GAN Reports Second Quarter 2024 Financial Results
Growth in B2B revenues coupled with continued cost rationalization leads to improved results
Expected timeline for completion of merger with SEGASAMMY remains on track for late 2024 or early 2025
Seamus McGill, GAN’s Chief Executive Officer, said, “I’m very pleased with the continued operational progress the team is delivering. We achieved top-line revenue growth in the second quarter while reducing our operating expenses. We continue to operate the business more efficiently with a focus on improved profitability.
Mr. McGill added, “Looking ahead, our focus remains unchanged. We will continue to optimize our overall cost structure and roll-out product enhancements. We continue to work through the gaming regulatory requirements for our planned merger with SEGASAMMY and anticipate a successful closing in late 2024 or early 2025."
Second Quarter 2024 Compared to Second Quarter 2023
-
Total revenue of
increased$35.6 million 5% driven by an increase in the B2B segment.
-
B2B segment revenue was
versus$13.0 million . The increase was primarily due to an expansion of our B2B offerings in the state of$9.9 million Nevada and the recognition of revenue related to the exit of a B2B partner inMichigan .
-
B2C segment revenue was
versus$22.6 million . Growth in European markets driven by increased player activity was offset by reduced player activity in$23.9 million Latin America and lower margins resulting from unfavorable event outcomes.
-
Operating expenses were
versus$25.1 million . The decrease was primarily attributable to the Company's overall reduction of compensation costs and reduced headcount realized as part of ongoing cost saving initiatives, as well as lower depreciation and amortization expenses as a result of intangible assets fully amortizing in the prior year.$32.8 million
-
Net loss of
versus$1.7 million , which was primarily due to increased revenues and decreased operating expenses. Additionally, the prior period included a loss on debt extinguishment of$18.4 million .$8.8 million
-
Total segment contribution was
versus$25.3 million , which was driven by increased revenue in the B2B segment.$24.3 million
-
Adjusted EBITDA was
versus$3.7 million . The increase was driven by increased revenues and lower operating expenses resulting from the aforementioned factors.$(2.0) million
-
Cash was
as of June 30, 2024 versus$36.9 million as of March 31, 2024.$36.6 million
-
B2C Active Customers declined primarily driven by limited customer acquisition in
Latin America .
-
B2B Gross Operator Revenue totaled
versus$609.3 million in the prior year quarter, a$436.0 million 40% increase. The increase was driven primarily by organic growth inPennsylvania ,Michigan ,New Jersey ,Ontario andConnecticut .
GAN Limited
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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||||||||||
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|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B2B |
|
$ |
12,990 |
|
|
$ |
9,895 |
|
|
$ |
25,341 |
|
|
$ |
21,174 |
|
B2C |
|
|
22,570 |
|
|
|
23,863 |
|
|
|
40,870 |
|
|
|
47,713 |
|
Total revenues |
|
$ |
35,560 |
|
|
$ |
33,758 |
|
|
$ |
66,211 |
|
|
$ |
68,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B2B segment contribution (1) |
|
$ |
10,779 |
|
|
$ |
7,817 |
|
|
$ |
21,049 |
|
|
$ |
17,101 |
|
B2B segment contribution margin (1) |
|
|
83.0 |
% |
|
|
79.0 |
% |
|
|
83.1 |
% |
|
|
80.8 |
% |
B2C segment contribution (1) |
|
$ |
14,537 |
|
|
$ |
16,456 |
|
|
$ |
25,595 |
|
|
$ |
32,140 |
|
B2C segment contribution margin (1) |
|
|
64.4 |
% |
|
|
69.0 |
% |
|
|
62.6 |
% |
|
|
67.4 |
% |
Net loss |
|
$ |
(1,731 |
) |
|
$ |
(18,409 |
) |
|
$ |
(5,891 |
) |
|
$ |
(16,908 |
) |
Adjusted EBITDA (7) |
|
$ |
3,730 |
|
|
$ |
(2,029 |
) |
|
$ |
3,162 |
|
|
$ |
(1,990 |
) |
|
|
|
|
|
|
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|
|
|
|
|
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|
Key Performance Indicators |
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B2B Gross Operator Revenue (2) (in millions) |
|
$ |
609.3 |
|
|
$ |
436.0 |
|
|
$ |
1,241.3 |
|
|
$ |
858.8 |
|
B2B Take Rate (3) |
|
|
2.1 |
% |
|
|
2.3 |
% |
|
|
2.0 |
% |
|
|
2.5 |
% |
B2C Active Customers (in thousands) (4) |
|
|
237 |
|
|
|
257 |
|
|
|
328 |
|
|
|
359 |
|
B2C Marketing Spend Ratio (5) |
|
|
23 |
% |
|
|
20 |
% |
|
|
23 |
% |
|
|
21 |
% |
B2C Sports Margin (6) |
|
|
8.7 |
% |
|
|
8.5 |
% |
|
|
7.1 |
% |
|
|
7.7 |
% |
SEGASAMMY Transaction
The merger has been approved by GAN shareholders at a special general meeting of its shareholders and received clearance from the Committee on Foreign Investment in the
Conference Call Details
Due to the expected merger of the Company with SEGASAMMY, GAN will not be hosting a conference call in conjunction with its second quarter 2024 earnings release.
