Gan (LSE:GAN)
Historical Stock Chart
From May 2019 to May 2024
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
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+28% increase in gross income to £23.8m (H1 2017: £18.6m)
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Group Net Revenue of £4.6m (H1 2017: £4.1m), an increase of +11%
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Recurring revenues grew by +19% YoY and now account for 92% of Net
Revenue
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The US and Italy accounted for 61% and 38% of Net Revenue,
respectively
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Clean EBITDA1 loss of £467,000 (H1 2017: profit of £24,000)
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Loss after tax of £2.9m (H1 2017: loss after tax of £2.0m)
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Basic loss per share of £0.04 (H1 2017: loss per share £0.03)
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Cash and cash equivalents at 30 June 2018 of £5.1m (£2.7m at 31
December 2017)
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A subscription by new investors for 15,000,000 new shares in the
capital of the Company raised gross proceeds of £7.5m
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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
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Net Assets at 30 June 2018 of £12.3m (H1 2017: £9.0m)
Operational Overview and Current Developments
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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")
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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
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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™
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Opened 'GAN Digital' in Tel Aviv, Israel, an in-house marketing agency
to provide digital user acquisition & retention services to selected
GAN clients worldwide
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Announced a strategic relationship with SBTECH to serve real money
sports betting to GAN's diverse US casino operator clients
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Signed a multi-year agreement with GOLDBET Srl a leading Italian
Internet sports betting & casino gaming operator in Italy's regulated
market
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Signed the Mississippi Band of Choctaw Indians as a new client of
Simulated Gaming™ expected to launch in Q4 2018
Post-period end:
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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
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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.
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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
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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.
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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.
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Significant growth was also experienced in Italy where gross gaming
revenues increased +43% in H1 2018 against H1 2017.
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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.
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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
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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