year our first steps into the African regulated markets.

To touch now as well on some of the events after the quarter. We continued that expansion in Latin America, which remains an incredibly attractive market, poised for growth, not only fundamentally but also as the number of businesses opening up there and regulated markets continue to increase. The deal was signed with a relatively large land-based operator within the region. So we're looking forward to the launch of that. We also launched 3 brands within the quarter, including 2 in Ontario that I mentioned previously. And as I mentioned, all-time high again in October for GiG Media in terms of the number of players that they are referring to their partners.

GiG Media is also being able to now expand in its markets. We recently received the approval and the Greek license to operate marketing services in what is also a high-growth market and region as more and more brands start to enter that particular market. October has also developed very positively with revenues are up 34% compared to the same period last year and whereof 22% of that was organic.

Kind of going back to our long-term financial targets. We remain very committed and focused towards. We still see a significant number of opportunities in front of us and the business is performing well. And therefore, we continue to target growth in the region of 20% on an annual basis going forward. And in conjunction with the revenue growth and the improving operational performance and synergies that we're deriving and continually improving the operations, we have a full confidence in reaching our EBITDA target of an EBITDA margin in excess of 50% during 2024. We're also generating cash within the business. That cash generation is being used to also not only to improve our leverage ratio and therefore, bring our leverage down over time, but also being able to identify particular markets or areas in particular where we see that the fast pace of this industry moves and being able to deploy capital in order to capture further growth and refine in towards growth profitability and the deleveraging of the business itself.

In summary, GiG has delivered its seventh successive all-time high in revenues, strong double-digit growth in revenue and EBITDA. Our Media business continues to perform exceptionally well financially and in its operational KPIs and is poised for further growth as we continue to be aggressive in its market expansion and player acquisition channels. The SaaS business is delivering on its strategy, much improved financial performance and continued operational focus will enable that business to also continue to improve its position in the coming periods. GiG is one of the few full-service suppliers within the industry, providing media platform and sportsbook and a turnkey solution to a number of operators in a number of markets. It has an unparalleled geographical footprint with its operations.

We therefore reiterate our guidance for the year as well with the combined operations of GiG and Sportnco for the full year should generate revenues in the region of EUR 87 million to EUR 93 million and EBITDA in the region of EUR 30 million to EUR 35 million. GiG is positioned for multiple growth opportunities and increasing profitability through its improved and continual focus on operational performance.

With that, I would like to thank you very much for your time in the presentation today, and I'll move over to the Q&A with Hjalmar. Thank you.

[Hjalmar Ahlberg, analyst]

I'm going to start a little bit with the trading update. You mentioned the growth in October. Can you say anything about the platform segment versus the media segment, is the similar growth or anything that...

[Richard Brown, executive]

We see growth across all of the business units, and we're very pleased with how things are developing overall and going into the fourth quarter. Of course, we have the World Cup coming up as well and with sports betting being a much more significant role than it has historically, we're kind of eagerly anticipating how that will perform and a number of new launches as well that have come through in the last 3 to 6 months. And the media business, obviously, the FTD number intakes continues to be an outstanding performance.

[Hjalmar Ahlberg, analyst]

Right, right. And you kind of ask my next question. But if you look into Q4, is FIFA, the World Cup, the main growth driver there? Or seasonality and something else that will drive growth in Q4?

[Richard Brown, executive]

There's a combination of items there. In Q3, there was a kind of more normalized seasonality in the summer, low level of sporting events in the first couple of months that kind of normally impacts, but we were able to navigate that well. And then coming through into Q4, there's a traditional growth of seasonality. And it's the first time the World Cup has been held in the winter. So we'll have to see how that kind of impacts overall. But normally, there is an increased activity. We're obviously dependent also on the results given the fact that we work on revenue share, but it will definitely be a driver for activity.

[Hjalmar Ahlberg, analyst]

Yes. Yes. And you maintain your full year guidance suggesting that you also see potential for good growth in Q4, but would you see any risk that you don't meet this guidance? Or what would that be?

[Richard Brown, executive]

No, no, no. I mean we're very comfortable with the guidance range that we have. And if you extrapolate the numbers more or less already in there, if there be, but so we feel very comfortable with the numbers and structures that we have within the guidance. And I think the World Cup plays a little bit of role of where we would be in terms of the revenue guidance, but in particular, on the EBITA one, I think we're more at the top end of the range.

