GNOG - Earnings call transcript Q1 2021 | Golden Nugget Online Gaming, Inc.

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Operator

Good day and thank you for standing by. Welcome to the Golden Nugget Online Gaming First Quarter 2021 Earnings Call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. now today, hand Sloan would to conference I speaker your Bohlen, Instructions] like the to over [Operator Investor Relations. you. Thank ahead. go Please

Sloan Bohlen

Good President, results Harwell. you discuss thank Chief Officer, Executive today afternoon, Mike us Fertitta; and and everyone. to and our Tilman today Financial our our for Chairman our Winter; XXXX. for joining quarter Officer, With Thomas me first And Chief

all meetings participants forward-looking Before the that comments to we begin, include the I’d today laws. statements securities remind within of like federal will our

statements not in statements, number We today. future what could therefore, and and actual Forward-looking are facts, from interpreting statements and exercise on them. forward-looking relying about in of cause assume you of should a no results periods historical materially talked uncertainties to responsibility differ factors for caution and we the our updating

we discussion SEC. to as as our risks, For filings earnings a the these release, the encourage complete company’s well you with of read

In earnings opening turn the addition, Tilman? income to we refer EBITDA, me refer EBITDA measures. of definitions our over And and let for Tilman and or to non-GAAP full release to that, with net loss of adjusted call during his reconciliation Please call. the a for the to for non-GAAP measures our remarks.

Tilman Fertitta

all Sloane, the to you, Thank and analysts thank the on and investors you call.

few Before I points level high from a I turn the with the call begin over Mike, to Thomas will quarter. and

our team quarter, how accomplished But addressable assets, we market in areas with Online well historic and First, geographic the execution. expand seeing feel significant you to XXXX our and what Gaming we iGaming for as as I the emphasizes confident course, growing continue we be last of mentioned into about people, and are right positioned really quarter. see growth has our the revenue Golden build can by increasingly what Nugget can scale. new

have there geographies agreements we’re you Thomas, going will that our from and expansion Michigan alone, under equal in plans next population. we it well a I’ve we latter But our the my casino ahead and our way very our third that and operate Also, they’re in New grew as the more own in now of New XXXX represent simply, of extremely success generate Jersey strong about year. in to U.S. revenues makes it that next results we’re profitable EBITDA from our have Jersey business XX%. are believe revenues year a we so I the part Second, will help our but our nearly hear state April our will Michigan, expectations. In exceeded of in XXXX DNA turn on can’t happy to based sometimes requires that expectations. Michigan playbook In that run our aim our experience same country. more results really money. and states recreate in I across got to very it’s by and

and relationship advantage. over produced to and standpoint, XXX we understands customer ours who millions is have to paid broader Golden Thomas the With excitement have don’t through in five Winter. significant for powerful it the a results are. future know of With team many We the of already infancy President, I’ll are XXXX. I’ll our entertainment royalty connectivity Nugget great the venues exists strong, of go have given Nugget highlighting think to massive GNOG getting begin into the and enhance is or of own we’re and our Across Landry’s From markets customers access and really lots our that, relationships. by able Landry’s. our is the our up competitors base. other A XX is of U.S. dollars customer how so end that to across reiterating we unlocking with combined strategic by available lot me Lastly, tens close I over brand equity states, businesses. definitely to is media value Online powerful just Golden people and restaurants, It our that, casinos turn we let there. to market Gaming Landry’s

Thomas Winter

Thank you, Tilman’s by I’d welcome Tilman, everyone. begin and like comments. echoing to

start XX% the largest long-term lot a and are increase that view generated We revenue record. growth our about we opportunity. start have quick truly on quarter ago about of the year a In QX, review our from support $XX.X promising our and in revenues, success results We’ll excited a XXXX with of a sizable quarter. of million on

especially Michigan, our We while from America. growth. expansions planned XX% organically came came this with Jersey, first A XX% are North New pleased many across of for

growth strong Our the player acquisition retention, in operating New continued and Jersey by while was of markets competitive and Michigan. driven

in last year. materials, see tailwinds beyond will the growth continues experienced we early our you and As the COVID-related to is broad-based expand

new grew on our quarter returning active expansion, our which both XXX% minute. first grew in In market deposit ago, year a new will the encouraging, driven and in mainly Most fact, I by significantly across a time by we of depositors. over elaborate

even active active XX% strength last year is in markets. sequentially, by XX% deposits which grew how rapidly growth as driven just of shows deposits, exciting continuous grow was can in new retention. returning our earlier average and XXX% we Overall, While and really monthly over

