GAN Ltd (GAN)·Q2 2024 Earnings Summary

Executive Summary

• Q2 delivered modest top-line growth with clear operating leverage: revenue rose 5% YoY to $35.6M while operating costs fell sharply, driving a net loss improvement to $(1.7)M and positive Adjusted EBITDA of $3.7M .
• Mix shift favored B2B: B2B revenue grew to $13.0M (vs. $9.9M YoY) on Nevada expansion and revenue recognized from the exit of a B2B partner in Michigan; B2C was $22.6M as European strength was offset by Latin America softness and lower margins from unfavorable outcomes .
• No earnings call; merger execution is the near-term narrative: CFIUS clearance received in Q2, and closing with SEGA SAMMY remains targeted for late 2024/early 2025, with $1.97 per share cash consideration upon completion .
• Estimate comparison unavailable: S&P Global consensus data was not retrievable for Q2; use YoY and sequential comparisons and non-GAAP reconciliation to frame performance until coverage resumes (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

• B2B momentum and mix helped the quarter: B2B revenue increased to $13.0M, aided by Nevada expansion and revenue related to the exit of a partner in Michigan .
• Cost rationalization drove margin improvement: operating expenses declined to $25.1M from $32.8M YoY, supporting a swing to positive Adjusted EBITDA of $3.7M from $(2.0)M YoY .
• Management focus and tone: “We achieved top-line revenue growth in the second quarter while reducing our operating expenses…with a focus on improved profitability” — Seamus McGill, CEO .

What Went Wrong

• B2C headwinds persisted: B2C revenue of $22.6M was below $23.9M YoY as European strength was offset by reduced player activity in Latin America and lower margins from unfavorable event outcomes .
• B2C customer acquisition softness: B2C Active Customers declined, primarily due to limited customer acquisition in Latin America .
• No earnings call/Q&A: given the pending merger, management did not host a call, limiting incremental disclosure and guidance clarity for investors .

Financial Results

Core P&L and Margins (oldest → newest)

Q2 2024 Actual vs. Consensus

Segment Revenue and Contribution (oldest → newest)

KPIs (oldest → newest)

Notes on non-GAAP: Adjusted EBITDA excludes interest, taxes, D&A, share-based compensation, transaction costs and other infrequent items; see reconciliation in the release .

Guidance Changes

Earnings Call Themes & Trends

GAN did not host earnings calls for Q1 or Q2 2024 due to the pending merger; themes reflect management disclosures in press releases.

Management Commentary

• “I’m very pleased with the continued operational progress the team is delivering. We achieved top-line revenue growth in the second quarter while reducing our operating expenses. We continue to operate the business more efficiently with a focus on improved profitability.” — Seamus McGill, CEO .
• “Looking ahead, our focus remains unchanged. We will continue to optimize our overall cost structure and roll-out product enhancements. We continue to work through the gaming regulatory requirements for our planned merger with SEGASAMMY and anticipate a successful closing in late 2024 or early 2025.” — Seamus McGill, CEO .

Q&A Highlights

• No conference call or Q&A session was held in conjunction with Q2 2024 results due to the pending merger with SEGA SAMMY .

Estimates Context

• S&P Global Wall Street consensus for Q2 2024 revenue and EPS was unavailable via our data connector for GAN this quarter; therefore, comparisons vs. consensus cannot be provided. Until estimates resume, use YoY/seq comparisons and non-GAAP reconciliations to frame performance .

Key Takeaways for Investors

• Operating leverage story emerging: revenue +5% YoY to $35.6M alongside materially lower OpEx drove a swing to positive Adjusted EBITDA ($3.7M) and narrower net loss $(1.7)M .
• B2B strength is the anchor: B2B revenue rose to $13.0M on Nevada expansion and specific contract dynamics (Michigan partner exit), while take rate stabilized at 2.1% .
• B2C still volatile but margins improved: B2C sports margin rebounded to 8.7% (from 5.7% in Q1), though LatAm activity remained soft; monitor sustainability into seasonal sports calendars .
• Cash and runway: cash was $36.9M at quarter-end, essentially flat QoQ, supporting operations through merger milestones .
• Merger path is the central catalyst: CFIUS clearance in Q2 and ongoing gaming approvals keep closing targeted for late 2024/early 2025; consideration remains $1.97 per share cash upon completion .
• No call, limited incremental disclosure: absence of Q&A constrains near-term estimate visibility; watch regulatory approvals and any update on operational KPIs in subsequent releases .
• Trading setup: near-term stock action tied to regulatory gating items and any changes to expected closing terms/timeline; operationally, continued B2B expansion and B2C margin normalization are secondary supports .

Appendix: Additional Detail

Revenue by Geography (Q2 2024 vs. Q2 2023)

• United States: $10.45M vs. $7.30M .
• Europe: $14.12M vs. $12.11M .
• Latin America: $8.20M vs. $12.39M .
• Rest of World: $2.78M vs. $1.97M .

Non-GAAP Notes

• Adjusted EBITDA excludes interest expense (income), tax, D&A, share-based compensation, transaction costs, and other infrequent items; see reconciliation in Q2 release and methodology notes .