Online gaming technology provider GAN says it recorded its first ever ‘clean’ earnings in the first half of 2017 following significant investment in the US casino market.
On Thursday, GAN released its H1 earnings report, which showed gross revenue of £18.6m in the first six months of 2017, up 17% from the same period last year. Net revenue gained 6% to £4.1m but the company still booked a net loss of £2m, although that’s an improvement over the £2.3m GAN lost in H1 2016.
GAN (formerly known as GameAccount Network) chose to celebrate its maiden ‘clean’ earnings – basically, a non-GAAP measure that takes regular EBITDA and subtracts all items the company considers non-recurring one-offs – of £24k versus a £500k loss in H1 2016.
Nearly two-thirds of GAN’s H1 revenue came via the US market, which is primarily driven by brick-and-mortar casinos signing up for GAN’s Simulated Gaming online free-play casino, although GAN does supply real-money gambling technology to Betfair’s New Jersey-licensed gambling site.
GAN launched Simulated Gaming with five new US clients in H1, bringing the overall total of licensees to 13. GAN also inked a second real-money New Jersey client that the company expects will launch in H1 2018 pending regulatory approval. However, this client is Atlantic City’s TEN casino (formerly Revel), which has been the recent subject of acquisition talk but remains mothballed at present.
GAN also shed a little more light on the “Overseas Internet Casino” deal it inked with an unidentified “major US casino operator” in September 2016. While the operator’s identity remains a state secret, GAN now says the overseas site will launch in Q4 2017.
GAN previously hinted that its mystery client was already a customer, and a “major multi-property casino operator in a regional US gaming market” with $1b in annual revenue. For the record, the companies on GAN’s client roster that fit that description include Station Casinos, JACK Entertainment, Isle of Capri and Oklahoma’s Chickasaw Nation.
GAN CEO Dermot Smurfit claimed GAN will benefit from the unnamed casino operator’s “material marketing investment.” Since H1 ended, GAN says it has received £2.2m in cash payments related to the launch of this online casino and a “2016 claim to ongoing research and development activity.”
GAN says it recently established a wholly-owned subsidiary in Tel Aviv to “support user acquisition marketing worldwide for diverse GAN clients.”
Real-money online gambling operations in Italy accounted for 31% of GAN’s H1 revenue and Italy-facing operations improved by 33% year-on-year. However, these gains contributed to a 22% rise in GAN’s royalty expenses related to distribution of third-party content.
Smurfit predicted a continuation of GAN’s favorable earnings trend in the second half of 2017 as returns roll in from those five new US Simulated Gaming clients.