NetDragon Announces 2022 Annual Financial Results

Education Business Achieved Record-high Revenue

NetDragon Websoft Holdings Limited ("NetDragon" or the "Company"; Hong Kong Stock Code: 777), a global leader in building internet communities, today announced its financial results for fiscal year 2022. NetDragon's management team will hold a conference call and webcast at 10:00am Hong Kong time on March 28, 2023 to discuss the results and recent business developments.

NetDragon Websoft Holdings Limited Logo (PRNewsfoto/NetDragon Websoft Holdings Limi)

Dr. Dejian Liu , Chairman of NetDragon, commented: "In 2022, we delivered a resilient performance with 11.8% revenue growth in a year of both opportunities and challenges. Our education business achieved record-high revenue of RMB4.3 billion with 34.2% YoY growth, as we continued to build on our global market leadership position with our commitment to providing educators the ability to transform learning and collaboration. In June 2022 , we introduced our all-new ActivPanel 9 that deliver the most robust, seamless and secured user experience yet for teachers and students. During the year, we also took steps to expand our strategic partnerships and M&A initiatives to tap into concrete software monetization opportunities that will unleash the value of our global channel reach, as well as our largest installed base in the overseas market."

"We are also excited to have announced that in June 2022 , we entered into a strategic partnership with Merlyn Mind, a leader in education AI technology. We are currently building on this partnership to develop an artificial intelligence enabled interactive panel for classrooms, which we plan on launching in our next panel release. We believe this will be a one-of-a-kind product that will elevate our competitive position to a new level."

"The gaming industry in China went through unprecedented challenges throughout 2022 as a result of a slowdown of the domestic economy due to the Covid-19 impact. However, a clearly defined go-to-market strategy and our unique gaming IP portfolio helped us to weather the storm. Although revenue of the gaming segment decreased by 5.8% YoY, such revenue performance outperformed the market [1] as we remained laser focus on execution with operational excellence. Our overseas games continued to deliver exceptional performance with a YoY overseas revenue growth of 6.5%. We also substantially strengthened our R&D capability by adding over 300 R&D headcounts during the year, hence putting ourselves in a much stronger position to expand our pipeline of new games."

"Last but not least, we continued to put shareholders' capital return as a high priority. We are pleased to announce that the Board has approved our final dividend proposal of HK$0.40 per ordinary share. Total dividends for the year (including special interim dividend declared in August 2022 ) amounted to HKD1.30 per ordinary share, representing approximately 73.0% of the total profit attributable to the owners for the year."

Fiscal Year 2022 Financial Highlights

  • Revenue was RMB7.9 billion , representing an 11.8% increase YoY.
  • Revenue from the gaming business was RMB3.4 billion , representing 43.6% of the Company's total revenue and a 5.8% decrease YoY.
  • Revenue from the education business was RMB4.3 billion , representing 55.1% of the Company's total revenue and a 34.2% increase YoY.
  • Gross profit was RMB4.3 billion , representing a 4.6% decrease YoY.
  • Core segmental profit [2] from the gaming business was RMB1.8 billion , representing a 14.1% decrease YoY.
  • Core segmental loss [2] from the education business was RMB299 million , representing a 27.4% improvement YoY.
  • EBITDA was RMB1.5 billion , representing a 20.7% decrease YoY.
  • Operating profit was RMB1.2 billion , representing a 17.0% decrease YoY.
  • Non-GAAP operating profit [3] was RMB1.3 billion , representing a 12.7% decrease YoY.
  • Profit attributable to owners of the Company was RMB834 million , representing a 21.5% decrease YoY.
  • Non-GAAP profit attributable to owners of the Company [3] was RMB1.3 billion , representing a 2.2% decrease YoY.
  • Operating cashflow was RMB1.1 billion , representing a 4.2% increase YoY.
  • The Company declared a final dividend of HKD0.40 per ordinary share (2021: HKD0.40 per ordinary share), subject to approval at the coming annual general meeting.

