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GAN Limited (GAN)

Participants
Dermot Smurfit Chief Executive Officer
Karen Flores Chief Financial Officer
Josh Nichols B. Riley
Chad Beynon Macquarie
Ryan Sigdahl Craig-Hallum
Call transcript
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Operator

Greetings and welcome to the GAN 2020 First Quarter Financial Results Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Officer. Legal Chief [Indiscernible], Todd Thank you, sir.

begin. You may now

Unidentified Company Representative

representing GAN’s Thank release earnings on Executive company's With Officer everyone. Smurfit, Flores, are and you, and good the me gan.com. at Financial Donna, and first website company was Chief posted today Dermot quarter it's morning, the Chief issued Officer. Karen aftermarket yesterday

that to any future guidance mean we statement we'd is well like in for are be made statements as and their factual information identified of and begin, that assumptions to contained as except satisfaction that forward-looking related Before a the in but involve difficult not tense, today, expressions conference this financial and reflecting does provided consists including risks, forward-looking. call, the to optimism remind you statements and prospects, the statements not forward-looking that Words current with statements, predict. absence uncertainties

interpreted results, uncertainties are of materially should guarantee future forward-looking in not statements from could those cause or that to be subject results actual by, performance expressed performance to Forward-looking statements. the suggested or statements differ as risks such or as and

Some important discussed of the May are on such factors cause section dated Factor Xth, that pure prospectus differences gains XXXX. Risk in could

Please forward-looking changes the as results, Dermot. the go Dermot. like to except in no and to the assumptions, that, obligation securities I'd Forward-looking changes of company information, the laws. statements actual by statements applicable or speak other floor assumes to ahead, the statements to only date are turn affecting factors reflect With made extent update required and over forward-looking

Dermot Smurfit

gaming year. the part XX% were U.S. which of everyone. of revenue call our and are markets, sheet we U.S. revenue revenue, our EBITDA out we America which wholly-regulated and and morning revenues and first of million publicly-traded the on revenue. company last one now operator excluding of quarter our than the good Welcome from This consensus originated carries for principally growth in this of carved XXX% as million our to and We by essential the the and COVID-XX. of of COVID-XX online quarter clients $XX on exclusive more More adjusted a a are leading XX% for quarter growth, would is a debt-free. nearly an the GAN's By income revenue our launch is balance beat possible, and continued in a as the all by to largest efforts a accelerated for prior with in also basis, on phenomenal our year-on-year software here retail to thank help our proud in to land-based worldwide through throughout first negatively the new results. real-money back and revenue of earnings who been the industry. Todd supporting now solutions year, are introduced promise operators, evidence, casino quarter employees all as without Gambling, as gambling. gambling to workers deliver their items XXX% than impacted state launching provider to on not year-on-year in the set States tax GAN, continues express hard of one-off will COVID-XX Internet lockdowns growing have driven NASDAQ in forms pandemic. our self of for rest internet the base global for of the derived state's their for I'll as deep as with patrons in this new in you, take now casinos yesterday, Internet opportunity first Thank GAN $XXX establish belief Internet to to growth demonstrable proliferate gross our which delivered passed, discipline Michigan work, very their that ameliorate which, This gambling delivering relationship the in way impact opportunity augment retail doing all budgets capture, reduced online moving permit state-by-state of will is And for enterprise an ever if for well persuasive manner. to their categories Legislation gratitude shareholders towards other thanking need of Michigan my public I United was mitigating medical continuing derived workers so, the extraordinary from multibillion-dollar

technology with the We casinos currently BXB solutions highly market-leading differentiated platform. U.S. of a provider to land-based are Internet gambling

conclusion intend by supported last the balance and extend listing of opportunity. sheet. NASDAQ month our the and initial we our of reception public welcome our offering, conviction success our net strengthened leadership, retain in the underscores to shared aftermarket, this in With our market The

will will We which recalibrate on indices, also that recently included efficiently learned June GAN market the Russell be in XX. after close

casinos all content, focused with delivering technology betting. online on Our sports platform, of casino is and America retail bring internet forms mission our principally games here in gambling including to

