GiG recently made headlines by announcing its decision to spin-off its affiliate marketing division, now rebranded as Gentoo Media.
This bold and strategic move signals a new direction for the company—an industry leader in iGaming platforms and sportsbook solutions—as it embarks on a new path to streamline operations, unlock its full potential and maximise shareholder value.
To delve into the rationale behind the split that everybody is talking about, IGF’s Head of Content Curtis Roach sat down with GiG’s Chief Financial Officer Phil Richards to discuss the growth opportunities this spin-off creates and what it means for both GiG and investors moving forward.
What was the primary strategic reason behind the spin-out?
“The reason for the spinout is simple: It allows GiG to stand on its own and fully realise its potential. While Gentoo Media has been incredibly successful, the platform side of the business often stood in its shadow.
“By spinning out, we can focus solely on delivering a top-tier sportsbook and platform service to our customers. We won’t have the distraction of managing a separate business that serves a different vertical.
“This split allows both companies to excel independently. As a result, the combined value for shareholders will be greater than when they were part of a single entity.”
How does this allow GiG to focus on its core strengths?
“It makes things very simple for us. We can dedicate all our resources and attention to being a top-notch B2B technology provider. We’re in a much better position to develop our platform without the distractions of another business, which means we can push innovation and service quality further than ever before.”
What opportunities do you see for GiG operating independently in the medium-to-long term?
“The growth potential is enormous. We’ve already developed a robust pipeline that’s expanding at a rapid rate – growing by some 500 percent, year-on-year. The markets we serve are expanding as well.
“We’ve got products like SweepX targeting the sweepstakes market, but we’re also signing new customers globally and entering new territories.
“The team we’ve built, combined with our cutting-edge products and expertise, gives us the capability to scale significantly in the short, medium, and long term.”
How does this spinout appeal to different types of investor profiles?
“GiG, as an independent platform business, represents a high-growth opportunity, almost akin to a tech startup. We’re a B2B SaaS model, offering high growth and strong revenue visibility.
“Investors will appreciate our long-term contracts with key customers, which give us predictable revenue streams for the next 12-months and beyond.
“That said, the platform business comes with a slightly different risk profile than the media arm. The platform hasn’t performed as well as it should have in the past, so it requires investors with a different risk appetite. However, the upside is significant. Investors looking for a growth story will be attracted to GiG’s long-term potential.
“By contrast, Gentoo Media is generating steady cash flow and EBITDA returns but is operating, as we have said, in a completely different market.”
What’s the difference between GiG as a proprietary technology owner versus a media company?
“As a technology owner, we have complete control over our future. We’ve developed all of our technology in-house, which means we own the intellectual property outright. This gives us more control over which customers we choose to work with and allows us to continue developing our technology without any external dependencies.
“In comparison, the media arm will operate under its own strategy. But for GiG, our tech ownership is the foundation of our growth plan. We’re confident that the quality of our platform will give us a significant competitive advantage.”
How do you expect the spinout to impact GiG’s short and long-term valuation?
“Initially, the valuation may reflect our past performance as a platform business that hasn’t always met expectations. However, our business plan is highly scalable, and we have great visibility on our revenue for the next 12-months.
“As we start to deliver on this plan, we expect the market to recognise our potential. Investors will see the growth in annual recurring revenue, the scalability of our model and our improving EBITDA margins.
“We aim to be cash-generative by Q3 or Q4 of next year.
“The key for us is to deliver on our targets and ensure investors understand the spinout’s growth story. Once we demonstrate consistent performance, we expect our valuation to reflect the true value of the business.”
What synergies or partnerships will remain between GiG and Gentoo Media after the spinout, if any?
“There won’t be any shared synergies between the two companies.
“They are now two completely separate entities with independent boards.
“Any transactions between GiG and Gentoo Media will be handled at arm’s length, just as they would be between any two independent businesses. We’re no longer operating under the same roof, and that’s a deliberate move to ensure each company can pursue its goals without overlap.”
What operational efficiencies do you expect following the spinout?
“We’ve made significant improvements to our cost structure this year.
“Historically, we had a relatively high-cost base compared to our revenues, which impacted our bottom line. However, we’ve overhauled this completely.
“Moving forward, we don’t expect significant growth in costs year-on-year, even as we increase revenue. Our current cost base is mature enough to handle double our revenue without substantial additions. As a result, new revenue will primarily flow directly to the bottom line, improving profitability.”
Are further Mergers and Acquisitions part of GiG’s future growth strategy?
“While we’ve built the product we need to support our current revenue growth projections, we’ll always be open to opportunistic M&A in the medium-to-long term.
“Whether we buy or build additional products depends on what makes the most strategic sense at the time. But right now, we have everything we need to execute our growth plan, so it isn’t on the horizon.
“We’re focused on what we need to do to grow the business, having worked hard to position us where we are now on the edge of something special.”
What are investors really buying-into with GiG?
“Investors are buying-into a first-class proprietary technology platform that delivers top-of-the-line sportsbook and platform services.
“But, more importantly, they’re investing in an experienced management team that knows how to scale a business in this industry. We’ve done it before. And we’ll do it again. It’s a combination of cutting-edge technology and deep industry expertise that gives us a clear growth path.
“The spinout represents a pivotal moment for GiG. It allows the platform business to stand independently and unlock its full potential. With a scalable business model, best-in-class proprietary technology, and a focused management team, GiG is well-positioned for rapid growth.
“While there are risks, the upside for investors is significant, and the company’s clear vision for the future makes this an exciting opportunity.”
Editor’s note:
In the dynamic and fast-paced iGaming industry growth is not always linear. Sometimes it requires a bold step to the side – and a refocus.
GiG’s decision to spin-off Gentoo Media marks one of these moments.
This strategic split will allow both companies to leverage different investment opportunities and increase their capacity for growth and success.
While this move may affect the company’s valuation in the short term, it’s a gamble that GiG is certain will pay off in the long run.
Why?
Because they have existing cutting-edge products and expertise that will underpin this rapid growth, while keeping costs low and allowing the additional revenue streams to flow directly to that all-important bottom line.
