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GAN Limited (GAN)

Participants
Todd McTavish Chief Legal Officer.
Dermot Smurfit Chief Executive Officer
Karen Flores Chief Financial Officer
Josh Nichols B. Riley FBR
Chad Beynon Macquarie Group
Greg Gibas Northland Securities
Ryan Sigdahl Craig-Hallum
Call transcript
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Operator

Greetings and welcome to GAN's 2020 Second 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. I would now like to turn the conference over to your host, Todd McTavish, Chief Legal Officer.

Todd McTavish

good and Barrack, you, afternoon, everyone. Thank quarter and is second earnings website release market after today issued posted gan.com. was at GAN's on company's the Chief Flores, representing Officer; me the today Dermot With company and Financial Chief Smurfit, Karen Officer. are Executive

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

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

important such discussed Factor the Risk XXXX. - differences IPO May that cause prospective Some in GAN's prospectus are dated could factors Xth,

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

Dermot Smurfit

gross driven phenomenal on by Internet revenue. US growth, principally year-on-year afternoon gambling, everyone. of derived in money GAN from you, operator the $XXX an with growing our good second part revenue reported Thank XXX% million of year-on-year a Todd quarter revenue excellent back XXX% nearly real the largest and

XXX% to $XX leap gravity-defined revenue exceeded casino year aspects quarterly growth jumped the interesting of and of forecast XX% here available, operator also gross the last our quarter of $XX I've the gross in the revenue now second XX% second gambling, all currently consensus was significant sequentially. from in to full only reiterate America. year, estimate quarter of illustrates which which and derived phenomenal Internet revenue the indicated year-on-year year through the on in revenue right of earnings million. presentation, the Internet for total made million Most we're quarter US gaming, US executing and from rest in this we've growth year derived Our comparatively, XX% as performance real money path was this of operating compared our of in

high during revenues revenue see our In to clients delivered retail of of year to months than current of in XXXX. quarter, we despite entire properties. reopening the and we operator this casino gross continue fact, more engagement continuing the year, calendar in clients our the And activity, the seven levels of

leading and maintaining again, to take We operators. as this on fourth our Looking we already strengthening for thank we technical order. is I'll several our execution. continuing based position land provider as continue all client support US enterprise casino the new shareholders for solutions anticipate and BXB wins their leadership software of licensing focus opportunity ahead with into Michigan, clients to the application in of now launch few our of weeks a for underway, anticipate the deployment good and our quarter,

gambling. second as gaming gaming on money social America's of incorporating tailwinds Simulated casino gaming National’s platform additional time, for casino a of in these To that anticipate and to launched technology Parx offer online country. avatars, to results we've opportunities We Internet simulated money their Ocean being with at technology as clients, growth this time Resort, client available Casino, now months a to derived promising. coming casino gaming in internet even casino gaming and gambling in of and finish, forward to delivered recently in now property on coupled the many partner and a US Penn our largest and retail highly who are social underscoring for largest including by the website major we FanDuel, Cordish leaderboards, client quarter, of Group, Pennsylvania, X well in as is signing Philadelphia, as by I launched several their Cordish gaming From casino retail and a capable and social full before operator in fully serving some sports over new floors. the efficient our only quarters to mychoice from the look engagement as betting, available Casino range record offering with success Yesterday, experienced point, program time. such our growing first range remain Hollywoodcasino.com features, our proved two of key content GAN real start is the that each apart, from have playlive.com And names part as forward XX-plus mychoicecasino.com the this Class achieve playlive.com proud are Penn to rewards first. Cordish believe platform days some observation goal. market we industry-leading now serve real the states and just which achievements Initial industry open launches delivering integrated We look Group's we're in this same launches two client over track Penn deriving all casino the well just in this fastest our GAN of recognizable to time clients, the US and choose advantage from I'll who as will XXXX and evaluating from on enjoyed National's substantial with provider. internet contracts, in operators, one to we National, in other of retail months took

this opportunity for the of state launching to capture the major clients to a state basis. focused Internet as Michigan on proliferate multi in currently component dollar represents which are we forwards, gambling continues state billion QX, GANs Looking of by next

our casino expect from state operator we impact the sports launch gaming Michigan now is announce Furthermore, call, to newest and the betting of help earnings and casinos. near full multi tax reduced With launch last income our that very term, the Michigan's commencement Internet market to implemented updating Internet in QX to X in logically COVID-XX in state's market highly flagged accelerated ameliorate forward probable. clients in shortly. Tier look the and retail this on As

