GAN(US:GAN)2021-05-16 16:00Acquisition and Integration - The company completed the acquisition of Coolbet on January 1, 2021, enhancing its online sports betting and casino platform capabilities across eight markets in Northern Europe, Latin America, and North America [143]. - The integration of Coolbet's technology is expected to improve profitability through organic growth and margin expansion opportunities, leveraging the company's existing customer base [144]. - The acquisition of Coolbet has resulted in increased amortizable intangible assets, significantly impacting total operating costs and net income [160]. - The company expanded its revenue footprint into Latin America following the acquisition of Coolbet, contributing to overall revenue growth [167]. Financial Performance - Revenues for the three months ended March 31, 2021, were $27.8 million, an increase of $20.2 million or 263.0% compared to $7.7 million for the same period in 2020 [164]. - B2B revenues increased by $5.9 million, or 76.4%, from $7.7 million in Q1 2020 to $13.5 million in Q1 2021, driven by growth in platform and content fees [178]. - B2C revenues were $14.3 million for the three months ended March 31, 2021, representing a new revenue stream following the acquisition of Coolbet [182]. - Operating costs and expenses totaled $31.6 million, an increase of $24.8 million or 363.8% compared to $6.8 million in Q1 2020 [163]. - The company recorded a net loss of $4.5 million for the three months ended March 31, 2021, compared to a net income of $0.7 million in the same period in 2020, reflecting a change of $5.2 million or 743.2% [163]. - Adjusted EBITDA decreased by $0.8 million, or 33%, to $1.7 million from $2.5 million in the prior period, primarily due to increased personnel costs and professional services [185]. Customer and Market Growth - The company launched three operator customers in Michigan in January 2021, with expectations of expanding into additional states like Louisiana and Maryland, increasing the total addressable market in the U.S. [142]. - The company anticipates that its installed customer base will continue to license additional products and renew maintenance agreements, contributing to revenue growth [139]. - The B2C Active Customers reached 111,566, indicating growth in user engagement [189]. - The B2C Marketing Spend Ratio was reported at 14%, providing insight into the effectiveness of marketing expenditures relative to revenues [189]. Costs and Expenses - General and administrative expenses rose by $7.6 million, or 318.7%, primarily due to increased personnel costs and compliance requirements following the company's IPO [171]. - Cost of revenues increased by $7.0 million, with B2B and B2C segments contributing $1.0 million and $6.0 million, respectively [168]. - Sales and marketing expenses increased by $3.2 million, or 375.2%, driven by increased headcount and planned investments for customer acquisitions [169]. Operational Metrics - B2B Gross Operator Revenue increased by $72.3 million, or 51.0%, to $214.2 million for the three months ended March 31, 2021, driven by the acquisition of Coolbet and expansion in the U.S. market [189]. - B2B Active Player-Days rose by 0.5 million days, or 5.6%, to 9.5 million days, reflecting increased engagement from existing and new U.S. customers [189]. - B2B Average Revenue per Daily Active User (ARPDAU) increased by $6.76, or 43.0%, to $22.48, attributed to higher revenue growth in the U.S. RMiG platform [189]. Cash Flow and Financial Position - Net cash used in operating activities increased by $2.7 million, or 188.0%, to $4.1 million for the three months ended March 31, 2021, primarily due to net loss and changes in operating assets and liabilities [206]. - Net cash used in investing activities surged by $94.0 million to $95.0 million, mainly due to the $92.4 million cash paid for the acquisition of Coolbet [207]. - As of March 31, 2021, the company had cash of $52.2 million, a decrease from $152.7 million as of December 31, 2020, following the acquisition of Coolbet [204]. - The company reported an accumulated deficit of $50.2 million as of March 31, 2021, resulting from prior years' operating losses [201]. Risks and Challenges - The company operates in an evolving environment with various risks, including competition and economic uncertainties, which may impact future performance [138]. - The financial results for the three months ended March 31, 2021, include Coolbet's performance for the entire period, making comparisons with prior periods challenging [161]. - The effective tax rate for the three months ended March 31, 2021, was (17.4)%, compared to 17.3% for the same period in 2020 [173].