AXES.ai, a cloud-based information management platform for casinos and gaming operators, could raise additional capital in 2023 ahead of an initial public offering in 18-24 months, said co-founder and CEO Earle G. Hall.
Quebec City-based AXES.ai would consider a raise in the CAD 20m-CAD 30m (USD 14.5m-USD 21.8m) range, which could be used for up to two acquisitions, the executive told this news service. The company already has CAD 20m in cash on its balance sheet, he said, adding: “It’s always fun to have a healthy bank account.”
When public market conditions turn favorable, Hall said AXES.ai would seek to list on the Toronto Stock Exchange at a minimum valuation of CAD 150m. “We will go public when market conditions are ready,” he said.
The company has raised CAD 38m over six rounds and counts Desjardins, Lune Rouge, Export Development Canada and Quebec Angels among its largest shareholders, Hall said, adding that management collectively owns 15% of the business. The company was independently valued at “over CAD 100m” in 2021 by Eilers & Krejcik Gaming in anticipation of going public, the CEO said, adding that the valuation “has increased sharply since.”
Founded in 2008, AXES.ai provides monitoring devices for slot machines and related applications for cashless solutions, regulatory compliance, tax collection and allocation, business intelligence and fraud alerts. Clients include casino operators and gaming regulators.
Hall, who along with most senior management works from Las Vegas, said AXES.ai has 1,186 clients in 47 countries. The US accounts for 68% or revenue, which is undisclosed, with the European Union being the second-largest market, he said. Most gaming clients are “little chains that nobody knows,” he said, but in 2023 AXES.ai will seek to “integrate the largest [gaming] organizations in our market,” which is the main reason the management team has shifted to Las Vegas.
Ideal acquisitions in the near term would be around “fintech acceleration and everything digital that is out of the home,” he explained without going into further detail. AXES.ai has made two previous acquisitions, acquiring a mobile application platform in 2021 and an undisclosed media management platform for automated ad placement and patron experience on TVs and kiosks within casinos. Terms were not disclosed.
Hall said business is poised to explode as more casino operators upgrade technology following the COVID-19 global pandemic, which hurt cash-based slot machine operators and underscored the benefits of remote monitoring and cashless operations. “The casino industry has been slow to adopt technology and evolve toward more efficient means,” he said, “but they are waking up to the need for digital payments and customer data.”
Major competitors include UK-based International Game Technology [NYSE:IGT], Japan-based Konami Holdings [TYO:9766], Las Vegas-based Light & Wonder [NASDAQ:LNW], Austria-based Novomatic, Australia-based Aristocrat Leisure [ASX:ALL] and Las Vegas-based Everi Holdings [NYSE:EVRI], according to the CEO. He said AXES.ai is the only fully cloud-based company in the group, giving it a competitive advantage on cost to implement.
Hall said that going public will provide a better return to shareholders than being acquired by one of these competitors or others in the near term. “We have been approached several times in the past, but we will not entertain any discussions that do not reflect the true value of our shareholders’ investments.”
Deloitte provides accounting and Eric Levy at Osler provides legal services to AXES.ai.