Segmental Financial Highlights


FY2022

FY2021

Variance

(RMB million)

Gaming

Education

Gaming

Education

Gaming

Education

Revenue

3,430

4,336

3,642

3,231

-5.8 %

34.2 %

Gross Profit

3,280

1,007

3,474

995

-5.6 %

1.2 %

Gross Margin

95.6 %

23.2 %

95.4 %

30.8 %

0.2 ppts

-7.6 ppts

Core Segmental
Profit (Loss)

1,821

(299)

2,120

(412)

-14.1 %

-27.4 %

Segmental Operating
Expenses [4]







- Research and
development

(768)

(446)

(658)

(501)

16.7 %

-11.0 %

- Selling and
marketing

(398)

(532)

(419)

(530)

-5.0 %

0.4 %

- Administrative

(292)

(387)

(318)

(351)

-8.2 %

10.3 %

[1] Market revenue down 10.3% YoY, according to the China Game Industry Group Committee ("CGIGC") & Gamma Data , Jan 13 th , 2023

[2] Core segmental profit (loss) figures are derived from the Company's reported segmental profit (loss) figures (presented in accordance with Hong Kong Financial Reporting Standard ("HKFRS") 8) but exclude non-core/operating, non-recurring or unallocated items including government grants, intercompany finance costs, impairment loss (net of reversal), impairment loss of intangible assets, inventories, goodwill and interest in an associate, fair value change and exchange difference on financial assets at fair value through profit or loss ("FVTPL"), fair value change and exchange difference on derivative financial instruments, interest expense and exchange difference on convertible and exchangeable   bonds, write off of intangible assets and redundancy payment.

[3] To supplement the consolidated results of the Company prepared in accordance with HKFRSs, the use of non-GAAP measures is provided solely to enhance the overall understanding of the Company's current financial performance. The non-GAAP measures are not expressly permitted measures under HKFRSs and may not be comparable to similarly titled measures for other companies. The non-GAAP measures of the Company exclude share-based payments expense, amortization of intangible assets arising on acquisitions of subsidiaries, impairment loss of intangible assets, inventories, goodwill and interest in an associate, fair value change on financial assets at FVTPL, fair value change on derivative financial instruments, finance costs, interest income on pledged bank deposits and exchange difference on financial assets at FVTPL, bank borrowings, convertible and exchangeable bonds and derivative financial instruments.

[4] Segmental operating expenses exclude unallocated expenses/income such as depreciation, amortization and exchange difference that have been grouped into SG&A categories on the Company's reported consolidated financial statements, but cannot be allocated to specific business segments for purpose of calculating the segmental profit (loss) figures in accordance with HKFRS 8.

Education Business

Revenue from education business reached a record high of RMB 4.3 billion , representing a YoY increase of 34.2%, and accounting for approximately 55.1% of total revenue. Our flagship edtech subsidiary Promethean continued to outperform the market [5] and maintain its global ex- China #1 market leadership position [6] in terms of shipment volume. Total shipments of interactive flat panels reached a record-high of over 253,000 units, a YoY increase of 37.5%, as we delivered strong performance across all major markets, ranking #1 in market share in nine of our top ten markets, including the U.S., the U.K., Italy and Australia . In addition to expanding penetration of its hardware installed base, Promethean continues to leverage its unique position of being the classroom edtech hub by stepping up efforts in pursuing strategic partnership and M&A opportunities with an aim to tap into concrete software monetization opportunities. The Company announced in December the acquisition of Explain Everything, a leading digital whiteboard platform for creating engaging lessons, activities, and interactive presentations. Through this strategic acquisition, Promethean is expected to add to its product portfolio a revenue-generating application tool that addresses one of the most common use cases of its customers. This acquisition will also support the development of new and better solutions that would address teaching, learning, and collaboration needs.

Our gross margin was impacted by various geopolitical and macro challenges during the year, more specifically with respect to tariffs and a lower GBP and Euro relative to USD. On an ex-tariff and forex-neutral basis, Promethean achieved an adjusted gross margin of 30.3%, which is a 2.4 ppt reduction from 32.7% in 2021 that is largely caused by the sell down of our existing ActivPanel 7 inventory since the launch of ActivPanel 9 in June, and a slightly higher unit material cost for ActivPanel 9 relative to the older model. It should also be noted that the new ActivPanel 9 had an Average Selling Price (ASP) that was 17.0% higher than the ASP of the existing ActivPanel 7 during the year, thanks to its positioning as a next-generation product that includes new features with enhanced simplicity, connectivity, security, adaptability and longevity.

We are also actively expanding our country model with a pipeline of countries in emerging markets. In Egypt , the Company secured an order of 94,000 Promethean panels from the Ministry of Education in the first quarter of 2022. In Thailand , the Company's paid pilot program entered its second phase with an expectation to enter commercial rollout later this year. In China , the Company continued to build on its partnership with the National Center for Education Technology, a unit directly under the Ministry of Education, in building and providing technical support for the National K-12 Smart Education Platform for primary and secondary schools. Such platform was launched in March 2022 with a huge success, amassing over 77 million registered users and 23 billion page views as of March 23, 2023 . The monthly active users surpassed 10 million for every month after the launch.

