GAN Limited (GAN) 23 Mar 222021 Q4 Earnings call transcript

Greetings, and welcome to GAN's Q4 Fiscal Year Earnings Conference Call. At this time, all participants are in a 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, Mr. Investor Capital of VP Shore, Relations Markets. and Robert go ahead, sir. Please

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Thank our afternoon, me the and performance segment slide fourth presentation everyone. good encompassing you, enterprise financial Bobby. the XXXX international quarter results And segment. gaming fourth join discuss full on BXB internet Please segment both to and year of software our and our operating

positive remain we the as Arkansas filed of gambling We final discuss of Oaklawn intellectual our through for of platform in the deliver EBITDA quarter framework, EBITDA iBridge now Entain and and patent will omnichannel call also and for items will newest in way will Park in the our well RGS this first call, litigation discuss our patented will client, each property, to profitable XXXX, By calendar America. which claim year. first as new Lottomatica, Super enables clients, as pursue infringers also the adjusted outlook agenda quarter this balance which of major progress we we

against as $XX profitable, back international of our subsequent plan. XXXX. XXXX, operator million strong to sports $XXX business to overall was which BXC This revenue as XXX% year Coolbet, by well and international our integration successful versus million Looking added full acquisition strategic the led over betting BXC a increased driven execution in high-growth

by with U.S. quarter. year-end, launching Canada, revenue $XXX jurisdictions increasing million gross million delivered Ontario, our operator operational in in to $XXX a an we including XX to clients North X of division states, BXB versus XXXX net next of expectation are now domestic operational as Our in BXB America

to distribution chain, including deal progress greater with more share milestone the online existing content the course, Vegas our and with and the a BXB Resorts Rock Red profitable betting locals acquiring game BXB acquire platform omnichannel business technology of to an provide Silverback, with on deal share We Las of and our retail studio also Ainsworth reaching leading and market. to their a value power leading made of a exclusive great online in sports strategy reaching

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a and on performance While EBITDA. EBITDA This our profitability, strategic one the GAN number hindering improving our growth without Sports. initiatives course, underlying iGaming of and hold margins is volatility our loss adjusted focus strong, caused in consolidated Super quarterly RGS business us the in year, report was to adjusted

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Finally, we in Oaklawn secured this platform deal a second with Arkansas, the year. of which Park half will in recently launch

developments some to patent the property. non-platform for having we patron a I recent to is took it that Before have technology obviously monetized. clients. We to multiple discussing until land-based occasions to on ensure leveraging intellectual our which property XXXX, operators related XXXX success databases our both legal recently seen tremendous online, and our outlook, protected mention protected intellectual our want We've and action considered monetized defend patented remains

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the full to jumping for outlook our of year Now XXXX.

between organic We $XXX growth nearly revenue guidance million. of and instituting are $XXX XX% midpoint, this of million implies year-over-year. At the

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on our profitability operating XXXX As leverage. is in and focus I mentioned earlier, sustainable

like business. be adjusted on to guidance our having the current every that is EBITDA current We also highly expect of view I'd thoughts provide achievable. as U.S. to a to of short-term our quarter BXB state on impact minutes the take and a couple market positive

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control Our strategic can is near-term headwinds. actions we mitigate to mantra industry to implemented have and we as a several leadership what control, team

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on now aggressively. minimum profitability The decide deals first have is whether or to for we one, new our ensure day for implemented action client revised that market GAN revenue to contract doesn't terms guarantees with decides

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clear development we international $XXX to to locations, this growth vendors, existing want taking $XXX pipeline such contracted accelerate efforts lower off measures third-party outlook long-term and million long-term XX% revenue highly I in our $XXX of of said, million target revenue margins I million year line next headcount our executing profitability, leveling client as That reliance very cost and will are we to that XXXX. remain robust. confident and reducing on between Finally, be with several be our on focus remains XXXX on our in our top increasingly as moving year. over

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This three As a stay-at-home were by simulated for COVID difficult benefited primary factors. our the from or XX% driven XXXX, $XX QX, versus such, in in year Operating and increase be or offerings. million will gaming expenses million as $X.X gaming QX. was this a up social reminder, simulated dynamic comp

headcount, we short hiring year the XXX in comp the and quarter costs by partially employees. X% XXXX rate related of in final increase plan. term exited increases were offset represented First, at incentive The in our full-time to personnel adjustments the QX a

in related Expo we most participation increased on And notably primarily momentum growing programs Gaming marketing continue our organically anticipation international established of Global BXC for our to build the to the Ontario in business. in regulated marketing October invest and as to have we spend launch our Second, upcoming as market. in our BXB in revenues, the

expense Third, share QX. based versus compensation increased

foster incentive long-term key period. typically driver the changes is increase culture retention of largest units are change also reflects to the ownership where stock compensation the expense, in now as While leveraging this strategically broad-based long-term as we in a management the headcount both growth well and drive restricted and hires made structure the

foreign on was year We reduction U.S. release of provision also million of to incurred and period, of a a $X $X.X related quarter-over-quarter million to QX. to our the year. jurisdictions. $XXX,XXX our loss benefit largely in during addition to $XXX,XXX expenses of from $X.X to improved income our our million QX impact million Due to slightly tax million earned widened primarily in allocated related QX our between adjusted period impact a tax entity the This $X full OSB from to of conclusion, a net EBITDA and benefit valuation driven the tax low U.S. in results the loss in in $X.X full shift hold, in QX. the income the as In by in benefit allowance and

