UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) March 25, 2021

 

GAN Limited

(Exact name of registrant as specified in its charter)

 

Bermuda   001-39274   Not Applicable
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (I. R. S. Employer
Identification No.)

 

400 Spectrum Center Drive

Suite 1900

Irvine, CA 92618

(Address of principal executive offices, including ZIP code)

 

(702) 964-5777

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Ordinary Shares, $0.01 par value   GAN   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

 

 

 
 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On March 25, 2021, GAN Limited (the “Company”) issued an earnings release announcing its financial results for the year ended December 31, 2020. A copy of the earnings release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information contained in this Item 2.02, including the related information set forth in the earnings release attached hereto as Exhibit 99.1 and incorporated by reference herein, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by the specific reference in such filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
Number
  Description
99.1   Press Release, dated March 25, 2021

 

 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: March 25, 2021 GAN Limited
   
  /s/ Karen E. Flores
  Karen E. Flores
  Chief Financial Officer

 

 

 

Exhibit 99.1

 

 

 

GAN Reports Fourth Quarter and Full Year 2020 Financial Results

 

Multiple new client launches and product portfolio expansion support continued strong momentum

 

Integration of Coolbet’s best-in-class B2B sportsbook engine remains on target for mid-year launch in the U.S.

 

Strong start to the year supports 2021 outlook for revenue of $100 - $105 million

 

Irvine, California | March 25, 2021: GAN Limited (the “Company” or “GAN”) (NASDAQ: GAN), a leading full-service Internet gaming software-as-a-service provider to the real money Internet gaming, online sports betting, and simulated gaming industries, today announced its operating and financial results for the fourth quarter and year ended December 31, 2020.

 

Fiscal 2020 Business Highlights:

 

  Full year total revenue up 17% to $35.2 million, or 37% excluding business-to-consumer (“B2C”) related revenue that ceased in 2020.
     
  Annual Gross Operator Revenue (“GOR”)(1) increased by 73% to $545 million year-over-year.
     
  Real money Internet gaming (“RMiG”) up 6% to $25.6 million in 2020, or 28% excluding B2C-related revenue that ceased in 2020.
     
  Simulated gaming (“SIM”) revenue up 66% to $9.5 million in 2020.
     
  Launched six new client partnerships in 2020 without any new state markets, including two RMiG and four SIM partners.
     
  Secured seven new client deals, including landmark Wynn Resorts 10-year deal in Michigan and multi-state deal with Churchill Downs, all of which bring multi-year, recurring revenue opportunities.
     
  Invested in the future through acquisition of Coolbet, $167.6 million in capital raises and addition of over 150 full time employees to support future growth.
     
  Integration of Coolbet’s sports betting technology and international B2C operations on schedule for a mid-year launch.
     
  Company expects full year 2021 revenue of $100 - $105 million, including first quarter revenue of $24 - $25 million.

 

 
 

 

Dermot Smurfit, CEO of GAN stated:

 

“2020 was a highly successful, foundation-building year for GAN. We expanded our top-line, doubled our new client launches, signed numerous new customers that we believe will support stable and growing recurring revenue, and rounded out our product portfolio through multiple new content partnerships and the critical acquisition of Coolbet. Our annual revenue increased 17% in 2020, but the key recurring components of that, our U.S. RMiG and Simulated offerings, saw revenue growth of 92% and 77%, respectively. We also invested in our infrastructure and have fully converted to U.S. GAAP during the fourth quarter, which completed our journey to becoming a public company listed and based in the U.S. Most importantly, we filled a significant need in our product offering through Coolbet’s best-in-class sportsbook engine, which positions GAN as a full-service B2B solution for real money gaming in the U.S. and as a vertically integrated B2C player in select international markets.”

