GAN(US:GAN)2021-11-12 02:03Financial Data and Key Metrics Changes - Third quarter revenues were $32.3 million, down 7% from Q2, driven by growth in the B2B segment despite seasonality and lower sports hold rates [30] - B2B segment revenue was $11.2 million, up 5% sequentially, with development services and other revenue increasing by 84% [30] - B2C segment revenue was $21.1 million, down 12% from Q2, primarily impacted by a 7% decline in sports turnover and a 280 basis points decline in sports hold [31] - Net loss for the quarter increased to $7.9 million, while adjusted EBITDA broke even [33] Business Line Data and Key Metrics Changes - B2B division delivered 5% sequential growth, with strong performance in iGaming and a significant increase in the take rate on gross operator revenue [9][30] - Active customers in the B2C International division increased by 6% quarter-on-quarter, despite a quieter sports calendar impacting revenues [16] - B2B operator revenue from clients declined 3% quarter-on-quarter to $215 million, while total U.S. iGaming gross operator revenue was flat versus the prior quarter but up 99% year-over-year [33] Market Data and Key Metrics Changes - The company is now operational in nine states for online gambling, with plans to expand to 14 states, up from three states a year ago [12] - The U.S. market share for the company decreased slightly from 21% to 19% [33] - The company anticipates strong demand for its technology platform, particularly in the context of recent M&A activity in the industry [47] Company Strategy and Development Direction - The company targets $500 million to $600 million in top-line revenue by 2026, with long-term adjusted EBITDA targets exceeding 30% [14][29] - The company is focused on expanding its B2B and B2C operations, with new client launches and market entries planned for the upcoming quarters [29] - The acquisition of Coolbet is expected to enhance the company's offerings and market position in the U.S. [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming fourth quarter, which is expected to be the seasonally strongest period for the company [11][37] - The company is preparing for incremental launches in Latin American markets and anticipates annual gains in operating leverage as both divisions scale [29] - Management noted that the recent M&A activity in the industry increases the scarcity value of their technology, positioning the company favorably [47] Other Important Information - The company remains debt-free, allowing it to focus on high-growth initiatives and securing additional market share [33] - The company is committed to improving profitability and cash flow, with a focus on reducing G&A costs as a percentage of revenue [35] Q&A Session Summary Question: About the Super RGS launch and integration timeline - Management confirmed that the first Super RGS clients will launch in Michigan before the end of the month, with technical integrations starting in advance of contract finalization [43][45] Question: Impact of recent M&A activity on competitive positioning - Management indicated that recent corporate transactions increase the scarcity value of their technology and create competitive replacement opportunities [47][48] Question: Content strategy and potential for further M&A - Management is exploring exclusive content distribution deals and is engaged in discussions with various content providers, while remaining cautious about compliance issues [52] Question: New states for iGaming and guidance implications - Management confirmed that new states are assumed in the 2023 guidance, with expectations for several new opportunities to be incorporated [55][56] Question: Opportunities in New York and future M&A - Management sees potential for future opportunities in New York and is actively monitoring the market for potential tuck-in acquisitions [60][62]