Earnings call transcript Q1 2023

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Operator

Good day ladies and gentlemen. Welcome to GAN Limited First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be provided at that time.

I would now like to turn the call over to your host, Robert Shore. begin. may you Robert,

Robert Shore

me good issued GAN's closed today the Chang, gan.com. posted and and Smurfit, earnings and CEO; and quarter release on Brian With at website was after CFO. company's are afternoon Morgan, Dermot first President everyone. Interim XXXX is today Thanks the market

in forward-looking the call, refer with audience the under SEC protected Safe calculate afforded by remind by I’d we are make in Please to are like discussed contained we our qualified to earnings release. metrics forward-looking which disclaimers to may Securities each laws, our and how Federal that today today’s the statements case on the our the call. any in filings of understand Harbor

to ahead Dermot, With CEO, our that, I’ll please. Dermot go turn over call Smurfit. the

Dermot Smurfit

good the extended initial Thank in exclusivity quarter. has the first of rolling U. happy everyone. afternoon, that operation today you, our now I'm Bobby, a Group market the FanDuel iGaming period to in and following been S. for the basis on exclusivity update the

believe critical overhang providing and with thank mission like to GAN solution. FanDuel of executives to FanDuel an this at has I'd the with Group our uncertainty continuing We BXB been trust

growth value revenues market achieved to last opportunity our also the ahead in BXC largest an record us. opportunity take underlying our of year I'll brief all month of million and to BXC proposition divisions last highlight $XX significant with nearly time the revenue speaking

channels Wynn Boston in both BXB winning deployed scale quarter which and first international property. The online during was has BXC sports technology their division division, Harbor in to Resorts our contributed modern also for award at Encore Massachusetts retail the

BXB across rewards year has together and an a future that their to we attributed their book. as the exciting believe And loyalty reported nation. XX% to sign out ups just sports new roll Wynn partnership program I to-date increase win

are that such ultimately confident reduce strategy cost In progress solid in our gains executing and way the first a drive quarter revenue therefore, we in our we we made structure. will

restructuring a financial our us Sammy on Inc. Post Holdings that stronger significantly of Sega with debt footing. quarter disclosed end, puts we a

our cash we eliminated issues. secondly, materially potential interest annual cost. we Firstly, reduced covenant And

Furthermore, Ainsworth in exchange for company. content in small equity $XX by exclusively million licensing iGaming we of cost reduced a our the stake

elected also division We rate from highly marketing capital to our faster our market to Ontario, in the exit of to Canada available BXC return deploy competitive Latin markets America. in in order

partnership the just reminder, is Ontario, ago. PAM a which And our as both to and FanDuel, in a Canada executing as strong continues BXB together exclusive well since platform provided division launch year iGaming one

These realizing three in restructure and commitment X, evidence reduce strategic exclusive towards our steps Step shareholder clear Ontario. BXC from value. exit content this already are debt, Step two, process, review Ainsworth iGaming Step one, cost taken

in not I the Speaking I'm the could of beneficial which first closing refinancing, a to this capital taken, the to with on I'll more speak be process confident be and remarks. clients, shareholders, bit strategic our my happier outcome our debt and our broader BXB course review employees of step strategic will

our BXB contractual revenue million, primarily was So overall The getting to decrease $XX.X from for BXB we the decrease which into related in X% rate which results, the a a division, quarter. decline correspondingly prior the the take generated in of first division. year rates the quarter of our with client was revenue decreased

the GAN rate, Sports our we this across roll trend we take United quarters out respect trend in With to to States. coming the expect upwards as do

capability favorable Our particularly sports betting technology technology our retail economic model. sports a and betting carries

were revenues consistent some basis. local January their of offset growth XXXX decrease market gains BXC domestic customer and even exchange BXB a in until factoring the of contract remains in by underlying year-over-year currency share modest first is when on iGaming. our Positively, largest in rate adverse with with quarter foreign the the place partially in

the World of benefited division. in which acquired for with on sponsorships BXC wake XX% appear solid all key return revenues major Latin the to record soccer from In month players towards performing retained American Cup which new last soccer nearly pointing of well coolbet.com, customers recently to in tournament, during were and active markets, a time that growth our be an

were underlying strong The KPIs or our operating rate Performance of the take both very Key excluding Indicators across segments.

through of from million $XXX XX% platform, of processed we period. an side, prior BXB revenue was which our gross the over On operator the increase year