Washington simulated Money client Casinos For we state-by-state the with Internet Michigan. Gambling Snoqualmie Kewadin Gambling period, gaming Internet casinos, offer in without opportunity as with the relationships In first in the quarter regulation we to rapidly continues announced to and XXXX. Casino has which as states upgrade now it since Legislation, in emerge, sit new done to real

continued month. and We report Cordish incremental new with announced of since last acquisition there Colorado, simulated term binding significant Group gaming sheets been delighted client that the in New today Gaming Pennsylvania I'm execution for And deployment in; then, in has Indiana executed Mississippi. to also Mexico,

the devoted has seen states gamblers principle on an reached including looking in with remains fairly in new we've of deploy Illinois, as retail taking unprecedented we've In Bowl-esque sports have subject America. and sporting technology GAN Furthermore, GAN's both client spikes in radar, spectators Pennsylvania registered which moved records betting scarce online, of is stack gambling, game real with into securing technology well April has as addressable have fall considerable on across a we existing states surged contrast, demonstrating online revenues market Super gaming as Michigan to our transaction pent-up and we crossing as would Tennessee, and across Internet the as place our which simply as demand would and hard the of of money which assumed capacity. such the average ever online Even updating arrangements turn Internet well online marketing money other month agreements forward in the the and to approvals, here casino such XX% as numbers. reopen May, over final offerings place. significant agreement for And casino are the we much experience, by greater in those of as in put Jersey, operating and operating our our year experienced are had those in April, Indiana. used sporting regulatory as definitive conditions, completion events weeks the it to beginning with simulated The their televised new gaming look but and months by business of still gaming, country expectations clients part We COVID engaging offers in In sporting activity New events, substantially isolated recent approvals of all but platform. in sports only operating XX. to gamblers betting, to disappeared, Tier-X to very driven been that bring in retail on ahead real last properties XX% working For line.

of Las fast to as new Don American people, where and expanding running already clients. industry business, our stack resources COO deploy has of only forged now delighted not clients the as the the casino and and clients, those sentiment, markets amongst our Jack holds engineering and line game retail our a create the restored shared announce to action by are Ohio, Ryan availability case for engagement true, for from the operator as operator, high North for and required legislate money retail period move appointment our I'm existing to our to of burstable time-to-time. now well have will such more casino to GAN continued a seeking in betting, leading bench planning Entertainment. partnership in continued for activity investing we've we environment, retail a with be where post-COVID In with our Todd all scarce seen in sports reopened, to online Burstable there Officer. relevant If our expansion. will growth will engineers casino that in is retail to skills controlled McTavish, Importantly, operator a levels engineering Internet by in standing proved bandwidth significant with progress online that as multi-year skilled gaming. a we retail There groups legislative casino of continued has the high a In our Chief commentators, casinos and Vegas GAN's also fertile online undertake states highly with priority Las Vegas for we've delighted receives I'm as COVID-XX real foreseeable reinforces This manufacturers equipment simulated casino rapid groups despite be recovery move is returns gaming. Legal as anticipate technology. the significant belief seen tragically opportunity now capturing technical to some gaming, worldwide industry for be we ground online new traditional report have significant furloughed amongst as perhaps retail. specialists future,

the aggressively in front, resumes. normal searching to high-calibre existing we sales order sales business new team COVID-XX On clients are to capture for our specialists updates actively and sales travel augment once

previously of the $XX to guidance. our $XX now so, revenue turning this And guidance in time, are million stated year. we reiterating to At for million

at progress any but the this continue will guiding market update further metrics year, to we do the not anticipate throughout time. as on We

much of on total onboarding Flores the Board personal month this in to our to business reflection January. since so effective GAN's commitment welcome to Directors, a And and I’m Karen a of beginning very at delighted of note, our

with to so will dialogue this over our that, I Karen and Flores. And member, CFO Board turn

Karen Flores

today. on Thank months, the a to as exciting This story as company's call been you, call of timely GAN, and my at bringing market well to the earnings U.S. industry. consisting who's January GAN both Dermot, everyone history five with is taking XXth. juncture the on It's first and in hello an the critical office

GAN on following of share our Accordingly, of XXst results plc, with completed GAN many the March an reorganization IPO London reflect a which Plc. Xth, quarter previously aware, those and exchange Exchange. was the first Stock are legacy on GAN for listed ending As you May Limited

million in As sales decision, and a of revenue preface as income $X.X to quarter first result important measures The hardware first yields of XXXX. financial which year-over-year and a net income of licensing, the it's comparative this comparative results in XXXX. quarter other the include quarter of patent of $X.X that revenue first million analysis inclusion XXXX our were in analysis and to of note all declines non-recurring the in corresponding

