Good afternoon, everyone. GAN’s Fourth Quarter and Full-Year 2022 Earnings Release was issued today after the market closed and is posted on the Company’s website at gan.com. With me today are Dermot Smurfit, President and CEO; and Brian Chang, Interim Chief Financial Officer.

I’d like to remind our audience today that we may make forward-looking statements on the call which are protected under Safe Harbor afforded by the Federal Securities laws, and in each case are qualified by the forward-looking disclaimers contained in our earnings release.

Please refer to our filings with the SEC to understand how we calculate any of the metrics discussed in today’s call. With that, I’ll turn the call over to our CEO, Dermot Smurfit. Dermot, go ahead please..

Thank you, Bobby, and good afternoon, everyone. I look forward to discussing our fourth quarter and full-year 2022 financial performance and operating segment results.

As major agenda items, we will also discuss the strategic review process we are announcing today, our recent successful sports betting deployment for Wynn Resorts and our amended Ainsworth exclusive iGaming content distribution partnership that will help reduce our future cash commitments by $15 million.

Each of these items underscores a refocus of our business towards segments where we can truly win, notably, B2B GAN Sports; and in the B2C division, Latin American Operations and, of course, related items in our earnings release. Taking a brief look back, our full-year 2022 revenue increased 15% to $142 million versus $124 million in 2021.

The growth was driven by both our B2C segment or coolbet.com and our domestic B2B segment. The increased growth in revenue and cost controls led to $6 million of positive adjusted EBITDA as compared to a loss of $3 million in the prior year.

Looking at the fourth quarter, the momentum in our revenue growth continued as we generated $36.9 million of revenue, an increase of 21% from the prior year. The growth was enabled by both our B2B and B2C segments. In the B2C segment, active customers grew nearly 50% to 331,000 in the quarter.

This was enabled by a strong World Cup, where the team delivered a masterful performance to support our B2B clients and of course our B2C end user customers before and during the event.

During the World Cup event, we saw New Depositing Customers or NDCs of approximately 47,000, driven by the Latin American region, together with approximately $42 million in sports bets wagered and the final between Argentina and France actually resulted in a record $2 million in sports betting handle for a single event.

We are optimistic that the new customers we gained during the tournament and the positive experience we are able to deliver will ensure they remain loyal players even after the World Cup.

However, while adjusted EBITDA improved to loss of $0.4 million versus $6 million in the prior year on cost saving measures, we didn’t deliver positive results and we must continue to improve our operations and cost containment efforts. In 2023, we are off to an exciting start on several operational fronts.

Firstly, we launched GAN Sports with WynnBET in Massachusetts in retail in January, and earlier this month on mobile on March 10, for 2023. Secondarily, Coolbet launched in the Mexican-regulated market, a country with a large and growing $700 million-plus TAM where we can leverage our proven success in the LatAm regions.

And thirdly, we are making progress on our new Version 2 GameSTACK 2.0 platform, which will result in significant cost savings. We expect to have this up and running by the second half of 2023. Now moving to our financial outlook for the year and the first quarter.

For the first quarter, we expect revenue to be in the range of $37 million to $39 million. Unfortunately, for the full-year 2023, we are unable to provide guidance at this time given the nature of our strategic review process. As a result, the variability of potential outcomes prevents us from providing an outlook within a reasonable range.

However, we do expect to be in a good position to provide future guidance for the year upon the resolution of these discussions hopefully in the very near future.

I’ll now turn over the call to our Interim Chief Financial Officer, Brian Chang, to provide more color on financial and accounting items, and then I’ll conclude with additional color on strategy and the strategic review process.

Brian?.

Thank you, Dermot, and good afternoon, everyone. I’ll just briefly touch on a few highlights or items worth noting from our fourth quarter results. One, cash increased by $4.1 million to $45.9 million in the quarter, driven by strong results and activity generated from the World Cup in our B2C segment.

Two, G&A expense was consistent compared to prior year, however, reduced as a percentage of revenue by 800 basis points. Three, we recognized an adjusted EBITDA loss of $0.4 million for the quarter.

Our adjusted EBITDA was impacted by incremental costs within our product and technology group that did not qualify for capitalized development [treatment]. Four, FX in the quarter did not materially impact us as the majority of our foreign revenues and expenses are aligned and constant currency exposure was a wash.

