Summary
He never studied finance — now he's CFO of a publicly listed gaming company that just survived a brutal first year on the stock market.
In this episode of Bets and Balance Sheets, host Vasco Vaz Rodrigues talks to Phil Richards, CFO of GiG Software, about his unconventional path into the C-suite — from a medieval history degree, to building a sports betting company's US office from scratch, to running finance for a business that IPO'd straight into a stock price collapse.
Phil gets candid about missing market guidance, choosing to write off €50 million on purpose, what it's like to get "absolutely pummelled" by investors, and how GiG is clawing its way back toward profitability and cash generation.
Want to hear more honest conversations with gambling's finance leaders?
Introduction
Vasco: Hi everyone, welcome to Bets and Balance Sheets, where we interview the finance leaders running the behind the scenes of the biggest gambling companies. Today I have the CFO at GiG Software, one of the best-known gambling platforms in the industry. A crazy thing about him is that he never studied finance, and yet he became a very successful CFO. Phil, welcome to the podcast. I’m really happy you are our first guest of the new season.
Phil: It’s great to be here. Really excited. Looking forward to the conversation. Thank you.
The benefits of working across different countries
Vasco: You studied history and you are half German. You’ve lived and worked in Sweden, Germany, the UK and also the US, by the way. That’s not a path a lot of people have. How do you think all of those experiences shaped who you are today?
Phil: A lot, to be honest. Part of my family is German, I spent a lot of time in Germany and my father lived there as well. That gave me a real insight into different cultures and how different people work and operate, and it helped shape where I wanted to go. When I joined KPMG they had a Germany scheme, and moving out to Munich was fantastic. It was probably the hardest thing I’ve ever done, because I’d studied medieval history and then spent a year at university running the sports section. In Germany you generally study accountancy if you’re going into accountancy, and you’ve done a year’s worth as part of your degree. So I went over there and they weren’t quite sure why I was there. I wasn’t adding a lot of value.
It was a real baptism of fire, but it taught me how to work in different places, and I got a taste for it. Then I just wanted to move somewhere else, really. So I went to Sweden for a couple of years, primarily because I’d never been and didn’t know anything about it. I had a fantastic two years there with KPMG as well. Then I joined Kambi, and when PASPA was repealed, the opportunity came up for Kambi to set up a US office. I headed out to Philadelphia with my family to set up the office, talk to regulators and recruit. It was something very different, quite a unique experience that you don’t often get.
It really helps you understand how to operate in different cultures, how an international organisation works at its best and where people are coming from. A lot of the time when there’s friction, it’s not that there’s a disagreement. It’s a misalignment in understanding how different people approach things. Hopefully it’s helped me become a better person, a better manager, a better C-level. Hopefully it’s shaped me for the better.
Vasco: Do you think your studies as well, the sports and the history, contribute to what you do today?
Phil: Great question. The bit of history I did is so niche that it’s helped me once in a pub quiz and that’s been it. However, what you do in history is a lot about presenting, about teaching other people, about writing and understanding how to write. When you start off in your accountancy career that’s not so important, but I’ve leaned heavily on it later in my career, because a lot of what I do is about writing, telling a story, building narratives and bringing people along with you. I present both internally and externally, to shareholders, potential investors and my own employees. That experience of how to talk to a room and build a story has really helped. Maybe that’s where I get a bit of an edge. If I’d done pure accountancy, I wouldn’t have learned those other skills.
Running the sports programme was brilliant. There are 30,000 people at the university, I went to Nottingham and it’s a very big sports university, and you get an opportunity you would never get elsewhere. You’re a director of a company, a trustee of a charity, and effectively running the whole students’ union alongside seven others, full-time. Sports was a massive thing. You have a budget of hundreds of thousands of pounds to distribute among sports teams, so you learn so much about budgeting, financing and running events. And you get to combine it with what I love doing, which is playing sport and watching sport. I don’t regret a second of it, and I think it’s really helped me. But it is what you make of it, at the end of the day.
An unconventional path to CFO
Vasco: Very cool. Not only did you have a very unconventional studies path, you also had a very unconventional career path. Most people do Big Four, then become a controller, and eventually they become CFOs, if they do. You had a variety of roles. You had interim roles, you were a group FC, a US manager. How did all these roles come about? Did you plan for them or did they just happen?
Phil: I part planned for it. In my little world, I had to map out where I wanted to be. It’s a bit like a grid. From early on I’ve always wanted to be a CFO, so I thought, what skills do I need to get there? Absolutely, you need to understand accountancy and financial reports. But there are also all the other parts, like investor exposure and understanding the stock exchange. Running multinational organisations and multinational teams is very important too, and so is getting experience of other parts of the business, not just accountancy. Understanding the commercial side of a business is really important for CFOs. Going out to the US and running the US operations was really useful for me, because it let me get under the hood of the commercial side.
In my last role I was CFO and CPO, which is an unusual combination. It’s very hard, but it really gets you to understand how important culture is and what employees need in order to feel supported, and that hopefully makes you better at running the business. When you’re doing the role I’m doing, you have two hats on. One is your CFO hat, but you’re also part of the senior management team, so you have to look at the company as a whole, not just say “this is a finance thing”. What are we doing generally as a company? Digging into these different areas helps you understand them. When I was CFO of a cyber security company, I spent a lot of time getting involved in the technology. I never thought I’d be such an expert on DDoS as I am now, but it’s fundamental to performing at your best.
