Group revenue for the 12 months to 31 December 2023 was $129.4m (£101.1m/€118.3m), signaling an 8.6% decrease from the $141.5m that GAN reported in the preceding year. In a year that could seemingly be described as fluctuating fortunes for GAN, positive net profit growth was tempered by a decrease in revenue. Yet it was the company’s strategic review initiated in Q1 which captured the attention of stakeholders, exploring “a range of strategic alternatives” to enhance shareholder value.
This strategic reevaluation culminated in a significant event for GAN when Sega Sammy Holdings—a consolidated giant in the gaming world, born from the merger of Sega and Sammy Corporation—agreed to buy GAN for $107.6m. GAN shareholders last month signaled their approval for the deal. Upon completion, the acquisition by Sega Sammy is expected to bolster its push into the U.S. online gambling market.
As 2024 dawns, the future of GAN as an independent entity remains uncertain. Completion of the Sega Sammy transaction is anticipated before year-end, pending regulatory consents. Should the acquisition proceed without a hitch, GAN would merge with Sega Sammy Creation and become part of a newly constituted special purpose company, with GAN as the surviving corporation.
2023 also witnessed a significant leadership transition for GAN. Dermot Smurfit, a stalwart CEO departed at the close of September. GAN’s Board then appointed Seamus McGill, who has been serving as a non-executive director since 2014, as interim CEO, with McGill securing the position permanently last month.
A closer look at the year’s financial performance reveals a revenue downturn in both B2B and B2C segments that contributed to the overall dip. B2C, as GAN’s major revenue contributor, regressed slightly by 1.5% to $86.2m, primarily due to a reduction in active customer base within Latin America.
The B2B sector experienced a more pronounced revenue contraction of 20.2%, coming in at $43.2m for the year. The root cause, according to GAN, was a reduction in contractual revenue rates following the end of an exclusivity period with a prominent B2B customer.
Geographically segmented performance showed Europe as the leader, generating $47.8m, while Latin American operations brought in $39.9m, the US delivered $31.8m, and the rest of the world $9.9m.
Operational spending witnessed a precipitous fall, with total operating expenses in 2023 amounting to $159.7m, a 52.2% decrease from the previous year. This drop can be largely attributed to the absence of the significant impairment charges—totalling $166.0m—that were booked in 2022. Additional expenses accounted for $4.0m, resulting in a pre-tax loss of $34.3m for the year, marking a notable improvement over the prior year’s $193.6m loss.
After accounting for income taxes paid amounting to $138,000, GAN’s net loss stood at $34.4m, comparatively better than the net loss of $197.5m in 2022. However, adjusted EBITDA told a different story, swinging from a positive $6.0m in the previous year to a loss of $8.4m.
The year’s final quarter echoed the broader annual trends with revenue decreasing by 16.8% from $36.9m to $30.7m. B2C revenue decreased to $18.9m and B2B revenue slid to $11.8m.
Revenue on a regional basis for the quarter varied, with Europe reporting $12.1m, the US $8.5m, Latin America $7.1m, and the rest of the world $3.0m. All markets except Latin America showed improved revenues.
On the expense sheet, operating costs were significantly less at $39.3m, compared to the staggering $182.4m in 2022 due to the prior year’s impairment charges. Other expenses reached $1.0m, bringing the pre-tax loss for the quarter to $9.6m. This was markedly lower than the $145.5m loss of 2022. Yet, GAN saw its adjusted EBITDA loss widen to $3.9m from the previous year’s $368,000 loss, after receiving a $247,000 tax benefit, leading to a net quarterly loss of $9.4m.
As GAN strides into a potentially transformative 2024, the outcome of the Sega Sammy deal and its impact on GAN’s operational framework and financial fortunes is eagerly anticipated by investors and industry analysts alike.
