HOUSTON, Nov. 10, 2021 /PRNewswire/ -- Golden Nugget
Online Gaming, Inc. (Nasdaq: GNOG) (the "Company"), a leading
online casino operator, today reported its financial results for
the third quarter and first nine months of 2021.
Third Quarter and First Nine Months Financial
Highlights
- Revenue for the third quarter was $35.6
million, representing an increase of 37.4%, compared to
$25.9 million during the third
quarter of 2020. Revenue for the first nine months of 2021
increased 38.2% to $94.1 million
compared to $68.1 million during the
first nine months of 2020.
- Net loss for the third quarter was $31.3
million, compared to a net loss of $1.8 million in the prior year period. Net income
for the first nine months of 2021 was $36.7
million, compared to net income of $2.5 million during the prior year period. Net
loss for the third quarter of 2021 includes a loss on warrant
derivative liabilities of $18.9
million, stock-based compensation expense of $3.4 million and $2.8
million of merger related expenses whereas no such loss or
expenses were recognized in the prior year period.
- Adjusted EBITDA loss for the third quarter was $2.5 million compared to adjusted EBITDA of
$8.2 million for the third quarter of
2020. For the first nine months of the year, adjusted EBITDA loss
was $9.8 million compared to adjusted
EBITDA of $22.6 million for the first
nine months of 2020. The decline in adjusted EBITDA compared to the
prior year period is primarily attributable to growth investments
in new markets, predominantly in Michigan.
- Active First Time Depositors ("AFTD") for the third quarter
grew 133.2% compared to the third quarter of 2020 while 12-Month
Active Depositors grew 111.9%. For the first nine months of the
year, AFTD grew 188.2% compared to the first nine months of
2020.
Chairman and Chief Executive Officer, Tilman Fertitta commented, "We are pleased to
deliver another quarter of double-digit revenue growth in an
increasingly competitive market. Golden Nugget Online Gaming
continues to pride itself in making the right investments in
product, marketing and technology without wavering from our
ultimate goal of profitability – as we have achieved in New
Jersey. With successful launches in West Virginia and Virginia now under our belt, we look forward
to expanding into new jurisdictions where we can bring our players
a premium player experience."
Technology & Content Updates
- Deployed 103 new games in Michigan and 90 new games in New Jersey on web, iOS and Android in the
third quarter. Continuing our focus on content, we expect to
bring our offering in New Jersey
to over 1,000 games in the fourth quarter.
- New Jersey: enhanced our
content offering, including exclusive content, by partnering with
Greentube as they debut their innovative new games in the United
States.
- New Jersey: launched Live
Dealer Auto-Roulette in our Live Dealer studio.
- Michigan: launched Free Spins
in Michigan, a player favorite
promotion.
- Initiated a refresh on the Live Dealer tech stack which will be
replaced by an Amazon Web Services solution to improve
resiliency.
- 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 now expected to be completed
by the end of the year.
Business Update
- West Virginia: launched our
online casino and sportsbook in West
Virginia on September 22,
marking the third jurisdiction in which GNOG is live with online
casino. Additionally, the West Virginia Lottery granted us
permanent iGaming and sports wagering management services provider
permits.
- Virginia: launched our online
sportsbook in Virginia on
September 29 as an untethered license
holder, making it the fourth jurisdiction in which GNOG is live
with an online sportsbook. At launch, we made a $1.0 million donation in support of the five
historically black colleges and universities ("HBCU's") in the
state as part of our commitment to be a part of meaningful
change. GNOG is proud to continue to support the HBCU's by
sharing proceeds from Virginia
operations on an annual basis going forward.
- New Jersey: Live Dealer
agreement with Entain was extended for three more years and
includes a commitment to operate additional private tables once the
Live Dealer Studio expansion has been completed.
- To facilitate the prompt consummation of our proposed merger
transaction (the "merger") with DraftKings Inc. ("DraftKings"), we
have temporarily withdrawn our petition with the Commonwealth of
Pennsylvania for an interactive
gaming certificate and expect to promptly reapply for such
certificate after the merger closes. Accordingly, we
now expect to commence operations in Pennsylvania, subject to regulatory approvals,
at the end of the first quarter of 2022 and as a result of our
delayed launch in Pennsylvania, we
expect to come in at the low end of the range of our revenue
guidance for the year.
President, Thomas Winter stated,
"2021 continues to be a banner year for growth at GNOG. In
Michigan, we continue to grow revenues, posting a 26.3% GGR
increase over Q2 2021, while the rest of the market grew
4.7%. Our market leading growth in market share in the state
during the quarter is a direct reflection of our steady focus on
customer acquisition and retention, while our 33.6% quarterly
growth in Net Gaming Revenue, outpacing our GGR growth, illustrates
our financially disciplined approach to new markets. In Q3,
Michigan accounted for 70% of our
new active depositors, Net Average Revenue Per User (ARPU) kept
growing in line with our forecast and we expect this trend to
continue, as the weight of returning players, especially VIPs,
increases in our players mix. This customer loyalty gives us
further confidence that Michigan
will eventually be at par with New
Jersey in our revenue mix."