We continued to enhance the cost structure of the education business during the year. Overall core segmental loss of the business for the year narrowed by 27.4% YoY to RMB299 million . Operating expenses as a percentage of revenue decreased by 11.3 ppts YoY, driven by effective cost control initiatives that will also lead to higher operating leverage going forward. Furthermore, despite 11.0% YoY reduction in full year R&D expense, the Company managed to step up its R&D effort in the second half of the year with an aim to expand its offerings into multiple new products due for launch in 2023, designed to broaden its penetration of the market and to bring user experience to a new level.

In 2022, market penetration of interactive flat panels reached a new high of 21% [7] of global K12 classrooms, which in our view represents a critical scale that will enable future scaling of value-added subscription/SaaS-based applications. Looking forward, we believe that we are well-positioned to capture this future revenue stream, thanks to our market leadership in interactive flat panels and our installed base of 1.9 million classrooms. To that end, we announced in June 2022 that Promethean has entered in a strategic partnership with Merlyn Mind, the leader in education AI technology with classroom applications. We are currently building on this partnership to develop an artificial intelligence enabled interactive panel for classrooms, which we plan on launching in our next panel release. We believe the product will be one-of-a-kind product that will not only strengthen our competitive position in classroom technology, but also put us in a position to become a category dominant leader in a new product category.

[5] Our market share of global ex China K12 IFPD shipment volume is 23.7% this year vs 23.0% last year, according to the Futuresource Consulting , Mar 2023

[6] We rank the first in global ex China K12 IFPD market, according to the Futuresource Consulting , Mar 2023

[7] According to the Futuresource Consulting , Mar 2023

Gaming Business

A slowdown of the domestic economy in China due to the Covid-19 impact has resulted in a revenue YoY decrease of 5.8% to RMB3.4 billion in 2022 for our gaming business. Mobile gaming revenue remained steady at RMB577 million , representing a modest decrease of 0.2% YoY, outperforming a domestic mobile game market decline of 14.4% [8] YoY in 2022. Eudemons Pocket Version continued to deliver strong performance and achieved record-high gross billings, representing a YoY growth of 6.2%, largely a result of the change to a ROI-driven user acquisition strategy, as well as effective content and gameplay updates throughout the year. Our mobile gaming portfolio under the Eudemons IP on a combined basis achieved a steady revenue growth of 3.6% YoY.  Meanwhile, PC gaming revenue was RMB2.8 billion , representing a 6.9% YoY decrease as we saw short-term impact from Covid-related economic slowdown on spending of our core players during the year in the domestic market. Despite the challenges, we stepped up our effort in making enhancements to the in-game spending mechanisms for our flagship game Eudemons Online to optimize our payers' base, resulting in a 28.4% YoY increase in APA for this game. Enhanced playability on the mobile platform also significantly drove user engagement and stickiness, leading to increase of DAU and ACU of Eudemons   Online   cross-platform version by 26.1% and 36.4% YoY, respectively.

Our overseas gaming business continued to deliver strong performance with revenue of RMB540 million , a YoY increase of 6.5%, a growth rate that outperformed the market [9] . Overseas gaming revenue as a percentage of total gaming revenue also increased consecutively for 5 years to 15.7% in 2022. Our Conquer IP was the main driver for the growth in 2022 with 48.5% overseas revenue increase YoY to RMB188 million , with the growth mainly driven by solid execution along with easing pandemic controls and market recovery in the Middle East . Meanwhile, we continued to replicate our successful business model in Egypt to new markets including Saudi Arabia , Kuwait , Morocco , the Philippines , the U.S. and Canada . New language versions were launched in Filipino, Turkish and Russian during the year. We also continued to make progress in expanding the overseas market presence of our Heroes Evolved IP. In July, the Company launched the Vietnamese pocket version under the Heroes Evolved IP, labelled Loan Chien Mobile , hailed by local gaming media as the new giant of Vietnamese e-sports. In August, the Company signed an exclusive licensing agreement with a renowned global publisher for AAA games to co-launch Under Oath in major international markets starting in Japan in 2023. Neopets: Faerie's Hope , the Company's first match-three game, was launched in the U.S., Canada , the U.K., Germany and France in December 2022 , which saw its next-day retention rate and three-day retention rate in the top 5-10% of titles in the same genre. Our flagship metaverse Web 3.0 game Neopets Metaverse also hit another major milestone in January 2023 by completing a US$4 million financing round with participation from industry leaders including Polygon Ventures, Blizzard Avalanche Ecosystem Fund, Hashkey Capital and IDG Capital. Neopets Metaverse is expected to launch its initial metaverse offering (IMO) later this year.

