HOUSTON, Aug. 16, 2021 /PRNewswire/ -- Golden
Nugget Online Gaming, Inc. (Nasdaq: GNOG) (the "Company"), a
leading online casino operator, today reported its financial
results for the second quarter and first half of 2021.
Second Quarter and First Half Financial Highlights
- Revenue for the second quarter was $31.7
million, representing an increase of 27.7%, compared to
$24.8 million during the second
quarter of 2020. Revenue for the first half of 2021 increased 38.6%
to $58.4 million compared to
$42.2 million during the first half
of 2020.
- Net loss for the second quarter was $1.6
million, compared to net income of $0.1 million in the prior year period. Net income
for the first half of 2021 was $68.1
million, compared to net income of $4.3 million during the prior year period.
- Adjusted EBITDA for the second quarter was $(3.8) million compared to adjusted EBITDA of
$8.5 million for the second quarter
of 2020. For the first half of the year, adjusted EBITDA was
$(7.4) million compared to adjusted
EBITDA of $14.4 million for the first
half of 2020. The decline in adjusted EBITDA compared to the prior
year is primarily attributable to growth investments in new markets
such as Michigan.
- Active First Time Depositors (AFTD) for the second quarter grew
110% compared to the second quarter of 2020 while 12-Month Active
Depositors grew 108%. For the first half of the year, AFTD grew
313% compared to the first half of 2020.
Chairman and Chief Executive Officer, Tilman Fertitta said, "We are proud to have
achieved another solid quarter driven by the strength of our new
customer growth both in our established and newer markets. Golden
Nugget Online Gaming continues to successfully execute on our
national expansion, while concurrently strengthening our
capabilities and product offerings with key partnerships. In
Michigan, we grew market share and
are very pleased with the trajectory of growth in the early
quarters of our operations. We expect similar trajectories for our
planned launches in Virginia,
West Virginia and Pennsylvania later this year. In addition, our
partnership with Boom Entertainment will only strengthen our
award-winning content offerings. We are increasingly encouraged by
our results and look forward to executing on the significant and
growing market opportunity available to us."
Technology & Content Updates
- GNOG is pleased to announce that it has signed a partnership
with Boom Entertainment ("Boom"), a premier provider of online
gaming and sports products in the U.S., which includes a minority
equity investment, preferred and exclusive content, bespoke game
development and market access rights in Ohio. This partnership will give GNOG the
ability to offer more content at a faster pace and targeted to our
player base to enhance the player experience.
- The GNOG Android App is now available in the Google Play Store
across New Jersey and Michigan.
- New Jersey: Work continues on
completing the 1,800 square foot expansion of our Live Dealer
Studio, which will increase our capacity from 18 to 33 tables. The
studio expansion is expected to be live by the end of the third
quarter of 2021.
- New Jersey: Successful
migration to advanced technical stack and hosting facility in
New Jersey on July 21, 2021.
- Michigan: Deployed 103 new
games from 9 different suppliers on web, iOS and Android in the
second quarter. Launched with 3 new suppliers including IGT, AGS
and Inspired Gaming.
- Michigan: Successfully
launched Live Dealer in Michigan
on July 22, 2021 among the first wave
of operators, growing our online casino offering.
Business Update
- Entered into a definitive agreement with DraftKings Inc.
pursuant to which DraftKings Inc. will acquire GNOG in an all-stock
transaction with an implied equity value of approximately
$1.56 billion, subject to approval by
GNOG shareholders, receipt of required regulatory approvals and
satisfaction of other customary closing conditions. The transaction
is expected to close in the first quarter of 2022.
- Executed an agreement with the Grand Canyon Resort Corporation,
wholly owned by the Hualapai Tribe, for market access in
Arizona, subject to regulatory
application approvals.
- Signed a market access agreement with Dayton Real Estate
Ventures, LLC, operating the Hollywood Casino Dayton and owned by
Penn National Gaming, to offer both online casino and online sports
in Ohio, legislation and
regulations permitting. Ohio is
forecast to be a more than $1 billion
online casino market at maturity, similar to neighboring
Michigan and Pennsylvania. With the addition of
Ohio and Arizona, GNOG now has access market access
agreements in 14 states representing about 33% of the U.S.
population.