Thomas Winter added, "Elsewhere,
we expect to build on this growth with our recent launches in
West Virginia and Virginia and look forward to continuing our
expansion plans as we move closer towards bringing the premium
content and innovative features, synonymous with the Golden Nugget
brand, to Arizona, Ontario and Pennsylvania, subject to licensure and
regulatory approvals."
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 regulatory
approvals or other determinations from certain gaming regulatory
authorities, or complete other conditions to closing of the
proposed merger 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 Class A Common
Stock of an affiliate of DraftKings 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 GNOG's filings with
the U.S. Securities and Exchange Commission (the "SEC"), including
those set forth in the section entitled "Risk Factors" in the joint
information statement/prospectus relating to the proposed merger
filed 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, including the section entitled "Risk Factors"
in the joint information statement/prospectus relating to the
proposed merger filed 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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
Gaming
|
$
31,792
|
|
$
22,938
|
|
$
82,886
|
|
$
59,890
|
Other
|
3,846
|
|
2,990
|
|
11,192
|
|
8,201
|
Total
revenue
|
35,638
|
|
25,928
|
|
94,078
|
|
68,091
|
Costs and
expenses
|
|
|
|
|
|
|
|
Cost of
revenue
|
17,007
|
|
10,241
|
|
43,868
|
|
26,930
|
Advertising and
promotion
|
16,618
|
|
5,284
|
|
47,496
|
|
12,870
|
General and
administrative
|
7,858
|
|
2,187
|
|
21,260
|
|
5,648
|
Merger
related expenses
|
2,763
|
|
-
|
|
2,763
|
|
-
|
Depreciation and amortization
|
76
|
|
55
|
|
160
|
|
138
|
Total costs and
expenses
|
44,322
|
|
17,767
|
|
115,547
|
|
45,586
|
Operating income
(loss)
|
(8,684)
|
|
8,161
|
|
(21,469)
|
|
22,505
|
Other expense
(income)
|
|
|
|
|
|
|
|
Interest expense,
net
|
5,180
|
|
11,311
|
|
15,983
|
|
19,077
|
Loss (gain) on
warrant derivatives
|
18,944
|
|
-
|
|
(71,031)
|
|
-
|
Other expense
(income)
|
(101)
|
|
-
|
|
331
|
|
-
|
Total other expense
(income)
|
24,023
|
|
11,311
|
|
(54,717)
|
|
19,077
|
Income (loss) before
income taxes
|
(32,707)
|
|
(3,150)
|
|
33,248
|
|
3,428
|
Provision for income
taxes
|
(1,361)
|
|
(1,376)
|
|
(3,477)
|
|
914
|
Net income
(loss)
|
(31,346)
|
|
(1,774)
|
|
36,725
|
|
2,514
|
Net loss attributable
to non-controlling interests
|
5,590
|
|
-
|
|
16,126
|
|
-
|
Net income (loss)
attributable to GNOG
|
$
(25,756)
|
|
$
(1,774)
|
|
$
52,851
|
|
$
2,514
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$
(0.55)
|
|
n/a
|
|
$
1.18
|
|
n/a
|
Diluted
|
$
(0.55)
|
|
n/a
|
|
$
(0.44)
|
|
n/a
|
Weighted-average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
46,570
|
|
n/a
|
|
44,826
|
|
n/a
|
Diluted
|
46,570
|
|
n/a
|
|
78,755
|
|
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
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
(31,346)
|
|
$
(1,774)
|
|
$
36,725
|
|
$
2,514
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
(1,361)
|
|
(1,376)
|
|
(3,477)
|
|
914
|
|
Interest
expense, net
|
5,180
|
|
11,311
|
|
15,983
|
|
19,077
|
|
Depreciation and amortization
|
76
|
|
55
|
|
160
|
|
138
|
|
EBITDA
|
$
(27,451)
|
|
$
8,216
|
|
$
49,391
|
|
$
22,643
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
Debt
extinguishment expenses
|
-
|
|
-
|
|
1,622
|
|
-
|
|
Loss
(gain) on tax receivable agreement liability and other
|
(101)
|
|
-
|
|
(1,291)
|
|
-
|
|
Loss
(gain) on warrant derivatives
|
18,944
|
|
-
|
|
(71,031)
|
|
-
|
|
Merger related
expenses
|
2,763
|
|
-
|
|
2,763
|
|
-
|
|
Stock-based compensation
|
3,378
|
|
-
|
|
8,707
|
|
-
|
|
Adjusted
EBITDA
|
$
(2,467)
|
|
$
8,216
|
|
$
(9,839)
|
|
$
22,643
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA is comprised of the following (In
thousands):
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
State-level adjusted
EBITDA
|
$
(213)
|
|
$
8,932
|
|
$
(3,036)
|
|
$
24,234
|
Corporate adjusted
EBITDA
|
(2,254)
|
|
(716)
|
|
(6,803)
|
|
(1,591)
|
Total adjusted
EBITDA
|
$
(2,467)
|
|
$
8,216
|
|
$
(9,839)
|
|
$
22,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Golden Nugget Online Gaming, Inc.