GAN - GAN stock tumbles on guidance cut

GAN ( NASDAQ: GAN ) shares tumbled 20% on Tuesday as FX headwinds and a tight operating environment in certain markets in Europe hurt the online gaming company's second quarter results .

Q2 revenue grew 2% Y/Y to $35M, as strong growth in the B2B segment was partially offset by a decrease in the B2C segment. B2C segment revenue was impacted by a lower sports margin and the unfavorable impact of foreign currency fluctuation. Adjusting for the effect of currency exchange, revenue increased 10% in constant currency.

The above factors and an increased operating expense hurt profitability, with net loss widening from $3.8M in the prior year quarter to $38.3M. Adjusted EBITDA slipped from $3.5M to $1.3M, due to increased B2C segment sales and marketing expense related to securing key sponsorships to drive continued growth and brand awareness particularly in Latin America in advance of the 2022 FIFA World Cup.

CFO Karen Flores expects a difficult foreign exchange environment and European headwinds to temporarily impact results in the second half of the year. Consequently, the firm lowered its full year revenue expectation to $142.5M to $152.5M vs. $157.19M consensus (prior outlook: $155M to $165M) and adjusted EBITDA expectations to be in the range of $10M to $15M (prior outlook: $15Mto $20M).

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