Total revenues of $27.8 million up 263% versus
prior year on B2B growth and addition of Coolbet
Strong execution and new customer launches
drive 52% growth in B2B revenues versus prior quarter
New B2C Segment (Coolbet) outperforms Company’s
expectations and delivers $14.3 million in quarterly revenues
Content strategy bolstered by long-term
exclusive deal with Ainsworth
GAN Limited (the “Company” or “GAN”) (NASDAQ: GAN), a leading
full-service Internet gaming software-as-a-service provider to the
real money internet gaming, online sports betting, and simulated
gaming industries, today announced its operating and financial
results for the first quarter ended March 31, 2021.
Dermot Smurfit, CEO stated:
“We started the new year on a strong note with 263% top-line
growth year-over-year, fueled by both organic growth as well as the
Coolbet acquisition. We completed a record five RMiG partner
launches during the first quarter, highlighted by our
groundbreaking launch and strong results in Michigan, plus our
exciting new partnerships with Wynn and Churchill Downs. We carried
that momentum into the second quarter, with now 10 launches
year-to-date, exceeding all of 2020. Most notably, we completed a
successful multi-faceted transition onto our platform for Churchill
Downs’ TwinSpires branded sports betting and iGaming across five
states leveraging our scarce multi-State ‘One Account, Any Product,
Any State’ technical capability. Additionally, we secured a
long-term exclusive content deal with Ainsworth to further enhance
our market offering. This key partnership will increase the
Company’s overall ‘take rate’ on Gross Operator Revenue from
iGaming, and help us secure a fast-growing share of existing
iGaming revenues from B2C Operators who are not already partners of
GAN. Looking ahead, our pipeline continues to expand with new
opportunities for our industry-leading B2B offering here in the
U.S. Lastly, we are thrilled with Coolbet’s strong contribution
this quarter and how seamlessly we’ve been able to integrate the
team. Coolbet offers a dual growth platform with our anticipated
launch of their B2B sportsbook engine in the U.S. later this year
and its exciting B2C international growth opportunity.”
First Quarter 2021 vs First Quarter
2020 Financial Highlights:
- Total revenues of $27.8 million versus $7.7 million, a
263% increase driven by the $14.3 million contribution from Coolbet
to our Business-to-Consumer (“B2C”) segment and growth of $5.8
million from our Business-to-Business (“B2B”) segment.
- Closed acquisition of Coolbet sports betting technology and
operations in early January 2021, continuing the development of
their sports betting technology for U.S. deployment.
- GAN’s business has grown to two segments: (1) B2B –
which includes Real money Internet gaming (“RMiG”) and Simulated
gaming (“SIM”), and (2) B2C – which includes Coolbet's assets and
international operations.
- B2B segment revenues up 76% to $13.5 million, driven by
a RMiG increase of 68% to $10.5 million and a SIM increase of 114%
to $3.0 million.
- B2C segment revenues of $14.3 million, derived from
Coolbet’s existing and proven international sports betting and
casino gaming operations. Key performance indicators remain at
exceptional levels.
- Segment gross profit of $19.1 million versus $6.0
million. The 220% increase was driven by an $8.3 million
contribution from the acquisition of Coolbet to our B2C segment,
plus strong organic growth and new customer launches within our B2B
segment.
- Net loss of $4.5 million versus net income of $0.7
million, driven primarily by increased amortization related to
acquired intangibles from the Coolbet acquisition ($2.9 million),
increased share-based compensation ($1.2 million), and operating
expenses related to marketing, organizational expansion to meet
market and customer demand, and costs related to regulatory
requirements.
- Adjusted EBITDA of $1.7 million versus $2.5 million. The
decrease in Adjusted EBITDA was driven by increased operating costs
in the current year related to regulatory requirements and
organizational expansion to meet market and customer demand.