quarter accounted to Jersey, for in in meaningful early X% In XXXX, stages have boosted markets, been our the first New user QX few quarter of of which long-term can numbers earlier was income last is us we Jersey. it first than gaming has the our net we total over The in XX% quarter compared $XXX, makes Looking months, quarter of this short New the $XXX in monthly net COVID-XX of Jersey’s Michigan’s XXXX of our Michigan, depositors most three for of XX% comparison. temporarily XXXX, depositors depositors. record Overall, X% the of Michigan median first encouraging active been is number Still the average revenue gross create the was which household at too, New by share while first $XXX believe in first per in lower which more Michigan. a is year, was net an our were in confidence ARPU shows and dampened of only ARPU of the increase the pandemic. value nationwide time major in revenue casino the

is You bonuses will players ARPU are welcome recall will initially net of that lower virtue less by spend against new measured revenue. that and also

in mature. expect of we closer to progressively I last would up historical iGaming as ARPU We the our you net call. to new casino growth drivers markets outlined Overall, remind ramp levels major

growth early its tremendous experiencing is is and iGaming in still First, innings.

in immense Pennsylvania that U.S. year. enter exhibited revenues revenue players the our call, iGaming rates over or where Together, gaming are states. iGaming the market our continues size third, New XX% Michigan population. we the to compounded time. twice and of already revenues sports tend continue in just continuing loyal In are regulated, online more in last Second, to with of potential in and Building increase our grow than million on as spend we have the betting representing to footprint average QX gross revenue is were more, trajectory iGaming of past this growth to summary, see years. In nicely four we over new around U.S. a already progress we $XXX in their earnings Jersey, the And while generates key line states our XX%

more iGaming states iGaming We we discussing Nevada. expect recently, legislation, revenue have more tax including states several and and consider to ignore will seen last a months, the potential legislation to as few become Illinois, harder Indiana, in

Let’s now our expansion and quarters. speak of market our number the give some key over updates next build to for

secure and market which North access U.S. our represent across We XX of footprints population. no have to been potential have working aggressively XX% expand the across America states,

Z especially We are announce Casinos permitting. both the agreements Casino regulatory Rose to access in market most betting, and our Iowa Wild sports recent where cover our with approvals iGaming and legislation and with in pleased online agreements Colorado

and Illinois, addition and casino a affiliation New has Iowa, Virginia, casinos Colorado GNOG our York sports West online through access online Golden Virginia, negotiated Mississippi. In and Nevada market in Pennsylvania, betting and/or Louisiana, to Nugget for with

going are additional we four of these and in some While legislation anticipate this states still year. regulation, states pending live

are in forward Pennsylvania casino ready West launch the Virginia to online casino sports In online launch sports online in to to and getting in sports and Illinois. Next Colorado, online Virginia. we plan and in and Early look quarter, fourth year, we Iowa in Louisiana. quarter, we next launching

addition in other open several discussions are in Ontario, states, of the markets U.S. believe next currently year. will which We Canadian as to as soon we the province market iGaming for access in

slightly be achieving strategic our breakeven year result while significant As up iGaming different. continue player we our EBITDA acquisition. first general, Each into will in years negative make ramp two jurisdiction we investments in new in new operation, will three space. of we markets, investments in the But to in in expect expansion to

noted, to progress like minute Michigan way Tilman new take to discuss build a achieve Jersey. the I’d growing each excited in As same markets with these in in of profitability we’re New to our and to-date.

of in the with at planning, end First months January. were of many wave launch of the first of Michigan the operators we to thrilled

to Golden million share month of marketing. it and in first a and promotions are This gaming at gross than in amounts contributed We we operators the four us New that trend. Jersey. have have static years doubling revenue, of continuing In over our forward fourth more of took are rules the generated a XX% last to incredible our to was pleased market where spending market and achieved to only one there database iGaming more $X.X large three look with we Nugget than operation, months our GGR two homegrown some competitors achieve we which in full increase month-over-month. and April, In

which has the live the studio. Slot with operator call roadmap launching XXXX. themselves before own Megaways. emphasized quality are in on but core results Review Year speak success we’ve been operator, Jersey. and successful review XXXX as operator. campaign, by were and we to to any also more Dealer, row. our update slot XXXX, to upon service by eGaming innovation recently the to We marketing U.S. our The our in in first were product financials, an Categories underway like build expect the for of I and to operator, We launching we’ve to have happen success. already in series mobile Nugget dealer Steppers coming Video than a upcoming product for Operator years first to other five We and launch turn slot our Michigan, innovation product casino of New launch the categories, and a four branded categories customer new Live initiatives weeks. are to XXXX, In we on a North American the a launch In have we give Awards like, Since to-date excited Finally product game, focus the won for, one I’d in we Golden seen its we operator, were to business. of dominated the always in shortlisted the GNOG our the Mike in of of