- Won EGR North America Mobile Operator of the Year, for the
second year in a row, and Marketing Campaign of the Year
awards.
- Launched our flagship $1 million
wagering race in July, with a top prize of $100,000 – our biggest and most successful
monthly promotion.
- Signed sponsorships with the PGA Rocket Mortgage Classic for
2021 and 2022, with Front Row Motorsports to sponsor the No. 38 car
in the Michigan and Virginia
NASCAR Cup Series races and with Detroit City Football Club through
the 2022 season.
President, Thomas Winter stated,
"GNOG continues to show strong growth with our results in the first
half of this year. In Michigan, we more than tripled our market share
since launch which validates our steady, ROI-focused growth
investments. In the second quarter we grew gross gaming revenue, or
GGR, 99% over the first quarter while the rest of the market only
grew 35%. In July, the positive trend continued with GGR over
$5.3 million, a 32% increase over the
monthly average in the second quarter,
making GNOG the fifth largest iGaming operator in the state, with a
market share of 5.7%. In New
Jersey, where market revenues had been boosted by the
pandemic last year, we were still able to grow net revenues by 8.9%
in the first six months of 2021 compared to the prior year
period."
Thomas Winter added, "Our latest
agreements highlight yet another big step in executing on our
market expansion plans by adding the states of Ohio and Arizona to our list of potential future
markets and we look forward to launching online casino and sports
when legislation and regulations permit. GNOG's focus on
innovation and exclusive games is also on full display with
our partnership with Boom
Entertainment. Our players can look forward to continued
innovation from our best in-class online casino."
Additional Financial Information
- Net loss for the second quarter of 2021 includes a gain on
warrant derivative liabilities of $8.9
million and stock-based compensation expense of $3.0 million whereas no such gain or expense were
recognized in the prior year period.
- Net income for the first half of 2021 includes a gain on
warrant derivative liabilities of $90.0
million, a gain on the tax receivable liability of
$1.2 million and debt extinguishment
expenses of $2.2 million associated
with the early repayment of $10.6
million of the Company's term loan during the first quarter
of 2021. Stock-based compensation expenses were $5.3 million for the first half of 2021, whereas
no such expenses were recognized in the prior year period.
About GNOG
Golden Nugget Online Gaming, Inc. is a leading online gaming
company that is considered a market leader by its peers and was
first to bring Live Dealer and Live Casino Floor to the United States online gaming market. GNOG
was the recipient of 17 eGaming Review North America Awards,
including the coveted "Operator of the Year" award in 2017, 2018,
2019 and 2020.
Cautionary Statement Regarding Forward-Looking
Statements
This communication may contain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended, and the Private Securities Litigation Reform Act of
1995, known as the PSLRA. When used in this communication, the
words "estimates," "projected," "expects," "anticipates,"
"forecasts," "plans," "intends," "believes," "seeks," "may,"
"will," "should," "future," "propose" and variations of these words
or similar expressions (or the negative versions of such words or
expressions) are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside of GNOG's control, that could
cause actual results or outcomes to differ materially from those
discussed in the forward-looking statements. These forward-looking
statements include, without limitation, DraftKings' and GNOG's
expectations with respect to future performance and anticipated
financial impacts of the proposed merger, the satisfaction of the
closing conditions to the proposed merger and the timing of the
completion of the proposed merger. These forward-looking statements
involve significant risks and uncertainties that could cause the
actual results to differ materially from the expected results. Most
of these factors are outside DraftKings' and GNOG's control and are
difficult to predict. Factors that may cause such differences
include, but are not limited to: (1) the outcome of any legal
proceedings that may be instituted against DraftKings and GNOG
following the announcement of the definitive merger agreement
between DraftKings and GNOG (the "Merger Agreement") and the
transactions contemplated therein; (2) the inability to complete
the proposed merger, including due to failure to obtain approval of
the stockholders of GNOG, approvals or other determinations from
certain gaming regulatory authorities, or other conditions to