[Hjalmar Ahlberg, analyst]

Right, right. And I mean, with the workup being a large event, would kind of sports met margin if the wrong team win something can that have a major impact...

[Richard Brown, executive]

There will always be an impact but I mean, over an entire tournament, normally, it kind of plays it plays out. And we then also obviously have a strong footing in both the casino side as well. So probably less susceptible than if it was just purely [indiscernible] it will play a potential role, but there was a significant influence from our casino activities as well.

[Hjalmar Ahlberg, analyst]

Right. And looking back at the Q3 result, I mean, you continue to grow very strong. You mentioned, I mean, in Media segment, at least Americas is a market that's growing from small levels. Any specific counter region that you can mention that is doing well or anything that sticks out?

[Richard Brown, executive]

Latin America, Canada has remained a positive environment for us historically, but in particular, Latin America has proven a real growth driver for the Media business and also for the platform business. We also see that while some of the play values, it's a lesser and it's emerging market, but they continue to build very nicely. So very pleased with that.

[Hjalmar Ahlberg, analyst]

Right. Right. And you also mentioned Sportnco is not fully integrated, and you were talking about the second phase. Could you expect what's next to expect or with the Sportnco acquisition?

[Richard Brown, executive]

Yes. I mean we've always been quite clear that we would prioritize kind of some new business post the integration. And then once the World Cup has completed, we would then start the migrations of our existing clients over to the new product and new services. So that's kind of the second phase. First is obviously the technical integration, then we move into kind of migrations, thinking about that. And then also just being able to, we've been operating with them now for 6 months. So now we get to know each other a little bit better. We understand where the strengths are, where the weaknesses are, how to then work together to it in order to improve on a consistent basis. So that Phase 2 then becomes incredibly important for us because we can see so much opportunity with the M&A or with this particular merger. And therefore, we want to focus and make sure that we don't just, okay, kind of we've done the integration, we do the migrations. But what else can we do? How can we improve every single element of each other's businesses and performance then?

[Hjalmar Ahlberg, analyst]

Right. Right. And looking at kind of market and customer perception following this merger, have you started seeing any kind of positive comments from clients or potential new clients. What's the view from the customer side?

[Richard Brown, executive]

Yes. I think from the customer side, they're very pleased that we have a very strong proven in sportsbook that's operating in a number of what quite challenging markets from a technical perspective and from a product perspective as well. So therefore, very pleased with how that's being perceived and as we move through the various different opportunities of new clients as...

[Hjalmar Ahlberg, analyst]

And also a question here from our viewers. Some want you to share the progress on the cost saving initiative. What's the time frame there? What's going on there?

[Richard Brown, executive]

Yes. I mean we stated in the last quarter that we had, it was a kind of 12-month rolling program. So we've moved forward, and we did quite a lot of the execution of that in Q3 and going into Q4. So we would anticipate the kind of that to translate into the actions of the P&L latter part of Q4 and then into Q1. But the progress itself is going exactly to plan and we're anticipating it to be complete kind of during Q1. There's obviously some things that moves like 1 or 2 months, but we're very comfortable and confident in how that's been progressing so far.

[Hjalmar Ahlberg, analyst]

Great. Right. And there was also a follow-up question there on the CapEx spend, which the question seems that they think the CapEx is high. Do you think that will come down? Or is this the kind of level where we choose to see going forward as well?

[Richard Brown, executive]

We've kind of talked about the cost savings that we're doing also in the synergy programs that we're working through. Is it on a cash basis. So that will also then impact the CapEx investment structures. And part of that is because we have such a strong footprint geographically and our main investment levels go into that expansion. And we've been developing technology as well along the way, that enables us to be more effective and more efficient in that. So over time, that will come down as well because we're not going to be having to spend as much to enter new markets, et cetera. And we have a very strong footprint as of today. So therefore, the requirement on the CapEx is less. And part of the program was obviously not bringing just OpEx down, but also bringing CapEx down materially over time.

[Hjalmar Ahlberg, analyst]

All right. And moving back a bit to the Media segment. I mean, FTDs continues to grow very strongly, and it's I mean largely driven by the paid side of the business. How should we just going forward? Can you continue to grow at this pace at the paid segment? Or can you... I think more of that...