XX% well Soccer below or growth World double in at U.S. Cup KPIs marketing with and healthy spend the customers, our just peers BXC new digit importantly, post remained remains ratio XX%.

which is ratio profitable is markets, to from marketing. where key for a we drive acquisition better lower return this ours of even in profiles American growth see Latin customer geographies focus Notably,

we've version will Adjusted sports measures the The profitability, as money saving was EBITDA positive cost modestly real X.X BXB mentioned from of will team new our quarters, prior new our iGaming be our technology on platform. in the set as all and clients decrease remains focused or GameSTACK gambling in revenue. launching

bit and to structure. While our to platform first that reallocate cost our and base improve return great lighter our new to higher our our revenue meaningfully to resources quarter We're our diversify making strides scalability opportunities will transition accelerate revenue than expectations. our results are technology

last we simply is betting believe sports LATAM quarter, the a to and BXB number the marquee on groundwork with market client our U. what puts the Sports noted it. laid As we solution in GAN GAN one we roster On for S. BXC. focus prove Sports,

popular percent including retail yielded attracting with individual sports impressive in VIP gamblers partnership major on with major channel events, retail placed handle share Super Madness. wagers excess local of sports of $XXX,XXX March In the in Massachusetts, Bowl Resorts national sporting plus and XX our and Wynn the

mobile in continuing week well book, any operations the delivered season The certainly but first the by the operations proved and of regular promising the impact performance level second are while a in results into resulted overall quarter. high of historic of the run margins to very bruins interest, retail the

will look partnership both channels. be this Wynn with to their We PAM tech where online forward and nationally across Nevada their rolling and developing out provider we included major retail and sports in

is we and In Sports in we licensed U. to every licensing Jurisdiction. GAN in continue Nevada, States ultimately licensed expect U.S. be to GAN work now S. XX operational through process. the

this in Moving Latin Mexican early to encouraging, recent entry still clear strong Coolbet's low our with in market. that Cup but World performance initial markets. saw America, the it's customer our of grow continued growth has growth the over into We our these costs to of out KPIs during new and allowed very XX% quarter strong acquisition customer presence metrics

expectations had our revenue a net competitive soccer which LATAM record new in market delivery a Finally, team be sponsorship, April climate. gaming and ahead by of largest partly to tough in appears driven

market fine clearly We this market BXC exited six-month illustrate return the of a spend in point, shift rate To rate Ontario, or continue will American at order to capital the Latin faster return XX-month tuning America. deployed a to marketing we to return Canada Latin highest throughout from of markets. regions capital in

our new progressing best platformer Coolbet's elements of technology existing well. GameSTACK and Finally, platform X.X, combines is which the our

which BXB gambling will GamesSTACK $XX and in in clients cash will of on annual million our money be conservatively operators new All X.X, the functionality result result for savings. real in greater launched

then on Chief Brian I'll to and conclude review strategic financial now color Chang, turn items, color and with accounting the provide process. on Financial more the interim and I'll Officer, call to our over strategy additional

over to you. Brian,

Brian Chang

everyone. you, Thank afternoon, good Dermit, and

of the to we credit Before provide first our the wanted amendment facility, some well were as results, part I review. on our our discuss as each our which agreement, amended quarterly to of of more strategic as phases details executed Ainsworth

changes these truly were great believe and outcome stakeholders. for We its a GAN

credit all were amended fully to for result certain that all are potential waivers of our a with default report we very secure As financial pleased facility, the events to we of amendment financial now and and in covenants. of covenants compliance to able are we our

new Our XX.X% fixed was which effectively based and rate so to prior prior at year interest far, that was the on, in X% variable rate our compared is quarter.

PIT of time, otherwise interest, to allows known loan. rate, cash as the is to addition the our rate interest lower defer fixed which paid until In interest [ph] maturity interest in any us

While through $X interest. maturity. annual recognize interest in will million cash We estimate this we there result outflows P&L, cash no be and our until savings will expense will still

our million or share Ainsworth, $XX commitments agreement as stake million. million $X XX.X in with X.XX our from approximately future count XX.X to increase Dermot by basis an our Related cash noted, in the of will million annual million we an modestly on reduced equity shares. This to company for exchange

perspective, the to other this and the $X.X year. amendment, million outflows recorded per As to a recognized Ainsworth credit reported of our a million that is quarter cash will $X result we of income the lead a income gain that million. reduced From cash in this agreements quarter in contributed to significantly of net facility amendments $X.X approximately

Moving on to million to primarily rate This revenues year a is our BXB attributable decrease described were period. versus $XX.X in as in quarter, earlier. the the $X.X take prior

to free have not added run impact but our rates P&L, capitalized been development which of $X.X expenses, adjusted, our For approximately expenses cash did flow.

as currency exposure revenues in We of impact and our materially and the constant also quarter on FX majority did was wash that are note foreign us not expenses the lined earnings. a

capital. driving we in from year in $XX.X changes million quarter cash, primarily as million down ended end the with $XX.X working of Lastly, from

balance. at balance of April cash end end approximated our year Our the

I'll back over the call turn to that, With Dermot.