their meet demand. end successful in quickly, FanDuel online to user as partners Regarding great in with sports and order has betting, customer been such working very in GAN bringing Parx platforms

casino quickly a a still proportion casino be sports Internet as revenues, overall and option in alongside to with betting exclusive While beyond sports to will gaming. states, as provider of for betting deliver excellent small Internet commercial partnerships governing our enhanced and able To exclude their relatively multiple while our serving GAN's stated the of note, they FanDuel in revenue proven these to account strategy alignment been gaming agreement. develop and migrated QX simultaneously as we've sports are

money substantially will our the from, client content. acquisition Adding Virginia before contribution the be years revenue office in acquisition, Continuing synergies operator content promoting the GameSTACK we our of acquire immediately any our evaluating iSight, West applicable event technology, to relationship the subject require prove platform, of just is within in gaming we the sports end and betting, Internet also Michigan as complementary, to gaming with expect target sports highly Internet offers significant diverse rapidly choose revenues we incremental clients together are and will opportunities as real earnings. make existing rely continuing made loyalty. capability, logical player will and while flowing integrated to criteria be upon to several sports any way capability alongside betting to back systems to revenue and any our technical for of on such option complimentary casino with such account continue and the FanDuel continue for grow which earnings acquisition accretive a gaming, to gross available the that and forward, sports one we that US will will share to expansion launches and both clients leverage Moving casino expand through

state casinos bring technology all Our casinos the casino on offer emerge. in by states those gambling with Internet online to opportunity content, forms state we continuing with simulated as betting. is our regulation money delivering of including platform, gambling, mission without focused to legislation, to real principally Internet retail Internet gambling continues gaming, Retail to and upgrade now, gaming sports

COVID-XX? the to that total Turning analysts how in gaming casino with $XX revenues, gaming. listing, many NASDAQ indicated pre intervening as At COVID out. the consensus the a maturity for have question, would Today, of industry at opportunity forecasts online us the betting years in result landscape, US months gambling outset revenue dominate total this asking since US market addressable market changed the Industry of shareholders our has been the broader most sports year, some a Internet of $XX Internet addressable plus gaming first the all market, track an post is of delivering estimated COVID majority US GAN markets company, reality derived specifically generate both our that billion point from clients. casino a forecast will Internet and a to Internet new this models sports of to casino nascent record betting Internet long with billion a casino the gaming

casino And the better. gaming forward on to to further has next light as evolves position time. attempted the and our therefore COVID-XX. market surrounding climate we what over business we a business Our in At of developing Internet changing been market look focus largely GAN, never prepare

with gambling. position multi premise We over approval market several state in legislative the US continuing Internet regulated years, of have invested original our and of

GAN Sales, that current kinds. continuing replace incremental In We American client could have opportunities all, with our markets state intrastate online incremental multiple us search New our GAN tax income. such perhaps to of the I'm to with a gambling, all Internet and clients. Yoder delighted a And last New existing many new favorable to view with gambling to invested post on required our to the in expanding And COVID spend deploy capability, year. creating environment Native Outside real large of just states to continue Americans of entertainment consuming the our line York’s regulates climate preparing their of bench all and York Senior states come. of continues simulated the has home our we them Vice relationships, regulation environment, as gambling. as in to through each of positive leadership as in to see at President money watch a accelerating opportunities regulation existing a industry industry continue for market time a in did particularly expansion lost of engineering veritable substantial availability as with York, a for New We high COVID-XX politicians York, Internet New of where focus list gaming see for resources or creating casinos announce resources. for more Illinois by tablet in for to presence charged Marcus nationally for revenue our this our very and planning people appointment is much expanding marketing surprise Internet which sales GameSTACK COVID continue engineering

nation increase Las and our gambling. and across groups simulated amongst new clients on and we capabilities gaming expansion. bandwidth Burstable simultaneously, worldwide fertile remains controlled execute Marcus the you Internet be multiple to money we real rapid engineering high win will for as new of continues team clients his As online ground priority, in Vegas a our see delivering markets both

guidance. million. we're $XX to turning again we time, guidance stated our At reiterating $XX of Now to revenue are million this previously

and I’ll update to for wholly in regulation online look our markets, revenue are continues forward all new we with in here to as wins also We originate client reiterate XXX% announce line the continuing in of of to due to course. client America. unswerving that commitment launches our excited and in market compliance our regulated upcoming

now firmly second is the with second costs listing, one substantial The mirror. NASDAQ despite to of associated which quarter set in our one-off which the NASDAQ proud rearview results, deliver our as we very are are