[Richard Brown, executive]

There's still significant opportunities both within the paid and the publishing sector to be able to continue to drive up that number. New markets, not only opening, but also becoming more mature and as player values come through, a lot of the markets that we operate in emerging sectors tend to be quite sportsbook-led and casino then follows that. So we still don't have the opportunity with the casino side of the media business. And the paid as well, like we kind of continue to focus on revenues have grown 20% in Europe, which are much more mature markets. We're doing that by the driver product share. So we continue to focus on that. So we're very happy with how we've progressed and we see a strong future in that part of the business to continue its progression.

[Hjalmar Ahlberg, analyst]

Right. And can you also remind us a bit about how the kind of lag effect is? I mean, if you have this kind of strong growth in FTDs, will we see the revenue from that in 2 quarters, 3 quarters? Or what's the typical effect there?

[Richard Brown, executive]

Again, a little bit dependent on the market in itself, but you would normally anticipate within kind of 3 to 4 months to start being able to realize maybe a bit shorter in casino and a bit longer or around that in sports betting. So it starts to come through. The players come through their bonuses that kind of impact the revenue share, and then they go through into building up the player lifetime value. So if you can think about it similar to a B2C operator, the first couple of months after players acquired, it's a cost and then you come through, and it continues to build up over time.

[Hjalmar Ahlberg, analyst]

Right. And looking at new markets, I mean, you mentioned U.S. that you had strong traffic growth at least, and then you don't split the North America versus the South America and the U.S. and so on. But could you say anything about the progress in U.S. in terms of media?

[Richard Brown, executive]

Yes. Anything you see that the website assets are continuing to perform better. I think everyone in the industry would like the iGaming to roll out a little bit quicker across the U.S. states. But we're pleased with how we're progressing. We've been building those assets for quite some time organically rather than doing it via M&A. And we still have a really strong belief that, that will pay off in the long term. We continue to invest. We also mentioned that probably next year, we will start or we start now as well kind of ramping up the investments. We've been doing it gradually, sensibly over time, making sure that we don't go in too fast. We understand where our gaps are, where we need to improve, and then we start investing more and more and continue to do that. And I think over the next year, we'll probably start to ramp that up a little bit more as we've learned that market a little bit better over the last year or so.

[Hjalmar Ahlberg, analyst]

And another question on U.S. It seems like the operators there in which were some of them are quite loss-making. And we see some comments that they are maybe trying to focus a bit more on profitable growth or taking down the losses a bit and maybe focusing on taking down marketing. And we know that CPA levels have been very high in U.S., but your focus on revenue share. Do you think this is kind of a positive for you that maybe more operators are more open to do a revenue share in U.S.?

[Richard Brown, executive]

Yes, I think so. And I think also it's one of the kind of synergies we can extract on a group level, one of the difficulties with revenue share in the U.S. is that you have to go through quite a large and invasive licensing program, which we've already done as part of the platform certifications in New Jersey and Pennsylvania and such, so therefore, that enables us to be able to operate a revenue share there. I think that demand will come. I still think there will be a large CPA market in the U.S. for time to come. But yes, we also continue to focus on what we control in terms of how we acquire customers, the value of those customers, the volume of those customers. And by doing that, then we can control the pricing as well. So we continue to evaluate the value of a customer referred to any operator so that we can make sure that we have the right commercial deals in place to extract the most amount of value.

[Hjalmar Ahlberg, analyst]

Right, right. Also a couple of questions on the media business here from the viewers. One is on listing fees, which were up quarter-over-quarter. Is that a World Cup effect?

[Richard Brown, executive]

No, I don't think it's related to the World Cup. I think mainly listing fees are often derived by the quality of your traffic as well and the value that you are able to kind of send over to the operators that they're willing to secure their place on those assets. And as the assets grow and they get more viewerships and we'd be more willing to deploy kind of more above-the-line style marketing in order to not just the pure performance marketing structures towards that.

[Hjalmar Ahlberg, analyst]

Right. And also a question on the marketing investment that you did now in Q3 in the Media segment. Do you expect to continue to have a high kind of marketing spend in Q4 due to the World Cup?