Coming back to your question, I was always asking what I really needed to get there and what experience was important. You need to tick off certain things. You need to have done M&A, for example, so you make sure you get involved with that. If you can demonstrate these things, you have a much more powerful argument for why someone should put you in the CFO role. Sometimes that’s where the gap is. People can be fantastic group FCs, but they haven’t had commercial, product or people experience, or dealt with shareholders and investors. You need these other bits as well to really succeed at the job, in my opinion. I’m not saying you can’t do it without them, but it does help.
Managing multi-cultural teams in gambling
Vasco: You touched on a lot of interesting topics, and one of them is culture. Having worked in different countries, the US, the UK, Sweden, what are the biggest differences, and how did they help you manage what in gambling is very often a multicultural team?
Phil: Absolutely, and we’re no different here at GiG. We span Malta, Spain, France and obviously here in the UK. It was the same at Kambi and the same when I was at [Carrera]. I’m very used to managing that type of team. But understanding it is important, because you need a little patience as to how the team is going to gel. You also need to help the team understand why, if they ask something a certain way, they’re not getting the response they expect. It’s because the question was formed in the wrong way for someone to really understand it.
I always think back to Germany as my starkest example. Growing up with a German mother, going to Germany all the time and with my dad living there, I thought I really understood how to live and work in Germany. Then I moved to Munich and realised I hadn’t even scratched the surface of what working in Germany is like, compared with having the family connection and learning German from my family. Take little things. You go in and say, “Hi, how was your weekend?” and someone says, “I don’t understand why you’re asking me that, because you don’t really care about my weekend.” You think, well, that’s kind of true, but it’s what we do in the UK.
Then it comes to why someone isn’t giving me the information I’ve asked for. That’s because you wrote your email saying, “Dear so and so, I hope you’re well, I hope you had a lovely weekend, if you had a moment would you mind sending me whatever.” I’d get so frustrated that no one would reply, and then someone would say, “You do know they’re just going to ignore you? You’ve written it in such a way that they think there’s too much fluff in here and it doesn’t really need an answer.” Whereas if I’d written, “Dear so and so, I would like this information by the end of the day. Regards, Phil,” I would have got it straight away.
It sounds obvious. In the same way, when you receive an email like that over here, you think, God, that’s rude, I’m not going to do that. It automatically puts you on the back foot. But then you think, no, that’s not the purpose of this. It’s a factual request and it requires a factual answer. Don’t take offence at the content just because it’s brief. I still do this now. I have a little sliding scale of how annoyed I am, which shows in how I sign off my emails. If I’m happy, it’ll be “many thanks”, then it goes to “thanks”, then to “kind regards”, and if I say nothing and it’s just my name there, I’m so pissed. It’s unbelievable. However, no one outside the UK would read that and think, “Oh, this guy’s really cross.” They’d think, “That’s fine, I’m okay with this.”
So I try to tell these anecdotes to help people understand that we’re all different. That’s the great thing about having such an international team: you all have a different mentality and a different way of looking at things, and that really benefits the business. You just need to be aware of it. Some things can be very offensive in one place and not at all offensive in another, and the language you use is very important. We try to get together once a year, and one part of that is our teams talking to each other about different personality types, different cultures and how they interact well with each other. That’s not to say you can stereotype. Not all Germans are like that, not all Swedes are like that, not all Brits are like that. It’s not that binary. But if you get an understanding of that, plus how different personalities work, then slowly you start to work better with people. That’s the plan, anyway.
Vasco: What was the moment where you had the thought, “I actually want to become a CFO,” and what triggered it?
Phil: When you’re in audit, it’s actually a fantastic route. You get exposure to C-level very early on, which you would never get if you were actually at that company. You get to understand early on, or you think you do, obviously you don’t really, what’s going on. You sit down with a CFO and say, “Can you give me an update on the business?” and it struck me how interesting what they do is. As a CFO you really span the whole business, while still having that accountancy and finance speciality, although that becomes less and less important the further along your career you go. So I thought, this is super interesting, and I can see how what I’m doing now could lead me there if I go about it in the right way. If you look at my career path, you might say I deviated a bit, but there was a plan.
Phil's advice to aspiring CFOs
Vasco: You made it. You’re there. So it worked. Speaking of that plan, there will be other people going through an unconventional path who figure out somewhere along the way that they want to become a CFO. What piece of advice would you have for them?
Phil: You need to work out what your sales pitch is as to why someone would take you as a CFO. What have you done that means they can’t say no? You really need an answer to all the questions. The hardest jump is probably from FD or group FC to CFO, because you have to persuade someone to take a gamble. If you’re promoted from within it’s a little easier, but if you’re moving externally you have to persuade the board of directors and the CEO that, whilst you haven’t been a CFO, you have all the attributes you’d need and there’s a reason they should take that jump.
So you have to give people no reason to say no. If they say, “Talk to me about M&A,” you have to have done M&A. If they say, “Talk to me about talking to shareholders,” you have to have an example. You need to plan out everything they can throw at you and how you’d address it. If you can’t address it, maybe you’re not quite ready, but then how can you get that experience in your organisation? You need to almost test yourself and ask what you’re missing, then look around your organisation and see how you can get involved. Can you sit in on investor calls, for example? That’s an easy one. Next time there’s an M&A deal, can you be part of the due diligence team? Things like that, where you make the case so compelling that it’s very hard for someone to turn you down.
Vasco: In my opinion, the CFO is a role that requires a lot of empathy towards other people’s needs and goals, because ultimately everyone in the C-level team will request something from the CFO, even if it’s budget or permission to do something. It’s almost like another CEO, but for everything that is financial, which is basically the core of a business. Do you think your career was what you needed to make sure people would trust you, or did you do something else as well?