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

Karen Flores

Thank another you, business call on Dermot year The continue This The generating the to versus increase of and quarter. GANs excitement online allowed quarter. quarter. everyone concluded the gaming or us and $X.X secular today. prior nature shift of hello as to casino and we journey to strong real to revenue of million thrive, million in represents $X.X XX% an Internet the money continues

underlying many in XXX,XXX in lastly, sports million increased simulated Real outlined increased Internet reflect our As gaming COVID-XX. gaming trends declines our Money by notable revenues revenue the filing, our as gaming service $X.X trends clients, result in passing are and core year-over-year. continued to or XX% betting regulation, XXX% allowing million some is expansion Internet today's The for growth increased these clients to betting. states revenue changes KPIs. revenue attributable SaaS US by continued of strength growth Real Internet by $X.X XX% offsetting existing or the year-over-year. due strategy gaming as simulated in in our of gaming of new of Underlying gaming, of well or year-over-year. and real sports revenues and positive money new And

mentioned, from XXX% Internet casino sequentially. derived comparatively, and Dermot growth operator increased As revenues XX% gaming

XX% This day. shift and a year. with gaming, of $XX this revenue for monetization sequentially, an with Additionally, our rate towards in record increase observed casino QX ARPDAU XXX% mix per overall of Internet increases comparatively the previous player quarter $XX we versus record represents active of a

to pleased the market only we as at in as at the the relation in clients, a growth of for million unusual penetration extremely performance compared of to of results period did and the was client see which Internet NASDAQ wins term which increased listing, continued XXXX we and our total long X% of are in expected today expenses execution stands seeing quarter. as this recently the and $XX.X second the IPO US to maturity. well market, an $X.X for addressable with serve are year-over-year with new last our company, expenses. opportunity our In number unique million operating We period of our $X.X continued is well This This managing gambling quarter to million. as completed

costs. for Adjusted was occurred XXX,XXX based EBITDA new healthy primarily margin versus June compensation driven company of of prior strategy to direct the public one-time million increase of public with business in our was quarter. in higher cash our The of associated a key EBITDA Those million and quarter. compensation XX%, the expense million paid in that cash leverage, PLC and of This Adjusted vesting and margin in and million options to $X.X EMI gain comprised in of exercises operating were expense expenses, XXX,XXX in acceleration expanded directors, second $X.X accounting delivering EBITDA expense. to included quarter XXX,XXX contracting under margin GAN scale line bonus equity and resources and initial line under adjusted charges related financial at non-cash XXXX remained the included grants driven $X.X $X.X and segment legal, our of plan. versus gross markets. profitable as $X.X profit including margin, options of operating loss expanded cash related expenses payments charges in related million million growth to Share share top of $X.X officers expense non-cash employees The issued quarter plans, by by year surveys to and the XX% option to long was compensation and related and continues offering. our the with term growth prior

with assess recent other a additional of to Finally, strong cash highlight I the cash comfortably we capture free, to to and of and market the debt capitalized future And At and would balance like as IPO. our that, you. share, equivalents the in back us result allowing to of sheet, remained million market. quarter, opportunities $XX.X remain end held the Dermot

Dermot Smurfit

Okay.

So the with to period, for we'll Barrack, line our concluding you. remarks this that, we're and questions. for over open

Operator

Josh question. first Please question B. sir. FBR. [Operator of comes you, Our with from proceed Nichols today Thank your Riley Instructions]

Josh Nichols

my strong iGaming the Clearly segment. taking question. of performance some thanks Yeah, phenomenally for

of XQ? like, assumptions are the a could as half as half what back for into this underlying are ask the year, for potential launch I Michigan You did that the reaffirm second built guidance guidance far in

Karen Flores

Yeah, it's our of have Michigan we've at noted not uncertain, this because forecast. point, probable is although in launch the highly still it included we

Josh Nichols

it. Got

season would football right got upside potentially to, you and XQ like guiding Michigan, what correct? you're in currently to if So a be for that

Karen Flores

upside. Correct. Anything be from Michigan would considered

Dermot Smurfit

in Josh, this market we're that of as it's preparing commences And year. worth actually October the if adding

Josh Nichols

should the seasonally and mean, then, we slower And thinking clearly, bit then a ramp Great. how up back half. quarter about second I is in QX the half you be

You'd the expected is about in revenue, have X.X% what's operator increase on that? half? thought gross process the that rate materially take a Or to second for

Karen Flores

Yeah, about we've lot talked a the rates take historically.

