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GAN reveals acquisition interest as net loss reduced in Q2

| By Robert Fletcher
GAN said it has spoken with several prospective bidders interested in acquiring all or part of its business amid an ongoing strategic review, while it also reported a reduced net loss to $18.4m (£14.4m/€16.7m) in Q2.

The provider launched the review in Q1, looking at a “range of strategic alternatives” to improve value for GAN shareholders. The review is ongoing with a special committee on non-executive directors evaluating options for the business.

Among these options are potential sales of parts of or the entire GAN business. During Q2, the provider said it spoke to several interested parties, although it has not yet reached any sort of agreement.

GAN added it will continue to consider its options as the review continues, with no timetable for this having been set.

“We have received indications of interest from prospective bidders interested in acquiring all or part of our business,” GAN CEO Dermot Smurfit said. “A special committee of our board of directors, comprised of non-executive directors, is evaluating those alternatives. 

“The indications of interest are non-binding; no definitive agreements for a strategic transaction have been reached at this time. There is no assurance that a transaction will take place and no timetable for completion of any transaction.”

B2B decline pushes revenue down in Q2

The review has been taking place throughout GAN’s Q2, during which revenue fell 3.4% to $33.8m.

This decline was due to a drop in B2B revenue, with this falling 30.3% to $9.9m. B2B revenue comprised $7.2m in platform and content licence fees and $2.7m of development services and other sources.

GAN put this fall down to contractual revenue rates, in line with an agreement regarding an exclusivity period with an unnamed B2B customer.

In contrast, B2C revenue increased 14.9% year-on-year to $23.9m. GAN said this was driven by growth in its European and Latin American operations, helped by higher sports and casino hold percentages.

Net loss reduced with impairment charges absent

Operating costs for the quarter reached $42.3m, which was 41.6% lower than the previous year. This was mainly due to last year’s figure including $28.9m in impairment charges, with such costs not appearing in Q2 this year.

GAN also noted $8.4m in other loss and $905,000 worth of interest expense. In turn, this left a pre-tax loss of $18.4m, a significant improvement on $38.6m in 2022.

The provider paid $585,000 in tax, meaning Q2 next loss was $18.4m, compared to $38.3m last year. However, adjusted EBITDA slipped from a positive of $1.3m to a $2.0m loss on the back of the B2B decline.

H1 net loss lower than Q2

As for the first half, figures for the six months to 30 June made for similar reading. Revenue was 5.0% down year-on-year to $68.9m. 

B2B revenue slipped 22.1% to $21.2m but B2C revenue increased 5.5% to $47.7m.

Cost-wise, operating expenses fell 27.1% to $83.4m, again due to last year’s impairment charges. A further $2.6m was reported in interest expense, but some of this was recouped with $934,000 in other income.

As such, pre-tax loss reached $16.2m, compared to $42.7m last year. GAN paid $659,000 in tax, with net loss at $16.9m, an improvement on $42.8m in 2022. However, adjusted EBITDA followed a similar path to Q2, turning from a plus of $4.3m to a loss of $2.0m.

“Our second quarter saw solid execution and progression of our business plan. We continued to see strength in international markets for B2C, expanded our roll-out of GAN Sports and made significant progress on the new GameSTACK 2.0 version of our technology platform,” Smurfit said.

“With GAN Sports now live in nine US states and the encouraging momentum we are seeing in our international markets, we would expect our top-line performance to improve over the coming quarters and into 2024.”

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