How to build trust as a CFO
Phil: Yes, absolutely, the experience you have is predominantly why people trust you. However, there’s a lot of trust you have to build up. What’s important is for you as a CFO to understand what other functions do, so that you can make a well-weighted judgement when there are requests. Where frustration comes in with CFOs is when someone comes to you about something they know you don’t understand, and you maybe just say no. Maybe the no was the right answer, but they don’t trust that you got to the answer in the right way.
So it requires sitting down with the engineering team, for example, and saying, “Talk me through what you’re doing. Show me the product roadmap. Let me understand how everything fits together.” Then when there’s a request like “we need this infrastructure, we need that infrastructure,” you come out at a place where you won’t know everything, but you’ve demonstrated that you’re trying to learn and that you have some rudimentary understanding of what’s going on. So you do need understanding, probably more than empathy. Empathy is an interesting word to use, because it’s not something that comes up often in finance. I find understanding an easier thing to be than empathetic. You can always understand what someone’s doing, and for sure that does breed empathy.
For me it’s just important to understand why people are asking. In my experience people don’t make frivolous requests. People don’t want to throw money around. Unless you’re in an AI organisation in the US or something like that, the main mentality of most people in an organisation, particularly here in the UK and in Europe, is to watch what they’re spending. It’s quite a spendthrift culture. So most people are coming at it from the right place, and it’s really about understanding what takes priority. None of the requests will ever be wrong. Some will just be more pressing than others, and some will have a better ROI. That’s maybe where the empathy comes in, where you say, “Listen, I understand. However, this is why we’re potentially not going to be able to free up budget for you, because we’re doing this or that.” Then people come along on the journey and understand. Some people won’t, and some people get pissed off, but that’s what you get paid to do. You’re not paid to please everyone.
Vasco: No, of course. The CFO never pleases everyone. [laughter] That’s a very hard challenge. There are a lot of people to please. You touched on something that I think a lot of people think about, which is when they don’t know something. How do you deal with that in the moment? If someone asks you a question you actually don’t know the answer to, there’s pressure in the C-level to always have the right answer or always know everything. How do you deal with that?
Phil: It happens a lot, honestly. You’ll get a question you don’t know. One thing I would say is that it’s important to take a step back and think. I know that sounds a bit [obvious], but quite a lot of the time you might get put on the spot, particularly at a board meeting or an investor meeting, where someone puts you on the spot with a question and you think, “Oh, I don’t know that.” But you maybe actually do know it. Your mind just freezes and blanks and you think it’s totally gone.
What I’ve found is that if you really do know you don’t know, then you just say, “Listen, that’s a great question. Let me get back to you on that, because it would require a more detailed response.” Something like, “I’ll get back to you by the end of the day with a more detailed response. Let me know the format you’d like.” But if you think, “Maybe I do know the answer, I just can’t think of it right now,” one trick I’ve found quite useful, particularly if someone asks about the numbers, like “how do you build up to this?” or “talk me through your progression in salary expenditure”, is to get a pen and paper and do the maths in front of them. You can get there, because you know how to do the maths.
Say they ask, “Talk to me about the quarterly progression.” Okay, I know my salaries were X last quarter and then we went up by 10%. So you work it out: it was 2, we went up to 2.2, then we did this, and you start drawing the story out. You become more confident as you’re doing that on a piece of paper, and it looks good as well. You’re writing everything down, but you’re also ordering your mind. Quite a lot of the time you have so many numbers in your head about what’s happened in the last quarter or the last half or the last month, so ordering your mind around what the really important thing they’re asking is can be helpful. You can visualise it for yourself, write down some of the numbers and then look at whether what you’ve written is even logical, and therefore whether it’s the right answer.
No one begrudges you taking time over an answer. They would begrudge you throwing out something that is absolute nonsense. You will get found out. The board, management and shareholders will call you up on it straight away. They’re not really going to care whether you’re upset by it or not. They can smell [expletive] a mile away, so you’ve got to know what you’re talking about. But I do find that helps. A lot of the time the answer’s there. You just need to access it somehow.
How Phil joined the gambling industry
Vasco: Fair. CFOs are in all kinds of industries and somehow you ended up in gaming. I’m pretty sure this was not your plan all the way, or your childhood dream. How did you come to gaming?
Phil: I was at Shell for a couple of years and it wasn’t quite my kind of organisation. It had over 100,000 people, it was very hard to get anything done and quite bureaucratic. It was a very good transition from practice to industry, but it was quite clear it wasn’t something I particularly wanted to do long term. I was very agnostic about what industry I went into after Shell. I just wanted somewhere fast-moving, a tech company, and I didn’t really mind what. Then the opportunity came up, and I’m very passionate about my sports, so it was a really good fit. It’s a sportsbook-only company, so for me it was the perfect fit. I get to live, eat, breathe and sleep sports and do finance at the same time. It was a really lovely start to my gaming career and I met so many nice people there and made some really good friends. It’s quite a close community. Everyone knows everyone else, but it’s a very nice community once you’re in there.
I spent six years at Kambi and was very happy there. Then I was offered a CFO job at a cyber security company, which was great, and I had a fantastic couple of years there. But then GiG came and said, “We’re doing a listing on Nasdaq Stockholm. It’s a B2B sportsbook platform and you’ve got the prerequisite experience.” I’d been listed on First North, I’d done sportsbook and I’d been a CFO. They said, “We’ve got a new management team and we’re completely redoing the company.” It was an opportunity I couldn’t turn down. I was gutted to leave the cyber security company, because it was a fantastic place and I’m still very good friends with people there. But getting back into the industry was great. It was rekindling connections I already had in an area I knew very well.