Our plan in 2023 will be to significantly expand our pipeline of new games, in conjunction with driving revenue growth for our existing games. During 2022, we stepped up our investment in R&D to put ourselves in a stronger position to capitalize on the market rebound anticipated for 2023, as we saw our gaming R&D expense increased by 16.7% YoY to RMB768 million , accounting for 22.4% of gaming revenue. Our R&D headcounts increased by over 300 in 2022, hence significantly strengthening our development competencies and resulting in an increase of both the quality and quantity of our pipeline of new games. We are expecting a total of 5 new games under the Eudemons IP to be launched in 2023 and 2024, the first of which is Eudemons Mobile II , which was successfully launched in March 2023 . We also have new games in the pipeline under our Under Oath and Heroes Evolved IP, as well as new IPs to be announced.  Last but not least, we expect to actively explore acquisition opportunities in order to further expand our market reach and core competencies.

[8] According to the China Game Industry Group Committee ("CGIGC") & Gamma Data , Jan 13th, 2023

[9] The revenue of Chinese game development companies in the overseas market decreased by 3.7% YoY, according to the China Game Industry Group Committee ("CGIGC") & Gamma Data , Jan 13th, 2023

Management Conference Call and Webcast

NetDragon's management team will hold a conference call and webcast at 10:00 am Hong Kong time on March 28, 2023 (or 10:00 pm, Eastern Time on March 27, 2023 ) to discuss the results and recent business developments.

Details of the live conference call are as follows:

International

+852 2112 1888

Mainland China

4008 428 338

HK (China)

+852 2112 1888

US

+1 866 226 1406

UK

0800 032 2849

Passcode

9143528#

A live and archived webcast of the conference call will be available on the Investor Relations section of NetDragon's website at https://ir.nd.com.cn/en/category/webcast . Participants should visit the website 10 minutes prior to the call, then click on the icon titled "2022 Annual Results Conference Call and Webcast" and follow the registration instructions.

About NetDragon Websoft Holdings Limited

NetDragon Websoft Holdings Limited (HKSE: 0777) is a global leader in building internet communities, with a long track record of developing and scaling multiple internet and mobile platforms that impact hundreds of millions of users, including previous establishments of China's first online gaming portal, 17173.com, and China's most influential smartphone app store platform, 91 Wireless.

Established in 1999, NetDragon is one of the most reputable and well-known online game developers in China with a history of successful game titles, including Eudemons Online , Heroes Evolved, Conquer Online and Under Oath . In recent years, NetDragon has also started to scale its online education business on the back of management's vision to create the largest global online learning community, and to bring true integrated blended learning solutions to every school around the world.

For investor enquiries, please contact:

NetDragon Websoft Holdings Limited

Maggie Zhou
Senior Director of Investor Relations
Tel:+852 2850 7266 / +86 591 8390 2825
Email: maggiezhou@nd.com.cn
Website: ir.netdragon.com

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME





FOR THE   YEAR   ENDED   31 DECEMBER 2022
















2022


2021






RMB million


RMB million





Revenue

7,866


7,036





Cost of revenue

(3,551)


(2,513)













Gross profit

4,315


4,523





Other income and gains

223


224





Impairment loss under expected credit loss model,

(14)


(8)





net of reversal





Selling and marketing expenses

(945)


(956)





Administrative expenses

(975)


(956)





Research and development costs

(1,224)


(1,160)





Other expenses and losses

(213)


(266)





Share of results of associates and joint ventures

(17)


(16)





Operating profit

1,150


1,385





Interest income on pledged bank deposits

-


1





Exchange (loss) gain on financial assets at fair value through
profit or loss, bank borrowings, convertible and
exchangeable bonds and derivative financial instruments

(73)


19





Fair value change on financial assets at fair value
through profit or loss

(33)


20





Fair value change on derivative financial instruments

15


(3)





Finance costs

(219)


(186)













Profit before taxation

840


1,236





Taxation

(76)


(253)













Profit for the year

764


983





















Other comprehensive income (expense) for the year,








net of income tax








Item that may be reclassified subsequently to profit or loss:








