Good Life Plus — Welcome to the Goodlife!

GL+ is a disruptive, entertainment-focused subscription service, offering monthly subscribers the chance of the ‘good life’ through daily prize draws as well as discounts and rewards. Potential prizes include luxury cars, holidays, high-value electronic goods and experiences with a cash alternative. Membership to GL+ also provides subscribers with discounts and rewards at national brand restaurants and experiences, comparable to an entertainment or lifestyle subscription with the added bonus of entry into the prize draws. Free cinema tickets or a monthly complimentary movie are also offered to members based on their subscription plan. Daily prize draws are held live and online with presenters, providing greater engagement and transparency with members when compared to traditional lottery or prize draw models.

Co-founded in 2021 by brothers Charlie and Joseph Chadd, GL+ has grown quickly from 7,000 subscribers in September 2022 to c 25,500 subscribers and more than 800,000 email subscribers. Subscribers are acquired through targeted social media marketing campaigns across Google, YouTube, Facebook and Taboola. Management notes GL+ has over 400,000 followers across multiple social media platforms and 2,256 five-star reviews on Trustpilot.

Management believes its model provides an exciting alternative to the current traditional lottery and prize draws from operators including the People’s Postcode Lottery, the UK National Lottery, Best Of The Best and Omaze. By offering discounts and rewards through a subscription model, GL+ provides customers with a value-add membership to the Good Life Plus club. This generates scalable and profitable recurring revenue. Much like other lottery operators, GL+ supports charitable causes, focusing specifically on supporting young British athletes and children. The company, however, does not state how much of its membership fee goes towards these causes.

GL+ came to market via a reverse takeover of Semper Fortis Esports on the Aquis Stock Exchange (AQSE) Growth Market, with the first day of dealings on 18 December 2023. GL+ undertook a placing and subscription offer at a price of 2p, raising £1.4m, equating to a market capitalisation on admission of £12.58m.

The purpose of this report is to discuss the company and its growth strategy, and provide some wider context to give an idea of the market opportunity. This report relies solely on the company’s disclosure and management’s expectations, and we have carried out a limited sense check on the financial model. The valuation is based on the company’s own financial model, with Edison flexing it to provide sensitivities around key variables. Key risks associated with investing in GL+ include the early-stage nature of the business, and hence high execution risk, as well as liquidity issues due to its AQSE listing and potential concerns regarding data protection and cybersecurity given its heavy reliance on customer data.

New customers to the GL+ website are initially offered entry into GL+’s prize draw for free, by providing their name and email address. This allows GL+ to follow up with a membership offer via email. If a customer converts to a paying subscriber, they are given a free seven-day trial, after which they start being billed.

GL+’s business model is predominantly based on a monthly membership fee, which is tiered, as illustrated below:

GL+ also offers an unlimited membership for an annual price of £99.99, which is paid a year in advance, equating to a c 30% discount to the standard membership plan. This unlimited subscription provides subscribers with 100 entries per prize draw, with entry in every daily draw.

In addition to the prize draw entries, GL+ members are offered discounts at national chain restaurants including Pizza Hut, Zizzi, Caffè Nero, Domino’s and Gourmet Burger Kitchen. As shown in Exhibit 1, higher-paying members are also offered a complimentary movie or two Vue movie tickets per month. Members are also offered deals on leisure experiences, such as indoor skydiving or Thames River boat rides.

As the company scales, management plans to develop the membership offering via additional benefits to the various tiers. Other additional benefits include members being able to weight their allocated entries into certain draws, a loyalty programme and a referral scheme.

As with any subscription service business, GL+ faces challenges around customer retention and churn rate. Since launch management has focused on lowering the churn rate of paying members, a key metric that underpins the recurring revenue model. GL+ believes that the development of the membership tiers as described above will grow its customer retention levels, as well as an improvement in the prizes on offer, which would consequently increase the lifetime value of a customer.

Essential to GL+’s business model, the company offers consumers wishing to enter the prize draw the opportunity to do so for free via the post. These postal entries are sent by the individual with their personal and contact information, as well as the prize draw they wish to enter. The company allows one postal entry per envelope and the terms and conditions of the prize draw are applied equally across the entries from the paying membership and the free postal route.

This freemium option is key to GL+’s model as it means the company is not beholden to the same UK regulatory requirements as the traditional lottery operators. This is due to GL+ operating a free prize draw and promoting both the free and paid routes to prize draw entry on an equal basis.

