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GAN benefits from Q2 online shift to grow first half revenue


Gaming technology provider GAN saw the migration of US players to igaming almost double its second quarter revenue, helping the supplier to a 16.2% year-on-year increase in revenue for the first half of the year. 

Over the three months to 30 June, almost all of the US land-based casinos were shuttered for a time, as a result of the novel coronavirus (Covid-19) pandemic. This saw players shift to online gaming, and resulted in GAN’s revenue for the quarter soaring 99.4% to $8.3m. 

This was driven by an 110.4% year-on-year rise in real-money igaming revenue to $5.7m. This broke down to $4.2m in software as a service (SaaS) revenue (up 99.1%), coupled with $1.5m in service revenue, a 148.9% improvement on the prior year. This was credited to customer launches, namely the roll-out of online casino for FanDuel and Parx Casino in New Jersey and Pennsylvania.

GAN’s free-play solution, Simulated Gaming, also benefited from the shift online, with revenue up 79.1% to $2.6m, aided by the roll-out of an offering for the Snoqualmie Tribe in Washington State.

The US accounted for $7.0m, or 84.6%, of the quarterly total, with a further $1.2m coming from Italy, $33,000 from the UK and Channel Islands, and $11,000 from the reset of the world. GAN said that after the Chickasaw Nation ended its partnership to operate the WinStar Casino brand in Europe, it does not expect to generate meaningful revenue from the UK, unless it signs up another partner for the product. 

“We were pleased to achieve revenues of $8.3m during the second quarter of 2020, a period during which nearly all of our land-based casino customers were forced to close their physical operations and when most major sporting events were cancelled as a result of the global pandemic,” GAN chief executive Dermot Smurfit commented. 

“Our business has proven resilient to these outside forces in recent weeks, and we believe GAN can greatly contribute to both our customers’ success and the accelerated secular shift to igaming as casino operators continue to be impacted by the pandemic.”

“We achieved record KPIs during the second quarter of 2020, and our operational model continues to demonstrate strength, particularly in the current market environment.”

The online shift was further highlighted by GAN’s clients’ gross revenue for the quarter, which more than doubled to $129.1m. Active player days grew to 5.6m for the period, with average revenue per daily active user rising to $23.02, up 99.8%. 

Despite the growth in revenue, revenue related costs actually declined for the quarter, to $2.9m, leaving a gross profit of $5.5m, a significant rise on Q2 2019’s $976,000 total. 

However, administrative expenses rose significantly. GAN said this comprised expenses incurred in connection with its US initial public offering – which saw the business generate proceeds of $62.4m – and ongoing expenses associated with its new status as a US reporting company. The business also invested in expanding its operations to support future client and revenue growth.

This resulted in the business posting an operating loss of $8.3m in Q2, significantly higher than the $1.8m loss in the prior year. After finance costs of $341,000 and $172,000 in taxes, GAN’s Q2 net loss came to $8.8m. 

The supplier’s second half performance contributed to a 16.2% year-on-year rise in revenue for the first half of the year. For the six months to 30 June, revenue grew to $16.0m, comprising $11.9m from real-money igaming, and $4.1m from Simulated Gaming. 

Again, revenue-related costs declined, to $5.4m, leaving a first half gross profit of $10.5m. Once administrative expenses of $18.1m were factored in – which as outlined above were mainly incurred in Q2 – the business posted a $7.6m operating loss. 

Once $429,000 in finance costs and $317,000 in taxes were removed, GAN’s net loss for H1 2020 was $8.3m.

Following the end of the reporting period, GAN has announced a number of new client wins, signing up Penn National Gaming and tribal casino operator Laguna Development Corporation – its eighth tribal client – for its Simulated Gaming solution. This was complemented by the roll-out of real-money gaming in Pennsylvania with Cordish Companies, through a deal announced in May this year.

The supplier therefore expects its strong first half performance to continue throughout 2020, with plans to roll out online casino for its long-term partner FanDuel in West Virginia and Michigan “in the immediate term”. 

“The company has secured significant new customers that will enter Michigan on the GAN platform in Q4,” GAN added.

However, it will no longer secure a share of sports betting revenue from FanDuel after 31 August, with the Flutter-owned operator deploying its proprietary digital wallet for the vertical. For the year to 31 December 2019, this contributed $3.0m in revenue.

This will be mitigated by the launch of sports betting for customers such as Parx, which is launching an iOS app in New Jersey developed by GAN, and will go live in Michigan with three clients.