It is a very nice community. When you go to ICE or wherever, there are all these faces you met along the way. What I really like is the people I met in the US when I was going to regulators and talking. It’s a slightly different type of experience from what others maybe have in terms of building up connections in gaming. It’s very fast-moving and very dynamic. The tech is always changing, which is really interesting. There’s so much still left in the gaming world to regulate, so it’s one of those few industries where you see huge growth potential in the regulated market still. Many industries today are flatlining, but in gaming there’s still huge growth potential, in my opinion.
Vasco: I agree. I feel like that view often comes when people are in the industry and understand how it works, but from the outside, gaming is not always seen in the nicest way. Did you ever have second thoughts about working in this industry?
Phil: Yes, I did. We can’t shy away from the fact that there are problem areas in the industry, in the same way that there are in other industries. I was at Shell, and there’s definitely quite a lot of bad press around power and gas. For me, that’s why it was important to join somewhere that had, and this word gets bandied around a lot, genuine integrity, worked in regulated markets and did everything possible to ensure we aren’t at the harmful end of the industry. You see a lot of bad stuff, absolutely, but that shouldn’t taint the entertainment side of things. I like sports, I think it’s really good, and a lot of people take a lot of enjoyment out of it. So what was important for me was that if I was going back into gaming, it had to be in the regulated space. It had to be someone who genuinely cares and believes in the players, and who does everything we can to stop problem gambling.
After finance and banking, and medtech, it’s probably one of the most heavily regulated industries in the world. I think people don’t really understand that part of it when they see it as a problem area. They don’t understand how strict the regulations are in gaming. If you’re above board and in the regulated market, it’s tough. Genuinely tough. But that was important for me. If I’m going back, it’s got to be in the regulated space.
Phil's unconventional take on the industry
Vasco: Fair. Do you have an unconventional take on this industry? Something you think people would disagree with?
Phil: [sighs] The industry is quite faddy. It can move quite quickly from one hot, shiny thing to the next. Prediction markets are the current fad, and sweepstakes were maybe last year’s. There’s always something that pops out of the woodwork that can be very disruptive, but it tends not to be what people think it’s going to be in the end. I think most people are quite aligned on where they see the industry going. When we talk to people about regulation and taxes, most people are pretty aligned across the board. I think there’s still a lot of growth in the market. In terms of an unconventional take, I don’t really think I’ve got anything too controversial. We finance people don’t express controversial views. We’re very straight down the line on this stuff.
How a very expensive typo cost one operator millions
Vasco: Fair enough. [laughter] As someone who also works in the gaming industry, I find that most people have a really crazy or funny story that they’ve experienced or heard from a friend or a colleague. What is yours, that you can actually tell on a podcast?
Phil: “That you can actually tell” is probably the crucial bit. I quite enjoyed this when I was out in the US, when New York opened up gaming. It was ridiculous the amount of money you had to spend on licensing to get into New York. The tax rate was 50%. It was totally commercially unviable to go into New York State, but people had to do it. I know someone’s going to listen and say this is complete nonsense, but I never bothered to fact check it, because I quite liked it as a story.
The story is that Caesars went into New York, but only for a few months, and lost, I think, north of 50 million or something at the time. They were running a campaign that was a $3,000 matching campaign, which is insane. [laughter] People were flying from across the US to New York to bet there. And it got to my ears that this wasn’t meant to be the campaign at all. The campaign was meant to be a $300 match, but somebody in marketing accidentally mistyped the number.
Vasco: Oh my god. [laughter]
Phil: Because of so much publicity around it, they couldn’t pull back the campaign. So they haemorrhaged cash for about three months and then got out again. As I say, I take no responsibility for any factual accuracy in this story. [laughter] It might be complete nonsense, so please, no one go after me on this. But that’s the story I was told in the pub once, and I enjoyed it and kept it with me.
Vasco: I hope whoever worked in marketing at that company, especially the PR people, can justify the earned media from all the posts that came out about it, because that’s a very expensive typo to make for sure. [laughter]
What it's like to be CFO of a cybersecurity firm
Vasco:
You mentioned that you also worked for a cyber security firm, which I find super interesting. In general, people already look at finance as a bit of a boring job, which I really disagree with. I think it requires a lot of curiosity as well, because it’s not just numbers, as a lot of people might perceive it. How was it to go from the gaming industry, which is perceived as almost crazy and fun, to cyber security, which people would think also feels a bit boring? You told me you loved it.
Phil: Not boring at all. And maybe this is something to bear in mind when people are looking at jobs: nothing’s boring. This is what I try to teach my kids. The word “boring” is basically banned in my house. Nothing is boring. It’s only boring if you want it to be boring. If you want it to be interesting, it’s interesting. Cyber security is fascinating because of the way the world is at the moment, because of how it links into everything and because of how the technology works. If you really get under the bonnet and see how important it is to everything we do, it’s fascinating. It was good having that and then coming to GiG, because it gave me a good understanding of what our own cyber security needs to look like as well.
I found it absolutely fascinating. The idea that you can go on the dark web and there’s a sort of Chinese restaurant menu, where you can say, “Right, I want to do such and such, it will cost me $20, I want it done tomorrow, I want to take someone down.” There’s an industry for it, ransomware as a service. It’s crazy. You get under the bonnet of this stuff and see how simple some things can be and how complex others can be. Then you start trying to understand the psychology of the people doing this and why they’re doing it. It gets really interesting really quickly. It gave my mind over to something I had no knowledge about whatsoever, and suddenly you peel back the onion a little bit and think, my god, there are so many layers to this.