GL+ is still very early stage but has demonstrated rapid growth in its first two years of trading. Revenue in H123 to 31 March 2023 was £638,895, not far off the amount achieved between the company’s inception (17 September 2021) and 30 September 2022 of £752,522. Over the same period the subscriber base has more than tripled from 7,000 to c 25,500.

Key to the company’s growth profile is the level of and return on marketing spend, as well as the churn rate. Based on the company accounts in the Admission Document, in GL+’s first year of trading, advertising and marketing fees were almost 100% of sales. This highlights the importance of effective marketing in driving customer acquisition at as low a cost possible. Management notes it is always evaluating alternative marketing strategies to ensure maximum efficiency.

Simply put, an increase in the level of marketing expenditure drives revenue growth. Due to the company’s relatively low overhead costs, much of the gross margin, which is after the cost of the prizes awarded to members, drops through to cash. This cash is reinvested into the business to continue acquiring customers and driving the subscriber base. Greater detail around the sensitivity to potential EBITDA margins is discussed in the Financials section.

The scaling and growth of GL+’s membership base is important in making the company an attractive proposition for high-quality entertainment- or leisure-focused companies to partner with. This in turn makes the GL+ offer more appealing to the consumer as the breadth of exclusive discounts and rewards available through a subscription grows.

The UK online gaming market has grown significantly over the past 10 years. Active online gambling accounts have grown from 15.2m in 2011/12 to the latest figure of 31.9m in 2021/22, while gross gambling yield has increased from £710m to £6.4bn over the same period (source: Statista). The substantial growth has been enabled by greater regulation of the UK market, in particular the Gambling (Licensing and Advertising) Act 2014. Although regulation in the short term can cause disruption, formal regulation is generally positive for gambling operators in the longer term, as it provides a clearer operating environment and reduces future regulatory risk.

Lotteries as a gambling channel have consistently accounted for a large proportion of Great Britain’s gross gambling yield, ranging from 24–33% between 2016 and 2022 (source: Statista). Within this, The National Lottery makes up c 86% of the lottery total shown in Exhibit 4, highlighting its consistent popularity within this channel.

The Gambling Commission’s February 2023 report investigated UK gambling participation, specifically breaking down the gambling habits of 4,001 respondents over the prior four weeks. As can be seen in Exhibit 5, both The National Lottery and other forms of lottery entries have consistently been the largest method of online gambling from respondents, alongside an aggregation of sports betting channels.

Consequently, management believes there is a large market opportunity and that GL+ is well positioned to disrupt the sector with its differentiated approach.

Although GL+’s business model is unique and disruptive to the traditional prize draw operators, we list below its closest peers and UK lottery operators to give an idea of the potential scale of the business, as well as the competitive environment. Many of these operators are large and well-established, reflecting some of the challenges facing GL+ as it seeks to acquire new customers.

The National Lottery, established in 1994, is GL+’s largest and most established peer. It reported sales of £8.2bn in 2023. The state-franchised lottery had been operated by Camelot Group since its inception, but from February 2024 will be run by Allwyn Entertainment. The National Lottery offers a range of draws throughout the week for a low entry fee (Lotto: £2, EuroMillions: £2.50). Participants in these draws can enter online or via selected retailers. When compared with GL+, the cash prize on offer is far greater, however the odds of winning are far lower given its scale. The highest jackpot on record for Lotto was £66.1m and for EuroMillions £195.7m.

People’s Postcode Lottery was introduced to the UK in 2005 and is operated by Novamedia. In its annual report the company quotes 4.3 million players in the UK, achieving revenue of €649m. Much like GL+, players pay a monthly subscription fee of £12 to be entered into weekly and monthly cash prizes. Based on the player’s postcode, the weekly cash prize equates to a share of £1m, while the monthly cash prize is a share of a minimum of £3.2m. The People’s Postcode Lottery is widely popular, with the company claiming 70% of Great Britain enters the prize draw. As the company is a regulated lottery it does not need to offer a free route to entry. People’s Postcode Lottery pays out 70% of its revenue in prizes or to charity, with a stated 33% of ticket sales going to charity.

