Golden Matrix Reports Financial Loss in the Second Quarter Despite Income Increase
Online game developer and licensor Golden Matrix Group (GMGI) reported a financial loss in the second quarter, despite also reporting an increase in revenue year-over-year.
Golden Matrix expressed satisfaction with the performance of its B2B and B2C divisions in the three months ending April 30, typically its slowest quarter.
However, the group stated that system malfunctions impacted income and profitability in its RKings B2B business due to a significant number of clients purchasing lottery tickets with substantial prize payouts.
Addressing the issue, CEO Brian Goodman stated that the technology has been updated to accommodate higher player traffic in the future.
“Collaborating with Amazon AWS, the technology has now been upgraded to enhance the performance and speed of the RKings servers and accommodate increased player engagement,” Goodman stated.
“With this issue resolved, we are confident in the continued success of RKings in the United Kingdom and anticipate introducing its scalable platform to more geographical markets.”
Elevated costs offset revenue growth
Income in the second quarter reached $1.31 million (£8.1 million/€9.5 million), representing a 21.2% increase from $1.08 million in the same period last year. The RKings B2B segment contributed $3.8 million, while 6.
GMGIs earnings for the third quarter of 2023 improved by 21.3% to $21.1 million. A substantial portion of this, $5 million, originated from Mexplay B2C operations. However, expenditures also rose significantly. The cost of goods sold increased by 39.0% to $8.2 million, while operational costs surged by 44.4% to $26 million.
Despite an additional $29,281 in income from interest and foreign exchange gains, the elevated expenses resulted in a pre-tax deficit of $461,452. This represents a considerable change from the $873,229 profit reported in 2022.
After paying $72,301 in income tax, the net loss for the quarter was $533,753, compared to a profit of $586,984 last year. Even after taking into account a foreign currency translation of $96,343, the combined net loss was $437,410, compared to a profit of $476,749 in the prior year.
The initial six months of the fiscal year also exhibited a similar trend. Revenue expanded by 21.3% to $21.1 million, but increased expenses resulted in a net loss. The cost of goods sold reached $16.6 million, and operating expenses were $5.3 million. Income related to finance reached $60,401, but the pre-tax loss was $759,287, compared to a profit of $1.4 million in 2022.
Income tax payments totaled $217,987, resulting in a net loss of $977,274, compared to a profit of $1.1 million in the previous year. After considering a foreign currency translation of $248,602, the consolidated net loss reached $728,672, compared to a profit of $833,182 last year.
GMGI also provided an update on its planned acquisition of MeridianBet Group and its associated companies. The acquisition is nearing completion.
The team came to a consensus in January to take over the consumer-focused sports wagering and gaming enterprise for around $300 million.
GMGI stated that both sides have orally consented to push back the cutoff date and adjust the supplementary provisions of the accord to make the smooth finalization of the deal easier. A fresh concluding date for the completion of the transaction is anticipated to be declared soon.
“This is a thrilling period for our organization,” said Goodman. “We are entering the latter half of the year with a robust financial standing and two established verticals, in addition to our expanding casino ventures in Mexico.
“With the successful takeover of MeridianBet Group, the merged entity will produce numerous gaming income streams while providing the finest and most sought-after products to players globally, encompassing casino games and sports betting.”
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