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GAN(GAN) - 2021 Q4 - Annual Report
GANGAN(US:GAN)2022-04-14 16:00

Financial Performance - GAN Limited reported a net loss of $30.6 million for the year ended December 31, 2021, compared to a net loss of $20.2 million for 2020, reflecting the inclusion of Coolbet's financial results for the entire period [224]. - Revenue for the year ended December 31, 2021, was $124.2 million, an increase of $89.0 million from $35.2 million in 2020, primarily driven by B2C operations [258]. - The increase in revenue included $40.1 million from the Coolbet acquisition, $32.4 million from Latin America, and $9.3 million from platform and content license fees in the U.S. [260]. - B2B revenue increased by $10.4 million to $45.6 million in 2021, a growth of 29.6% compared to 2020 [270]. - B2C revenue reached $78.6 million in 2021, with a gross profit of $48.8 million, representing a gross margin of 62.1% [274]. - Adjusted EBITDA for 2021 was a loss of $2.8 million, compared to a loss of $2.3 million in 2020 [278]. - The effective tax rate for 2021 was 0.7%, reflecting a tax benefit of $0.2 million, compared to a tax expense of $0.4 million in 2020 [268]. Operational Growth - The company increased its global headcount from 440 employees at January 1, 2021, to 682 employees at December 31, 2021, indicating a significant investment in operational support [223]. - The company expects to improve profitability through increased revenues from organic growth of existing casino operators and expansion into newly regulated jurisdictions [231]. - The company aims for revenue expansion from the rollout of its Super RGS content offering to B2C operators who are not already clients [231]. - B2C active customers increased to 394,000 in 2021, up from 158,000 in 2020, indicating significant growth in user engagement [280]. Acquisitions and Investments - GAN Limited acquired Coolbet for a total purchase price of $218.1 million, which included a cash payment of $111.1 million and the issuance of 5,260,516 ordinary shares valued at $106.7 million [230]. - A follow-on public offering in December 2020 raised gross proceeds of $98.5 million, which were used to fund the acquisition of Coolbet [229]. - The company raised gross proceeds of $62.4 million from its U.S. IPO in May 2020, with net proceeds of $55.3 million [228]. - Capital expenditures increased to $14.0 million in 2021 from $5.9 million in 2020, with $11.6 million allocated to internally developed software [293]. - The company entered into a Content Licensing Agreement with a third-party provider for $30.0 million, enhancing its gaming content offerings [289]. Expenses and Costs - Cost of revenue was $41.4 million for 2021, an increase of $30.9 million from 2020, mainly due to B2C operations' gaming costs [261]. - Sales and marketing expenses rose to $22.3 million, an increase of $17.2 million from the previous year, with $14.9 million attributed to B2C operations [262]. - General and administrative expenses increased by $24.1 million, with $16.6 million related to Coolbet and additional costs for legal, recruiting, and compliance [264]. - An impairment charge of $3.5 million was recorded in 2021 due to a termination notice served to a content provider [266]. - Depreciation and amortization expense was $16.8 million, an increase of $13.6 million from 2020, primarily due to the acquisition of Coolbet [267]. Cash Flow and Financing - Cash on hand was $39.5 million as of December 31, 2021, sufficient to meet working capital needs for at least the next twelve months [295]. - Net cash used in operating activities decreased by $1.3 million to $(5,003) thousand, a 21.2% improvement compared to $(6,348) thousand in 2020 [300]. - Net cash used in investing activities increased by $100.8 million to $(106,674) thousand, primarily due to $92.7 million for the acquisition of Coolbet [302]. - Net cash provided by financing activities decreased by $154.5 million to $169 thousand, largely due to the absence of proceeds from previous public offerings [303]. - The net decrease in cash was $(113,177) thousand, a decline of 179.5% compared to an increase of $142,375 thousand in 2020 [300]. - The company has no current credit facilities or debt arrangements, raising concerns about future financing availability [298]. Awards and Recognition - GAN Limited's B2B segment won three awards from EGR North America in 2021, highlighting its expertise in delivering gaming solutions [221]. - Coolbet won two awards at the International Gaming Awards in 2021, recognizing its impact in the mobile sports betting industry [222]. Future Outlook - The company expects continued growth in sales and marketing expenses as it seeks to attract additional end-users in the B2C segment [262]. - The company expects to launch an integrated B2B sportsbook technology solution in North America in Q4 2022 [291]. - Future taxable profits assessments for deferred tax assets rely heavily on estimates based on historical results and business forecasts [253]. - B2B Take Rate decreased to 4.9% in 2021 from 6.4% in 2020, influenced by a shift in revenue sources and increased promotional bonuses [283].