 

“We entered 2021 with a strong foundation to build upon and positive business momentum. The first quarter of 2021 has started particularly strong as we launched multiple clients in the state of Michigan, which exceeded both our expectations and those of our customers. We also signed our first sportsbook engine customer during the first quarter, and continue to entertain significant interest from both current and prospective clients for our new sportsbook offering and its associated managed trading services. Our integration of the Coolbet team and technology are on schedule and we continue to forecast a midyear launch of the B2B sportsbook technology and service. Lastly, we further validated our intellectual property through multiple client wins, including the recent license of our patented iBridge integration framework for 10 years, at a value of roughly $75 per reward card. This agreement set a new bar for its value per rewards card, and we expect to leverage and protect this strategic asset much more actively in 2021 and beyond. We have the right strategy, an industry leading platform that we enhance each and every day, and a strong financial position that will support our growing recurring revenue-based model and help us drive long-term value for our shareholders.”

 

GAN Limited

Key Financial Highlights

(Unaudited, in thousands)

 

    Three Months Ended
December 31,
    Year Ended
December 31,
 
    2020     2019     2020     2019  
Revenue                                
RMiG revenue   $ 5,978     $ 9,291     $ 25,610     $ 24,228  
SIM revenue     2,922       1,400       9,549       5,743  
Total revenue   $ 8,900     $ 10,691     $ 35,159     $ 29,971  
                                 
Profitability Measures                                
RMiG gross profit margin     62 %     95 %     71 %     77 %
SIM gross profit margin     55 %     62 %     69 %     60 %
Net income (loss)   $ (8,329 )   $ 3,388     $ (20,217 )   $ 2,004  
Adjusted EBITDA(4)   $ (6,008 )   $ 5,102     $ (2,264 )   $ 7,900  
                                 
Key Performance Indicators                                
Gross Operator Revenue(1) (in millions)   $ 131.8     $ 120.8     $ 545.2     $ 315.8  
Active Player-Days(2) (in millions)     7.2       9.0       29.3       24.5  
ARPDAU(3)   $ 18.31     $ 13.43     $ 18.58     $ 12.90  

 

 
 

 

Full Year 2020 Compared to Full Year 2019

 

  Total revenue of $35.2 million increased 17% compared to $30.0 million, driven by growth in recurring revenue-oriented services including RMiG business-to-business (“B2B”) and SIM revenues. In 2020, $0.3 million of B2C revenue was recognized compared to $4.5 million in 2019, the latter of which was related to a partnership with WinStar World Casino (“B2C/WinStar impact”) that ceased in 2020. Excluding those impacts, total revenue increased by 37% year-over-year in 2020.
     
  GOR was $545.2 million in fiscal 2020, which increased 73% compared to $315.8 million, driven by 273% growth in U.S. iGaming, partially offset by a 21% decline in online sports betting as a result of the FanDuel sports migration effective September 1, 2020 and COVID-19’s impact on the professional sports calendar in 2020.
     
  RMiG revenue increased 6% to $25.6 million compared to $24.2 million in 2019, driven by new client launches and GOR expansion. Excluding the B2C/WinStar impact, RMiG revenue increased 28% year-over-year.
     
  SIM revenue increased 66% to $9.5 million compared to $5.7 million, driven by four new client launches, most notably Penn National, in anticipation of future legislation changes in states where RMiG is yet to arrive.
     
  Gross profit of $21.7 million compared to $18.0 million, driven by growth in recurring revenue-oriented services including RMiG B2B and SIM revenues.
     
  Net loss was $20.2 million, or $0.75 per diluted share, compared to net income of $2.0 million, or $0.09 per diluted share, driven by increased operating expenses related to new hiring to meet client demand ($6.9 million), share based compensation and related expenses ($10.2 million), increased professional services incurred in relation to our initial public offering, corporate infrastructure and expansion projects ($5.8 million), and expenses and transaction costs related to the acquisition of Coolbet ($1.0 million).
     
  Adjusted EBITDA loss of $2.3 million compared to Adjusted EBITDA of $7.9 million in the prior year driven by increased operating expenses and transaction costs related to the acquisition of Coolbet.
     
  Operating costs and expenses (excluding cost of revenue) for fiscal 2020 were $41.2 million compared to $16.0 million for 2019. The increase was primarily attributable to increased administrative expenses associated with the U.S. listing related expenses, current year hiring to meet customer demand, as well as the acquisition of Coolbet.
     
