GAN Limited (GAN) Misses Q4 EPS by 21c, Revenues Miss; Offers FY21 Revenues Guidance Above Consensus

GAN Limited (NASDAQ: GAN) reported Q4 EPS of ($0.27), $0.21 worse than the analyst estimate of ($0.06). Revenue for the quarter came in at $8.9 million versus the consensus estimate of $11.84 million.

Fourth Quarter 2020 Compared to Fourth Quarter 2019

• Total revenue of $8.9 million declined 17%, compared to $10.7 million last year, driven primarily by the aforementioned B2C/WinStar impact and a decline in sportsbook related RMiG revenue due to the FanDuel migration, partially offset by strong growth in SIM. Excluding the B2C/WinStar impact, total revenue increased 43% compared to 2019.
• GOR of $131.8 million increased 9% compared to $120.8 million mainly due to growth in U.S. iGaming, partially offset by a decline in online sports betting as a result of the FanDuel migration.
• RMiG revenue of $6.0 million declined 36% compared to $9.3 million driven by the B2C/WinStar impact. Excluding the B2C/WinStar impact, RMiG revenue increased 23% compared to the fourth quarter of 2019.
• Gross Profit of $4.5 million decreased 49% compared to $8.9 million driven by the B2C/WinStar impact.
• Net loss of $8.3 million compared to net income of $3.4 million driven by increased operating costs in the current year, including costs associated with the Company’s U.S. listing related expenses, the acquisition of Coolbet and the B2C/WinStar revenue that was recognized in the fourth quarter of 2019.
• Adjusted EBITDA loss of $6.0 million compared to Adjusted EBITDA of $5.1 million in the prior year. The decrease was driven by increased operating costs in the current year and the B2C/WinStar impact.
• Operating costs and expenses (excluding cost of revenue) were $12.8 million compared to $5.9 million. The increase was primarily attributable to current year hiring to meet customer demand, as well as the acquisition of Coolbet and costs related to regulatory requirements.

Dermot Smurfit, CEO of GAN stated:

“2020 was a highly successful, foundation-building year for GAN. We expanded our top-line, doubled our new client launches, signed numerous new customers that we believe will support stable and growing recurring revenue, and rounded out our product portfolio through multiple new content partnerships and the critical acquisition of Coolbet. Our annual revenue increased 17% in 2020, but the key recurring components of that, our U.S. RMiG and Simulated offerings, saw revenue growth of 92% and 77%, respectively. We also invested in our infrastructure and have fully converted to U.S. GAAP during the fourth quarter, which completed our journey to becoming a public company listed and based in the U.S. Most importantly, we filled a significant need in our product offering through Coolbet’s best-in-class sportsbook engine, which positions GAN as a full-service B2B solution for real money gaming in the U.S. and as a vertically integrated B2C player in select international markets.”

“We entered 2021 with a strong foundation to build upon and positive business momentum. The first quarter of 2021 has started particularly strong as we launched multiple clients in the state of Michigan, which exceeded both our expectations and those of our customers. We also signed our first sportsbook engine customer during the first quarter, and continue to entertain significant interest from both current and prospective clients for our new sportsbook offering and its associated managed trading services. Our integration of the Coolbet team and technology are on schedule and we continue to forecast a midyear launch of the B2B sportsbook technology and service. Lastly, we further validated our intellectual property through multiple client wins, including the recent license of our patented iBridge integration framework for 10 years, at a value of roughly $75 per reward card. This agreement set a new bar for its value per rewards card, and we expect to leverage and protect this strategic asset much more actively in 2021 and beyond. We have the right strategy, an industry leading platform that we enhance each and every day, and a strong financial position that will support our growing recurring revenue-based model and help us drive long-term value for our shareholders.”

GUIDANCE:

GAN Limited sees FY2021 revenue of $100-105 million, versus the consensus of $98.57 million.

The Company expects full year 2021 revenue to be between $100 million and $105 million, and the first quarter 2021 revenue to be between $24 million and $25 million.

Karen Flores, CFO of GAN concluded:

“Our first quarter has started off very strong across all of our business lines. This should support strong growth in 2021 and we expect to almost treble our top-line performance, inclusive of strong organic growth and Coolbet’s contribution. We also expect to drive operating leverage that will yield stronger profitability results year-over-year. We remain confident that we will continue to onboard new customers as well as deepen our relationship with our existing customers, and we look forward to the launch of new states in 2021 to further support our growth trajectory. In the meantime, we are acutely focused on the integration of Coolbet to round out our B2B offering. We maintain a strong financial position and have a differentiated IP portfolio and management team that will continue to support and drive our multiprong growth strategy.”

For earnings history and earnings-related data on GAN Limited (GAN) click here.

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