Moving on, we recorded $137 million related to non-cash impairment charges in the quarter across goodwill, intangible assets and capitalized development costs. The impairment charges were a result of changes to the company’s 2023 budget and long-range plan as a result of material reductions in our expected future cash flows from our B2B segment.

A strategic decision to not pursue and invest further in our exclusive content strategy and a reassessment of our growth strategy related to the B2C segment. The results of the impairment charge cleared the carrying balance of our goodwill to zero, reduced our intangibles by $19 million and reduced our capitalized development costs by $10 million.

Lastly, GAN was in compliance with all financial covenants associated with our term loan as of year-end.

However, given our cash flow and net losses for the LTM period ended December 31, 2022 and updates to our 2023 budget and long-range plan, as noted earlier, there is the potential that the company could violate a financial covenant associated with term loan in the future and result in a potential acceleration of our credit facility.

If our lender were to accelerate the debt, it is possible that we could have an insufficient cash flow to support our operations for a full-year following the date of issuance of our consolidated financial statements.

We are in continued negotiations with our lender and expect further amendments to the credit facility as needed to maintain compliance with the future financial covenants, but we cannot make any assurances regarding the likelihood, certainty or exact timing of further amendments to the credit facility.

GAN plans to address its liquidity needs by taking steps to improve its operations and cash position, including identifying access to future capital, continued growth from the company’s consolidated operations, cost savings initiatives implemented during the past year and the strategic review process.

I’d encourage investors on the call to refer to our Annual 10-K filing for additional details when filed. With that, I’ll turn the call back over to Dermot..

Thank you, Brian. Despite many positive achievements last year, our financial performance has not been up to our expectations. This is due to both external factors and admittedly suboptimal execution on our part.

In our B2C segment, despite a record performance in the fourth quarter, which featured the Soccer World Cup, our annual growth was impacted by a combination of factors, including a reduction in COVID-related tailwinds, increased competition in certain Latin American markets, and regulatory marketing challenges in Europe.

In our B2B segments, we met internal revenue guidance expectations, but underperformed in segment profitability with continued overconcentration on certain partnerships as newer B2B clients fail to attain meaningful scale. Furthermore, our iGaming content distribution strategy has struggled against competitors’ content libraries.

Our focus for 2023, therefore, is on these unresolved challenges. The business is now focused on markets where we can truly win, those which offer attractive growth profiles, scalability and rapid ROIs. These will be the markets that require lower future capital intensity and where we are better positioned to capture market share.

Essentially, we are putting more of our wood pile behind fewer fires to ensure success. Firstly, in B2C, we need to be a podium player in the Latin American market and leverage our existing success to new adjacent regulated markets such as Mexico, where we recently launched Coolbet.MX.

We hope to leverage our existing playbook that has proven successful in other LatAm countries, and we view these markets in adjacent launches as generally having lower start-up costs in terms of marketing spend and labor. We followed the same path of a highly localized and pro-consumer by offering the best odds in sports betting.

This is reflected in our branding, product offering and markets for local sports events. For those markets where we don’t see a clear and rapid path to profitability outside of Latin America, we will pull back resources and/or exit those markets.

To that end, we have exited the Ontario market described by some industry experts as the most competitive market in the world.

The sheer number of entrenched operators and heightened promotional environment did not present a clear path to profitability or achieving an adequate return on capital relative to existing Latin American market opportunities. These resources both operational and financial will be focused towards higher-return markets and cash flow generation.

Secondly, in the B2B division, our area of focus is now firmly on GAN Sports, already deployed successfully in multiple states across the U. S.

Back in September, we launched Retail Sports for Island View Casino Resort in Mississippi and very recently launched GAN Sports for WynnBET in Massachusetts Encore Boston Harbor, the first launch in a nationwide deployment for Wynn.

Next up is our fourth coming launch in Nevada with Station Casino’s LLC in the second half of 2023, subject of course to Nevada licensure. While GAN Sports is still in the early innings of rolling at, we think our existing B2B client roster for GAN Sports truly speaks for itself.

There are 32 states in which we can sell our Retail Sports today, coupled to 22 states for our online GAN Sports offering. Thirdly, when it comes to technical efficiency, we are rolling out GameSTACK 2.0, our new B2B technology offering in the U. S.