About GAN Limited
GAN is a leading business-to-business supplier of internet gambling software-as-a-service solutions predominantly to the
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 anticipated trends in revenues (including new customer launches) and operating expenses, the anticipated improvement in profitability, expectations that it will meet all closing conditions or successfully close its planned merger with SEGASAMMY, 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 including those risks detailed under “Risk Factors” in our Annual Report on Form 10-K and subsequent periodic reports. 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
This release uses certain non-GAAP financial measures as defined in Securities and Exchange Commission rules. The Company reports financial results in accordance with accounting principles generally accepted in
(1) The Company excludes depreciation and amortization in certain segment calculations.
(2) The Company defines B2B Gross Operator Revenue as the sum of its B2B corporate customers’ gross revenue from virtual simulated gaming (SIM), gross gaming revenue from RMiG, and gross sports wins from sportsbook offerings. B2B Gross Operator Revenue, which is not comparable to financial information presented in conformity with
(3) The Company defines B2B Take Rate as a quotient of B2B segment revenue retained by the Company over the total Gross Operator Revenue generated by our B2B corporate customers. The B2B Take Rate gives management and users of our financial statements an indication of the impact of the statutory terms and the efficiency of the commercial terms on the business.
(4) 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.
(5) 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. Additionally, this metric allows management to compare across jurisdictions and other subsets, as an additional indication of return on marketing investment.
(6) The Company defines B2C Sports Margin as the ratio of wagers minus winnings to total amount wagered, adjusted for open wagers at period end. Sports betting involves a user placing a bet on the outcome of a sporting event with the chance to win a pre-determined amount, often referred to as fixed odds. Our B2C sportsbook revenue is generated by setting odds that are intended to provide a built-in theoretical margin in each sports bet offered to our users. This metric allows management to measure sportsbook performance against its expected outcome.
(7) Management uses the non-GAAP measure of Adjusted EBITDA to measure its financial performance. Specifically, it uses Adjusted EBITDA (i) 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 (ii) 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 Company defines Adjusted EBITDA as net loss before interest expense (income), net, income tax expense (benefit), depreciation and amortization, impairments, extraordinary gains or losses, share-based compensation expense and related expense, transaction costs, and other items which the Board of Directors considers to be infrequent or unusual in nature. A reconciliation of Adjusted EBITDA to Net Income (the most closely aligned measure under
GAN Limited
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
35,560 |
|
|
$ |
33,758 |
|
|
$ |
66,211 |
|
|
$ |
68,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue(1) |
|
|
10,244 |
|
|
|
9,485 |
|
|
|
19,567 |
|
|
|
19,646 |
|
Sales and marketing |
|
|
7,056 |
|
|
|
7,324 |
|
|
|
13,073 |
|
|
|
14,508 |
|
Product and technology |
|
|
8,137 |
|
|
|
11,238 |
|
|
|
17,753 |
|
|
|
20,816 |
|
General and administrative(1) |
|
|
7,980 |
|
|
|
10,029 |
|
|
|
15,139 |
|
|
|
20,035 |
|
Depreciation and amortization |
|
|
1,914 |
|
|
|
4,243 |
|
|
|
3,753 |
|
|
|
8,444 |
|
Total operating costs and expenses |
|
|
35,331 |
|
|
|
42,319 |
|
|
|
69,285 |
|
|
|
83,449 |
|
Operating income (loss) |
|
|
229 |
|
|
|
(8,561 |
) |
|
|
(3,074 |
) |
|
|
(14,562 |
) |
Interest expense, net |
|
|
1,157 |
|
|
|
905 |
|
|
|
2,289 |
|
|
|
2,621 |
|
Other loss (income), net |
|
|
27 |
|
|
|
8,358 |
|
|
|
1 |
|
|
|
(934 |
) |
Loss before income taxes |
|
|
(955 |
) |
|
|
(17,824 |
) |
|
|
(5,364 |
) |
|
|
(16,249 |
) |
Income tax expense |
|
|
776 |
|
|
|
585 |
|
|
|
527 |
|
|
|
659 |
|
Net loss |
|
$ |
(1,731 |
) |
|
$ |
(18,409 |
) |
|
$ |
(5,891 |
) |
|
$ |
(16,908 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share, basic and diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.42 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.39 |
) |