- Cash of $52.2 million at March 31, 2021 compared to
$152.7 million at December 31, 2020. The decrease is driven
primarily by the cash paid to acquire Coolbet, net of cash acquired
($92.4 million), in January 2021.
GAN Limited
Key Financial
Highlights
(Unaudited, in thousands unless
otherwise specified)
Three Months Ended
March 31,
2021
2020
Revenues
B2B
$
13,530
$
7,670
B2C
14,312
—
Total revenues
$
27,842
$
7,670
Profitability Measures
B2B segment gross profit (1)
$
10,788
$
5,978
B2C segment gross profit (1)
$
8,335
N/A
B2B segment gross profit margin (1)
79.7
%
77.9
%
B2C segment gross profit margin (1)
58.2
%
N/A
Net income (loss)
$
(4,464)
$
694
Adjusted EBITDA (7)
$
1,700
$
2,549
Key Performance Indicators
B2B Gross Operator Revenue (2) (in
millions)
$
214.2
$
141.9
B2B Active Player-Days (3) (days, in
millions)
9.5
9.0
B2B ARPDAU (4) (in whole dollars)
$
22.48
$
15.72
B2C Active Customers (5) (number of
customers)
111,566
N/A
B2C Marketing Spend Ratio (6)
14
%
N/A
Performance Highlights
- B2B Gross Operator Revenue(2) of $214.2 million versus
$141.9 million, a 51% increase, driven by the strong performance
from our new B2B casino iGaming partners.
- Launched major new B2B customers in four new states with
Churchill Downs (sportsbook for MI and TN), Wynn (sportsbook and
iGaming for MI) and FanDuel (iGaming for MI) during the first
quarter. Additionally, in April 2021, we launched Churchill Downs
in three additional states (sportsbook and iGaming in PA;
sportsbook in CO and IN) followed by FanDuel iGaming in WV in early
May 2021.
- Secured three new B2B partnerships, including SuperBook
(sportsbook and iGaming for NJ and sportsbook for CO), Gila River
(SIM for AZ) and Seneca Gaming (SIM for NY), all of which bring
multi-year, recurring revenue opportunities.
- Ainsworth iGaming online slot portfolio secured 70+
active gaming titles, anticipated to grow to nearly 200 over the
term, exclusively for the long-term benefit of all partners of GAN
in the U.S. for both RMiG and SIM, as well as partners of GAN’s
Super RGS. The platform offering stands to benefit from an enhanced
online gaming portfolio of exclusive high-value online slot games
recognized and valued by casino patrons coast-to-coast, with titles
derived from counterparts present on America’s retail casino gaming
floors.
- Operating costs and expenses increased from $6.8 million
to $31.6 million driven primarily by the addition of Coolbet in the
current year (acquired January 1, 2021), plus increased
amortization related to acquired intangibles ($2.9 million),
increased share-based compensation ($1.2 million), and operating
expenses related to marketing, organizational expansion to meet
market and customer demand, and public company and regulatory
costs.
2021 Outlook
Karen Flores, CFO added:
“Our first quarter financial results exceeded our expectations,
and the outlook remains positive for the balance of 2021. We are
increasing our full year revenue guidance to a range of $103
million to $108 million. As we gain scale, become more efficient,
and move through a period of significant investment for growth, we
anticipate to drive improved profitability. These factors will
yield better operating leverage across the business over the
long-term and further bolster our strong financial position as we
execute our growth strategy, support new and existing customer
launches and launch the B2C sports book technology later this
year.”
Conference Call Details
Date/Time:
Monday, May 17, 2021, at 4:30 PM EDT
Webcast:
https://www.webcast-eqs.com/ganlimited20210517/en
U.S. Toll-Free Dial-in:
(877) 407-0989
International Dial-in:
(201) 389-0921
To access the call, please dial in approximately ten minutes
before the start of the call. An accompanying slide presentation
will be available in PDF format on the “Events & Presentations”
page of the investor relations portion of the Company’s website
(http://investors.gan.com) after issuance of the earnings
release.