[Richard Brown, executive]

We evaluate on a consistent basis. So it's very hard to say like specifically, I think we would anticipate similar levels on a consistent basis. I mean the EBITDA margin itself is more or less unchanged between 45% and around 45% on average over the last period. So we look at kind of maintaining those levels anyway. And then we can see whether there's opportunity like there was in the last quarter, to be very aggressive, then we go and pursue it. And then also when we start to see that the prices are potentially inflated for whatever reason, then we can also look to pull back very quickly. So we don't necessarily have like a committed, we have a plan and a budget that we work towards. But when we see opportunity, we try and be aggressive. And then when we see that maybe there's an ROI squeeze for whatever reason, then we look to pull back a little bit. So we try and manage it on a consistent basis in that sense in order to be able to capture the best ROI for each campaign that we do.

[Hjalmar Ahlberg, analyst]

Right, right. And moving back a bit to the other operational costs and cost synergies that you're seeing. There's also a new level of cost inflation in general in the market. Do you see any pressure from that? And do you think you can, I mean, extract the synergies as expected even with the kind of general higher cost inflation that we have all over the world now?

[Richard Brown, executive]

Yes, we're still confident in our kind of range that we provided in terms of the cost savings, like we think that a lot of them were quite fundamental structure only, of course, every business has to deal with inflationary items to us, but we don't necessarily feel anything specific as of today. And we have a diverse operational spread as well throughout Europe. So that also enables us to recruit and manage the OpEx spend quite effectively rather than potentially being in just one location where you have a much more higher sensitivity to it. So we can manage that on a constant basis as well.

[Hjalmar Ahlberg, analyst]

Right, right. And there's also a question around the regulatory change in the market. Are you involved in the market now that that's where the regulatory change is ongoing or anything that is impacting you?

[Richard Brown, executive]

No. I mean, over the last 2 years, we've obviously had Germany and Holland have impacted us. But as of today, it's mostly on the positive side that as new markets open up or become regulated or some of our clients, for instance, in Germany who have kind of been waiting for that market to fully regulate and move into the next phase of its regulation, then we would anticipate them to start being a bit more aggressive in that side. You have even markets such as Sweden that have kind of contracted initially and then now they started to expand again, at least from an operational, we launched 2 new clients in Sweden this year. et cetera.

So I think there's a number of opportunities that come out of it. We don't have a huge exposure to anywhere like the U.K. where there will potentially be a meaningful change, although I think most people are operating under principles that would be employed already. So kind of starting from today, and we're going to launch a large U.K. client next year, and we're starting from 0. So therefore, the impact is going to be positive. And we believe as well with both the technology and the quality of the service that we can provide within the markets that we can still gain in positions from where we are today.

[Hjalmar Ahlberg, analyst]

Right. And also a question on the pipeline or the contracts and the pipeline for the platform segment, what kind of lead times do you see to execute on that pipeline?

[Richard Brown, executive]

The pipeline is continually filling as it should be. So there will be some that drop over and some clients move quickly depending on their kind of structure, then we have some of the clients that are potentially potential land-based businesses that move a bit of a slower pace and such like that. So it can vary between a lead time of 3 months to 6 months, sometimes even longer, depending on the processes themselves. But we're continually building that through and we signed 1 client already this quarter 4 last quarter. And we think that there's obviously the summer tends to be a bit quieter. So then we can continue to run through. So we're anticipating a strong pipeline in the coming kind of 3, 4 months as well.

[Hjalmar Ahlberg, analyst]

Right, right. And a few questions on the leverage shares as well. I mean, can you talk about your current leverage ratio? And I know in international target you want to see leverage coming down, what do you see for next 12 and 24 months?

[Richard Brown, executive]

We haven't provided any specific guidance on the leverage ratio, but we're approximately 2 today. And we would anticipate as our earnings and cash flows continue to increase as they are doing today, and that leverage ratio will continue to decline. And then we will take it there. I mean, we will always evaluate if in a particular period, we need to make some kind of attractive investment of some kind, but we would always anticipate it to be moving down on a consistent basis other than maybe some overall fluctuations. But very pleased, and it's continuing to perform well in that regard in that KPI where we were 2 years ago, 1 year ago and where we are today despite the investments that we've made and the quality of the businesses that we acquired in Sportnco as well.

