Double digit revenue growth and a maiden interim dividend from online bingo group Stride Gaming (STR:AIM) send shares in the £131 million cap surging 6.3% to 271p.

Net gaming revenue rose 21% to £21.6 million in the six months to 29 February, driven by a near-doubling of real money gaming players and an increase in the daily average revenue per paying user from $27.50 to $34.70.

The group says this is due to the launch of better content and effective marketing.

STR - Comparison Line Chart (Rebased to first)

Stride acquired mobile social gaming company InfiApps in July 2015 and is on the lookout for further acquisition opportunities. Chief executive Eitan Boyd says he would be disappointed if the company didn’t announce another deal by the end of the year.

The bingo market is very fragmented, while increased regulations and taxes are encouraging larger gambling companies to add scale in order to remain competitive.

Stride’s pre-tax profit plummeted from £1.57 million to £228,000 in the first half due to the introduction of a share-based payment plan and the acquisition of InfiApps.

It has declared an interim dividend of 1.1p, giving it a 1% yield for the 2016 financial year.

Canaccord Genuity says Stride’s ownership of technology gives it the scope to launch a B2B or white label offering, which would be higher margin.

The stock has risen by 47% since its May 2015 IPO, but Canaccord reckons further growth in its real money and social gaming divisions and acquisition activity could drive the share price higher. It has initiated coverage on the stock with a 305p price target, implying 12.5% upside.

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Issue Date: 23 May 2016