  Cash and cash equivalents were $152.7 million at December 31, 2020, compared to $10.3 million at December 31, 2019. The increase in cash and cash equivalents primarily reflect $57.4 million in net cash proceeds from the Company’s U.S. initial public offering, which closed in May 2020, as well as $99.4 million in net proceeds received from the Company’s follow-on offering, which was executed to complete the acquisition of Coolbet in early January 2021.

 

 
 

 

Fourth Quarter 2020 Compared to Fourth Quarter 2019

 

  Total revenue of $8.9 million declined 17%, compared to $10.7 million last year, driven primarily by the aforementioned B2C/WinStar impact and a decline in sportsbook related RMiG revenue due to the FanDuel migration, partially offset by strong growth in SIM. Excluding the B2C/WinStar impact, total revenue increased 43% compared to 2019.
     
  GOR of $131.8 million increased 9% compared to $120.8 million mainly due to growth in U.S. iGaming, partially offset by a decline in online sports betting as a result of the FanDuel migration.
     
  RMiG revenue of $6.0 million declined 36% compared to $9.3 million driven by the B2C/WinStar impact. Excluding the B2C/WinStar impact, RMiG revenue increased 23% compared to the fourth quarter of 2019.
     
  Gross Profit of $4.5 million decreased 49% compared to $8.9 million driven by the B2C/WinStar impact.
     
  Net loss of $8.3 million compared to net income of $3.4 million driven by increased operating costs in the current year, including costs associated with the Company’s U.S. listing related expenses, the acquisition of Coolbet and the B2C/WinStar revenue that was recognized in the fourth quarter of 2019.
     
  Adjusted EBITDA loss of $6.0 million compared to Adjusted EBITDA of $5.1 million in the prior year. The decrease was driven by increased operating costs in the current year and the B2C/WinStar impact.
     
  Operating costs and expenses (excluding cost of revenue) were $12.8 million compared to $5.9 million. The increase was primarily attributable to current year hiring to meet customer demand, as well as the acquisition of Coolbet and costs related to regulatory requirements.

 

2021 Outlook

 

The Company expects full year 2021 revenue to be between $100 million and $105 million, and the first quarter 2021 revenue to be between $24 million and $25 million.

 

Karen Flores, CFO of GAN concluded:

 

“Our first quarter has started off very strong across all of our business lines. This should support strong growth in 2021 and we expect to almost treble our top-line performance, inclusive of strong organic growth and Coolbet’s contribution. We also expect to drive operating leverage that will yield stronger profitability results year-over-year. We remain confident that we will continue to onboard new customers as well as deepen our relationship with our existing customers, and we look forward to the launch of new states in 2021 to further support our growth trajectory. In the meantime, we are acutely focused on the integration of Coolbet to round out our B2B offering. We maintain a strong financial position and have a differentiated IP portfolio and management team that will continue to support and drive our multiprong growth strategy.”

 

 
 

 

Conference Call Details

 

Date/Time: Thursday, March 25, 2021, at 4:30 PM EST
Webcast: https://www.webcast-eqs.com/ganlimited20210325/en
U.S. Toll-Free Dial In: (877) 407-0989
International Dial In: (201) 389-0921

 

To access the call, please dial in approximately ten minutes before the start of the call. An accompanying slide presentation will be available in PDF format on the “Events & Presentations” page of the investor relations portion of the Company’s website (http://investors.gan.com) after issuance of the earnings release.

 

About GAN Limited

 

GAN is a leading business-to-business supplier of Internet gambling software-as-a-service solutions predominantly to the U.S. land-based casino industry. Coolbet, a division of GAN, is a market-leading operator of proprietary online sports betting technology with market leadership positions in selected European and Latin American markets. GAN has developed a proprietary Internet gambling enterprise software system, GameSTACK™, which it licenses to land-based casino operators as a turnkey technology solution for regulated real money Internet gambling, encompassing Internet gaming, Internet sports gaming and virtual Simulated gaming.