The people working in cyber security are at the forefront of their game in terms of tech. It’s the same as gaming, and there are many similarities between the two. It’s extremely fast-evolving technology where you’re always trying to keep on top of it. In gaming you’re always trying to keep on top of the newest innovation and of any rogue actors, and it’s the same in cyber security. Even the way you sell the B2B product is very similar. So it was quite a natural fit that I hadn’t really appreciated until I did it. I’m really passionate about it. As I say, I don’t think there’s any such thing as a boring job, certainly not at CFO level, because everything can be really interesting.
Vasco: What do you miss the most about it?
Phil: About cyber security?
Vasco: Maybe about the company.
Phil: About cyber security, maybe the fact that my mum was happy to say I worked in cyber security, and now she sort of mumbles when people ask her what industry I work in. [laughter] But that company in particular had a really nice niche. It was basically about DDoS prevention, so preventing DDoS attacks. It fitted into one gap in the market really nicely, and it was reasonably small. What I do miss is the fact that they only reported twice a year to the stock market. Two a year is fine. Four a year takes over your life. I really miss that. I’d highly suggest it. Quantity of reporting isn’t always the best.
Leading an IPO in gambling
Vasco: Fair. Then you came back to gaming. You went to GiG just before the IPO. Why do you think they picked you?
Phil: I think it was the combination of having been for a long time in a B2B sportsbook company that was listed on Nasdaq First North, had its headquarters in Malta, was international and was in the same markets. I also had the US experience, experience as the CFO of a listed company and experience of a growing ARR business. There probably aren’t that many people who can tick all of those boxes in gaming. Maybe there are, and maybe I’m doing my peers a disservice. But it worked quite naturally as a fit. It helps that I know Sweden well. I lived there and I speak Swedish. My Swedish mates would contest that, but I maintain I speak Swedish. So there’s a cultural fit as well. All of our board are Swedish and they knew of me through Kambi too. If you add all those together, that’s probably why it was quite a natural career progression from both of our perspectives, GiG’s and mine.
Vasco: You came for the IPO, so take us a bit inside the prep of the IPO. What were the hardest conversations you had in the room, and how do you think people perceive a listing coming together? Is it the real way, or how is it?
Phil: The IPO was decided before I joined. We split from a bigger company, so it’s now [Gen2 Media] and GiG Software plc. Previously it was just one, so effectively it was a distribution out of the old parent. Those conversations happened well before I joined, so that ball was already in motion and they had already filed for the initial IPO. One of the things when I joined was a conversation about which market to be on: First North, which is the sort of secondary listing, or the Nasdaq main market. Explaining the differences between the two was really important.
I’d done a lot of work at Kambi on whether we should move up the listing or not, and it was quite clear there was no benefit. You stay on First North and that’s absolutely fine. If you get to the main market level, there’s not really more liquidity or a bigger investor pool, but there is more burdensome regulation, more reporting you have to do, and it costs a lot more money. So there’s not really a benefit. I had that conversation early on. I think it was in the balance when I was talking with the GiG guys, and I said, “Look, this is my opinion. We should go First North.” That helped frame an easier path to the listing.
It did help that we were already listed, although maybe not as much as people thought, because it is effectively a new listing. You can’t just piggyback off what you’ve done previously. You have to do everything from scratch again. The GC is absolutely crucial in that. We got an absolutely fantastic GC and he navigated absolute minefields. But the tough conversations really are about what is a nice-to-have versus what you must have. When you do the listing, there are all these things that come up from the auditors, from your certified adviser, from everything, and it can be quite overwhelming. You think, “Right, how are we going to fix all of this?” So it’s really important to lock down what the absolute blockers are, the things without which we cannot join the stock exchange, and what the “in the best world you’d have all of this” list looks like. Then you can say that over time we’ll bridge that gap. You’ve got to understand what the bare bones are that you need and what good looks like, and then you can make a path between the two. You shouldn’t aim for the second on day one, because things can change. It’s really important to understand what the real blockers are and what are perceived blockers but not really.
When you’re thinking about doing an IPO, particularly in this day and age, there really needs to be good rationale, because the market is so depressed at the moment. Everyone’s getting hit left, right and centre. Whether you want to blame AI, the war in Iran, the war in Ukraine or gaming regulation specifically in the gaming sphere, or the fact that AI in the US has basically decimated all the stock exchanges, whatever you want to blame it on, it’s just hard. That’s a fact. So you have to have a very good reason why you’re IPOing. In this day and age the rationale has to pass the sniff test. You can no longer say, “This is quite an easy way to exit and cash out,” because it just doesn’t wash. You won’t make any money from it. So you have to have really strong reasoning and a good game plan, and then it probably will work. But now is a difficult time to be doing it, I would say. You probably need things to settle on a lot of the uncertainties at the moment.
Dividing Gaming Innovation Group in two
Vasco: When you split, you had to divide the company in two, which from the outside sounds a bit messy. You have two boards, you have to decide who pays for what and what goes where. How was that conversation, how did you deal with it, and why did you have to do it?
Phil: The basis of why the split happened was that we had an affiliate media business that was printing money and going nicely, and then we had a platform sportsbook business that was losing money, let’s put it that way. It was the unloved child and wasn’t really factored into the valuation of the overall company. The thinking was, if we split these two and get someone who can really focus on the platform sportsbook and bring it up, and let the affiliate run itself, then the aim is that two plus two equals five. You maximise shareholder return by having two focused businesses, because affiliates and a sportsbook platform don’t have a lot of synergies. They’re not natural bedfellows, so you’re not going to get a lot of crossover between the two.