closing in the Merger Agreement; (3) the occurrence of any event,
change or other circumstance that could give rise to the
termination of the Merger Agreement or could otherwise cause the
transactions contemplated therein to fail to close; (4) the
inability to obtain or maintain the listing of the shares of Class A Common Stock
of the combined company on
Nasdaq following the proposed merger; (5) the risk that the
proposed merger disrupts current plans and operations as a result
of the announcement and consummation of the proposed merger; (6)
the ability to recognize the anticipated benefits of the proposed
merger, which may be affected by, among other things, competition
and the ability of the combined company to grow and manage growth
profitably and retain its key employees; (7) costs related to the
proposed merger; (8) changes in applicable laws or regulations,
particularly with respect to gaming, gambling, sportsbooks, fantasy
sports and other similar businesses; (9) the possibility that
DraftKings, GNOG or the combined company may be adversely affected
by other economic, business, and/or competitive factors, (10)
market and supply chain disruptions due to the COVID-19 outbreak or
other epidemics, pandemics or similar public health events; and
(11) other risks and uncertainties indicated from time to time in
the information/prospectus relating to the proposed merger,
including those under "Risk Factors" in GNOG's filings with the
SEC. GNOG cautions that the foregoing list of factors is not
exclusive. GNOG cautions readers not to place undue reliance upon
any forward-looking statements, which speak only as of the date
made. For a discussion of additional risks and uncertainties, which
could cause actual results to differ from those contained in the
forward-looking statements, see GNOG's filings with the SEC. GNOG
does not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to buy or sell or the solicitation of an offer to buy or
sell any securities, or a solicitation of any vote or approval, nor
shall there be any offer, solicitation or sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made in the United States
absent registration under the U.S. Securities Act of 1933, as
amended ("Securities Act"), or pursuant to an exemption from, or in
a transaction not subject to, such registration requirements.
Golden Nugget
Online Gaming, Inc.
Unaudited
Consolidated Statement of Operations
(In thousands, except per share amounts)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
Gaming
|
$
28,028
|
|
$
22,047
|
|
$
51,094
|
|
$
36,952
|
Other
|
3,663
|
|
2,773
|
|
7,346
|
|
5,211
|
Total
revenue
|
31,691
|
|
24,820
|
|
58,440
|
|
42,163
|
Costs and
expenses
|
|
|
|
|
|
|
|
Cost of
revenue
|
14,745
|
|
9,944
|
|
26,861
|
|
16,689
|
Advertising and
promotion
|
16,507
|
|
4,609
|
|
30,878
|
|
7,586
|
General and
administrative
|
7,325
|
|
1,765
|
|
13,402
|
|
3,461
|
Depreciation and amortization
|
40
|
|
49
|
|
84
|
|
83
|
Total costs and
expenses
|
38,617
|
|
16,367
|
|
71,225
|
|
27,819
|
Operating income
(loss)
|
(6,926)
|
|
8,453
|
|
(12,785)
|
|
14,344
|
Other expense
(income)
|
|
|
|
|
|
|
|
Interest expense,
net
|
5,095
|
|
7,765
|
|
10,803
|
|
7,766
|
Gain on warrant
derivatives
|
(8,884)
|
|
-
|
|
(89,975)
|
|
-
|
Other
expense
|
66
|
|
-
|
|
432
|
|
-
|
Total other expense
(income)
|
(3,723)
|
|
7,765
|
|
(78,740)
|
|
7,766
|
Income (loss) before
income taxes
|
(3,203)
|
|
688
|
|
65,955
|
|
6,578
|
Provision for income
taxes
|
(1,638)
|
|
587
|
|
(2,116)
|
|
2,290
|
Net income
(loss)
|
(1,565)
|
|
101
|
|
68,071
|
|
4,288
|
Net loss attributable
to non-controlling interests
|
4,829
|
|
-
|
|
10,536
|
|
-
|
Net income
attributable to GNOG
|
$
3,264
|
|
$
101
|
|
$
78,607
|
|
$
4,288
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.07
|
|
n/a
|
|
$
1.79
|
|
n/a
|
Diluted
|
$
(0.13)
|
|
n/a
|
|
$
(0.28)
|
|
n/a
|
Weighted-average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
46,593
|
|
n/a
|
|
43,879
|
|
n/a
|
Diluted
|
78,987
|
|
n/a
|
|
78,020
|
|
n/a
|
Non-GAAP Financial Measures
EBITDA and adjusted EBITDA are supplemental non-GAAP financial
measures that are used by management and external users of our
financial statements, such as industry analysts, investors, lenders
and rating agencies. We define "EBITDA" as earnings (or loss)
before interest, taxes, depreciation, and amortization, and we
define "Adjusted EBITDA" as EBITDA before stock-based compensation,
acquisition transaction related expenses, gains or losses on
warrant derivative liabilities, debt extinguishment expenses and
other non-cash or non-recurring items. Neither EBITDA nor Adjusted
EBITDA is a measure of net income as determined by U.S. generally
accepted accounting principles ("GAAP").