 

Forward-Looking Statements

 

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding the Company’s 2021 revenue guidance, the Company’s anticipated trends in revenues (including new customer launches) and operating expenses, the anticipated impact of the COVID-19 pandemic on the Company’s operations and industry, the resilience of the Company’s business in the pandemic, the anticipated launch of regulated gaming in new U.S. states, the expected integration of Coolbet’s sports betting technology and international B2C operations, the anticipated launch timing of the B2B sportbook technology solution in the U.S., the recurring nature of the Company’s revenue relationships with customers and the Company’s ability to leverage its intellectual property portfolio, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements for any reason, except as required by law.

 

 
 

 

Key Performance Indicators and Non-GAAP Financial Measure

 

(1) The Company defines Gross Operator Revenue as the sum of its corporate customers’ gross revenue from Simulated gaming, gross gaming revenue from real money regulated iGaming, and gross sports win from real money regulated sports betting. Gross Operator Revenue, which is not comparable to financial information presented in conformity with generally accepted accounting principles in the United States of America (“GAAP”), gives management and users an indication of the extent of transactions processed through the Company’s corporate customers’ platforms and allows management to understand the extent of activity that the Company’s platform is processing.

 

(2) The Company defines Active Player-Days as unique individuals who log on and wager each day (either wagering with real money or playing with virtual credits used in Simulated gaming), aggregated during the respective period. By way of illustrative example: one (1) unique individual logging in and wagering each day in a single calendar year would, in aggregate, represent 365 Active Player-Days. Active Player-Days provides an indicator of consistent and daily interaction that individuals have with the Company’s platforms. Active Player-Days allows management and users to understand not only total users who interact with the platform but gives an idea of the frequency to which users are interacting with the platform, as someone who logs on and wagers multiple days are weighted heavier during the period than the user who only logs on and wagers one day.

 

(3) The Company defines Average Revenue per Daily Active User (“ARPDAU”) as Gross Operator Revenue divided by the identified number of Active Player-Days. This measure allows management to measure the value per daily user and track user interaction with the platforms, which helps both management and users of financial statements understand the value per user that is driven by marketing efforts and data analysis obtained from the Company’s platforms.

 

(4) Adjusted EBITDA is a non-GAAP financial measure that is provided as supplemental disclosure which is defined as net income (loss) before interest costs, income taxes, depreciation and amortization, share-based compensation expense and related expense, impairments, initial public offering related costs and other items which our Board of Directors considers to be infrequent or unusual in nature.

 

This presentation uses certain non-GAAP financial measures as defined in Securities and Exchange Commission rules. The Company reports financial results in conformity with GAAP, and also communicates with investors using certain non-GAAP financial measures. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures. These non-GAAP financial measures are intended to supplement the presentation of the Company’s financial results that are prepared in accordance with GAAP. For example, management uses Adjusted EBITDA to measure its financial performance. Specifically, it uses Adjusted EBITDA (1) as a measure to compare its operating performance from period to period, (2) as it removes the effect of items not directly resulting from core operations and as a means of assessing its core business performance against others in the industry, because it eliminates some of the effects that are generated by differences in capital structure, depreciation, tax effects and unusual and infrequent events. The presentation of Adjusted EBITDA is not intended to be used in isolation or as a substitute for any measure prepared in accordance with GAAP. Adjusted EBITDA, as defined, may not be comparable to similarly titled measures used by other companies in the industry, and Adjusted EBITDA may exclude financial information that some investors may consider important in evaluating the Company’s performance. Adjusted EBITDA, as calculated by the Company, along with a reconciliation to net income (loss), the comparable U.S. GAAP equivalent measure, is included below.

