GAN(US:GAN)2022-03-23 01:44Financial Data and Key Metrics Changes - Full year revenue increased over 250% to $125 million compared to $35 million in 2020, driven by the acquisition of Coolbet and strong execution of the strategic plan [9] - Q4 revenue was $30.5 million, up 242% year-over-year but down 6% from Q3, resulting in the full year coming in at the low end of guidance [45][62] - Adjusted EBITDA loss widened from $800,000 in Q3 to $5 million in Q4 due to low OSB hold impacting revenue [57][62] Business Line Data and Key Metrics Changes - B2C segment revenue grew 133% year-over-year, with a record handle of $633 million in Q4, up 12% from Q3 [12][48] - B2B segment revenue increased 33% year-over-year, with recurring SaaS and services revenue up 16% from Q3 and 144% year-over-year [15][50] - B2C cost per acquisition remained low at $46 per customer, with active customers increasing by 12% from Q3 [12][48] Market Data and Key Metrics Changes - Domestic B2B division delivered $921 million of gross operator revenue to clients, up from $545 million in 2020, with operations in 9 U.S. states [10] - U.S. real money iGaming SaaS revenue increased 22% versus Q3 and over 100% year-over-year [51] - Italy's revenue was up 1% versus the prior quarter and 9% versus the prior year, while simulated gaming observed modest declines [51] Company Strategy and Development Direction - Focus for 2022 is on achieving profitable growth, with a revenue guidance of $155 million to $165 million, implying organic growth of nearly 30% year-over-year [20][63] - Strategic actions include implementing minimum revenue guarantees in contracts and investing in GAN Sports and iGaming content to expand client base [26][31] - Long-term revenue target for 2026 is between $500 million and $600 million, with margins over 30% [28] Management Comments on Operating Environment and Future Outlook - Management remains bullish on the mid- to long-term outlook of the B2B market despite near-term headwinds such as reduced marketing spend by B2C operators and slower market fragmentation [22][23] - The company expects to be adjusted EBITDA positive every quarter in 2022, driven by a profitable B2C business and scaling B2B operations [21][76] - Management is confident in the long-term potential of iGaming legislation in the U.S. and sees significant opportunities for B2B clients as more states legalize iGaming [99][100] Other Important Information - The company has filed a patent litigation claim to protect its intellectual property related to omnichannel gambling [8][18] - Operating expenses in Q4 were $31 million, up 13% from Q3, driven by increased hiring and marketing spend [52][54] - The company ended the year with $39.5 million in cash on its balance sheet, impacted by low hold events and timing of payments [62] Q&A Session Summary Question: Clarification on B2B guidance and Super RGS impact - Management confirmed a revenue target of $225 million for 2023, with Super RGS contributions expected to ramp throughout the year [82] Question: Patent fee contributions in 2022 guidance - Management does not assume any patent revenues in 2022 or 2023, with legal actions taken to protect intellectual property [84] Question: U.S. online market liberalization potential - Management sees significant opportunities in Native American states and believes iGaming legislation will continue to roll out, creating a larger B2B client base [88][99] Question: Market share trends for Coolbet - Coolbet is maintaining market share in Europe and expanding in Latin America, with a focus on generating positive cash flow from online operations [113] Question: Adjusted EBITDA ramp throughout the year - Management expects adjusted EBITDA to build throughout the year, with a back-loaded effect in Q4 due to seasonality and the World Cup [114]