Management believes EBITDA and Adjusted EBITDA are useful
because they allow management to more effectively evaluate our
operating performance and compare the results of our operations
from period to period and against our peers without regard to our
financing methods or capital structure or non-recurring, non-cash
transactions. We exclude the items listed above in calculating
EBITDA and Adjusted EBITDA because these amounts can vary
substantially from company to company depending upon capital
structures and the method by which assets were acquired. None of
EBITDA or Adjusted EBITDA should be considered an alternative to,
or more meaningful than, net income (loss), the most closely
comparable financial measure calculated in accordance with GAAP.
Certain items excluded from EBITDA and Adjusted EBITDA are
significant components in understanding and assessing a company's
financial performance, such as a company's return on assets, cost
of capital and tax structure. Our presentation EBITDA and Adjusted
EBITDA should not be construed as an inference that our results
will be unaffected by unusual or non-recurring items. Our
computations of EBITDA and Adjusted EBITDA may not be comparable to
other similarly titled measures of other companies.
Reconciliation of net income to EBITDA and adjusted EBITDA
(In thousands):
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
(1,565)
|
|
$
101
|
|
$
68,071
|
|
$
4,288
|
Adjusted
for:
|
|
|
|
|
|
|
|
Provision for income taxes
|
(1,638)
|
|
587
|
|
(2,116)
|
|
2,290
|
Interest
expense, net
|
5,095
|
|
7,765
|
|
10,803
|
|
7,766
|
Depreciation and amortization
|
40
|
|
49
|
|
84
|
|
83
|
EBITDA
|
$
1,932
|
|
$
8,502
|
|
$
76,842
|
|
$
14,427
|
Adjusted
for:
|
|
|
|
|
|
|
|
Debt
extinguishment expenses
|
-
|
|
-
|
|
1,622
|
|
-
|
(Gain) loss on
tax receivable agreement liability
|
66
|
|
-
|
|
(1,190)
|
|
-
|
Gain on
warrant derivatives
|
(8,884)
|
|
-
|
|
(89,975)
|
|
-
|
Stock-based compensation
|
3,039
|
|
-
|
|
5,329
|
|
-
|
Adjusted
EBITDA
|
$
(3,847)
|
|
$
8,502
|
|
$
(7,372)
|
|
$
14,427
|
Adjusted EBITDA is comprised of the following (In
thousands):
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
State-level adjusted
EBITDA
|
$
(1,430)
|
|
$
9,101
|
|
$
(2,823)
|
|
$
15,302
|
Corporate adjusted
EBITDA
|
(2,417)
|
|
(599)
|
|
(4,549)
|
|
(875)
|
Total adjusted
EBITDA
|
$
(3,847)
|
|
$
8,502
|
|
$
(7,372)
|
|
$
14,427
|
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SOURCE Golden Nugget Online Gaming, Inc.