Weighted average ordinary shares outstanding, basic and diluted |
|
|
45,390,559 |
|
|
|
44,147,701 |
|
|
|
45,262,413 |
|
|
|
43,568,197 |
|
(1) Excludes depreciation and amortization expense
GAN Limited
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Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
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|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B2B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform and content license fees |
|
$ |
8,700 |
|
|
$ |
7,243 |
|
|
$ |
18,371 |
|
|
$ |
15,870 |
|
Development services and other |
|
|
4,290 |
|
|
|
2,652 |
|
|
|
6,970 |
|
|
|
5,304 |
|
Total B2B revenue |
|
|
12,990 |
|
|
|
9,895 |
|
|
|
25,341 |
|
|
|
21,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B2C |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming |
|
|
22,570 |
|
|
|
23,863 |
|
|
|
40,870 |
|
|
|
47,713 |
|
Total B2C revenue |
|
|
22,570 |
|
|
|
23,863 |
|
|
|
40,870 |
|
|
|
47,713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
35,560 |
|
|
$ |
33,758 |
|
|
$ |
66,211 |
|
|
$ |
68,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B2B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
12,990 |
|
|
$ |
9,895 |
|
|
$ |
25,341 |
|
|
$ |
21,174 |
|
Cost of revenue (1) |
|
|
2,211 |
|
|
|
2,078 |
|
|
|
4,292 |
|
|
|
4,073 |
|
B2B segment contribution |
|
|
10,779 |
|
|
|
7,817 |
|
|
|
21,049 |
|
|
|
17,101 |
|
B2B segment contribution margin |
|
|
83.0 |
% |
|
|
79.0 |
% |
|
|
83.1 |
% |
|
|
80.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B2C |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
22,570 |
|
|
|
23,863 |
|
|
|
40,870 |
|
|
|
47,713 |
|
Cost of revenue (1) |
|
|
8,033 |
|
|
|
7,407 |
|
|
|
15,275 |
|
|
|
15,573 |
|
B2C segment contribution |
|
|
14,537 |
|
|
|
16,456 |
|
|
|
25,595 |
|
|
|
32,140 |
|
B2C segment contribution margin |
|
|
64.4 |
% |
|
|
69.0 |
% |
|
|
62.6 |
% |
|
|
67.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment contribution |
|
$ |
25,316 |
|
|
$ |
24,273 |
|
|
$ |
46,644 |
|
|
$ |
49,241 |
|
Total segment contribution margin |
|
|
71.2 |
% |
|
|
71.9 |
% |
|
|
70.4 |
% |
|
|
71.5 |
% |
(1) Excludes depreciation and amortization expense
GAN Limited
|
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Three Months Ended June 30, |
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|
Six Months Ended June 30, |
|
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|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue by geography * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,454 |
|
|
$ |
7,296 |
|
|
$ |
19,546 |
|
|
$ |
15,812 |
|
|
|
|
14,120 |
|
|
|
12,107 |
|
|
|
25,728 |
|
|
|
24,784 |
|
|
|
|
8,204 |
|
|
|
12,388 |
|
|
|
15,100 |
|
|
|
23,658 |
|
Rest of the world |
|
|
2,782 |
|
|
|
1,967 |
|
|
|
5,837 |
|
|
|
4,633 |
|
Total |
|
$ |
35,560 |
|
|
$ |
33,758 |
|
|
$ |
66,211 |
|
|
$ |
68,887 |
|
* Revenue is segmented based on the location of the Company's customer.
GAN Limited
|
||||||||||||||||
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(1,731 |
) |
|
$ |
(18,409 |
) |
|
$ |
(5,891 |
) |
|
$ |
(16,908 |
) |
Income tax (benefit) expense |
|
|
776 |
|
|
|
585 |
|
|
|
527 |
|
|
|
659 |
|
Interest expense, net |
|
|
1,157 |
|
|
|
905 |
|
|
|
2,289 |
|
|
|
2,621 |
|
Gain on amendment of Content Licensing Agreement |
|
|
— |
|
|
|
(427 |
) |
|
|
— |
|
|
|
(9,719 |
) |
Loss on debt extinguishment |
|
|
— |
|
|
|
8,784 |
|
|
|
— |
|
|
|
8,784 |
|
Revaluation of contingent liability |
|
|
— |
|
|
|
221 |
|
|
|
— |
|
|
|
221 |
|
Depreciation and amortization |
|
|
1,914 |
|
|
|
4,243 |
|
|
|
3,753 |
|
|
|
8,444 |
|
Share-based compensation and related expense |
|
|
870 |
|
|
|
2,069 |
|
|
|
1,740 |
|
|
|
3,908 |
|
Transaction related costs |
|
|
744 |
|
|
|
— |
|
|
|
744 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
3,730 |
|
|
$ |
(2,029 |
) |
|
$ |
3,162 |
|
|
$ |
(1,990 |
) |
GAN Limited
|
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|
|
Three Months Ended, |
|
|||||||||||||
|
|
June 30, 2024 |
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
|
September 30, 2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sports Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual sports margin |
|
|
8.7 |
% |
|
|
5.7 |
% |
|
|
6.5 |
% |
|
|
6.0 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240809473863/en/
Investor:
GAN
Robert Shore
Vice President, Investor Relations & Capital Markets
(610) 812-3519
rshore@GAN.com
Alpha IR Group
Ryan Coleman or Davis Snyder
(312) 445-2870
GAN@alpha-ir.com
Source: GAN Limited