GAN Shows Mixed Results in Its Q2 Earnings Call

Online sports betting and iGaming software provider GAN Limited released its Q2 2022 earnings call. The company recorded revenues of $34.97 million for the quarter, constituting a 2% year-to-year rise compared to 2021’s $34.63 million. Despite the slight growth, this result missed estimates by 4.37%, as the earnings call revealed several underperforming metrics.

Outside Factors Exacerbated an Underperforming B2C Segment

Dermot Smurfit, GAN CEO, commented that the company’s prospects remained solid but admitted that the Q2 earnings call had revealed some underperforming sectors. He attributed these to outside factors and noted that GAN was already taking measures to readjust accordingly.

Financial results were below our expectations due largely to factors outside of our control, including foreign currency fluctuations.

Dermot Smurfit, CEO of GAN Limited 

According to Smurfit, the harsh operating environment in some European markets and the company’s slow progress in Ontario, Canada, also attributed GAN’s underwhelming performance. The CEO also admitted that the company’s B2C segment fell significantly short of expectations despite key performance indicators remaining positive. B2C revenue dropped to $20.8 million, compared to Q2 2021’s $23.9 million. Despite the negative result, Smurfit was adamant that the B2C’s setbacks were only temporary. He pointed out that active customers grew nearly 40%, and the volume of wagers and per unit customer acquisition costs remained competitive and sustainable.

We’ll continue to focus on operational excellence, but to be very clear, our B2C business remains healthy, profitable, and growing.

Dermot Smurfit, CEO of GAN Limited 

Positive B2B results helped mitigate losses

GAN’s 2% revenue growth was predominantly due to the company’s B2B segment, which performed exceptionally well, bringing $14.2 million in revenue, a 36% year-to-year increase. One of the main drivers behind this record growth was the company’s US expansion efforts. GAN recorded strong organic growth in several states, boosting its iGaming and SaaS offerings.

Despite the small revenue growth, adjusted EBITDA dropped to $1.3 million, compared to $3.5 million in 2021, primarily driven by the negative impact of currency fluctuations. The company’s net loss amounted to $38.3 million, and GAN had to decrease its earlier full-year estimates, setting a new range of $142.5 million to $152.5 million. However, the software developer still has $49 million in cash, giving it a sufficient safety margin as it expects future growth.

GAN Is Confident in Future Profitability

CEO Smurfit announced several key measures to improve GAN’s performance. The company plans to focus its expenses on the countries with the highest returns and continue investing in expanded product offerings. 

We continue to focus on what we can control and find additional ways to run the business more efficiently and ultimately more profitably.

Dermot Smurfit, CEO of GAN Limited 

Smurfit drew attention to the World Cup in November and December, noting that it would substantially boost Q4 results. He also announced that GAN had secured a deal with Caesars Entertainment, expanding the developer’s reach to 50% of the US iGaming market. Despite the mixed interim results, the company retains its substantial mid-to-long term growth potential.

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