Covid-19 has been a magic eraser of corporate profits in 2020. With economies shutting down the world over to try and prevent the spread of the novel coronavirus, there have been relatively few companies that have flat-out prospered by people staying in. Sadly, though, too many companies are struggling to stay afloat as they deal with significant declines in revenue and mounting debt.
Golden Matrix Group (OTCPK:GMGID) fell more into the category of the former, with shares soaring in 2020 and the Las Vegas-based company expanding its footprint as an emerging gaming technology outfit in the Asia Pacific region. Golden Matrix develops and owns online gaming intellectual property (branded GM-X) and builds configurable and scalable white-label social gaming platforms. The IP includes tools for marketing, acquisition, retention and monetization of users.
Online gaming has been riding steady tailwinds for several years, but the coronavirus outbreak delivered the latest gust as millions of people looked for at-home entertainment.
Golden Matrix CEO Anthony Goodman noted that Covid-19 certainly created challenges to operations, but that didn’t stop the company from recording its seventh consecutive profitable quarter during the first fiscal quarter ended April 30, 2020, despite a large accounting expense.
Revenues compared to a year earlier were essentially flat at $734,764. Margins remained very high for the tech outfit, with net income coming in at $229,739. That was down about 50k from the year prior quarter, but this was due to the negative impact of a non-cash amortization expense of $259,560.
Operating profit, which excludes derivative expense, was $520,795 for the quarter.
While the recent quarter may have been a COVID induced pause, the company reassured investors by announcing this morning that revenues in June were expected to exceed $325,000 and are currently on track to post a record month. The anticipated improvement in June revenues is a result of the recent upsurge in the number of both new operators and registered users.
Golden Matrix CEO Brian Goodman stated that he expected the current (second fiscal) quarter to finish strongly with increased revenues and profitability with plans to soon leverage their large and growing user base to enter new vertical markets such as eSports and Sports Gambling.
What’s interesting here is that it seems many casino operators were caught with their pants down when Covid-19 shutdowns hit. Simply, they weren’t prepared to offset lost revenue from their physical locations with digital sales.
As noted by Goodman, “Toward the end of the quarter, we saw a significant increase in the number of casino operators seeking to create an online presence.” Judging by a rising number of users, these operators are getting Golden Matrix technology implemented, which should have investors closely watching revenue and profits in the coming quarters.
There are now nearly 360 active operators of the GM-X platform.
Goodman didn’t pull any punches in saying that he expects the string of profitable quarters to continue for “the foreseeable future.”
On Friday (June 19), the company said that total registered users across all GM-X platforms had more than doubled from the end of 2019 to now exceed 3 million.
At the end of December, shares of GMGID could be purchased for less than half a penny ($0.0046). Added exposure to online gaming and executing on the business model to land new customers has created a buzz surrounding the growth potential for Golden Matrix as it strengthens its foothold overseas.
On the topic of the share price, the company announced back on April 24th a 1-for-150 reverse stock split which according to the Financial Industry Regulatory Authority (FINRA) is set to occur tomorrow morning. Starting tomorrow, every 150 shares of issued and outstanding common stock will be automatically exchanged for one issued and outstanding share of common stock, resulting in about 19 million shares post-split. The authorized shares of common stock will also be reversed at the same ratio and be reduced to 40 million shares from 6 billion shares.
This company is firing on all cylinders fundamentally and this reverse stock split is one of the key steps needed to fulfill their desire to uplist GMGID shares to a major exchange later this year.
Looking at the stock chart (pre stock-split), shares reached a 52-week high at 1.8 cents on June 8 (+291% for the year) before pulling back to around 1 cent. A new technical support has been established there, providing a point of lift-off. Shares closed up 29.86% at $0.0187 cents today, a new 52 week high for the stock.