Exchange differences arising on translation of foreign
operations

47


(25)





Item that will not be reclassified to profit or loss:








Fair value change on equity instruments at fair value through
other comprehensive income

(2)


(2)





Other comprehensive income (expense) for the year

45


(27)





Total comprehensive income for the year

809


956





















Profit (loss) for the year attributable to:








- Owners of the Company

834


1,062





- Non-controlling interests

(70)


(79)






764


983













Total comprehensive income (expense) for the year
attributable to:








- Owners of the Company

879


1,036





- Non-controlling interests

(70)


(80)






809


956














RMB cents


RMB cents





Earnings per share








- Basic

154.15


191.67





- Diluted

154.14


191.58





CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT   31 DECEMBER   2022






2022


2021


RMB million


RMB million

Non-current assets




Property, plant and equipment

1,936


1,940

Deposits made for acquisition of property, plant and

equipment

5


5

Right-of-use assets

380


428

Investment properties

59


77

Goodwill

287


217

Intangible assets

739


772

Interests in associates and joint ventures

34


50

Equity instruments at fair value through other comprehensive
income

56


8

Financial assets at fair value through profit or loss

404


266

Loan receivables

8


8

Other receivables, prepayments and deposits

89


38

Deferred tax assets

347


135


4,344


3,944

Current assets




Properties under development

343


317

Properties for sale

303


205

Inventories

807


685

Financial assets at fair value through profit or loss

84


2

Loan receivables

4


22

Trade receivables

654


832

Other receivables, prepayments and deposits

549


494

Amounts due from joint ventures

5


3

Tax recoverable

29


25

Restricted bank balance and pledged bank deposits

1


9

Bank deposits with original maturity over three months

207


630

Cash and cash equivalents

3,701


3,717


6,687


6,941









Current liabilities



Trade and other payables

1,513


1,455

Contract liabilities

406


357

Lease liabilities

67


64

Provisions

94


89

Derivative financial instruments

31


43

Bank borrowings

737


403

Convertible and exchangeable bonds

16


15

Tax payable

100


128


2,964


2,554

Net current assets

3,723


4,387

Total assets less current liabilities

8,067


8,331





Non-current liabilities




Other payables

19


11

Lease liabilities

50


95

Bank borrowings

2


-

Convertible and exchangeable bonds

1,317


1,070

Convertible preferred shares

-


-

Deferred tax liabilities

80


80


1,468


1,256

Net assets

6,599


7,075





Capital and reserves




Share capital

40


40

Share premium and reserves

6,859


7,275

Equity attributable to owners of the Company

6,899


7,315

Non-controlling interests

(300)


(240)


6,599


7,075





UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS






2022


2021


(Unaudited)


(Unaudited)


RMB million


RMB million

Operating profit

1,150


1,385

Add:




Share-based payments expense

6


14

Amortization of intangible assets arising on acquisitions
of subsidiaries

56


64

Impairment loss of intangible assets, inventories and
goodwill

103


21

Impairment of interest in an associate

-


23

Non-GAAP operating profit

1,315


1,507





Profit attributable to owners of the Company

834


1,062

Add:




Share-based payments expense

6


14

Amortization of intangible assets arising on acquisitions
of subsidiaries

43


49

Impairment loss of intangible assets, inventories and
goodwill

100


12

Impairment of interest in an associate

-


20

Finance costs

199


168

Fair value (gain) loss on derivative financial instruments

(15)


3

Fair value loss (gain) on financial assets at fair value
through profit or loss

32


(21)

Exchange loss ( gain) on financial assets at fair value
through profit or loss, bank borrowings, convertible and
exchangeable bonds and
derivative financial instruments

63


(16)

Interest income on pledged bank deposits

-


(1)

Non-GAAP profit attributable to owners of the Company

1,262


1,290

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SOURCE NetDragon Websoft Holdings Limited

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NorthStar Gaming Reports Year-End 2024 Results

Annual Revenue Growth of 57%, Gross Margin up 91%

NorthStar Gaming Holdings Inc. (TSXV: BET) (OTCQB: NSBBF) ("NorthStar" or the "Company") today announced its financial results for the three months and year ended December 31, 2024. The Company also announced that it will discuss the results on an investor webinar to be held Thursday, May 15, 2025 at 11:00am (please see below for details). All dollar figures are quoted in Canadian dollars.