you around gaming is simulated we revenue know, is the know, simulated can So share one our that things of gaming revenue, typically that XX%. because on increase our

with come the expect to the Penn so of half launch there, do And the in National and platform the year. rates up of gaming second take simulated we

Josh Nichols

And I'll revenue has bit baton. if help then little provide that. launched potentially and could National that the me, the half? expectation kind simulated you year. question you Penn like this for for what's next any of last Or Thanks as extrapolate for as far opportunity Could framing the for now pass can gaming you a

Karen Flores

do Yeah, that National we earnings. far be let's in year come launched We'll at quarter to a have sort of included six as ramp, next as out with running is of as to do over expect the we that we our that be second about so the that, course, our say full until is, there forecast. We capacity. expectations half about more Penn talk of able just of course the months

Josh Nichols

you. thank Great,

Karen Flores

Thank you, Josh.

Operator

Please The next is Beynon of your question. proceed from question with Chad Macquarie Group.

Chad Beynon

for to a second. question. back Thanks go taking just for wanted that I afternoon. Good my to

XX now being removed FanDuel we to August. XX, So did And is guidance OSB just after of that understand so that include the previous revenue?

the the in being non-FanDuel by, recent and think Cordish about revenue, of that guess, stronger then that's way to launch back PA So half. the ramping I best it? replaced Is Penn in

Karen Flores

to forecast you course, a conservative I for We would in have sports launching mean, contractual to XXXX replace always customers relative that second terms we stream. that. of knew to the FanDuel the possibility migrating half was of other they think rights that, be the we've that portion do would the know, far that as the off and I again revenue year the the as under be been Yeah, there of

approach So at changing which QX, it is this not was point. guidance, why to it a relative the QX we're balanced

Chad Beynon

it that kind I Thanks, licenses. a standpoint, from Okay. the other guess a know, dramatically, few has few, thinking that's offer? Or management, player repealed? competitive just think how companies guys saw I since market received competitive do you what just landscape in your account Karen. past what you then have opportunities versus you their that about, PASPA your you on know competitors think there's been you And offer the of might some other changed is, Do basically and share

Dermot Smurfit

in not the Chad, prospective the discussions. very We've competitive we any material since appear reported you same seen, last names earnings. clients we've seen discussions know, in change or landscape client

increase in coming significant there platforms So new been the more entrants the to or point hasn't credible, any technology table. optimized to

that of we we're in right now. no the So the course, reporting opportunities right term, over pipeline but and engaged may difference are sales now, as different various with medium will heavily change of

Chad Beynon

thank and And to you. about M&A Okay, cash then lastly, your just opportunities. wanted ask potential

mentioned opportunities. betting sports You complimentary

all -- segments? you you maybe had And would what content how do wholesome? Thanks. previously your And iGaming make different How do you for on think the some I I opportunities side. two more that's me. offerings the view really talked guess about

Dermot Smurfit

M&A references. take I'll the Chad, Yeah,

if us we've market in us position, asking interest. had recipient inbound overtures naturally we any current So multiple been to the our of

survey and be ideal It's we've fit, sports a product cultural sports people difficult opportunities evaluating capabilities to to mix. ideal. content for from have will to a to So technology landscape do it, it opportunistically quite related ideal GAN's we identify again, sports overall from completely the been candidates and any various candidly overall standpoint, standpoint, add if different acquisition, trading

the probable content we number us gross a allow casino M&A of roadshow. client or casino through and that on our On casino of operator large online of to portfolios content our IPO more our very flowing aspect gaming. as revenues would from online touched share is online significantly increase something interesting part There's

at more update markets the M&A the up certainly of that's side probable think continuing this to course run our point, process. of But I we'll we as So Thanksgiving. review

Chad Beynon

Okay, luck. thanks. of Best

Operator

question next proceed Please Northland Greg your The question. is from with Securities. Gibas of

Greg Gibas

for It wondering and gaming those maybe launches and your to what questions. QX Dermot out looks at taking think relative how launches, then implies then XX? the the afternoon, those Karen, this XX we if guidance you thanks new of could should we just year, of remaining year-to-date, QX? least Good breakdown the total versus are simulated was timing like of provide money maybe of at And real

Karen Flores

launches this just simulated for number we've approximately real year-to-date, the as money two of And so of a of Penn month. and again, National. we four, gaming Yeah, again, had gaming that's which combination announced,

do that of comment you As far half pipeline, then… in to want included obviously as the back year the on and being Dermot, Michigan