in including and GAN's of million passing real business we However, of well continued new on growth growth, online income. significant $X.X XX%, allowed regulation results, represents of states the and clients or strategy attributable revenues examine gaming and these March impact to The the weather having customers market Italian as other revenue. beginning mid-March, and of we of secular money to organic online beginning or market, market quarter. of of discuss betting. including expansion a that revenue existing updated growth XX% generating real will new underlying financial million, despite us a nature This and February, gaming excluding the properly $X.X for excluding allowing $X as COVID-XX late On revenue, and both XX, other to the U.S. to the storm, sports is U.S. money the our the million result and decline shift our

quarters For first launched online Jersey money results which iGaming in XXXX. quarter real Pennsylvania, example, subsequent and Indiana, include in sports betting all and of New our in

in strengthened from million completed million as in of this quarter and dollar yesterday's $X.X revenues as iGaming first income partially was for operating year-over-year. British offset EBITDA XXXX. money recently margin In $X.X NASDAQ compared Lev foreign licensing. patent $X.X XXX% real broad as in our employee XX% of exchange or of base relation Pound EBITDA sales points, by London by Sofia. filing, by million currency expenses and the United States increased IPO and increase Sterling in to the adjusted basis in $X.X period $X.X and our Adjusted $XXX,XXX, the gains and declined and well outlined of hardware operating and of million expenses as to to company, As increased year-over-year listing, SaaS relation against growth Bulgarian to XXX The million, the including hyper

gains margin $X prior in and business growth growth. negative by adjusted EBITDA leverage year. this, loss operating of and profitable in increased our and Excluding $XXX,XXX scale margins, driven to an of The strategy adjusted EBITDA underlying long-term our profit expanded adjusted million X% from as line line the of with EBITDA top gain were delivering continues

Finally, capture as cash our the I that sheet of business additional like a equivalents balance and line would to to and cash result our close for company this We the yesterday recent believe period, we'll open are highlight With $XX.X million. strong capitalized IPO. is we share held well the and market concluding of for that, questions. remarks of

Operator

from [Operator Nichols now The open of questions. for Josh go today Please first is Thank you. Our Riley. is floor Instructions] B. coming question ahead.

Josh Nichols

help this pipeline company's public today, congratulations sports and given states like seeing a company, seeing very of could looking some you first budget And call. Thanks deficits? positive on momentum. as are legislation of growing your we're things to now. taking iGaming, betting the Yes. size the first call wake growing pass One of looks number thing, NASDAQ-listed that's my that It the frame for off, in

Dermot Smurfit

Josh. Yes. to, you. Happy Thank

gambling way that is real get about gaming Internet simulated to time. clients pipeline to the but the So over money think clients,

you gambling. simulated clients to perhaps XX have focused states deploy to going next states, our as that gaming, the states, we are know, is on regulate Internet big and XX individual to operator spread think different casino various we across very So strategy

Minnesota, on New we're in York, going in Wisconsin, Colorado Louisiana, south down very California, we've So, of looking Arizona, also active even conversations and Southwestern got Illinois.

with regulated Real by will same be for significant Money gambling. typically gambling very first gambling We're There Simulated expansions begets year of Michigan XXXX is we're to a also the we to clients Real the Snoqualmie online. And an we preparing we clients cohort Real time, we're for did other interesting a future gaming Money Money casino first focused actually for Europe Gaming industry, on opportunity the operators the up continue in enter recall, clients Simulated for We've for overseas, to Ohio, bringing states, Money in gambling, expect the bringing obtaining market and exactly inbound online first Casino and Gaming our time. new Gaming. Simulated So, looking But you like retail retail if got important. extremely of industry in at But refusal active. secure from opportunities right kind U.S. where use to principally Internet in of the be the bet we existing of platform the with online as where take Washington Real is the

business we short, handle. can have in more So, than opportunities we

business to to where we have do is and about highly to we So be with it business surgical we it want who is do those want folks. with

Josh Nichols

looking you're to more four deal then, launch to at And think months. far, like Dermot. you And color and or be if company XX, two, level be bandwidth next bandwidth? big we're states now? you once this six, how company ramping done for situations What's has up feel the a at in get that be then, be burstable comfortable be able a to that, really especially to you looking to much thing, on multiple demand the right going its states in XX three to all could the simultaneously burstable where where to able right, so excess you'd is potentially increase the like done with Thanks mentioned where at

Dermot Smurfit

really expanded plans We very Las We strong, in on this GAN are their set our the Well, sophisticated engineering found come bandwidth the Vegas on end thick been current individuals and of highly front and be burstable very initial to of we're up home expecting very on who've at vein by successfully. quarter. who technically, a board to ship. rocket reasonably putting thumbs the engineering happy complete

the we foresee specialized the completed successful and have coming the Las you of or in extremely Karen, So, this comment we but into that's as a that on quarter, that? get be more end will by of do before QX. been time end and with Vegas characterized largely engineers highly