"We delivered strong financial results in 2024, highlighted by 57% growth in revenue and a 91% increase in gross margin. At the same time, we held marketing expense to a 10% increase and reduced G&A expense, demonstrating the continually improving operating leverage built into our business model," said Michael Moskowitz, Chair and CEO of NorthStar. "Equally important, our team rolled out innovations in both our sportsbook and casino that have further differentiated NorthStar Bets as a premium offering and helped drive the retention of, and engagement with, our loyal customers."

Restatement of Results

The comparative results for the three months and twelve months ended December 31, 2023 have been restated in the financial statements and management's discussion & analysis ("FY2024 MD&A") for the year ended December 31, 2024 to include additional merchant fees and player bonus expenses which were not captured in the previously published financial statements (note 2 of the Financial Statements for the year ended December 31, 2024). The Company's payment processor deducted the additional merchant fee from the daily remittances to the Company, and the deductions were not accounted for by the Company. These additional fees were identified as part of the year-end reconciliation of the amount due from the payment processor, and the financial statements and FY2024 MD&A have been adjusted accordingly. These restatements did not impact the cash balances reported for the years ended December 31, 2022, 2023, or 2024. However, they did result in adjustments to the reported current asset balances for those periods.

Financial Highlights for the Fourth Quarter Ended December 31, 2024 ("Q4 2024"):

  • Total Wagers1 at Northstarbets.ca were $303.0 million in Q4 2024, a 42% increase compared to $213.3 million in Q4 2023.
  • Gross Gaming Revenue2 at Northstarbets.ca was $10.0 million in Q4 2024, a 31.6% increase from $7.6 million in Q4 2023.
  • Revenue2 was $9.5 million in Q4 2024, a 51% increase from $6.3 million in Q4 2023. Revenue in Q4 2024 includes $1.5 million of managed services revenue, which compares to $0.2 million in Q4 2023.
  • Gross Margin was $3.6 million, a 71% increase from $2.1 million in Q4 2023, while the Gross Margin percentage increased to 38.1%, up from 33.6% in Q4 2023.
  • Profit/(loss) before marketing and other expenses1 was $0.6 million in Q4 2024 compared to a loss of $2.5 million in Q4 2023, indicating that gross margin is now sufficient to cover the Company's overhead expenses.

Financial Highlights for the Year Ended December 31, 2024 ("FY 2024"):

  • Total Wagers2 at Northstarbets.ca were $980.0 million in FY 2024, a 51% increase compared to $648.8 million in the year ended December 31, 2023.
  • Gross Gaming Revenue2 at Northstarbets.ca was $34.0 million in FY 2024, a 51% increase from $22.5 million in FY 2023.
  • Revenue2 was $29.6 million in FY 2024, a 57% increase from $18.8 million in FY 2023. Revenue in FY 2024 includes $2.3 million of managed services revenue, which compares to $0.5 million in FY 2023.3
  • Gross Margin was $10.5 million, marking a 91% increase from $5.5 million in FY 2023, with the Gross Margin increasing to 35.7%, up from 29.3% in FY 2023.
  • Profit/(loss) before marketing and other expenses1 was $0.1 million in FY 2024 compared to a loss of $6.7 million in YTD 2023, an improvement of $6.8 million.

"Early in 2025, we completed our most significant fund-raising to date, with a $43.4 million debt financing. This capital gives us a long runway on which to continue our trajectory of growth in wagering, gross margins and improving operating leverage. This was a milestone event for our business," added Mr. Moskowitz.

2024 Operating Highlights:

  • Completed the inaugural Blackjack Championship tournament, an innovative online competition that helped drive the acquisition of new high-value players and engagement for existing customers while increasing Blackjack wagering activity.
  • Implemented a series of enhancements to the NorthStar Bets platform, highlighted by streamlined navigation in both the Casino and Sportsbook sections, a doubling of Casino game selection since the start of 2024, personalized prop bets and intelligent parlay suggestions.
  • Introduced the "NorthStar Elite" program and branded tables to help secure the loyalty and satisfaction of our most active players and reinforcing the Company's positioning as a premium offering.
  • Launched "Sports Insights 2.0," a robust suite of enhancements to our content vertical that includes a redesigned home page, comprehensive team and player statistics, injury and player news feeds, added coverage of popular sports and strengthened casino content.
  • Gained significant traction outside the Ontario market with managed services revenue from Northstarbets.com site, owned by the Abenaki Council of Wolinak, increasing from $0.5 million in FY 2023 to $2.3 million in FY 2024.
  • Outpaced the industry growth rates reported by iGaming Ontario in 2024 in both Total Wagers (51% for NorthStar vs. 33% for the industry) and Gross Gaming Revenue (51% for NorthStar vs. 31.5% for the industry).