plan Studio. an states. The of to add be are XX we instrumental announce our games to and be space XXX from and we’ll also IGT, the capacity will Spin driver providers, revenue several that by should content spend, the our New in Inspired significantly Dealer we new growth from to square over XX its expand thrilled Jersey, activity We key feet studio content and additions player couple Content to Gaming, is Games increase these offering of X,XXX launching our expanding tables months. a Gaming expansion additional Evolution next will In and Live of including tables. in

expect this this in third We to complete quarter the of project year.

and focused We an to tables. be on Dealer about existing XX roulette, launched a roulette to doesn’t which the complement Live launch auto In same new slots. to also mean quarter, while studio and on XXxX are on QX. first basis track an games no in excellent casino the will exclusive flow we we our do forget plan than And less

this improvements, Scientific newly across features portal all of we our will partner navigation designed technology a first This operated. our design will quicker delivering Eventually, casino with portal come states with deployment Games working on we to new expect faster. and deployed new and release West in allow we a interface are be should We user us new Virginia. be this

like new development of in Store first are with last we applications. making We New in-house progress our be native build are completed phase analytics apps our into solid capabilities, QX. mobile to in new also as business is and deployed on Jersey. quarter Android would have first will investing our This a and submitted app in the solution last centralized Michigan how jurisdictions. I iOS note more We intelligence The we further Google the on to thing and to move data warehouse Play the

as Tilman QX. we let New in are excited in our coming and growth years. of plan summarize, growing organic the the to by to promising begins So call, we starts months our With to very Michigan, walk but not to over also the Jersey, by only in states that, call the new for launch turn through our financials me list Mike

Mike Harwell

of totaled non-cash including liability gain which non-cash a tax change discrete a non-cash Net on Thomas. were quarter million, on on revenue year-over-year you, of the everyone. $XX.X these afternoon, number XXXX. $XX.X liabilities warrant value a based XX% reported million, reported million of includes $XX.X when $X.X for quarter million, representing a XXXX during a on quarter. to receivable of totaled first for agreement the fair compared increase which a Revenues the the of Thank income quarter million $XX.X items, and a first of Good gain in a of both basis derivatives of in

adjusted million We in $XX.X first accelerated repayment the debt discounts $X.X million for extinguishment the the connection in also first of in of deferred million, was $X.X million, of EBITDA million $XX.X with the period. quarter recorded of a term indebtedness. amortization and prior loss net income to of million these costs Adjusted in of non-cash $X.X quarter loan costs debt with net $X.X income our we expense of of compared XXXX, interest that during $X.X items, the expense discrete as and When recorded recorded including million issuance year quarter debt compared XXXX. negative to the associated for is non-cash

Advertising in XXXX. for for compared last adjusted Advertising adjusted or associated quarter. $X.X and million plus for $X.X compared year. $XX.X compared compensation, million first XXXX. million compared of $X.X and first to quarter expenses quarter EBITDA totaled to and year million, was stock-based the with EBITDA, our million Cost the the Corporate administrative million, at expenses expense $X.X first adjusted for million $X.X General of the state to the of negative of of to compared quarter XX% $X quarter, the at for net promotion the further promotion the Looking revenue, quarter the quarter first were level, million or million $X.X $XX.X Michigan. at in during $X.X negative EBITDA quarter in of was XXXX. $X.X to of for million quarter XX% negative in the revenue quarter the was spend the revenue launch incremental million prior

of our quarter quarter $X.X later quarter when first keep first for to year, administrative and during Illinois in expense, this investing to a we likely in public the the second expect million stock-based stock-based expected reflect associated compensation as expense $X company. operating incremental remain million quarters throughout XXXX. and quarter excluding the relatively third general a $X.X expected for costs administrative million compensation Stock-based to currently be fourth flat is and with year. to of are compensation the expenses amounted our quarter. We which the and and Pennsylvania full non-cash General significantly Corporate advertising increase and expenses with fourth launched of approximately

are of associated which million expected quarter revenues markets. debt $X.X increase the accelerated launch for While to of the remaining state net expense general of the totaled a new and $X.X increase the deferred or expected approximate non-cash costs. level quarters public three the currently the million administrative Gain issuance the included with net year is gains to Interest the which amortization and expenses discounts we in as $X.X in Interest million, derivatives expense for debt with linearly warrants were included exercised they million, date warrant $XX.X quarter. redeemed. on till first were expense on for first quarter