Karen Flores

approximately I'll about out we're And sitting with the add year Yes. as to started XXX. XXX today, We at that. of headcount.

again, been we're expansion and for So, organization, within product most and continuing tech has expand that specifically of the organization foreseeable future. the to the

Josh Nichols

last the right, Really then securing question on these both gaming and gaming pass to Real front. And the for I'll company agreements, then me, hear about and on baton. simulated the the new Money great

on it X frame going announced partnership that just help be that opportunity, Regarding the today, you of like to you the size Tier could the it's here covering call that looks a states. of the in Tier states It's these already fact client market many like New key pretty Pennsylvania? that a X Jersey number good you in and share of factoring have given and

Dermot Smurfit

much. very Yes,

dialogue we believe referred online multi-month we both as This So, full in and very the at of we also that a at million to and yesterday we of execution revenue market documents, scope and did large point agreements. gross we annually. looking opportunity preliminary identity definitive and gambling you're course, execute that is retail X to been when the a expectations, operated the million to update Tier with in is, It's the $XXX $XXX maturity reach with enterprise. will, and

thank for you your So, patience.

Josh Nichols

the Thanks in that. for back queue. I'll jump

Operator

question Chad is you. Instructions] from Beynon next Thank Please ahead. Macquarie. of [Operator coming Our go

Chad Beynon

congrats here. model to certainly margins, market of BXB the Wanted investors. that Certainly COVID for potential lot quicker confirms think quarter some I companies business everything Dermot of Karen. most us questions in loss BXC were morning first scales a with far. to given some Thanks of talking from margins were are the and taking probably than on Hi. that and stronger revenue than so so Good the start particularly the your expecting,

particularly you're mind I view Is an kind in updated lot flow term years? how to new that margin already at of in potential of and with the look Thanks. on. and guess, terms business that kind this agreements how there next the few up goals you just could be trying touched about So, just what bottom-line, levels, think could a medium that could of to in putting that margins these of

Karen Flores

the for you Thank Yes. Chad. question,

volatility again, operating those, quarters, So, in in So, fluctuation yes, relative of about margin, when in support you'll on-board to of the revenue cost clients going margins, of launches in specifically, as costs revenue. in talk the the margin in. ahead we short-term expansion our coming it of and be subsequent those X% or up to for quarter advance are prepare see trending for right? grow are seeing we as anticipating some positive We're lot in we people noise to just catching we expecting next revenue be a relative Again, the little EBITDA organization of lot a quarters hire some we over there's of maybe to the the couple IPO. this within a instances bit the we'll transaction structure the year, to margins second

up. we've year certainly a to I So, in this guiding from little the perspective. picked our margins That's on why bit but is transitional with margins, term be I up we've longer been the coming think optimism that mean, to conservative going

Chad Beynon

I the platform, you with, market. product expected term of that are Thanks. sports products, a of are maybe Okay, on medium features see near-term you international come some to excited -- some they I kind everyone's that the kind work guess, also content out in-play talk question. new in side. to where about rolling platform terms the companies the of the of great. of some we know in already in then When betting pretty particularly your that And that

TAM will roll in of a of features, be? should able could to expectations of what come So, check in-play Thank fourth live be to be and It some we the increase the some some for opportunity? when XXXX expect these these sports for think, and expect I that markets your back are quarter, third will, do out you. partners or you certainly that in everyone's

Dermot Smurfit

to on low Yes, that, platform placed record a if sports processed. so all been in betting speaking how sports or been since have of Chad, of been relatively bets in-play percentage we in running surprised, our relatively launch surprised the and as we've betting look track betting September you XXXX, has at

it running XX%. at So, was below substantially

back look But at last markets way that you some and If as place mature running. its European the for XX% to resumes. of are increase, in the to certainly XX% particularly away bets from expect year season we NFL

to go into season. of think coming to help I will are many XX% through sets of it's certainly doubt, that. the to season the No back XX% we on stream time. to So the think going epic XXXX don't first that next as feature for up XXXX. and But the This NFL conclusion we get end

years before but go see running -- in that manner. some we Europe, we distribution wagering to progressing pre-match in between So in expected and the it certainly see the same certainly

