GAN sees revenue grow 11% in first half of 2018
GAN sees revenue grow 11% in first half of 2018
GAN plc has again said that it expects 2019 to be a year of record growth for the business after posting first half results in which revenue grew, but the company’s post-tax loss widened to £2.9m.
The supplier saw net revenue for the six months ended June 30th rise to £4.6m, with £2.5m of the total coming from the company’s real-money gaming business, predominantly from the Italian and New Jersey markets. A further £2.1m was generated from its Simulated Gaming business, mainly from clients in the US and Australia.
The vast majority of came from recurring operations, such as revenue share agreements with its partners, rather than one-time revenue generated from game and platform development. For real-money gaming, recurring revenue was up 17% to £2.1m, while all Simulated Gaming revenue was recurring.
During the quarter GAN positioned itself for growth in the US sports betting market by signing a multi-year extension with its long-term platform client Paddy Power Betfair. It is also integrating FanDuel’s IGT sportsbook application onto its platform.
It has agreed a strategic partnership with SBTech, that sees it offer GAN’s casino clients the supplier’s real-money wagering solution. GAN also added a new Simulated Gaming client to its roster, with the Mississippi Band of Choctaw Indians set to launch a free-play gaming products in the final quarter of the year.
In Europe, meanwhile, GAN has signed a multi-year agreement with Italian betting and gaming operator Goldbet. It has also launched a major expansion of its engineering resources, with the majority of new staff being recruited for its Bulgaria hub, with others being hired for its Las Vegas office.
The expansion of its engineering team follows the establishment of a new Tel Aviv-based marketing agency, which will provide user acquisition and retention services to selected GAN clients.
GAN chief executive Dermot Smurfit said that the decision to focus engineering resources on existing clients rather than launching with new customers, was “a long-term decision taken in the interests of shareholders”. This, he said, had been necessary with a number of its highest-profile partners needing to move fast to take advantage of the repeal of the Professional and Amateur Sports Protection Act.
The expansion of the Bulgarian and Las Vegas-based engineering teams would provide GAN with the resources to on-board new clients as well as serving existing customers, Smurfit said.
The client integrations and engineering team expansion contributed to an increase in operating costs in H1 2018. Total operating costs rose to £7.6m, up 17% year-on-year.
The company posted a clean earnings before interest, tax, depreciation and amortisation (EBITDA) loss of £467,000, having posted a positive result of £24,000 for H1 2017.
Having reported an operating loss of £3.0m for the six month period, GAN was positively impacted by a £388,000 tax credit, though this only served to limit the post-tax loss to £2.9m. This represented a 45% increase on the £2.0m loss posted for the first half of 2017.
Since the end of the reporting period, GAN has made significant progress in the US real-money gaming market. It has launched online sports betting for FanDuel, noting that the initial success of New Jersey wagering may encourage other states to regulate the vertical, creating new opportunities.
It has also launched its second iGaming client in New Jersey, with Ocean Resort Casino going live in July. While a desktop gaming site is live, the roll-out of mobile gaming has been pushed back, as the New Jersey Division of Gaming Enforcement is focused on processing sports betting applications.
In Pennsylvania, it is primed to go live with its partner Parx Casino, though the slower-than-expected issuance of regulations by the Pennsylvania Gaming Control Board. With iGaming now expected to launch in the state early in 2019, revenue from professional service fees delivered to the casino will now be reported in the first half of that year.
The second half to date has also seen GAN begin marketing for the Chickasaw Nation’s Europe-facing online casino, which aims to develop a client base in Europe for the tribal gaming operator.
CEO Smurfit reiterated the company’s prediction, made earlier this month, that while it may not see any tangible impact from the expansion of US real-money gaming in the second half of the year, GAN would enjoy record growth in 2019.
“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 the overseas internet casino,” he said.
“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 GAN’s revenue and EBITDA prospects."