GAN Suspends FY Guidance Amid Uncertainties

Award-winning supplier of enterprise Software-as-a-Service solutions for iGaming and online sports betting apps GAN Limited has reported a relatively flat revenue for the third quarter, compared to last year’s results for the same quarter. This, together with the ongoing market uncertainty has convinced the company that has deployed its GameSTACK platform in the US and Europe to suspend its full-year revenue guidance for 2022.   

“Difficult” Macroeconomic Environments 

GAN’s chief financial officer Karen Flores spoke about the “difficult” macroeconomic environments that influenced Q3’s results and ultimately convinced the company to opt for the suspension of the year guidance. She explained that while GAN was still looking forward to the launch of GAN Sports and other initiatives such as Super RGS, the company will primarily focus on the rationalization of costs with the purpose of protecting its margins during the “volatile and difficult macroeconomic backdrop.”

At the end of September, GAN launched its on-property sports betting solution GAN Sports in Mississippi. 

At the same time, GAN is interested in maintaining its organic investment in spite of the ongoing effects of the same macroeconomic factors expected to have an impact on the upcoming quarter. While the upcoming FIFA World Cup in Qatar with a start date set for November 20 will attract an important activity boost for GAN, this did not suffice to maintain the revenue guidance for 2022. Plus, the uniqueness of the event in itself and the complexity of the potential outcomes for Q4 both weighed heavily in the decision. 

When the company recorded Q2 results lower than it had projected, its headcount went down while its full-year revenue guidance was lowered to a figure between $142.5 million and $152.5 million.

Foreign Currency Fluctuations Influenced B2C Revenue 

GAN’s Q3 total revenue reached $32.1 million. While the Business-to-Business revenue went up 14% reaching the $12.7 million mark, the company also recorded a $1.7 million drop in Business-to-Consumer revenue because of the severe fluctuations of foreign currencies with a negative impact on the revenue.

The B2B segment revenue growth was mostly triggered by a growth in the platform as well as the company’s revenue from content license fees from fresh content and organic growth in the U.S. RMiG business. GAN’s chief executive officer Dermot Smurfit explained the developments in the B2B segment during Q3 as arguments for the growth in B2B revenue. Smurfit added that the launch of the company’s sportsbook platform, GAN Sports, “would have a strong launch”, adding that the upcoming World Cup and the company’s entry into the Mexican markets were also excellent opportunities.

The company recorded a gross profit of $22.7 million in Q3 2022 compared to $21.5 million in Q3 2021. Operating expenses dropped from $28.6 million in Q3 2021 to $27.8 million in Q3 2022. GAN’s net loss reached the $6.9 million mark during this year’s third quarter compared to $8.7 million in the same period of last year. The drop was mostly caused by the decrease in administrative and rental expenses and the improved gross profit margin. In Q3 2022, the adjusted EBITDA reached $2.1 million compared to $(0.9) million primarily in Q3 2021, mostly thanks to a smaller net loss.