GAN plc: 2018 Half Year Report
28 September 2018 - 4:15PM
Business Wire
Strong Revenue Growth for the Period ended
June 30, 2018
GAN plc (“GAN” or the “Group”), a leading B2B supplier of
Internet gambling enterprise software-as-a-service solutions to the
US and Europe land-based casino Industry, announces its results for
the six months ended 30 June 2018. The full Financial and
Operational Review are available on GAN’s website at
www.gan.com.
Financial Overview
- +28% increase in gross income to £23.8m
(H1 2017: £18.6m)
- Group Net Revenue of £4.6m (H1 2017:
£4.1m), an increase of +11%
- Recurring revenues grew by +19% YoY and
now account for 92% of Net Revenue
- The US and Italy accounted for 61% and
38% of Net Revenue, respectively
- Clean EBITDA1 loss of £467,000 (H1
2017: profit of £24,000)
- Loss after tax of £2.9m (H1 2017: loss
after tax of £2.0m)
- Basic loss per share of £0.04 (H1 2017:
loss per share £0.03)
- Cash and cash equivalents at 30 June
2018 of £5.1m (£2.7m at 31 December 2017)
- A subscription by new investors for
15,000,000 new shares in the capital of the Company raised gross
proceeds of £7.5m
- The Company elected to redeem and repay
in full, with interest, the £2,001,483 9% Convertible Unsecured
Loan Notes 2022 issued by GAN in April 2017
- Net Assets at 30 June 2018 of £12.3m
(H1 2017: £9.0m)
Operational Overview and Current Developments
- Welcomed the decision of the Supreme
Court of the United States ("SCOTUS") to overturn the previous
Federal US prohibition on sports betting enshrined with the
Professional and Amateur Sports Protection Act 1992 ("PASPA")
- Entered into a multi-year extension
with key client PaddyPower Betfair Plc for the continued provision
of Platform Services in New Jersey's fast-growing Internet gaming
market and the integration of their nominated Sports betting
application from third party provider IGT, Inc, substantially
completed in the period
- Commenced a significant expansion of
engineering resources principally in Sofia, Bulgaria with secondary
recruitment in Las Vegas, Nevada in order to meet existing and
expected demand from both existing clients and new clients for
incremental real money Internet gambling services (particularly for
sports betting in the US) and Simulated Gaming™
- Opened 'GAN Digital' in Tel Aviv,
Israel, an in-house marketing agency to provide digital user
acquisition & retention services to selected GAN clients
worldwide
- Announced a strategic relationship with
SBTECH to serve real money sports betting to GAN's diverse US
casino operator clients
- Signed a multi-year agreement
with GOLDBET Srl a leading Italian Internet sports
betting & casino gaming operator in Italy's regulated
market
- Signed the Mississippi Band of Choctaw
Indians as a new client of Simulated Gaming™ expected to launch in
Q4 2018
Post-period end:
- Launched Internet sports betting in New
Jersey delivered for PaddyPower Betfair plc's FanDuel Group, GAN's
first US client to operate Internet sports betting via the GAN
Platform. The reported success of the Internet sports betting
market in the first operating month of August 2018 may result in an
increase in the speed of regulation of intra-State Internet
gambling going forwards. It is believed that additional US States
are now considering the regulation of Internet gambling
- Extended for a multi-year period the
existing agreement with Pennsylvania’s largest land-based casino,
Parx Casino, in order to prepare for the commencement of real money
Internet gaming, real money Internet sports betting and on-property
retail sports betting delivered via the GAN platform.
Pennsylvania’s real money Internet gambling market is now expected
to commence in early 2019. This delay, due to a
slower-than-expected issuance of regulations by the state agency,
impacts GAN’s ability to recognise revenues derived from
professional services fees already generated by GAN year-to-date
and similar incremental professional service fees expected to be
generated in Q3 2018 as preparations to launch our client Parx
Casino’s Internet gambling operations continue. Such fee-based
revenues from the professional services rendered by GAN to its
clients are recognised following the client’s commercial launch of
Internet gambling. Accordingly, revenue from professional services
delivered to Parx Casino in H1 and H2 2018 will now be recognised
in H1 2019.
- Launched real money internet gaming for
GAN’s second New Jersey client, Ocean Resort Casino (“ORC”),
supported by GAN’s Turnkey Managed Services comprising technical
operations management, software development, customer services
& payments management together with associated regulatory
consultancy. Ocean Resort Casino opened its land-based casino in
Atlantic City on 28 June 2018 and the Internet casino delivered to
ORC by GAN commenced operations of its desktop-only website on 10
July 2018. The secondary launch of mobile apps to enable end users
to engage with ORC’s Internet casino via their personal mobile
devices has been materially delayed by the New Jersey regulatory
process due to the demand for certification of new Internet sports
betting systems. The full launch was originally planned for early
Q2 2018
- Full marketing of our Overseas Internet
Casino in Europe commenced on 12 September 2018. This followed an
extended period in Q3 restructuring certain operational
arrangements to ensure an efficient deployment of the
previously-reported $10m in user acquisition marketing provided to
GAN, to develop their Internet gambling business in European
regulated markets. Customer acquisition was originally planned for
early Q2 2018
Dermot Smurfit, CEO of GAN commented:
The first half of 2018 saw continued growth in recurring
revenues to represent a record 92% of total Net Revenues in the
period.