Best Of The Best (BOTB) was founded in 1999 by William Hindmarch and is similar to GL+ in the prizes it offers to players, such as luxury cars, cash and lifestyle prizes. For the dream car competition, players enter the prize draw through playing a game of ‘spot the ball’, with the player closest to the centre of the ball winning a luxury car. The entry fee for dream car competition ranges from 80p to £4.95, while the lifestyle competition starts from 50p. Players can purchase up to 75 tickets, however each ticket requires a new choice in the ‘spot the ball’ game and as such it is a clunkier process than GL+ or the other peers. BOTB was admitted to on AIM on 14 August 2006 and was listed until 24 August 2023 when the company was delisted following a recommended cash offer from Globe Invest, which valued the company at an equity valuation of £45.3m. We calculate the exit multiples for the transaction at 1.5x EV/sales and 7.0x EV/EBITDA, based on last reported FY23 revenue of £26.2m, EBITDA of £5.5m and net cash of £6.9m. Globe Invest is an investment holding company of Teddy Sagi, the founder of Playtech and Kape Technologies.

Omaze is a US prize draw company that launched in the UK in 2020. It provides players with the chance of winning a luxury multi-million-pound house and a £100,000 cash prize through a draw. Entry into the prize draw can be via a single purchase (ranging from 320 entries for £150 to 15 entries for £10) or via a subscription service (ranging from 150 entries for £30/month to 30 entries for £10/month). Much like GL+, Omaze also offers a free route to players via a postal entry and consequently does not fall under the UK Gambling Act 2005. Omaze donates 17% of all ticket sales to a chosen charity and guarantees said chosen charity a minimum donation of £1m.

As with most companies in the early stage of the business life cycle, GL+ exhibits execution risk as it scales, particularly as it has not yet been net operating cash flow positive and is loss-making. Gross profit generated from the business operations is reinvested into operating expenses, particularly marketing expenditure, to grow the subscriber base. We undertake a scenario analysis below in our Financials section to show the sensitivities to management’s business execution.

In this section of the note, we will examine the risks that the business faces that are outside of management’s control. These are listed below:

GL+ has assembled an experienced management team across both the gaming and digital marketing spaces, as well as expertise in scaling early-stage companies with a similar profile to GL+. The board believes this management team has the correct expertise and is well positioned to scale the business.

Charlie Chadd – CEO: Charlie graduated from Nottingham University with a degree in economics and subsequently worked at TLS Investments while completing an MSc in real estate and finance at Reading University. He set up Borough Studios in 2017, a co-working space in London with a four-year lease, and having fitted it out he used digital marketing to promote the space. The company ran at capacity with 200 desks and was profitable in year two. Charlie then set up Good Life in the last year of the lease with his brother Joseph Chadd and launched the subscription model (Good Life +) in 2021.

Joseph Chadd – executive director: after graduating from Exeter, Joseph joined RBS’s equity trading desk through its investment banking programme, later moving to JP Morgan’s FX trading desk. In 2012, he founded Prestige Cars Kent, now a top 30 UK independent auto dealership by turnover and Kent’s largest independent prestige dealer, with 75 staff and sales of £50m in 2022. Alongside his brother Charlie, Joseph is a co-founder of GL+ and was pivotal in re-launching the subscription service in 2021. He oversees commercial operations at GL+.

David Craven – chairman: David has extensive experience in the global gaming sector. He was the former CEO of Allwyn where he played a crucial role in winning the fourth National Lottery licence from the previous operator, Camelot. He led The Tote from a state monopoly to a successful private company and co-founded UPC/Chello, leading them to an IPO in 1999. David has extensive board-level experience, including as chairman of Turf TV and a board member at Ultimate Finance Group.

John Gordon – non-executive director: John is the CEO and co-founder of Incentive Games, a B2B software provider that specialises in customer engagement, retention and monetisation. Through fun, engaging solutions, Incentive helps clients such as Bet365, FanDuel and LiveScore acquire users, upsell products and strategically drive traffic to improve monetisation and spur growth.

John Edward Taylor – non-executive director: John previously spent 20 years in the Army Air Corps, and has more recently focused on assisting the development of small-cap listed companies. He is currently the chairman of AQSE-listed Asimilar Group and is an NED of AQSE-listed TAP Global and BrandShield Systems. He has previously held NED roles at AIM-listed companies including Pathfinder Minerals, Sabien Technology Group and Bidstack Group.