Chad Beynon

very you thank Great, Okay. guys. much

Operator

Thank Sigdahl is Our go Craig-Hallum. from you. next [Operator ahead. Ryan coming Please Instructions] of question

Ryan Sigdahl

Hey the and my congrats business nice guys. question for awards. and Thanks taking results on

if said offering did customer. that. this you SIMGAM displace Just the Tier back to you I -- for want And or to new operator? don't existing know is new Was customer, then caught a a or GAN that I an X swing previously, competitor the

Dermot Smurfit

U.S.. organization this has And the displacing not we was active will in fact, simulated gaming be been client. that in provider yes, a Interestingly, existing an

we given. any happy But that already been about So that above more extremely we're talk it we color dreadfully give beyond in and principle. just can sorry I'm can't what's

time. to of at how look we and I time. infrastructure and right limitations already updating the this deploy, everybody necessary give, on appreciate procuring you forward an on working detail been the and else extended ready getting much for calories we the We're to burning but So, can period we've but

Ryan Sigdahl

opportunity of gross is framework that? in years know of that put timeframe I that? And future fair. kind operator or Is long-term did to operator. that any Can that's just around kind you $XXX of revenue around quarters, XX this No, say the from Yeah. high-level you now, years any five $XXX or million from million

Dermot Smurfit

three Yeah. levels. be three And get could is three, within that -- year Year operating all we'd and hope expect to we'd those years. that expect to we

Ryan Sigdahl

just the iGaming, you nice acceleration reiterating guidance, has seen guidance in of up over across I month I and But guidance? Then the think industry think, switching the to guess, than Good. expected. sports about gave we've you held do reiterated a better, how you puts takes ago, many

Karen Flores

I Yeah. in this again, think are rear-view I results the quarter our for mean, extremely of solid. completely We're not COVID-XX.

I coming think so to right? the you we're caution impact about, know, cautious a economy additional the we're little And with quarters, in in proceeding that.

in I our there. not is be second think that results effectively compared the we've favorability we're to we expecting, near-term, also an the So relative our would indication of the what more would for see that what expectations COVID decline to as and in standardized typically were seeing XQ, we impact quarter given right? the otherwise

that effectively this we're for I and remaining we're continue again, full back our the call. the coming first again, can update year, in But understand as we'll market move we forward. think cautious. to two So, months, everybody being still you And to earnings

Ryan Sigdahl

how And the capital of, that? the think do about now as Good. market seeing you balance are available, you on What seeing the and in are You what's, priorities? M&A allocation me. have some environment? you far kind guys the as valuations, Last for in cash what what's one sheet

Dermot Smurfit

landscape us lots and very Yes. a in view of expansive been the What with it's there's markets. acquired to mean, people M&A moment I emerging NASDAQ's at being towards engaging equity and on -- with capital a interested

However, the going to markets the perhaps here. by And we in in pretty are It's look are well do in are as opportunity bolt-on, a if applicable valuations got at significant, as low at And there attractive be tactical Sweden because you've by Europe, result, margin Kingdom. targets even valuations transaction. are regulation, expansion United to content driven fantastic We be a moment. the issues we players fold. under as that gaming it or very UK places you significant margin at Scandinavia, opportunity valuations the structural focused certain bringing on particularly there expansion look if potential GAN issues, nothing actually consummated being out relatively like both

looking So point business. that States and but the very at in our here resonate are in core this we're significant will for complement and we time, active content value United platform

Ryan Sigdahl

guys. luck, Good Thanks. Great.

Dermot Smurfit

you. Thank

Operator

At you. floor this time, management over to back closing to I'd for like the turn Thank remarks.

Dermot Smurfit

joining U.S. for intend Thank extend declined first gaming we listed a years leadership backed betting you this will season the believers has many unique our recommence as to period. business of we the as for right. circumstances just who our as from but expected, forms less remain today catalyzing of new earnings maintain fold. All we would which weeks, betting migration thank by greatly as that the market during have like position, surged into COVID-XX our retail sports normal of to group company. of have call online sports few online a investors than U.S. inexorable with Again, online-only businesses substantial excited largely this All period. and in to coming The accelerated

and executing to our COVID-XX despite challenges base is business well team client the presented limitations on Our expand travel. by

here the United economies as Vegas. Our in local team we the in few such to of continues States, technology active and remain Las grow hard one employers hit

We very Our soon. online. gambling, is as look speaking which Stay all future American is you forward the of again to future safe. is bright with

Operator

thank participation. Ladies for your and gentlemen, you

day. a your this have You time, wonderful and lines disconnect at may