Quite early on, they ran the sportsbook platform as a separate business, so it maybe wasn’t as hard to split down the middle. But you’re right that it still gets messy. No matter what you try to do, there’s still loads of stuff that falls in the middle, like who pays for this audit or that one, and some of those are pretty whacking great bills at the end of the day. We did have some quite strong conversations about it, even post-split, and that was not always easy. When they split, we really had one crossover board member, well, two when we split, but that’s kind of it, and now it’s really only one. So there wasn’t a lot of crossover. We don’t have a lot to do with the previous company.
It’s not the easiest. Some employees had to decide whether to focus on this or that, particularly in the central functions, where you would maybe split roles, and people would say, “I want to go to the sportsbook platform side” or “I want to go to the media affiliate side of the business.” So it was as clean as it could have been, but nothing’s ever clear-cut on day one.
Cleaning up the balance sheet
Vasco: You guys also had a quite tough first year. You reported roughly 8 million in losses. Was that to do with the business, as in how the business was being run in practice over 12 to 18 months, or was it more a one-off cost due to the separation and the listing?
Phil: What happened in 2024, when we listed, was that I basically wanted to clean up the balance sheet, and that involved writing down a lot of assets. It was quite a significant impairment, so you’re seeing one-off write-downs of well north of 50 million euros in 2024 relating to the balance sheet, for example M&A valuations and other things. When I looked at it, I thought, this is our one opportunity to rightsize the balance sheet and the company. It’s not easy, but it’s better if I do it now, on day one, than in six months’ time. You need to be upfront with investors about what they’re actually investing in and what they’re buying into. So it was our one chance to clean the company up. For the 2024 results I’d say that was a complete cleanup exercise.
The focus was then on 2025: how do we turn this into positive EBITDA, how do we get the revenue growth story, and how do we get to cash generation? So the big focus in 2025 was signing new customers, getting new launches out the door and building momentum. We didn’t quite get to where we said we’d get to with the stock market in our first year for sure, but I’m very proud of how we turned round EBITDA by 13 million, and our top line grew at double-digit rates. I was really pleased with 2025. What we still didn’t manage to do was the cash generation side of things, which is very important for the business. I’d say that’s my number one focus at the moment: generating some cash. The tanker is turning, the business is turning. We were probably losing [two and a half million euros a month] before we listed. That’s gone way down, our run rate has gone way down, but I need to make sure that by the end of this year we are generating cash. That is my number one focus for this year.
How to deal with falling short of guidance
Vasco: Exactly. We’ll have time to talk about that, because that was definitely a moment where things took a much more positive turn. But back to 2025. You initially projected 44 million in sales and around 10 million in profit, but it came out at around 39 million in sales and 5 million in profit. What happened?
Phil: Look, we were probably quite ambitious with our message to the market, if I’m really honest. We had a lot of very good pipeline opportunities, and it was frustrating that a few of them just did not happen in the end. We talked about Brazil, for example. That would have been significant top-line generation in 2025, and unfortunately the partner we went with decided not to go into the market. There’s not much you can do about that. We had quite a few headwinds like that, and a few launches got delayed. If you combine all those together, you take quite a significant hit to the top line.
I’m personally very proud of the numbers we posted. It’s one of the frustrating things: if you go to the market, say something and miss it, you get absolutely pummelled. If we’d gone to the market and said we were going to do 39 and 5, our share price would have rocketed, because it would have been a really good growth story, a great turnaround in EBITDA. I have this drummed into my head all the time by the analysts: you have to meet expectations, you have to beat them, and you have to do that time and time again. If you don’t, you get punished. Unfortunately we got punished for it, even though I think the numbers we put out were really good and positive for me. They weren’t what we said we’d do, and that’s where the problem lies.
Vasco: Do you think that experience changed how you look at guidance from now on?
Phil: It does. It’s always a difficult balance, because you can never please everyone with guidance. We think we’ve got a really good growth story and we want the market to understand how good it is, but you can end up hamstrung by what you say to the market. If you consistently overpromise and underdeliver, that gives you a trust issue. But this comes back to the quarterly reporting thing again. If you say, “This quarter I’m going to do this and this and this,” it doesn’t work like that. These things aren’t linear. One quarter you’ll do well, one quarter maybe not so well, and there are a lot of different variables in there. You can end up constricting what you do as a business, or making maybe the wrong decisions, by being too specific in your guidance.
It’s a really hard balance, because my belief is that investors should really be looking three to five years down the line, at the underlying growth of the business. Not “where will they be next quarter, do they hit exactly where they said”, but what the ARR growth story is, how their cash generation is going, how their profitability is, what the ultimate goal is for these guys, what the outcome is and how they’re going to get there. Is it a credible story? That’s quite hard when you’re chasing quarterly or half-year returns, or you have specific metrics in a portfolio. So it’s a tricky balance, I think.
Vasco: Then things took a turn. Your sales are growing and you’re back to underlying profitability. What changed?
Phil: It’s a mixture. We knew we had the pipeline. We’d already signed these deals, and it was about when they launched, not if. We are also laser-focused on cost control. Unfortunately we had to do another round of looking at costs earlier in the year, stripping another four to four and a half million out of the business on an annualised basis. It’s still a focus of ours. If you look at our costs, we’re basically flat year on year while our revenue grows accordingly. For me, that means we can make this a really scalable business, because our cost base does not need to grow to support a lot more revenue. We ultimately had a very mature cost base and the revenue wasn’t matching it. So we’ve got a lot more capacity to drive revenue growth before we really need to do anything with our costs.
Why choose debt over equity
Vasco: As you’re saying, there was a big consumption of cash at the time, and yet you raised equity twice, which diluted your shareholders by roughly a quarter, if I’m not mistaken. Why did you pick that, and did you explore debt as an option?