About GAN Limited
GAN is a leading business-to-business supplier of Internet
gambling software-as-a-service solutions predominantly to the U.S.
land-based casino industry. Coolbet, a division of GAN, is a
market-leading operator of proprietary online sports betting
technology with market leadership positions in selected European
and Latin American markets. GAN has developed a proprietary
Internet gambling enterprise software system, GameSTACK™, which it
licenses to land-based casino operators as a turnkey technology
solution for regulated real money Internet gambling, encompassing
Internet gaming, Internet sports gaming and virtual Simulated
gaming.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements contained in this release that do not relate to
matters of historical fact should be considered forward-looking
statements, including, without limitation, statements regarding the
Company’s 2021 revenue guidance, the Company’s anticipated trends
in revenues (including new customer launches) and operating
expenses, the anticipated impact of the COVID-19 pandemic on the
Company’s operations and industry, the resilience of the Company’s
business in the pandemic, the anticipated launch of regulated
gaming in new U.S. states, the expected integration of Coolbet’s
sports betting technology and international B2C operations, the
anticipated launch timing of the B2B sportbook technology solution
in the U.S., the recurring nature of the Company’s revenue
relationships with customers and the Company’s ability to leverage
its intellectual property portfolio, as well as statements that
include the words “expect,” “intend,” “plan,” “believe,” “project,”
“forecast,” “estimate,” “may,” “should,” “anticipate” and similar
statements of a future or forward-looking nature. These
forward-looking statements are based on management’s current
expectations. These statements are neither promises nor guarantees,
but involve known and unknown risks, uncertainties and other
important factors that may cause actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Readers are cautioned not to place
undue reliance on any forward-looking statements, which speak only
as of the date on which they are made. The Company undertakes no
obligation to update or revise any forward-looking statements for
any reason, except as required by law.
Key Performance Indicators and Non-GAAP Financial
Measures
(1) The Company excludes depreciation and amortization from
certain line items in certain calculations, including segment
results and operating costs and expenses.
(2) The Company defines B2B Gross Operator Revenue as the sum of
its B2B corporate customers’ gross revenue from Simulated gaming,
gross gaming revenue from real money regulated iGaming, and gross
sports win from real money regulated sports betting. B2B Gross
Operator Revenue, which is not comparable to financial information
presented in conformity with accounting principles generally
accepted in the United States of America (“U.S. GAAP”), gives
management and users an indication of the extent of transactions
processed through the Company’s B2B corporate customers’ platforms
and allows management to understand the extent of activity that the
Company’s platform is processing.
(3) The Company defines B2B Active Player-Days as unique
individuals who log on and wager each day (either wagering with
real money or playing with virtual credits used in Simulated
gaming), aggregated during the respective period. By way of
illustrative example: one (1) unique individual logging in and
wagering each day in a single calendar year would, in aggregate,
represent 365 B2B Active Player-Days. B2B Active Player-Days
provides an indicator of consistent and daily interaction that
individuals have with the Company’s platforms. B2B Active
Player-Days allows management and users to understand not only
total users who interact with the platform but gives an idea of the
frequency to which users are interacting with the platform, as
someone who logs on and wagers multiple days are weighted heavier
during the period than the user who only logs on and wagers one
day.
(4) The Company defines B2B Average Revenue per Daily Active
User (“ARPDAU”) as B2B Gross Operator Revenue divided by the
identified number of B2B Active Player-Days. This measure allows
management to measure the value per daily user and track user
interaction with the platforms, which helps both management and
users of financial statements understand the value per user that is
driven by marketing efforts and data analysis obtained from the
Company’s platforms.
(5) The Company defines B2C Active Customers as a user that
places a wager during the period. This metric allows management to
monitor the customer segmentation, growth drivers, and ultimately
creates opportunities to identify and add value to the user
experience. This metric allows management and users of the
financial statements to measure the platform traffic and track
related trends.