Slide XX, to and on Moving our results. full year

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our XXXX a strategy annual event. recap two EBITDA where negative negative at approximately in progressive $X.X align to million our XXXX with breakeven, our ground for this of was at that with to improvement revenue slight challenging foundation the extracting improvement of with the about to in us from recent $XXX I'll market operated we our the we operational years, into adjusted to Investor the and refine in sight in XXXX current of a In made Day this are integration spoke million we've efficiencies and has in are the full ourselves XXXX has year margin in clear scaling $XXX,XXX given have to we're a last and laid. elaborate the line we to XXXX. stake the business guidance, progress we'd While on year pleased we moment momentarily take The environment. execution like Coolbet heading, but

driven investments While infrastructure-related We company. the our the year. operational staffed, significant acquisitions operating gained which the a expenses technical talent, in two with sufficiently and grew the throughout year as leverage turning marks we point key and operating in ended costs, through critical corporate business categories for in

costs administrative technology XXX% costs were general and as and to and percent combined, product declined a XX%, which revenue XX% of revenue Our in over and of respectively, XXXX.

launch Our from the We quarter the loss in net expanded effect with XXXX, versus in related $XX.X QX our in million payments $XX.X acquisition. to content income $XX.X payments our primarily hold million $XX.X to our corporate RGS and of million as related The to million program. to the both for upcoming low of well of events the cash product given as offering XXXX for exclusive decline Super timing annual on purchase the rights the accounting timing balance related insurance Coolbet in of amortization sheet. ended

full Slide our to and guidance. year on Moving XX,

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comprising approximately versus total to million revenue. We and revenue $XXX to thirds XX% XXXX growth expect $XXX range BXC of XX% representing to two million, of

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implemented lower Related our business we to million on our is As talent. third-party controllable to to Dermot company operations, the in that as several entirely I focused costs profitability. We such almost costs efforts near-term reducing fixed development some of annual without highly controlling with locations impacting out noted, switching point measures are $X reliance of and approximately take and the nature. skilled costs, vendors on accelerating also will cost public out

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XX% we to revenue of able adjusted achieve year that EBITDA expect of are scaled in With with investments ahead. the revenue through with flow newly we to approximately impact will continued made in XXXX, the our infrastructure we the combined incremental the growth,

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that We We structure, be this are taking $X increased move planned ensure profitability. repurchase the hold quarter, year had this plan. million levels. towards our capital through we'll evaluating our steps to results and actively flexibility as to retain our We we the view delayed forward to stock undervalued but as impact at these we stock

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you. first Beynon from drive time, questions. Instructions] session. you. to for Macquarie. term and focus GAN in now it Please Sports back question Chad and RGS. Our conducting operator to for squarely with Hector, be execution your the [Operator XXXX question. At cost the with Our investing Super I'll turn over while is the line we’ll open control this near question-and-answer a comes profitability line to Thank of strategically proceed up to

taking question. my Thanks afternoon. for Good Hi.

more part should able the And willing Just that wanted from Sports? RGS other like that your the thought some able BXB why so feel into the GAN we think have you on that guide. know Thanks. little RGS, would then guess, of into XXXX and you'll confirm think then didn't of assuming that's you of second as of is is. be you're XXXX, the strong, the Can systems. to kind Super you I to were Investor you probably I XXXX, where us And Super to plug I impact I but issued kind dig be to I positive those just is, confirm Dermot, confusion look to recognize revenues. content you the at if if the outlook help Day?

