Perth-based online gaming company VGW Holdings, founded by ‘young rich lister’ Laurence Escalante, has achieved spectacular revenue growth over the past year and reported its maiden net profit.
The privately-owned company has declared revenue of $379 million for the year to June 2018, up from $99 million in the prior year.
On the back of the higher revenue, it has also posted a net profit of $5.1 million, from a loss of $23.1 million previously.
Mr Escalante, who has a long history in online gaming, established the business in 2010.
Its core gaming products are Chumba Casino, which more than doubled revenue last year to $204 million, and Global Poker, which achieved extraordinary growth in revenue to $172 million from just $10.3 million previously.
The higher revenue was reflected in a big lift in payouts to winners of its online games to $238 million – its payouts are structured as ‘sweepstakes prizes’, which can be redeemed for cash.
VGW’s marketing and advertising expenses also jumped rapidly, more than doubling to $68.8 million. Nearly all of this was spent on Facebook.
A third expenses item that grew rapidly was employee costs, which jumped to $17.5 million last financial year from $6.8 million.
VGW has become a big employer of programmers in Perth, as well as Sydney, the US, the Philippines and Malta.
Its annual report, posted on the company’s website, also noted the company was establishing a software development team in South Korea.
While VGW posted a net profit in FY18, it still has accumulated losses of $35.5 million.
This exceeded its share capital ($22.2 million) and reserves ($4.1 million), meaning it had negative equity of $8.8 million.
This figure was affected by the adoption of an accounting standard that changed its recognition of revenue.
Its 2017 annual report showed positive net equity of $2.6 million as at June 30 2017, but this has been restated to negative $17.6 million.
Mr Escalante, who retains a 63.6 per cent shareholding in the business, features in the latest Australian Financial Review young rich list, with an estimated net worth of $62 million.
The AFR does not explain how this was calculated.
The only other Western Australian on the list is Rory Vassallo, with an estimated fortune of $47 million.
VGW’s annual report discloses several restructuring moves during the year.
Most notably, the group transferred its social gaming operations to Malta on May 1 after obtaining remote gaming licences from the Malta Gaming Authority.
Another notable development, in July 2017, was the appointment of Perth-based Mark Potts as a non-executive director.
Mr Potts was formerly the worldwide CTO and VP for Corporate Strategy at Hewlett Packard Enterprise.
His current board roles include gold miner Resolute, fintech Decimal Software and iCetana.