Dermot Smurfit

Thank you, Brian.

last we good As continues process progress a formal review at to initiated pace. a we quarter, mentioned strategic that

year more the executed important distinct Importantly, three we've already initial most provide two I'll color steps. and on of those to-date steps

content greater distribution cash the $X $XX reduced our in million The flexibility future partnership few million and approximately provides cash commitments amended our transaction much reduces a IME exclusive over successful outflows Ainsworth next and annual refinancing financial years. by

forward While are strategic will when market immensely in the continues review isolation, each update appropriate. we and positive steps of the these

PAM profitable a the remains process, our collective unrealized belief As that proprietary offerings and our through BXC our technology we encompasses business. that value sports, and significant iGaming aggregation, go is patented in there growing omni-channel IP leading unshaken

provide outcomes as process. a time us providing prevents the reasonable at outlook are of strategic We forward range. result, to our this guidance of an a given from within potential unable variability review the nature And

be upon these hopefully discussions near Although for of the guidance the in year we expect the to resolution future. to a position provide in

sports and growth BXB LATAM. growth strategy To wrap go BXZ in drive I'm up, in revenue confident forward our with to

a we more We taking how resources. simplified allocate focused approach and and our are capital to

next operational up grow the innings And rollout the GAN profitably are time to our Sports our of we gaming markets. subject we've made plans at across key this Sports. that will to of quarter, to in more We GAN in strides financial fact expect early year, approvals balance business. of with strong biggest flexibility past providing This be the shore U.S. sheet course, very regulatory

are our a on we will designed value for market deliver appropriate. when to at moving good and review Finally, incremental the pace shareholders, process we strategic update

And take with we'd that, questions. be to your happy

Operator

will Instructions] you. the Hallum open. At answer conduct and Capital question first Thank line Craig Your comes Sigdahl question session. your time, of [Operator from we Ryan, Ryan is Group. this

Ryan Sigdahl

afternoon, for guided day March guys. you QX XXth, you end to missed start, quarter the million. on by so one and Good $X Want before loan

curious spend So I from happened what now? till guess

Dermot Smurfit

Yes. Ryan, look, I'll take that.

into with we commercial some duration negotiation – So, multiple and we throughout were that quarter. on of our BXB the continuing where had through seeking discussions conversations of clients in we not wins our some had And quarter. continued economic we incremental a stage second all some had clients value BXB from first basis. have the We if the continuing

to We didn't you're time. closed call out. in right things get So it

Ryan Sigdahl

imply So given over?. long was a does guess, the quarter retrospective I renegotiation? it's almost guess when I that follow quite

Dermot Smurfit

illustration, material our give of one just agreement the day I'll you literally the with Well, last clients right? definitive We of signed our an quarter. on actually

of these So, approach a our know things you hard quarter. all sometimes it's there's rush, end about to very the predict clients and as which obviously the

have to decisions about decisions. strategic and those quite of be make you So you the timing

Ryan Sigdahl

you. Got

customer, old As that it to does that your rate? BXB relates to was the How what largest compare new rate?

Dermot Smurfit

just strategic this review. anything customer at That's disclosing point. a our with I'll byproduct specific -- decline of mean, not to answer slightly And to we're the just individual I Ryan, do contracts.

Brian Chang

it that those given hard $X million to business. to okay. most important I contract not in with – going guess knowing It's forecast the far, this terms its $X to really going million business in BXB changes forward and by forward QX

year? a So, you any revenue that more other expect or ask different one I I'll from way. this help, maybe less Do customer guess,

Brian Chang

significant of under point. we growth round and in can't we with this the in I this balance really Again, demand. the and see year direction review Sports we're and process, the at mean happy very GAN of the strategic with adoption our comment through travel BXB rates

to is built for online and Sports which customers the and a inflection Now that both business. GAN Massachusetts making retail, we commitments deployed in key fully point U.S. our

hard frustration. and again, questions the to the understand in So accept be I specific and

Ryan Sigdahl

me. That's all for

Operator

from Your Chad, comes is next your question Macquarie. Chad Beynon line of open.