 

Investor Contacts:

 

GAN

Jack Wielebinski

Head of Investor Relations

(214) 799-4660

[email protected]

 

Alpha IR Group

Ryan Coleman or Ashley Gruenberg

(312) 445-2870

[email protected]

 

 

 
 

 

GAN Limited

Consolidated Statements of Operations

(Unaudited, in thousands, except share and per share amounts)

 

    Three Months Ended
December 31,
    Year Ended
December 31,
 
    2020     2019     2020     2019  
Revenue                                
Platform and content fees   $ 6,939     $ 9,309     $ 26,208     $ 20,011  
Development services and other     1,961       1,382       8,951       9,960  
Total revenue     8,900       10,691       35,159       29,971  
                                 
Operating costs and expenses                                
Cost of platform and content fees (1)     2,432       2,760       7,787       6,630  
Cost of development services and other (1)     1,141       (2,389 )     2,684       473  
Impairment of internal-use software     -       626       -       626  
Sales and marketing     1,264       955       5,046       3,487  
Product and technology     2,939       1,310       11,032       3,413  
General and administrative (1)     8,519       3,052       24,825       8,435  
Depreciation and amortization     884       829       3,257       4,316  
Total operating costs and expenses     17,179       7,143       54,631       27,380  
                                 
Operating income (loss)     (8,279 )     3,548       (19,472 )     2,591  
Other (income) expense, net     16       (5 )     392       13  
Income (loss) before income taxes     (8,295 )     3,553       (19,864 )     2,578  
Income tax expense     34       165       353       574  
Net income (loss)   $ (8,329 )   $ 3,388     $ (20,217 )   $ 2,004  
                                 
Income (loss) per share                                
Basic   $ (0.27 )   $ 0.16     $ (0.75 )   $ 0.09  
Diluted   $ (0.27 )   $ 0.14     $ (0.75 )   $ 0.09  
                                 
Weighted average ordinary shares outstanding                                
Basic     30,644,044       21,422,476       27,006,058       21,367,948  
Diluted     30,644,044       24,163,105       27,006,058       23,420,361  

 

(1) Excludes depreciation and amortization

 

 
 

  

GAN Limited

Consolidated Balance Sheets

(Unaudited, in thousands, except share amounts)

 

    December 31,  
    2020     2019  
ASSETS            
Current assets                
Cash   $ 152,654     $ 10,279  
Accounts and other receivables, net     8,056       5,604  
Prepaid expenses     1,912       575  
Research and development tax credit receivable     -       1,127  
Other current assets     874       1,181  
Total current assets     163,496       18,766  
                 
Property and equipment, net     1,320       303  
Capitalized software development costs, net     6,648       4,784  
Operating lease right-of-use assets     577       1,051  
Intangible assets, net     468       348  
Other assets     737       934  
Total assets   $ 173,246     $ 26,186  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities                
Accounts payable   $ 4,707     $ 2,645  
Accrued expenses:                
Compensation and benefits     3,958       1,402  
Royalties     1,984       1,294  
Other     2,596       461  
Contract liabilities     1,083       3,023  
Operating lease liabilities     262       289  
Other current liabilities     2,722       1,179  
Total current liabilities     17,312       10,293  
                 
Operating lease liabilities     313       693  
Other noncurrent liabilities     57       55  
Total liabilities     17,682       11,041  
                 
Stockholders’ equity                
Ordinary shares, $0.01 par value, 100,000,000 shares authorized, 36,635,362 and 21,486,059 shares issued and outstanding at December 31, 2020 and 2019, respectively     365       215  
Additional paid-in capital     203,842       40,862  
Accumulated deficit     (45,766 )     (23,024 )
Accumulated other comprehensive loss     (2,877 )     (2,908 )
Total stockholders’ equity     155,564       15,145  
Total liabilities and stockholders’ equity   $ 173,246     $ 26,186  

 

 
 

 

GAN Limited

Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

    Year Ended December 31,  
    2020     2019  
Cash Flows From Operating Activities                
Net income (loss)   $ (20,217 )   $ 2,004  
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
    10,135       5,733  
Changes in operating assets and liabilities     3,734       (2,149 )
Net cash provided by (used in) operating activities     (6,348 )     5,588  
                 
Cash Flows From Investing Activities                
Expenditures for capitalized software development costs     (4,388 )     (2,739 )
Purchase of intangible assets     (262 )     -  
Purchases of property and equipment     (1,269 )     (229 )
Net cash used in investing activities     (5,919 )     (2,968 )
                 