This will bring together the best elements of new and existing tech to drive efficiencies and deliver superior product to our clients at substantially lower cost to GAN. All new GAN clients will be on GameSTACK Version 2.0.

And importantly, the implementation and eventual sunsetting of GameSTACK 1.0 will conservatively result in $10 million in annual cash savings.

Moving on as part of our commitment to improving our return to shareholders, we have launched a formal strategic review process to evaluate options available to us to facilitate that value creation process and hastened our path to better profitability metrics at a more attractive return profile.

We hope to complete this process in a timely manner and will certainly provide updates as required. Let me be extremely clear on a very important point.

I and my entire executive group firmly believe that there is tremendous unrealized value in our proprietary technology offerings, our [panted] IP and a growing profitable B2C business that generated annual revenue of nearly $90 million this past year, which is well north of our current trading market cap.

The Board and I feel it’s highly prudent at this time to explore all options to realize this value. It’s also worth noting given the range of potential outcomes related to the strategic review, we do not currently have an adequate level of visibility to provide guidance for 2023 within a reasonable range.

That said, we do expect a relatively swift resolution to the strategic review process and hope to be in a position to provide our financial outlook for 2023 at some point in the very near future. At this time, we are unfortunately unable to provide a forward guidance outlook given the nature of our strategic review process.

But we are well into discussions with multiple involved parties and simultaneously evaluating numerous options for the go-forward organization of the company.

In addition, the variability of potential outcomes for the process precludes us from confidently outlining our forward outlook until we reach a resolution, which we expect to occur in the very near future. And with that, Brytania, we will be happy to take questions..

Thank you. We will now conduct a question-and-answer session. [Operator Instructions] Our first question comes from Ryan Sigdahl with Craig-Hallum. Please proceed..

Hey. Good afternoon, Dermot. Curious, Super RGS, it’s been a focus area, you’re pulling capital or resources away from it.

I guess is the plan to continue to support existing relationships and kind of work as is, but just push resources away? Or is it planning to kind of shutter that business line?.

Thanks, Ryan. There’s a new plan to shutter that business line. In fact, the only area which we’re reallocating resources is in relation to the exclusive content distribution deal that leads into its Ainsworth, which has been amended to save our company $15 million in cash..

Helpful. Incredible Technologies, I think you had an exclusive with them as well.

Any change to that agreement?.

No, no. There was no exclusive agreement with Incredible Technologies ultimately consummated and we continue to distribute those and many others. In fact, we have 36 individual game contact suppliers integrated into our iGaming aggregation platform, which is one of the largest contact portfolios available anywhere in the U. S..

Good. Maybe just one on the quarter, still excluding the impairment charge. Fairly significant sequential increase in several OpEx lines, product technology G&A.

I guess what drove that given what’s been kind of a focus on cost efficiencies and whatnot for a little while now?.

I can speak to the product and technology line specifically, saw an increase because related to the impairment, changes some of our accounting implications. And as discussed on the call, we are unable to capitalize quite as much within the B2B segment specifically..

Are you able to quantify that?.

If I had to guess, it’s between $1.5 million and $2 million in the quarter..

Got it. One more housekeeping. What was debt as of 12/31, I don’t believe it wasn’t in the press release. I don’t believe I already say it. And then if you’re willing to comment what cash and debt are at the end of Q1, given that’s tomorrow? That would also be helpful..

Our principal debt balance is $30 million and it’s the same at both year-end and the quarter..

Good. One more for me. You gave a revenue range for Q1.

I guess, are you willing to give EBITDA range given again the quarter ends tomorrow? And then secondly, I’m thinking pretty simplistically here without having your covenants in front of me, but given the trailing 12 months, it implies lower EBITDA expected in 2023 relative to the $6 million in 2022.

Is that I guess the right high-level implication?.

Apologies, but we can’t comment on the EBITDA at this point in time..

I’ll pass it on. Thanks..

Thank you..

[Operator Instructions] Our next question comes from Chad Beynon with Macquarie. Please proceed..

Hi. Good afternoon, and thanks for taking my question. First one for you guys, understanding that you’re not giving annual guidance.

Dermot, just wondering if you could kind of reframe out some B2B opportunities? I know over the past several quarters, you’ve talked about some of the early marriages and partnerships that happened right after [POSCO] was repealed and I think it was your call that some of these could come to an end. We’ve seen some of that happen.