Chad Beynon

taking Thanks question. for my Afternoon.

Dermot, First as where believe what revenues the on excited you Mexico, for you're in basis. I the on terms that about up still you talk you mean a Can of currency kind previously were business? opportunity in the Coolbet. of this if business were said as is could constant a

markets? then And kind you're deep of a trying on in exited dive you Ontario you what's secondly, seeing a Coolbet kind into going that just further where you. Thank to bit the growth of can understanding better little get markets in sense of

Dermot Smurfit

with said on time club rate, started quarter very great of activity byproduct quarter call, the No NGR record a problem, the into activity. question. with of growth, all Very, entered for very the second The and happy results soccer at Yes. run that I and Chad. unruly April. end as great major the the we division, Thanks first the sponsorship BXC

positive very indications in growth Latin of that America. So

The growth Latin America. around is centered

but perhaps It's slower excited Mexico. anticipated year, we the bit out very positive. still are the of We beginning of been at the a than gates indications about early are little this

optimized you patient new with depositing amounts funnel the allocating market to you very, to and players entries, have very capital. As marketing start of all new be significant before conversion

markets will with and been that itself, optimize in previous rates out penetration So region. extremely our achieve but and into, team to the same in will American the expect to experiences align we're anticipate which market coolbet.com product, growth rolled all continue Latin continue going we regulated the to it's received market, well that the has particular and in product market Mexican

behind about a in BXC forward expectations. growth indicators positive. year the But prospects division very XXXX, our return performance after and excited very looking is in pedestrian the through the and the growth to relatively quarter the So, which are current

Chad Beynon

are Great. would GAN Thank and why kind it I'm it we really get takes And of long of Sports, asking The adoption just think can is, then launches to rates. for kind you. up, hear contract how any ahead need on biggest be of season, obviously the BXC to new there anything, for there? when would big about running, up customer something opportunities when help you about contributor Is contracts is live NFL XXXX? to most us which that just to contribution reason a to operators. need hear coming And have we

Dermot Smurfit

For Wynn XXXX, it's rollout story for really a Resorts nationwide. deployment

large We Resorts, exciting. summer have markets a of going live very this which is number very for Wynn

and Casinos. the process launch We the Station subject which undertaking. summer and much of have Nevada, is The this successful seriously is to – as for complex also licensing certification very conclusion an in

I shift provision think vendor tectonic that's industry-wide be a going infrastructure and highly plates of to massive in gaming impactful markets. in major the

So out. we're get that excited to super

reception by Resorts just Wynn attention of and lot our the Massachusetts rollout of of by the Sports Resorts not indicator the on GAN paying XXth GAN was client early the very one the online the retail, other day to people a successful or in in of but in for very in positive industry Massachusetts, rollout really first first The or Wynn that the quarter. launch sports fast March Wynn

retail the which very, operation in deploys super well rollout, and are it to retail effectively we is scales exciting and states was stood positive weeks, months where licensed. get super very not So up, very

clients GAN are XXXX. they the state-to-state, through significant states, cycle, from multi technical be states or licensing required new we as to tend slightly BXB new we month certification any or which progress a Sports do can balance are different, anticipate of but where requirements Other cycles be

Chad Beynon

or number diluted Thanks. then you warrants that last one quarter you're Can XX.X current after diluted for the was release. share. Brian, housekeeping the And one. all larger the give at that Ainsworth options? conversion, than the fully press in with mentioned us of the you number end The

Brian Chang

should XX we around that million. believe be I

We the up Ainsworth effect make and invested that that options, have would delta. have the obviously RSUs of that

Chad Beynon

luck. Good you Thank very Okay. much.

Brian Chang

you, Thank Chad.

Operator

questions. time, remarks. there to this At turn no Smurfit the are over would any you. for like now Thank Dermot closing call further I to

Dermot Smurfit

this here. Thank for GAN right to lean From international are joining and path hard everyone you, operator, for best you in positioned S. excited from and here, BXC and thank team Sports to see execute attainable where you, markets clearly afternoon's will I the about And ahead to U. have we remain plan course, into the of selected the we we opportunity profitability. us. confident all. I'm Thank of and call.

Operator

attending. everyone today's for This concludes Thank you presentation.

GAN Limited (GAN) 10 May 232023 Q1 Earnings call transcript