Phil: The question of debt versus equity has pros and cons on both sides. When you’re a growing company that has only just IPOed, with a track record of not generating cash, the debt path is probably a harder one to go down, to be quite honest. In this day and age, with SaaS businesses where they are, I would think a lot of debt providers are probably avoiding the sector slightly, and with gaming and regulation on top, it’s quite a hard market to raise debt in. We were lucky because there was shareholder demand, which is why we did it. One shareholder in particular wanted access to a large stake in the company. So we took the opportunity and thought, we could actually do with additional cash to invest in our growth. It was a good way to satisfy the shareholder demand and support our growth story at the same time. That’s why we went down that route. But I would say we didn’t look at debt. And for sure, I know it would have been quite hard to find reasonable debt financing at that point in time.
Vasco: Okay, makes sense. When you listed, you listed at six kronor and now you’re trading at roughly two. How do you read this number, and how do you explain it to a retail investor? This is more of a personal opinion, as a retail investor myself: when we invest long term, gambling probably isn’t our first choice. We wouldn’t see an investment at 10 or 20 years, we see it more like five years maybe. How do you read this number and how do you explain it to them?
Phil: Obviously it’s not pretty at first sight. But we’re not the only ones. If you map out what’s happened with share prices across the sector, very few have bucked the trend at the moment. So I’d look at it more as an industry downturn than something specifically that we’ve done. The way I look at it, and obviously I’m biased, is that we’re now woefully undervalued, so I see a very good investment opportunity for anyone coming in. If you look at our growth, our move to profitability and our move to cash flow generation, we should be valued multiple times more than we are. However, that’s not how the market sees it. The market just needs to see us deliver cash. I firmly believe the day we come out and say, “We’re generating cash this month,” is the day our share price is going to shoot up.
That’s really the difference between UK and European investors and US investors. US investors are happy to be sold a dream five years down the line. UK and European investors want a sensible business that’s mature, generating cash and stable. They’d rather have that than 100% revenue growth year on year. So I don’t like to read too much into the share price. The tail shouldn’t wag the dog. If you deliver as a business and grow well, the share price will follow eventually. My job is to tell the story and make sure investors understand it, but ultimately a lot of investors just want to see the results. They’ll make a decision based on that. It is dangerous to chase a share price. It really is. It can be quite short-termist. You have to understand why it’s where it is, and you have to observe investor sentiment and make sure investors understand what you’re doing as a business. But if you produce the results, the share price will follow eventually. Gaming stocks have taken such a pummelling. Have we reached the floor? I don’t think you can ever say you’ve reached the floor, but I’d like to think that as an industry we’re pretty close to bottoming out.
Managing expectations of the share price in gambling
Vasco: I feel like there’s probably a big pressure to follow the share price, and in theory that should be the number one target. How do you manage those expectations, and when the conversation on that level comes about, what do you say?
Phil: You have to acknowledge it. You can’t just dismiss it and say, “Oh, I don’t follow the share price.” You absolutely have to acknowledge that the share price isn’t where it should be. However, if you explain what you’re doing as a business well enough, then in theory that should address those issues. I think the market will understand your growth plans, even if it doesn’t buy into them. If you can clearly demonstrate, “Listen, we accept that the share price isn’t where we want it to be, here’s our path to get us there and the share price will follow,” the logic does follow.
The problem when you’re on First North, and it’s the same on AIM, is that you don’t need a lot to move the share price either way. It’s the good, the bad and the ugly. You can literally sell 10,000 shares to a retail investor and that will either tank or drive your share price up. That’s why you shouldn’t make it your be-all and end-all, because some market movements are irrational and you can’t do anything about them. Someone will just dump shares, or someone will just want to buy shares, and you maybe don’t even know who that person is, because it might not be a big volume. It might not be anywhere near big enough for you to understand why. So it’s dangerous to always draw conclusions from it.
Vasco: In November you said you didn’t foresee needing any more investor money. From my perspective, that means your focus on cash-generating activities is probably working out. Is that the case?
Phil: The initial round of cost cuts we did earlier in the year has been 100% successful. We’ve realised those cost savings now, so I’m seeing the cash burn come right down as well. It’s never job done. There’s more to come for sure. There are more efficiencies we can make, more things we can use AI for, and more platform consolidations we’re working on, which means our cost base will naturally come down a bit more. In terms of funding, we’ve got a reasonably strong balance sheet. As a CFO, I don’t think I would ever say we’ve got enough cash. I don’t think any CFO should ever say that. I’m always happy if someone throws more money in my direction. [laughter] However, from our perspective, it’s about standing alone and not having to rely on equity injections or debt or things like that. That’s important for us.
Vasco: CFOs are often asked to predict the future. My question to you, and you can answer to the best of your abilities, is whether there’s something that could happen that might change this picture?
Phil: There’s a lot we’re working on at the moment, and we could go in one of many directions. That’s why it’s exciting. That’s why the industry is exciting, to be honest. It’s constantly moving and in flux. We’ve talked in quite a few investor presentations about looking at potentially whether there’s an M&A story that might work. There are lots of different things, and some really big customers we’ve got in the pipeline, ready to launch this year. So there’s a lot in the next six to 12 months that may change our trajectory for the better.
Vasco: That’s the most important part, for the better. You’re also exploring the Canadian market, the French market and the lottery vertical, right?