Just wondering if there’s some more retail or mobile opportunities now given what you have in the full stack versus what you had before. And then also I believe there’s some new retail markets like Ohio and some others. Just wondering if you could kind of frame out how you’re thinking about B2B opportunities in 2023? Thanks..

Yes. No problem, Chad. Thank you. So we see ourselves through the Wynn nationwide sports betting partnership [Massachusetts at the beginning]. We will be in Ohio as well and many other states, 18 in total for Wynn.

It’s been a highly successful deployment not just at the end of January for retail, where it’s been extremely well received by residents in Massachusetts, but also in the more recent launch of mobile sports betting for WynnBET on March 10. We are online on time in the first hour of the market’s commencement.

And I think that is an incredibly important and valuable achievement and contribution to Wynn’s overall strategy. We do see other replacement opportunities. In fact, Wynn itself is effectively a replacement opportunity that we captured with GAN Sports product and service solution.

The same is true of the Red Rock contract, which will come on stream later on this year and we’re very focused on not just rolling out WynnBET across all these different states throughout the balance of the next few months, but of course, getting the extraordinary existing retail and online sports betting business on Red Rock modernized with the GAN Sports solution in the Silver State of Nevada, subject of course to the all important licensing process.

But there are many other replacement opportunities. There were two primary competitors for GAN Sports and we believe our GAN Sports product and services feature set is substantially advanced as compared to those competitors.

So we’re extremely happy with how GAN Sports is effectively giving us a right to win in the BB segment because online sports gets opportunities for the PAM as well as iGaming aggregation..

Thanks, Dermot. And then Mexico, I think you said, there’s some low start-up costs you’re going to approach this as you have in other markets with the localized approach.

Could this be – I don’t know, could this be, like a top three market by the end of 2023, I believe, for Coolbet, it’s Finland, some of the Northern European markets and then obviously Chile and some other LatAm.

Can Mexico kind of move into a podium position in your geographies by the end of 2023?.

Yes. We think we’ve got a very real shot at a podium position in Mexico. We’ve proven we can get onto the podium in Peru, which is a regulated market as I think everybody was rather surprised when regulation happened, which tends to be the way in Latin America markets, but Mexico has the advantage of being an existing regulated market.

And the product to sports led operators have relatively weak sports betting experience to the consumers. So we think Coolbet has got a very serious advantage, and you just don’t see the kind of competitive promotional orientated mania that we saw in Ontario during the first several months of that market. It’s launched where a lot of the U. S.

brands were pushing north very, very aggressively, combined with the entrenched operators who’ve been there for many, many years indeed.

So Mexico is a great market, very well suited to the Coolbet product offering, relatively small group of people on the ground in Mexico supporting the business combination of local traders, local marketers, local customer services agents in and around the Mexico City area.

And we’re very happy to drive the Coolbet team and exciting product offering into Mexico, which is, of course, just that – our domestic market in the U.S..

Thanks. And then with the Net Deposit Customers, the NDCs that you gain during World Cup, obviously, this is embedded in the Q1 guidance that you issued.

So what have you generally seen during these customer acquisition periods? Like, what’s the retention rate on these customers? And will that drive additional revenues beyond the first quarter maybe kind of through 2023? Is that what you’ve seen in some of these previous big soccer tournaments?.

Yes. Well, there’s always effectively the business equivalent of a hangover after a major soccer event like the World Cup. Industry kind of expectation would be doing a great job if you see 40% retention quarter-on-quarter and that’s a – thankfully, we’ve outperformed that expectation.

So we’re seeing great and very significant evidence of continued stickiness of the Coolbet sports betting offering and user experience..

Thank you very much. I’ll hand it off. Appreciate it..

Thanks, Chad..

Thank you. At this time, I would like to turn the floor back over to Mr. Dermot Smurfit for closing comments..

Thank you, everyone, for joining this afternoon’s call. While 2022 saw many important achievements, our profitability execution did not meet our expectations for the year. We understand that we have plenty of work to do in 2023 to improve our return profile and deliver better returns for our shareholders.

We anticipated that the strategic review will facilitate that process along with our renewed focus on higher ROI opportunities. Thank you, and be safe..

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation. Have a great day..