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Higher costs lead to $14.4m loss at Golden Nugget Online Gaming in 2020

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Golden Nugget Online Gaming (GNOG) said a sharp increase in expenses led to a $14.4m net loss for its 2020 financial year, though the operator did experience a significant increase in revenue.

Total revenue for the 12 months to December 31 amounted to $91.1m, up 64.4% from $55.4m in the previous year.

Gaming revenue reached $79.9m, which was 67.5% more than 2020 and slightly higher than GNOG’s initial forecasts published last month. Other revenue was also 45.5% up from $7.7m to $11.2m.

Last year marked a key period of change for GNOG, with 2020 being its first year of financial results since spinning off from the land-based Landry’s business.

GNOG in December completed its combination with special purpose acquisition company (SPAC) Landcadia Holdings II. Shares in the combined business began trading on the Nasdaq from December 30, 2020.

“We are extremely proud of everything achieved by Golden Nugget Online Gaming in what was a challenging year for everyone,” GNOG president Thomas Winter said. “We completed our public listing and our business grew faster than ever before while maintaining high levels of profit margins.”

However, costs related to the combination meant overall expenses for the year were up 76.7% to $66.6m, with spending higher in all areas. Selling, general and administrative costs were the main outgoing at $25.9m, while gaming taxes hiked 75.0% to $17.2m and royalty and license fees 71.9% to $10.1m.

Operating profit reached $24.5m, up 39.2% year-on-year, but when including $38.5m in interest costs and a further $25.4m in other expenses, this left a loss before tax of $39.4m, compared to a $17.6m profit in 2019.

GNOG benefitted from $7.7m in income tax provisions, meaning net loss stood at $31.7m, in contrast to an $11.7m profit in the previous year. However, after also taking into account $17.4m in profit from non-controlling interests, net loss was $14.4m, but still a big drop from the $11.7m profit posted in 2019.

The operator also noted a loss before interest, tax, depreciation and amortisation of $702,000, down from $17.8m in earnings in 2019. However, when removing the impact of $25.5m in debt extinguishment costs and $4.1m in acquisition expenses, adjusted EBITDA was $28.9m, up 62.4%.

GNOG chairman and chief executive Tilman Fertitta said: “The large and long-tailed opportunity for igaming paired with the strategic benefits GNOG has within the Golden Nugget and Landry’s network is a powerful combination.

“I echo Thomas’ enthusiasm and excitement for the future and thank him and the entire Golden Nugget Online Gaming team for an incredible 2020 and everything that lies ahead.”

GNOG also published results for its fourth quarter, during which revenue was up 47.4% year-on-year to $23.0m. Gaming revenue was 49.3% higher at $20.0m, while other revenue also increased 36.4% to $30.0m.

However, costs and expenses more than doubled to $21.0m, leaving an operating profit of $2.0m, down 57.4% on the previous year. Other expenses hit $44.8m, which meat loss before tax totalled $42.8m, compared to a $4.7m profit in 2019.

GNOG received $8.6m in tax benefits, leaving a loss after tax of $34.2m, but after including $17.4, in profit from non-controlling interests, net loss for the quarter was $16.9m, compared to a $3.2m profit in the previous year.

Loss before interest, tax, depreciation and amortisation was $23.3m, in contrast to $4.8m in earnings in 2019, but after removing $25.4m in debt extinguishment costs and $4.1m in acquisition expenses, adjusted EBITDA was up by 29.2% to $28.9m.

Publication of the results comes after GNOG also announced the launch of a new mobile sportsbook in New Jersey, via a partnership with Scientific Games.

The deployment will see Golden Nugget customers benefit from the OpenSports product suite and managed trading services from Don Best Sports, as the operator migrates onto Scientific Games’ sports betting technology.