Outlook

"We expect our consistent pattern of year-over-year revenue increases to continue throughout 2025, based on our ongoing success in attracting and engaging high-value players," said Mr. Moskowitz. "We will maintain disciplined control over costs so that incremental gross margin falls primarily to the bottom line. As we continue to focus on operational excellence, we remain confident that we have the capital necessary to reach profitability based on our current business platform."

FY 2024 Corporate Update Webinar

On May 15, 2025, Michael Moskowitz will present an in-depth Corporate Update, including a discussion of the Company's FY 2024 Earnings, current operations and strategic priorities. All investors and other interested parties are invited to register for the webinar at the link below.

Date: Thursday, May 15, 2025
Time: 11:00 am EDT
Register: Webinar Registration

Management will be available to answer your questions following the presentation on the webinar platform. You may also submit your question(s) beforehand in the registration form linked above.

Extension of Strategic Marketing Agreement

The Company also announced that its wholly owned subsidiary, NorthStar Gaming (Ontario) Inc. ("NorthStar Ontario"), has extended its strategic partnership with Playtech Software Limited ("Playtech Software") through the renewal of their previously announced strategic marketing agreement. Under the agreement, Playtech Software contributes services designed to accelerate NorthStar Ontario's player acquisition strategy in the province. The agreement was first implemented in June 2023 and has since been renewed several times. Pursuant to the latest renewal, Playtech Software will reimburse marketing expenses valued at a total of up to $1.5 million over a 3-month period through to March 31, 2025. Playtech Software will be compensated through a share of revenue from the income generated in connection with the marketing initiatives to which it contributes. The Transaction between Playtech and NorthStar Ontario is exempted from Multilateral Instrument 61-101 Protection of Minority Securityholders in Special Transactions.

"We are very pleased to renew the marketing services agreement with Playtech Software," said Michael Moskowitz, Chair and CEO of NorthStar. "The agreement serves to extend our marketing budget and has contributed to our tremendous growth in Ontario. Playtech plc continues to be a valuable strategic partner and we look forward to further collaboration."

Continuous Disclosure

Further to a review by the staff of the Ontario Securities Commission (the "OSC") of the Company's continuous disclosure, the FY2024 MD&A includes enhanced disclosures with respect to:

  • the Company's regulatory framework, licensing regimes applicable to its business operations and the legal authorizations necessary to conduct its business operations;
  • specific risk factors relating to the Company's business operations which include risks relating to operating in a heavily regulated industry, cyber security risks and risks relating to conflicts of interest with respect to directors and officers of the Company; and
  • the relationship between the Abenaki Council of Wolinak and the Company as well as its subsidiary, Slapshot Media Inc.

Such amended disclosure is being included in the FY2024 MD&A to address comments received from the OSC on its management's discussion & analysis, for the period ended September 30, 2024, and to improve the Company's disclosure.

As a result of having to include such enhanced disclosure after the OSC review, the Company will be placed on the public list of Refilings and Errors in accordance with OSC Staff Notice 51-711 (Revised) - Refilings and Corrections of Errors for a period of three (3) years.

Additional Information

For additional information, please refer to the Company's condensed consolidated financial statements for the year ended December 31, 2024, and the corresponding FY2024 MD&A. These documents are available on SEDAR+ at www.sedarplus.ca, and on the Company's corporate website at www.northstargaming.ca.

About NorthStar

NorthStar proudly owns and operates NorthStar Bets, a Canadian-born casino and sportsbook platform that delivers a premium, distinctly local gaming experience. Designed with high-stakes players in mind, NorthStar Bets Casino offers a curated selection of the most popular games, ensuring an elevated user experience. Our sportsbook stands out with its exclusive Sports Insights feature, seamlessly integrating betting guidance, stats, and scores, all tailored to meet the expectations of a premium audience.

As a Canadian company, NorthStar is uniquely positioned to cater to customers who seek a high-quality product and an exceptional level of personalized service, setting a new standard in the industry. NorthStar is committed to operating at the highest level of responsible gaming standards.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange ("TSXV") nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.