Dermot Smurfit

- if path to Yeah, this We And think towards state touched on – it subject it's clients the and launch all we’re we of material Michigan as glide on launch, to three year, our and live guidance. believe that's, target October. we add be in of in course, regulatory of working full will go approvals, the have year a have the opening QX is October does month. already we operator it to in

Greg Gibas

many practically the share maybe you gaming non-existent through of May. or there online of is QX, relative there Got do know, partway That's it and that you're activity with then vary? those activity back seeing was when, to versus helpful. you no casinos, know, reopening in retail you And retail April today, can How levels it. levels anything was

Dermot Smurfit

we as deck. actually this on part our touch of Greg, presentation

our as all the presentation frame pretty same have deck nine time visual within a beginning clients in slide interesting reopened. COVID the year on and you of So impact March this largely in then

saw a real online adoption, money activity. So in continued levels gaming. both There heightened simulated and was of acceleration we significant

forms So continue in to more a in online. COVID the Americans has continued lot environment various continuing entertainment to consume result gaming casino

Greg Gibas

full of in you up that's guidance? the me, that I the follow a guess And the great. level share last client Okay, Well, if maybe question, very year mentioned revenue also just your on just was previous near would know, term. implied be, X provide you a for then percentage, you could one Tier

So these something and rollout would contributions including in more financials guidance this or expect a are client? to assuming this none it that XXXX is of XXXX we see is of from

Dermot Smurfit

certainly to X we'll few Thanksgiving. Yeah, P&L infrastructure side next client the we see of whole relationship. weeks - that forward contributing We'll client the that our forward how to Tier specifically over hope market we, we the and the in cycle of see look deployment course the goes also imminently updating the into

breaking the not a we're out percentage to year something do. That's share full to As basis. revenue just on going

specific So, suitable you any give on Greg. decline that, with the opportunity apologies information will to more

Greg Gibas

guys. Thanks, Okay.

Operator

next Our Instructions] of from with question. your Please proceed is Ryan Sigdahl Craig-Hallum. [Operator question

Ryan Sigdahl

Great, I thanks want informed that FanDuel the when guess I start leaving question, you to GAN sports for platform? guys. the taking curious was were

Dermot Smurfit

The business technology the are to target GAN we very a remain clarify the very date custody their platform - actually technical a lucrative relationship, key is that positive let that, in supplier their and of and business year-to-date. portion large fact, me in part and what not just of largest very, we leaving of client a they're

make So very it's that right. clarifying statement, important just to

was XX target place ago. date However, really only days XX the in put actual to

continue we're GAN very in delighted significant to forward. growth and technology that So term to a it's it's, a for standpoint, help something FanDuel. up going we their long medium contractual see that relationship much earnings to And to ambitions. support was revenues from And

Ryan Sigdahl

promoting the you was referring And over, Tier pipeline Xs we've is hearing seeing talking then online. to. I cross various Sports yes. you are the and you your for what in numbers of millions tens yes, important what heard in rewards patent licensing the several how about operators Tier of frameworks Yes, you X awards integration there? their the have, from switching know, pipeline are What

Dermot Smurfit

point intellectual them not at commercial right them framework discussions that of we GAN's sits technical but implement number with time. are this in of actually the seen we've property, licensing Yeah, processes any or a in within patented

Ryan Sigdahl

me. for Last one Good.

So see National nice this launched to SIMGAM Penn morning.

there? gaming. opportunity there, beginning a beyond mentioned what marks they opportunities of partnership, in Curious it you on exist You the elaborate the potential social grow can if other of

Dermot Smurfit

their all their Well, are that I have entirely appropriate possession, but hope suspect of And of But their comments a next databases they National see that's team. that report control Barstool's acquisition early that recent highly consequence the we'll Penn they them, would with I'll today and within as through defer so plenty group us progresses. how market the suggest will But you the the as signs again, Pen I National pick earnings, when up of the to executive encouraging. multiple activities. certainly business within client. the The would

Ryan Sigdahl

Sure. Makes sense. I'll Thanks. me. Good. That's luck. turn good it guys. over, And it for

Dermot Smurfit

Thanks, Ryan.

Operator

the to With management that, call will for remarks. now turn closing back

Dermot Smurfit

who backed market which for thank for joining of all investors you coming Thank our to call like would the substantial leadership to in period. position second group listed our today earnings US extend we as the a US intend company. Again, we

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

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

is speaking of Our move will to which online. future bright, future continue as with has look the safe. remained again gambling, forward We Please American before you stay Thanksgiving. to all

Operator

conference. concludes This today's

You for your time. this disconnect your at may participation. Thank lines you