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GAN Reports Q1 Loss For 2022

GAN Limited the North American B2B internet gaming provider has reported its unaudited financial results for the quarter ended March 31, 2022.

Dermot Smurfit, CEO of GAN said

“We delivered an encouraging start to 2022 driven by organic revenue growth in both our operating segments coupled with cost rationalization efforts to deliver strong growth in Adjusted EBITDA. We continue to demonstrate the value of our integrated B2B and B2C portfolio, soon to be joined on one unified platform and our ability to deepen our presence in both new and established markets as we add to our offering. In the state of Michigan, our presence began with supporting a tribal operator, and has evolved to now power both iGaming and online sports betting and features our Super RGS platform content as well. The evolution of our platform in Michigan is a perfect example of our competitive offering and its position in the market as we prepare for future state launches.”

“In addition to our planned expansion to new states in the U.S., we successfully launched in Ontario on April 4^th to support online sports betting and iGaming in the province and launched PlayEagle.com for Soaring Eagle Casino & Resort in the state of Michigan in April. We also remain excited about the momentum behind our GAN Sports and International B2C strategies as well as operator reception to our Super RGS content and offering. We expect each of these efforts to drive significant year-over-year revenue growth which, when coupled with our laser focus on profitability, will yield much better scale and improved margins compared to last year.”

First Quarter 2022 Compared to First Quarter 2021

Total revenue was$37.5 million versus $27.1 million, up 38% compared to the prior year quarter. The strong increase from the prior year quarter was driven by organic growth in the B2C and B2B segments.
B2B segment revenue was$13.1 million versus $12.8 million. The prior year period included $3 million in patent license revenue which did not recur during the current period. Recurring platform and content fees increased 17% to $10.7 million.
B2C segment revenuewas $24.4 million versus $14.3 million. The handle, or amount wagered, increased 57% on strong organic demand for the Coolbet product offering.
Gross Profitof $25.8 million versus $18.4 million. The increase was primarily driven by strong growth in revenue.
Operating Expenses of $29.9 million versus $23.3 million. The current quarter included $1.1 million of restructuring expenses related to the Company’s cost rationalization plan.
Net lossof $4.5 million versus $5.6 million.
Adjusted EBITDAof $3.0 million versus $0.5 million. The primary driver of the current quarter over prior year quarter change was higher revenues and lower operating expenses as a percentage of revenue.
Cash was $33.6 millionas of March 31, 2022, which was a decline of $5.9 million from December 31, 2021 primarily related to capitalized software development and changes in working capital. In April 2022, the Company successfully entered into a fixed term credit facility (the “Credit Facility”) which provides for $30.0 million in aggregate principal amount of secured term loans. The Company incurred $2.4 million in debt issuance costs in connection with the Credit Facility.
B2C continued strong KPI’s. B2C continued to grow active customers, deposits and turnover with record-breaking activity from the prior year quarter driven by organic growth.
B2B Gross Operator Revenue (“GOR”) ⁽²⁾totaled $297.8 million versus $214.2 million in the prior year quarter, a 39.0% increase. The increase was driven by organic growth in several states including Michigan, New Jersey, Pennsylvania along with new states including Connecticut and West Virginia.
After the 2022 first quarter-end, the Company launched its technology platform to support its operating partner as their PAM (Player Account Management) system enabling both online sports betting & iGaming in Ontario. The Company’s B2C segment (Coolbet) simultaneously launched ‘day one’ as a licensed operator in the Ontario market. The Company also launched iGaming and online sports betting for the Saginaw Chippewa Indian Tribe of Michigan, who own and operate Soaring Eagle Casino & Resort (“Soaring Eagle”).