- Recurring revenues were driven by the
continued strength in Simulated Gaming™ in the US, which grew gross
purchases by end user players +52% in H1 2018 as compared with the
prior year same period H1 2017.
- Significant growth was also experienced
in Italy where gross gaming revenues increased +43% in H1 2018
against H1 2017.
- In the US, New Jersey’s Gross Gaming
Revenues grew +22% in H1 2018 compared to H1 2017, out-performing
the overall Internet gaming market growth rates in New Jersey
thereby increasing market share.
- The gross participatory revenues
generated for our clients from both Simulated Gaming™and real money
Internet gaming, in which GAN participates, grew at the blended
rate of +36% in H1 2018 compared with H1 2017.
One-off setup fees derived from new client launches were
constrained in H1 2018 by the need to re-assign internal
engineering resources to existing clients in order to deliver on
their critical business needs, including the integration of
Internet sports betting which was substantially completed in H1
2018 and launched post-period end on 1 September 2018 for client
PaddyPower Betfair plc in New Jersey. The decision to commit
significant engineering resources to integrating and delivering
sports betting was a long-term decision taken in the interests of
shareholders in order to logically prioritise major existing
clients’ high priority business objectives triggered by the
material new opportunities presented by Internet sports betting in
New Jersey and the Overseas Internet Casino in Europe.
We have also improved GAN’s balance sheet and cash position with
an equity raise of GBP 7,500,000 though an over-subscribed placing
of 15,000,000 new ordinary shares. The capital will be used to grow
development resources in Sofia, Bulgaria and Las Vegas, NV to
capture substantial incremental revenue opportunities available
from Internet gaming and sports betting in New Jersey,
Pennsylvania, and other US states expected to regulate internet
gambling in the near future.
Regulatory delays will impact US real money gaming results in H2
2018, but we will continue to invest in resources to prepare for
2019 and beyond. GAN’s prospects for 2019 and beyond in Real Money
Gambling are very encouraging given the initial results from the
launches of internet sports for Paddy Power Betfair plc’s FanDuel
Group in New Jersey, Internet gaming for Ocean Resort Casino in New
Jersey, and the start of customer acquisition marketing for
Overseas Internet Casino.
By way of outlook on 2019, the recent launch of Internet sports
betting, the Company’s current sales pipeline and existing
contracted clients are projected to significantly enhance GANs
revenue and EBITDA prospects.
Notes
- Clean EBITDA is a non GAAP company
specific measure and excludes interest, tax, depreciation,
amortisation, share based payment expenses, certain non cash
transactions and other items which the directors consider to be
non-recurring and one time in nature. Where not explicitly
mentioned, EBITDA refers to EBITDA from continuing operations.
Note regarding forward-looking statements
This announcement includes forward-looking statements, including
statements concerning current expectations about future financial
performance and economic and market conditions which GAN believes
are reasonable. However, these statements are neither promises nor
guarantees, but are subject to risks and uncertainties that could
cause actual results to differ materially from those
anticipated.
Half-Year Results | Conference Call Details
The GAN management team will host a conference call for analysts
& institutional investors at 4pm BST (11am EDT / 8am PDT).
Please use the following dial in numbers:
UK Participants: 0800 756 3429 US & Canada
Participants: 877-407-8629 International Participants:
201-493-6715
The Half Year Results Press Release and Presentation is
available to download from the website, www.GAN.com
Half-Year Results | Webcast
The call will also be simultaneously webcast over the Internet
via the following link:
https://78449.themediaframe.com/dataconf/productusers/gan/mediaframe/26571/indexl.html
and such link will also be made available in the “Results and
Presentations” section of GAN’s website
www.GAN.com/investors/results-and-presentations
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180927006001/en/
GANDermot Smurfit, +44 (0) 20 7292 6262Chief Executive
Officerdsmurfit@GAN.comorRichard SantiagoChief Financial
Officerrsantiago@GAN.comorUS Investors:The Equity
GroupAdam Prior, 212-371-8660aprior@equityny.comorUK &
Ireland Investors:Walbrook PRPaul Cornelius, +44 20 7933
8780GAN@WalbrookPR.comorDavy (Nominated Adviser, ESM Adviser and
Joint Broker)John Frain / Barry Murphy, +353 1 679
6363orLiberum (Joint Broker)Neil Patel / Cameron Duncan, +44
(0) 20 3100 2000
GAN (NASDAQ:GAN)
Historical Stock Chart
From May 2024 to Jun 2024
GAN (NASDAQ:GAN)
Historical Stock Chart
From Jun 2023 to Jun 2024