(6) The Company defines B2C Marketing Spend Ratio as the total
B2C direct marketing expense for the period divided by the total
B2C revenues. This metric allows management to measure the success
of marketing costs during a given period and compare across
jurisdictions. Management and the users of the financial statements
can use this metric as a comparison to peers and track the success
of marketing costs over time versus revenue levels, plus as an
indication of return on marketing investment.
(7) Adjusted EBITDA is a non-GAAP financial measure that is
provided as supplemental disclosure which is defined as net income
(loss) before interest costs, income taxes, depreciation and
amortization, share-based compensation expense and related expense,
impairments, initial public offering related costs and other items
which our Board of Directors considers to be infrequent or unusual
in nature. Management uses Adjusted EBITDA to measure its financial
performance. Specifically, it uses Adjusted EBITDA (1) as a measure
to compare its operating performance from period to period, as it
removes the effect of items not directly resulting from core
operations, and (2) as a means of assessing its core business
performance against others in the industry, because it eliminates
some of the effects that are generated by differences in capital
structure, depreciation, tax effects and unusual and infrequent
events. The presentation of Adjusted EBITDA is not intended to be
used in isolation or as a substitute for any measure prepared in
accordance with U.S. GAAP. Adjusted EBITDA, as defined, may not be
comparable to similarly titled measures used by other companies in
the industry, and Adjusted EBITDA may exclude financial information
that some investors may consider important in evaluating the
Company’s performance. Adjusted EBITDA, as calculated by the
Company, along with a reconciliation to net income (loss), the
comparable U.S. GAAP equivalent measure, is included below.
This presentation uses certain non-GAAP financial measures as
defined in Securities and Exchange Commission rules. The Company
reports financial results in conformity with U.S. GAAP, and also
communicates with investors using certain non-GAAP financial
measures. These non-GAAP financial measures are not in accordance
with, nor are they a substitute for or superior to, the comparable
U.S. GAAP financial measures. These non-GAAP financial measures are
intended to supplement the presentation of the Company’s financial
results that are prepared in accordance with U.S. GAAP.
GAN Limited
Condensed Consolidated
Statements of Operations
(Unaudited, in thousands, except
share and per share amounts)
Three Months Ended
March 31,
2021
2020
Revenues
$
27,842
$
7,670
Operating costs and expenses
Cost of revenues (1)
8,719
1,692
Sales and marketing
4,101
863
Product and technology
4,850
1,024
General and administrative (1)
10,011
2,391
Depreciation and amortization
3,963
853
Total operating costs and expenses
31,644
6,823
Operating income (loss)
(3,802)
847
Interest expense, net
1
8
Income (loss) before income taxes
(3,803)
839
Income tax provision
661
145
Net income (loss)
$
(4,464)
$
694
Income (loss) per share
Basic
$
(0.11)
$
0.03
Diluted
$
(0.11)
$
0.03
Weighted average ordinary shares
outstanding
Basic
41,986,083
21,512,225
Diluted
41,986,083
23,040,345
GAN Limited
Condensed Consolidated Balance
Sheets
(Unaudited, in thousands, except
share amounts)
March 31, 2021
December 31, 2020
ASSETS
Current assets
Cash
$
52,185
$
152,654
Accounts receivable, net
11,945
6,818
Prepaid expenses
2,800
1,912
Other current assets
3,423
2,112
Total current assets
70,353
163,496
Capitalized software development costs,
net
8,134