Phil: Exactly. The lottery one is going to be an important one that will hopefully launch towards the end of the year. Alberta has just regulated. We’re pretty big in Ontario, and we’ve signed three of our existing partners to go into Alberta. That’s exciting and there are more opportunities there. The French market is a really interesting one. We’ve got an office in France, and I’m actually going there tomorrow. It will be interesting to see where that regulation goes, and I think a lot of people are waiting on the sidelines there, so that will definitely be one we’re interested in. The Spanish market is great for us, and LatAm is great. So there are a lot of really good stories out there that we can do. One of our real focuses is on growing our existing customers and getting them not only to grow in their markets but into new markets. That’s where it’s nice that we’re across 30 different markets. You can easily say, “Hey, listen, if you’ve all done that, why don’t you look at this market and this market?” and develop a nice win-win growth story for both us and the partners.
Vasco: Expanding into new markets is not only costly but also very hard work. You told us that this year you’re focusing on cash-generating activities, and generally speaking you have to spend money to make money. How are you managing this expansion into so many different things at the same time, and do you believe that, even though you’re distributing this effort, your timeline will hold?
A CFO's guide to market expansion
Phil: When it comes to market expansion, it’s important for us that if we go into new markets, they’re markets that make it worthwhile. You need three to four opportunities there that are going to convert before you really go in. You can’t go into a new market with one opportunity, unless it’s something like Alberta, where you already have Ontario and you know the opportunities will come. So when I say new markets, it’s really about bringing existing customers into markets we’re in that they’re not already in. If you’re in Ontario, why don’t you take Alberta? That type of thing. So it’s more about bringing existing customers into new markets for them, maybe not for us, or bringing new customers into markets we’re already in.
We did a super quick launch in the UK recently, and we talked about Jupiter Gaming on that. That was good because it’s a really core market for us and we’ve already got the market package, so it’s quick to go in. That’s important for us. When it comes to this, we just need to be smarter. We can’t be chasing new markets that will cost, as you say, a lot of money to go into. It needs to fit with our strategic plan, but also be something we can go into quickly and easily.
Vasco: How do these decisions come about? Is the CFO part of the decisions on which markets to explore, or does this come from other departments or other C-levels?
Phil: We would typically sit around as a C-level and discuss our market focus. We’ll bring in someone from business development to talk about the opportunities and the markets they’re in, and then we’ll go away and talk about what strategically makes sense for us. What’s the shortlist of new markets, what’s our focus on existing markets and where do we want to expend our energy? Absolutely the CFO needs to be in that conversation. I think it would be worrying if those decisions were being made elsewhere, because then you’re not necessarily thinking about the whole angle: what’s the ROI on the market, what resources do we need to expend to get in there?
Phil's biggest lessons from his time as CFO
Vasco: Makes sense. Now we are two years in. What were your biggest lessons?
Phil: It’s been a lot of learning. We obviously took a bit of a bloody nose with the share price, for sure. In terms of managing messaging about guidance, that’s always something I need to reflect on and think about how to better manage expectations going forward. That’s very important. The ongoing focus on cash generation has been really relentless in this role, and I think it’s something every CFO needs to go through, to be quite honest. You really start to understand cash flow deeply, and where and when and the timings, and how important it is that everything works together. That’s certainly something I’m still learning.
With regard to the IPO and the lessons from it, hindsight’s a great thing, but was it the right time? I’m not sure I can answer that question. The lesson is that if you’re going to IPO, we couldn’t have predicted what’s going on in the market. You couldn’t have predicted that AI would kill SaaS business valuations, so you can’t really beat yourself up about that in retrospect. But it’s always about questioning your mindset: if you do want to IPO, is it the right time, and what are the other factors involved? So I’ve learned a lot, and I’m still learning every day. Every day is a school day for me. [laughter] There’s always something that happens where you think, I need to work out the answer to this rather than already knowing it.
Vasco: I’m sure your answer is going to be yes, but would you have done anything differently, knowing what you know now? And what would that be?
Phil: In terms of my current role, or in my life? [laughter] All of it. Where do we start? Honestly, no. I think you have to learn from your mistakes. I think it’s disingenuous to say, “Oh yes, I would have done this differently.” Then you wouldn’t ever have learned why that was not the right way to do it. It’s not always fun while you’re in the mix of it and something’s gone wrong, but if you’re not seeing why it’s gone wrong, you won’t learn. Hindsight is a great thing, but you can’t turn back the clock and make a different decision, because then you would never have understood the outcome. So I think the answer is no, honestly. I don’t think I would have done anything differently. It’s taught me a lot of things along the way.
Vasco: I’m guessing that’s the advice you also give your kids all the time, because we all think about what we could have done differently and sometimes beat ourselves up a bit too much over the mistakes we make.
Phil: Exactly. If we don’t make mistakes, we don’t learn.
Vasco: Exactly. What is next for GiG?
Phil: I think the next six months are going to be honestly transformational. When we start generating cash and start launching some of the big names we’ve got, that is going to be massive. We’ll also have shut down, or migrated onto [Corx], one of our legacy platforms. There are three or four things in the hopper that I think are going to make a fundamental difference to what we do, so I’m super excited. There’s a bit more hard work to go, but if we talk in January, I think you’ll find it has totally transformed the company.
Vasco: Very good. And what’s next for you?
Phil: Well, I’m off to Toulouse tomorrow to see my French office. So there we go, that’s immediately what’s next for me. From my perspective, the GiG growth story is one I really believe in. We’ve put in a lot of hard work and it’s been hard, so seeing it come out the other end is going to be really satisfying for me. I think we’ve got a great story ahead.
Vasco: I’m sure it will. Well, Phil, I’m very happy that you are our first guest. It was a wonderful conversation. Thank you so much for everything you shared today. It was a pleasure to have you on.
Phil:
