Fall in B2C Revenue Leads to Drop in Overall GAN Earnings in Q1
GAN has revealed that it suffered a 12.5% fall in revenue in Q1 to $30.7 million due to a reduction in its B2C business but that its acquisition by Sega Sammy remains on track.
GAN revenue falls 12.5% in the first quarter of 2024.
LISTEN TO THIS ARTICLE:In the quarter, B2C revenue fell 23.4% but B2B revenue increased 8.9%. Nonetheless, with B2C being the company’s main revenue source, an overall decline was inevitable. GAN did manage to reduce operating costs in Q1, but it still saw a net loss.
Q1 saw strong B2B revenue growth of nearly 10% as well as successful ongoing cost initiatives to reduce our overall operating expenses by 20%. Our B2C revenues were impacted by a lower sports margin, though we are excited about the pending rollout of new products such as pre-built parlay bets and the upcoming major events like the European Championship as well as Copa America – one of the largest soccer tournaments in Latin America where Coolbet is particularly strong.
Mixed Quarterly Results
In Q1, revenue from the B2C sector dropped from $28.5 million to $18.3 million. This fall was primarily due to a drop in gaming activities, attributed to decreased player activity and lower sports margins. Furthermore, there was a 13.6% reduction in active B2C customers to 222,000.
However, the B2B sector was more positive with revenue increasing from $11.3 million to $12.3 million. GAN attributed this growth primarily to the expansion of its B2B offerings in Nevada.
Of the total B2C revenue, $9.7 million came from platform and content license fees, a 12.8% increase. An additional $2.7 million in B2C revenue stemmed from development services and other activities, remaining steady year-on-year.
In terms of geographical performance, Europe remained the largest revenue contributor, though there was a decrease of 8.7% to $11.6 million. In contrast, revenue from the US increased by 7.1% to $9.1 million, while revenue from the LatAm gambling market saw a drop of 38.9%. Revenue from other global operations rose by 14.8%, amounting to $3.1 million.
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Lower Costs Fail to Prevent Net Loss
GAN’s operating costs decreased, with total expenses falling 17.3% to $34 million. This was primarily due to lower compensation costs and a reduced workforce, achieved through ongoing cost-saving initiatives. Additionally, GAN reported a decrease in depreciation and amortization, as intangible assets were fully amortized in the previous year.
The company also paid $1.1 million in finance costs, resulting in a pre-tax loss of $4.4 million for the quarter, compared to a profit of $1.5 million in 2023. It is important to note that the previous year's profit included a one-time gain of $9.3 million from an amended content licensing agreement.
After an income tax payment of $249,000, GAN reported a net loss of $4.2 million for Q1, a shift from a net profit of $1.5 million in 2023. Furthermore, adjusted EBITDA was a loss of $569,000, in contrast to a positive of $39,000 last year.
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