Cash Flows From Financing Activities                
Proceeds received from issuance of ordinary shares in initial public offering, net     57,445       -  
Proceeds received from issuance of ordinary shares in follow-on offering, net     99,442       -  
Payment of offering costs     (1,974 )     -  
Proceeds from exercise of stock options     2,474       332  
Cash consideration paid to GAN plc shareholders     (2,525 )     -  
Principal payments on finance leases     (154 )     (86 )
Net cash provided by financing activities     154,708       246  
                 
Effect of foreign exchange rates on cash     (66 )     310  
                 
Net increase in cash     142,375       3,176  
Cash, beginning of year     10,279       7,103  
Cash, end of year   $ 152,654     $ 10,279  

 

 
 

 

GAN Limited

Segment Revenue and Gross Profit

(Unaudited, in thousands)

 

    Three Months Ended
December 31,
    Year Ended
December 31,
 
    2020     2019     2020     2019  
RMiG                                
Platform and content fees   $ 4,324     $ 8,161     $ 18,030     $ 15,396  
Development services and other     1,654       1,130       7,580       8,832  
Total RMiG revenue     5,978       9,291       25,610       24,228  
                                 
SIM                                
Platform and content fees     2,615       1,148       8,178       4,615  
Development services     307       252       1,371       1,128  
Total SIM revenue     2,922       1,400       9,549       5,743  
                                 
Total revenue   $ 8,900     $ 10,691     $ 35,159     $ 29,971  
                                 
RMiG                                
Revenue   $ 5,978     $ 9,291     $ 25,610     $ 24,228  
Cost of revenue (1)     2,250       (155 )     7,486       4,833  
Impairment of internal-use software     -       626       -       626  
RMiG segment gross profit     3,728       8,820       18,124       18,769  
Segment gross profit margin %     62 %     95 %     71 %     77 %
                                 
SIM                                
Revenue     2,922       1,400       9,549       5,743  
Cost of revenue (1)     1,323       526       2,985       2,270  
SIM segment gross profit     1,599       874       6,564       3,473  
Segment gross profit margin %     55 %     62 %     69 %     60 %
                                 
Cost of revenue - depreciation and amortization     778       808       2,968       4,253  
Total gross profit   $ 4,549     $ 8,886     $ 21,720     $ 17,989  
Gross profit margin %     51 %     83 %     62 %     60 %

 

(1) Excludes depreciation and amortization

 

 
 

 

GAN Limited

Revenue by Geography

(Unaudited, in thousands)

 

    Three Months Ended
December 31,
    Year Ended
December 31,
 
    2020     2019     2020     2019  
Revenue by geography (1)                                
United States   $ 7,394     $ 5,048     $ 29,351     $ 20,935  
Italy     1,477       1,284       5,191       4,599  
U.K. and Channel Islands     10       4,355       263       4,359  
Rest of the world     19       4       354       78  
Total   $ 8,900     $ 10,691     $ 35,159     $ 29,971  

 

(1) Revenue is segmented based upon the location of the legal entity of the Company’s customer

 

GAN Limited

Adjusted EBITDA

(Unaudited, in thousands)

 

    Three Months Ended
December 31,
    Year Ended
December 31,
 
    2020     2019     2020     2019  
                         
Net income (loss)   $ (8,329 )   $ 3,388     $ (20,217 )   $ 2,004  
Income tax expense     34       165       353       574  

Other (income) expense, net

    16       (5 )     392       13  
Depreciation and amortization     884       829       3,257       4,316  
Share-based compensation and related expense     1,387       99       10,181       367  
Initial public offering transaction related     -       -       2,831       -  
Tax related provisions     -       -       939       -  
Impairment of internal-use software     -       626       -       626  
Adjusted EBITDA (Loss)   $ (6,008 )   $ 5,102     $ (2,264 )   $ 7,900  
Adjusted EBITDA margin %     (68 %)     48 %     (6 %)     26 %