be of all gains the cash exercised the of redeemed for changes were the during recorded fair periods. future or first $XXX.X discussed, for losses public additional million million. value will these in previously warrants warrants As in of or quarter No $XX.X the proceeds

will $X.X the in should outstanding and We and finished the all noted to million. and it related of be of the gains in value million change we However, quarters. of that record cash remain warrants losses future non-cash quarter first with these private fair cash equivalents warrants XXXX $XXX.X

year to additional excited our I’d like over expansion believe current outlook As fund the we some about you our to provide next those and and second heard our very are sufficient capitalization detail for XXXX. more Thomas, state from take is plants. a we than Tilman to on planned

saw revenue million. million to release, we First, expectation our $XXX of year you in full reiterated as our $XXX

to of markets. questions an In we investors modeling costs from that help acknowledge analysts, startup the received new as and advertising we’ve challenge answer to addition and in in enter we effort pace the and

As range of quarters same and our quarter, current results, revenue in Pennsylvania, the primarily saw EBITDA the market. in the first we next a loss plans that the state given XX%. of launch was fourth you year, Based our our percentage our that two expansion higher expect trend percentage negative EBITDA on as that will driven the to in in quarter in our size be for would by

range For the year of XX% of negative full EBITDA XX% a trend should in revenues. to

other for I’ll your dynamics Finally, point out forecasting. two

expansion that First, EBITDA on I’d in we will markets our to years. echo break three iGaming even comment expect Thomas’ of average each

With your database. new questions. the simply between our our the call you and the margin, of initial an growth the revenue states, build I’ll cost be turn consider relationship Operator of back to that, our for inverse player to EBITDA because as initial expansion likely Second, there will

Operator

comes Your from [Operator first Jefferies. from Instructions] David question Katz

David Katz

talk And rollouts how a where quarter, would the the expensive? you state I state you’ve a the the those just wanted second, about or wanted more all as far. for it, becoming characterize landscape incremental same and staying in ultimately, around I expect are bit to finding Thanks economics everyone. which access to the you’re are so cost whether not be just afternoon, added perspective? a a ask couple from detail. you they about to degree or Good Hi. competitive, the right, And to

Thomas Winter

one I a thank David, on access. questions. will start market your you Thomas. for -- is second new Okay. this I will with

of as access, yeah, weeks states we two Iowa, hopeful coming we states So, in terms in new and announce and the Colorado are we’ve you market -- added saw are to and more months.

are course of on We that. working

terms versus In states need new offer a that. get add it’s of economics look states, profitability of the is really when sports states sports, to first differently. the to the that difficult to in new thing when new to profitability, comes real because iGaming One, extremely at iGaming you you you

awareness, player definitely it to eventually, most -- believe brand betting way state ahead start the an So launch really presenting that iGaming, we if iGaming where increasing not is that’s our offering when get we us the focus opportunity states But at will iGaming offer this investment. to staff on this want as of our a sports investments, marketing return only build we sports least to state, in on. expected an In to that the operate higher will because have because states at really base. for to where our later more we together the is all

believe Jersey. in see we return economics New on states we saw So as that refocus investments all in iGaming the on should types if of same we we and states,

could the So state difference the be a another tax to rate. from main

you and your tax margin And think Of expect was type -- see have than question of lower other the returns. what a a time we course, conversely. you same we again? But first of will profit if rate, higher that, should

David Katz

plus to about any degree was or new the asking rollout states expected I finding surprises which competitively into you’re them and there? be minus the as to or

Thomas Winter

KPI surprise of course, slightly or four we haven’t three any if and market, where we’ve that months if I big really would this think, the expected. that have early is stage at seen of we’ve I anything, seen say, for were better months. been So look live what we Michigan, But than would just I

believe ramped thing that to else us, how everyone first was but market revenues kind the So a was quickly up. surprise I to a that of

demand already four forward, we just that And Pennsylvania, months that is that gaming new and you we a lot line unbelievable. case be that after pent-up the that So because much moving gross had pretty million in is going market in above for think is fact saw it revenue -- to this gaming, of $XX Michigan. every in the iGaming saw we state in

in Of role that. really course, COVID-XX on played it, but it its believe we that depends

really was the that first So observation.