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to today take announced going of take do takes clients relatively contract. RGS fact, times, the months the exact will view It operator about are the in throughout made. totality kick does technical many contribution any year. in, conservative for RGS Super on such to integration. the quarter, in contract ramp to those As Chad. the takes about throughout the Super do three last Typically, Super It announcements those months item major second the as to time processes four XXXX. before but the to RGS, the very frame. time Hence, the these And six is do they're deals, same It in to place

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patent importantly, suit, infringing awareness your are be you. anything maybe it in in guide? to a the And on out others like it patent of filing that about better of process. this kind more in will to the XXXX long guessing term? your you way Is Thank think patents. the kind assuming you near drawn to raises -- then said, terms the guess of I Okay. I'm suit And well, contributions related fee But

Chad. revenues Yeah. account the modest I XXXX XXXX. mean already takes taken, guidance legal in there actions into very associated with assume is any don't patent anticipated our costs And -- we or the

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jump back Okay. it. the I’ll queue. Thanks, in Appreciate Dermot.

comes Riley. Please Bain B. your Our with with question. David proceed next from question

Thank Great. you.

step if of and forward an a of ones you York look large online just kind model. U.S. promoting our kind just mid-level the future? a be potential take just been model, I'm for coin at market liberalization second of online how kind even the thesis Tribes, sort sort maybe guide, back would has look licensing And like long-term market more you side the Part just open market candidates of contemplate could the First, the seeing as other California. we of New those or operators, like more wondering, of of of like your the of

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-- I or that yourself that Awesome. their going mitigating on Karen, can on I'm it and mean just the based I are by market. there? recovery Churchill And over both overly or we one Okay. material, assume the to for that's go and factors assume exiting wasn't can comments

some David, BXB will feel continuing This retail-oriented is of hopefully I But that the situation. evaluate. to and the Well, of is enterprises, the picking not parties majority in and we'll least exit revenues, contractual space, discussions that states exiting a continue in I yet various for now. we thing in new relatively parties announcing up last be as different But mean, actually year be to provided We're is exiting. clients from deals of for I'm very access protection the disappointment going on market believe third different are an the to our fantastic vast an have we determined. the show third with which the those downside at -- Yeah. modest X% to for [ph] financial for operations us, Churchill, to

Right.

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Okay, great. Thanks, guys.

question. [Operator with Instructions] Our comes David question Jefferies. from Please Katz your with proceed next

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Thank you taking question. it. my for Got

you. Thank

your from question. Craig with comes Hallum Capital proceed question next Group. Sigdahl Please Ryan with Our

does one questions and the piggyback Good one the off that first Two was asked. just of afternoon.

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of the the in data one actual Ryan, as to go. the how out it I unique all example Michigan. get right operating perfect the of And Well, like we hold have states advantage in Michigan

New traits. Jersey, Michigan common share some

betting sports online and casino and tribal in operators both betting where Michigan operators. sports gaming state and You've got retail you got iGaming commercial

around in So been have online their Michigan, positive we generate that online vast quickly, -- relatively cash to The able majority know consistently is clients of flow their from centered casino operations. activities. that cash

tax, that GAN, commercial is for about and XX be ever out gets total a clients if in a trialing operators to will that reimplemented, operators, significant legislative load state. casino the launch we're online for framework that get Michigan fourth our of So opportunity great model you

share, thought I you're the top, have don't kind X fragmented I of nature of don't had operators or I the the Maybe Michigan what counteracts market -- know, which saying? X of XX% in plus the

market in I think, the markets, obviously which clients our about to Ryan, of ability these question first induce the your enter the to was profits generate in them place.

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specifically U.S. delivery here It's online MGM onto product for the offerings in the

Thank you. Great. Good guys. luck,

sir. Thank you,

the of Securities. Northland line Please proceed question. from question Our your with comes Gibas Greg next with

just Wondering trends the question. Hey, both you Coolbet's market Europe takin in and South share if discuss thanks for America? could

moment. the market challenging. with the is market, very seen at much they Latin a Europe, Latin number Yeah. expand Europe In Greg, players markets but of we've more podium American share American overall the slightly trend in are selective line in

increasing maintaining their they're it. opposed as think to or I rapidly greatly share market

follow-up, throughout adjusted EBITDA And imply build a that to sequentially Okay. ramping is that year. the going Does Karen, kind I saying were Great. the of on you think EBITDA as front? quarters then

ramp outlined. it in think, revenue the follow that will trends -- I Yeah. general, I the will mean I

So of that increasing XX% XX% revenue. to

the of the building kind also in too. forward, we're Cup just period, but quarters, but So because World in X high back-loaded the have effect again, fourth is quarter, that a the seasonally of first we there looking

you. Thank it. got Okay,

Dermot have to Smurfit, CEO And for I and remarks. reached like we Ladies to call the closing gentlemen, end session. back turn the the question-and-answer would of Mr.

today Thank quarter for our you joining year fourth XXXX full and earnings. for

are continue mitigate our segment. and challenges business, grow to to some confident these strategic we're this steps in there BXB I'm short-term industry While taking

impacting GAN we BXC path, quarter a addition, Sports execution we've current in will have a and positive a strong In segment that the to transitioned follow profitable continued the as launch of business XXXX now we first fast-growing growth generating EBITDA profitable continues year to full the our in be while our and U.S. Super into Ontario, Thank you in cost business out growth strategic all to year. the of you forward grow without updating taking of initiatives. throughout all on business our RGS the I conjunction balance progress do again. look

This concludes today's conference.

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