Gaming technology company VGW reported big revenue gains to almost $4.84 billion in the past year on the back of a significant marketing spend, but profit was down.
Perth-based gaming company VGW Holdings reported strong revenue gains to almost $4.84 billion boosted by more marketing expenditure, although rising costs eroded profitability .
The after-tax profit of $377.6 million for the 12 months to June 2023 was down 17 per cent from $454 million the previous year, a shareholder update has disclosed, while revenue jumped about 40 per cent from $3.46 billion in the previous corresponding period.
Marketing costs and sweepstake payouts as a percentage of revenue, as well as merchant and affiliate fees, all grew faster than revenue.
The company remains a cash generator for shareholders, paying $318.9 million in dividends, down from $339 million the year before. VGW also bought back almost 39 million shares for $251.4 million, being a $6.50 per share cost, of which $6.44 was deemed a dividend.
“We had a solid full-year 2023, generating strong revenue growth, entertaining more customers and experiencing high engagement with our products, games and promotions,” Mr Escalante said in a brief statement.
"We continued to invest in our business and people to support growth.
"This included increased marketing spend and our headcount grew as we continued to attract great people.
"Macroeconomic and market conditions continue to evolve coming out of the pandemic.
"But we’re running our own race and investing for growth both today and into the future.
"Opportunity abounds and my confidence in our amazing team’s ability to execute on our strategic objectives remains as strong as ever.”
The marketing budget was among the biggest costs to rise in the year ending June 30, with the company spending $360 million, up more than 50 per cent from the year before, without adding in the sponsorship deal with Formula One racing team Scuderia Ferrari.
Sweepstakes payouts were the biggest cost rising to almost $3.56 billion, a 47 per cent increase from $2.29 billion. Merchant and affiliate fees also lifted 54 per cent to $$248.9 million, and employee benefits cost 45 per cent more at $116.9 million while share-based payments tripled to $24.4 million.
Sponsorship, general and administration expense more than doubled to $33.2 million.
In the annual report, VGW said its total assets now stood at $727.6 million, up from $506.8 million but liabilities had risen too, more than doubling to $648.9 million from $301.9 million, leaving net assets at $78.6 million.
Its main asset was cash and cash equivalents at $535.6 million, while the biggest liability was contract liability at $189.2 million which represents players' purchases that were yet to be recognised as revenue over the remaining retention life of the players.