the methods, assess population total It’s a is when kind your is X look for you take, of to method say, revenue when regulate, we an the basically first and because user. state two were market, formula. New if second of of at average Jersey want the to apply per as if have percent you U.S. for point, the proxy, all accounts The Jersey a you the addressable instance, New interesting then you to

the time assumption. what the as not And impact because on extent player to the think But higher XX% user, than Jersey. I we’ve was household is way income. that budget, see what than about other said, far, we disposable is The is going with U.S. I income let’s look an it the Michigan in have average is our about we by the XX% for say, New first much first are Jersey, our the Jersey. per we in their we New when did population our their Michigan, higher New And of median And is but that spend in bigger the encouraging. that in to, New today -- you XX%, is income lower a XX%, forecast that revenue gives than method. Jersey than that pretty month the lower especially household And gross XX% like average should another median is on think and we so of saw is depositors say, seen at to in X%

of churn of New see terms In in in players, we we than Michigan churn are rates seeing new lower rates Jersey.

so that of You a terms in per because we the is cost certain see adopters acquisition, today, of cost new player. surprise definitely the lower Jersey, But here acquisition market, no our it’s And motivated that in say things early so is the players probably that in per new bad disclose, than can are probably I fast. either. if most what it Michigan has is even market grown but New involved

So, revenue overall, really positive takes about the Michigan are the in opportunity and economics similar we’ve on your rate I be seen user revenue terms of should other it your be states. time similar. going per churn your return similar, lifetime we I and similar But increase should I investment. think the cost the to and fairly be for average globally, acquisition, pretty be gradual gross the fairly mean, for instance, gaming value recoup to in think, should hope per

David Katz

more, don’t ask interesting. can and mind. you if I one just Helpful Understood. If

Thomas Winter

Sure.

David Katz

Live expansion. the me, pardon Around, Studio Dealer

Thomas Winter

Yeah.

David Katz

BXB Nugget Where fair it Golden if and I using are I’m studio other in cases, other is a a on operators portion think that for basis. of correct,

Thomas Winter

Yeah.

David Katz

far. -- have ultimately for How do themselves? of proprietary unique beachhead obviously over what are those well which it, so vision can is do operators with product defensible, they your and How Is sort have time. what building what you specifically a so you just -- is, other you that going is pretty is and it

Thomas Winter

Sure. Yeah.

brands studio of all come the thought Jersey too big in And XXXX, that set of to back a back mean, talk believe them suppliers in and much want for in time missing of that market. if New to all online usually genesis number really to didn’t we at that small guys part the Jersey. And the make go Live the we would market Dealer casinos we serve up for because all too money. project was offering a the And hard big to basically to BXB So went to be it who was and of pretty I in they us. a New

it So to honest. and did be partnership it we first we own with we our to why decided in the on do place that’s and reason did really the Ezugi

because today buildings now Playtech So U.S. in a and is of in Gaming bit the number of a situation Evolution the different, right tomorrow states the likes studios

feel our a order good It own is don’t and we the need studio. build well, are we the controlling have our studio Still to because like. really, us So to in it’s for start operation.

that. some acting we because because here of supplier are savings mentioned, So we also, a as And you have as well. cost BXB as

six today. have the has we these today our using last of year. brands tremendously, We all capacity to existing reaching And close combination studio that are grown in that activity the And means especially brands studio.

XX will we So additional increase or them order. XX around tables pre-booked tables, in the probably for by of out we short brands and have XX of our capacity studio XX my to think, already XX I will some using the

us for we good a good So other use have. are studio BXB of that are also And These to revenues in it’s will asset. states, really tactical as a provider.

in think some asked uncertainty Right be you all So as for change us might have a state. that the our But located Gaming studio that’s have the the residents going Evolution because to that I in the for it now, Pennsylvania Michigan start. serving to is around and like they way local like used iGaming. states

You don’t have that anymore.

So authorized would own will we studio use any positive. in do and if that are at point to course, regulator by a of other a states, we be in time, our that

David Katz

Perfect. Thank much. you very

Operator

to Fertitta That turn call At remarks. closing I was time, our Tilman will over the question. for this back last

Tilman Fertitta

how conviction answer we like of I future in a state of build help future months if our future to -- bright We and or Mike we’re be in that And great about continuing so Michigan. how all EBITDA now our bright us, excited much. to a you feel or any you to great to ever industry the forward can or out. we’re this it’s we the more very just much always said, and kind XX Michigan, questions. in it major about thank Well, available, like get very validates And look and to and is even strategy the can Thomas positive myself we

thank So great a all have everybody very week. much and you

Operator

for call. This participating. today’s conference concludes you Thank

You may now disconnect.

Golden Nugget Online Gaming (GNOG) 18 May 212021 Q1 Earnings call transcript