David Ivy – CTO: with over 20 years in the digital sector, David founded the web agency Ellipsis Media in 1999, serving as creative and digital director. He grew it into the dotDigital Group, spearheading industry-leading products like dotMailer and taking the email platform public. At dotDigital, he managed 300+ employees, including 50+ product designers and developers. After exiting, he consulted for companies like eBay and Grosvenor, advising on growth and mentoring directors. David now oversees product architecture at GL+, ensuring robustness and scalability amid GL+’s ambitious expansion plans.

Ian McCaig – adviser: Ian founded Fiit, a top-rated digital fitness subscription business with the UK’s number one rated fitness app, whose strategic partners include Sky and Samsung. He is a seasoned entrepreneur skilled at scaling high-growth companies, previously co-founding and serving as CMO of Qubit, which was acquired by TSX-listed Coveo Solutions in 2021.

Victor Chandler – adviser: Victor is a prominent British entrepreneur. He founded one of the UK’s leading iGaming companies, BetVictor, and served as chairman during its period of growth. Having sold his stake in 2014, he now is an active investor in the real estate and technology spaces. He will provide GL+ with advice on customer acquisition and retention, as well as insight into scaling the company.

GL+’s model is to attract new customers through a number of digital marketing channels, by offering a range of membership plans. The company then looks to subsequently retain its membership base through increasingly attractive prize draws and membership offers. The membership base has grown rapidly since inception, with the latest figure at c 25,500.

GL+ has a number of levers it can pull to control the rate of growth of paying new subscribers, and therefore its recurring revenue. The company has a low fixed-cost base due to a small number of employees and a relatively small number of overheads. Given variable costs make up a much larger proportion of the cost base, of which marketing and advertising make up the majority, this presents the opportunity for operational leverage as the revenue grows. This is particularly pertinent given the company’s early stage. Management can scale up or down the absolute level of marketing spend to influence the growth rate of new subscribers, as well as improving the efficiency of that spend with a greater level of targeting or a change in the mix of channels it utilises.

As with any subscription business, GL+ faces issues around customer retention and churn. GL+ has already implemented actions to reduce the churn rate, and is evaluating other churn reduction measures. Reflecting the rapid growth of the company, the selected financials provided in the Admission Document show revenue of £639k in the six months to 31 March 2023, 85% of the total revenue for the full year to September 2022.

In the six months to 31 March 2023, the most recent period of trading, GL+ reported a net cash outflow of £157k, as the operating loss was offset by an injection of cash with the issue of new shares. As GL+ is likely to remain lossmaking at the EBITDA level in FY24, given the ramp up in marketing spend to grow the subscriber base, it is important that the group remains well funded until profitability. Of the £1.4m equity raise through the placing in the reverse takeover in December 2023, management has allocated 80% of funds to the acquisition of new customers and 10% to product development. The reported cash flow and balance sheet figures in Exhibits 9 and 10 do not account for the equity raise.

Given the early-stage nature of GL+ and its lack of trading history, we are reliant on management’s base case expectations when undertaking scenario analysis of the direction of EBITDA margins by 2026. Management’s base case scenario anticipates revenue growth of 141% in FY24, 253% in FY25 and 150% in FY26, with margins developing from negative 24% in FY24 to 35% in FY26. This is under the assumption of a broadly stable cost of acquisition per new customer (CAC), average revenue spend per user (ARPU) and long-term churn rate. The visibility on these is limited given the lack of disclosure of the absolute numbers.

In Exhibit 6 we provide a sensitivity of the FY26 EBITDA margin around management’s base case to changes in the CAC and ARPU of -30% to +30%. This sensitivity is based on all other inputs remaining fixed, including group overheads and the absolute level of marketing spend. The input changes to ARPU and CAC affect the numbers from January 2025 through to December 2026, as we assume that management has relatively good visibility over the next 12 months of trading. It is clear, however, that if GL+ sees a fall in its ARPU or a rise in its CAC, then the likelihood is that management would reign in marketing costs to manage cash flow.

As mentioned previously, BOTB was acquired by Globe Invest in August 2023 at exit multiples of 1.5x EV/sales and 7.0x EV/EBITDA. We have applied these multiples to FY26 revenue and EBITDA expectations and have discounted these back at a range of discount rates to arrive at a range of potential enterprise/equity values for the company. We show in Exhibit 7 the sensitivity of these discounted enterprise values to the different discount rates. Importantly, we note that to achieve positive EBITDA, GL+ is likely to require additional funding.