Non-IFRS Financial Measures [/ Reconciliation of Non-IFRS Measures to IFRS Measures]

Throughout this document, management uses certain non-IFRS financial measures and supplementary financial measures to evaluate the performance of the Company. The terms "Gross Gaming Revenue" "Total Wagers" and "Profit/(Loss) before marketing and other expenses" are non-IFRS financial measures. These measures are not recognized measures under International Financial Reporting Standards ("IFRS") and do not have a standardized meaning prescribed by IFRS and are, therefore, not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective and to discuss NorthStar's financial outlook. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including industry metrics, in the evaluation of companies in our industry. Management also uses non-IFRS measures and industry metrics in order to facilitate operating performance comparisons from period to period, the preparation of annual operating budgets and forecasts and to determine components of executive compensation.

Total Wagers

Total Wagers are calculated as the total amount of money bet by customers in respect of bets that have settled in the applicable period. Total Wagers does not include free bets or other promotional incentives, nor money bet by customers in respect of bets that are open at period end. Total Wagers is used to provide investors with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures.

Gross Gaming Revenue

Gross Gaming Revenue is calculated as dollar amounts bet by customers less the dollar amounts paid out to the customers in respect of such bets which have settled in the applicable period.

Reconciliation of Non-IFRS Measures to IFRS Measures

In Q4 2024, the Company reported $10.0 million of Gross Gaming Revenue ($34.0 million in FY 2024) and has provided a reconciliation to the most comparable IFRS financial measure (Revenue) as follows:
$ Millions (unaudited)
Unaudited Three
months ended
Year ended
Dec 31,
2024
Dec 31,
2023
Dec 31,
2024
Dec 31,
2023
Gross gaming revenue from wagered games$10.0$ 7.6$ 34.0$22.5
Bonuses, promotional costs and free bets(2.0)(1.5)(6.7)(4.2)
Sub-total Gaming revenue8.06.127.318.3
Other revenue from managed services1.50.22.30.5
Revenue$ 9.5$ 6.3$ 29.6$ 18.8

 

Operating Results

Marketing expenses are a key driver of the business but are completely discretionary. Management considers "Profit/(Loss) before marketing and other expenses" to be a good indication of the extent to which the business' Gross Margin is in excess of its overhead costs, and therefore offsetting some portion of marketing expenses, reflecting improving economies of scale.

$ Millions (unaudited)Unaudited Three 
months ended
Year ended
Dec 31,
2024
Dec 31,
2023
Dec 31,
2024
Dec 31,
2023
Revenue$ 9,478$ 6,275$ 29,556$ 18,845
Cost of Revenues5,8684,16719,01313,317
Gross Margin3,6102,10810,5435,528
General and administrative expenses3,0334,45210,45312,277
Profit/(Loss) before marketing and other expenses (1)577(2,344)90(6,749)
Marketing5,2495,47215,45614,094
Loss before other expenses (1)(4,672)(7,816)(15,366)(20,843)
Other expenses(1,070)1493,6456,547
Net loss$ (3,602)$ (7,965)$ (19,011)$ (27,390)

 

(1) These measures are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or companies.

Cautionary Note Regarding Forward-Looking Information and Statements

This communication contains "forward-looking information" within the meaning of applicable securities laws in Canada ("forward-looking statements"), including without limitation, statements with respect to the following: expected performance of the Company's business, the Company's growth plans being fully funded, expansion into new markets and future growth opportunities, and expected benefits of transactions. The foregoing are provided for the purpose of presenting information about management's current expectations and plans relating to the future and allowing investors and others to get a better understanding of the Company's anticipated financial position, results of operations, and operating environment. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. This forward-looking information is based on management's opinions, estimates and assumptions that, while considered by NorthStar to be appropriate and reasonable as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, levels of activity, performance, or achievements to be materially different from those expressed or implied by such forward-looking information. Such factors include, among others, the following: risks related to the Company's business and financial position; risks associated with general economic conditions; adverse industry risks; future legislative and regulatory developments; the ability of the Company to implement its business strategies; and those factors discussed in greater detail under the "Risk Factors" section of the Company's most recent annual information form, which is available under NorthStar's profile on SEDAR+ at www.sedarplus.ca. Many of these risks are beyond the Company's control.

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking statements. Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements, there may be other risk factors not presently known to the Company or that the Company presently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking statements. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents NorthStar's expectations as of the date specified herein, and are subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements.

For further information:

Company Contact:

Corey Goodman
Chief Development Officer 647-530-2387
investorrelations@northstargaming.ca

Investor Relations:
RB Milestone Group LLC (RBMG)
Northstar@rbmilestone.com

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