The top line
As prefigured in the Q2 pre-announcement, GGR was up 24% QoQ to $34.6m with strong B2C (Coolbet) growth (up 68% to $24m) in Latin America and Europe. B2B was down c$3.5m QoQ to $10.6m.
Adjusted EBITDA rose 171% to $4.6m vs. $1.7m in Q1. Net losses were trimmed QoQ to $2.7m vs. $4.5m. The company has cash reserves of $52.1m as of June 30. FY revenue guidance maintained at $125-$135m or 270% YoY growth at mid-point.
Battle hardened: While B2C led the way in Q2, CEO Dermot Smurfit said the B2B pipeline in the US and Canada would drive much of the revenues in H221 and beyond. Referring to Canada, Smurfit said “there is an exciting B2B opportunity for a battle-tested platform that has been deployed successfully in the US, which makes us a very attractive proposition if you’re looking to launch in Canada.”
Lean on me: Smurfit said GAN was scaling up to meet the US demand for its B2B services and as major US brands opt for in-house tech teams and platforms, he said “existing US B2C online operators with their own in-house tech, (are) looking to lean on our battle tested platform as they run short of engineering bandwidth.” He repeated the point for good measure and added that the recent M&A activity made GAN’s technology “demonstrably scarcer and more valuable”. The cost, technical and regulatory expertise required to bring platforms in-house meant it was not a realistic option for most casinos.
“Some who tried will ultimately fail, as they have again and again throughout Europe, which must serve as a cautionary tale for all who underestimate the challenges here in the U.S, which remain(s) the high watermark of online regulatory technical complexity anywhere in the world,” said Smurfit.
New York I love you, but… : GAN opted against entering any of the consortia vying for sports-betting licences in New York, because it “didn’t see a path to a positive ROI”. Smurfit said it would err on the side of caution and “remain true to our B2B business model”. He added that he was “cautiously optimistic that continuing opportunities to deploy as a platform for commercial operator participants, or New York’s tribal operators” would remain open in the near-term.
No buena onda: Smurfit was bullish and outspoken on betting kiosks. To date he said they had been a mainly “standalone part of the industry that had been served by one or two major providers of sports betting tech broadly describable as plugging in a microwave.” “We’re offering something that combines online and land-based and we will leverage our online tech to infiltrate this very lucrative corner of the industry”.
However, referring to GAN’s patented iBridge product that is designed to connect mobile to customer loyalty programs, analysts at Macquarie noted “it continues to appear that many of the omni-channel players are linking their customers’ accounts without the use of what we thought was a critical piece for GAN. We will continue to monitor this in the near term.”
