Newgioco Group (NWGI) Strong Fundamentals, Expanding Network and Premier Sports Betting Technology Driving Value

- Q4 results show robust growth

- Launches payment gateway technology

- Mobile betting to continue to drive growth

The last week was tumultuous for the global equity market. In the U.S., the S&P 500 posted its worst weekly losses in more than two years. Meanwhile, exchange traded funds bullish on the benchmark index saw record outflows last week, indicating that there could be more pain for global equity investors.

The sharp pullback in equities comes after a period of relative calm. The reason for the sell-off last week was expectations that inflation is finally returning after years of cheap money and deflation worries. What investors are particularly worried is the impact higher interest rates would have on an economy used to cheap money and near-zero rates for almost a decade.

While sell-offs like the one last week can shake investors’ confidence, they also create buying opportunities. In fact, during sell-offs like these, small cap stocks are the hardest hit as they are deemed to be riskier. But on several occasions, the sell-off is not justified especially if business fundamentals remain solid.

One such opportunity in the small cap space was created last week. Newgioco Group (NWGI) shares tumbled 20% last week. This sharp decline though is not justified considering the recent news flow involving NWGI. In fact, as the market rebounded sharply on Monday, NWGI shares surged more than 13%, wiping off most of the losses from last week. However, there still remains a buying opportunity, especially when you consider the recent progress NWGI has made.

NWGI is a promising company in the global gaming arena. After two disappointing years, the global gaming industry saw a revival last year and NWGI stands to benefit from this trend. Another important tailwind for NWGI is the fact that more and more states in the U.S. are looking to legalize sports betting. NWGI directly stands to benefit from this trend.

While NWGI is incorporated in the state of Delaware, the company’s focus market currently is Italy. In 2016, the regulated online leisure gaming market in Italy was valued at $1.2 billion, according to a report from the Polytechnical Institute of Milano. The market saw substantial growth in 2016 and trend also continued in 2017 as by the end of the year the market was estimated to have reached $1.8 billion. If figures for 2017 do meet expectations, then we are talking about a 50% growth in the market.

This robust growth in the Italian market has allowed NWGI to register strong operational numbers. For example, in 2016, the company saw 43% growth in betting turnover. Recently, NWGI reported strong transactions growth for the fourth quarter of 2017. The company reported that sport betting volumes in the fourth quarter of 2017 rose 25% on a year-over-year basis to $32 million. Gross gaming profits were $6.5 million in the quarter, which is the highest for any quarter in NWGI’s history. Gross gaming profits rose 82% on a year-over-year basis.

In the fourth quarter of 2017, casino and other brand sales rose by 10% to $23 million. Virtual bets rose 59% to $8.17 million.

The growth in the gaming industry, as in most industries, is being driven by mobile betting. In its core market of Italy, NWGI expects this trend to benefit it significantly over the coming years. And this was evident from the significant increase in mobile betting processing volume for fourth quarter. The company reported that its mobile processing volume for the quarter rose to 38% of total transactional volume, representing an increase of 7 percentage points. NWGI is benefiting from the launch of its new mobile betting app in the fourth quarter of 2017.

NWGI Chairman and CEO noted that the successful execution of revenue growth plan is now yielding results for NWGI as the company is exceeding its business plan projections well in advance of the implementation of its 2018 acquisition strategy. The CEO further added that the positive surprise gives the company better visibility and confidence in continued revenue growth throughout 2018 having started the year with all its systems and business verticals integrated and stabilized.

NWGI is also benefiting from increased marketing and branding efforts that allow NWGI to increase market penetration. Although the Italian market is growing at a robust pace and is one of the largest in Europe for online leisure gaming, the penetration is only 5%. As more people switch to online betting, NWGI stands to benefit as it is one of the biggest players in that market.

Recently, the company took further steps to strengthen its position in Italy with the signing of four new online gaming networks in the country. NWGI noted that the new operators expand its fast-growing online distribution to regions previously not covered by its webshop locations bringing the total retail stores to approximately 1,300 and increases the number of websites distributing the NWGI brands to eight. In addition, NWGI expects to add approximately 20,000 registered players to its regulated online gaming network from these operators and expanding its brands which now include;;;;;; quibet, resulting in projected annual turnover growth of $12 million in sports betting and $36 million in casino sales.

NWGI also announced recently that it has launched NG PAY, a payment gateway, under a licensing agreement with Euronet Worldwide Inc. The payment gateway is a multi-service platform that offers NWGI customers virtual distribution, through its private circuit, of products and ancillary services such as telephone top-ups, processing of digital product transactions as well as the distribution of gift cards for major global brands such as Amazon, Netflix and PAYTV programming in Italy.

Underlying this development, NWGI stated the NG PAY program also paves the way for their integrated digital and crypto accessible betting wallet and blockchain technology strategy on their leading-edge betting software.

The recent developments have further strengthened the NWGI story and the recent pullback has allowed an excellent opportunity to go long.


Except for the historical information presented herein, matters discussed in this release contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance, or achievements expressed or implied by such statements. WFM, Inc. is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. For making specific investment decisions, readers should seek their own advice. For full disclosure, please visit: