Gan Shares Fall On Q3 Earnings, Coolbet Acquisition

Shares of Gan Limited GAN are down after reporting third-quarter earnings and announcing an acquisition.

Q3 Earnings: Third-quarter revenue grew 86% year-over-year to $10.3 million, beating the street consensus of $10.04 million. Gross operating revenue grew 76% year-over-year to $142.3 million in the third quarter.

Gan reported $7.7 million in real money internet gaming revenue and $2.6 million in simulated gaming revenue.

Earnings came in at a loss of 17 cents per share, which doesn't compare to the estimate of 2 cents per share.

“Our new customer pipeline in the U.S. remains strong and we’re building exciting relationships that we believe have the ability to scale across our customers’ casino portfolios as more states come online in the future," the company said in a release.

The earnings release also included this notable quote: “During the third quarter of 2020, the company’s largest customer deployed their proprietary digital wallet for OSB and therefore GAN did not recognize OSB revenue attributable to this customer after August 31, 2020.”

This likely is in reference to Penn National Gaming Inc PENN, which did not use Gan for its Barstool Sportsbook.

“We look forward to the potential launch of multiple customers in Michigan, which are anticipated to go live in December,” said CEO Dermot Smurfit.

Related Link: Gan Shares Surge On Sports Betting, iGaming Partnership With Wynn In Michigan

Coolbet Acquisition: Along with quarterly earnings, Gan announced the acquisition of Coolbet, a B2C iGaming operator.

Gan is paying 149 million Euro split between 80 million Euro in cash and the rest in Gan shares.

Coolbet has 26 million Euro in trailing 12-month revenue and saw CAGR of 46% from 2018 to 2020. The company has 18.6 million Euro in revenue for the first nine months of 2020, split evenly between sports betting and casino.

Coolbet counts Norway, Sweden, Finland, Iceland, Estonia and Chile as the market for its proprietary platform. The acquisition is expected to bring additional scale to Gan going forward including solutions for Gan’s expansion in the U.S.m market in 2021.

What’s Next: Gan reaffirmed guidance for the full fiscal year with an estimated $37 million to $39 million versus the consensus estimate fo $38.1 million.

Shares of Gan are down 7% to $16.82 in after-hours trading.