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GAN reduces net loss despite revenue decline in 2023

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GAN has posted a reduced net loss for its 2023 financial year despite a fall in revenue, with declines reported across both its B2B and B2C divisions.

Group revenue for the 12 months to 31 December 2023 was $129.4m (£101.1m/€118.3m). This was 8.6% lower than the $141.5m that GAN posted in the previous year.

With net profit growth, 2023 proved to be something of a mixed year for GAN. The year will be perhaps best known for the strategic review that launched in Q1, looking at a “range of strategic alternatives” to improve value for shareholders.

Sega Sammy acquisition edges closer

Ultimately, this led to Sega Sammy Holdings, the gaming heavyweight formed by the merger of Sega and Sammy Corporation, agreeing to acquire GAN for $107.6m. The deal was last month given the green light by GAN shareholders. Sega Sammy is seeking to use GAN to support its online gambling expansion plans in the US.

As to how far GAN continues in 2024 as a standalone business, this remains to be seen. The Sega Sammy deal is expected to close before the end of the year, should it gain the necessary approvals.

If this is the case, GAN would merge with the Sega Sammy Creation arm of Sega Sammy and form a new special purpose company. GAN would be the surviving corporation after this merger.

Last year also saw long-serving Dermot Smurfit step down as CEO. Smurfit departed at the end of September. Seamus McGill, a non-executive director since 2014, was appointed as interim CEO before taking the role on a permanent basis last month.

B2B and B2C declines for GAN

Breaking down GAN’s performance, revenue fell across both B2B and B2C, leading to the overall decline.

B2C remains its primary source of revenue at $86.2m, but this was 1.5% behind the previous year. GAN said this was due to a decline in active customers in Latin America.

As for B2B, revenue here fell 20.2% to $43.2m in 2023. This decline, GAN said was down to a decrease in contractual revenue rates, related to the expiration of an exclusivity period with a B2B customer.

In terms of geographical performance, activity in Europe drew the most revenue at $47.8m. Latin American operations generated $39.9m in revenue, the US $31.8m and the rest of the world $9.9m.

Lack of impairment costs push net profit up

Looking at spending, total operating expenses for 2023 were down 52.2% at $159.7m. This sharp drop was due to the 2022 figures including $166.0m in impairment charges, whereas for 2023, there were no such costs.

Other spending amounted to $4.0m, meaning pre-tax loss for the year was $34.3m, which was an improvement on the previous year’s $193.6m loss.

GAN paid $138,000 in income tax, leaving a net loss of $34.4m, compared to $197.5m in 2022. However, adjusted EBITDA slipped from a positive of $6.0m to an $8.4m loss.

Similar story for GAN in Q4

As for the final quarter of the year, this made for similar reading with revenue falling 16.8% from $36.9m to $30.7m. B2C revenue was down 17.1% to $18.9m and B2B revenue slipped 16.3% to $11.8m.

Geographically, Europe revenue amounted to $12.1m, the US $8.5m, Latin America $7.1m and rest of the world $3.0m. Revenue was higher in all markets with the exception of Latin America. 

Turning to spending, operating costs stood at $39.3m, a stark improvement on 2022 when $182.4m was spent as a result of the impairment charges. Other spending reached $1.0m, meaning a pre-tax loss of $9.6m, compared to $145.5m in 2022.

GAN received $247,000 in tax benefit, meaning net loss was $9.4m, again much shorter than $147.7m in the previous year. Adjusted EBITDA, however, came in at a loss of $3.9m, which was wider than 2022’s $368,000 loss.

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