[Hjalmar Ahlberg, analyst]

Right. And regarding the outlook over the next couple of years, maybe firstly on 2023. I mean for 2022, you gave a guidance. Is this something that you will continue to do out of each year? Or is there...

[Richard Brown, executive]

Yes. I mean I think we will discuss with the Board there kind of as we close off the year and start presenting the full year results, whether we will provide guidance, but probably likely that we would continue to provide an estimate for what we anticipate to achieve.

[Hjalmar Ahlberg, analyst]

Right, right. And the kind of trajectory to the financial target, I mean, growth is now, I mean, above the target, you could say, of course. But on the EBITDA margin, do you think we should expect quite a smooth road, of course, with a fluctuation on a quarterly basis, but kind of a steady trajectory? Or is it back-end loaded?

[Richard Brown, executive]

No, it's not back end loaded. So I would anticipate over the next kind of couple of years to see a progression. There may be quarters as you kind of alluded to, the way we are aggressive with marketing spend or do something particular that moves it. But on an overall basis, and we've seen that margin continue to improve over the last 2 years and more or less steady state, maybe it moves to one like a step change and then it continues and another step change, but we would anticipate that as pretty normal in any business. So we believe that it will be a continued improvement of the business' performance.

[Hjalmar Ahlberg, analyst]

All right. And I mean, growth opportunities, you have the organic growth and then you also have M&A and you did Sportnco and the balance sheet is gradually getting stronger. How is the market out there? Do you see any or any discussions? Do you see I mean, I guess, historically, a few years back, maybe the valuation were a bit high, but what's the market in terms of maybe looking like?

[Richard Brown, executive]

I think there's always going to be attractive opportunities now within M&A, and we continue to have an eye on those at all times. We think that our business is extremely well positioned. And one of the fantastic things about GiG's portfolio of operations, if you will, is multifaceted. And therefore, there are a number of businesses that would make a lot of sense to be part of the group and you could acquire that provide synergies, revenue growth, expansion to your markets, et cetera. And because it touches almost the entire value chain within B2B supply, there is a number of opportunities that we always keep our eye on. But we are very disciplined in that regard as well. We keep an eye on the valuations and themselves and make sure that if we're even thinking about it, that we would make sure that it was accretive and it was both the shareholder value, but also make sure that the company was able to be able to then drive it forward as well and experience a successful M&A track record.

[Hjalmar Ahlberg, analyst]

And another question in terms of outlook. I mean with high inflation, we see consumer spending could get hit. What do you see in terms for GiG's business in that sense?

[Richard Brown, executive]

So far nothing, we haven't really noticed anything. It's something that we keep a very close eye on, of course, but we're not seeing anything as of today, what the future holds is a little bit harder to predict. And I think another aspect is that it's quite localized, although it's a global issue. There is quite varying levels. And our business is incredibly diverse. Both business units operating in more than 30 markets. So on a combined basis, you have a really diverse revenue portfolio that can alleviate some of the kind of pinch points that you would have experienced if you were more saturated elsewhere.

[Hjalmar Ahlberg, analyst]

Got it. So it seems like, I mean, the outlook is quite good. You have your financial target, maybe we ask just one final question on the kind of growth trajectory. I mean you said that consumer spending looks okay for you at least. You have a lot of opportunity to grow in markets, lots of new products. What kind of risk do you see that you don't achieve this kind of 20% growth target over the next 3 to 5 years or so?

[Richard Brown, executive]

I mean there's always [ ex-essential ] risk to any businesses, right? But I think for us, like we have an entire focus not only on the growth opportunities, but also minimizing those risks. So our businesses are continually evaluating where we can potentially okay, if we have a particular regulation that may or may not, we think that the regulator is likely to change their mind about certain items, okay? Or how do we navigate that? Should we be investing more in that market? Should we move the thought process elsewhere, et cetera. So we're consistently trying to mitigate what we see as the potential risk of the business that we can control in the operational side of things. But we have a real extreme confidence on where we're positioned. We have a really clear plan in terms of what we're going to execute operationally over the coming 6 months, 12 months and such like that, that we'll only have increased the performance of the business, and therefore, we believe the financial targets that we're striving for every day.

[Hjalmar Ahlberg, analyst]

Okay. Great. That was the final question. Thank you very much, Richard.

[Richard Brown, executive]

Thank you very much, Hjalmar. Thank you.