Stride Gaming - On track for underlying margin expansion

Stride’s AGM trading update confirmed the continued momentum in its core real money gaming (RMG) vertical. The Aspers Casino partnership has had an encouraging start and Stride is well positioned to keep gaining market share. Its key differentiating factor is the high-performing proprietary platform and we expect underlying margin expansion as customers migrate from acquired businesses. We believe that visibility into the social gaming vertical (5% of revenues) remains limited and we have lowered our future revenue forecasts by c £2m per year. Our profit forecasts are unchanged. At 7.4x EV/EBITDA and 10.8x P/E for CY18, Stride trades at a meaningful discount to peers.