GAN(US:GAN)2023-08-08 16:00Financial Performance - Revenue for Q2 2023 was $33.8 million, a decrease of $1.2 million (3.5%) compared to Q2 2022, primarily due to reduced contractual revenue rates with a B2B customer [175]. - The net loss for Q2 2023 was $18.4 million, a reduction of $19.9 million (52.0%) from a net loss of $38.3 million in Q2 2022 [175]. - Operating loss for Q2 2023 was $8.6 million, an improvement of $29.2 million (77.3%) compared to an operating loss of $37.8 million in Q2 2022 [175]. - For the six months ended June 30, 2023, total revenue was $68.9 million, a decrease of $3.6 million (4.9%) from the same period in 2022 [186]. - Total revenue for the six months ended June 30, 2023, was $68.9 million, a decrease of $3.6 million (4.9%) compared to the same period in 2022 [188]. - B2B revenue decreased by $6.0 million (22.2%) to $21.2 million for the six months ended June 30, 2023, primarily due to decreased contractual revenue rates [203]. - B2C revenue increased by $2.5 million (5.5%) to $47.7 million for the six months ended June 30, 2023, driven by higher sports and casino margins [207]. - Adjusted EBITDA for the six months ended June 30, 2023, was $(1.99) million, compared to $4.32 million in the same period of 2022 [212]. Cost and Expenses - Cost of revenue decreased to $9.5 million in Q2 2023, down $1.0 million (9.3%) from Q2 2022, mainly due to the absence of hardware sales from the prior year [179]. - Cost of revenue for the six months ended June 30, 2023, was $19.6 million, a decrease of $2.6 million (11.7%) from the prior year [190]. - Sales and marketing expenses increased by $1.0 million (7.4%) to $14.5 million for the six months ended June 30, 2023, due to increased activities in the B2C segment [191]. - General and administrative expenses rose by $0.3 million (1.5%) to $20.0 million for the six months ended June 30, 2023, attributed to higher salaries and wages [193]. Revenue Segmentation - Revenue from the United States decreased by $4.4 million (37.7%) to $7.3 million in Q2 2023, while revenue from Europe increased by $1.9 million (18.6%) to $12.1 million [176]. - The B2C segment showed growth, particularly in Europe and Latin America, contributing to overall revenue despite declines in B2B performance [177]. - B2B segment contribution decreased by 16.1% to $17.1 million for the six months ended June 30, 2023, reflecting declines in revenue and cost of revenue [206]. - B2C segment contribution increased by 7.4% to $32.1 million for the six months ended June 30, 2023, driven by revenue growth [208]. Tax and Profitability - The effective tax rate for Q2 2023 was (3.3)%, compared to 0.6% in Q2 2022, influenced by earnings in foreign jurisdictions and loss carryforwards [184]. - The effective tax rate for the six months ended June 30, 2023, was (4.1)%, compared to (0.4)% for the same period in 2022 [195]. - The company expects to achieve profitability through organic growth, expansion into new jurisdictions, and margin expansion from integrating Coolbet's technology [174]. Cash Flow and Financing - Net cash used in operating activities decreased by $2.8 million to $(1.3) million in the first half of 2023, a 67.8% improvement compared to $(4.2) million in the same period of 2022 [238]. - Net cash used in investing activities decreased by $8.9 million to $(3.6) million in the first half of 2023, primarily due to reduced spending related to the Content Licensing Agreement [240]. - Net cash provided by financing activities decreased by $25.7 million to $1.2 million in the first half of 2023, largely due to the prior year's $30.0 million credit facility [241]. - The company expects to continue investing in products and technologies to scale its business, requiring significant capital expenditures [230]. - The Amended Credit Facility increased the principal balance from $30.0 million to $42.0 million, with a minimum liquidity requirement of $10.0 million [234]. Customer Metrics - B2C Active Customers decreased to 257,000 in Q2 2023 from 260,000 in Q2 2022, attributed to limited customer acquisition in Latin America and exiting the Ontario market [221]. - B2C Marketing Spend Ratio improved to 20% in Q2 2023 from 22% in Q2 2022, driven by increased revenues from strong sportsbook and casino margins [223]. - B2C Sports Margin increased to 8.5% in Q2 2023 compared to 7.1% in Q2 2022, due to more favorable outcomes in sports betting [225]. B2B Performance - B2B Gross Operator Revenue for Q2 2023 reached $436.0 million, up from $283.0 million in Q2 2022, representing a growth of 54.1% [215]. - B2B Take Rate decreased to 2.3% in Q2 2023 from 5.0% in Q2 2022, primarily due to reduced contractual revenue rates [218].