6,648
Goodwill
152,734
—
Intangible assets, net
43,855
468
Other assets
3,926
2,634
Total assets
$
279,002
$
173,246
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable
$
4,329
$
4,926
Accrued compensation and benefits
6,127
4,956
Accrued expenses
4,414
3,363
Liabilities to users
6,916
—
Other current liabilities
3,944
4,067
Total current liabilities
25,730
17,312
Deferred income taxes
2,167
—
Other noncurrent liabilities
559
370
Total liabilities
28,456
17,682
Stockholders' equity
Ordinary shares, $0.01 par value,
100,000,000 shares authorized, 42,004,100 and 36,635,362 shares
issued and outstanding at March 31, 2021 and December 31, 2020,
respectively
419
365
Additional paid-in capital
312,715
203,842
Accumulated deficit
(50,230)
(45,766)
Accumulated other comprehensive loss
(12,358)
(2,877)
Total stockholders' equity
250,546
155,564
Total liabilities and stockholders'
equity
$
279,002
$
173,246
GAN Limited
Condensed Consolidated
Statements of Cash Flows
(Unaudited, in thousands)
Three Months Ended
March 31,
2021
2020
Cash Flows From Operating
Activities
Net income (loss)
$
(4,464)
$
694
Adjustments to reconcile net income (loss)
to net cash used in operating activities
5,694
1,179
Changes in operating assets and
liabilities, net of acquisition
(5,375)
(3,312)
Net cash used in operating activities
(4,145)
(1,439)
Cash Flows From Investing
Activities
Cash paid for acquisition, net of cash
acquired
(92,404)
—
Expenditures for capitalized software
development costs
(2,153)
(534)
Purchases of gaming licenses
(34)
—
Purchases of property and equipment
(426)
(437)
Net cash used in investing activities
(95,017)
(971)
Cash Flows From Financing
Activities
Payments of offering costs
(604)
(909)
Proceeds from exercise of stock
options
315
87
Principal payments on finance leases
—
(44)
Net cash used in financing activities
(289)
(866)
Effect of foreign exchange rates on
cash
(1,018)
(850)
Net decrease in cash
(100,469)
(4,126)
Cash, beginning of period
152,654
10,279
Cash, end of period
$
52,185
$
6,153
GAN Limited
Segment Revenues and Gross
Profit
(Unaudited, in thousands)
Three Months Ended
March 31,
2021
2020
B2B
Platform and content fees
$
9,184
$
5,933
Development services and other
4,346
1,737
Total B2B revenues
13,530
7,670
B2C
Gaming
14,312
—
Total B2C revenues
14,312
—
Total revenues
$
27,842
$
7,670
B2B
Revenues
$
13,530
$
7,670
Cost of revenues (1)
2,742
1,692
B2B segment gross profit (1)
10,788
5,978
B2B segment gross profit margin (1)
79.7
%
77.9
%
B2C
Revenues
14,312
—
Cost of revenues (1)
5,977
—
B2C segment gross profit (1)
8,335
—
B2C segment gross profit margin (1)
58.2
%
—
Total segment gross profit (1)
$
19,123
$
5,978
Total segment gross profit margin (1)
68.7
%
77.9
%
GAN Limited
Revenues by Geography
(Unaudited, in thousands)
Three Months Ended
March 31,
2021
2020
Revenues by geography *
United States
$
11,473
$
6,251
Europe
11,064
1,410
Latin America
3,603
—
Rest of the world
1,702
9
Total
$
27,842
$
7,670
* Revenue is segmented based on the
location of the Company's customer.
GAN Limited
Adjusted EBITDA
(Unaudited, in thousands)
Three Months Ended
March 31,
2021
2020
Net income (loss)
$
(4,464)
$
694
Income tax provision
661
145
Interest expense, net
1
8
Depreciation and amortization
3,963
853
Share-based compensation and related
expense
1,539
295
Initial public offering transaction
related
—
554
Adjusted EBITDA
$
1,700
$
2,549
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210517005848/en/
Investor Contacts: GAN Robert Shore VP, Investor
Relations & Capital Markets (610) 812-3519 rshore@GAN.com
Alpha IR Group Ryan Coleman or Ashley Gruenberg (312)
445-2870 GAN@alpha-ir.com
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